"There is another area of festering and cancerous growth which must be cleaned out before our full potential can be reached. In this area lies the opportunity for great progress with consequent benefits to labor, management, shareholders, shippers and, indeed, the entire American economy.

"I refer now to the wasteful and burdensome work rules-commonly known as featherbedding-which hang like an economic albatross around the neck of American progress. Rooted in the horse-and-buggy era of 40 and more years ago, the work rules have remained fixed and inflexible while the industry made enormous strides in technical improvement. These outmoded rules now constitute an immediate drain on the industry in excess of $500 million annually and equally important-act as a deterrent to further progress, as a job depressant and a barrier to advancement to the men and women now employed in our industry.

"Imagine, if you will, what half a billion extra dollars a year could mean if plowed into repair work. The backlog of bad-order cars would evaporate and vast numbers of laid-off men put back on the payroll. Or think of what such a volume of additional investment in modernization could do to railroading—and what it could mean to our customers, our suppliers, and to the national economy. "Net loss to all America

"Featherbedding by any definition is a net loss to all America.

"It puts pressures on our rate structure and bids up prices to all consumers. It is a handmaiden of the ruinous inflationary spiral.

"It helps impoverish and weaken the railroads, means fewer returns to investors and a virtual freezeout of the new equity capital needed to expand and improve plant.

"It gnaws insidiously at our competitive position and ultimately destroys the very jobs it seeks to protect-both for railroaders and all those who depend on railroad purchases.

"So I say that for the good of all America, something drastic must be done about this destructive growth. And 1959 is the year of decision. A 3-year-old agreement to postpone revisions in working rules expires on October 31. This poses great opportunity for both labor and management to break out of these chains to the past.

"Three most damaging areas

"But let me bring this subject down to specifics and show what featherbedding really is. The practice is concentrated among certain classes of train operating positions, which account for about one-fourth of total employment. The three most damaging areas are as follows:

"First is the antiquated mileage-day pay system which siphons off virtually all the benefits from modernized motive power and stepped-up train speeds.

"Second are the towering jurisdictional walls that stand rock-hard in the path of streamlined service-the claim-to-work rules that ban roadcrews from working in yards and bar traincrews from crossing district and seniority boundaries. "Third are the senseless requirements for useless crewmen on trains and other equipment-for firemen who tend no fires and extra brakemen who handle no

brakes.

"The dual mileage-day pay standard is itself a glaring anachronism. While modernization sweeps ahead throughout the railroad structure, this 40-year-old work rule clings like a leech to the carrier's body, draining away its lifeblood. Simply stated, it provides that when locomotive and freight train crewmen cover 100 miles, they must get a basic day's pay. Passenger trainmen put in 150 miles. "One doesn't have to be a railroad expert to see what is wrong with such a system. When standardized in 1919, it had a perfectly reasonable basis. That was the day of the plodding steam locomotive, the model T and the wheezing biplane. A run of 100 miles in freight service did indeed take about 8 hours' time. And a run of 150 miles in passenger service required 71⁄2 hours.

"But those times are now ancient history. Along came great improvement programs-streamlined diesel locomotives, electronic traffic control systems, faster rolling stock and straighter, freer right-of-way. Freight and passenger train speeds nearly doubled.

"No change in old rules

"Yes, railroading changed as all America changed. But the old rules did not. They remained as inflexible as a rock. And the modernized 'iron horse' remained tied to a 1919 hitching post.

"Employees on passenger and through-freight trains found themselves completing runs in up to half the time formerly required. On some of the choice 'red apple' runs where train speeds exceed 75 miles an hour, a basic day's wages are earned in less than 2 hours.

"Look briefly at what happens when train speed rises within this fixed workrule frame. A passenger train now covers the 900 miles between New York and Chicago in about 16 hours. But the railroad by no means pays just 2 days' pay for the engineers' services. No, the carrier must pay over 9 basic days' pay for each crew position on the 16-hour run.

"Or move on westward to another fast run. A train covers the 1,034-mile trip between Chicago and Denver in 161⁄2 hours. Again, the payout is not for 2 days' pay, nor even for 9. The carrier's costs equal a total of 101⁄2 basic days' pay for each engine crew position. By contrast, a busdriver generally works a full 8 hours for his day's pay.

"The system is so self-destructive that I doubt if one could have devised anything more likely to kill off its practitioners. As railroads step up train speeds and streamline service, these restrict-the-work rules rake off virtually every dollar of benefit that results. Little remains for other employees-and nothing remains in the way of price reductions for customers and dividends for shareholders. Modernization thus carries a built-in penalty. It becomes a curse instead of a blessing.

"How long can the railroad business withstand such bloodletting? How long can the great majority of rail employees tolerate such obstacles to their own advancement? How long will our customers countenance accompanying up pressures on our prices? The future of this vital industry rides on the answers. "Work 'separations'

"At the same time revision is made in the old dual pay system, something must also be done about the rigid lines drawn between the kinds of work each

group of employees will do. These separations hit the railroads and the general public especially hard because they pose invisible blocks on what should be a free and open track. For instance, we generally cannot run one train crew through a division change-point, because rules say that employees within each walled-in division have the right to man all trains in that area. This may have made sense when steam locomotives covered only 100 miles or so and took a crew's entire working day.

"But it makes no sense now. That New York-Chicago passenger train I cited a while ago has to stop and change engine crews seven different times along the way. That Chicago-Denver run requires eight different engine crews, each putting in an average of about 2 hours. And think what time is lost changing crews and cabooses on 'piggyback' and hot-shot freights. The system practically invites competition, not so burdened, to nibble away at our traffic.

"High walls also loom between road and yard crews, with each forbidden to work in the other's domain except at grave penalty to the railroad. This can even lead to a railroad's paying three times to get one thing done. For example, in one referee's interpretation of the rules, a yard employee was awarded an extra day's pay for working a few minutes on line outside the yard limit, while a road employee got a day's pay for work he did not do but claims he should have done. That's 3 days' pay for one task-two for the yardman, one for the roadman.

"In another instance, the rules forced payment of an extra day's pay to a road freight engineer for moving his train a few car lengths in a freight yard—the job claimed under the work rules to belong to a yard engineer.

"A yard crew making a 4-mile round trip to help a freight train through snow got extra pay for 100 miles of road service.

"Deadly drag on U.S. economy

"Can you think of a faster way to go broke? How long can the Nation's economy bear such a deadly drag? Here is a system geared to inefficiency and bungling, to delays in moving your shipments, to the most indefensible waste. We cannot continue to carry such a back-breaking load. And neither can you or the public.

"Now look for a moment at that classic featherbedding rule-one which places unneeded men on trains just for the ride-excess baggage which displaces and preempts the jobs of truly essential railroaders. Hoary-headed, coal-burner rules still require an inflated number of men on trains and self-propelled passenger cars and work equipment. These surplus men may have been truly needed long ago, but no more.

"The position of diesel firemen is a case in point. They once shoveled mounds of coal into giant steamers and were among the hardest workers on the railroads. Now, as stated by the neutral members of Arbitration Case 140, 'the change from steam to diesel power left little or nothing for the firemen to do.' "Canada has demonstrated the high statesmanship required to deal with this problem. When negotiations on the status of firemen reached a deadlock between the Canadian Pacific Railway and the firemen's brotherhood, the Government appointed a royal commission of outstanding Canadian citizens to investigate. After months of study and hearing, the commission handed down its historic decision just a little more than a year ago. It found the fireman's position on diesel engines in either freight or yard service wholly unnecessary. At that stage of the controversy, no other classes of service were a part of the disputed issue.

"The firemen's functions, the commission concluded, “have either totally disappeared, as in the case of the production of power, mechanical assistance and inspection, or are a mere duplication of what is discharged by another or others, as in the case of the lookout functions performed by the headend brakeman and the engineman.''

"Canada has shown the way

"The commission, significantly, was not impressed with arguments that firemen are necessary for safety reasons. It made on-scene studies of train operations without firemen on this continent and in Europe and found their safety experience comparable to operations with firemen. I might add that overall railroading is no different here from the system across our northern border. Canada has shown the way toward truly modernized train employment. The lagging United States can do not less than catch up.

"The telling burden this type of 'make work' imposes on the industry can be measured in the annual cost of unnecessary firing jobs on U.S. railroads. This amounts to more than $200 million. Rules and regulations forcing use of other unneeded men bleed off another $90 million.

"Imagine for a moment how much savings of that magnitude would mean to the public in the way of healthier railroads, more purchases and supplier jobs-and more jobs on the railroads themselves as they get back on their feet. "Now, all I have said up to this point proves just this: Even the most reasonable work standard must in time become wholly unreasonable unless improved and tailored to match changing conditions. And no one can deny that revision is long overdue in railroading. That fact has been attested to by the highest authorities who have investigated the problem, including representatives of the Congress, presidential emergency boards, the Interstate Commerce Commission, and State regulatory bodies. It is also significant that enlightened labor leaders in almost all other segments of industry recognize that job-output standards must keep pace with changes in technology and employee performance.

"Actually, fair reassessment and revision of these ancient work standards are all the railroads seek. Our goal boils down to this simple, reasonable objective: A fair day's work for a fair day's pay.

"Rules, not rail labor, attacked

"Now, I want to make one point crystal clear. I am not attacking railroad labor. There is no more able or conscientious work force in any industry in the Nation. I am, however, attacking and condemning the deadly rules our workers must work by *** rules which limit their creative ability and their output and detract from their dignity * * * rules which are thoroughly un-American in concept and economically destructive in practice.

"If railroad labor leaders were with us today, I would plead for them to join us here in forging this new era of growth and greatness. A half million railroad jobs have been lost in the last dozen years. Unless we solve our internal and external problems, more thousands of jobs will go down the drain. No labor leader wants that. And neither does any railroad official.

"So I urge our brotherhoods to act with us to help reverse this disastrous trend. Let's wipe out featherbedding. Let's stop paying men for work they don't do.

"Let's stop dissipating our lifeblood in frustrating clashes over rules everyone recognizes as unsound and unfair.

"Let's stop arguing over who will get the biggest share of a reeling industry's dwindling income * * * and turn our eyes and hearts to ways to regain strength, expand business, and divide the fruits of new-found prosperity.

"Public-interest considerations

"Let me illustrate this overriding public interest in wiping out featherbedding with just two specifics:

"First, the peace of the world-and the continued freedom of our own country and all other free nations-is utterly dependent today on the continued strength and resources of America. The military mobility of our Nation, in event the cold war ever suddenly flares into a hot war, is of transcending importance.

"In World War II the railroads were called upon to handle over 90 percent of military freight and 97 percent of all organized movements of military personnel. This is an achievement of which all of us in transportation have a right to be proud. But we must also be deeply disturbed over the fact that the railroads do not now have the equipment and capacity to handle the military passenger volume imposed on them in the last war, and at the same time the civilian load. It is also a blunt fact, which we cannot afford to ignore, that under the conditions of World War II, highway and air transport would be entirely inadequate to carry the load. Reliance wold have to be placed on the railroads. Full recovery of the railroad industry is of paramount security importance to the American people.

"Second, President Eisenhower, in his annual economic message to Congress last month, called for an all-out national campaign to halt inflation. He warned that the United States can become increasingly prosperous only if it holds the line against price increases, and called up labor, businessmen, and consumers to join the Government in a drive to achieve 'inflation-free, sustainable growth.' Wage gains that outrun increases in industry's productivity were singled out as a primary cause of higher prices.

"Hard blow against inflation

"The elimination of half a billion dollars a year in wholly nonproductive make work and featherbedding in the railroad industry would represent a tremendous contribution to the fight against inflation. For nothing is more inflationary than pay for work not done, for services not performed, for goods not produced. Featherbedding goes hand in hand with the high and rising cost of living.

"Then we must recognize still a third and more pressingly immediate symbol of the public interest. In these times of upheaval, America cannot afford the luxury of labor-management discord in a vital industry. Nor can it tolerate work stoppages and the inexorable grinding down of the economy that would come if train wheels stop turning.

"The Nation has just emerged from serious trouble resulting from strikes in air transportation. I do not belittle that trouble when I say that what we have seen is but a token of the economic disruption and personal hardship a railroad tieup would bring. So while we seek labor's earnest cooperation in preventing full-scale crisis, we cannot bury our head in the sand. It is time to face up to the possibility of tieup-and time to take forthright action to make sure it does not happen.

"Proposal for White House action

"I, therefore, propose this first step toward solving the problem of featherbedding on the railroads: That leaders of the train-operating brotherhoods join with railroad management in asking President Eisenhower to name a nonpartisan group of distinguished citizens to study this whole question.

"Such a special commission should go to work immediately, well in advance of any transportation crisis, preparing an independent and objective appraisal that will protect the welfare of our country, the solvency of the railroad industry, and the security of its workers.

"We all recognize what exceedingly heavy burdens are carried by the President, and none of us would unnecessarily add to these responsibilities. We feel, however, that our urgent request is justified because of the transcendent national significance of a sound solution to the featherbedding problem.

"Accordingly, I am sending today a letter to the leaders of the operating brotherhoods, asking them to join with me and other railroad executives in requesting Presidential action on a commission. Labor can do the Nation— and itself-no greater service than to join us now in seeking the Government's help in laying a basis for sound, new work standards in the railroad industry. "The job of breaking the featherbed chains around our industry is going to be the most difficult labor issue ever faced in railroading. Both the brother

hoods and management need help. And we cannot shrink from seeking it. The American people themselves have too much at stake on the outcome. Only through the wholehearted cooperation of management, labor, and public leaders can we hope to free the Natoin from the wastes of featherbedding and from the multiplying penalties of a weakened industry.

"In closing, let me say again to you shippers and to all America that railroadmen know only too well that the road back for our industry is a rugged one but we intend to leave nothing undone to regain our place as a dynamic, progressive business. During the months ahead when this crucial issue is being decided, we will need your warmhearted support and understanding. In return, we will express our gratitude in the one way you will understand best-in the rebuilding of a great industry, in new achievement, and in new benefits for all the Nation."

Mr. LOOMIS. That will be a pleasant experience.

Senator MORSE. I judge from what you said Mr. Calhoun will cover another line of questioning that I intended to raise, that was brought up in our hearings the other day: the benefit for people that were discharged for cause or voluntary quit cases.

Mr. LOOMIS. Mr. Calhoun will cover that in detail.

Senator MORSE. I will refer those questions to him then.

While I have you on the stand, I would like to have the record show that after we finish these formal hearings I would like to have representatives of the brotherhoods and representatives of the carriers make one other attempt to reach any agreement that they can on any one or all of the issues involved in the hearing. I think I ought to have a statement from you on the record as to what has transpired with respect to the previous request that I made of you and of the brotherhoods, when I asked that you have this meeting. You did have such a meeting. Both sides notified me that that meeting in effect came to naught. Is that a fair summary?

Mr. LOOMIS. Yes, that is. Mr. Habermeyer, the Chairman of the Retirement Board; Mr. Leighty, the chairman of the Railway Labor Executives Association, and I met together on the afternoon of February 2 or 3, I believe, and discussed that proposition. I outlined the proposals which are now embodied in S. 987. Mr. Leighty stated they could not possibly consider them. That was the outcome of the meeting.

Senator MORSE. Do you have any objection, Mr. Loomis, to meeting with the members of the staff of the committee, at a convenient date following the completion of the record of these hearings, in our committee rooms and with the brotherhood representatives and representatives of the carriers to make a final attempt?

Mr. LOOMIS. No objection whatever, Mr. Chairman. In fact, we would welcome it.

Senator MORSE. Let the record show that-do you see any objection to it?

Senator CLARK. No.

Senator MORSE (continuing). That we make this effort to have such a meeting before we proceed to write up the bill?

Thank you very much, Mr. Loomis.

Mr. LOOMIS. There is possibly one other thing I should mention, Senator Morse. At times it has cropped up in these hearings-the matter of supplemental pensions in other industries in addition to social security payments. I have a compilation secured from the files of the Bureau of Labor Statistics of the Department of Labor showing the pension under the Railroad Act for employee age 65, with 30 years