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lars, and extending the period of payout time. We are not unmindful of the problems of the railroads.

The CHAIRMAN. I want to suggest that I do hope that bills will be introduced as to some real serious tax problems with the railroads which should be cleared up, which taxes are unjustified in many cases. There are depreciation and other tax matters which I hope to be able to get at at this session of Congress.

Mr. Fox. Mr. Chairman, we appreciate what the Senator had to observe with respect to the loan proposition. In the other areas in which the railroads are seeking some relief, with one or two exceptions we are helping them, and we hope the Congress will give them such relief.

The CHAIRMAN. The Senator from Maryland, do you have any questions?

Senator BUTLER. No, sir.
The CHAIRMAN. The Senator from South Carolina?
Senator THURMOND. Mr. Chairman, I have just one question.

I think all of us realize the importance of the railroads to the national defense of our Nation, and the essential part it plays in the transportation segment of the economy of this Nation. I think most people also realize the importance of the trucking industry and the essential part it plays in that segment of our economy.

Frequently, I feel that we overlook what I think is the most important of all, however, and that is the public, the consuming public.

I notice on page 2 you have a statement thatThe shippers and consuming public would be denied the savings in cost otherwise available to them through such reduced rates.

Then on page 8, your last sentence is: I am at least assured of being joined by a vast majority of the shipping and consuming public which will enjoy reduced costs whenever competition is not artificially restrained.

The question I want to ask you is this: Under this interpretation that has been made by the ICC, the transportation charges for transporting automobiles will be cheaper, will it not? Mr. Fox. I believe so. It should be, if it is not.

Senator THURMOND. What I want to know is who is going to get the benefit of that, the automobile manufacturers or the public? Mr. Fox. I would hope and trust it would be the public, Senator.

Senator THURMOND. What assurance do we have of that? On what do you base your answer?

Mr. Fox. I don't have the answer to that, but it might be a matter to be looked into, as to whether or not the public is actually getting the benefit of these savings.

Senator THURMOND. I think if either side can present any information or evidence on that particular point, that it will be of great interest to this committee.

Frankly, I am openminded on this question. I want to do what is for the best interests of the public.

I would like to receive any information that either side can produce on that point.

Mr. Fox. I don't believe that we would be in a position to get that, but perhaps the railroads handling this might be in the position of telling you what the effects would be, Senator. We are not in a

position to tell you that. I know we feel very little effect in my community so far on any reduction in the cost of an automobile.

Senator THURMOND. Thank you.
The CHAIRMAN. The Senator from Ohio!

Senator LATSCHE. Mr. Fox, I was impressed by your discussion that 2 years ago we spent much time and effort in studying the problem and came up with certain conclusions which were translated into law. I was a member of the Surface Transportation Committee.

Senator Thurmond asked if there is a saving. I merely want to point out, Mr. Fox, the testimony of Mr. Rentzel, where he said that the shipping of a car from Chicago to Des Moines would amount to $56.10 as compared with the proposed rail charge of $35 in a bilevel car and $26 in a trilevel.

So if you ship it in a trilevel there ought to go to the consumer, eventually, $30 in savings.

Mr. Fox. I completely agree with you, Senator.

Senator LAUSCHE. If it is not going, we should reach that evil through appropriate sources.

I would like to ask you: To what extent have the workers of the railroads lost their jobs because of the constant attraction of the truckers because of their inherent advantages in the transportation system?

Mr. Fox. Let me first say that it was mentioned here this morning by the previous witness that dieselization had a large impact on the railroad industry employment, which of course it did. But dieselization had reached its peak around about 1956 or 1957. And since that time, since about 1956 or 1957, our job loss in the railroad amounts to better than 250,000 people.

My own group that I represent, the shopworkers-my own group has lost 100,000 in that same period.

These are the people who maintain the cars and the rolling stock and the motor power that transport all the goods that are transported by rail cars.

And there has been a considerable amount of diversion, as you probably well know, Senator.

Senator LAUSCHE. I would like to make a brief statement. In the hearings held 2 years ago these highlights, as I recall them, were raised: The railroads said, “We are being subjected to unfair competition by the truckers; you should give us relief by modification of the law by adopting the three shall nots'; but if you don't give us that relief let us go into the trucking business." And we answered “No” to that proposition.

They said, “We are losing passenger service; we would like to have the right to go into the air-carrying business.” And we said “No” to that request.

All of the transporters argued that something must be done to eliminate the private carrier who was taking from all, and to eliminate the inducement of the manufacturer to set up his own transportation system. On that we all agree.

The query was about getting relief on the transportation tax. With that they practically all agreed.

The next query was about providing loan money, and the competitors subscribed to that idea, let the Government loan them the money.

The railroads argued primarily: “We can't compete; we have to own our own rights-of-way, our own terminals. We have to pay taxes on our rights-of-way and our terminals.” They testified, We will give you our terminals for nothing; take them off of our hands."

Then they pointed out that we subsidize the air carriers; we subsidize the inland carriers by building facilities to serve them solely. We subsidize the truckers by having the general passenger car operator pay for the construction of roads that are mostly used by the truckers.

Now, then, I think the highlight of the whole thing, as far as I was concerned, was the plea of the railroads to let us run our own business, quit giving subsidies to the truckers and the airlines and the water carriers, and if you will do that we will survive, but if you shackle us the way you have we must go down to defeat. That was the sum and substance of it. And out of it came this provision, 15a (3).

After listening to that argument, 2 years later they say: "Repeal what you did in 1958,” which was accepted by all as the proper remedy. I think it is a travesty of the worst type to even dare request


Mr. Fox. I agree with you, Senator.
The CHAIRMAN. Thank you, Mr. Fox.
Senator Scott?

Senator SCOTT. Mr. Chairman, I have no questions except to say that I had intended to go into the question of unemployment. That has been covered by other Senators.

The CHAIRMAN. I think it would be well, as a part of this whole matter, since the trucking group put in their unemployment figures, if you would put in yours.

Mr. Fox. We will do that. We will present it for the record. (The material referred to follows:)





Average number of employees, class I railways in the United States, 1945-61"

[Average number of employees (midmonth count)] Year:

Year-Continued 1945

1, 420, 266

1, 064, 705 1946__ 1, 358, 838 1955_

1,058, 216 1947.351, 961 1956--

1, 042, 664 1948

1, 326, 906

986, 001 1949.

1, 191, 444

840, 575 1950.. 1, 220, 784 1959.-

815, 474 1951.. 1, 276, 000 1960

2 780, 480 1952.1, 226, 663 1961 August---

* 733, 001 1953

1, 206, 3121 1 Class I railway account for 99 percent of the revenues of the total of all line-haul railways,

It will be noted from this tabulation that the number of railway employees declined from
1.420.266 in 1945 to 733,001 employees in August 1961, which is the latest figure available.
This represents a loss of 687,265 jobs in the railroad industry since the end of World
War II.

2 Preliminary.
Source: Interstate Commerce Commission Statement No. M-300.

The CHAIRMAN. Thank you, Mr. Fox.

We will meet Tuesday morning at 11 o'clock on the fifth floor, room 5110. We have an executive meeting at 10.

(Thereupon, at 12:44 p.m., the committee was adjourned, to reconvene at 11 a.m., Tuesday, May 16, 1961.)


(Rule of Ratemaking)

TUESDAY, MAY 16, 1961


Washington, D.C. The committee met, pursuant to adjournment, at 11 a.m. in room 5110, New Senate Office Building, the Honorable Warren G. Magnuson (chairman of the committee) presiding.

The CHAIRMAN. The committee will come to order.

I want to say to Mr. Rentzel and the people with him that some of the committee would like to ask some technical questions. We did schedule Mr. Forgash for this morning. If you would allow him to testify first, then we will go back to the others.

Is Mr. Forgash here? Mr. Forgash has a prepared statement. I think we would save time if we let him read his statement and then the committee ask questions after he is through with his statement.

Many of the questions we may want to ask might be covered later on in the statement, so we will save time that way.

Mr. Forgash is president of the United States Freight Co., a freight forwarding business which deals with all modes of transportation.

Mr. Forgash, we will be glad to hear from you. STATEMENT OF MORRIS FORGASH, CHAIRMAN OF THE BOARD OF GOVERNORS, FREIGHT FORWARDERS INSTITUTE, AND PRESIDENT, UNITED STATES FREIGHT CO.; ACCOMPANIED BY GILES MORROW, ASSISTANT GENERAL COUNSEL OF THE UNITED STATES FREIGHT CO. Mr. FORGASH. Mr. Chairman, I appreciate the opportunity to testify with regard to S. 1197. My prepared statement, which I believe you have before you, has two appendixes which I will not read, if you will so permit, but which I respectfully request be printed in the record along with my testimony.

The CHAIRMAN. The statement will be put in the record in full. Also, for the purpose of the record, Mr. Forgash is chairman of the board of governors of the Freight Forwarders Institute.

Mr. FORGASH. Mr. Chairman, on my right I would like to introduce Mr. Giles Morrow, formerly president of the Freight Forwarders Institute, and now associated with me as assistant general counsel of the United States Freight Co.

My name is Morris Forgash. I am president of United States Freight Co., 711 Third Avenue, New York, N.Y. I am also board chairman and chairman of the Legislative Committee of the Freight Forwarders Institute, and my appearance today is on behalf of the institute.

United States Freight, through its subsidiaries, conducts extensive freight forwarding operations in this country and throughout the free world, and utilizes every medium of transportation. The Freight Forwarders Institute, with headquarters in the Continental Building, Washington, D.C., is a national organization representing freight forwarders subject to regulation under part IV of the Interstate Commerce Act.

The freight forwarders of this country for whom I speak do approximately $450 million in transportation business annually. Our interest in freight rates and the rules under which they are made is understandable. I will say in the beginning that we are opposed to the bill, a fact which will become very evident as I move along.

The railroads handled substantially all of the domestic intercity transportation of the United States 45 years ago. Today they handle considerably less than half of it. To arrest a deteriorating situation on the railroads which had become dangerous, Congress just 3 years ago, enacted the Transportation Act of 1958.

To me it is truly astonishing that there should be any confusion or misunderstanding about why Congress enacted the Transportation Act of 1958, or what was meant by section 15a (3). Senate Report No. 1647, 85th Congress, reporting the 1958 act, is one of the most lucid documents I have ever read. The report of the Subcommittee on Surface Transportation, incorporated in the report of the full committee, starts out with a discussion of problems of the railroads, which is what the hearings were all about. What better source could there be for ascertaining the “why” of the Transportation Act of 1958? Let's take the information directly from that source a few specific quotes :

For generations the railroads have been the bedrock of our Nation's transportation system. * * * Their history is closely linked with the economic progress of our Nation.

During times of crisis for our Nation the railroads have met the challenge. During World War II the railroads transported more than 90 percent of all military freight traffic and 97 percent of organized military passenger move. ments. Thus the railroads were, and are, a vital part of this Nation's security.

Because of the essential part the railroads play in our whole transportation system, it was a cause of great concern to your subcommittee when we observed the rapid deterioration of the railroad position in the fall of 1957.

These specific quotes appear on page 7 of your committee's report.

The report then quotes figures showing the declining traffic trend and the precarious financial position of the Nation's railroads, and states:

It was clear from these and other similar figures that not only were the railroads being adversely affected by the business recession which was then appearing, but that, in fact, the sickness of the railroads was contributing greatly to the deeping recession of the Nation (p. 7).

As a result of these observations, it was determined that the Subcommittee on Surface Transportation should hold hearings and look into the problems of the milroads in relation to our national transportation system and the reces

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