Student Scholarship

Document Type

Research Paper

Abstract

This research project, presented by Caroline Drane in 1961, examines the regulatory framework and rating procedures of the Interstate Commerce Commission specifically concerning common motor freight carriers. The study utilizes the legal case of Watson Bros. Transportation Co., Inc. regarding the transport of meats and packinghouse products to illustrate how the Commission manages rate control and the resulting tensions between the trucking and railroad industries. Historically, the regulation of motor carriers through the Motor Carrier Act of 1935 was driven by intense competition and the need for a coordinated national transportation system rather than the monopolistic concerns that prompted railroad regulation. The author explains that the Commission operates under a broad national policy intended to preserve the inherent advantages of different transport modes while maintaining fair economic conditions. 

The core of the analysis focuses on the transition of rate-making theories from value-of-service to cost-of-service models, a shift complicated by the technical difficulty of accurate cost-finding in a complex industry. In the specific instance of Watson Bros., the carrier proposed lower rates to combat competition from private and illegal trucking operations. However, the Interstate Commerce Commission ultimately ordered the cancellation of these rates, finding that the company failed to prove they were compensatory or just. The case moved to the U.S. District Court not on the merits of the rates themselves, but on procedural grounds regarding the omission of an examiner's report. The court upheld the Commission's actions, reinforcing the agency's broad discretionary power over administrative procedures. Drane concludes that while the Commission successfully prevents rate demoralization, its legalistic and often slow processes can hinder managerial initiative and the timely adjustment of rates to changing economic conditions.

Research Highlights

  • The Problem: The Interstate Commerce Commission (ICC) faced challenges in regulating motor carrier rate-fixing and balancing competition between railroads and the expanding trucking industry while interpreting broad national transportation policies. 

  • The Method: A case study of Meats and Packinghouse Products—Watson Bros. Transportation Co., Inc. was conducted using ICC library files, legal briefs, and Commission memoranda to analyze the 1958–1960 administrative and judicial proceedings. 

  • Quantitative Finding: Watson Bros., a carrier with 1958 gross revenues exceeding $36 million, proposed a rate of 235 cents per 100 pounds with a 35,000-pound minimum to 10 points in the Midwest; during 1958, its perishable division averaged 45.7 cents revenue and 42 cents expense per mile; only 25% of all truck traffic was engaged in interstate commerce. 

  • Qualitative Finding: The ICC denied the rate reduction because it threatened rate structure stability and appeared non-compensatory; the U.S. District Court upheld the ICC decision, ruling that the Commission could legally omit an examiner's report if "due and timely execution of functions" required it. 

  • Finding: Federal transportation policy in 1961 was characterized by a conflict where the government simultaneously restricted and promoted different transport agencies, resulting in a division of authority that hindered accountability for technical progress.

Publication Date

1-1961

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

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