the Interstate Commerce Commission, and shall become a part of the revenues of the collecting carriers.

SEC. 4. The Interstate Commerce Commission is authorized and directed to make such rules and regulations and to take such further steps as may be necessary to insure compliance with the provisions of this joint resolution.

Senator REED. The subcommittee has requested the Interstate Commerce Commission, the railroads, and various traffic organizations to appear and give us the benefit of their judgment based on their experience. We will make a letter addressed to Chairman Aitchison of the Interstate Commerce Commission, dated June 22, 1942, a part of the record at this point [reading]:

The Honorable CLYDE B. AITCHISON,

Chairman, the Interstate Commerce Commission,

Washington, D. C.

JUNE 22, 1942

DEAR MR. AITCHISON: Senator Wheeler, chairman of the Interstate Commerce Committee, has appointed the following subcommittee to consider Senate Joint Resolution 147:

Senator Johnson of Colorado (chairman), Senator Tunnell, Senator Reed. Hearings will begin on June 30. The location of the hearings will be announced later. We have already received an expression of opinion from the Commission on this resolution. However, the subcommittee desires information along the following lines:

A. The history of demurrage charges.

B. Whether such charges are regarded in the light of revenue or as a penalty for not unloading within a specified time.

C. The basis upon which "free time" is fixed.

D. The basis, if any, of the amount of charges imposed.

E. The lines of commodities in which the greatest delays in unloading have occurred.

F. The destinations at which most numerous delays occur.

G. The feasibility of imposing extra demurrage charges during seasons when a particular type of car is in the most demand.

The Association of American Railroads is being asked to submit to the subcommittee its views on these points. All shippers organizations, including the National Industrial Traffic League, the National Association of Shippers Advisory Boards, all traffic bureaus, chambers of commerce, boards of trade, etc., and all individual shippers are invited to appear before the subcommittee and give it the benefit of their experience.

The hearings will open with the views of the Interstate Commerce Commission, to be followed by the Association of the American Railroads and any individual railroad that desires to be heard. If those desiring to appear will notify the chairman, arrangements will be made for sufficient time and a program of appearance will be planned.

Sincerely yours,

EDWIN C. JOHNSON, Chairman of the Subcommittee.

Senator REED. I want to call attention to the fact that in this letter a request was made for a discussion of the subject under these headings:

A. The history of demurrage charges.

B. Whether such charges are regarded in the light of revenue or as a penalty for not unloading within a specified time.

C. The basis upon which "free time" is fixed.

D. The basis, if any, of the amount of charges imposed.

E. The lines of commodities in which the greatest delays in unloading have occurred.

F. The destinations at which most numerous delays occur.

G. The feasibility of imposing extra demurrage charges during seasons when a particular type of car is in the most demand.

Identical letters were written to the Association of American Railroads, the Office of Defense Transportation, the National Association

of Shippers Advisory Boards, the National Industrial Traffic League, and perhaps others.

I want to say in the beginning as the author of this resolution it would be utterly useless to consume any time in discussing the advisability, relatively or otherwise, of congressional action upon demurrage and things like that. Everybody knows my position in that regard-that we have a minimum of congressional legislative action and a maximum of administrative action.

The situation is that last year the railroads collected in demurrage charges about $9,000,000. Roughly speaking that is the equivalent to an average detention beyond free time of 11,000 or 12,000 freight cars every day. It is the intent of this resolution to reduce that detention. This subcommittee is going into every phase of this matter, the full history of it, and make a complete record of the situation, and desires to hear everybody who wishes to be heard.

I might explain that after our hearings are closed the record made will be held open for about 3 or 4 months, and after that lapse of time we are going to ask the Commission and the railroads to make a check of the improvement the shippers are now promising.

I am referring particularly, but without any criticism, to the use of refrigerator cars, whose users have been notorious offenders; the users of grain cars and having had 15 years' active experience as chairman of a shippers board in the greatest grain State in the country I know something about that situation; also in the matter of coal cars.

At this point, in order that the gentlemen present representing the coal interests may have the matter definitely in mind, I wish to call attention to this very important fact: This is the month of June, normally one of the light coal-shipping months. Fortunately this year, with admonitions that have been given from all sources for people to buy coal early, there seems to be a larger shipment of coal than usual. I hope to have information from the coal interests definitely upon this point; there is more coal moving at this time of year than ever before, but the situation in regard to coal cars is that as of June 20, 1942, there was only a surplus of 4,724 gondola cars and 3,875 hopper cars. These figures are taken from the carloading statements of the Association of American Railroads for the week ended Saturday, June 20. Anybody familiar with transportation and car service knows that with such a situation in June there will be a terrific shortage of opentop cars next October.

I discussed this matter with Director Eastman, of the Office of Defense Transportation, and embodied that discussion with him in a speech I made on the floor of the Senate, June 12, if I remember correctly the date.

Mr. Eastman told me—or at least I think it was Mr. Eastman who told me that there would be 16,000 cars delivered to the railroads this quarter, if my memory serves me right, of which 12,000 would be coal cars, but 12,000 are not enough if the present car supply of the railroads, I mean of open-top cars, are being used to as near capacity as this report shows. This is a serious situation.

This subcommittee does not want the coal people to come in and tell about their merits and what good work they are doing to win the war, when all we ask is that cars be loaded and unloaded promptly. So we are going to hold this record open to see how well the promises

made are kept. Then, if every other means fails, this resolution will be brought to the full committee for its consideration and such action as the full committee may see fit to take.

Let me explain that, naturally, we are all busy, but it is the plan to run these hearings, beginning at 10:30 every morning, as long in the day as we can. Senator Tunnell and I have an ear cocked toward the Senate floor where a number of important matters are coming up for consideration

Senator TUNNELL. And the Senate convenes at 11 o'clock this morning.

.

Senator REED. That is right. We will sit as long as we can each day. When we conclude this morning and recess we will try to make a program so as to adjust these hearings to suit everybody's convenience. After we have heard Chairman Aitchison, we may ask the railroads to defer their discussion of the subject so as to permit outof-town folks to be heard next. The subcommittee desires to meet the convenience of everybody just as far as we can.

As the author of this resolution I wish to say I am very much in earnest about this subject. Primarily the resolution is for the purpose of doing just what we are doing today, bringing this acute transportation situation to the attention of the country, in an earnest. effort to aid in an improvement of the service.

I would ask the railroads and I see Mr. Kendall back there so I will address my question to him.

Mr. Kendall, I do not know how close contact you have with this matter as chairman of the car-service division of the Association of American Railroads. How close contact has your division with the efficiency boards and the various regional shippers' boards?

Mr. KENDALL. We have weekly reports from them.

Senator REED. I did not know that, but hoped you might have. Would you be good enough, either yourself or Mr. Clark, or Mr. Betts, to make those reports available to the subcommittee? We want to see what is being done through the voluntary efforts of the shippers, and wish to encourage that work to the limit.

Mr. KENDALL. Very well.

Senator REED. Chairman Aitchison is here at the invitation of the subcommittee and we will now be glad to hear him.

STATEMENT OF CLYDE B. AITCHISON, CHAIRMAN, INTERSTATE COMMERCE COMMISSION, WASHINGTON, D. C.

Mr. AITCHISON. I will deal with the first four matters mentioned. in the letter from Senator Johnson, which letter has been placed in your record. I will be followed by Commissioner Johnson, who will deal with the remaining matters, and Director King of the Bureau of Service of the Commission.

The Commission, through its legislative committee, expressed its views with respect to the above resolution in a letter dated May 26, 1942, to Senator Wheeler, chairman of the Interstate Commerce Committee.

By letter of June 22, 1942, Senator Johnson, chairman of the subcommittee appointed by Senator Wheeler to consider this resolution, requested further information as to the following matters:

A. The history of demurrage charges.

B. Whether such charges are regarded in the light of revenue or as a penalty for not unloading within a specified time.

C. The basis upon which "free time" is fixed.

D. The basis, if any, of the amount of charges imposed.

E. The lines of commodities in which the greatest delays in unloading have occurred.

F. The destinations at which most numerous delays occur.

G. The feasibility of imposing extra demurrage charges during seasons when a particular type of car is in the most demand.

Dealing first with those specific matters, in the order named, the following may be stated:

A. The history of demurrage charges: "Demurrage" is a term used with respect to both marine and rail transport. In marine transportation, it is a charge made by the owner or operator of a vessel for the detention of the vessel at dock for loading or discharge of cargo beyond the number of lay days provided for in the charter party or contract of affreightment.

In railroad transportation it is a charge, partly in the nature of compensation for use of the cars and partly as a penalty, charged to shippers and consignees by railroad carriers for the detention of cars for loading or for unloading beyond the period of free time allowed for these purposes, or for the detention of cars en route awaiting diversion or reconsignment orders.

Demurrage charges are now subject to regulation by the Commission within the jurisdictional limits of section 1 of the Interstate Commerce Act (Turner, Dennis & Lowry Lbr. Co. v. Chicago, M. & St. P. Ry. Co., 271 U. S. 259). They apply to private cars as well as to railroad-owned cars when such private cars are in railroad service (Procter & Gamble Co. v. United States, 225 U. S. 282).

The carrier's common-law duty to transport includes affording the shipper a reasonable time within which to load or unload carload freight. After the lapse of such time referred to in the demurrage tariffs as "free time," shippers have no inherent right to hold freight in the cars. For any such detention and use of cars by shippers for their own purposes or their own account demurrage charges are assessed, as separate and distinct from charges for the actual transportation. As previously stated, demurrage, in maritime law, originally represented damage to the carrier for the shipper's detention of a vessel but, as applied to railroad transportation, has long been recognized as appropriately being for the purpose not merely of compensating the carrier for the use of the cars and tracks but also of increasing car efficiency, which latter purpose is important to the public interest and becomes particularly so in periods of traffic congestion. (See T. M. Kehoe & Co. v. Charleston & W. C. R. Co., 11 I. C. C. 166; Investigation and Suspension Dockets 83 and 83-A, 25 I. C. C. 314; American Wholesale Lumber Asso. v. Director General, 66 I. C. C. 393; Balfour, Guthrie & Co. v. Chicago, M., St. P. & P. R. Co., 235 I. C. C. 437; Chrysler Corp. v. New York Central R. Co., 234 I. C. C. 755; Pennsylvania R. Co. v. Kittaning Iron & Steel Mfg. Co., 253 U. S. 319.)

Demurrage appears to have been first applied to the detention of railroad cars in the early 1860's. Even before the Civil War the New York & Harlem Railroad Co. applied a charge of $1 a day running 48 hours after notice of arrival of the cars (Crommelin v. New York & H.R. Co., 4 Keyes 90). The Pennsylvania Railroad during the Civil War

assessed $5 per car per day for detention of cars beyond a 24-hour freetime period granted for loading and unloading. Other carriers from time to time made individual efforts to enforce payment of demurrage. Demurrage rules and charges were not always published in tariff form but were published in freight classifications, car-service rules, rate schedules, special circulars, so-called billing instructions, or bills of lading forms.

Because of keen competition between carriers, the lack of uniformity in rules and charges, and the practice of rebating (see American Warehousemen's Assn. v. Illinois Central R. Co., 7 I. C. C. 556, at p. 562), the situation became chaotic. In an attempt to remedy that situation numerous "car service associations" were organized, the first appearing in Omaha in 1887, each, however, having its own code of rules. In some of the early cases the question was whether the railways could use these associations as agents, or ratify their determinations. The courts sustained their use. Prior to 1887 it was the practice of many shippers, particuarly at important terminals, to hold cars as long as suited their convenience. Such use of cars as warehouses tended to cause congestion of terminals, deprived a carrier of equipment needed to meet the constant demands of other shippers, and increased its cost of operation. Primarily to stimulate the prompt release of cars, which would facilitate traffic in general and be a practicable solution of the evil, demurrage was assessed. In 1887, when the Commission was created, such demurrage rules as existed were confined largely to the important terminals.

To date the Interstate Commerce Commission has issued 566 reports which dealt with some aspect of railway-car demurrage. The first of these, Riddle, Dean & Co. v. Pittsburgh & Lake Erie R. R. Co. (1 I. C. C. 374, 391-2), was heard in December 1887, and was decided on January 14, 1888.

It there appeared that the Pittsburgh & Lake Erie during a period of car shortage had

done all in its power to enforce the prompt unloading of these cars (i. e., loads of ore, limestone, and iron, also coal and coke) by making a rule that 24 hours of daylight, and no more, should be allowed for the unloading of its cars, and when more than this was taken, unless good excuse was shown for it on the part of the consignee, demurrage was charged.

In addition to using all means it could to have its cars unloaded promptly:

It frequently went to the extent of shutting off mines and mills because they did not load and unload its cars promptly.

These efforts were held to be sufficient excuse for a preference or prejudice in favor of such shippers, as against the complainants-owners of coal mines who were not obtaining cars to meet their orders for placement.

The Railroad Commissioners of Iowa, a few months before, December 5, 1887, had decided that the rule of the Chicago & North Western Railroad Co. imposing a charge of $3 per day after 24 hours was reasonable. The commissioners were confronted with an extreme situation: Shippers were facing financial dishonor because the company was unable to furnish them cars, and this "affected businessmen, farmers, and all classes seriously. Hundreds of complaints were being pressed based on this situation. The sole question was stated