today, but on the sidings in the Altoona yards you see hundreds of passenger cars, sleepers, dining cars, and day coaches that are no longer in use. As a matter of fact, over a period of months the Pennsylvania Railroad repaired no passenger equipment whatsoever, but used existing equipment and drew on a reservoir of repaired equipment on hand. The result was that all of the jobs that were related to the maintenance of this passenger equipment simply were abolished and employees with years of service were without employment. Mr. ROGERS of Texas. Then if some of that passenger traffic could be recovered, you could have a chance of reducing the unemployment insofar as that is affected? Mr. VAN ZANDT. Very definitely so. Starting the first of the year the Pennsylvania Railroad began repairs on a schedule of approximately 10 passenger cars a month. That meant immediate employment for men employed in that department of the railroad. Mr. ROGERS of Texas. Thank you, sir. Thank you, Mr. Chairman. The CHAIRMAN. Mr. Younger. Mr. YOUNGER. Mr. Van Zandt, you have given quite a study to this problem. What are the reasons that the Federal Government ought to continue to handle this retirement? Why cannot it be handled like the retirement of General Motors, or steel, or other private retirement funds? Mr. VAN ZANDT. This is a very unique retirement system. The system itself was conceived by railway employees and railway management and they in turn approached the Federal Government through the Congress and asked that the necessary laws be written so that the Government would simply manage or administer the system. Therefore, railroad retirement is a system that railroad management and railroad employees themselves wanted. Suggestions have been made from time to time that it be absorbed by social security. I know that the railroad employees through their respective labor organizations (and I am a furloughed employee myself), will continue to resist any effort to have the railroad retirement system absorbed by social security. We look at railroad retirement as being a unique system since we are paying for it and hence we receive benefits that are not paid to recipients of social security benefits. Mr. YOUNGER. I mean to handle the retirement benefits over and above the social security by employees and the employers just like is done in the other large industries. Mr. VAN ZANDT. Are you talking about a supplemental pension? Mr. YOUNGER. Yes. Mr. VAN ZANDT. If I recall correctly, firms in the steel industry augment the social security benefits by a supplemental pension and so does the United Mine Workers. That is a matter that would have to be worked out, as I understand it, between the representatives of railway labor and railway management. In some instances the railroads do have a supplemental system--I know they do on the Pennsylvania system, where it is possible for an employee to buy additional retirement benefits. Mr. YOUNGER. That is all. The CHAIRMAN. Mr. Mack. Mr. MACK. I just wanted to see if I understood that reply to Mr. Rogers. Did you say you thought it would level off at about 5,000? Mr. VAN ZANDT. 6,000. Mr. MACK. You do not have 6,000 people employed there? Mr. MACK. Do you not think that the opening of the St. Lawrence Seaway will adversely affect employment in your area or in the general area? Mr. VAN ZANDT. Yes, I do. I think that the bottom of the barrel is yet to be reached as far as this situation is concerned with respect to the railroads. I think when the St. Lawrence Seaway opens up traffic that the freight the Pennsylvania carries from the ports of Baltimore and Philadelphia and New York, and what comes through the Boston and New York gateways, will be diverted to steamers that will deliver the cargo to Great Lake ports. This means that the Pennsylvania. Railroad will have lost that cargo. I also think that some of the wheat now being hauled by the railroads will be diverted to steamship and likewise ore and coal. I have tried to establish a figure and the best estimate that can be agreed to is about 15 percent. However, I am informed that it is the consensus of opinion among leaders in the transportation field that the amount of freight diverted from the railroads to ships is contingent on the tolls levied against foreign-flag ships for the use of the St. Lawrence Seaway. In other words, the St. Lawrence Seaway could take 15 percent or more of the cargo now carried by the railroads in eastern United States. Mr. MACK. Then it would be very difficult to continue to increase your employment, in this area especially, in view of the fact that the St. Lawrence Seaway is opening up. Mr. VAN ZANDT. That is right. We are going to be very fortunate in Altoona if we level off at 6,000 and the only reservation I would make is in the event of a national emergency, which, of course, could make it possible that we go beyond 6,000. The CHAIRMAN. Mr. Avery. Mr. AVERY. Mr. Chairman, I would like to ask our colleague from Pennsylvania just one question: Mr. Van Zandt, that question would be in your second bill, H.R. 1373, I believe, dealing with the unemployment insurance. You are aware that the provisions of your bill, assuming they are identical to H.R. 1020 in that section, inject a whole new theory into unemployment insurance, whereas unemployment insurance benefits are extended and they are based on seniority. Mr. VAN ZANDT. Yes. Mr. AVERY. Are you in full support of that concept? Mr. VAN ZANDT. Yes, I am. Mr. AVERY. Even though it is a departure from the unemployment insurance concept that we have accepted now for 25 years? Mr. VAN ZANDT. The provisions of H.R. 1373 are incorporated in the provisions of H.R. 1012 and I am in wholehearted support of H.R. 1012. Mr. AVERY. You feel that is economically sound? Mr. VAN ZANDT. I think it is economically sound. I think that we have to take into consideration management as well as employees and I have done that and I think it is economically sound. Mr. AVERY. That is all, Mr. Chairman. The CHAIRMAN. Thank you, Mr. Van Zandt, for your statement. Mr. VAN ZANDT. Thank you. The CHAIRMAN. At this time I would like to recognize a member of this committee, Mr. Rhodes, for the purpose of introducing a distinguished visitor we have with us today, and also for a brief statement on the legislation. STATEMENT OF HON. GEORGE M. RHODES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA Mr. RHODES. Thank you, Mr. Chairman, and my colleagues on the committee. I want to introduce the distinguished Mayor of our city of Reading, Daniel A. McDevitt. He is here in Washington because of his interest in housing for the aged. Reading is a railroad city and I know he is also interested in the legislation which is now being studied by this committee. Will you rise, Mr. Mayor. The CHAIRMAN. Mr. Mayor, we are very glad to have you with us today. You are welcome to this committee any time you have an opportunity to be with us. Mr. RHODES. Mr. Chairman, fellow members of the Interstate and Foreign Commerce Committee, I appreciate this opportunity of stating my views favoring the enactment of H.R. 1012, H.R. 1013, and other identical bills, including my own, H.R. 2925, providing for a 10percent increase in benefits under the Railroad Retirement Act and also making liberalizing amendments to the Railroad Unemployment Insurance Act. On August 23 of last year, only a few hours before adjournment, I expressed regret over failure of the House to act on similar legislation to raise railroad retirement benefits and to amend the Railroad Unemployment Insurance Act. At the same time, I expressed the hope that action on this legislation would be the first act of the new Congress in order to keep faith with retired railroaders, their survivors, and those rail employees who are unemployed. It is, Mr. Chairman, a great credit to you and this committee that hearings on this legislation have been scheduled so promptly. This increase is long overdue. I trust that we will act favorably on the proposal for improved retirement benefits as soon as possible. Persons living on fixed incomes such as pensions and annuities have been most severely hurt by the increasing cost of living. Since the enactment of the last bill raising railroad retirement benefits, Public Law 1013, 84th Congress, the consumer price index for all items has risen by 8 points, medical care, so important to old folks, by 15 points, and housing costs by 7 points. Rises in the cost of living have also worked a hardship on those unemployed railworkers who have been adversely affected because of sharp cutbacks in the industry. I am pleased that the bill contains the January 1, 1959, retroactive date, the effective date of the increases which was contained in the bill last year. This will guarantee that no one will lose benefits because of the failure of the previous Congress to enact the measure before adjournment. H.R. 1012 and companion bills are sound. They provide adequate increases in the present tax rates to cover the actuarial costs of the increases under both the Railroad Retirement and Railroad Unemployment Insurance Acts. Mr. Chairman, I urge the early approval of this needed legislation. The CHAIRMAN. Thank you very much, Mr. Rhodes. We are glad to have with us today the gentleman from Missouri, Mr. Charles Brown. Mr. Brown, we will be glad to hear you at this time. STATEMENT OF HON. CHARLES H. BROWN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSOURI Mr. BROWN. Thank you, sir. Sooner or later, we Americans of the 20th century must recognize that the vast changes of the past 30 years in our economic and social system, while beneficial to so many, have posed new problems for our retired, disabled, unemployed, and all people not actively engaged in producing and earning. We have become a Nation dedicated to providing every American a fair chance to earn a decent honest living, to educate his children, and to spend a few retirement years honorably and independently. Also, we are determined to prevent economic depression. The Nation, through many elections, has instructed the people's Congress to use the full power of the people's government to achieve these noble and worthwhile goals. Every thinking person recognizes that it is not, nor ever will be, an easy task. Especially, in times of external threats of conquest. It means a heavy tax burden on each citizen, constant inflationary pressures, and an ever present threat of imbalances and inequities among various segments of the population. These facts we must face and face squarely: (1) If the American citizen is to contribute a large share of his earnings to Government for the common defense and the common good, he will probably accumulate less for his retirement years or his unemployment days. So, instead of his basic retirement program-social security, railroad retirement, or company pension plan-being merely a bare base, it is becoming, more and more, a major portion of the retired person's total means of livelihood. (2) If this Nation has indeed achieved a depression-proof economy and certainly everyone who has ever been a victim of a depression hopes we are close to depression-proof, it would mean that present costs of living might level off or adjust downward slightly, but no drop in living costs could be expected in the foreseeable future. So, any retired or disabled or unemployed person who can't "chin it" now will probably not be able to "chin it" any better next year or year after. the World War II and other economic changes in this country have frozen into our economy a new level of living costs. We must-and can-keep it from getting completely out of hand; but that won't help solve the problem of our parents and grandparents who are already hopelessly behind. These people are in trouble-serious trouble; and for them, fear is a constant companion. They fear a protracted illness. They fear every bond issue that comes before a community. They fear every trip to the grocery store, every call to a plumber or electrician, every knock in the old car. And their fears are real, because the new level of living costs is beyond their reach; and they are forced-against their will to turn to us who are earners for help. Only the most heartless could turn his back on such a legitimate plea. Most of these people are not asking for luxuries. They're asking for subsistence. It means an additional load on those actively engaged in earning and producing, but the load is inescapable. The alternative is poverty for many in the midst of prosperity. Ours must be a two-pronged effort to bring our retired and disabled more in line with the new level of living costs, while fighting valiantly to keep inflation from forcing them still higher. Government can and should encourage private companies and individuals to make their own pension programs more realistic. Government can and must lead the way by direct action on pension programs it controls. I urge this great committee to take immediate action by putting together the best possible legislation to improve railroad retirement and unemployment benefits. It is a must, and it is already overdue. I am not here to tell you how to do it. Many bills have been introduced. Each incorporates some excellent suggestions for improve ment. I am sure that a constructive piece of legislation can be formulated out of all these suggestions. The main point is-let's do it, and do it now. I live with a lot of railroad families. They are the salt of the earth. The problems of the retired, disabled, and unemployed railroaders are serious. There can be no choice but to lend them a helping hand. The CHAIRMAN. Thank you for your interest and appearance, Mr. Brown. Mr. BROWN. Thank you, Mr. Chairman. The CHAIRMAN. We are also glad to have our colleague from Florida, the Honorable Charles Bennett, who has heretofore appeared before this committee and expressed his interest in the railroad retirement legislation. We welcome you again, Mr. Bennett, to this committee and we will be pleased to have your statement at this time. STATEMENT OF HON. CHARLES E. BENNETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA Mr. BENNETT. Thank you very much, Mr. Chairman. I would first like to express my appreciation to you and to the members of this committee for permitting me to appear here today to testify in favor of H.R. 3705, my bill to increase railroad retirement benefits. Your committee is in a much better position than I to determine what railroad retiree benefit increases can be financed and how they should be financed. In introducing this bill, my principal objective |