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The CHAIRMAN. We will recess until 10 o'clock tomorrow morning.
Thank you Mr. Robillard for your testimony, and Mr. Zagri.
Mr. Zagri will return tomorrow morning when we will question him.

(Whereupon, at 12:10 p.m., the committee was adjourned, to reconvene at 10a.m., Thursday, May 18, 1961).



(Rule of Ratemaking)

THURSDAY, MAY 18, 1961


Washington, D.C. The committee met, pursuant to adjournment, at 10:17 a.m., in room 5110, New Senate Office Building, Hon. Warren G. Magnuson (chairman of the committee) presiding.

The CHAIRMAN. The committee will come to order. Mr. Zagri testified yesterday, and he finished his prepared statement. Members of the committee expressed the desire to ask some questions on his prepared statement. He is here today, and we will be glad to proceed. FURTHER STATEMENT OF SIDNEY ZAGRI, LEGISLATIVE COUNSEL,

The CHAIRMAN. Senator Thurmond?
Senator THURMOND. I have no questions.
The CHAIRMAN. The Senator from Ohio?

Senator LAUSCHE. First with respect to Mr. Hoffa, I had not heard his name mentioned in the hearings until it was mentioned yesterday. I would like to ask with respect to that: how was the figure of $5, that has been requested of trucking companies to be paid to the pension fund of the union, reached ?

Mr. Zagri. Through collective bargaining, Senator. Recent negotiations involving the motor carriers in the Central States and the Southern States, and the Teamsters Union.

Senator LAUSCHE. How many such collective bargaining agreements have been made ?

Mr. Zagri. I believe this particular agreement is the first and the only one thus far.

Senator LAUSCHE. And it provides that if a trucking company uses the piggyback service it shall have to pay $5 for that service into the pension fund?

Mr. Zagri. That is a tentative figure subject to further study by both management and labor, and this will not take place until 1962, at the earliest. However, this is an effort on the part of

Senator LAUSCHE. To what extent-
Mr. ZAGRI. May I explain?

and by pretendining agreemere been efforts

Senator LAUSCHE. Yes.

Mr. ZAGRI. This is similar to the negotiations in the packinghouse industry and the longshore industry where management and labor attempt to negotiate a transition between the situation that exists prior to automation and after automation. And because piggyback is a form of automation, the industry recognizes the problem exists. Since there will be a reduction in employment, and the lifespan of the truckdriver back to service is shorter than in most industries, we felt it would be better to define a lower retirement age and the benefits of automation would then result in increased pension fund and lower retirement age.

Senator LAUSCHE. Have any collective bargaining agreements been made in which payments will be made, though no work is done, to those who are supposedly put out of work because of automation ?

Mr. ZAGRI. Oh, yes. Senator LAUSCHE. In this particular subject? Mr. Zagri. Not on this subject, no. This is the first, as far as I know.

Senator LAUSCHE. Have there been efforts made to procure, through collective bargaining agreement, compensation of workers who just stand by pretending that they are working when in fact they are not !

Mr. ŽAGRI. The reverse is true, sir. We have discouraged—I only talk for the trucking industry-General President Hoffa, our executive board, and our local unions as well have always taken the position that it is in the total interest of our members and the economy to encourage productivity. We have never discouraged productivity.

We have supported, for example, increasing the length of trucks in the various State legislatures in order to increase productivity, even though it may mean work for fewer numbers of our members.

Senator LAUSCHE. In these arrangements and this deals with the general subject—when with the trucking company and the labor union you are discussing how much should be paid into the pension fund, who if anyone is representing the general public that frequently says that they ought to have a bit of the benefit of automation?

Mr. ZAGRI. The general public is represented by Congress, sir.
Senator LAUSCHE. By Congress?
Mr. ZAGRI. That is right.

In other words, Congress passes laws in hopes, for example, to pass on the benefits of savings in price which are not presently being passed on to the consumer because the automobile manufacturer is not passing on the benefits of any savings in the shipment of automobiles. The consumer would be protected by Congress if the auto manufacturer were compelled to pass the savings on.

But we would never entertain a suggestion that the Government intervene in the collective bargaining process as such. This is contrary to our free institutions.

Senator LAUSCHE. Then your position is that as between the employer and the union they have to, in their collective bargaining negotiations, work out some understanding of how the profits of automation should be enjoyed ?

Mr. Zagri. Exactly.

Senator LAUSCHE. And finally, if the Congress does nothing toward channeling a bit of those profits to the public, the public gets nothing; is that correct?


Mr. ZAGRI. Unless the rules of your free-enterprise system break down. If the rules of the free-enterprise system function as they should, then the public should benefit. But if through industry monopoly those rules are interfered with, the public will not benefit.

Senator LAUSCHE. I am not trying to quibble. You say that the Congress must protect the public as far as channeling those profits to public benefit.

Mr. ZAGRI. Insofar as the free-enterprise system does not protect the public, then it becomes the Congress responsibility.

Senator LAUSCHE. If management and labor sit down and say, "Here we have this pie; how are we going to divide it?"-—who at that time says a part of this pie should go to the public?

Mr. ZAGRI. I think that the competition between the trucking industry and the other modes of transportation will determine that.

Senator LAUSCHE. I see. You think that will determine that it will go to the public. I think that there is some soundness in that.

Mr. Zagri. I don't say it will. I say it should, if the free-enterprise system works.

Senator LAUSCHE. And if there isn't competition, it will not go to the public?

Mr. ZAGRI. Well, if there is a restraint by a shipper, for example, and there is no way of controlling that restraint through free competition, then Congress must decide.

Senator LAUSCHE. You state on page 2:

The transportation industry is responsible for the production of approximately $90 billion a year, representing one-fifth of the gross national product. Destructive rate pratices not only adversely affect carriers and shippers, but also the entire transportation system.

May I ask this: Your point is that we have got to maintain a sound transportation system, and that the destruction of the truckers or the inland water carriers or the railroads would be bad ? Mr. ZAGRI. Exactly. Senator LAUSCHE. Or the airlines? Mr. ZAGRI. Exactly.

Senator LAUSCHE. You are familiar with what the findings were of our committee 2 years ago concerning the railroads?

Mr. ZAGRI. What are you referring to, Senator?

Senator LAUSCHE. The findings of what were the problems of the railroads. Referring to page 9 of the report:

From the testimony the subcommittee has concluded that the general decline is due to a number of reasons. That is, the decline of railroad business. One reason is the development of newer methods of transportation that offer intense competition to the railroads. These newer methods include the tremendous number of private cars on the highways, the development of airplanes, and the building of modern highways on which move a large number of buses and trucks. All of these modes of transportation cut into the traffic that could be hauled by the railroads.

A second reason for the general decline of the railroads is the Government assistance offered to the railroads' competitors. This includes the building of highways and airports, the provision of toll-free waterways and facilities.

A third reason for the decline of the railroads is overregulation. The Federal Government, through the Interstate Commerce Commission, and the vast majority of the 48 States through State regulatory agencies, supervise and

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