a carrier is predominantly an originating, terminating or bridge line, he states that the bill would enable the Commission to prescribe per diem charges on a basis that will provide an economic incentive to the deficit owning railroads to acquire more cars. And in so stating, he recognized, in answers to questions, that such Commission action could have an adverse financial effect on certain railroads, but he brushed this aside with the comment that such inequities could be cured by agreements between railroads.

There is certainly little consolation or security in this suggestion. In fact, the freight traffic manager of the Burlington was recently quoted as saying that the

financially distressed railroads are not building nearly as many freight cars as we western lines think they should

and that the only workable solution is S. 1063.

That the purpose of the railroads supporting S. 1063 is to place a financial burden on the railroads that I represent is implicit in Mr. Martin's statement at the June 17 hearing, page 133 of the transcript, where he said:

In fact, the only opposition comes from a few railroads which have not maintained their share of the car fleet, which can do business, fortuitously, on the car investments of other roads-by using their cars at a rental of $2.88 per day, and which have a vested selfish interest in the preservation of the status quowhich has been so unfortunate from a national viewpoint.

I will deal with this statement later. I mention it now as a clear indication that the agreements suggested by Chairman Walrath are illusory.

All in all, we are left completely up in the air as to how the additional powers granted by the bill would be used. Presumably the Commission could fix different per diem rates for different types of equipment, different rates depending upon the season of the year, different rates dependent upon varying economic levels of business, different rates for different railroads, and different rates in different areas of the country.

Aside from the question of the equity or possible benefits of such a hodgepodge system, the problems of administering and accounting for any or all or any combination of these possibilities would be fantastic, and, to say the least, extravagant.

The inequities that could stem from the application of the provisions of S. 1063 are many. Of immediate concern to the railroads that I represent is the penalty that it would place on them as predominantly terminating roads. This is particularly true of carriers in Eastern territory-east of Chicago and north of the Ohio River— because the pattern of traffic flow is from west to east and south to north. Consequently, under the application of the car service rules that I have mentioned, the Eastern lines do not have the need for an expanded car fleet to take care of their originating traffic requirements. On my railroad alone, we release, in interline service, 10 empty cars for every 9 cars loaded in such service.

Therefore, the so-called incentive rates, which would result from the application of the bill's provisions would serve not as an incentive to the Eastern lines to build cars which they cannot properly load under car service rules, but only as a burdensome penalty on

them in the form of increased car rental charges which they cannot afford.

In addition, such increased car rental charges would further unfairly penalize terminating railroads for per diem days over which they have little or no control. For example, on cars moving from Southern coalfields to Lake Erie ports for transshipment, the railroads grant by agreement 5 days free time on cars held under load at the ports to protect marketing requirements. Millions of tons of coal are involved in this movement.

Because of the free time arrangement, which is for the benefit of all railroads participating in the business, even the existing per diem rate consumes a substantial portion of the revenues of the lines terminating and trans-shipping the coal at the ports.

A similar situation exists with respect to coal at tidewater ports. Also, with respect to grain and other export traffic moving through the Atlantic ports, the eastern roads are forced to assume per diem on such traffic during extended periods of free time.

In the case of traffic originating on the western roads moving to Baltimore, Philadelphia, and New York, 12 days' free time is allowed at these ports on grain, with an additional 3 days for inspection. On general cargo for export 7 days' free time is allowed in addition to intervening Saturdays, Sundays, and holidays. The terminating railroads, of course, are the ones that pay this entire per diem bill during all of these free time periods. If we are forced to pay penalties in addition to ownership costs, the Pennsylvania will probably have to again seek increases in divisions or give consideration to embargoing these ports for export traffic moving in foreign line equipment.

It is inherent in the nature of joint service offered generally by all the railroads that the time consumed in termination is considerably greater than the time consumed on the origin and intermediate railroads. The privileges that I have mentioned induce a shipper to use rail service, and the benefits of these provisions accrue mutually to all carriers participating in the movement. While they all participate in the benefit, the terminating line bears the entire per diem burden.

To assess the terminating line a per diem charge in excess of the fair ownership cost of the cars involved would be to penalize it for conditions not only beyond its control, but also which are the result of the origin or intermediate line turning over to it a shipment subject to detention despite the most diligent efforts of the terminating carrier. In such a situation, if the origin line has a shortage while cars are backed up at the port awaiting ships, it is not the terminating line's fleet of cars which is inadequate. It is the origin line which has insufficient cars to take care of the transportation needs of its shippers, and this is true irrespective of whether or not the origin line shows an annual net credit in its per diem account.

It has been claimed by those in support of previous bills similar to S. 1063 that terminating railroads would not be penalized by higher per diem charges resulting from delays for which they are not responsible since such charges are offset by demurrage charges which accrue to terminating lines. May I point out that the Pennsylvania's annual net debit on account of freight car per diem, under the rates as have existed, far exceeds its revenue from demurrage. For the year

a carrier is predominantly an originating, terminating or bridge line, he states that the bill would enable the Commission to prescribe per diem charges on a basis that will provide an economic incentive to the deficit owning railroads to acquire more cars. And in so stating, he recognized, in answers to questions, that such Commission action could have an adverse financial effect on certain railroads, but he brushed this aside with the comment that such inequities could be cured by agreements between railroads.

There is certainly little consolation or security in this suggestio In fact, the freight traffic manager of the Burlington was recen quoted as saying that the

financially distressed railroads are not building nearly as many freight ca as we western lines think they should

and that the only workable solution is S. 1063.

That the purpose of the railroads supporting S. 1063 is to plac financial burden on the railroads that I represent is implicit in Martin's statement at the June 17 hearing, page 133 of the transer where he said:

In fact, the only opposition comes from a few railroads which have not tained their share of the car fleet, which can do business, fortuitously, car investments of other roads-by using their cars at a rental of $2.88 p and which have a vested selfish interest in the preservation of the stat which has been so unfortunate from a national viewpoint.

I will deal with this statement later. I mention it now a indication that the agreements suggested by Chairman Wa' illusory.

All in all, we are left completely up in the air as to how tional powers granted by the bill would be used. Presu Commission could fix different per diem rates for differe equipment, different rates depending upon the season of different rates dependent upon varying economic levels o different rates for different railroads, and different rates i areas of the country.

Aside from the question of the equity or possible benefit hodgepodge system, the problems of administering and for any or all or any combination of these possibilities w tastic, and, to say the least, extravagant.

The inequities that could stem from the application visions of S. 1063 are many. Of immediate concern to that I represent is the penalty that it would place or dominantly terminating roads. This is particularly t in Eastern territory-east of Chicago and north of the because the pattern of traffic flow is from west to ea north. Consequently, under the application of the that I have mentioned, the Eastern lines do not have expanded car fleet to take care of their originating ments. On my railroad alone, we release, in inte empty cars for every 9 cars loaded in such service.

Therefore, the so-called incentive rates, which w the application of the bill's provisions would se. centive to the Eastern lines to build cars which the, load under car service rules, but only as a burde.

1962, our net per diem debit for freight cars was well over four times as much as assessed demurrage charges.

On grain cars, to which I have referred, there are 15 days free time, including inspection time. Following that period, there is a storage charge in lieu of demurrage for grain held in cars, which charge works out to considerably less than half of the present per diem rate. Nevertheless, the full per diem rate applies during the entire period. Also, with respect to lake and tidewater coal, because of free time and average agreements with shippers, very little, if any, demurrage is actually assessed. On export traffic generally no demurrage applies during the 7-day free time period. Even with ordinary run of the mill traffic, where 2 days free time are allowed, with additional free time on Saturdays and Sundays, in most cases average agreements are in effect between railroads and receivers which materially reduce demurrage revenues.

The application of the proposed increased per diem charges would also impose inequities in instances where car service orders are in effect requiring the return of empty equipment to the owning line. Again referring to the movement of coal to the lakes, the originating railroads send off-line far more loaded cars than they receive. Consequently, to protect their car supply, specific Car Service Division orders are in effect which provide that coal cars of these railroads must, with a few specific exceptions, be returned empty when released on another railroad. What incentive would result from paying a higher per diem for a car that comes to a road without that road having any control over it, and which, when released, must be returned empty to the owner.

The same situation exists with respect to boxcars moving to western railroads, where it is common practice for the eastern lines to receive AAR and ICC orders to send literally trainloads of empty boxcars to the West to meet their grain loading and other requirements. Many of these western cars come to the Pennsylvania Railroad via Potomac yard here in Washington and other eastern junctions, and terminate at nearby eastern seaboard points. Under the orders referred to the Pennsylvania is, in many cases, not permitted to load the cars but is required to return them empty to Chicago, or some other western gateway, and assume the regular per diem charge while they are on our line. Certainly, that per diem charge should not be increased. Rather, as a matter of equity, in view of the short haul we receive in the loaded movement, we should not only be relieved of per diem, but actually compensated by the owner for moving the car empty in long haul.

As I understand it, the proposed incentive per diem rate would bear no relation to avoidable delay or to inefficiency. It would be payable for every day that a railroad has a foreign car on its line, regardless of circumstances. If a railroad utilizes such a car to the 'maximum possible extent for 10 days, it would pay exactly the same per diem as another railroad which might use the car for 1 day and let it stand idle for 9 days. Such a charge, insofar as it would penalize, would penalize use and nonuse, efficient and inefficient use, unavoidable and avoidable delays, alike.

In spite of the absence of control by terminating lines, with respect to their originations and, with respect to the eastern lines, their financial problem, it has been the position of proponents of this bill that