This committee for quite some time has been interested in trying to shorten the distance from the producer to the consumer and to remove the unnecessary burdens from our distribution system.

In view of the fact that prices largely are determined at the terminal markets, the farmers of the Nation naturally have an interest in the marketing facilities which are now in existence, and therefore an interest in the purpose of the bill we now have under consideration. And, the bill certainly should be of interest to the consumers of the country, and the efforts on the part of this committee to do something to remedy a situation, which has become burdensome not only to the producers but as well to the consumers.

The interest in the problem is rather widespread. We have a number of witnesses who have expressed a desire to be heard. It occurred to the chairman that in view of the fact that Mr. Crow, Director of Marketing Facilities Branch of the United States Department of Agriculture, has worked with the committee in conducting these hearings, and also worked with the chairman of the committee in the preparation of the bill, it might be well to hear from Mr. Crow briefly concerning the situation which now exists and which this bill seeks to correct.

Mr. Crow, we will be glad to have you come around and make a statement to the committee about the situation.

STATEMENT OF W. C. CROW, DIRECTOR OF MARKETING FACILITIES BRANCH, U. S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D. C.

Mr. CROW. Mr. Chairman and members of the committee, this problem of improving the wholesale marketing facilities for the handling of perishables is one that has been widely discussed since about 1860, to my knowledge, and became the subject of Federal Government comment as long ago as 1919, when the Federal Trade Commission put out a rather extensive report dealing with the subject, describing the uneconomic conditions existing in these wholesale produce markets, and suggesting a course of action which that commission thought, in 1919, would be a wise course.

I recently reviewed that publication of 1919 by the Federal Trade Commission and was quite interested to find that the description that they had at that time fits perfectly the conditions existing in these markets today, because many of these wholesale produce markets that are the food-distribution centers of the country have still undergone no significant change. Some of these markets are located just where they were 100 or more years ago and are using the same buildings that were used then.

Obviously, facilities that were constructed before the railroads were even invented cannot be very efficient in meeting modern requirements because several things have happened since those facilities were built. In the first place, in most of these large cities the markets were built when the cities were quite small. The population of many of these cities has increased a hundredfold, and some of them even a thousandfold since the markets were established. Skyscraper districts have grown up around them to press in on the marketing areas; so they do not have enough room to handle the volume of business that goes through them today.

In some cases the city has tended to move away from the market center, so that the market is no longer centrally located and in several of the cities not convenient to the people that come there to buy, even if they could get through the very heavy traffic of the skyscraper district of the city.

Railroads were invented after these markets were established, and in many cases it is impossible to get the railroad tracks into these areas, so that supplies arriving by rail must be moved by motortruck from the scattered "team tracks" over the city into the market area.

The streets in these marketing areas are almost invariably very narrow and cannot handle the large number of trucks bringing the supplies in and taking the supplies out, which results in a great deal of waste of time, unnecessary exposure of the products to the elements, and much cartage of the products which would become unnecessary if they had an efficient facility.

The buildings themselves in many instances are not much more than square boxes with the floors near the ground level, with no rear entrance, and with a narrow front entrance-just four walls and a roof. Some of them do not have enough room to take care of the business that is handled in 1 day. The majority of them have no refrigeration facilities, even though they are supposed to be handling perishable commodities. With the buildings designed as they are, and with the lack of room, they cannot be adapted to the installing of modern handling equipment and lavor-saving devices to make the job easier. Under conditions such as these, it is necessary to transact business over a long period of time during the day which is not satisfactory for many reasons. These conditions which I have briefly described are quite uneconomical. They are unnecessarily increasing the cost of handling perishable foods through these large wholesale markets.

In addition to that, because of improper facilities, perishable foods deteriorate and in some cases spoil; they lose vitamin content in some cases, and in others the products are lost.

Nobody is very happy with conditions of that kind. All groups concerned have complained about these conditions for many years. Farmers are concerned, because it is in these principal markets of the country that prices are established. Even prices on products that do not reach their market through these facilities are based on prices fixed in these facilities. These markets, therefore, cannot serve as correct price-making institutions when they are as inefficient as they are now. If they could operate more efficiently, a more nearly correct price could be established at which the consumer could get the products in better condition, and farmers could sell larger quantities of commodities and get a better return.

The wholesalers who are operating in these markets are not too happy about the conditions either, because the expense that they have to go through in handling the products places them at a very great disadvantage with the larger operators who can move out of the market district and locate their warehouses on railroad tracks and have modern and efficient facilities.

But these individual wholesale operators in these markets cannot alone do very much about it, because they are dependent upon the buyers who come to the market, the retail grocer, the restaurant operator, and other buyers in that group. These buyers want, when

they come to market, to get a complete line of perishable products for their store or restaurant. Therefore, they want to go to the area that has a complete line of commodities where they can get at competitive. prices products which others are buying in the market to sell in competition with them.

So, if these independent wholesalers were to move out of the area, the buyers would not seek them out in the new location but would continue to go, for the most part, to the established marketing areas. Thus, there is little the wholesaler can do except stay in the marketing area. Therefore, remedial action must be taken for the group as a whole or not at all.

The retail grocer who goes to this marketing area for his source of supply is not too happy about the condition, because it is a most difficult task for him to obtain his supply. Often he must buy on the basis of samples of the products that he needs. And when he gets the products often he finds they are not the same as the ones he thought he was purchasing. In some cities, where the old market district became so outgrown it simply was impossible to get the products into the market area, you will find that some one railroad, perhaps, has built a freight house in a different part of the city and will allow the dealers to sell in that freight house the products that are brought in by that one railroad.

Perhaps another railroad, a competing line, would then build a similar facility in another part of the city, thus splitting the market and causing wasteful cross hauling among markets.

When conditions of that kind exist retail grocers and others have two ways of getting their supplies: One, they can go to two or three areas of the city, buy some commodities here, and some commodities some other place, wasting time through cross hauls, until they get the supply they want. Or the supplies they want may be hauled from the railroad-owned markets by truck to the old market district with the extra cost of handling and trucking charges.

Whichever method buyers use, whether they visit several of these markets or whether the products are brought down into the main old market district, they still have a very unsatisfactory method of obtaining their supplies. This places the independent retailer, who must use that market, in a rather difficult situation in meeting the competition of his more fortunately situated competitors.

So, the retailer is not happy about conditions in these terminal markets. The wholesalers are not happy about them; the farmers and the consumers are not happy about them, and in many cities the city governments are not happy about them, because these conditions exist frequently in the heart or near the heart of the business section where traffic congestion is bad already. When thousands of trucks handling perishable foods are added to the normal traffic, they create a very serious traffic problem for the city.

In a number of places the railroads are not happy about conditions, because most of these old markets are located off the railroad track. The producers from 400, 500 to 1,000 miles away have a choice of sending their products to that market by rail or by truck.

If the producer wants to send his product to market by truck, he pays the freight on the product delivered to the wholesale house in this market.

DEVELOPMENT OF TERMINAL MARKETING FACILITIES

11

If he uses the railroad, he pays the railroad freight rate for bringing the commodity, usually to a point 2 or 3 miles away from the market, from which it must be carted into the marketing area. The costs of cartage usually range from $30 to $50 per carload, and it is because of that handicap which the railroads must overcome, and for other reasons that the railroads have lost much of the traffic they would like to haul. The volume of the products moving to the markets throughout the country over the past 10 to 20 years has increased very greatly, but the railroad movement of perishable commodities has not increased. The increase in movement has been taken care of by truck transportation. Until these markets can be placed on the rails, so that railroad cars can deliver directly into the wholesaler's place of business, the railroads are going to continue to operate under that disadvantage.

With so many cities having these inefficient, antiquated markets, and with so many groups interested in the situation, one might wonder why something is not done about it.

There is not very much opposition to improving these conditions under which our perishable foods are handled, so the problem is really one of helping the small-business men who are operating in the markets find a way to do it.

Most of the farmers whose supplies go through the market live so far away that they cannot see these conditions, and they would not know what to do with them if they did live closer to the market, which may lie within the boundaries of some other State or city. So the farmers would not know where to start. The wholesalers and other dealers who operate in these markets often are at a loss to know what to do about it. The retail grocers are too.

We have, in the Department, as a result of legislation that was sponsored by this committee, performed the service of helping localities that are interested in getting improved facilities in developing plans for proper wholesale marketing facilities for the handling of all kinds of perishables.

We have developed plans and designs, determined the cost, developed the lay-out, and furnished a model showing just what the facilities would be like for 30 or more localities.

In some of these places steps have already been taken to build these facilities that we have recommended, but those places, for the most part, that have been able to take action on these plans are the smaller cities where the facilities recommended would not cost much.

There must be 10 or 12 of the 30 that have actually constructed, or are just about to construct new facilities. But in cities of all sizes, from the larger ones on down to the smaller ones interest in this subject is growing rapidly. Besides the 30 cities at whose request we have already developed plans for facilities, we have on file 30 additional requests for this service, most of which we have been unable to comply with because of the lack of trained personnel to do the job.

That backlog of 30 that we have on hand now is interesting in this connection primarily because it shows the growing interest in the subject. About 12 months ago the backlog was 20, and shortly before that it was only 10. We have been turning out these reports on the different localities with increasing rapidity, but we cannot keep up with the increased interest in this subject. People in practically all of the States are concerned about the wholesale markets.

We think as the result of our research that we can develop reasonably good plans for wholesale produce markets in large cities, mediumsize cities and small cities, but the problem now, after the plans have been developed is how can those plans be translated into improved wholesale marketing facilities where food can be handled more efficiently, with less deterioration, and where we can, in the words of the chairman, shorten the distance between the farmer and the consumer by the elimination of unnecessary operations.

The CHAIRMAN. Mr. Crow, you mentioned the interest of different groups in these terminal markets. I wish you would tell the committee something about the Washington Street Market, for instance, in New York; the amount of food that passes through that market, the percentage of it that is locally produced, and the percentage of the food that is locally consumed which goes through that market. Mr. CROW. I will be glad to.

The CHAIRMAN. The point I have in mind is this: It seems to me that that market, along with many other terminal markets, is definitely impressed with public interest for the reason that so many people deal in the market, either buying or selling. I wish you would explain that to the committee.

Mr. CROW. The New York market is a large market, the world's largest. In one market area on adjacent streets they handle fruits, vegetables, poultry, eggs, meat, butter, cheese, and the other perishable commodities, but in order to save time and facilitate the discussion I will use the fruit and vegetable group of commodities to illustrate conditions there, with the understanding that conditions for the other commodities are very similar.

About 200,000 carloads of fresh fruits and vegetables move to the New York markets for sale each year. That amounts to about one carload for every daylight minute of the year. This is about 8 to 10 percent of all the fruits and vegetables produced for sale fresh in the United States.

With that large volume that market is the predominant pricemaking market in the country, not only for the commodities moving through it but for commodities that do not move through it.

Rail receipts of these commodities that come to New York for the most part reach the end of the railroad line on the New Jersey side of the Hudson River. At that point the cars are put on ferryboats, car floats, and floated across the river to some piers on the New York City side.

As much of the car as they think can be sold that day is unloaded on the piers. If they do not think they can sell the entire contents of the car the remainder, in order to stay under refrigeration, would stay in the car and be floated back to New Jersey and brought back the next day.

The cost of floating the cars across the river to those piers is a part of the freight rate, but at that point the service that the railroad performs for the regular freight rate ends.

The contents of those cars must be unloaded on those piers at an unloading charge which averages perhaps $45 a carload. The Pennsylvania Railroad has its piers to unload its products. The Erie has piers. The New York Central has piers. The Baltimore & Ohio has piers, and so forth