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the supply is adequate, and (4) to such other cases or circumstances as the Commission finds to be in the public interest."

The railroads which I represent are strenuously opposed to this amendment. They are convinced it is unsound as a matter of law, equity, and practicality. They believe it would destroy the effectiveness of the bill to accomplish its intended purpose, and earnestly urge you to report H.R. 7165 as introduced, without such a crippling and emasculating amendment.

The basic vice of the amendment is the fact that, apparently, it would permit the Commission to prescribe dozens of different car-rental charges for the use of the same car, depending upon the financial, geographical, or other conditions, of the different car users. This is a false and vicious concept on its face, and is contrary to the opinion of the Supreme Court in CRI&P Ry. Co., et al. v. United States, 284 U.S. 80, 95, 96-97. In that case, the court overturned as arbitrary and unreasonable an I.C.C. order which undertook to relieve certain railroads in whole or in part, from per diem payments (for reasons similar to those advanced by the sponsors of the Senate committee amendment). In effect, the court said that car owners are entitled to a "fixed sum per day for every car used by a foreign line" without regard to the effect of such charges upon any particular car user or group of car users. The Senate committee amendment, or any amendment designed to give special treatment to any group of car users, would threaten the constitutional validity of the bill, and almost certainly defeat its major purpose.

From a practical standpoint, it is obvious that an accounting nightmare would be created if car rental charges for the use of the same car should depend upon the financial or other condition of different users, but the amendment is impractical for other reasons. The theory inherent in clause (2) of the amendment is the fundamental cause of all our difficulty, namely, the unwillingness of certain roads to bear their share of the equipment burden; their insistence upon doing business with cars owned by others; and their constant effort to depress car rental charges to the lowest possible level. If the Congress, even by implication, gives any recognition to this false concept, its efforts to improve the national car supply, by providing incentives for freight-car ownership, may well be fruitless and wholly ineffective. If, as now, certain railroads can continue to appropriate and use freight cars owned by others, by payment of a depressed and inadequate rental, the damage is double barreled. The car user thus fortunately situated has no incentive to acquire more cars; and the car owner, whose cars are thus used, has no incentive to add further units to his fleet. The amendment is thus diametrically opposed to the basic philosophy of the bill, and would tend to perpetuate the evils which it is designed to correct. If we are to rebuild America's freight-car fleet, in consonance with the President's effort to "build a second America," such false concepts must be summarily rejected.

I should add that the foregoing is not intended to suggest indifference to the financial plight of the New England roads, nor is it intended to foreclose due consideration of their interests in appropriate proceedings before the Interstate Commerce Commission. Rather it is based upon the propositions (1) that the bill, H.R. 7165, relates solely to the level of per diem or car-hire charges, as distinguished from the apportionment of such charges among car users, (2) that if and when a proper level of per diem charges is prescribed, car owners will be entitled to receive such charges without regard to the identity of car users, and (3) that if hardship results from observance of these sound principles, relief is obtainable in proceedings before the I.C.C., which do not involve the level of per diem charges, but, instead, the apportionment of such charges among car users. I conclude by quoting from the decision of the Supreme Court in CRI&P, et al. v. United States, supra:

"If, as claimed, the earnings of the short lines are insufficient to enable them to make full payment of car-hire costs, the Commission may be able to afford a remedy by increasing the rates, or by a readjustment of the division of joint rates. New England Divisions Case, 261 U.S. 184; Beaumont, S. L. & W. Ry. v. United States, 282 U.S. 74. It cannot be done by confiscating for their benefit the use of cars of other railroads.

"The case does not present a question of apportionment of car hire costs. The Commission undertook to determine, and did determine, what was a reasonable compensation for the use of cars, and definitely fixed that compensation on a per diem basis. It then, by its order, denied such reasonable compensation in certain cases. This is in no proper sense an apportionment of expense, but a plain giving of the free use of property for which, the Commission had concluded, the owner should be paid. ***”

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EXHIBIT A

Freight Car Ownership Class 1 U.S. Railroads 1945 to 1965 Incl.

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EXHIBIT B

BOX Car Ownership Class 1 U.S. Railroads 1945 to 1965 Incl.

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EXHIBIT C

Boxcars owned and percent of "home" boxcars on line

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Mr. MARTIN. As I said yesterday, I speak in the support of this legislation on behalf of 26 railroads who collectively own about 40 percent of the national freight car fleet. I emphasize the fact that these railroads are not located in any one section of the country. They serve all parts of it. I missed one or two yesterday in my extemporaneous remarks so I will now repeat not all of those that are listed on the written statement, but some of the more important ones.

In the East we have the Chesapeake & Ohio, Baltimore & Ohio, and Western Maryland. In the South we have the Southern Railway, the Louisville & Nashville, the Illinois Central, and the Gulf, Mobile & Ohio. In the West we have Santa Fe, Burlington lines, the Denver & Rio Grande Western, Great Northern, Northern Pacific, "Frisco," and Western Pacific.

Those of you who know even a little about the railroad network will understand from this that among the ardent supporters of this legislation are railroads serving all parts of the United States.

I will not, because of what transpired yesterday and because of what appears in my written statement, devote very much time to the extent and severity of the car shortage in which we now find ourselves. I do want to emphasize the fact that these recurrent car shortages have ceased to be either seasonal or regional. Time was perhaps 10 years ago or thereabouts, when serious car shortages were concentrated during the fall harvest season, and even then were concentrated to a large extent in the grain producing areas of the country. That has changed and changed radically.

Today these shortages are nationwide and are almost continuous throughout the year. This is an important change in conditions which I hope the committee will keep in mind.

Last year's shortage was characterized as the worst yet and this year there is every indication that the shortage will be even worse than it was last year. The freight car ownership of this country is at a record low, lower than it has ever been during this current century. There is before you on the easel a chart and which you will find appended to my written statement, which I think you have before you,

the same chart and with respect to those charts I want to emphasize only one point.

You will see on the big chart, which is on the easel, some red hatched lines that show a dropoff even more precipitate than the dropoff that appeared on the chart as originally made up. This chart was prepared for the Senate committee hearings in June of this year. The red hatched line which extends down to September 1 of this year, shows that the drop in ownership of plain boxcars has been even more precipitate since June than it was immediately prior to June.

The plain boxcar ownership is at a dangerously low level and something ought to be done about it.

The CHAIRMAN. What do you mean by the drop in boxcar ownership?

Mr. MARTIN. I mean the total car fleet of the country.

The CHAIRMAN. Available?

Mr. MARTIN. You can state it either way. The ownership or the serviceable ownership. There are differences of about 6 or 7 percent. The figures which appear on this chart and which appear in the written statement are ownership figures.

You will have to reduce them by 7 or 8 percent in order to get the actual available ownership, because approximately that percentage of the total fleet is out of service awaiting repairs.

Because those percentages apply all the way across the board and because the ownership figures are more readily available, I have used them.

I emphasize only two points there in connection with the decline in car ownership. This chart and the tables in the written statement cover a period of 20 years from January 1, 1945, to September 1, 1965. During that period, the ownership of all freight cars excluding railroad-owned refrigerator cars which are not subject to per diem charges, there appears to have been a loss of almost 300,000 cars.

The figure, as of September 1, was 296,383 and I believe that if it were brought down to date it would closely approach a loss of 300,000 freight cars since 1945. The plain boxcar ownership as of September 1, 1965-and that is the figure that is exemplified by the chart-is down well over 200,000 since January 1, 1945.

Then just one more statistic. This refers to the installations and retirements of boxcars. During 1964, the calendar year, there were installed 18,061. That is 18,061 new boxcars placed in service. But 37,301 were retired from service. The ratio of retirements to installations for the calendar year was greater than 2 to 1 against the maintenance of the fleet.

To bring it even more closely down to date, in August of this year, the latest month for which the figures are available, 1,131 new boxcars were installed but 3,895 were retired. So the retirement of boxcars is still proceeding right down to this very moment at a rate of better than 2 to 1, retirements versus installations.

The CHAIRMAN. Are those ICC figures?

Mr. MARTIN. Those are AAR figures. I think they are the same. Mr. SPRINGER. Mr. Chairman, I have a question.

You mean by "retirement" those are out of existence?

Mr. MARTIN. Yes, sir.

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