Senator JOHNSON of Colorado. Well, you say the new bill is going to cost you $100,000,000 a year-I presume it is a year. What is the cost under the present law?

Mr. FORT. The taxes which we are paying now for retirement are 314 percent, and that would be about $130,000,000.

Senator JOHNSON of Colorado. And the additional benefits that are to be paid under the bill on the present pay roll is 100 million; is that right?

Mr. FORT. On the present pay roll, yes; 110 million. That is an abnormally high pay roll.

Senator JOHNSON of Colorado. Yes; that is an abnormally high pay roll, but you get your estimate of 100 million on the present pay roll? Mr. FORT. That is right, but that is not what you will get in the future, because your pay roll wouldn't be that high.

Senator JOHNSON of Colorado. So the 100 million would decline? Mr. FORT. That is right.

Senator JOHNSON of Colorado. Perhaps to 75 million, or something like that amount? Your testimony was very interesting. Some of your logic was a little hard to follow. You argue that because certain other systems do not reach the high standards of the railroad system that we ought not to do anything about it, yet, at the same time, you say 20,000,000 people are without social security at all. Following your logic we would not do anything, and we wouldn't have any social security because 20 millions do not have social security, and, therefore, no one should be raised above that level.

Mr. FORT. No, Senator, the fault was not with my logic. It was with my expression. I say you have this picture of 20 millions with no social security, 47 million with general social security, and 11⁄2 million with more than the rest, and you want to make a change, the change should not be to further favor those that are now preferred.

Senator JOHNSON of Colorado. I understand that, but you made the point unless you had them all on an equal basis, there just shouldn't be any social security.

Mr. FORT. Oh, that is not my point. As I say, I did not state it as clearly as I should.

Senator JOHNSON of Colorado. The other thing that appealed to me in your testimony is that you said that the railroad industry is exactly similar to every other industry. Of course, that just isn't so. The railroad industry is apart from other industries. Employment in the railroad industry is career employment. We heard Mr. Brown, who has spent all of his life in the railroad industry. Mr. Brown is a typical railroad man. Of course, he has advanced a lot higher. He got into the higher grades of railroad employment, yet you take the average railroad man, he spends his lifetime in railroad work. That is not true of industry, generally, and I know from my own experience on the railroad in handling a train sheet as a dispatcher, that there just isn't any comparison between men on the railroad and men in other industries. I don't know of any industry where a man has an opportunity to make as great a contribution to an industry because of his ability. I know that in handling a train sheet I used to figure a certain engineer would do certain things, a certain conductor would get a local train over the division 2 hours quicker than other con

ductors. I know that railroad men, if they are interested in their work and do a good job and have the ability-and railroad men do have superior ability as compared with other men-that that means a great deal to the railroad companies.

Now with this security and all that you are providing for railroad men, the railroads are going to get better men, abler men, more capable men, better quality of employment, and because they get that better quality of employees they are going to get better results out of their industry. There just isn't any question about that in my mind. Henry Ford, for instance, was able to make the cheapest car in the United States when he was allowed to pay a higher wage than the rest of the automobile industry. When he had to pay the same level of wages, why, his car was more or less regimented in price, too. So there is something to the argument that it is advantageous to a railroad company to be able to pay something extra for better men. Isn't there something to that?

Mr. FORT. Senator, I go along with you wholeheartedly in your statement about what a fine group of men railroad workers are. I don't think you'll find a finer group anywhere, and I have had a lot to do with them. Again, however, I must have failed to make myself entirely clear on some of the points which you mention.

Senator JOHNSON of Colorado. Well, you complained

Mr. FORT. Let me state it this way: I did not say the railroad business was no different from any other business. I said that the need of a railroad man for protection for survivors was no different from the need of any other man, and that sickness was a hazard of all men, that it was not in any way distinctive to railroad men. These two features that are covered by this bill go into the realm of pure social security. That is the point I made, and I think it is absolutely sound.

Senator HAWKES. In other words, what you had in mind is if the railroad man is a higher class man and a better man, that thing should be taken care of in wages as related to other people. When you get into the social-security field then everybody in the United States that works for a living is going to expect similar treatment, and in that I am very substantially in agreement with you.

Of course, everybody thinks their own men are high-class men. I think that about the men in my own company. We have had over 52 percent of the men in our company with us for over 28 years. We have had very little change in all that period of time. Those fellows, every one of them-I talk with them--I know what they want. I have even had the thing discussed on the differentials that already exist. I think that is one of the most important things we have got to consider in connection with this thing. I am wholeheartedly in favor of finding a way, if we can, to eliminate all the hardship there is that comes from being out of work and sick, and so forth, if we can find the system, but I am one who believes there has to be a system over all. It has to be a system that affects the whole Nation broadly and fairly as related to each other.

Senator JOHNSON of Colorado. Well, we thank you very much, Mr. Fort.

Mr. FORT. Mr. Chairman, we have a pamphlet here, which is a very short statement of our case. May I hand that to the members of the committee?

Senator JOHNSON of Colorado. Yes; we will be glad to have copies of it.

I just want to say one other word, though. The railroad companies, as you have stated, or as has been stated here, were the pioneers in the pension system. The reason they wanted that pension system for their employees was in order to stabilize employment and to have better satisfied employees, and to make them like their jobs and stick to their jobs, and stay with the jobs.

I have worked on railroad divisions where you had men coming and going every day, and it was just terrible trying to get the trains of the division over the division. I have worked on other divisions where your employees were old employees, where they were satisfied, where they were contented, where they were happy, where they were proud of their job, and it made all the difference in the world in operating on those divisions.

So, there is a lot in having a contented employee.

Mr. FORT. Well, you couldn't be prouder of the railroads or the railroad men than I am. So we exactly agree on that, Senator.

Senator HAWKES. I think we are all in accord, Mr. Chairman, on that, because I don't think there is a higher group of men in the United States than the men who run the railroads. I mean who actually work on the railroads.

Senator JOHNSON of Colorado. Mr. Hood, are you ready, sir?

STATEMENT OF J. M. HOOD, PRESIDENT, AMERICAN SHORT LINE RAILROAD ASSOCIATION, WASHINGTON, D. C.

Mr. HOOD. My name is J. M. Hood. I am president of the American Short Line Railroad Association, with offices in the Tower Building, Washington.

We represent 317 of the smaller railroads. They employ 57,000 persons and have an annual pay roll of $130,000,000. They, of course, are proportionately interested in any type of legislation including retirement act proposals as is a larger line. They are universally and uniformly in favor of a retirement system for railroad employees.

Witness the fact that any one of them probably could have secured an unconstitutional decree for the act now in effect had they chosen to start such a proceeding.

They are without exception opposed to the Senate bill before you. Their reasons I can only state briefly, and to a considerable extent they will be repetitive of what you have been hearing. They object to the preferment of railroad employees for benefits larger and more expensive and more costly to themselves than those of their competitors. The only way a short-line railroad can live is through its revenue, and that revenue has to come from the shippers located in the territory served by them. Such revenue can only come when the service can be rendered by that short-line railroad carrier at a cost competitive with that available by highway or water or air competitors. They are peculiarly susceptible to highway competition because of their relatively short mileages. That is the field in which highway carriers are most economical and, for that reason, tend to take a larger proportion of the business normally available to a rail carrier when competing on longer hauls.

Another place in which the short-line carrier is peculiarly subject to harm from the proposals contained in Senate bill S. 293, is the broadening of the coverage. The organization of the short-line railroads obviously cannot include every type of repair machinery and employees of all skills, with the result that a great many of our repair and construction activities are conducted by private contractors. Witness nearly all water-borne facilities and water-borne labor handling, unloading and loading of cargoes done at carrier expense.

Many other types of services: It is a known fact and has been stated to me by people doing that contracting work that should this bill prevail they would probably abandon it. They would not be bothered to be brought under the Railroad Retirement Act as this bill purports to do, for the small portion of their total business in that field. That would leave many of our carriers with no place to get that type of work accomplished.

Senator JOHNSON of Colorado. Are they under the present law?

Mr. HOOD. They are not. Take, for instance, a railroad having a dock in a harbor. There is a firm which specializes in that type of work-salvage, repair, and construction. No short-line railroad can possibly organize itself to do that type of work, yet that contractor, under this bill, would be brought within its provisions. Obviously, they could not afford to be placed there.

The essential objections of the short-line carriers, for which reasons they object to the bill and hope that it does not pass, are the broadening of the coverage to the performance of their employees as against those of their competitors, the failure to provide against future insolvency of the funds, and the increased costs to themselves which they fear they will not be able to pay.

That concludes my statement, Mr. Chairman.

Senator JOHNSON of Colorado. We thank you very much, Mr. Hood. Mr. Lacey, of the National Industrial Traffic League.

Mr. FORT. Senator, Mr. Estes, who appeared, took Mr. Lacey's place.

Senator JOHNSON of Colorado. Oh, yes; that is fine.

Mr. FORT. But Mr. Roland Rice is here.

Senator JOHNSON of Colorado. All right, Mr. Rice; we are ready for you now.

Mr. RICE. Mr. Chairman, there is another gentlemen here, Mr. Brodsky, who is from out of town, who is on your list, I think. He is very anxious to get on. It will not take him long.

Senator JOHNSON of Colorado. All right, Mr. Brodsky; we will be glad to hear from you. Mr. Brodsky is with the National Furniture Warehousemen's Association.

STATEMENT OF DAVID BRODSKY, COUNSEL FOR NATIONAL FURNI

TURE WAREHOUSEMEN'S ASSOCIATION, CHICAGO, ILL.

Mr. BRODSKY. This statement is being made on behalf of the National Furniture Warehousemen's Association, a nonprofit association. of approximately 600 household-goods warehousemen throughout the United States. The members of this association are engaged in the storage and moving of household goods. The association's office is at 1918 South Wabash Avenue, Chicago 5, Ill.

The association takes no position with respect to the merits of the bill itself. Their interest in this bill is solely because of certain language contained therein which may be construed to bring within its scope warehousemen of household goods. It is apparent that the purpose of this amendment is to bring in persons affiliated or closely identified with the railroads, but we believe it is not the intention of this act to include totally unrelated industries, such as the household-goods warehousing industry.

There are two sections of the bill which may be construed to include such warehousing. The first is subdivision (2) of section 1 (a), lines 3 to 10, on page 2, which defines an employer under the act as

Any person, other than a carrier regulated under part 1 of the Interstate Commerce Act, which, pursuant to arrangements with a carrier or otherwise, performs, for hire, with respect to * * * property transported, being transported, or to be transported by a carrier, any service included within the term "transportation" as defined in section 1 (3) of the Interstate Commerce Act, whether or not such service is offered under railroad tariffs.

Section 1 (3) of the Interstate Commerce Act defines the term "transportation" to include—

all services in conection with the receipt, delivery, elevation, and transfer ín transit, ventilation, refrigeration or icing, storage, and handling of property transported.

By incorporating the definition of the term "transportation" with out qualification, an "employer" could be construed as any person other than a carrier regulated under part 1 of the Interstate Commerce Act, which, pursuant to arrangements with a carrier or otherwise, performs, for hire, with respect to property transported, being transported, or to be transported by a carrier, the service of storage. The word "storage" is a broad term and includes the storage of all goods, including household goods.

It is respectfully submitted that qualifying language be incorporated in subdivision (2) of section 1 (a), limiting the definition in such a way so that the services included would include only those services performed by railroads or in connection with railroads, this being the intention of the bill. In any event, the bill should specifically exclude the storage of household goods, since by no stretch of the imagination is household storage related in any way to the railroads.

The second objectionable section of the bill is subdivision (3) of section 1 (a), lines 11 to 22, of page 2, which defines an employer under the act as "any freight forwarder.". The section then proceeds to define a freight forwarder as

Any person, other than a carrier, which holds itself out to the general public to transport, or provide transportation of property for hire, and which in the ordinary and usual course of its undertaking assembles and consolidates, or provides for the assembling and consolidating shipments of such property

and assumes responsibility for the transportation of such property from point of receipt to point of destination, and regularly and substantially utilizes, for the transportation of such shipments, the services of one or more carriers." This definition is apparently taken from the definition of a freight forwarder in part IV of the Interstate Commerce Act. The definition without qualification or limitation would include forwarders of household goods.