Mr. SCHOENE. I have not heard that figure, Senator, and I would be unable to say whether it is a valid figure or not.

Senator PROUTY. Thank you.

Senator PASTORE. Senator Yarborough?

Senator YARBOROUGH. Mr. Schoene, after the carriers served notice of proposed rule changes on the brotherhoods on November 2, 1959, there has been a good bit of material in the press and in the magazines about this controversy over the intervening years. I have read part of that that was available. And generally it dealt with featherbedding or what they called an excess number of jobs that were not needed to do the work. And the last few days, before this committee, the matter has come up of reduction in pay and there were certain tables submitted in the last 2 nights, that if certain categories of operating personnel worked so many hours a week, then there would be no reduction in pay. Getting away from the elimination of jobs entirely, and going only to pay reductions, how many of the 200,000 operating personnel would have their salaries reduced by the carriers proposed work rules changes?

Mr. SCHOENE. Well, Mr. Homer has addressed himself to that and as I recall, subject to correction by him, about 80,000.

Mr. HOMER. Something between 80,000 and 90,000.

Senator YARBOROUGH. So in addition to the elimination of jobs, the work rules changes involve reduction in pay for some 80,000 to 90,000 of the 200,000 operating personnel?

Mr. SCHOENE. That is right.

Senator YARBOROUGH. How many would the proposed work rules changes eliminate in jobs, 32,500 firemen, is that the only jobs that are eliminated?

Mr. SCHOENE. No. Now in the other categories, here again under the carrier proposals, since they would be vested with complete discretion as to the manning of these operations, it would depend on their arbitrary decision as to how many would be eliminated.

As I recall, the carriers themselves have estimated that they are going to eliminate some 18,000 train service employees through revisions in the train consists.

Senator YARBOROUGH. So if we added that to the 32,500 firemen, there would be a reduction of at least 50,000 in the operating personnel, from 200,000 roughly to 150,000.

Mr. SCHOENE. I would say that would be a minimum under the carriers' estimates. Probably it would exceed that figure.

Senator YARBOROUGH. And of the remaining 150,000, there would be a reduction in pay to between 80,000 and 90,000.

Mr. SCHOENE. That is right.

Senator YARBOROUGH. So you are dealing with not only the elimination of jobs, but with a reduction in pay for the majority of the remaining employees.

Is that correct?

Mr. SCHOENE. That is correct.

Senator YARBOROUGH. I have no further questions.

That would be an elimination of at least 25 percent of the existing jobs and a reduction in pay of over half the remaining 75 percent. Mr. SCHOENE. Subject to check by my mathematician, I will accept your figures.

Senator YARBOROUGH. That is a rough estimate.

Mr. HOMER. There might be some duplication as between thoseSenator YARBOROUGH. We are just getting a rough estimate. Just as close as we can in round figures.

No further questions.

Senator PASTORE. Any further questions?

(No response.)

Senator PASTORE. The Chair hears none.

This hearing is brought to a close with the exception that statements may be filed.

(Whereupon, at 3:25 p.m., the committee was adjourned.) (The following statements were subsequently submitted:)

REPORT OF DEPARTMENT OF COMMERCE TO SENATE COMMERCE COMMITTEE ON IMPACT OF A NATIONWIDE RAILROAD SHUTDOWN, JULY 26, 1963

Estimates have been made by the Commerce Department of the economic impact of a nationwide railroad shutdown. Our survey has been made on an industry-by-industry basis, and by obtaining information from appropriate agencies of the Federal Government. This industry survey has been summarized on the attached table, appendix I, arranged to show the cumulative effect as the shutdown goes on, from duration of a few days to a month.

The first industry on our list is coal mining. Coal has three major markets: Domestic public utility plants, steel production and export. The effect on each market will be immediate, because most of the coal mined in the United States is hauled by railroad from the mine to the point of use, or to a dock where it is transferred to a river barge, a Great Lakes vessel or an oceangoing bulk carrier.

Midsummer is a period of accumulation of coal reserves for a coming winter. If this accumulation of coal reserves is interrupted long enough, there will be a shortage resulting in added cost. Coal that normally is exported in summertime illustrates this. Failure to export coal now means less coal in the winter stockpiles at the foreign destination. This deficit may have to be overcome by shipping additional coal after the shutdown is over-paying higher ocean transportation charges because of the increased demand for vessel space. The result may be a substantial adverse balance-of-payments factor, depending on the duration of the shutdown.

sources.

With regard to the balance-of-payments question, it should be pointed out that the foreign customers for our export coal will immediately turn to other We will therefore lose not only the immediate sales during the shutdown period but may quite possibly lose many of these customers either permanently or for a prolonged period. Generally speaking, most of our export of chemicals, automobiles, and heavy machinery reach dockside by rail. On the other hand, imports of foreign automobiles, light machinery, nails, wire fence, and reinforcing bars can and normally do move from the port to destinations in the interior of the United States by barge or truck. It follows that our exports will fall relative to our imports, again worsening our balance-ofpayments problem.

At this time of year, both refrigerator freight cars and refrigerator trucks are using their full capacity to carry fresh foods such as lettuce, melons, oranges, and meat. If the refrigerator freight cars, or "reefers" in railroad slang, are immobilized, the result in a very few days will be shutdown of meatpacking plants and the loss of fruit and vegetable crops on the farm by inability to ship. A substantial part of the western sugarbeet crop is dependent on rail movement to sugar refineries. A shutdown of rail service would result in a large part of this year's sugarbeet crop to remain unharvested in the fields with resultant disastrous loss of farm income and further pressure on the already high sugar price to the consumer. Another example is the recent shortage of boxcars for moving this year's grain crops from farms to mills or elevators. The complete disappearance of railroad transportation for vital grain crops, and the resulting loss from inability to store will result in great economic losses.

The Food and Drug Administration of the Department of Health, Education, and Welfare anticipates serious problems due to the deterioration of perishable foods in transit, and in obtaining suitable transportation of volatile liquids required for testing purposes which normally move by parcel post. Only a 30to 60-day supply of medical inventories of medicines is on hand in most cities and emergency arrangements would have to be made to maintain needed supplies. Carbon bisulfide also is carried only in rail tank cars, and not by truck. because of its hazards. This chemical is essential for the manufacture of rayons, and although all other materials could be delivered to the plants by truck, the absence of this one material would force shutdowns starting at or in advance of a suspension of railroad service.

In construction, by the end of 1 month, 15 to 30 percent of all projects would be shut down, depending on the degree of dependence on rail for long hauls and on materials of great weight and dimensions such as steel girders. For example, several missile-site access road projects now underway are on the list of highway projects that would be drastically curtailed due to lack of rail-hauled materials.

Periodicals, moving mainly by rail would be hit heavily by a shutdown because there is nothing staler than yesterday's newspaper. Aircargo could not be used extensively for magazines because of military, postal, health and welfare, and passenger travel needs.

The cumulative effect of a nationwide railroad shutdown is evident from the examples cited. By the end of the first month the total injury to our economy will be very serious. The table appendix II, which is submitted for the record, compares the estimated effect on the first day with the cumulated impact at the end of 30 days. Note that after a month, and assuming vigorous efforts by truck and barge carriers, the table shows that seven-eighths of the present-day normal rail traffic would still be immobilized. Only one-eighth would have been diverted to barges and trucks. This comes about in part because rail hauls are generally longer than truck journeys. Another reason is that there just are not a sufficient number of trucks and barges to move large volumes of the present-day railroad freight traffic.

The Department of Defense estimates that 30 percent of the traffic they normally route via railroad is not divertible to barge or truck or air, either because of location of origin or destination, or because of the dimensions or nature of the commodity. This defense transportation problem, it seems to us, of itself justifies swift and favorable response by the Congress, by enacting the legislation requested by the President in his special message of a week ago.

Likewise, the military applications program of the Atomic Energy Commission must not be interrupted because it is vital to national defense. Much of its materials requirements can only be shipped by rail.

The Post Office Department has had to send out advance instructions to the 35.000 post offices, so they will be able to take immediate action, if there is a railroad shutdown. These instructions emphatically highlight the seriousness of this entire situation. All second-, third-, and fourth-class mail, including parcel post and magazines, will be refused if the destination is more than 150 miles from the point of origin. As much first-class mail as possible will be moved by air, giving precedence to the longer distances and to international origin or destination. In brief the Post Office plan is to move mail of all classes by truck up to 150 miles and to provide air service for as much of the longer haul firstclass mail as possible.

The General Services Administration is prepared to authorize all agencies for whom they provide traffic management assistance, to defer nonvital railroad shipments.

The Department of Agriculture has made preparation to reroute grain shipments, and they are prepared to stop grain export sales from the east coast.

The problems that will be faced during and after a railroad shutdown by large metropolitan areas will be very serious. Already minor scare buying has begun to deplete food supplies in grocery stores and meat markets. Only prompt action by the Congress can allay such consumer fears.

The commuter and long-distance rail passenger problem will have serious disrupting effects, including the well-known phenomenon of permanent loss of some of the preshutdown patronage. Both the Interstate Commerce Commission and the Civil Aeronautics Board will help all they can by giving prompt approval of emergency operating authority for additional bus and air service. State regulatory agencies may be expected to take similar actions.

Following is the report the Department of the Interior has furnished us as to the effect on production of minerals and other resources.

No problem is anticipated as to transportation of petroleum products, although moderate problems are anticipated with respect to chemicals and liquified petroleum gas. Most coal mines have been idle because of the miners' vacations thus depleting shipments. There is a 57-day supply on hand nationally, and an 81-day supply in powerplants. However, a few plants may not have such large stocks. Serious regional shortages would rapidly occur. Movements of copper, lead, and zinc between mine and smelter would be seriously curtailed. Steel mills could receive some raw materials and fuel but could not move production. Significant effects would be felt in the transportation of cement, crushed stone, and other bulk commodities.

NOTE. At end of 1 month, additional unemployment is estimated at over 6,500,000 persons. Total unemployment is estimated at 15 percent or more.

APPENDIX II

Alternative transportation capacity available to handle rail freight traffic [Billions of ton-miles per year]

NOTE.-Increase obtained from approval of emergency air and surface operating rights (ICC and CAB) also increased utilization of private air and surface equipment.

THE MONONGAHELA CONNECTING RAILROAD CO.,
ALIQUIPPA & SOUTHERN RAILROAD Co.,
THE CUYAHOGA VALLEY RAILWAY Co.,
July 13, 1963.

Hon. WARREN G. MAGNUSON,
Chairman, Committee on Commerce,
U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: Reference is here made to Senate Joint Resolution 102 concerning the railroad rules dispute.

The companies herein represented are all class I common carrier railroads. Usually categorized as terminal switching railroads, they originate line-haul moves by collecting shipments at industrial sources and interchanging them to a connecting line-haul carrier for movement to ultimate destination, and they complete the line-haul move for the major trunklines by transferring to ultimate industrial destination those cars and commodities interchanged to them by said carriers. In addition to the foregoing, these railroads move commodities from one mill or plant to another on their own lines, and they also perform so-called intraplant or industrial switching for industries served. The major industry served by the railroads here represented is the Jones & Laughlin Steel Corp., the country's fourth largest steel producer.

As previously stated, the three railroads here represented are class I railroads with all the "boons" and "banes" of any other class I railroad. They are covered by the Railway Labor Act, the rules and regulations laid down by the Interstate Commerce Commission, Railroad Retirement and Unemployment Insurance Acts, etc., and their approximately 2,000 employees are also represented by the standard railroad brotherhoods via 20 different bargaining units.

As terminal switching is strictly a yard-type operation, operating employees are called yardmen, and their contractual labor agreement work rule terms are almost identical with those of yardmen employed by the major lines.

As I understand proposed Senate Joint Resolution 102, it is intended to prevent, or at least postpone for a minimum of 2 years, a railroad strike over the socalled manning and related issues. It is felt that the economic impact of such a work stoppage would be intolerable. With this I am in complete accord. I do seriously question, however, the effectiveness of such proposed legislation if its jurisdiction and application is limited to that segment of the railroad industry represented only by the Eastern, Western, and Southeastern Carriers' Conference Committees. Such selective legislation would defeat the very purpose for which intended. It might keep the steel, automobile, and other associated industries operating by prohibiting a work stoppage on the line-haul railroads, but on the other hand, it would permit almost all of them to be effectively shut down by a work stoppage on railroads such as ours by the same operating brotherhoods over the identical manning rules which have precipitated the present crisis. Under such circumstances, the proposed controversial resolution would obviously be futile.

It is my contention that if legislation is enacted to temporarily or permanently settle the problem, such legislation should be all-inclusive and nondiscriminatory in its application, and that it cover all disputes of the nature here involved whether they be presently going through the procedures of the Railway Labor Act or whether such procedures have been exhausted. The purpose of the legislation, if enacted, is to avoid work interruption and resultant economic havoc due to the manning issues and related subjects. Unless such legislation is all-inclusive of every carrier having the problem, its end purpose will be thwarted and defeated.

There have been numerous strikes and threats of strikes on railroads such as ours over the years involving the very issues here present. The frequency and intensity of these disputes have increased in recent years. A general shutdown of heavy industry and the resulting shutdown of suppliers, fabricators, and manufacturers which would ensue from a work stoppage on a railroad such as ours, if such should occur, would have very serious economic impact on the public, railroad employees, and railroads.

I abhor the necessity of governmental intervention in a matter such as this. However, if intervention is determined to be necessary and machinery is set up to handle the subject, such machinery should be available, as the need arises, to anyone faced with the exact or related issue.