ment for Federal responsibility in this field of subsidizing local commutation service. I hope that day does not come. Thank you very much. Mr. WILLIAMS. Thank you very much, Mr. Shoemaker. Are there any questions, Mr. Moulder? Mr. MOULDER. No questions, Mr. Chairman. Mr. WILLIAMS. Mr. Bennett? Mr. BENNETT. No questions. The CHAIRMAN. Does anyone desire recognition? Mr. Younger? Mr. YOUNGER. Mr. Shoemaker, in your testimony on page 5 you give the figures about the railroad retirement compared with the social security benefits of the bus and truck employees. Are you familiar with the supplemental retirement plans that those motor carriers have for their employees? Mr. SHOEMAKER. My understanding, Mr. Younger, is that those vary in various parts of the country. They are not industry plans as such. I cannot, therefore, answer you intelligently about their supplemental plans. Mr. YOUNGER. However, you are informed that most of them do have some type of supplemental plan? Mr. SHOEMAKER. I know that some of them do, sir. Whether most of them do or not I cannot answer. Mr. YOUNGER. In other words, I think it is a little unfair to merely compare what the railroad retirement plan provides compared with social security alone for competitors, because I think you will find that most of your competitors, both airlines and motor common carriers, do have suplemental retirement programs for their employees, and it would be a far better comparison if that was taken into consideration than just comparing the railroad retirement with social security. How many bonds does the Lackawanna have outstanding? Mr. SHOEMAKER. I can't tell you in number, Mr. Younger, but we have about $19 million, sir. Mr. YOUNGER. You mean dollar volume? You say about $19 million. Generally those bonds are held by trust companies and in trusts and by insurance companies and so forth? Is that true? Mr. SHOEMAKER. To the contrary, the best of our information is that our outstanding bonds, as well as stock, are quite widely distributed, sir. Mr. YOUNGER. They are widely distributed, but would you say that a majority of your outstanding bonds are held by individuals, or by corporations which have the legal right to invest in railroad bonds? Mr. SHOEMAKER. I would say unquestionably that the majority of them are held by individuals, sir. Mr. YOUNGER. So therefore, if your railroad goes into bankruptcy, all of those people will suffer, will they not? Mr. SHOEMAKER. Without any question, sir. Mr. YOUNGER. That is all, Mr. Chairman. Mr. WILLIAMS. Mr. Rogers, do you have any questions? Mr. ROGERS of Florida. I would just like to say I found this statement very interesting, Mr. Shoemaker. As I understand it from the statement, in the States where you operate, the unemployment payments by those States are less than would be required by this proposed legislation? Mr. SHOEMAKER. That is true, sir. Mr. ROGERS of Florida. Without exception? Mr. ROGERS of Florida. Yes; that is all. Mr. AVERY. Mr. Shoemaker, what was the stock last year? Thank you. rate of earnings for your Mr. SHOEMAKER. There was not any, sir. We had a deficit of just under $4 million. We did not make our fixed charges. Mr. AVERY. I believe I heard you say or maybe you read from your statement that you were going to appear before the Interstate Čommerce Commission and seek to be relieved of furnishing commuter service for approximately 30,000 daily passengers. Mr. SHOEMAKER. Yes, sir. Mr. AVERY. If you were relieved of that commuter service, how would that affect your loss column? Mr. SHOEMAKER. The full distributed losses on that service will approximate $3 million for last year. Mr. AVERY. So that, even for 1958, had you been relieved of the responsibility of operating the commuter service you would have still lost a million dollars? Mr. SHOEMAKER. We would still have lost a million dollars; yes, sir. Mr. AVERY. That is all, Mr. Chairman. Mr WILLIAMS. Mr. Collier? Mr. COLLIER. I have no questions. Mr. WILLIAMS. Does anyone else desire recognition? Thank you very much, Mr. Shoemaker. Mr. SHOEMAKER. May I thank you again for the courtesy of the committee. Mr. WILLIAMS. It is 5 minutes of 12. It is quite apparent that the committee will not be able to stay in session any longer. Accordingly, the committee will adjourn until 2 o'clock this afternoon at which time Mr. Loomis will continue his testimony. (Whereupon, at 11:55 a.m., a recess was taken until 2 p.m., same day.) AFTER RECESS this (The committee reconvened at 2 p.m., Hon. Oren Harris (chairman) presiding.) The CHAIRMAN. The committee will come to order. When the committee adjourned, Mr. Shoemaker had concluded his testimony. Mr. Loomis will resume the witness chair. Mr. Shoemaker's testimony will follow in the record the complete presentation of Mr. Loomis' prepared testimony and the interrogation and answers will follow. Mr. Hemphill, any questions? Mr. HEMPHILL. No questions; thank you, Mr. Chairman. Mr. GLENN. No questions, Mr. Chairman. The CHAIRMAN. Mr. Rogers, any questions? Mr. ROGERS of Texas. Mr. Chairman, I am sorry I wasn't here this morning. I had another committee meeting so I will forego any questions right now. The CHAIRMAN. Mr. Devine? Mr. DEVINE. No questions, Mr. Chairman. The CHAIRMAN. Mr. Loomis, I want to compliment you myself and on behalf of the committee on the presentation that you have made to this committee this morning stating very frankly the viewpoint of the Association of American Railroads. I am sure there are some questions in the minds of some of the members because they told me so, and I have a few in my own mind. In the first place, you have given a rather gloomy picture of the general situation of the railroad industry. There has been a great deal of discussion about the condition of the railroad industry. There has been a lot of publicity in the newspapers, particularly the relative decline the industry is experiencing in our great transportation system. It has disturbed me a great deal over a long period of time. As a matter of fact, I saw this coming several years ago, as did a lot of others, I think including yourself. We have tried to do something about it. As a matter of fact, a great effort was made during the last 3 years to assist the industry, consummating with the Transportation Act of 1958 and several other bills which this Congress had approved. Can you tell us what the railroad industry is doing itself to regain some of the business that it has lost, not in volume, but percentagewise, over the last few years? FURTHER STATEMENT OF DANIEL P. LOOMIS, PRESIDENT, ASSOCIATION OF AMERICAN RAILROADS-Resumed Mr. LOOMIS. Mr. Chairman, I would say there are a good many things underway. To take the rate situation, there have been quite a substantial number of proposals for rate adjustments filed with the Interstate Commerce Commission since the passage of the Transportation Act of 1958. Some of those proposed adjustments have been permitted to go into effect without suspension. Some of them have been suspended by the Commission and are under investigation. So far, I think it is fair to say that there is as yet no clear-cut decision from the Commission with respect to the ratemaking provisions of the Transportation Act of 1958. The leading case now pending before the Commission, I think, in size is probably the eastern railroads rate proposal on paint, which was suspended by the Commission, has been heard, and I believe is now on brief and argument. There has been at least one proposal filed, I believe, and there are others under consideration with respect to the proposition of agreed rates. I am not sure that the committee understands what agreed rates are, but a general description of them, and I am not a rate expert, would be an agreement between the carriers and a particular manufacturing company of a lower rate on a high volume of shipment or a lower rate on an agreed quantity of shipment. There are also quantity rate proposals which have been filed with the Commission, where as the quantity of commodity shipped goes up the rate goes down. With respect to quantity rates and the so-called agreed rates, an agreed rate, for example, might be where a carrier would say to a company, "If you ship 70 percent of your business by rail we will make you a certain rate. If you don't get to that percentage the rate will be somewhat higher." That is generally what is understood to be an agreed rate. There is no clear-cut decision on the question of quantity rates or agreed rates. The agreed rates in this country are a rather new thing. They have been used in Canada and in England. Quantity rates in this country are a comparatively new thing. Even multiple-car rates are new. So that so far there is no clear-cut pattern trafficwise on the effect of those proposals, but those proposals are being advanced and are being pushed actually to fruition. Insofar as other features of the Transportation Act of 1958 are concerned, the temporary and emergency loan provision, I think, has only been clarified within the past day with an opinion from the Attorney General. There are applications on file, none of which have been completely processed. I would expect that the ruling of the Attorney General which has just been issued would help to push those into fruition. Insofar as the private carriage amendments and the agricultural commodity amendments, it is difficult to measure the effect of those amendments thus far; much of that depends on enforcement, how much staff, how much money the Commisison has to enforce the provisions, particularly the private carriage amendment. With respect to section 13(a), which dealt with the passenger service, there has thus far been only two decisions from the Commission, one involved with the ferry case in New York involving the New York Central and the Erie, and, of course, the New York Central part of that case is still in the courts. The second decision was last week, involving what I recall is a branch line train on the Great Northern. So, while there are a number of petitions on file with the Commission, the Commission has thus far acted in only those two cases. So far as the ratemaking provision is concerned, I think it can fairly be said that the railroad traffic people are very active in processing that. I think it is also fair to say that the repeal of the 3-percent tax on freight transportation, so far as our people can ascertain, has been helpful in helping to stem the erosion of traffic to private carriage. The CHAIRMAN. Did you have an occasion yet to compare January 1959 with January 1958? Mr. LOOMIS. I think I gave the figures with respect to carloadings. The first 6 weeks of 1959 showed an increase in carloadings of 110 percent over the corresponding period of 1958. The CHAIRMAN. Would you provide for the committee the gross business of the class I railroads on an annual basis for the last 10 years? Mr. LOOMIS. Yes, sir. Stated in ton-miles, in revenues, or both, or how would you like it stated? The CHAIRMAN. I would like it stated in dollars and cents. You have already given us the ton-mile figure in your statement. Mr. LOOMIS. I think I had it for 5 years. The CHAIRMAN. Five years will be sufficient. Will you also give us the net income in each of those last 5 years? Mr. LOOMIS. I can read it into the record, or would you rather have it furnished in the form of a statement? The CHAIRMAN. I think if you furnished it in the form of a statement we would rather have it that way, sir. Mr. LOOMIS. All right. (The information to be furnished follows:) ASSOCIATION OF AMERICAN RAILROADS, Hon. OREN HARRIS, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. HARRIS: In the course of my testimony before your committee on February 16 in regard to H.R. 1012, you asked (pp. 369-370 of the transcript) for information on the gross revenues and net income of the class I railroads for the last 5 or 10 years. That information and other data which I cited in my discussion of railroad earnings are shown in the table below: Gross and net earnings, class I railroads in the United States, 1925-29 In this connection, it may be of interest to your committee to see how the increase in the cost of living has reduced the purchasing power of railroad earnings. In the table below, the net income in the peak earnings years in the postwar period and in 1956-58 is compared with that of 1929 in terms of 1929 dollars. Effect of price inflation on railroad net income Retained earnings adjusted on basis of ICC Railroad Construction Index, balance adjusted on basis of Consumer Price Index. |