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DEVELOPMENT AND IMPROVEMENT OF TERMINAL

MARKETING FACILITIES

FRIDAY, JUNE 9, 1950

HOUSE OF REPRESENTATIVES,
COMMITTEE ON AGRICULTURE,

Washington, D. C. The committee met at 10 a. m., Hon. Harold D. Cooley (chairman) presiding.

The CHAIRMAN. The first witness this morning is Mr. Richard W. Wirt. Will you come around, please, sir?

STATEMENT OF RICHARD W. WIRT, SOUTHERN RAILWAY SYSTEM,

WASHINGTON, D. C. Mr. WIRT. Mr. Chairman, members of the committee, and gentlemen, I represent the Southern Railway in the development of the South, both agriculturally and industrially. Our vice president in charge of traffic, Mr. Oliver, was very cordially invited to appear before the committee. Unfortunately, Mr. Oliver is away, has been away ever since the invitation came, and is in New York today. I happen to be assistant vice president in charge of agricultural and industrial development; so it is really my baby to come here and talk about this, because we are greatly interested in these markets.

I am glad to be here, and I just want to touch on one item in this bill, and that is on page 17, eligibility requirements, section 12, paragraph (b), which reads: That the proposed market will be so located and designed as to make possible the direct loading and unloading of rail and truck receipts into or from the buildings of handlers receiving substantial quantities of perishable agricultural commodities by such methods of transportation, and that no restrictions will be imposed which will prevent access to the facility of supplies handled by any rail or truck transportation company.

I think that clause is all right; it is fine; I think it is highly important that the railroads be allowed and facilities be furnished for the railroads to serve these markets and also the trucks. There is a lot of business the trucks are going to bring in there, but particularly the railroads.

For instance, take apples coming out of the State of New York, going down in the South to the Louisville market, only to mention one along the Southern, or to Richmond, Va.; mostly those carloads of apples come by rail. Or take the California fruits and vegetables or Florida fruits and vegetables: If they come up to a point, say, in Richmond and cannot get to the market because it is poorly located, they have to be trucked over there, to be carted; they have to be unloaded from the train or the cars, put on a truck, carried over to

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the market, unloaded there, and put into the market. It is not only a costly operation, but it tends to bruise the fruits and vegetables and delays them. Therefore, if the railroads have a facility to get right into the market, it is very, very desirable, I think.

That is about all I want to say, gentlemen. I think the bill is all right as far as I have read it.

The CHAIRMAN. I would like to ask you, Mr. Wirt, as an official of the Southern Railway and with your knowledge of the problems involved in marketing perishable commodities, if you do not feel that these big terminal markets are actually impressed with a public interest due to the fact that so many people from such a wide area trade in those markets. Mr. WIRT. Yes, sir. I agree with you 100 percent.

I The CHAIRMAN. As I see it, that is the only justification for the Federal Government to move into this situation.

Mr. WIRT. That is right.

The CHAIRMAN. Is because the farmers from many States ship their produce into some of the markets.

Mr. WIRT. That is true.

The CHAIRMAN. And it is our idea that this bill would be beneficial not only to the producers but to the consumers and that it will eliminate these unnecessary costs that are involved.

Mr. Wirt. In some places, as I mentioned awhile ago, in driving along, I see a farmers' market located out in a field, and the railroad is a mile away from the warehouse that is largely for the farmers. If we were bringing produce into this market which they are going to establish, especially a large market this bill provides for, it ought to be located so that the railroad can get into the market, so that it will have railroad facilities. But here is a market away out in the sticks, and the fellow brings in a truckload of cantaloups or whatever it is, and he has to dispose of them right there. But there are cases where he cannot dispose of them right there, and he wants to ship them on, and then they have to be sent to the railroad somewhere else; whereas, if those facilities were in the market, it is so much better.

I agree with you 100 percent that it is best to have a central market, and it should be well located. I will say that the Agriculture Department right here in Washington has a service that makes it a business of going around locating these markets, and it is very good. The only trouble is that they do not have the final say as to where they are located, because that is largely in the hands of the local people, but they do make surveys and pick out the right spots. I have checked along with them. We do not always get the spot-we did not in Richmond—but they do get the right spot, and we get into it in some way, either by switching or something.

So I think the bill is all right, and I hope it will go through.

The CHAIRMAN. Are there any questions? If not, we thank you, Mr. Wirt, for your statement.

Mr. Wirt. Thank you. It is a privilege to be down here.

The CHAIRMAN. The next witness is Mr. Souby of the Association of American Railroads.

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STATEMENT OF J. M. SOUBY, GENERAL SOLICITOR, ASSOCIATION

OF AMERICAN RAILROADS

Mr. Souby. My name is J. M. Souby; I am general solicitor of the Association of American Railroads. I am appearing here on behalf of its members generally, which includes substantially all of the class I railroads of the country.

Of course, in our organization, we do not undertake to control the views of any individual member at all. Each is free to express his own views, and in view of what Mr. Wirt has just said, I do not pretend to be speaking here for the Southern Railway, but I am speaking generally for the members of the association.

The association, or the members I represent, are opposed to this legislation for reasons which I will bring out. I want to emphasize at the outset that I doubt if there is any other branch of industry that has shown as deep an interest in this general subject of the provision of adequate marketing facilities for perishable agricultural products as have the railroads. Their interest in the matter has not been merely vocal; they have manifested it in very tangible ways. They have invested millions of dollars at various important marketing centers throughout the country in what we call produce terminalsterminals in which the products handled by the railroads can be marketed with what we regard as a minimum of cost and with a minimum of loss and waste.

Now, the facilities of that type that have been provided by the railroads, generally speaking, are neither obsolete nor inadequate. On the contrary, they are modern and they are efficient. They are more than adequate for the purpose for which they were developed; that is, the purpose of adequately handling the produce that is brought in by the railroads who operate into the facility. Some of them are provided by individual lines; others are joint affairs involving two or more railroads.

I have here, just for illustrative purposes, a statement that is made in the report of the Maryland State Planning Commission on the subject of wholesale market facilities for the greater Baltimore area, and I wish to read just a short paragraph from that report which describes one of these railroad produce terminals. It speaks of the B. & 0. terminal in Baltimore, and I quote:

The B. & 0. produce terminal is a modern, efficient building, 908 feet long and 98 feet wide, including an 8-foot platform. Railroad tracks are on both sides of the building. Its floor is at truck-bed height, and produce can be unloaded direct from the cars or loaded into the trucks with a minimum of handling. Much use is made of the modern wheel-type and conveyor equipment.

I quote that because a description similar to that, equally favorable, could be made of the other facilities that the railroads have provided in numerous cities throughout the country, including Philadelphia, Buffalo, Detroit, Cleveland, Chicago, Milwaukee, St. Paul, Minneapolis, Kansas City, Denver, and numerous other places. Many of those have been mentioned here already. I might say three or four of them that were specifically mentioned in commendatory terms by Mr. Crow are railroad terminal facilities. I refer particularly to the one at Denver that Congressman Hill has talked about, the one at Detroit, the one at Cleveland. Practically all of those that have been mentioned here with favor are railroad-provided facilities.

I might say a little bit about the cost of some of these facilities. The figures I will give are taken from reports that have been made by the Interstate Commerce Commission, which has investigated some of them. Its report says that in Philadelphia the terminal there that was provided by the Pennsylvania Railroad involved an expenditure by that company of $6,500,000. The competitive one at the same place, which is owned jointly by the Baltimore & Ohio and the Reading, the Commission says cost $3,100,000. Now, those terminals, I think, are among the oldest of the ones I have in mind. The construction of them was begun in about 1925, and they were completed about 1930. They were used prior to final completion, but they are probably among the older ones.

At Buffalo, built about the same time, 1931—I think the ones at Buffalo were completed in 1931—there is a joint one there owned by the Erie and Nickel Plate Railroad which involved, according to the Commission's report, an expenditure of about $6,700,000.

The New York Central one at Buffalo, N. Y., cost about $2,700,000.

The one at Denver—the Commission's report on that was made somewhat before it was entirely completed. That was not completed until somewhere along about 1936 or 1937, and at the time the Commission made its report it said it involved an expenditure to the Union Pacific of about $1,000,000.

At the same time there was another rival terminal built in Denver by a large group of railroads, including the Santa Fe, Rock Island, Burlington, and Denver and Rio Grande, that cost about $1,250,000.

My understanding is that now, as a result of an arrangement that was made to concentrate the operations over at the Union Pacific terminal, the joint one of the other railroads is no longer used strictly as a produce terminal but has been converted to some other useswarehousing and things of that sort.

Now, one of the reasons the railroads generally are opposed to this legislation is because they think it carries with it a definite threat of loss to them of the investment which they have in those facilities, and that investment, as I have shown, runs into a tremendous amount of money. Because, when you establish a joint, integrated terminal, such as contemplated by this act, to handle all of the marketing at a given point, that necessarily carries with it an abandonment of the existing separate facilities that are used for the same purpose.

Now, if we thought it would ultimately result in an over-all reduction in cost of marketing, I think we would be willing to withdraw our opposition to it, regardless of the fact that it would entail a tremendous additional cost on the railroads. But we question that, in many instances at least, the unification of these operations into one locality or into one area would really result in an actual saving. We say

that because, to start with, these sacrifices of existing locations and whatever losses that might entail constitute just as much a part of the cost of your new facility as does the actual construction of it.

From an economic standpoint, you have to look at the over-all picture, because ultimately whatever the railroads lose on their investment in their existing facilities has to be made up by the shippers in some way. Similarly, what the dealers themselves, lots of them, who own their own properties at the existing sites, are forced to sacrifice in moving into the new project constitutes part of the over-all

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