Therefore, if they are going to be forced to have these losses on passenger service, they are going to have to make it up on their freight. or otherwise they will have complete loss and go out of business.

Mr. MOULDER. I do not believe that is the basic rule for the estab-. lishment of freight rates.

Mr. ANDERSON. That may not be the basic rule, but that is one of the factors that has always been considered and has had its effect on the transportation cost, on the increase in our freight rates in the past. Mr. MOULDER. That is all, Mr. Chairman.

Mr. WILLIAMs. Mr. Staggers.

Mr. STAGGERS. Would you be in favor of delegating this authority back to the State commissions and taking it away from the Federal Commission?

Mr. ANDERSON. As I understand, dealing with the intrastate fea-. ture, that is in the hands of the State commission, if you are talking: about the discontinuing of the trains.

When it involves interstate trains moving from one city in one State to another city in another State, the State commission cannot do anything about that.

Mr. STAGGERS. Did they not previously have the say over that before?

Mr. ANDERSON. They still do.

Mr. STAGGERS. Over interstate commerce?

Mr. ANDERSON. No, I don't understand that the State commissions have any jurisdiction over interstate commissions at the present time. Mr. STAGGERS. On any discontinuance.

Mr. ANDERSON. On any discontinuance. That is the way I understand the setup.

As I understand it primarily that gives the carriers the right to come before the Commission with a request for discontinuance of the train.

Mr. WILLIAMS. Mr. Collier.

Mr. COLLIER. Mr. Anderson, you said you were formerly employed by the Rock Island Railroad; is that correct?

Mr. ANDERSON. Yes, sir.

Mr. COLLIER. For how long?

Mr. ANDERSON. 10 years.

Mr. COLLIER. In what capacity?

Mr. ANDERSON. As a rate clerk in their general traffic office. M Mr. COLLIER. Thank you, sir.

That is all I have.

Mr. WILLIAMS. Mr. Friedel.

Mr. FRIEDEL. What company are you connected with?

Mr. ANDERSON. The Lion Oil Division of Monsanto Chemical. We

have a refinery at El Dorado.

Mr. FRIEDEL. Do you have union labor?

Mr. ANDERSON. Yes, sir.

Mr. WILLIAMS. Mr. Jarman.

Mr. JARMAN. How do you feel about the proposal that would shift the burden of proof on discontinuances to the railroads?

Mr. ANDERSON. As far as that is concerned, if the railroads are the ones that want to discontinue this I think the burden of proof should be on the railroads to prove the necessity for the discontinuance of it.

I think that proof should be on the railroads.

Mr. JARMAN. That is all.

Mr. WILLIAMS. Are there any further questions.
Thank you very much, Mr. Anderson.

When the committee meets this afternoon, I will repeat, it will be in room 1334 of the New House Office Building. There will be seating facilities for everyone.

The subcommittee will adjourn now until 2 o'clock this afternoon. (Thereupon, at 12:05 p.m., the subcommittee was recessed, to reconvene at 2 p.m. same day.)

AFTERNOON SESSION

The subcommittee reconvened at 2 p.m., upon the expiration of the

recess.

Mr. WILLIAMS. The committee will come to order, please.

Mr. Breithhaupt, I believe we have a copy of your statement, so you may proceed.

STATEMENT OF HARRY J. BREITHAUPT, JR., GENERAL ATTORNEY, ASSOCIATION OF AMERICAN RAILROADS

Mr. BREITHAUPT. I believe copies have been distributed to you, sir.

Let me say at the outset, Mr. Chairman, that I have a somewhat lengthy statement, and in the interest of conservation of time, your time, I do not propose to read the entire statement; but I would like your permission to have the entire statement made a part of the record of these hearings.

Mr. WILLIAMS. The committee will be glad to receive it, the entire text of your statement, as a part of your testimony.

Mr. BREITHAUPT. Thank you, sir.

Let me say for the record that my name is Harry J. Breithaupt, Jr., and I am general attorney of the Association of American Railroads, with offices in Washington, D.C.

My appearance before you today is in behalf of the member lines of that association, by direction of its board of directors, and my appearance is in opposition to H.R. 9742 and related bills.

I should also say at the outset that the railroads will, with the indulgence of this subcommittee, tender a number of witnesses in opposition to these bills, dealing more specifically than I could hope to deal-and in many instances with greater firsthand knowledge as to individual circumstances with the several features of this proposed legislation that must bear upon your studied consideration of it. Let me first, Mr. Chairman, speak of H.R. 9742 and at the conclusion of my statement come back briefly to the other bills.

H.R. 9732, as you know, is labeled as the Passenger Train Service Act of 1960. It has been introduced, as you also know, and set for hearing because of dissatisfaction in certain quarters with the pro-, visions of section 13a of the Interstate Commerce Act.

Those provisions, as you also know, have to do with the discontinuance or change of the operation or service of trains and railroad ferries, and in their present form became a part of present law as the

result of the enactment-on August 12, 1958-of the Transportation Act of 1958.

What I want to emphasize, though, Mr. Chairman, and what I fear may not be fully recognized by all of the members of your subcommittee is that H.R. 9742 is designed to effect much more than a mere tightening up of the present provisions of section 13a of the Interstate Commerce Act.

It is designed to be much more, indeed, than a mere repealer of section 13a.

Under the guise of providing a remedy for certain alleged faults that its principal backers-and I will come back in a moment to identify the principal backers-profess to see in section 13a as its provisions now stand written in the Interstate Commerce Act, H.R. 9742 would in point of fact substitute a far-reaching, burdensome and destructive scheme of unnecessary regulation and control of railroad passenger service, equipment, and facilities.

Every aspect and virtually every detail of passenger service, equipment, and facilities would be covered by Government dictate or decree, including the type and number of cars in a train, matters of scheduling, hours of operation of ticket offices, et cetera, and even sanitation. I make this point early in my statement, without elaboration at this stage, in the hope that sight of it will not be lost, and with the hope that consideration of the bill may be kept in proper perspective as discussion of it ensues. Elaboration and explanation will, with your permission, come a little later.

I have already mentioned that the present provisions of law as to train discontinuance or change, section 13a of the Interstate Commerce Act, came into being as a result of the enactment of the Transportation Act of 1958.

That particular statute, remedial in nature, was the direct outgrowth of extensive hearings and study devoted by this committee and your counterpart committee in the Senate in 1958 to what was then aptly described as "the deteriorating situation of the railroads."

There was, at that time, a most comprehensive investigation by you, as well as by your counterpart committee in the Senate, into the reasons for the dangerous ills that threatened the well-being of the railroad form of transportation.

By no means least among the ills found to beset the railroad industry was the constantly recurring passenger deficit which, despite the partially curative action recommended by this committee and taken by the Congress, remains one of the graver problems, if not indeed the most grave, faced by the railroads today.

The extreme gravity of the passenger deficit problem has been repeatedly acknowledged, and emphasized, by the Congress, by the Interstate Commerce Commission, by State regulatory commissions, by shippers and, of course, by railroad management.

During 1958 you heard from numerous witnesses on this subject. As a matter of fact, to remind you of the attention that you have patiently displayed in connection with this matter and related matters, let me quote from your committee's report-House Report No. 1922, 85th Congress, 2d session, pages 2-3, on H.R. 12832, which became the Transportation Act of 1958:

The instant bill is the culmination of some years' consideration by the committee of problems in the surface transportation field and of various legislative pro

posals advanced for meeting them. The committee's Subcommittee on Transportation and Communications, since the 1st session of the 84th Congress, has continuallly conducted hearings on the overall situation, on proposals affecting general transport policy, or on proposals for changing specific statutory language to meet special circumstances.

In the fall of 1955 the subcommittee reconvened after the adjournment of the first session to have presented to it an explanation from the members of the Presidential Advisory Committee on Transport Policy and Organization of its report to the President of April 18, 1955. From April through June 1956, the subcommittee conducted hearings on H.R. 6141, a bill submitted by the Department of Commerce to carry out the Advisory Committee recommendations, and on other related bills before the committee.

In the spring of 1957 the subcommittee had further hearings on 15 bills to carry out certain legislative recommendations of the Interstate Commerce Commission-9 of which already have been reported and become public law-and upon 10 other bills in the surface transportation field.

In April and May of this year, the subcommittee again has been in practically continuous session on proposals to strengthen common carrier surface transportation, some of them restatements of those considered earlier, and some new legislation arising from the drastic effects of the recession upon such carriers. In your report-on the Transportation Act of 1958-you stated: A major cause of the worsening railroad situation is the unsatisfactory passenger situation. Not only is the passenger end of the business not making money, it is losing a substantial portion of that produced by freight operations (p. 11).

It is of interest, too, Mr. Chairman, to see what the Surface Transportation Subcommittee of the Senate Committee on Interstate and Foreign Commerce had to say in this regard:

The subcommittee realized that the railroads' financial condition results, in a large measure, from the general passenger defiicit of about $700 million in 1956 and similar large amounts in recent years (S. Rept. No. 1647, 85th Cong., 2d sess., p. 9).

In its report of May 18, 1959, to which your attention was invited this morning by Commissioner Tuggle of the Interstate Commerce Commission, in the so-called Railroad Passenger Train Deficit Investigation, made after searching study, the Interstate Commerce Commission said:

The financial loss is real; it is large and appears to be growing, and it endangers the present and future welfare of the railroad industry.

*** If this threat to realization of the objectives of the national transportation policy is to be substantially lessened, responsible efforts in this direction must reckon with facts as they are.

We continue to believe that the elimination of that deficit or at least an early and substantial reduction below the peak level of 1957 is imperative to avoid destructive effects on the freight carrying potential of the railroads.

Mr. WILLIAMS. Mr. Breithaupt

Mr. BREITHAUPT. Yes, sir.

Mr. WILLIAMS. May I interrupt. This is off the record. (Discussion off the record.)

Mr. WILLIAMS. The committee will stand adjourned until 10 o'clock in the morning.

(Thereupon, at 2:25 p.m., the subcommittee was recessed, to reconvene at 10 a.m., Thursday, April 7, 1960.)