Mr. KELLER. I have some charts to show briefly that wages go up and prices come down, and that that has been happening over the years, and I would like to introduce these tables, and I would not be unhappy if you would incorporate the charts in the record. Senator TUNNELL. Let them be incorporated. Of course, some of these things we cannot get into the record, probably, when it comes to the printed record, but we will have to do the best we can. (The charts referred to appear on the pages following.) Mr. KELLER. Dr. Parmalee told you in this industry we have 265,000 workers who would be affected by a 65-cent minimum, 476,000 by 70 cents, and 475,000 by 75 cents. Mr. Parmalee's figures, while I always find them interesting, I seldom can agree Senator TUNNELL. The same ones would be counted three times? Mr. KELLER. Yes, sir. Now, he pointed out that in order to give everybody a 65-cent wage who is not getting it would take $34,000,000; $75,800,000 to bring everybody up to 70 cents, and $127,000,000 to bring everybody up to 75 cents who is not getting it in the railroad industry. Now, let me take a look at it in its relative importance. The class I railroads' pay roll in 1944 was a little better than $3,833,000,000. Therefore, the $33,200,000 that would be required to increase that pay roll enough to pay 65 cents to everybody who does not get it would increase the pay roll by less than 1 percent, or 0.88; to raise it to 70 cents would increase the pay roll 1.95 percent, and to increase everybody to 75 cents would increase the pay roll 3.28 percent. But actually the railroads could have increased their minimum rates for everybody in the industry up to 75 cents without having one red cent from their own operating income; they could have done that by using a very small portion of their excess profits. They had more than $800,000,000 excess profits in 1943, and in 1944 they had $1,017,649,000 in excess profits. Senator SMITH. Are you speaking of excess profits before taxes? Mr. KELLER. I am speaking about the excess profits paid in as taxes. With 3.36 percent of that excess profit, they could have taken care of the 65 cents. Senator SMITH. Would the Government let them? Mr. KELLER. If they had been paid, it would have been part of their operating expense and it would have come out automatically. Senator SMITH. I realize that, but the thing I want to get at is that prior to this period, prior to the big bulge because of the war, I was led to believe railroads were in bad financial position, and that after the war, since they would be in competition with motor vehicles and airplanes they would perhaps be in the same situation they were in 1936, 1937, and 1938. I am not trying to defend them, but if the war-bulged figures, they are not the right figures to show what they might have done. you take Mr. KELLER. Having lived with the railroads for all these years, we know they have a sharp pencil. When things change they are very good at putting things down. Everybody who wants to deal with things fairly, and not be a professional mourner, anticipates a lot of business for the railroad industry for qute a few years to come. The war is over for some industries, but we are right in the middle of the war as far as the railroad industry is concerned, bringing people back home, and even when the factories are through with reconversion we will still be busy. INDEXES OF PRICES, HOURLY EARNINGS, 1923 100 WHOLESALE PRICES 80 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 UNITED STATES DEPARTMENT OF LABOR BUREAU OF LABOR STATISTICS CHART E INDEXES OF PRICES, HOURLY EARNINGS, UNIT LABOR COST, AND PRODUCTIVITY COTTON GOODS SOURCE: 1923 1924 1925 1926 1927 1928 1929 1930 UNITED STATES DEPARTMENT OF LABOR BUREAU OF LABOR STATISTICS CHART F INDEX 200 180 160 INDEXES OF PRICES, HOURLY EARNINGS, 140 SOURCE: Then we will pick up the backlog all of the way from toothpicks to automobiles. Our job is to keep up, and our industry faces a terrible problem to handle the business which is being forced on us, and it looks like that will be a problem we will have for several years. As we see it, there is not any probem of the rairoads' ability to pay. The Interstate Commerce Commission felt that way, too, because when we got an increase in 1942, the railroads rushed to the ICC and demanded an increase in freight and passenger rates to take care of the increased wage rates. That was canceled and deferred by the ICC two or three times because they found the railroads did not need it. I do not know whether it has been wiped out entirely, or just deferred again. But they got increased passenger and freight rates that the ICC later discovered they did not need, and they have been deferred. Incidentally, the portion of the railroad revenue dollar going to the railroad industry has been diminishing. In 1941 labor got 50 cents, and now labor gets 40 cents, and everybody else gets the rest of it. The amounts going to labor has declined 18.6 percent. Senator ELLENDER. What has caused that; is it not labor-saving devices? Mr. KELLER. That has had a lot to do with it. Senator ELLENDER. Has that not been the main reason? Mr. KELLER. We like to think we have been a little more efficient ourselves, too, and we think we have. Senator TUNNELL. The Government has gotten a good share of that in taxes. Mr. KELLER. Yes, sir, in the last few years they got more than a billion dollars out of the industry. Senator SMITH. I do not see why the railroads could not have given that increase to the employees if they could have deducted it from their taxes, unless they feared it would set levels they could not keep up when the let-up came after the war. I think probably they were afraid of that. Mr. KELLER. Yes. When you enacted the Transportation Act of 1940, you declared a railroad policy, and you declared it should be the policy of the railroads to pay good wages. Wages are operating expenses. Congress said good wages should be paid, and the ICC was directed to fix freight and passenger rates that would meet proper expenses. So, if we do not get good wages, we are not measuring up to the declared policy of Congress, but are subsidizing an industry by gift of monev which was meant to make up the difference between low and reasonable wages. Senator TUNNELL. Thank you. Mr. KELLER. Thank you, very much. Senator TUNNELL. Our next list of witnesses is for Thursday. I have not talked to Senator Ellender, but Senator Smith and I both think we cannot be here next week. Senator SMITH. No; next week I cannot be here. Senator TUNNELL. So I would like to see us finish this week if possible. Senator SMITII. We have Thursday and Friday. (Discussion off the record.) |