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was suggested that you come here to oppose the legislation, were you authorized by a board of directors or by the executives or just who?
Mr. SOUBY. I was authorized specifically by the board of directors at a meeting in Chicago on the last Friday in May. You know this bill came on quite hurriedly. I was not willing to appear down here without authorization.
The CHAIRMAN. Of course, I am not suggesting that you are here without authorization.
Mr. Souby. I might say, Mr. Chairman, at the invitation of the committee.
The CHAIRMAN. That is true, and we appreciate your coming, and I do not want you to get the idea by the questions I have asked you that they have been for the purpose of embarrassing you at all. I want to find out who you actually are representing.
Mr. Souby. I tried to make it clear that the AAR does not undertake to tell its members what is good for them, but we are down here to do what our members tell us we should do. The Association functions through a board of directors of 17 members that are railroad executives, chief executives of the railroads in the different sections of the country. I think there are four representing southern roads, and six representing eastern and seven representing the western roads.
The CHAIRMAN. Mr. Wirt, the gentleman who preceded you, is with the Southern Railway?
Mr. Souby. That surprised me, because Mr. Wirt's president is a member of the board. Whether he was present at the time they took this action, I do not know. We do not undertake to speak for any road that does not want us to speak for them. Each road is free to take whatever action it pleases.
The CHAIRMAN. Let me ask one other question. Where you have railroad markets now established
Mr. SOUBY. Where?
The CHAIRMAN. In a city where you have a railroad market, in some instances would it not be possible to improve or enlarge that market so as to make it available to truck traffic?
Mr. Souby. It might in some places, but in most places I understand not. In Denver that was an ideal situation. They built it there out where there is plenty of room, but most of these are built in rather congested areas where I do not believe they could be converted into joint ones at all. They have one in Chicago that is fairly complete, served by every railroad in the city. I think twentysome-odd railroads.
Mr. Hill. In Denver also we have a very fine unloading dock at the Union Stockyards for trucks. Every railroad that I know of comes into Denver comes into the Denver Union Stockyards, and I am here to testify to this committee that we unload the trucks any time of day and they have one of the finest facilities to unload trucks; any farmer can bring two or a load or a whole big carload down the highway or he can come down with one fat calf on the back end of a quarter-ton truck, to the Union Stockyards and unload and get the same service as if he had a carload.
Mr. GRANGER. That is true, but it was done over the strongest opposition of the railroads.
Mr. Hill. Was it? I know they use little judgment sometimes, and sometimes I think this committee does the same thing. There is no argument in that statement.
Mr. Souby. In many instances, the railroad facilities, while as I say they are more than adequate for the purpose for which they were designed, which was to handle the railroad traffic, could not possibly let the trucks in without creating a worse condition than you find now in some of these markets that are congested by the trucks.
Mr. Hill. In some of these markets they could not get down there. There are no highways to the railroad yards at all.
Mr. Souby. That is right. It cannot be done. These operating people tell me that there is a lot of misconception as to what is required in order to handle carload traffic. They talk here as though you can set up a unified facility and that every operator will have a platform at his back door where he can put his cars and unload them directly into his shop. Of course, that is a very unrealistic picture of the thing, because they tell me that a given dealer, if he has any business at all, will be unloading from 15 to 20 cars at one time. That is, he will be taking his produce from 15 or 20 cars at a given time. You could not conceivably have a facility where a man with a 20-foot office space or dock could have room outside of his back door to park 15 or 20 freight
There are a lot of practical sides to this thing, you know, that are not appreciated by people who are not familiar with it. I do not know anything about it. I am not familiar with the operations, but that is what our people tell me.
The CHAIRMAN. Have you not just agreed with Mr. Hill that out in Denver they do have a better situation merely because they went out where they had wide open spaces that could be accessible.
Mr. Souby. It was built that way initially and that is very fortunate. I used to be with the Union Pacific, and I left them shortly after they started that project. I knew something about it.
Mr. GRANGER. How many railroads during the depression had RFC loans, or I should say how many did not, that would be easier to answer.
Mr. Souby. I could get that information. I do not have it. There were a large number.
Mr. GRANGER. About four of them that did not have RFC loans.
Mr. Souby. Quite a large number. I do not know how many there were.
Mr. GRANGER. I say there were about four railroads in the United States that did not go to the Government for loans.
Mr. SOUBY. That did not?
Mr. Souby. I am not sure, but I think there were more than four that did not.
Mr. GRANGER. Four or five, and do you mean to say that the transportation system stood up, or would have stood up if the Government had not done anything to help the railroads?
Mr. Souby. They would have just gone through the wringer a little more quickly. I have talked to quite a number of railroad lawyers who handled the bankruptcy cases and several of them have told me that the most unfortunate thing in the world was the fact that their company had availed itself of the RFC loans, because it merely prolonged the evil day.
Mr. ALBERT. What about the land grants made to the railroads during their early development, do you think that was bad policy on the part of the Government?
Mr. Souby. I have never thought so, and one reason for that is something that most people overlook; that is that the grants to the lines had a definite quid pro quo attached to them. They were not outright gifts. Generally they required the railroads to handle the Government freight and passengers at certain rates, some of them absolutely free. There were one or two instances where they were construed as requiring the free transportation of Government property and persons. But they were generally construed as merely giving the Government a right to operate its own vehicles over the road, similar to some of the old highway land grants, and the courts worked that out to a point where it represented the Government paying about half rate on its traffic. You know we went through that long history in obtaining a repeal of the land-grant provisions requiring reduced rate transportation.
Mr. GRANGER. You used to work for the Union Pacific Railroad, did you not?
Mr. Souby. I was with the Union Pacific a great many years.
Mr. GRANGER. It is one of the railroads that has always operated at a profit, as I remember it.
Mr. Souby. Since they went through receivership back in 1896.
Mr. Hill. The Union Pacific has gone through receivership several different times, as I remember it.
Mr. Souby. I think only once, Mr. Hill. It was 1896, back in that period.
Mr. GRANGER. The reason it makes a profit now is because of the grants given it by the Government for oil wells and coal mines and grazing lands.
Mr. Souby. I would not say that is the reason. That is one
Mr. GRANGER. One reason it operates in the red.
Mr. HILL. What would the land be worth if you did not have the railroad?
Mr. GRANGER. I am not saying about that. I am saying if the railroads think like this man thinks, you would not have any railroads very long.
Mr. Hill. Britain has already turned them over to the Federal Government.
Mr. Hill. You think we will take them over, the Federal Government, like Britain?
Mr. GRANGER. I think they might be forced to take them over, unless they get more business. Mr. Hill. You think they are getting worse than they were.
I thought they were improving. We would not have Utah if we did not have the railroads. You folks walked into Utah the first time and then decided you needed railroads.
The CHAIRMAN. We thank you very much.
Mr. Souby. Mr. Chairman, I watched the witnesses ahead of me, and I thought I would profit by their unfortunate example, and not get myself into any wrangle, but I see that I am probably a very poor lawyer.
The CHAIRMAN. Thank you very much, Mr. Souby.
STATEMENT OF KARL D. LOOS, CALIFORNIA FRUIT GROWERS
EXCHANGE, LOS ANGELES, CALIF. Mr. Loos. Mr. Chairman and gentlemen of the committee, my name is Karl D. Loos, and I appear here in support of this bill on behalf of the California Fruit Growers Exchange, Los Angeles, and the California Fruit Exchange of Sacramento. Those are shipping organizations which ship the citrus fruit, in the case of the first, and deciduous fruits in the case of the second, of their grower members, and I think we can safely assume that they represent not only the shipper point of view, but also the grower point of view with respect to those two commodities grown in the State of California and the State of Arizona.
This subject has been pretty well covered in the hearings, and I think I can be very brief in stating our reasons for believing that public credit should be made available for improved terminal facilities, and I think that is the primary issue here, as to whether or not this bill should be approved.
The ideal market for perishable products, we must remember we are talking about perishable products, that means they have to be handled promptly and distributed fast, the ideal market is one where all of the supplies of those commodities can meet all of the buying power in a given area, and where at the same time the goods can be promptly unloaded from the conveyances, the cars, or the trucks, or the ships that have brought them to the market and promptly distributed through the wholesale and retail channels of trade to the ultimate consumer.
Now, we probably never will get the ideal market in any one place, but to accomplish as near an approach to that ideal as we can, it is essential that we get together in this market and get an agreement from all of the participants in that market and those participants are numerous and varied. They are the shippers and the growers from California and Arizona, from Florida, from Texas, from all over the country, that ship fruits and vegetables into those markets. They are the local receivers, the local trade, as they are sometimes called, the carlot receivers, the brokers, the commission men, the dealers, the wholesalers through whom these commodities must be distributed to the retailers.
There are also involved the local health authorities, the local traffic authorities, and the transportation agencies, the railroads and the trucks, and in some places the ships, and by the time you get all of those agencies, all of those groups into agreement as to a place where the market is to be located, and as to how it is to be constructed, what is to be done about it, you have gotten to the point where you cannot afford to run the risk of having to go to any one of those parties, like the railroads, alone and say, "You are the ones that have to
finance it,” because as soon as you go to one of those groups and say, “What will you contribute to the financing? " they immediately want some compensation for that contribution. So we have a situation where if we can get all of these interests in agreement on the construction and location of a market, we cannot afford to run the risk of having to go to any one or group of them for the financing, but we must have access to public credit to finance the deal. I think that that is then basically the reason for this bill, to get all of these parties in agreement because there are so many interested in it, the shippers, the growers all over the country, as well as the transportation agencies and the local trade; there are all of these interests involved, and only through public credit can we get the financing for something that involves so many different interests. That I think is fundamentally our proposition.
The CHAIRMAN. As proof of that, the railroads have constructed certain facilities but they constructed them only for railroad purposes.
Mr. Loos. Yes, sir; that is true, and that is our objection to the railroad facilities at some points, that there are truck shipments coming in and it means that the truck shipments cannot come into the rail facilities. They are sold some other place in town. The buying power and the supplies do not meet at a common point, and you have a disorganized market as a result.
Mr. ALBERT. Do you think that the competition which the different transportation facilities and others have to go through even though they separate their locations keeps the cost down to the consumer on these things or not?
Mr. Loos. Well, I think that the competition between the transportation agencies tends to hold rates down, rates of transportation, and to that extent they tend to hold down the costs to the ultimate consumer. But I think sometimes in competition with respect to terminal facilities that we sometimes run into losses and wasteful practices in the terminal that offset some of that saving in transportation cost, and the total cost perhaps is greater than it would be if there were a unified terminal. We would still have the competition between the transportation agencies with respect to the rates for transportation. We would not have the competition between one terminal and another terminal. I think that competition between two or more terminals for fresh fruits and vegetables in one market is not a particularly helpful competition.
The CHAIRMAN. Any further questions? If not, Mr. Loos, we thank you for your appearance.
Mr. Loos. Thank you.
The CHAIRMAX. At this point in the record, I would like unanimous consent to include in the record certain communications which have been received by the committee from various individuals and firms and organizations pertaining to the bill under consideration. (The communications referred to are as follows:)
STATE OF COLORADO,
Denver 2, Colo., June 26, 1950.
House of Representatives, Washington, D. C. DEAR MR. COOLEY: After receiving a copy of H. R. 8320, which you sent me sometime ago, I read the bill over and discussed it with some of the people in our department. We greatly appreciate the work that you have done on this bill,