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Mr. YOUNGER. You are in favor of the principle?

Mr. NELSEN. I am. Thank you.

The CHAIRMAN. Mr. Nelsen, there may be other questions. Mr. Moss? Mr. Pickle? Mr. Williams? Mr. Satterfield?

Thank you very much, Mr. Nelsen, for your presentation.

Our next witness is the Honorable Mark Andrews, Member of Congress from North Dakota, and we are happy to have you before the committee.

STATEMENT OF HON. MARK ANDREWS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH DAKOTA

Mr. ANDREWS. Thank you, Mr. Chairman. It is a privilege to be here.

After the eloquent testimony that our native son, Senator Warren Magnuson gave, there is little use for the rest of us to follow him up. You know, he was raised in our hometown, and we have long known him, and he does a wonderful job.

Mr. Chairman, representing the farm State of North Dakota I appear in support of H.R. 8950, which is my bill, and others similar

to it.

This type of legislation, by encouraging railroads to increase their supply of cars, will help solve the chronic boxcar shortages which have recurrently plagued my area. As a matter of fact, the boxcar shortage in North Dakota is a whale of a lot like the weathereverybody complains about it but nobody does anything about it. And just as certain as Christmas comes in the end of December, when autumn comes around you'll hear the wild clamor go up, "Where are our boxcars."

It is a pretty favorite political whipping boy. Everyone seems to want to get into the act, but the people who get it in the neck are the farmers and the business people in the communities.

Being brought up on a farm, I can't think of an autumn when we haven't had this problem, and commonsense dictates that it's about time we took steps to alleviate it. It seems to me that there's only one real solution to this problem, and that's the enactment of legislation such as H.R. 8950.

My bill gives the Interstate Commerce Commission power to fix more adequate rents which one railroad pays another for the use of cars. Present and past car rentals have been so low as to discourage new car building and to encourage railroads in some areas to rent cars of others rather than to buy their own.

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Because it has been cheaper to rent than to build and own cars, the number of freight cars in the country has declined by about 200.000. I don't think much of this slack has been taken up, Mr. Chairman, by the construction of these overlarge jumbo cars. fact, it is, as the Senator points out, doubly depressing to sit there and expect a big boxcar to come and not get it than it is to look for the smaller one which you have been used to seeing for many years. North Dakota is a farm State. In 1964 it grew about 150 million bushels of wheat and was exceeded only by Kansas of all States in raising that grain. Farmers in North Dakota also raise huge amounts of potatoes, barley, sugarbeets, corn, and other farm products...

North Dakota's economy is largely dependent on shipping to primary markets in the East and West grain and other crops. About 85 percent of its crops are moved to market by railroad and the rest by truck.

Elevator operators, farmers, and other shippers in our area have been plagued with severe railroad car shortages over the past few years. At times hundreds and even thousands of cars can be used but simply are not available.

In August of this year, for example, the shortage was so severe that just one of the major railroads in the State reported that it had up to 177 blocked elevators on its line and over 200,000 bushels of North Dakota grain stored on the ground along its line exposed to wind, rain, and rot. And incidentally, and significantly, the situation has gotten worse. North Dakota has had a unique fall this year, and we have had 5 weeks of nothing but rain and continual cloudy weather.

We have now some 25 to 30 percent of our crop still exposed in the swath, and as a result, the price of wheat has gone up on the open market. I mean, it has made this much of an impact. Many of these farmers feel that had their elevators not been plugged at harvest time, they could have gotten their crop in from the fields and marketed, and the delay caused by shortage of boxcars at the critical point of harvest has cost these farmers thousands of dollars as individuals in our State.

The road I mentioned had only 80 percent of its own ownership on line to serve its shippers, at a time when it should have had 110 to 125 percent of ownership on its line, because this was its peak hauling time.

Its fleet of boxcars numbers higher than what it was 10 and 15 years ago. Other roads, particularly in the East, have permitted their fleets to decline.

The present railroad car rental system has been established by the industry and is voluntary. These rents are now $4.50 per day for a car worth between $10,000 and $15,000; $6.15 per car-day for cars worth $15,000 to $20,000; $7.11 per car-day for cars worth less than $10,000; and higher rates for cars worth more than $25,000.

But Mr. Chairman, I would like to point out that it costs about $12,000 to $15,000 to build an average railroad boxcar today. The advantage of renting under this system can easily be seen by comparing the railroad car rental for a $12,000 car-$4.50 per car-day-with the automobile rental for a $3,500 Chevrolet-$10 per day plus 8 cents per mile almost twice as much per day for an automobile that is worth one-third as much, or less. Nevertheless, some roads have for years refused to pay the voluntary industry-established rate on the ground that even it is too high.

Bills such as mine, if enacted, will permit the ICC to require all roads to pay rates which the Commission establishes at levels which adequately compensate the owner for all the costs and economic risks, of car ownership. It will encourage restoring the car fleet through economic incentives. For these reasons it has my strong support.

I recognize that the cards are stacked against a bill such as this, because the roads that do not build cars have the preponderance of representatives in the Congress.

But, actually, this is a nationwide problem, and it is important to the entire Nation, since it affects the earning power of our basic industry, agriculture, and many other industries, such as construction and mining.

The key to agricultural prosperity is the price the farmer gets for his products. Our farmers produce bulk commodities that have to be shipped over long distances. Rail rates and the availability and cost of transportation can often mean the difference between profit and loss to the family farmer.

We in the Congress spend months worrying over sensible farm legislation; yet, a bill like this, by providing more adequate and, in the long run, cheaper transportation could, by adding 10 cents a bushel to the grain farmer's return on his crop, mean the difference in itself between profit and loss.

On the basis of simple justice, I urge your favorable consideration of this much needed legislation.

I do appreciate the opportunity to be here.

The CHAIRMAN. Thank you, Mr. Andrews. Are there any questions? Thank you very much, Mr. Andrews, for your contribution to the record.

The CHAIRMAN. Our next witness is Hon. Floyd V. Hicks, Member of Congress from the State of Washington. Congressman, it is nice to have you.

STATEMENT OF HON. FLOYD V. HICKS, A REPRESENTATIVE IN CONGRESS FROM THE state of wASHINGTON

Mr. HICKS. Thank you, Mr. Chairman. Let me start off by saying that I don't purport to be an expert of any kind, and it is probably unfortunate, in a way, that the committee has to sit here and expose itself to the nonexperts, while you have so many people here who can actually give you the facts on all these matters, although I think you had a true expert here in the senior Senator from my State, Senator Magnuson.

I had a script prepared for me, too, and the first page has a lot of figures on it that I don't know anything about, and the experts here will undoubtedly give you the same things, and tell you a little bit about them, but I do know a little about my own local problems.

The CHAIRMAN. Mr. Hicks, would you like to have this statement inserted in the record?

Mr. HICKS. It is short, and if I may I will read from it. I would like to give just a little bit about the actual impact it has in my local

area.

The CHAIRMAN. You may proceed as you desire.

Mr. HICKS. Thank you, Mr. Chairman. I would like first to thank the chairman and members for granting me the courtesy of appearing before this committee.

I am not an expert on railroads or freight cars, or on the various factors which bear on the freight car shortage. I have, however, been exposed to certain information on the effect of that shortage on business, labor, and other segments of the economy of the Sixth Congressional District of Washington, and the State of Washington in general. That there is a shortage, there can be no doubt. Nor can there be any question that the shortage is growing more severe day by day.

I have been provided with some figures that indicate the scope of the shortage, and the pace at which the shortage is increasing. As of January 1, 1956, the total carrying capacity of all cars owned by class 1 railroads was 91 million tons.

And as of January 1, 1965, the total carrying capacity had declined to 87 million tons. That is a loss of 4 million tons capacity, and during a period when production of goods and produce to be shipped increased. But even these alarming figures do not state the case as firmly as they might, at least insofar as my part of the country is concerned. For much of this total carrying capacity is accounted for in what railroads call "equipped" cars; that is, those designed for specific cargoes, such as tank cars which just cannot carry plywood, for example.

And in the Northwest we are more interested in the plain old freight car, the boxcar, for we ship more forest and agricultural products in general-purpose cars than goods which require special-use

cars.

The ICC's Bureau of Safety and Services last Thursday afternoon quoted figures for me that show the decline of that plain old boxcar. I won't go into the entire list, since that no doubt duplicates other testimony at this hearing. Suffice it to note that we started the year 1965 with 508,713 general-purpose freight cars and ended the month of August with 486,556. That is a net loss of 22,157.

The loss in January was 1,618. In February it was 1,681. And so on at an irregular rate, until in May the loss went to over 2,000 cars for the month, and in June it neared 3,000. The loss in July was 4,134 cars. In August the loss was 5,417 boxcars. In other words, during the harvest months of July and August, when they were needed the most, the net loss of freight cars was much greater even than in the preceding months-and it was bad enough in those earlier months.

The cause of the growing shortage of freight cars is simple enough. More cars are wearing out than are being built. And the cause of that is simple enough too. It is cheaper for a railroad to rent a boxcar than to build one, under present conditions.

We in the West ship perhaps three times as much of our products eastward as we receive in return because of the bulk of our products as compared with the manufactured goods we get from the eastern part of the country.

The western freight cars stay in the East in large numbers, because the eastern roads are able to rent them by regulation at a rate that would make it foolish for them to build their own replacements for wornout cars.

That has already been told to you. The results of the boxcar shortage in my district, my State, and the entire western and midwestern part of the United States range from the generally serious to the locally drastic. Agricultural crops do not get to their markets, for there aren't enough freight cars to move them there. Manufactured goods go into storage awaiting freight cars to move them to their markets.

Forest products are of particular concern to me, for the economy of western Washington is based in large part on our forests. Lumber,

plywood, chipboard, fiberboard, paper products-these are our mainstays, and they are physically bulky. They require considerable space for shipping, and considerable space for storage.

And they may be considered semiperishable, in the sense that if they are stored outside long enough the weather affects their value adversely. So when a lumber mill or a plywood mill has produced a certain amount of dimension lumber or plywood, its normal storage capacity becomes exhausted, creating additional problems.

In addition, with no products moving to market, collections fall off, adding to the woes of the companies, particularly the smaller ones. So the mill shuts down until it can move its products. This means the millworkers are laid off. So are the lumberjacks in the woods. So are the truckdrivers, and all the other people who depend on the mill for their income, directly and indirectly. The effect can be drastic on a town or an area which is almost totally dependent on a mill, as are many in the Northwest.

This is just one small matter here, but just to document this, I would like to quote a letter written by the sales manager for plywood and doors of the Simpson Timber Co., located in western Washington. The letter was written July 2, 1965, and addressed to Mr. Boyce F. Glenn, Jr., manager, Building Material and Equipment Co., Anderson, S.C. The letter follows:

DEAR MR. GLENN: Your recent letter advising you were deducting extra handling costs incurred due to our carload shipment of fir plywood in a 6-foot single-door boxcar has been reviewed.

It is with reluctance that we issue credit covering these costs that are beyond our control. I think it is only fair to inform you we cannot accept any purchase orders in the future that demand 10-foot or wider equipment. It is our wish to ship all of our products in double door or wider door cars. However, this year we are experiencing the worst car shortage in many years. It has only begun. It will be so much worse later this summer after the grain shipments get under

way.

We are asking our customers to write their Congressmen and Representatives to do what they can to alleviate this situation. There are times when our plants do not receive any railroad equipment-even 6-foot single doors-so you can see these plants would be quickly shut down for lack of available inventory space if our customers fail to cooperate with us.

Therefore we must ask our customers to bear with us through this critical period allowing us to ship in the equipment available at time of shipment.

It is signed by Robert H. Fletcher.

So here we have a case of a company which, even though it was lucky enough or effective enough to get a boxcar to ship its products, still was penalized in cash because it wasn't the kind of boxcar that was needed. Nevertheless, the company considered itself fortunate to have any boxcar at all.

A report in the June 1, 1965, issue of the Wall Street Journal indicates another aspect which is of at least as deep concern to me as a member of the House Committee on Armed Services, and that is that the boxcar shortage can have an adverse effect on our defense efforts. Ammunition destined for Vietnam has been delayed because of the scarcity of freight cars, according to the Journal article.

What can be done to alleviate this situation? Since more freight cars are most seriously needed, and since they are not being produced because of the low rental rates, a step in the solution of this problem

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