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Senator REED. Mr. Eastman suggested the same thing, did he not, when he was Coordinator of Transportation, back in 1933, 1934, and 1935, and he did not get anywhere. I was responsible for the insertion in the Transportation Act of 1940 of a section that would have accomplished what Mr. Eastman tried to do and what he is now doing, but it raised a storm of protest, both on the floor of the Senate and outside, that Senator Wheeler and myself took it out on the floor. That resulted in Senate Resolution 210 and freight-forwarder legislation on the Senate side, which I largely wrote. Later Mr. Eastman, because he has got authority, issued Ŏ. D. T. Order No. 1, saving 64,000 cars a week. It has taken 8 years to reach that end. Mr. HOLLOPETER. I am heartily for it in the emergency, but we do not want those conditions when the war is over, because we want the carriers back again competing for this merchandise service, to build up the service and hold up the service, and we can get something out of competition in this country that we cannot get in any other manner. Reasonable competition in the merchandise service is the only thing that is going to insure us good service when the war is over. During the war we have to eliminate it; that is true. I am not much in favor of O. D. T. or any of those other orders after the war is over. Senator REED. I think there are some virtues in it, perhaps, with some modifications. After all, the shipper collectively pays the freight; and when you have unnecessary expense due to duplication of service because of competition, the shipper pays for it.

Mr. HOLLOPETER. It should not be excessive, but it should not be entirely eliminated.

Senator REED. We will recess until 10:30 tomorrow morning. We will try to finish tomorrow.

(Whereupon at 1:10 p. m., a recess was taken until tomorrow, Wednesday, July 1, 1942, at 10:30 a. m.)






Washington, D. C.

The subcommittee met, pursuant to adjournment on yesterday, at 10:30 a. m., in room 412, Senate Office Building, Senator Clyde M. Reed presiding.

Present: Senators Reed (presiding) and Tunnell.

Senator REED. The subcommittee will resume its hearing. I desire to read a letter and make it a part of the record, written by the Timken Roller Bearing Co., Canton, Ohio, dated May 13, 1942, and addressed to me [reading]:

We noted in the Pittsburgh Post-Gazette this morning that you intend to introduce a bill in the Senate to increase freight car demurrage charges to a maximum of $25 per day to end holding of freight cars out of transportation service for storage purposes.

Demurrage, which is serious in wartime, seems to have always been with us as a necessary evil and a large majority of the people concerned with it have always contended that it could not be eliminated.

Might I interject here that that is also our experience in connection with this resolution. I continue to read from the letter:

Back in September 1941, we decided that demurrage could be eliminated and we are glad to advise you that since October 1941, we have not paid any demurrage charges in our five Ohio plants. Several months ago we advised the president of a large eastern railroad about this accomplishment and he said that this was something which we should advertise and publicize, and in accordance with his suggestion, we prepared an advertisement which we used in the Wall Street Journal, Chicago Journal of Commerce, Railway Age, and other newspapers and magazines which read as follows:

"WE HAVE ELIMINATED DEMURRAGE CHARGES AT ALL OF OUR PLANTS "Since November 1, 1941, we have not paid any demurrage charges on any freight cars bringing material into, or taking material out of, any of our five Ohio plants. Average detention during month of November, 1.23 days per car. We thus have completely eliminated demurrage charges-but what is of vastly greater importance during these trying times, we are sending cars so badly needed for the victory program back into service with the least possible delay."


We also sent out a news release which was given wide publicity and was the basis of editorials in the Wall Street Journal and other papers.

During the 5 months, November to March, inclusive, we handled a total of 8,360 cars at all plants, with an average detention of 1.226 days per car, that is after beginning of free time, namely 48 hours. This represents a total saving of 6,463 car-days of 24 hours each. This saving equals 64.6 freight trains of 100 cars each.


We accomplished this by simply making the head of every department in our various plants see to it that no car, either incoming or outgoing, is retained over 48 hours. We explained to our department heads that it is desirable to load and unload the cars in less than 24 hours, or if possible in 1 hour because the cars were badly needed elsewhere.

It greatly improved our operating conditions, and if all industrial plants would do this it would surely help the railroads perform their important wartime function.

Furthermore, even at existing demurrage rates, freight car storage is expensive, The average boxcar contains about 360 square feet of floor space and from 3,000 to 3,500 cubic feet of capacity. At $5.50 demurrage per day this amounts to 46 cents per square foot per month. The average rental of space in common storage warehouses costs about 3 cents per square foot per month, and this includes a sprinkler system and heat.

A number of industrial concerns have contacted us in regard to the procedure used. This letter is not written either for or against the bill which you propose to introduce, but simply to tell you how we eliminated all demurrage charges * * * and we think it is the first time it has ever been done by any large industrial plant.

Yesterday I suggested to Mr. Hollopeter, of Indianapolis, that I had in mind about 10 percent of the total number of cars unloaded received some detention beyond the free-time period. That is just a rough figure, and I got that figure by taking the number of cars apparently being detained and comparing that number against the total number of cars; the average turn-around of loaded cars during the year. Mr. Hollopeter thought I was too high. Maybe that figure is too high, and I do not give it as a definite figure.

I did not have the time yesterday to examine Colonel Johnson's statement, but I did it last night. My time between the hours of 9 and 11 every night is devoted to this kind of work, and that is the only time I can devote to it. You will notice on page 24 of Colonel Johnson's statement he referred to a Portland, Maine, plant where, in January 1942, 281 cars were handled and 170 cars were held beyond free time. That is about 66 percent of cars held beyond free time. That same plant made an improvement in March of 1942, when they handled 252 cars and only 93 were held beyond free time. That is about 33 percent. In May of 1942 they handled 288 cars, and 93 cars were held beyond free time. There are some other figures in his statement that show the same results.

In the case of only a part of the examples cited in his statement does he give this precise information; that is to say, the total number of cars handled and the total number held beyond free time. Sometimes he shows it in the form of amount of money collected as demurrage, and of course one cannot calculate detention from that.

At Memphis, Tenn., in April of 1942, he shows 261 cars handled and 134 cars held beyond free time. That is again about two-thirds. That same plant handled 146 cars in May of 1942, and detained 68 of them beyond the free time-almost 50 percent.

At a Toledo automobile plant in March of 1942, he shows 2,359 cars handled and 669 cars held beyond free time. Again that is more than 25 percent. In April of 1942, that plant handled 1,818 cars, and 316 of them were held beyond free time. That is about 16 percent. In May, 1,650 cars were handled in the war production program by that plant, and 534 cars were held beyond free time.. That is one-third.

At Pueblo, Colo., in February of 1942, a steel plant handled 6,661 cars, and 1,424 of those cars were held beyond free time. That is more than 20 percent. In March of 1942, that plant handled 9,361 cars, and 1,361 of them were held beyond free time. That is about 13 or 14 percent. In April of 1942, that plant handled 9,961 cars, and 1,181 of them were held beyond free time. That is about 11 percent. In May of this year, that plant handled 11,291 cars, and 1,657 of them were held beyond free time. Again there is an excessive percentage.

I do not mean to say that these figures obtain generally. All I refer to is the fact that Colonel Johnson included them in his report in order to give this subcommittee the information asked for, and he cites cases in Maine and Colorado and Memphis.

And here is the case of an automobile plant at Pontiac, Mich., that plant handled 1,173 cars and 547 of them were held beyond free time, almost 50 percent. In the same plant in April, they handled 4,077 cars and 833 of them were held beyond free time. That is about 20 percent.

I want the record to show that precise information because I fear some of you, even though you are very familiar with these things, do not appreciate the tremendous importance of the situation and what is actually happening.

Senator TUNNELL. That shows there is really something you are driving at.

Senator REED. Yes, and that is what this subcommittee is trying to show.

Mr. HOLLOPETER. Mr. Chairman, yesterday I was thinking of penalty days in the matter of $5.50 when I was talking about a very low percentage. I agree that on your average of 10 percent of the cars handled there is a demurrage period. I believe that is correct. I think the figures will come in later to show that.

And while I am speaking, might I add this: I think it will be shown in the record that Colonel Johnson pointed out the statement he had was developed only from the record of the very recalcitrant shippers, if I might use that term, or those shippers where it was necessary to send inspectors out to get after them. In that case the record would show, as you have pointed out, a more extreme situation, but they would not be representative of the average.

Senator REED. Certainly, Mr. Hollopeter, I fancy that is true. But these are all important shipping concerns. When detention beyond free time goes up as high as 65 percent, certainly I think something ought to be done.

Mr. HOLLOPETER. Our experience has proven that if you will get the record of the same shippers a month or 2 months later, after Colonel Johnson had been on their necks, you will find a much better situation.

Senator REED. And this subcommittee is going to be on their necks about the 1st of November. We will hold this record open for 3 months, and then will ask the Interstate Commerce Commission and the railroads to give us a statement showing just what has been the average detention of cars. We do not want to legislate on this question if it can be handled voluntarily. This subcommittee only intends to take this matter up with the full committee-well, in any event, we will make a report to the full committee, but we will not recommend anything to them beyond what may be found to be necessary.

Mr. HOLLOPETER. You will find our car efficiency committee on their necks, too.

Mr. F. P. SIDDIS (Colorado Springs, Colo.). I notice you mention Pueblo. I know of conditions there, which are under our efficiency committee, and which committee is doing everything it can in the matter of demurrage. I know the traffic manager of the C. F. & I. very well, and we have talked over matters frequently. But the troubles we have there are along a somewhat different line and I fear cannot be eliminated by this. We have a labor shortage at Pueblo, and also at Colorado Springs. We have Army camps out there and have no labor, and therefore you could not get cars unloaded if the penalty were made $50 a day. That is something you have to keep in mind.

Senator REED. Somebody said Mr. Kendall would appear for the railroads, and as far as this subcommittee is concerned it does not make any difference who appears next, for we will hear everybody. If somebody out of town wants to be heard so as to get away, we will hear him. Mr. Kendall is here in Washington and can appear at any time. [A pause without response.] If nobody else wants to be heard this morning we will start with Mr. Kendall. Mr. Kendall is the chairman of the car service division of the Association of American Railroads.

Before Mr. Kendall begins his statement I want to emphasize this situation: Today we will hear the coal people. We will finish their statements today no matter how long we may have to continue in session-and I assume Senator Tunnell agrees with me, although the time we may sit is somewhat dependent upon conditions in the Senate. However, this is a very important subject. We are almost certain to have a shortage of open-top cars suitable for handling coal from October to January. The public can help out in the situation by buying all the coal they can possibly store during the summer months. After I made my speech on the Senate floor, I think on May 12, I received a letter from the Bituminous Coal Commission expressing appreciation of the assistance given, in urging people to buy coal for summer storage. One of my Kansas coal operator friends called me up yesterday and stated they were selling more coal in June this year than ever before at this time of year. Information generally is to the effect that there is more summer storage of coal going on than in any previous year. I want all of you coal people to have your minds on that, because we are going to discuss it along with a lot of other shortcomings about the loading and unloading of cars.

Mr. ESTES. Mr. Chairman, on behalf of the National Coal Association we would like to add our appreciation to that of the Bituminous Coal Commission for your very helpful speech the other day on this subject.

Senator REED. We will now hear Mr. Kendall.


Senator REED. Mr. Kendall, inasmuch as you are the head of the car service division of the Association of American Railroads, would you mind discussing the outlook for open-top cars from October to

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