would be the adjustment of the rental rates so it becomes more attractive to a railroad to own boxcars than to rent them. This is precisely what the legislation now before the committee is designed to do. I most earnestly support this legislation, hope the committee will give it favorable consideration. Now earlier in here, I said that the cause of the growing shortage of freight cars is simple enough. More cars are wearing out than are being built, and the cause of that is simple enough, too. It is cheaper for railroads to rent a boxcar than to build one under present conditions. Apparently it is not quite that simple from the statement made by Mr. Harris, the chairman. However, as Senator Magnuson pointed out, a step in the right direction, or a step in any direction, may start help to alleviate this situation, and I would certainly urge that this legislation be favorably reported, and since I am not an expert, I won't expect any questions from you gentlemen, and I appreciate the opportunity to appear before the committee. The CHAIRMAN. Thank you very much, Mr. Hicks, for your presentation. Our next witness is the Honorable Lloyd Meeds, Member of Congress from the State of Washington. Congressman, it is nice to have you before this committee. STATEMENT OF HON. LLOYD MEEDS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON Mr. MEEDS. Thank you, Mr. Chairman and members of the committee. I am grateful for the opportunity to appear before the committee today and testify in favor of H.R. 7165 and similar bills, one of them introduced by myself, designed to help end the railroad freight car shortage and thereby to help bolster our economy. The legislation before us is a responsible answer to a most serious question: How can we increase the flow of goods when we lack the necessary freight cars to put these goods into the stream of commerce? Since January of 1956 the number of freight cars has decreased by over 200,000. Since January of 1965, the number of plain boxcars alone has decreased by 22,156. As a result, critical shortages of cars have occurred throughout the United States. This crisis is not regional or sectional. In the Pacific Northwest we originate more traffic than we terminate. This is particularly true in areas producing forest products. While manufacturers of plywood and other wood products are currently enjoying a boom, the boxcar shortage is threatening to severely depress wages, profits, and employment. Already six mills in Oregon have shut down. The American Plywood Association estimates that first, its member mills are operating at 98 percent of capacity and, second, that these mills need about 750 cars each day to transport their goods. But they have 650 cars at most. Their products are filling the yards. The proposed legislation will authorize the Interstate Commerce Commission to prescribe car rental rates that will encourage new car building and that will speed the return of existing cars. Since we do originate more traffic than we terminate, this will mean that we will have fewer costly delays resulting from having to wait long periods until our cars are returned from the East and South. But the speedy return of existing cars will only mean that other areas of the United States will be left without cars. That is, unless the carriers build or purchase new cars, we will not adequately meet the problem. The ICC has said that their first step following passage of this legislation will be to determine what railroads are lacking in what type of cars. In the Pacific Northwest there is a critical shortage of widedoor cars. Plywood is manufactured in large sheets, and it can be loaded. economically only if it is loaded by forklift into cars with 8-foot doors. Loading through a 6-foot door is a very expensive process, and the total loading-unloading expense can run as high as $215 over the expense of normal automatic loading. Ninety percent of all wood products are shipped by rail. And here we have a dangerous squeeze developing. On one hand, the demand for plywood is rapidly growing. On the other hand, the number of usable cars is decreasing. Serious long-range economic downturn will result unless we take action. It is clear that the present per diem rates only encourage hoarding and depress profits of our leading industries. Better circulation of cars will not alone solve this problem. American industry needs more cars, not less. The ICC should have the authority to establish incentive rates. I strongly urge the committee to approve this legislation. Mr. Chairman, I feel that the bills which we are considering today are a responsible answer to a very serious and complex problem. Since January of 1956, the boxcars in this country have decreased by over 200,000, and again, even this year, we find a decrease, although it is not as bad as it has been. I, too, originally entered this matter on a provincial basis, thinking that the Pacific Northwest was the sole recipient of this problem, but upon a little more thorough investigation, determined that it is not just a problem for the Pacific Northwest or the West, or the Midwest, but it is a national problem, which must be met by some responsible legislation. Like Mr. Hicks, I am sure that I can speak with some authority about the problems of the timber products industry in the State of Washington. We have the unique situation in our area of originating about four times, between three and four times as much goods as we take off the line. This, of course, makes our problem more serious with regard to the shortage. We have at the present time in the State of Oregon, six plywood mills which are closed down at this very time, today, because of a shortage of boxcars. I have a telegram this morning from a very responsible and respected plywood organization in my district, in Anacortes, Wash., in which, and I will just quote part of it, the manager tells me that: Many days, only a third of the required cars are available. This problem, gentlemen of the committee, is particularly depressing at a time when our plywood industry is operating and able to sell its products at almost full capacity, but when they need a total of 750 cars per day, and only have 650 available, you can see the depressing effect upon their ability to compete in a very competitive market. The bill which we are considering today, or the bills which we are considering today, I think will have a dual effect. One, they will speed the return of cars which are being hoarded in some instances, and two, the bills will provide an impetus for the building of more cars. Certainly, either one of these, standing alone, would not be sufficient, but I sincerely feel that the legislation will have this dual effect. The Interstate Commerce Commission has assured us that upon the passage of this legislation, they would make a thorough investigation to determine the problems which will be involved, and none of us here, certainly want to mitigate the seriousness of this problem to the railroads, either. While it has been called a sectional problem, it is obviously a serious problem in which many factors have to be considered. It is my feeling that the Senate amendment, or the amendment which was added in the Senate, will help clarify this problem, will help the Interstate Commerce Commission in their investigation to give the correct weight to the problems which some of the eastern railroads have, and in this way, I think enable this legislation to better serve all of us. I would like to speak also, particularly with regard to the matter of the type of cars which are available. We have, as Mr. Hicks pointed out, a situation in which plywood, and this, incidentally, gentlemen, is no longer specifically a Pacific Northwest or a Northwest problem. Certainly the Southern States are experiencing the same situation now with the increased plywood industry in their areas. We have the problem of needing wide-door cars for the efficient loading and unloading of this product, and it is costing in some instances as much as $215 to $290 more per car to load and unload a 6-foot door car than it does an 8-foot door car. Fortunately, most of the new cars being built are 8-foot door cars. I feel that the better circulation of the cars which are presently in operation and the increased impetus to build new cars provided by this bill will be a step in the right direction, and I strongly urge the committee to approve this legislation. The CHAIRMAN. Thank you, Mr. Meeds. Are there any questions of the Congressman? If not, thank you very much for your contribution. Mr. MEEDS. Thank you. Mr. HICKS. Mr. Chairman, could I interject for a moment? I had a call from the director of the port of Seattle, and they have sent a letter in here, and they asked that this letter be included in the record, and I spoke to one of the staff members, and it hasn't been found. The CHAIRMAN. Without objection, it will be included in the record at this point. (The document referred to follows:) PORT OF SEATTLE, Hon. OREN HARRIS, Chairman, House of Representatives, Committee on Interstate and Foreign Commerce, Washington, D.C. Seattle, Wash., September 24, 1965. DEAR CONGRESSMAN HARRIS: We desire to call to your attention the desirability of scheduling action on H.R. 9272 before the present session of Congress adjourns. There is positive need for long-range planning in the replacement of railroad cars for the orderly transport and marketing of the West's basic raw materials. Your early action is again requested on the above resolution. Yours very truly, J. ELDON OPHEIM, General Manager. Mr. CUNNINGHAM. As you know I favor this legislation and have introduced a companion bill. I also have a letter from the Nebraska Grain & Feed Dealers Association, for the legislation, which I would like to put in the record. The CHAIRMAN. Without objection, it will be included, and will be received subject to the rules of the committee, and if appropriate, will be included in the record at the appropriate place. (The document referred to follows:) NEBRASKA GRAIN & FEED DEALERS ASSOCIATION, Congressman OREN HARRIS, Chairman, Commerce Committee, Washington, D.C. DEAR CONGRESSMAN HARRIS: This association is composed of 850 members who are country elevators, terminal and subterminal elevators and feed manu-facturers. This is about 90 percent of the industry in Nebraska. We are served by two major railroads in our grain-producing areas, namely, the Union Pacific and the C.B. & Q. Railroads. Nebraska is an important grain and livestock producing state. We are now entering the harvest season on corn and grain sorghums. We are at the present time, according to the two above-mentioned railroads, 4,500 boxcars short in meeting demand. As harvest continues on a grain sorghum crop that will exceed 147 million bushels, the demand for cars will increase for some time to come. During the past number of years, it has been necessary that this crop be piled on the ground which requires that it be handled twice before it reaches market. This is expensive and wasteful. In 1965 this will become more of a problem than normal because of the wet condition of the grain and the excessive rainfall during the summer growing season and particularly during the month of September. Anything that can be done to insure that western railroads can operate with more nearly 100 percent of ownership of cars would be helpful. This might be done by an increase in per diem during times of need. This has been suggested, and we endorse the legislation introduced and passed by the U.S. Senate in S. 1098 to amend the interstate Commerce Act to insure the adequacy of the national boxcar supply and to insure better distribution of cars owned by specific railroads. Another problem that enters the discussion immediately is the inadequacy of the supply of boxcars. According to figures the supply of boxcars in 1925 was 2,357,000 cars and at the end of 1964 there were 1,492,000 cars, yet freight hauled has gone up 60 percent over 1925. This has been accomplished by two things, namely, bigger capacity cars and faster schedules. There is, however, a limit to both of these factors. We would like to suggest again that the Congress of the United States consider giving the railroads an incentive to build and own box cars. This could be accomplished by a fast tax depreciation schedule for a number of years on new cars. This would make it possible for the railroads to obtain sufficient capital to replenish the supply of cars in a short period of time. This, in our opinion, would do more to remedy this critical transportation problem than any one other solution. We sincerely suggest that your committee consider and act favorably on legislation which will promote better distribution of cars, encourage the ownership of cars, and encourage more efficient use of existing cars. We would like to thank you for the opportunity of expressing our opinion. Yours, very truly, HOWARD W. ELM, Executive Secretary. The CHAIRMAN. The next witness is our colleague from Montana, the Honorable Arnold Olsen. Mr. Olsen, we will be glad to hear you at this time. STATEMENT OF HON. ARNOLD OLSEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MONTANA Mr. OLSEN. Mr. Chairman, I wish to express my support for the freight car shortage bills, H.R. 7165, H.R. 425, and similar bills. As I have stated before, it is of utmost urgency that the Interstate and Foreign Commerce Committee report out and the Congress pass the bill which would alleviate the dangerous and economically depressing freight car shortage which exists in the country today. I will not repeat at length the facts which the Interstate and Foreign Commerce Committee has heard over and over again by representatives of the farming, lumber, mining, and railroad industries. These, in brief, are the summation of complaints as they have been presented to me: 1. No matter what the productivity and output of the farming, lumber, and mining industries, no income is received if this output is not transported to markets and to the consumers. Over the years the number of boxcars in use has fallen such that this fact alone would make it more difficult to transport the greatly increased output of these industries to the markets. 2. Compounding this shortage, existing legislation permits railroads to hold and use cars which they did not build and do not own for a minimal rent which makes it much cheaper to keep cars from other roads than it is to build new cars. Thus, a western railroad which has drastic car shortage will not spend upward of $15,000 to build a new car when this car will become the rental property of some other railroad at a ridiculously low price of $2 per day. 3. For these reasons, over the past 10 years the Nation has lost an average of 20,000 boxcars per year. The result is only too obviously disastrous for commerce. This shortage affects coal miners in Appalachia, grain producers in the Midwest, lumber mills on the Pacific coast, and all these industries in Montana. Plywood mills say they must close in certain heavily affected areas. Wholesale and retail trade is seriously curtailed in all geographical areas which depend upon these industries. In Montana these are the major industries, and all are affected by this blight. The effect on wages, profits, and employment on all trades and businesses in the affected areas is evident. This legislation is clearly in the national interest. This legislation would make the advantages of boxcar ownership more attractive in the interest of encouraging carriers to make a just and equitable contribution to the national car fleet. The Interstate Commerce Commission would be empowered to adjust per diem rates on boxcar rentals to give economic incentive to purchase cars to those |