senger traffic, freight demand, merger studies, railroad costs and transportation coordination.

He told the Congressmen that USDC's research would be handled by college and university experts, independent researchers and consulting firms-the people who, by and large, have been involved in government's large scale research efforts since World War II for the so-called sexy R&D industries-defense, aerospace, electronics, etc. Railroad men don't evidently figure to be consulted very much.

A look at the record.—In Boston late last year, however, New York Central's President A. E. Perlman put the industry's R&D record right on the line.

Hitting right at the bright image of competitors with whom railroads are often compared, Perlman noted: "Some individual railroads are spending more for research than all other forms of transportation put together." Railroads generally, and NYC particularly, said Perlman, are out to abolish outmoded theories and methods as a necessary preliminary to proper use of advanced technology already available.

Perlman's point, of course, is known to all insiders in this R&D discussion. Generally speaking, highway and waterway operators do no research whatever. Airline research is negligible. Government promotion cash and policies have given airlines and waterway operators a $23-billion boost since World War II. Highway investment, of crucial importance to truckers, has cost Uncle Sam, state and local governments more than $175 billion in the same period.

Railroads during that period got no handouts from the public purse to finance their technological progress. The industry, operating on its own cash, and under the additional handicap of restrictive regulation, invested more than $21 billion in betterments since World War II. Additionally, railroads and their suppliers have put up an estimated $480 million for R&D activities since World War II. That, too, was industry cash, not taxpayers' dollars.

JOHN D. MITROS.

RAILROAD RESEARCH-WHAT THE EXPERTS SAY ABOUT THE BOOM IN R&D

PROGRAMS

Interesting aspects of the state of industry research and development come through in the comments of leaders on both the railroad and supply company sides of the matter.

Santa Fe's president and chief executive officer. E. S. Marsh, points out the basic absurdity of accusing the industry of neglecting R&D: "I think railroads have adopted practically every new development that has come on the scene. There have been limitations, of course, due to the funds that have been available for R&D in an industry that has suffered from a meager rate of return due to inequality in competitive opportunity under our national transportation policy. "More emphasis is being placed upon R&D today than at any time in the history of the industry. Intensive competitive conditions requiring more efficient service to shippers and constantly rising costs, necessitating new measures to hold down costs of operations, dictate a continuing and increased emphasis on all R&D functions."

PUBLIC RELATIONS ASPECTS OF R&D ARE STRESSED

Public relations problem. Henry A. Correa, executive vice president of ACF, assesses the R&D problem of the industry as one of public misinformation. "When growth industries stand up to be counted for their technological advances, the railroads and their suppliers are often overlooked because their improvements aren't readily apparent to John Q. Public. The end products look much the same as their predecessors even through there is no comparison in performance. Some examples are 100- versus 70-ton trucks, roller versus solid bearings, and welded versus section rail.

"Other advances include faster loading and unloading hardware, the greater capacities of equipment and equipment's ability to carry wider varieties of ladings in custom style. All these betterments are immediately recognized by business to serve notice that the railroad indusry is prepared for the challenges of the 21st century. The record bears this out."

Jervis Langdon, Jr., chairman and president of the Rock Island, assesses the R&D situation this way: "We are engaged in research of various kinds in the

broadest sense of the term. Currently, we are examining every facet of our business, looking toward the adoption of new tools and techniques to improve operations and increase traffic.

'Research is, of course, a continuing and cooperative process, particularly in an industry like ours. While it might be felt that American railroads do not conduct as much research as they should, with the advent of mass-producted cars and locomotives much of the impetus for research has shifted from the railroads, which formerly designed their own equipment, to the builders. Further, although it is difficult to establish the optimum level of research which could be supported in total, the combined efforts of railroads, their suppliers and various organizations produce a surprisingly high output of innovation and invention." K. L. Selby, president of the National Castings Group of Midland-Ross Corp. like ACF's Correa, thinks the industry has a public relations problem in the R&D image it projects. "It's hard to demonstrate the real vigor of rail industry R&D. It has what I call an iceberg factor-for each visible betterment, eight or nine betterments lie below the surface. Nearly everyone is aware of dramatic changes, like steam power to diesels. Some even know about the giant hopers and tank cars, the microwave and computers.

"Really knowledgeable observers know today's railroads are as little like railroads of 30 years ago as a DC-8 is like DC-3."

Rail R&D money is productive.-Efficient use of R&D funds in the industry is a plus cited by National Casting's Vice President and General Manager L. G. Blackmon: "These are private funds which have proved highly productive in end results. I estimate that a dollar spent in rail industry R&D may go as far as $3 or $4 spent for R&D on aircraft or electronic R&D supported by government funds." Blackmon reasons his ratio this way: "Industry R&D money has a strong demand placed upon it for practical results in restricted time. Private industry, dependent upon profitable operations, has not got the freedom to fail." R&D emphasis is obvious

"Increased emphasis on R&D is evident throughout the transportation industry," says W. Ashley Gray, Jr., president of General Steel Industries, Inc., and vice chairman of the Railway Progress Institute. "There are many examples of the industry's efforts-from specialized freight cars to new types of trucks and suspension systems, and attractive modern rapid transit cars, consumer-designed with the passenger in mind. GSI's $1-million Research Center, recently opened at Granite City, Ill., is indicative of our confidence in the continuing development of the railroads through technological evolution.

"The historic work now under way at the BART test track and the progressive design and engineering being undertaken in connection with the Northeast Corridor high-speed train demonstration mark a new era of rail technology that will be felt throughout the industry. Modernization of the Port Authority TransHudson system with its new all-aluminum cars, the forthcoming stainless steelcomposite vehicles we are building for the New York City Transit Authority and, of course, the dramatically modern BART car are proof that our industrysupplier and operator alike-is moving swiftly ahead."

J. J. Wright, vice president and director of New York Central's Cleveland Technical Center, also makes this point: "Control of railroad research has always been tighter than in other industries. It's tough for the researchers-but good for over-all programs."

Long-range outlook bright.-James J. Conway, executive vice president, Evans Products Transportation Equipment Group, attributes his firm's prominent position in its field to continued emphasis on R&D. "To show how bullish we are about the industry's long-range prospects, we're building a new research facility right alongside our already considerable research facilities at Plymouth, Mich. Our new building will be alongside our test track and will be mainly used for designing, planning and constructing prototype freight cars and devices for test and evaluation.

"We're also backing up the building with an R&D budget of a million dollars plus a half-million for engineering back-up."

The complex nature of R&D efforts on railroads is aptly outlined by C&O President G. S. DeVine. "Although C&O-B&O has a department labeled research services, R&D is not centralized. It is deliberately diffused and encouraged in all departmental areas. There are research groups such as cost and revenue research, market research and so forth. The activities of these groups may not be comprehended within the scope of research in other industries and even by other railroads."

Another research center.-George L. Green, vice president and general manager of Pullman-Standard, points out the importance of R&D this way: "PullmanStandard was the first major supplier to set up a full-time R&D lab after World War II. We feel that technical know-how resulting from our consistent R&D programs is the only assurance we have of Pullman-Standard's future. We continuously work on car designs and innovations to help solve total distribution and material-handling problem.

"The ability of P-S to sharply increase production in 1964 and 1965 stemmed directly from the company's policy of maintaining and improving facilities and also intensifying R&D efforts during slack carbuilding times. In fact, our faith in the railroads as a growth industry prompted us to maintain and modernize plant capacity when others closed shops. Part of our $4.5-million improvement program includes construction of a new technical center at Hammond, Ind., which we plan to open in a few months. We, who already have the largest R&D department in the carbuilding field, will be able to greatly expand our R&D work."

R&D story has to be told.-Milwaukee President W. J. Quinn notes that it is of great importance that the industry's R&D record be set straight. "The content of such effort is of fundamental significance to all of us. In addition to what the railroads are doing, the R&D carried on by the suppliers of basic materials is supported in whole or in part by railroads through purchases. This is an aspect of the subject that has never been completely explored."

D. C. Howell, vice president and general manager of Union Switch & Signal, describes the rising requirement for innovation already coming from carriers as railroads push systems research efforts. "The R&D being conducted by the railroads themselves in the fields of total systems and operations research is already demanding support from suppliers in dozens of peripheral areas.

Stern R&D demands ahead. The pressure of mergers not only intensifies the need for the railroads to develop more efficient operating methods, but also puts the pressure on the suppliers to keep up with the railroads. Competition between staffs of merged roads actually results in more efficient operations and will make for some stern demands upon suppliers to come up with more efficient, more economical hardware."

"THE INDUSTRY IS NOW IN A REVOLUTION"

R. L. Duchossois, president of Thrall Car Manufacturing Co., does not feel the rail industry and its suppliers have neglected R&D in time past. "Because of poor times, we may have been limited in funds—but that did not stop our thinking, planning and engineering.

"The industry is now in a revolution. Entirely new concepts are being used. R&D is a key part of all thinking in the railway supply industry. There will be more and more money spent in this area. It is my feeling the industry will not set aside a given amount for this effort-but will spend whatever amount is necessary."

D. W. Brosnan, president of the Southern, citing the fact that the rail industry spends far more money for R&D than any other segment of the transportation industry, says, "It is a regrettable fact that our industry has a poor public image in this area. Nothing could be further from the truth."

R&D yes: Benefits no.—“Acutally, one of the bright spots in our industry has been the rapidity with which we have embraced technological improvements," adds the Southern president. "Our principal difficulty has been in extending the benefits derived from these technological improvements to our customers in the form of reduced pricing. Southern's effort in the grain rate case is an outstanding example of our inability to pass on to our customers savings generated through technological improvements by reason of restrictive regulation from governmental agencies."

Competing with government

A supplier with experience of somewhat the same sort is R. A. Williams, chairman of the board of the Stanray Corp., who describes how Stanray fared competing with government R&D funds: "In 1959, working with several major airlines, we developed the Jetway passenger loading bridge for aircraft terminals. We spent about a half-million dollars during the first years of the program and substantial expenditures continue to be made to improve the device and meet the needs of new aircraft. It has been successful-more than 300 units have been installed in major U.S. airports.

"When the government projected the building of Dulles International Airport near Washington, widely billed as the most advanced such facility, government sponsored another concept for handling passengers-the mobile lounge. The government agency responsible for the design and building of Dulles awarded a development contract for the prototype mobile lounge, reportedly costing taxpayers $750,000, and then awarded contracts for 20 such units at a reported price of $232,000 each. It is hardly necessary to debate the relative value of each device. The mobile lounges at Dulles are the only such devices in usewhereas airlines have all elected our device for passenger loading and unloading."

Williams goes on to describe how Stanray was hurt in yet another fashion when it attempted to market its device in Europe. "Foreign airline operators frequently said the mobile lounge must be better because it was the choice for what was touted as the world's most modern airport!"

Unions interested, too.-R&D activity is not confined to railroad and supply company leaders. Union leaders are also beginning to reflect increased aware ness of the connection between viable technology and the future security of their memberships.

Charles Luna, president of the Brotherhood of Railroad Trainmen, for example, has kept close tabs on technological and systems research unfolding in the industry.

"We are convinced that the industry has entered a dynamic growth state and that change will be the order of things from now on out," says Luna. "We have sponsored seminars for leading academicians, scientists and government people to probe into the nature and scope of that future. We are also investing money in research to determine the capabilities of our members and to structure programs in our union so that the union and its members will be ready for the future."

F. L. Bredimus, president of the transportation equipment division, Syming ton Wayne Corp., says, "The past 30 years provide abundant evidence of strong. continuing pursuit of excellence by the railroad industry and its suppliers.

"Many new and sophisticated equipment and operating concepts can be traced to railroad suppliers. The record of the industry stands well in comparison with other industries similar in scope and nature. Regrettably, the industry's preoccupation with getting the job done often leads to neglect in publicizing its research and development activities."

Economic roots.-One industry observer, irritated with what he feels is the uninformed sniping that goes on at industry R&D performance, sort of sums up the frustration felt by many industry leaders: "The name of this game is still economics. If private investors won't put up more cash for rail industry R&D, it is not because they're stupid or because they're not greedy enough to gamble for the returns that restructured railroads are bound to generate handling the traffic practically all the eggheads say they'll be handling in a decade or two. "Private investment in the last three decades has been understandably reluctant. Investors have been mindful that railroads play their competitive poker with three-card hands—while their trucker, barge and airline competitors hold five-card hands. The two extra cards held by rail competition are government promotion policies and the billions they get in support facilities. Even the game up-give 3-card hands to the competition or 5-card hands to the railroadsand you'll see investors lined up with money in both hands to support rail R&D moves."

Senator WILLIAMS. Thank you very much. We will recess now until 2 o'clock. We will hear from Mr. Jack Conway, AFL-CIO. (Whereupon, the hearing recessed for lunch at 11:55, to reconvene at 2 p.m., that same day.)

AFTERNOON SESSION

Senator WILLIAMS. We will bring this subcommittee now to order. Senator Sparkman is sorry he can't be here this afternoon.

We are honored to have Jack Conway, AFL-CIO here. Mr. Conway, do you want to come forward? You are a man of many mis

sions—and we welcome you before any of our committees here at the Senate from migratory farmworker problems in California 4 or 5 weeks ago

Mr. CONWAY. Five weeks ago.

Senator WILLIAMS (continuing). To problems of our people who live in cities and suburbs.

STATEMENT OF JACK CONWAY, EXECUTIVE DIRECTOR, INDUSTRIAL UNION DEPARTMENT, AFL-CIO; ACCOMPANIED BY JACK BEIDLER, LEGISLATIVE DIRECTOR, AND MARVIN CAPLAN, LEGISLATIVE REPRESENTATIVE

Mr. CONWAY. I hope things move as fast, Mr. Chairman, following this set of hearings, as they did following your last set of hearings in California.

Senator WILLIAMS. Let me explain that it was within 10 days after our hearings in California, although we weren't out there to settle any strike. There were developments, however, and I think our committee's appearance had some effect on the situation there. That was the Labor Committee, and I know some of the major industries both private and publicly acknowledged the contribution and the testimony the AFL-CIO made to the beginning of settlements in an area where it looked as though it might go years before settlement.

Mr. CONWAY. That is right. The progress is continuing and we hope to have some additional developments in the next few days.

Mr. Chairman, my name is Jack Conway, and I am the executive director of the Industrial Union Department of the AFL-CIO. I am accompanied here today by Jack Beidler, who is the legislative director of the IUD, and by Marvin Caplan, who is a legislative representative of the Industrial Union Department.

I have a prepared statement, Mr. Chairman, which I would like to submit for the record and forgo the reading of the statement, and cover in my remarks, informally, some of my reactions to the current situation, the demonstration cities bill in particular, and the philosophy behind it.

First of all, may I say, President Walter Reuther of the Industrial Union Department and the United Automobile Workers would have preferred to testify himself during these hearings, because he has an extraordinary interest in this particular area of activity of our Federal Government, not only nationally but locally in his own city of Detroit. He served as a member of the President's task force during the months of October, November, and December, where much of the background work on the demonstration cities legislation and the metropolitan areas demonstrations evolved. As I say, he would have preferred to be able to come and testify himself. Except for the fact that he is deeply involved in the preparations for the UAW convention, which is imminent, he would have been here.

I would like to say that President Johnson's identification of the cities of America as being "time bombs" is about as accurate a reflection of the situation around the country as I can possibly state. In the course of my work with the labor movement, I find myself frequently drawn to the central cities of this country, large, medium size,