railroads who now find it cheaper to keep cars from other railroads and pay a low per diem charge.

wholeheartedly support this legislation and again urge the committee to approve this bill this session.

The CHAIRMAN. We appreciate your testimony, Mr. Olsen. Mr. OLSEN. Thank you for the opportunity, Mr. Chairman. The CHAIRMAN. We will now hear from the Honorable James Battin.

STATEMENT OF HON. JAMES F. BATTIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MONTANA

Mr. BATTIN. Mr. Chairman, for many years, Montana wheat producers have suffered severe economic consequences resulting from boxcar shortages when cars were most needed.

Inability to ship wheat when it must be shipped has been very costly and has caused great inconvenience in normal grain marketing channels. A particularly ominous development in recent years, however, has been the increased severity of the car shortages. And they are no longer confined to the wheat harvesting season.

A commonsense approach to the problem of getting more freight cars is contained in H.R. 7165 and 18 identical bills introduced during this session. These bills provide logical incentive for railroads to acquire more cars and in an orderly way.

I concur with the philosophy of H.R. 7165 and other bills: That if freight car ownership is made financially attractive the railroads will build or acquire more cars. Not all railroads may choose to do so for some may not be financially able. But most railroads will choose to do so because freight cars will have become a sensible investment to make by railroad officers charged with such decisions.

In short, these bills introduce the infallible logic of supply and demand. When a demand exists for a product, service or a railroad freight car the market will meet this demand provided it can be done so profitably.

That is what these bills will do and I strongly support them in the interests of all shippers, farmers, and businessmen in Montana. The CHAIRMAN. Thank you, Mr. Battin.

Our next witness is Congressman Mize. You may proceed as you wish Mr. Mize.

STATEMENT OF HON. CHESTER MIZE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF KANSAS

Mr. MIZE. Mr. Chairman, members of the Interstate and Foreign Commerce Committee, thank you for this opportunity to testify in behalf of the legislation I have introduced, H.R. 5875, dealing with the problem of the railroad freight car shortage.

As a businessman in the Midwest, I have been particularly aware of this problem for a long time. I know what it means not to have enough boxcars to transport the Kansas wheat crop at harvest time. I've seen ton upon ton of valuable grain piled upon the ground along the railroad sidings waiting for shipment which had to be delayed weeks and months until enough freight cars could be made available.

When freight cars were diverted to take care of the grain harvest, other lines of business suffered because their shipments were held up due to lack of adequate shipping space.

The acute problems we have had in the Midwest have now become nationwide. This shortage is no longer peculiar to the Midwest and the far West. The South and the East have begun to feel the pinch. They know what it means to have vital commerce delayed. The universality of the problem is one of the reasons we are getting attention at this time.

When I came to Congress, I was obligated to carry on the fight for corrective measures which had been waged for years by my predecessors. I've studied the hearings and I've seen the volumes of testimony which have been filed calling attention to the problems and offering solutions which could be brought about through legislative action.

I would be remiss if I did not recognize the leadership which Kansas legislators of both political persuasions have taken in the annual battle to get Congress to move in adopting legislation which would get to the crux of this problem. I am particularly cognizant of what Gov. Bill Avery did when he represented the Second District of Kansas. Senator James Pearson, of Kansas, conducted hearings in the Midwest this year and has been recognized by his colleagues in the Senate Commerce Committee for the contribution which he made by making it possible for many people to testify who could not otherwise have come to Washington.

Gentlemen, the arguments for legislative action have been made time and time again. I can only emphasize the validity of these arguments in calling for action on the legislation you have before you. To all of these, permit me to add the impelling urgency of the moment. We are where everyone close to this problem predicted we would besmack in the middle of the worst freight car shortage in history. Something must be done.

A bill, S. 1098, has passed the Senate. It carries incentive amendments which should be included. There are some particular problems with respect to the terminal lines which must be recognized. We also must take into account those railroads which are doing a good job in maintaining an adequate fleet of freight cars. The Interstate Commerce Commission can take these items into consideration in setting realistic rates for freight car rental. If the Commission continues on the variable rental fee basis, we should see more improvement, although it is admitted there is not much evidence that the variable rates are the whole answer. It could be that they are still too low, and many lines are still finding it more economical to rent cars and not return them than to build them and own them outright.

At any rate, we should give the Interstate Commerce Commission the green light so that the necessary rate adjustments can be made and we can start working ourselves out of this perennial crisis.

I respectfully urge adoption of the language of the legislation I have introduced, H.R. 5875, plus the committee amendments to S. 1098 which were approved by the Senate. It is obvious that the national interest will be served when we have an adequate supply of freight cars, not only to move all of the goods which flow in peacetime com

merce, but to take care of the extra demands which are made whenever a cold war front heats up.

Thank you.

The CHAIRMAN. Are there any questions? If not, we thank you for your testimony, Mr. Mize. Next to be heard will be Congressman Bob Dole. Welcome to the committee Mr. Dole.

STATEMENT OF HON. BOB DOLE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF KANSAS

Mr. DOLE. Mr. Chairman and members of the committee, I appreciate this opportunity to present my views on pending legislation concerning the shortage of railway freight cars throughout the Nation.

The supply of serviceable boxcars has been declining yearly at an alarming rate, and the situation with respect to the reasonable movement of grain in western Kansas, as well as the entire Great Plains area, is becoming more acute each year.

As a member of the House Committee on Agriculture who represents one of the greatest Winter wheat and grain sorghum producing areas in the United States, I am perhaps more keenly aware of the impact. of the car shortage than if the economy of my district were not basically agricultural. For the past 15 years or more, each time wheat harvest approached, there has been an inadequate supply of boxcars to meet the requirements of farmers and grain shippers. There have been times when it has become necessary to pile thousands of bushels of harvested wheat and milo on the ground along railroad sidings or even in the main streets of towns, causing severe losses to producers and shippers. At this time, the milo harvest is commencing, and I have received numerous calls from grain handlers in recent days asking for cars to move grain in storage to make room for the new milo crop. Officials of railroads serving the Great Plains area, as well as those of the appropriate Federal agencies, have always been most cooperative in helping to alleviate these situations as they have arisen, but such relief as was forthcoming has been only of a temporary nature.

One factor which seems to complicate this situation is that many of the railroads find it cheaper to rent another's boxcars than to replace their own. This practice, resulting in hundreds of cars being concentrated in other areas of the country at a time when they were needed to move grain, appears to have been one of the conditions having the most serious impact. To help overcome this situation, the variable basis of per diem charges as proposed in the Senate-passed bill, S. 1098, would go far in my opinion, but a permanent solution can be found only by insuring the total boxcar supply is increased.

My colleague from Kansas, the Honorable Chester Mize, and others, have bills pending which are designed to encourage increased car ownership. This, I submit, is the solution, for if the supply is not increased our problems can only be expected to become more critical as time goes on.

It is my hope that due to the urgency involved, early congressional action will be taken bringing an end to this nagging problem. Thank you.

The CHAIRMAN. Thank you, Mr. Dole. Now, if there are no questions we will hear from another colleague, the Honorable Teno Roncalio. You may proceed Mr. Roncalio.

STATEMENT OF HON. TENO RONCALIO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WYOMING

Mr. RONCALIO. Mr. Chairman, the chief objective of H.R. 4543 is to insure the adequacy of railroad freight cars to meet the needs of commerce. The need is genuine, based on the decline of the U.S. rail car fleet. At the end of 1964, the fleet totaled 1,492,000 cars, down from the 1,512,000 total of a year earlier.

There are two reasons for this decline: A high retirement rate on old cars too far deteriorated to be worth repair; and low rental rates railroads pay each other for use of cars, making it cheaper to rent old cars than produce new ones.

In essence, my bill will provide that the Interstate Commerce Commission in fixing the compensation to be paid by one railroad to another for the use of freight cars-per diem-a basic power which the ICC has long held-shall consider the adequacy of the national car fleet, and prescribe such car rental charges as will "encourage the acquisition and maintenance of a car supply adequate to meet the needs of commerce and the national defense."

The bill also states other objectives, "sound car service practices," and "reasonable compensation to freight car owners." It states that the ICC may consider "value of use" of freight cars, as well as ownership expense. But its basic thrust is an effort to get more freight cars by providing incentives for increased car ownership through operation of economic laws and the profit motive. It would also contribute to sound car service practices by promoting more expeditious movement of existing equipment.

Supporters of this legislation believe that the now almost continuous freight car shortage is due to the simple fact that, for generations, freight cars have been an unattractive investment-because of the low rental charges which have been available to the user of cars owned by other railroads.

They think that if the ICC will put some profit into car ownership, more freight cars will be bought and built. They also think existing equipment will move more quickly, because that is the only way the renter can reduce the per diem charges he must pay while a car, owned by another railroad, is in his possession.

From the viewpoint of labor generally, the bill would be helpful, because under present conditions, large industrial plants, grain elevators, et cetera, are frequently compelled to shut down for lack of freight cars, and this has an immediate adverse effect upon payrolls.

It would seem vitally important to railroad labor for several reasons. In the first place, freight car shortages have diverted large quantities of traffic to other forms of transport, with a consequent reduction in the need for railroad workers. If the car supply can be increased by enactment of the bill, railroads will be enabled to handle more traffic, with consequent need for more workers.

It is a certainty that enactment of this legislation would be beneficial to all industrial labor; particularly to railroad labor, and still more beneficial to those railroad crafts engaged in construction, repair, or rehabilitation of freight equipment.

Mr. Chairman, I respectfully submit that passage of H.R. 4543 will bring about an increase in the national freight car fleet-an objective beneficial to the whole economy.

The CHAIRMAN. Thank you, Mr. Roncalio. We will now hear from Congressman Karth in support of his bill, H.R. 4172.

STATEMENT OF HON. JOSEPH E. KARTH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA

Mr. KARTH. The recurring national freight car shortage has been allowed to get progressively worse in the last two decades because of a per diem rate structure which makes it more profitable for many railroads to "rent" foreign cars than to build and maintain their own fleets.

Efforts by the Interstate Commerce Commission to establish realistic per diem charges have been made ineffective by the resort by some railroads to a Federal District Court decision in the case Palmer v. United States (75 F. Supp. 63 (1947)), which strikes down the Commission's authority to use other criteria than "bare bones" construction costs in setting per diem charges. Congress has been made aware of the need for specific corrective legislative action which will make it possible for the ICC to set a realistic per diem rate structure and will encourage railroads to rebuild depleted freight car fleets. I certainly hope that at long last in this 89th Congress we will enact such legislation before the freight car supply which has worsened since 1945 reaches crisis stage, perhaps during some national emergency.

I am advised by one western railroad that during August 1965 there were 49 blocked elevators on its lines in Minnesota. During that month there was also, in Minnesota, grain on the ground amounting to as much as 190,000 bushels because boxcars were not available. On August 1, 1965, this railroad had only 77.3 percent of its boxcar ownership on line and was by the end of the month to get only 90.2 percent of ownership, notwithstanding AAR car service orders. There were many complaints from local elevators during August because this railroad was unable to provide necessary boxcars.

This example could be multiplied manifold in the Midwest this summer and fall. It is a real tragedy that Congress did not intervene in this situation years ago to help farmers, business, industry and labor to move more efficiently and speedily the products of this Nation's fields, factories, and enterprises and to assure adequately our national defense needs.

I hope the House Committee on Interstate and Foreign Commerce will adopt the language of H.R. 4172 and will reject S. 1098 as amended by the Senate Committee on Commerce. In my opinion the Senate committee amendment not only destroys the effectiveness of the original bill but also unnecessarily complicates its application by introducing additional vague criteria which the Commission must also consider in determining freight car value.

In one particular respect I believe the language of the Senate amendment would negate the objectives of this legislation. I refer to the power given to the Commission in the Senate committee amendment to make fair value determinations inapplicable

to carriers which terminate a substantially higher percentage of interline traffic than they originate.