Mr. FRIEDEL. Assume that an increased tax was imposed to take care of this small deficit. Would you be in favor of it then?

Mr. HARPER. Yes. As I said, it would be desirable from the viewpoint of the employees, but from the viewpoint of the system as a whole, we have to forego the doing of a lot of things that we would like to do because once we let the bars down, then there is an interminable flow of additional amendments, provisions that some man, or some particular Congressman, or some particular railroad man is interested in and is affected by.

Mr. FRIEDEL. This bill refers to the widows. Do you feel that this bill is meritorious?

Mr. HARPER. Yes, sir; I do.

Mr. FRIEDEL. That is all, Mr. Chairman.

The CHAIRMAN. Mr. Avery?

Mr. AVERY. I believe no questions now, Mr. Chairman.

The CHAIRMAN. Mr. Moss.

Mr. Moss. Mr. Chairman, I have two questions on behalf of Mr. Dingell. He had to go to another meeting and asked that I ask them of Mr. Harper.

Can you give the committee statistics on contributions, the inflow and outflow, from the unemployment fund, and what percentage of payroll they were year by year from 1948 through 1958?

Mr. HARPER. Yes, sir.

Mr. Moss. The second question is "what figures and statistics can you give showing the prospective state of the unemployment fund late this year when you expect it to be in danger of running out"? Mr. HARPER. I didn't quite get that last question.

Mr. Moss. What figures and statistics can you give showing the prospective state of the fund late this year when you feel there may be danger of it running out?

Mr. HARPER. I would have to get that statement prepared. I can tell you, just my recollection from discussions, that our fund in June or July will be down to a possible $10 million or $15 million.

Mr. Moss. What would the probable demands be on it at that point?

Mr. HARPER. They have been running about $20 million a month. Mr. Moss. Would you supply this material for the record.

Mr. HARPER. I would be glad to. Do you want the other supplied for the record, or do you want it now?

Mr. Moss. I think, if you will, supply it for the record. It is a request on behalf of Mr. Dingell and he can get it from the record. Mr. HARPER. As I understand it, he wants the statement showing the percentages of contributions from 1948 to date?

Mr. Moss. Yes, and the inflow and outflow from the fund.

Mr. HARPER. We can give you that for the record.

(The information to be supplied follows:)

Contribution rates under the Railroad Unemployment Insurance Act

Income and expenditures from the railroad unemployment insurance account [In thousands]

Mr. Moss. Those are all the questions, Mr. Chairman.

The CHAIRMAN. Mr. Devine?

Mr. DEVINE. No questions.

The CHAIRMAN. Mr. Hemphill?

Mr. HEMPHILL. No, thank you, Mr. Chairman.

The CHAIRMAN. Mr. Nelsen?

Mr. NELSEN. No questions.

The CHAIRMAN. Mr. Rostenkowski?

Mr. ROSTENKOWSKI. No, sir.

The CHAIRMAN. Mr. Brock.

$170.5

$170.5

50.2

50.2

135.8

135.8

85.0

85.0

24

34

75

28

40

22

13

93 30

834

28

13

15

Mr. BROCK. My question has been answered, Mr. Chairman.
The CHAIRMAN. Are there any more questions?

Mr. Bennett, do you have a question?

Mr. BENNETT. No, sir.

The CHAIRMAN. Mr. Moulder, did you have a question?

Mr. MOULDER. No, sir.

The CHAIRMAN. Mr. Harper, how long have you been a member of the board?

Mr. HARPER. Nine years, a little more than 9 years.

The CHAIRMAN. What is the total number of employees of the railroad industry now?

Mr. HARPER. In round figures, about 850,000.

The CHAIRMAN. 850,000. You are talking about the class I railroads?

Mr. HARPER. Yes, sir.

The CHAIRMAN. How many employees in the railroad industry were there 10 years ago?

Mr. HARPER. About 1,400,000, I judge, from memory.

The CHAIRMAN. Approximately 1.4 million. In other words, employment in the railroad industry in the last 10 years has been reduced by a little more than a half million employees?

Mr. HARPER. The 1.4 million is from recollection, but I think it is about right, Mr. Chairman, and your statement is correct, that it has been reduced.

The CHAIRMAN. How many people are drawing benefits from the retirement system?

Mr. HARPER. About 740,000.

The CHAIRMAN. 740,000. In other words, you have a retirement system with almost as many people drawing against the fund as there are people contributing to it?

Mr. HARPER. Yes, but we must consider that in the 740,000, wives and children and parents in certain instances are included in that group. The 740,000 are not all workers.

The CHAIRMAN. I know they are not all workers, but they are all drawing against the fund.

Mr. HARPER. Yes, sir.

The CHAIRMAN. How many people drew unemployment insurance compensation from the fund last year?

Mr. HARPER. I will have to ask for some help on that. I understand it is 308,000.

The CHAIRMAN. 308,000 drew unemployment compensation in the year of 1958. Can you tell me how many people are drawing against the fund now?

Mr. HARPER. I am sorry, I have it but I would have to look for it. I understand it is about 130,000 employees at the present time. The CHAIRMAN. Approximately 130,000 unemployed are drawing unemployment compensation at this time?

Mr. HARPER. Yes, sir.

The CHAIRMAN. As a member of the Board have you come to any conclusion about what the employment figure would be in the railroad industry that would represent stable employment?

Mr. HARPER. My personal estimate and judgment is that railroad employment will level off at about a million employees. That is too optimistic from some viewpoints, but I have not lost my faith in the industry.

The CHAIRMAN. As you increase the tax rate both on retirement and unemployment, then the total number of personnel employed in the railroad industry has a great deal to do with the total sum paid into the retirement and unemployment insurance accounts; is that true?

Mr. HARPER. Yes, sir.

The CHAIRMAN. I was one of those, along with other members of this committee, who gave a lot of thought and study and effort toward trying to strengthen the transportation industry, and particularly the railroad industry, in the last few years. It was this committee that started in 1955, if you will recall, an analysis of some of the problems that were presented at that time in what was referred to as a Cabinet Committee Report on Transport Policy and Organization. For 3 years we stirred these issues. We passed a good many bills. Last year we were told that the industry was in a terrible plight. All of these years of consideration culminated in the Transportation Act of 1958. You are familiar with that.

Mr. HARPER. Yes, sir.

The CHAIRMAN. The condition of the railroad industry, as was alleged at that time, had a great deal to do with the thinking of a lot of people in connection with even the Railroad Retirement and Railroad Unemployment Insurance Acts. It is our hope that the railroad industry has been strengthened, and we are going to continue to do all we can working with both the employees and the management to see that it is good. If there are railroads that are having difficulty, and some are, regardless of the claims, isn't it natural that the more costs you put on them, the more people they are going to lay off?

Mr. HARPER. I don't agree with that. From personal experience I found out that when railroads decide to lay people off, their expenses and their financial condition have no bearing on it. Now, let me illustrate what I mean. I have railroaded all my life. I have seen railroads lay off shopmen by the hundreds to balance a budget, to arbitrarily balance a budget, and so I am not very much impressed with the thought that if the railroads are relieved of some unemployment and railroad retirement expense they will use the money saved in employing other employees.

The CHAIRMAN. Of course I am not an experienced man in the railroad industry and I know very little about their operation except from what I have heard here in 18 years on this committee. But if I know anything about business conditions, I know that if a particular business has reached the point where it is having difficulty keeping its head above the water, the only natural thing to expect is for it to start doing something to reduce expenses.

If that isn't normal and natural in business operations, then I don't know anything about it at all. Since we have been experiencing a tremendous reduction in employment in the railroad industry, I for one want to see some kind of policies adopted that will change that trend. We are searching for such policies and we are asking you people in the positions that you are in, on all sides of this transportation picture, to give us some help. To me it just does not seem to be any more sound a program than that which we follow with our Federal budget. How can we keep on piling up expense on an industry and expect to strengthen that industry?

Mr. HARPER. I think possibly some of you misunderstood the last statement I made. I recall, Mr. Chairman, in 1923 as an officer of one of the brotherhoods I went in to see the general manager about an increase in pay of 2 cents an hour, $4.08 a month. He had a great big sheet that was half the size of this table that was filled up with red

figures, and he almost, not quite, but almost convinced me that if he gave the clerks on that railroad a 2-cents-an-hour increase the railroads would have to stop operation immediately. I stayed there for about 25 years or longer and in all those 25 years I suspect, not wholly without cause, that they are still using that same red sheet. I say that to illustrate and to make clear my previous statement that I don't think that the enactment of this bill or the failure of this bill to be enacted, will have any effect whatsoever on railroad employment.

The CHAIRMAN. I just cannot simply understand that thinking. Where you are faced with the fact, as you have seen in the last 10 years, of a reduction in employment in an industry by 550,000, and where competition is growing stronger and stronger, it seems to me that somebody is going to have to wake up to the realization that the competitive situation in this industry has to be met rather than to permit a trend of events where you are reducing your personnel and reducing the business of the industry. I don't say you literally, understand; I am talking about the situation. Somebody better stop and think to see what we can do to change it. Certainly if we are going to have a railroad retirement system it has to be on a sound basis. However, if you have 740,000 people drawing benefits, and if we continue to follow the trend of greater and greater numbers drawing on the fund with less and less numbers of personnel working and less money going into that fund, we are heading for some pretty serious trouble. I am not questioning the legislation that we have under consideration or anything you have said in connection with it. I am saying there is a matter of policy that we are going to have to face one of these days if this situation keeps up. There was a time when everyone considered the railroad industry to have a virtual monopoly in transportation. We have reached a period in our very fine transportation system, the finest in all the world, where at least the three principal modes of our transportation system are pretty full-grown operations and can stand on their own feet. We have got to provide the right policies to permit them to compete. The American people will benefit by it.

Mr. YOUNGER. Mr. Chairman, may I ask just one question?

The CHAIRMAN. Yes, sir.

Mr. YOUNGER. I have an inquiry from one of my constituents who is a widow of a railroad employee. When he retired she drew $39.24 as a spouse's benefit from the retirement fund under the Railroad Retirement Act and $15 a month as a wife's benefit from social security under the Social Security Act, but when her husband died she lost the $15 from her social security and could only draw the $39.24 from the retirement fund as a benefit as a widow.

I want to know if this bill will cure that situation.

Mr. HARPER. No, sir.

Mr. YOUNGER. That situation will continue with all of your employees?

Mr. HARPER. I would like to see the file and the facts before I pass any judgment on the case that you described there, but I am sure that nothing in this bill affects the condition that you report there. Mr. YOUNGER. I will be happy to show you this letter.

Mr. HARPER. I will be glad to look at it and get the facts for you. Mr. YOUNGER. Just one other short question: Do you think that

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