(The statement of Mr. Seal is as follows:) STATEMENT OF CHARLES R. SEAL, CHAIRMAN OF THE LEGISLATIVE COMMITTEE OF THE NATIONAL INDUSTRIAL TRAFFIC LEAGUE, BEFORE SUBCOMMITTEE OF THE SENATE INTERSTATE COMMERCE COMMITTEE, IN OPPOSITION TO SENATE JOINT RESOLUTION 147, Providing for Reduced FREE TIME AND INCREASED RAILROAD PENALTY DEMURRAGE CHARGES The National Industrial Traffic League is, as its name implies, a national organization interested in transportation and matters affecting transportation. Its membership is directly representative of all principal groups of industry throughout the country, and also includes a large number of commercial and trade organizations. One of the primary interests of the league is in the maintenance of adequate and efficient transportation, which includes efficient freight-car performance. While the league appreciates and endorses the aim of Senate Joint Resolution 147, namely, the attainment of maximum car use and efficiency, and believes that introduction of the resolution has served the probable purpose of its author to promote efficiency through voluntary efforts, it does not feel that accomplishment of this aim should be attempted through further legislation, which is neither necessary nor desirable. The several reasons why the league feels that the resolution should not be passed have already been touched upon in the testimony of witnesses, and to avoid undue repetition this statement will be confined largely to an outline of the league's principal objections to the resolution. The first of these is that it provides for statutory rate making. The league has consistently opposed statutory rate making for the principal reason that it lacks the flexibility of administrative regulation and cannot be adapted to different states of facts or to new or changed conditions. Existing law provides complete but discretionary authority over demurrage charges and regulations. The resolution would impose excessive and injurious penalties in instances where car detention is beyond the control of the consignor or consignee, and in such instances the penalty would not actually accomplish car efficiency through release. Existing law may be and is administered to provide protection against such unwarranted penalties. The great majority of shippers and receivers of carload freight are governed by a desire to conserve equipment by releasing cars as promptly as possible. The comparatively few who are not can be dealt with effectively at present without at the same time penalizing the innocent. The present speed of production and consumption leaves little occasion for holding cars longer than actually necessary. However, there are conditions, some of which are now recognized in the demurrage rules, under which no amount of penalty would prevent car detention, and such situations should be dealt with on their merits and not be made subject to a severe general penalty. Difficulties causing delays occur chiefly in connection with unloading, and in many instances consignees have no control over the quantities of materials shipped to their plants at a given time. It is not uncommon, as to commodities allocated by Government agencies, that an industry will receive its total month's supply, possibly from a number of different shipping points, within a period of a few days, and will be without storage space adequate to accommodate such a supply quickly. Also, some commodities require heating for as much as 48 hours, as compared with the proposed free time of 36 hours, before they can be loaded into or removed from tank cars. The Interstate Commerce Commission and the Office of Defense Transportation have ample authority to accomplish any result that could be accomplished by this resolution, and without assessment of undue penalties under conditions beyond the control of consignors or consignees. Much in the way of car efficiency has already been accomplished through cooperation between the Government, the railroads, and shippers, as is shown by statements submitted at the hearing on this resolution. Restrictive changes in demurrage rules have already been made and another, concurred in by the National Industrial Traffic League, will become effective on July 10 and under which demurrage charges will accrue after free time for detention on Sundays and holidays. The shippers advisory boards, through their car efficiency committees and otherwise, have been a tremendous force in improving car efficiency through heavier loading and prompt release of cars. There is undoubtedly a greater degree of efficiency today than ever before due to these various efforts. If these efforts do not bring further results considered adequate or necessary, the Interstate Commerce Commission and the Office of Defense Transportation now have, as stated, ample authority to impose requirements that will. Senator REED (presiding). We will hear the next gentleman. STATEMENT OF G. E. MACE, REPRESENTING THE COMMERCE INDUSTRY ASSOCIATION OF NEW YORK, FORMERLY THE MERCHANTS ASSOCIATION OF NEW YORK Mr. MACE. I represent the Commerce Industry Association of New York, formerly the Merchants Association of New York, which is equivalent to the Chamber of Commerce of the City of New York if there were such an organization. I also represent the Shippers Conference of Greater New York, which is composed of about 150 traffic representatives of that many substantial shippers and receivers of freight at New York. I should like the privilege, the same as Mr. Seal, to submit a statement to be included in the record at your good discretion. Senator REED. Make it brief. Mr. MACE. It will be very brief. It will be a written statement and will be very brief. May I have 5 or 10 days to get it to you? Senator REED. Do not delay it too long. If we are going to have these hearings printed we will want the record complete. (The written statement furnished by Mr. Mace is as follows:) Hon. EDWIN C. JOHNSON, DEAR SENATOR JOHNSON: Pursuant to Senator Reed's generous statement at the conclusion of the hearing upon Senate Joint Resolution 147, I am taking this opportunity to put before you a statement of our views in regard to Senator Reed's resolution. At the outset let me say that we are in accord with the professed objective which the author of the bill is attempting to achieve, i. e., the avoidance of detention of railroad freight cars by shippers and consignees during the period of the war. However, we are opposed to the passage of the proposed legislation on several grounds among which are: 1. It involves legislative rate making, a principle to which we are unalterably opposed. It appears unnecessary to argue that principle because Senator Reed expressed his accord with our position in that respect. 2. The resolution has already achieved its professed purpose. The testimony introduced by the Interstate Commerce Commission and the Association of American Railroads, at the hearing June 30 and July 1, gives ample evidence that the battle for preventing freight car detention by shippers and consignees is being vigorously and successfully carried on, with gratifying cooperation on the part of the shipping public. The testimony of those witnesses is replete with respect to continually improved conditions. 3. The principal cause of car detention by either shipper or consignee at the present time is, as was explained, physical conditions over which neither the shipper nor the consignee have control. Important among these conditions are the uncertainty of steamship sailings from the ports, labor disputes, weather conditions, etc. Demurrage is a penalty placed upon the shipper or receiver for the detention of freight cars. It is self-evident that merely increasing the amount of the penalty cannot result in lessening the detention in those instances where the detention is caused by conditions beyond the power of the shipper or consignee to remedy or change. 4. If any additional penalty is to be imposed upon the shipper or consignee for the detention of freight cars, it should be made applicable through the Interstate Commerce Commission, and then only after a complete investigation of the facts involved. It should be definitely restricted to the particular type of freight car upon which such an investigation develops there is a real emergency shortage. It should be definitely limited to the duration of the emergency. However, any investigation into the matter of car detention by shippers or consignees, conducted through the Interstate Commerce Commission, should seek every possible means of reducing or limiting any undue detention that may be found to exist, rather than by a mere increase in the demurrage rates. Experience has proven that other available means are already being successfully utilized. The Commerce and Industry Association of New York, Inc., is cooperating whole-heartedly in the efforts of the Commission and the railroads to avoid car detention by both shippers and consignees, but we are firm in our conviction that a grave mistake would be made were Congress to take the matter out of the hands of the Commission and attempt, by direct legislation, to do what it previously directed and authorized the Commission to do. Certain it is that, should the demurrage rates be increased as provided in the pending legislation, all incentive for shippers and receivers of freight to work their men overtime nights at overtime rates of pay-would be canceled. This would invariably result in greater detention in those instances, which are many. We have faith in the ability of the Interstate Commerce Commission, with the cooperation that is being given it by the railroads and the shipping public, to reduce car detention to an irreducible minimum. Practically all that has already been done by means of embargoes. Neither Congress nor angels can do more. We are confident that the 3-month trial period, which Senator Reed announced would be granted before recommendation is made to the Committee on Interstate Commerce, will demonstrate further accomplishments for the prevention of car detention. For these reasons we respectfully ask that the joint resolution be not reported favorably to the committee. I desire to renew the request made by me at the conclusion of the hearing that this letter be incorporated in the record of the proceedings. Yours sincerely, GEORGE E. MACE, Manager, Transportation Bureau, Commerce and Industry Association of New York, Inc. Senator REED. We will now hear the next witness. STATEMENT OF A. H. SCHWIETERT, TRAFFIC DIRECTOR OF THE CHICAGO ASSOCIATION OF COMMERCE AND PRESIDENT OF THE ILLINOIS TERRITORY INDUSTRIAL TRAFFIC LEAGUE Mr. SCHWIETERT. I am representing the Chicago Association of Commerce and the Illinois Territory Industrial Traffic League. I have also been for the last year chairman of the vigilance committee on car efficiency of the Midwest Shippers Advisory Board. I have here a prepared statement and had intended to present it. Some of it may be duplication but a good share of it is not. Senator REED. Suppose you just touch the high points of your statement. Mr. SCHWIETERT. If the statement will be reproduced in the record then I need not read all of it. Senator REED. Yes, the committee reporter will make it a part of the record. Mr. SCHWIETERT. On page 3 of my statement I set forth a number of instances where cars have been detained for reasons over which the shippers have no control. I also call attention to a number of industries working on a 5-day week. We have induced many of them to hold on duty on Saturdays unloading crews in order to eliminate the holding of cars over until Monday. On page 5 of my prepared statement I have set forth what the vigilance committee does, although doubtless you may be somewhat familiar with its work. On page 6 I have some figures which you have asked for on several occasions. They are not complete for all industries within our district, but they do represent a good many large and small industries which we think are representative of our area. Senator REED. Suppose we just catch up to that point in your statement. Mr. SCHWIETERT. The Chicago Association of Commerce is made up of approximately 3,500 shipper members, who receive from and ship to points located throughout the entire United States. The Illinois Territory Industrial Traffic League is made up of firms, corporations, and commercial organizations located at points throughout the State of Illinois and the southern portion of Wisconsin. Chicago originates approximately 45,500 carloads and receives approximately 55,000 carloads of freight weekly. In addition to the positions outlined above I have, for the past year, been serving in the capacity of chairman of the vigilance committee on car efficiency of the Midwest Shippers Advisory Board, an organization of approximately 1,000 representatives, whose industries and plants are located in the States of Illinois, Iowa, Wisconsin, the Upper Peninsula of Michigan and the eastern half of Indiana. Our organizations are very much in favor of the objectives which the resolution, here under consideration, seeks to accomplish. However, we are firmly of the opinion that such results can best be obtained through cooperation between governmental agencies, carriers, and shippers. The Interstate Commerce Commission through its Bureau of Service now has the authority to issue such rules and regulations as may be necessary to bring about a more efficient use of our transportation system during the war emergency. Orders providing for the heavier loading of less carload merchandise cars have been issued and consideration is being given to provide for increases in the loading of carload traffic and the elimination of unnecessary use of cars in switching services. However, thus far the only change which has been made in the demurrage tariffs provides that under the average agreement two credits must be used in offsetting one debit, and under the straight demurrage plan only 2 days are allowed instead of 4 at the demurrage rate of $2.20 per day after which the higher rate of $5.50 per day is applied. It is our opinion, however, that this does not add to the efficient use of carrier equipment, and that while in some instances an extremely high penalty charge may cause some shippers to unload more promptly, it will not in all instances materially increase the efficient use of cars nor reduce the average detention time. The effect will be, in many cases, to penalize the shipper or receiver without saving any car-days. There are many factors which affect the prompt loading and unloading of railroad cars over which the shipper or the receiver has no control, and which would not be affected by the assessment of high demurrage or penalty charges. Loading and unloading of cars are affected by weather conditions, bunching of cars in transit, switching by carriers, irregular shipping by the consignor, forwarding of shipments in quantities beyond the ability of the receiver's facilities to unload, and other factors, many of which can be corrected and have been corrected through cooperation between shippers and carriers, but which would not be affected in any way by an increase in demurrage charges. During the past winter months we have found many instances where cars of coal arrived in a frozen condition due to extremely cold weather. When this happens it is necessary that such cars be thawed out with steam or other methods and the ordinary unloading facilities cannot take care of the receipts. A similar condition exists with respect to building materials which cannot be unloaded during rainy weather since such materials must remain dry. If the industry is required to unload the material at a point where proper protection against the elements is not available then no matter what the penalty charges are the freight cannot be unloaded, since to do so would ruin the commodity. If the demurrage charges are too high the industry may require the carrier to perform added switching services and move the traffic to other points where overhead facilities will permit the unloading, but this again requires the use of added motive power. Through cooperation material yards have made a substantial improvement in the loading and unloading of their traffic, and while occasionally, because of weather conditions, some cars are delayed the average detention time per car is much less than 36 hours. Another problem is presented in the loading and unloading of cars on Saturdays and Sundays at industrial plants working on a 5-day week. A survey of 129 industries shows 24 working 7 days per week, 59 working 6 days per week, and 46 working 5 days per week. Many of the 5-day per week industries have arranged to work an unloading crew on Saturday, whenever this is necessary to release equipment and when the rail carrier provides a switching service. Motive power, however, must be used just as efficiently as cars, and at the present time there is a greater demand on motive power than there is on other carrier equipment. Carriers must, therefore, weigh the value of obtaining an empty car against the extra use of locomotives required to perform Saturday and Sunday switching. Conditions at no two plants will be the same, and each community and each industry must work this out so as to bring about the highest degree of efficiency possible. Bunching of cars in transit, resulting in the arrival in lots beyond the ability of the industry to unload, is sometimes the cause of delay to cars, but again the consignee has absolutely no control over this condition. In many cases the carriers cannot control such bunching since they must provide the maximum use of locomotive power. In making up their trains they cannot run such trains frequently with light loads and, in their effort to make up longer trains (with the resulting delays at terminals), bunching of cars for certain industries occurs. Within the past few days, in calling a receiver's attention to his failure to unload cars promptly, my attention was directed to the fact that while shippers had been instructed to ship not to exceed three cars per day, and had followed such instructions, the cars arrived at destination in groups of two, four, and as high as nine in 1 day, while the consignee's facilities could only accommodate an average of three cars per day. Penalty charges will not cure situations of this kind, and it will require cooperative action between carriers and shippers in order to eliminate such conditions. Instances of this character have previously been called to carriers' attention, and corrective measures have been taken. For instance, in a movement of traffic from Chicago to an industry located at North Chicago, a distance of |