say it publicly as any other way and I would be willing to leave this entirely in your hands. I must say, I only have a little over 2 years, and I want to see this industry do well. I would like to leave it in a good healthy condition. It is all I have cared about all my life. And we are in the wonderful position that we can sit on the sidelines, and if you put in more penalty per diem, it doesn't make a damned bit of difference to us. Maybe it gives us a little more money. It can't penalize us. And I can sit here and tell you quite frankly and objectively what I think is for the best in the industry, because I have no ax to grind. And I know that you work the same way. And I would be perfectly happy to leave it in your hands.

The CHAIRMAN. Well, I thank you for the high compliment. And permit me to take the stage and say that I have enjoyed the many years of association in working with the industry to try to improve it. And I am happy to say that, as you have just indicated, there is a wonderful opportunity. I think the industry has improved greatly in the last few years. I, too, want to see it grow, become strong, and meet its obligations and its responsibilities to the American public. I would like to see something done about this one problem. I hope somebody will come up with an idea that everybody will go along with.

Mr. Watson?

Mr. WATSON. I hate to interrupt on this high note of commendation and proper commendation about our chairman, who is soon retiring. He deserves it all.

But I might make one or two comments and then ask you a question. As the chairman, and I am sure others, I am somewhat surprised, to say the least, by some of the comments made by our leaders of one of the giant industries of this country. I mean in reference to earlier comments by some of you gentlemen against others in your industry, such as, "good and bad guys, and a lot of bunk, and a lot of hogwash and false figures," and all of that. Really, it quite surprised me to hear such statements made. And I agree with your comment, that what is needed is some statesmanship on the part of the railroad leadership. And the thought occurred to me that if you gentlemen make such statements in public here in reference to one another, I can readily understand that you can get nowhere in private. It would be difficult to imagine what you would say in private. But be that as it may, we have this problem that is thrust in our hands because of the failure on somebody's part to act-and it might have been a failure on everybody's part to act.

Statesmanship includes a matter of service to the State and the public rather than service to yourself. And it is apparent that some have been motivated primarily by selfish interest rather than State interest. And that is a proper part but not the sole motivation of good business. One final question, perhaps you gave these figures earlier, and I apologize for being called away from the committee for a few minutes how many cars do you have, freight cars, do you have on the New York Central?

Mr. PERLMAN. 108,000.

Mr. WATSON. 108,000; how does that compare with 10 years ago?
Mr. PERLMAN. It is way below 10 years ago.
Mr. WATSON. A lot less than 10 years ago?
Mr. PERLMAN. Oh, yes.

Mr. WATSON. Help me to understand this. the number of New York Central owned cars?

Why the reduction in
Is it because of a lack

of business, or is it because you could use other freight cars cheaper than you could provide your own?

Mr. PERLMAN. That is what I tried to explain in the testimony. And I might repeat a few of the figures, if you don't mind.

In the Senate bill it showed that, compared to 1926, in 1964 the freight car ownership was only 60 percent of what it had been in 1926, the National Freight Car Forwarders. But the net ton miles handled by the railroads was 148 percent of what it was. It was the greatest in the history of railroad industry in 1964, with that number of cars. And that is because we have done systems engineering work on every type-it is just the thing you asked this morning: "Why don't you do this? Why don't you schedule these things?" We have a communications network so that we can reach into every town along our railroad, and in a matter of two hundred and fifty one-thousandths of a second, a man sitting at a television set, a closed television set in New York can tell a shipper that calls up where any freight car on the New York Central in which he is interested is located.

Mr. WATSON. Then do you agree with me that the problem is not so much one of supply, as the distribution of this supply?

Mr. PERLMAN. Yes, sir. What I pointed out was that with a FelxiVan, the 40-foot van in place of the 40-foot boxcar, we are getting five times the utilization out of that van, because we run these trains at passenger train speeds, and when they come to these terminals that are congested a motor tractor can pull that right off and take it where it has to go without all this switching around these congested terminals. So out of one Flexi-Van we are getting the equivalent of five boxcars. In these unit coal trains that let us mothball the only coal pipeline built, we load the cars on the run, they are unloaded on the run, they are never switched out of that one train, you have an integral train, and as a result, with those 100-ton cars instead of the 55-ton cars and the others, we are getting three turnarounds a week with these cars, where we used to be getting maybe two turnarounds a month. And so you just can't compare the number of cars with the capacity and utilization. We are running this Flexi-Van fleet at practically the same schedule as a Twentieth Century Limited, freight cars. This was unheard of 20 years ago.

These are the techniques, the systems engineering studies. In one, a trilevel freight car handles 15 automobiles, whereas the 50-foot boxcar only handled 5. But that only counts as one car, although it handles three times. And we run those on passenger train schedules even empty, back and forth. And we keep people up at night unloading them because we don't want them to sit around an extra day, where they are going, we want the cars right back.

Mr. WATSON. Then your position is that although your number of cars has decreased over the last 10 years, or 20 years, the volume of cars, so far as their freight capacity, has kept pace with the demands of the users of the railroad?

Mr. PERIMAN. It has exceeded the demands of the users.

Mr. WATSON. It has exceeded them?

Mr. PERIMAN. Yes, sir. I testified that we own 108,000 cars in round figures, and that the figures show that for the first 9 months this year, which are the last figures we have-and they are official ICC figures that we only averaged 103,000 a day on our line. So 5,000 were in use on the other railroads. And this is because, as I explained, that the Flexi-Van and the trilevel automobile car-the trilevel automobile car has released a 50-foot double boxcar which is of no use to us any more, and these boxcars are sent out to carry this plywood out West that the private industry wants carried. And our freight cars that were released because of these new automobile cars are 10 percent now of a fleet handling this plywood. They are not western cars, they are cars that are obsolete as far as we are concerned today. The 40foot boxcar we wouldn't buy under any condition any more, we don't care whether this bill or any other bill is passed, we are buying these tremendous Big John hopper cars for grain. You don't get the loss and damage and contamination and all of these things. We are trying to be moderate. And we have to run these fleets because of the high cost of these cars just like passenger trains are run. They can't sit around. We can't afford to have them sit around. And while we were losing $3 million out of pocket on our grain business last year, we have turned it into a profit this year. We are handling a million automobiles this year that 3 years ago were going by highway or by water. We are taking cement away from the highway by these pressure differential cars.

These are the things we are doing. And that is why I say this bill isn't the answer. It is just what you were trying to put your finger on this morning. It is systems engineering and market research. And in our market research we don't have salemen, we have industrial engineers doing that. We have a man that worked out his life in the chemical industry that knows what the problems are, what equipment best serves them, what service they need, how much they can afford to pay for the transportation before they decentralize their industry, all these things. It isn't what a truck can do it for versus what we can do it for, because we may charge way below the truck rate. But this fellow will still be centralized because of the high cost of transportation and we will lose that business even though we are the cheapest form for that distance.

All these things are the things we are trying to do. We are spending $10 million a year on technical research and market research and on cybernetics. And we think that if the whole country's cars were handled on a systems basis like that, it would make a tremendous difference in the utilization of the fleet.

Mr. WATSON. Thank you, Mr. Perlman.

We have other witnesses. But I want to say this. I appreciate your testimony. And I want further to commend you for the genius that you have applied, and others, to the development of this great industry, and for it perfecting the more modern means of freight cars and such as that.

It is lamentable that men of your genius cannot reconcile this little problem and you have to turn it over to those who are sitting on this committee. And I hope you will help us, study it more and give us the benefit of your study.

Mr. PERLMAN. If I had your patience I could do better. But the trouble is I don't.

The CHAIRMAN. Mr. Perlman, thank you very much. We appreciate your presence here.

(The following tables were subsequently submitted by Mr. Miller, Association of American Railroads:)

Revenue freight cars owned or leased by railroads and private car lines,

July 1, 1965

* Private cars leased to railroads, operated with private marks, but included in "owned and leased”— per CS-11-1, as of July 1965.

This total includes 55,478 refrigerator cars owned by railroad owned and controlled refrigerator car lines. Source: Class I railroad data from Car Service Division Reports. Other railroad and private car line data from July 1965 Official Railway Equipment Register and special survey.

54-899-6512

3 Average carrying capacity 56.94 tons.