of section 1 of the bill and thereby relieve the maritime industry from the objectionable expanded coverage and increased taxation which we challenge.

Senator JOHNSON of Colorado. Mr. Roland Rice, general counsel of the American Trucking Associations, who spoke briefly yesterday, asked permission to file a supplemental statement which he has now done and that may be included in the record.

(The statement is as follows:)

SUPPLEMENTAL STATEMENT OF ROLAND RICE, GENERAL COUNSEL, AMERICAN

TRUCKING ASSOCIATIONS, INC.

Mr. Chairman and members of the subcommittee, my name is Roland Rice. I am general counsel of American Trucking Associations, Inc., the only national organization representing the interests of operators of motortrucks generally. Our offices are located at 1424 Sixteenth Street NW., Washington, D. C. We have some 50 affiliated associations, at least 1 in each State. Our membership is composed of both for-hire and private carriers, the latter being engaged in the transportation of their own property.

Our industry is opposed to the enactment of S. 293 as presently worded. I shall try, briefly, to give you the reasons for our opposition.

If we correctly understand the bill, it would, among other things, extend to certain for-hire motor carriers of property, not heretofore subject to the Railroad Retirement Act or the Railroad Unemployment Act, the provisions of these statutes as amended by this bill.

Although the bill is very involved and the phraseology extremely indefinite, our reading of it, especially sections 1 (a) (2), 1 (a) (4), 1 (a) (5), and 1 (a) (10), leads us to the conclusion that one of its purposes is to apply the provisions of the Railroad Retirement and Railroad Unemployment Acts to the so-called pick-up-and-delivery motor carrier, also referred to as a local-cartage carrier.

We have made a rather careful study of the bill and frankly confess our inability to fathom, with any degree of certainty, the test of inclusion provided therein. For this reason, we are not at all sure of just which motor carriers would ultimately be covered should the bill pass as now written. We do know, however, that many pick-up-and-delivery carriers are wholly or partially railowned. Then, too, many stockholders of such motor carriers also own stock in certain railroads.

As the bill is written, we cannot be certain which, if either, of these cases would constitute the direct or indirect control contemplated by section 1 (a) (5). Also, we think it clear that section 1 (a) (10) does not exclude even independently owned motor carriers. This extremely broad coverage we certainly oppose.

At the outset, it is apparent that rail-owned motor carriers would be discriminated against. For example, certain members of our organization would have imposed upon them a tax of 84 percent, while other members, engaged in identical operations, would be subject to the 4 percent social-security tax. The competitive effect would be altogether unwholesome and the independent carriers realize that, even if they are exempt now, it will be just a matter of time until they too are covered. The proponents of this bill are, we believe, putting the old maxim "divide and conquer" to the legislative test.

As we read the bill, there are other motor carriers besides those owned or controlled by railroads which would be covered under sections 1 (a) (2) and 1 (a) (10). Both these sections can be construed to cover both common and contract carriers in local pick-up-and-delivery service. Despite the segregation provisions of section 1 (a) (11), the nature of pick-up-and-delivery operations is such that it would be absolutely impossible to determine when employees engaged in such operations would be subject to the Social Security Act and when the Railroad Retirement and Unemployment Acts would apply. Further, warehouse and terminal employees would apparently also be involved under section 1 (a) (4), lines 6, 7, and 8, and section 1 (a) (5), lines 21 to 25.

As we see it, the bill is provocative of jurisdictional disagreements between Government agencies, as well as labor organizations. Such disagreements would automatically arise because of the physical operation involved in the movement of freight.

A motor vehicle in pick-up-and-delivery service starts out and gathers all kinds of freight, some of it eventually to move by railroad, some to move by motortruck, and some to be delivered locally with no further movement by any type of trans

portation. All of these packages are loaded into one vehicle and may be taken to a central terminal from which they are dispatched according to directions, or they may be taken to a motor-carrier terminal, a rail terminal, or to a private consignee. The amount of time that a man spends on any one of these types of service simply cannot be ascertained because he is, in a very real sense, perform ing a combination of services simultaneously. Carrier after carrier with whom I have spoken about this bill have urged on me the absolute impossibility of separating or segregating the time spent on particular types of work.

Again a driver and his vehicle may perform exclusively one type of service today and another type tomorrow. Thus he would be subject to one law today and to another tomorrow. The resultant bookkeeping transactions would be costly, provocative of dispute, and likely to breed misunderstanding and dissatisfaction of the worst kind.

We vigorously urge the amendment of S. 293 to exclude from its provisions every motor carrier of property. The railroad legislation sought to be amended by the bill was enacted some years ago after lengthy negotiations between the railroads and the unions representing their employees. The legislation resulting therefrom was designed to fit the specific needs of the railroad industry. Now, without consultation with motor carriers, their employees or employee unions, it is proposed to extend to a segment of the motor-carrier industry the provisions of railroad legislation. In view of the adequacy of the social security system and the absence of clear and convincing reasons to justify such a legislative innovation, we cannot conceive of this subcommittee recommending the inclusion of any motor carriers of property within the orbit of this railroad legislation.

We think we can clearly demonstrate terrible difficulties inherent in a system of split regulation which would make certain motor carriers subject to one Government agency, while others, engaged in similar operations, would be under the jurisdiction of still another Federal agency. The industry today in the matter of overtime pay is, with ruincus results, subject to just such split jurisdiction. The Fair Labor Standards Act of 1938 provides, among other things, for payment of time and one-half the "regular" rate for overtime worked by any employee engaged in "commerce" or the "production of goods for commerce." other provisions of the act relieve motor carriers from the payment of such overtime to these employees over whom the Interstate Commerce Commission has power to establish qualifications and maximum hours of service under section 201 of the Interstate Commerce Act.

Certain

Not until March 4, 1941, did the Commission specify exactly the employees over whom it would assert jurisdiction. In the period of time elapsing between the effective date of the Fair Labor Standards Act, in 1938, and the Commission's decision of March 4, 1941, referred to, a large number of suits were filed by employees of motor carriers for overtime, liquidated damages, and attorneys' fees provided by the act. Despite the fact that the carriers were, of necessity, literally groping in the dark during the period referred to, in their efforts to determine whether or not the overtime provisions of the act applied to the employees in question, the Supreme Court, in the case of Overnight Motor Transportation Co. v. Missel (decided June 8, 1942, 62 S. Ct. 1216), held 5 to 4, that the carriers were liable for the payment of overtime, liquidated damages, and attorneys' fees to those employees not subject to the Commission's jurisdiction, not only since the date when that agency finally specified its exact jurisdiction, but all the way back to the effective date of the Fair Labor Standards Act. While no precise estimate can be made, I am certain that the split jurisdiction over employees of motor carriers by the Wage and Hour Division and the Interstate Commerce Commission, resulting, as it must, in confusion and inequities, has cost the motor-carrier industry millions of dollars. But even the Missel case has not settled the problem with finality, by any means, There has been a consistent attempt by the Wage and Hour Division to establish a beachhead upon the jurisdictional territory of the Commission which has resulted in further litigation, with its concomitant expense to the industry.

Today, almost 7 years after the overtime provisions of the Fair Labor Standards Act became effective, the split jurisdiction created by Congress is a constant headache to carriers who have tried in good faith to comply with the provisions of both the Interstate Commerce Act and the Fair Labor Standards Act. The expense, uncertainty, and time-consuming effort on the part of our industry continue today and will, I am afraid, not slacken unless and until Congress sees fit to remove the inequity of split jurisdiction by exempting employees of the carriers concerned from the overtime provisions of the Fair Labor Standards Act.

It should be pointed out that while the legislation under consideration proposes to subject a segment of the motor-carrier industry to the provisions of the Railroad Retirement and Unemployment Acts, we look in vain for provisions in the bill which would exempt the carriers affected from the overtime provisions of the Fair Labor Standards Act-an exemption which has existed in favor of the railroads since the passage of the act.

We believe the subcommittee will consider important the ability of the motorcarrier industry to bear the increased financial burden which the bill would impose. Under the social security law, at the present time, a total of 5 percent is deducted from pay rolls, with the employer paying 4 percent of this sum. The ultimate tax under this law is 9 percent of the pay roll up to $3,000 annually. Under the proposed amendment to the railroad legislation, the immediate payroll tax on the employer is 84 percent, with the total ultimately to be paid by the employers and employees amounting to 15% percent.

As a class, the motor carriers to whom this tax would apply cannot support the additional burden and remain solvent. Unlike the railroads, motor-carrier net revenues have decreased, rather than increased, as a result of the war. As a matter of fact, the financial condition of for-hire motor carriers of property has, in the last few years, grown gradually worse until today, unless ways and means can be found to substantially lower operating expenses, or otherwise offset them, many carriers are certain to be forced into bankruptcy. Appended to my statement is a tabulation of the operating ratios of class I motor carriers of property for the years 1941-44, and the first quarter of 1945, with the years 1943 and 1944 being broken down to show the figures submitted for each quarter.

Although the figures, which are those published by the Interstate Commerce Commission, speak very clearly, a few explanatory remarks may be in order.

During 1944 the revenue position of most carriers became critical. Just prior to the war motor-carrier operating expenses accounted for about 94 cents out of each revenue dollar. In 1943 rapidly mounting costs, although offset to some extent by an increase in rates, increased this ratio to nearly 96. Additional rate increases were received in 1944 but the ratio of expenses to revenue in that year was over 97 percent, and a large number of carriers were operating at a net loss. The upward trend in costs was decidedly similar in all territories, the eastern district having an operating ratio of 95 in the year 1942, 96.8 in 1943, and 97 in 1944. The southern region had an operating ratio of 94 in 1942, 96.5 in 1943, and 98.1 in 1944, The corresponding figures for the western district were 92.5, 93.8, and 97.

Operating ratios for the first quarter of 1945 were on about the same level as for the full year 1944, but significantly higher than the corresponding quarter of 1944 in all territories except the southern region.

It may, perhaps, occur to some of you that the sharply decreased net revenues of the motor carriers could be offset by an increase in the rate structure. To this I can only say that increases have already been made to the point that additional expense to shippers will, generally speaking, only serve to transfer traffic to our competitors.

The postwar period promises little hope of real relief to motor carriers. Although labor should be easier to obtain, its cost will undoubtedly remain relatively high. Any money which the carriers can save by reduced operating expenses will be more than offset by the absolute necessity of providing new equipment to replace the obsolete fleets which are in operation today only because of the stern dictates of necessity. I believe it is safe to say that motor carriers generally will owe more money in the first few years following the war than at any time in the history of the industry. To saddle them now with the increased expenses which are bound to come if the proposed legislation is enacted as written would, I am convinced, consign many of them to the financial graveyard. The next objection is not peculiarly applicable to our industry, but if the subcommittee will indulge me for a few moments, I should like to mention it briefly. When Congress enacted the first Federal social-security legislation in 1935, it was generally assumed that that law was to be the foundation for a continuing structure of legislative enactments designed to ultimately provide assurance of economic security for the vast number of workers who, for one reason or another, could not accrue, during their working days, the wherewithal to assure to themselves the desired security. To the extent that Congress enlarges the jurisdiction of the Railroad Retirement Board, by placing under its wing industries or segments thereof which are clearly beyond the pale of the railroad industry, we believe it works at cross purposes with the basic philosophy behind social-security legislation. We do not propose to say that one Federal agency is

superior to another in carrying out the legislative policy declared by Congress. But we do believe that Congress, having once determined that the best vehicle to insure economic security for the workers of America is social-security legislation, should not detract from its legislative policy by extending the jurisdiction of an agency administering special legislation carefully tailored to fit the needs of a particular industry beyond the boundary line of such industry and into the territory hitherto occupied by the Social Security Board.

Finally, we come to the specific amendments which we suggest to the subcommittee as being desirable. In section 1 (a) (2), line 7, after the word "service", add, in parentheses, the words "except motor vehicle or warehousing service owned or operated by a person other than a carrier."

Strike from section 1 (a) (4) ii, the following language appearing on page 3, lines 6, 7, 8, and 9: "or is rendered with respect to passengers or property transported by railroad, at point of departure or shipment or at destination or between such points;". Substitute a semicolon for the comma appearing on line 6 after the word "carrier”.

From section 1 (a) (5) ii, on page 3, strike the language beginning with the words "or services" on line 21 and continuing through to the end of line 2 at the top of page 4, including item iii. Substitute a semicolon for the comma appearing on line 21, page 3, after the word "transportation".

We suggest the following changes in section 1 (a) (10), page 5: After the word "exclusions" on line 3, strike all the language through the word "herein" on line 12, and substitute the following: "The term 'employer' shall not include any person (i) who transports persons or property by water, air, or motor or animal-drawn vehicle as a common carrier, os as a contract carrier by any of such means;".

It is our hope that S. 293 will be so amended as to clearly remove all motor carriers of property, of whatever type, from its coverage. If the amendments suggested fail, in any way, to achieve that result, we assure you it is because of oversight on our part.

(The table submitted by Mr. Rice is as follows:)

1 There may be slight variations in computations made from motor-carrier reports to the Interstate Com merce Commission, the variations resulting from later corrections in the reports, or from the inclusion of reports filed later and not shown in the earlier computation. Any such variations in these percentages would be inconsequential.

Not final, subject to fractional modification.

Senator JOHNSON of Colorado. Now, that completes the hearings so far as witnesses are concerned, but I have asked Mr. Latimer to come here. Mr. Latimer, as the members of the committee know, has been in charge of the operation of railroad retirement and unemployment insurance and unemployment compensation, and I have asked him to appear and I want to ask Mr. Latimer some questions.

Now, I think it is only fair that the proponents and the opponents of the bill-I don't want any round table here, but I think that the proponents and the opponents, if they object to Mr. Latimer's answers

and if they want to elaborate briefly on them, they should be permitted to do so, but we don't want to run this thing in the ground. So if you do wish to comment on the answers that he gives to this committee, I hope you will be very brief and very much to the point and not take too much time of the committee.

STATEMENT OF HON. MURRAY W. LATIMER, CHAIRMAN,
RAILROAD RETIREMENT BOARD

Mr. LATIMER. Thank you. I will be glad to answer any questions. Senator JOHNSON of Colorado. Well, I asked on Tuesday to have members of your staff comment on the proposals made by Mr. Martin Miller. His proposals were technical and covered changes that he recommended throughout the bill. I don't want to take the time of the committee to go into those technical changes but I would like to have them put in the record for the benefit of Mr. Boots, legislative counsel, and for the benefit of the committee when we consider the amendments in the bill that Mr. Miller suggested. If there are any you want to comment on now, it would be all right.

Mr. LATIMER. On the technical parts I think it better merely to put a statement in the record. There are one or two matters of substantial fact, one of which came up this morning, on which I think it might be appropriate to comment. I refer particularly to the question of employment relationships. One of the witnesses here this morning made a suggestion which I think would extend somewhat the present definition of employment relationships, and Mr. Miller also made the same suggestion.

I would like to deal with the nature of the problem of employment relationship and why it is that there was included in the act a provision that gives credit for prior service to persons who were not actually working on August 29, 1935, and I think it might be of some use to review the original provisions and the reasons for them. When the act was originally passed in 1934 there were a substantial number of persons who were not then in railroad service but who expected to return to railroad service. Employment relationship as we find it is rather an indefinite kind of thing. In the litigation over the 1935 act the railroads, as I remember, adopting some definition which they thought reasonable and which I think probably was, found about 180,000 persons they thought had employment relationship under the 1935 act.

Now, to go still further back, the 1934 act, which had been declared unconstitutional by the Supreme Court, realized that there were out of railroad service numbers of persons who would probably return, and in that original act, following a comment by Mr. Eastman to the effect that these rules and practices of various railroads were very widely different, a provision was made that everyone who had been m railroad service within 1 year prior to the enactment of the act would be considered as an employee and get credit for prior service, regardless of the reason for his cessation of service within such year. It was an effort to deal with everybody on a fair and equal basis irrespective of whether they were in railroad service at that particular moment, and at the same time set up no barrier to acquiring eligibility by returning to railroad service after permanent separation therefrom long before 1 year prior to enactment.