Many household-goods warehousemen engage in the consolidation and forwarding of household goods by rail and other modes of transportation. This fact was recognized and provision therefor made by exempting from the application of the Freight Forwarders Act the forwarding of used household goods where it was the only commodity handled by the forwarder. This exemption is contained in paragraph 1002, Definitions and Exemptions, paragraph (a) (8) (b), title 49, U. S. C. A.

It is respectfully submitted that adopting the definition of freight forwarders as used in part IV of the Interstate Commerce Act without providing for exemptions therein contained would bring within the purview of the bill under consideration the forwarders of household goods, which would include practically all of the larger householdgoods warehousemen and many of the smaller ones in the United States. This not being intended, it is respectfully submitted that the language of subdivision (3) of section 1 (a) be qualified to provide · for the exemption of household goods.

As stated at the outset, it is our belief that this bill was not intended to cover household-goods warehousemen, either as warehousemen or as forwarders. The language used, however, is broad enough to make such interpretation by the courts possible. Our only interest is to clarify the language of the bill to remove any ambiguity on this point.

Senator JOHNSON of Colorado. We thank you, Mr. Brodsky.

Mr. Jack Garrett Scott, general counsel of the National Association of Motorbus Operators, and in behalf of that association, asks me to insert his testimony in the record because he is not able to be here this afternoon.

He did want me to say to the committee that the intercity motorbus industry is opposed to the enactment of S. 293 in its present form, for the reason that it would extend to certain motor carriers of passengers the provisions of the Railroad Retirement and Railroad Unemployment Acts. He says: "This is quite objectionable to our industry for many reasons, which, briefly stated, are as follows." Mr. Scott wanted me to call it to the attention of the committee, and I ask that it be inserted in the record.

STATEMENT OF JACK GARRETT SCOTT, GENERAL COUNSEL, THE NATIONAL ASSOCIATION OF MOTORBUS OPERATORS

Mr. SCOTT. The National Association of Motorbus Operators is an organization which includes within its membership about 650 motorbus operators throughout the United States, including members of affiliated State associations. It is the national trade association for the intercity motorbus industry. All of its operating members, with very few exceptions, are common carriers by motor vehicle within the definition of part II of the Interstate Commerce Act and are regulated by the Interstate Commerce Commission under that statute. In the main, our members perform intercity passenger service by motor vehicle, as distinguished from local or urban service, although some operators are engaged in both types of service. The industry currently employs approximately 70,000 persons.

The intercity motorbus industry is opposed to the enactment of S. 293 in its present form, for the reason that it would extend to certain motor carriers of passengers the provisions of the Railroad Retirement and Railroad Unemployment Acts. This is quite objectionable to our industry for many reasons, which, briefly stated, are as follows:

If I read the bill correctly, it would, for the first time, include within the class of employers subject to these two statutes motor carriers of passengers which are "subject to control by or to common control with" a rail carrier. Although the meaning of "common control" is reasonably well understood, the words "subject to control by" are not, and they are so broad and indefinite that they would undoubtedly give rise to many disputes and claims as to inclusion, even in cases where inclusion probably would not have been at all intended.

For example, there are a number of bus lines in which one or more rail carriers own minority interests. What proporton of rail interest in such cases, or whatever other facts, might constitute, or be said to constitute, being "subject to control by" the rail carrier, no one would know in advance of a finding by the Board, which in fact and effect would be virtually final.

But the primary vice in including within the provisions of these statutes motor carriers which are affiliated with rail carriers is the unfair and unjust discrimination against them which would necessarily result. The motor carriers of passengers which have rail affiliations operate as individual, independent carriers and deal directly with the public as common carriers. All of them are subject, as individual entities, to regulation by the Interstate Commerce Commission under the Interstate Commerce Act; all of them compete directly with other carriers of passengers which have no such affiliation and which therefore would not be included within the rail statutes. There can be no justification, as we see it, in burdening one motor carrier with a tax of 834 percent of its pay roll when its direct competitor, similarly situated, similarly regulated, and engaged in a substantially identical operation, pays 4 percent. The unfair and unjust situation which would result from this uneven treatment is obvious.

A further serious objection arises out of the provisions of paragraph (11) of section 1 (a), entitled "Segregation." If the bill were enacted in its present form, it is not only possible but probable, in many cases, for part of the employees of a given employer to be subject to the provisions of the railroad statutes and the rest to be subject to the social security and State unemployment statutes. That would present a situation which would be unjustifiably difficult and confusing and would create disaffection and dissatisfaction among the employees themselves, thus tending to break down morale and to cause serious obstacles to the ultimate establishment of satisfactory labor relations in the industry. The existing duplication and overlapping, in respect of hours of service of employees, between the Interstate Commerce Act and the Fair Labor Standards Act, which has caused severe and needless difficulty and trouble for years, is a very good case in point.

If it should be contended that unfair and discriminatory treatment resulting from the bill as now written is an argument in favor of including all motor carriers under the Railroad Retirement and Unemployment Acts, the answer is that no motor carrier should be in

cluded under the statutes as now written or as they are proposed to be amended by this bill. This for many reasons: Labor relations in the railroad industry are controlled under the provisions of the Railway Labor Act, which covers only those carriers subject to part 1 of the Interstate Commerce Act. In the motorbus industry, other and different statutes apply. The present coverage of the Railroad Retirement and Unemployment Acts is substantially the same as that of the Railway Labor Act, would be unfair, confusing, and illogical.

I am informed that the Railroad Retirement Act of 1937 grew out of a collective-bargaining agreement between rail carriers and their employees conducted according to the principles of the Railway Labor Act and designed to cover only employers and employees represented in that bargaining. To now extend an agreement so made to employers and employees of an entirely different industry, who had no voice, participation, or right of participation in the bargaining, is decidedly unfair. This is particularly true because the railroad industry and the motor-carrier industry are essentially different in most particulars, financially, physically, and in the nature and character of their operations. A device of this kind designed particularly to fit the rail industry just won't fit the motorbus industry. It would be as illogical to impose it on the motorbus industry as it would be to require by statute that motor carriers use steam locomotives on the highways.

In the second place, the motorbus industry cannot stand the increase in its costs of operation which this bill would cause. Although its present gross revenues are somewhat higher than normal because of wartime conditions, the same is not true relatively of net income after taxes, and the industry will undoubtedly be in a very difficult financial position at the war's end. High operating costs, particularly in the field of maintenance and operations, and extraordinarily high income and excess-profits taxes have not left much of a cushion for the large and unusual expenditures which the industry must face when the war is over. It is well known that during, and because of, the war our motor-vehicle equipment has worn out, deteriorated, and become obsolete. Replacements have been very limited. That is also true as to such properties as terminals, garages, offices, and the like.

An estimate based upon reports from industry members, compiled in 1944, shows that the total cost of rehabilitation of the industry, if the war should end this year and materials and replacements should be available shortly thereafter, would be over a hundred million dollars. That breaks down into $59.278,176 for equipment and $41,926,307 for terminals, garages, and offices. The need for that huge expenditure will come at a time when revenues will be sharply decreased, with probably no decreases, certainly no corresponding decreases, in operating costs.

It will also be at a time when the industry will face the fiercest and most intensive competition for business it has ever known, not only from other carriers but also, and in large degree, from the private automobile. The motorbus industry does not have any such sums available.

Unlike the railroads, we do not have free access to public financing. On the contrary, in spite of its higher revenues, in 1942 the motorbus industry, class 1 carriers only, had a deficiency in working capital of over $17,000,000. That is the latest figure available. That deficiency

is undoubtedly much higher now. In view of all these considerations, to add materially to its cost, with the added financial burdens contemplated by this bill, would be dangerous, if not ruinous, for it as an industry.

It must be remembered that the motor-carrier industry is strictly regulated by public authorities, including the rates and fares it may charge. Its entire income is derived from the traveling public. Hence, whatever it has to pay out about what it takes in must come through increased costs of travel to the public. The only alternative is bankruptcy.

Our whole conception of the industry's future lies in more and greater economy and efficiency in its service to the public-cheaper and better transportation rather than more expensive transportation. Additional costs will defeat the accomplishment of these sound purposes. The motorbus industry is too important from the viewpoint of the national economy, as has been proven both in time of peace and in time of war, to be burdened and perhaps seriously jeopardized with added expenses, for purposes which are now satisfactorily cared for in other ways.

In the third place, if the Railroad Retirement and Unemployment Acts are to be substituted for the Social Security and State Unemployment Acts in the bus industry, it can be based logically upon the sole point that the former statutes provide a necessary and more substantial benefit by way of improved social conditions and security than the latter.

If that is true as to the bus industry, which we do not at all concede, it is necessarily true of all industries now subject to the Social Security Act. If our status and responsibilities are to be changed, then the status and responsibilities of every other industry in the country should be also changed, upon precisely the same basis.

The Vandenberg resolution, calling for an investigation as to a need for postwar revision of the social-security laws, is now pending in the House. That investigation should be completed before there is any serious consideration given to wholesale expansion of those statutes. But it has not yet been established by anyone that extension of the provisions of the Railroad Retirement Acts to all industry is desirable or sound, or that either industry or labor or the people generally would support it. But until the time comes, if ever, when such a course is shown to be desirable in the public interest, why, in the meantime, discriminate against the bus industry? As we see it, there can be no satisfactory or reasonable answer to this inquiry.

Many other serious and sound objections to the bill have been voiced by the rail carriers and other opponents. These objections we adopt and urge without repetition. The entire motorbus industry, so far as I have been able to ascertain, opposes this bill, whether it be made applicable to a part only or to all of the industry. Therefore, we strongly recommend that the bill, if it be favorably reported, be so amended by this subcommittee or by the Committee on Interstate Commerce that it will contain an absolute and unequivocal exclusion of all common carriers of passengers by motor vehicle which hold themselves out directly, as such common carriers, to serve the public. Our suggestion as to how this may be accom

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plished is to strike from section 1 (a) (5) the words appearing in lines 1 and 2 on page 4, "or (iii) is engaged in transportation by motor vehicle"; and to strike from section 1 (a) (10) the words appearing in lines 3 and 4 on page 5, "except with respect to persons covered by clause (iii) of paragraph (5)."

Senator JOHNSON of Colorado. Mr. Rice, will you go ahead now, please?

STATEMENT OF ROLAND M. RICE, GENERAL COUNSEL, AMERICAN TRUCKING ASSOCIATIONS, INC., WASHINGTON, D. C.

Mr. RICE. Mr. Chairman, my name is Roland Rice. I am general counsel of the American Trucking Association. That association is the national trade association for the highway motor freight carriers in the United States. We have affiliated associations in all the 48 States, the District of Columbia, and the Territory of Hawaii. I appear here in opposition to the bill, particularly those provisions of it which would apply to motor-carrier employees. I want to add that it is my understanding that we will be permitted to file a more lengthy statement, but at the present time I just want to outline a few of the more important points and file the statement separately later.

Senator JOHNSON of Colorado. Yes. We will be glad to have your full statement, sir.

Mr. RICE. My understanding of this bill is that it would include within its coverage certain local cartage operations of motor carriers. That would not be confined, as we read the bill, to those who operate solely in local cartage but would include local cartage operations, we fear, of certain over-the-road carriers as well as of those who operate in purely local service.

We believe also, as was pointed out by Mr. Brodsky, that some of the warehouse employees of some of our members would also be included within the terms of this bill. One of the difficulties facing us is that we are absolutely unable to segregate our operations. A truck, for example, in any of the types of service which I have enumerated here, performs many kinds of work. In actual operation we believe that individual vehicles and the men operating those vehicles would be subject to the Railroad Retirement and Unemployment Acts, for perhaps an hour, and then they might be subject to the general socialsecurity laws for a couple of hours. They might, in the course of their work, then be subject a portion of their time again during the same day to the Railroad Retirement and Unemployment Acts.

So that the nature of our business is such that we see absolutely no way in the world for us to segregate it so that we can tell whether a man is subject to one act or to another. As a matter of fact, we are very much afraid he would be subject to both of them at the same time.

Now, it has been said to us that this bill would cover only rail-owned motor carriers. We would be opposed to it on that basis also, because it definitely establishes a discrimination between the different kinds of motor carrier operations. That is, if that interpretation of the bill be correct, it would apply then only to rail-owned motor carriers and would segregate and leave untouched the independentlyowned motor carriers.