becomes a different product. It is not the grade of lumber that the fellow ordered, after a while. It has got to move, and this has a lot to do with it. This is affecting our balance of trade out there, because of the lack of cars, and this is a local haul. You can use pretty near any kind of car for lumber. Gondola, or a regular old freight car, or anything, and the railroads realize this, but it is important.

I am just hopeful that we can make a start. That's all I am pleading. We have some problems with it, and the ICC would be the last to say we don't have problems.

Mr. PICKLE. That's all, Mr. Chairman.

Senator MAGNUSON. Well, Mr. Chairman, I won't take up any more of your time.

The CHAIRMAN. Any other members of the committee have any questions? Mr. Ronan, Mr. Williams, Mr. Satterfield?

Senator MAGNUSON. I thank you very, very much for giving me this time, and I want to express something on this hearing that is off the record.

(Discussion off the record.)

The CHAIRMAN. Thank you very much.

We also have with us another distinguished gentleman from the other body, Senator Carl Curtis. We welcome this opportunity to hear your views Senator.

STATEMENT OF HON. CARL T. CURTIS, U.S. SENATOR FROM THE STATE OF NEBRASKA

Senator CURTIS. Mr. Chairman, I am grateful for the opportunity to submit this endorsement of S. 1098 and similar House bills intended to relieve shortages of freight cars which annually create such problems in the Midwestern and Western sections of the United States.

I will not burden your committee's record with a mass of technical details. Those much more qualified than I will supply this information. You have available the extensive record of hearings by the Senate Commerce Committee, and I am confident your committee will study that record.

This problem, Mr. Chairman, is not one of recent origin. The Congress has been called upon to deal with it almost every year over a long period. The Interstate Commerce Commission has sought legislation of the sort now before you, in its effort to solve the problem. Presently, the ICC authority is limited; enactment of S. 1098 would broaden that authority, would give the ICC the tools with which to effectively cope with the situation.

There are two aspects of the boxcar shortage problem, Mr. Chairman. You will recall that I discussed both in my letter to you requesting that hearings be scheduled.

First is the alarming rate of decline in the country's boxcar supply; second is the inability of railroads owning cars to retain control of them and put them to beneficial use on their own lines, serving their own areas. Car service orders designed to promote efficient use of cars simply are stopgap measures. As the ICC has said

the service order technique does not add cars; it simply requires all shippers to share in this freight car poverty.

S. 1098, which I cosponsored, would encourage acquisition and maintenance by the railroads of adequate fleets of cars to meet the

needs of commerce and defense. It would also assure owning railroads fair compensation for the use of their cars by other lines, when they are not themselves in control of their own cars.

You will recall, Mr. Chairman, in my letter to you requesting these hearings I cited the testimony before the Senate committee of a midwestern railroad's representative who said a 2-year study by his railroad, covering 600 new boxcars, showed that the owning line had the use of these cars on its own lines only 12 percent of the time. In other words, other railroads were "renting" these cars 88 percent of the time, thus depriving shippers in the owning line's service area of their use.

Legislation now before you has the endorsement of the Interstate Commerce Commission and all other executive departments and agencies asked to comment, except the Department of Justice. That Department withheld comment because it is not directly affected. Permit me to quote just one brief paragraph from the Senate committee hearings, when ICC Chairman Charles A. Webb was the witness. Said Mr. Webb:

The Commission believes that in view of the recurring critical shortage of freight cars, it is imperative that ownership of such equipment be increased, and that it be maintained at a level capable of meeting the needs of the shipping public during normal times and at the same time providing a reasonably adequate supply during periods of emergency.

Concluding his statement, Chairman Webb told the Senate committee that "we urge early and favorable consideration of S. 1098." Interest in enactment of S. 1098 is not confined to governmental circles, Mr. Chairman. A special subcommittee of the Senate Committee on Commerce last spring scheduled a series of hearings outside Washington. These hearings were held at Denver, Colo.; Omaha, Nebr.; and Kansas City, Kans. It was my privilege to participate in the Omaha hearing at the invitation of Senator James Pearson of Kansas. I commend to your committee's attention the record of those hearings. The numerous statements and significant testimony presented at those hearings give a full understanding of the grassroots sentiment on this question.

These people live with the boxcar shortage as a part of their daily lives. They look to Congress for assistance in solving this problem. They are not seeking special favors; they simply ask for assistance with a problem that is beyond them, a problem which is putting a blight on my part of the country.

I appreciate your scheduling this hearing, Mr. Chairman, and I am confident that your committee will come to grips with the problem and favorably report the legislation before you.

The CHAIRMAN. Thank you, Senator. Your remarks are greatly appreciated. We will now welcome our colleague, the Honorable Dave Martin, who has sponsored similar legislation.

STATEMENT OF HON. DAVE MARTIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA

Mr. MARTIN. Mr. Chairman, my appearance before the Committee on Interstate and Foreign Commerce is in support of H.R. 2230, a bill which I introduced. This legislation is designed to alleviate and cure a serious transportation problem which recurs from time to time and which has plagued our Nation for many years.

The problem is a shortage of cars in our national railroad car fleet. While the shortage of cars may embrace different types of cars, my principal concern is with the plain boxcar which is the workhorse of the fleet. Replacement of this type has lagged behind other types and new construction has not been sufficient numerically to meet the needs of our commerce and industry.

In my part of the country, the plain boxcar is in great demand for shipment of our farmers' and ranchers' products. Nebraska is a great agricultural State. Every year our grain cannot be handled by the railroads simply because they cannot get enough of their own cars back on line to carry these grain shipments. As a consequence, we must resort to ground storage. This is needless waste. It results in excess handling, waste, and nonproductive labor.

Last year we were faced with the most serious shortage ever in Nebraska. The Interstate Commerce Commission has repeatedly warned that this condition was expected to get worse. And it did during certain parts of the last year. At present there is an average daily shortage of cars in excess of 4,300. Again the Commission expects the shortage to become more severe.

Enactment of legislation to solve this problem is essential now. The best way to do it is to enact H.R. 2230 as law. Such action will provide the incentive for railroads to invest their money in new cars which they will own. When per diem charges are adequate, and by that I mean profitable, railroad management will invest and expand their own car fleet rather than rely upon renting another railroad's car. With the incentives provided by this legislation, our Nation's transportation needs will be met. The United States will have an adequate car fleet to meet the needs of its agricultural, commercial, and industrial shippers.

At the time I introduced H.R. 2230, some thought was given to providing in section 2 of the bill for a 2-year limitation. After watching the car situation continue to remain serious during the present year and remembering the acute shortages of recent years, I am now of the opinion that corrective action will take more time. Therefore, I request that consideration be given to reporting out of committee a bill without section 2. I am convinced there is no need for it and that no limitation should be incorporated in our transportation law. As the committee will also be considering the Senate-passed bill, I should like to comment on the amendment adopted by the Senate Commerce Committee and contained in the legislation as passed by the Senate.

Under the language which was added, it would empower the Interstate Commerce Commission to set different per diem rates for different sections of the United States and also for different railroads taking into consideration the financial health of various railroads and other economic factors.

This additional language is unnecessary to achieve the desired result. Further, it would lead to discrimination because there would not be a uniform rate. There might even be a serious question of deprivation or use of property belonging to another without just compensation. The per diem rate should be uniform. It should be the fair rental value for the equipment that is used.

Separate and apart from the considerations which I have mentioned would be burden and the complexities of a system of accounting such

language would require. I ask the committee to consider reporting a bill without the Senate language which was added to S. 1098. Such action would simplify the legislation. It would also make the administration of the law easier for the regulatory agency and the railroad industry would be relieved of a burdensome accounting task.

It is my earnest hope that the committee will report section 1 of my bill favorably at an early date. It is a sound proposal which will strengthen our basic transportation law.

The CHAIRMAN. We are very glad to welcome our colleague for a few remarks who is one of the sponsors of the legislation, the gentleman from Minnesota, Mr. Nelsen.

STATEMENT OF HON. ANCHER NELSEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA

Mr. NELSEN. Mr. Chairman and members of the committee, I am pleased to submit a statement at this hearing in support of my bill H.R. 3397 and others like it, and urge such legislation be favorably reported.

As you know, our bills would amend section 1(14)(a) of the Interstate Commerce Act in an endeavor to insure an adequate national railroad freight car supply in all parts of the country.

The amendment reads:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 1(14)(a) of the Interstate Commerce Act is amended by adding at the end thereof a new section reading as follows: "In fixing the compensation to be paid for the use of freight cars, the Commission shall give consideration to the level of freight car ownership and to other factors affecting the adequacy of the national freight car supply and shall, on the basis of such consideration, determine whether compensation should be computed on the basis of elements of ownership expense involved in owning and maintaining freight cars, including a fair return on value (which return shall be fixed at such level as in the Commission's judgment will encourage the acquisition and maintenance of an adequate freight car fleet), or should be computed on the basis of elements reflecting the value of use of freight cars, or upon such other basis or combination of bases as in the Commission's judgment will provide just and reasonable compensation to freight car owners, contribute to sound car service practices, and encourage the acquisition and maintenance of a car supply adequate to meet the needs of commerce and the national defense."

What this amendment means simply is that the Interstate Commerce Commission would be given needed additional ratesetting authority in order to provide incentives for construction of additional freight

cars.

Mr. Chairman, the need for such legislation has long been apparent to those of us who live in the Midwest, and particularly to farmers, the grain trade, and other shippers of farm produce from country to commercial centers and shipping points in the Nation.

Repeatedly, those of us from the rural areas of the Midwest and West have sought such legislation because we have witnessed a perennial boxcar shortage, particularly devastating at harvesttime. Farmers struggling to get their crops to market while prices remained high have found themselves without adequate boxcar transportation, and have seen their grain crops dumped alongside the railroad tracks until such time as boxcars could be made available, often a considerable period.

Obviously such procedures entail waste and cost, and exercise a price-depressing effect on the grain market. This situation exists today.

As a matter of fact, the situation has become so serious the Nebraska State Journal of Lincoln, Nebr., felt compelled to comment a few months ago:

In this age of transportation miracles, it has become almost as simple to send a man to the moon as to ship a boxcar of grain out of the Midwest.

Even discounting severe crop losses brought on by the recent bad weather, the boxcar shortage in the Midwest this year may well be the worst in peacetime history.

The reasons for this deplorable situation are numerous. Some railroads find themselves in a precarious financial condition which makes construction of new boxcars difficult. Moreover, the decline in new car construction has been greater in the past 2 or 3 years than ever before.

However, the problem has been seriously aggravated by boxcars shipped into areas where per diem rental rates are so attractive, additional boxcar construction is discouraged. When lines do not return boxcars promptly to their proper owners, the shortages inevitably result.

Mr. Chairman, I firmly believe the proposed legislation is fully justified. In view of the Senate's adoption earlier this year of similar legislation, the time is ripe to act. We will never have a better opportunity to obtain this needed legislation. We must strike while the iron is hot.

And I wish to include with my remarks a telegram from Earl Requa, vice president and general counsel of the Northern Pacific Railroad, at this point.

(The telegram referred to follows:)

Hon. ANCHER NELSEN,
House of Representatives,

[Telegram]

House Office Building, Washington, D.C.:

ST. PAUL, MINN., September 30, 1965.

I have been informed that the House Commerce Committee has scheduled hearings for October 5 and 6 on freight car per diem (rental) legislation (H.R. 7165), introduced by Chairman Harris, and 15 other identical bills. Eldon Martin, vice president and general counsel of Burlington Railroad, will present our argument. We urgently request that you consider favorably this bill without the objectionable Senate amendment and hope that the House committee will favorably report the bill to the House for passage without the Senate amendment as it will go a long way to alleviate the serious car shortage in our Midwest and Western States.

Kindest regards,

EARL F. REQUA,

Vice President and General Counsel, Northern Pacific Railway.

Mr. NELSEN. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Mr. Nelsen, for your statement. Are there any questions? Mr. Jarman? Mr. Younger?

Mr. YOUNGER. Just one. To our colleague. You do not limit your support just to your own bill?

Mr. NELSEN. No; I do not.