larly interested in. They are becoming selective geographically which affects us. We sell in all marked areas. We are one of three principal hosiery manufacturers in the country.

We are selling in small towns as well as the Los Angeles area, San Francisco area. We are interested in the small towns in Montana and Idaho, where we do not have motor carrier service at the present time from North Carolina.

Our commodity is hosiery, which is light bulk freight. We are also plagued with something else, the so-called small shipments. The freight forwarders to us seem to be an answer of one way to continue to market this particular commodity that we are manufacturing.

I would like to make a comment, too, on the contracting. Of course, in any contracting, there has to be a mutual meeting of the minds. Many motor carriers now do not and have never contracted with the freight forwarders. We would not presume that all railroads would contract with the freight forwarders. So, we don't particularly see any dange in allowing the freight forwarders to contract with the railroads because there still has to be a meeting of the minds.

In summary, we also have something else that I don't think has been mentioned and that is certain Interstate Commerce Commission control. If things get out of hand, there are controls to restrict alleged unfair competition.

Therefore, we can only see, as a result, a better competition, a healthier competition, if this bill is allowed to become effective and to us as a shipper certain benefits will accrue, namely our ability to market our goods in many of these smaller areas, smaller towns that we do not have an outlet in now without higher priced transportation. Thank you, sir.

(Mr. Drake's prepared statement follows:)

STATEMENT OF R. L. DRAKE, TRAFFIC MANAGER, KAYSER-ROTH HOSIERY CO., INC.,

BURLINGTON, N.C.

We are a leading hosiery manufacturing company with 12 plants located primarily in the Southern States. We ship to all 50 states and many foreign countries. We are very interested in H.R. 10831 and wholeheartedly support this bill. We believe that if the freight forwarders were afforded the opportunity to make contracts with the railroads, that the cost of operation to this industry would be improved and become a primary factor in holding their costs in line to the extent that subsequent rate increases to shippers could be deferred.

Historically, hosiery is a very competitive business and we are concerned with the cost of transportation, as we have already noted, but of more importance, we see advantages in this bill of allowing more healthy competition. It has been our observation that whenever a full coordination exists between various modes of transportation, the shipper receives the advantages in better service.

In the hosiery business, we are vitally concerned with the so-called small shipments. The freight forwarders presently have no restrictions and we would anticipate none with the passage of this bill in the handling of small shipments. Both the motor carriers and the railroads are becoming more selective in the handling of small shipments to the extent that the problem now concerns us in making shipments to certain sections of the country. Therefore, we want to encourage the freight fowarders in handling many of our small shipments.

Our personal experience with the freight forwarders, with whom we are doing business, has been most satisfactory. In all phases of our business, we ship on an average of between 150,000 and 170,000 pounds per month via freight forwarders. We feel that the freight forwarder's rate structure is attractive to us and regardless of the outcome of this House bill, it would not effect our continued use of the freight forwarders.

If enacted, we feel that this House bill would be of benefit to us and furthermore, that passage is in the public interest and in line with the National Trans

portation Policy. In conclusion, we most respectfully hope that this bill can receive a favorable consideration before this committee.

Mr. FRIEDEL. Thank you, Mr. Drake. Are there any questions?
There are no questions. Thank you again.

Our next witness is Mr. Milton Strickland, Jr., office manager, Kex plant, Callaway Mills Co., La Grange, Ga.

Mr. Strickland, you may proceed.

STATEMENT OF MILTON STRICKLAND, JR., OFFICE MANAGER, KEX PLANT, CALLAWAY MILLS CO., LA GRANGE, GA.

Mr. STRICKLAND. Mr. Chairman, my appearance before you today is to seek your favorable support and consideration of House bill H.R. 10831, which, if passed, will enable the freight forwarders to make contracts with the railroads.

I am employed by a manufacturer of industrial wiping cloths. These cloths are shipped from La Grange, Ga., to industrial laundries and linen suppliers located in major cities of the United States, Canada, Hawaii, and Puerto Rico. It has been our policy to use freight forwarders for our shipments to the west coast. During the past several years we have received excellent service on these shipments.

I am most interested in the passage of this bill in order to maintain this service and enable the freight forwarders to hold the line on increasing costs and rates. This bill will authorize the freight forwarders to enjoy the same privileges motor carriers have been enjoying for some time. Passage of this bill will insure us a continued good service for our small shipments. Most of the major railroads have discontinued accepting small 1.c.l. shipments. Our customers receiving small shipments must have transportation service available to them as well as our customers who are in a position to purchase in large lots. We feel passage of this bill will allow the freight forwarders to maintain their service on small shipments and enhance coordination of freight forwarders' service with their underlying transportation. Our experience with the freight forwarders has been satisfactory. Their rates are in line, and we plan to continue to use them. I feel this bill's passage will be in the interest of the shipping public and our national transportation policy.

I very deeply appreciate the time allotted me by this committee, and trust House bill H.R. 10831 will be acted upon favorably by all concerned.

Thank you.

Mr. FRIEDEL. Thank you, Mr. Strickland. Are there any questions? Thank you very much.

Mr. Kazuo Takei, traffic manager in charge of consumer products, Leslie Foods, Inc., Newark, Calif.

STATEMENT OF KAZUO TAKEI, TRAFFIC MANAGER IN CHARGE OF CONSUMER PRODUCTS, LESLIE FOODS, INC., NEWARK, CALIF.

Mr. TAKEI. Mr. Chairman and members of the committee, my name is Kazuo Takei, and I am the traffic manager in charge of consumer products for Leslie Foods, Inc.

89-367-68- -10

Leslie Foods, Inc. is a wholly-owned subsidiary of Leslie Salt Co. producing and distributing almost 500 food products. Our 160-acre farm near Dixon, Calif., may well be the largest commercial herb farm in the United States. Products are manufactured in eight plants.

The major products marketed on a national basis are some 150 Spice Islands product such as spices, herbs, vinegars, and teas. Our customers include small grocery stores, department stores, chain grocers, jobbers, distributors, specialty stores, and military commissaries overseas as well as those in the continental United States.

As part of our long-range growth plans, we maintain our own distribution center in Berkeley, Ill., and also distribute products from a public warehouse located in North Bergen, N.J. The bulk of the finished goods are supplied by our manufacturing plants in the San Francisco Bay area.

The aggregate volume of finished goods shipped during 1967 to the two distribution centers by freight forwarders exceeded 3 million pounds. We are very pleased with the service provided by the freight forwarders. Also, the rates they established for the movement of our products are a very important factor in our ability to maintain the two distribution centers.

We support H.R. 10831 because we consider it constructive legislation that ultimately will benefit the general public. It appears that the contractual arrangement will bring the two principals to work together more closely to effect results that will be mutually advantageous. Thank you.

Mr. FRIEDEL. Are there any questions? Thank you very much.
Mr. TAKEI. Thank you.

Mr. FRIEDEL. Our next witness will be Mr. Vincent J. Scarpinito, general traffic manager, M. Lowenstein & Sons, New York.

STATEMENT OF VINCENT J. SCARPINITO, GENERAL TRAFFIC MANAGER, M. LOWENSTEIN & SONS, INC., NEW YORK, N.Y.

Mr. SCARPINITO. Mr. Chairman, I want to thank you for the privilege of addressing the members of committee. I am going to ready my short text here.

My name is Vincent J. Scarpinito, general traffic manager of M. Lowenstein & Sons, Inc., whose principal offices are located at 1430 Broadway, New York City. I have had said position for the last 19

years.

M. Lowenstein & Sons is a corporation incorporated under the laws of the State of New York.

M. Lowenstein & Sons is known as a vertical textile operation, who owns and operates 14 plants in North Carolina, South Carolina, Georgia, and Alabama. It employs nearly 18,000 people. In the State of South Carolina it owns and operates two of the largest textile printing plants in the country, one at Rock Hill and the other at Lyman, S.C.

M. Lowenstein & Sons is a national organization with sales offices in the principal cities of the United States. It caters to the cutting trade, department store trade, and chainstore trade. It owns and sells worldwide the famous Wamsutta and Pacific sheets and pillowcases in addition to its regular textile trade.

This company uses all modes of transportation on a nationwide. scale and in conjunction with foreign commerce.

We support H.R. 10831 because we feel it will enable the forwarders to offer a better and more extensive service to shippers. Our shipments are mostly in the 100 to 1,000 pound category. Most railroads have restrictions on 1.c.l traffic. The forwarder welcomes the small shipment. We feel that forwarders and railroads should enter into contract agreements. It will stimulate ratemaking and extend the services. that forwarders perform in conjunction with the railroads. This should be extended to the forwarders who we are sure will enhance the transportation industry.

Thank you, Mr. Chairman.

Mr. FRIEDEL. I want to thank you, Mr. Scarpinito. Are there any questions, Mr. Devine?

Mr. DEVINE. Mr. Scarpinito, what is meant by vertical textile?

Mr. SCARPINITO. I thought I would get a question on that. A vertical textile operation is an operation where the company actually goes out and buys in the field the cotton or contracts to buy it from brokers. They begin the operation right from the cotton which then goes into a cotton warehouse where the cotton is graded. It is then sent to its various spinning and weaving mills.

It is then shipped from the spinning and weaving mills to the finishing plants. The company at the same time is merchandizing the various commodities that it sells.

Mr. DEVINE. Is there such a thing as a horizontal textile operation?
Mr. SCARPINITO. I think we would like to get into that business.
Mr. DEVINE. I had never heard of that term before.

Mr. FRIEDEL. Mr. Kuykendall, do you have any questions?
Mr. KUYKENDALL. No, Mr. Chairman.

Mr. FRIEDEL. Thank you very much.

Our next witness will be Mr. J. R. Fitzwater, manager, traffic and transportation, Varian Associates, Palo Alto, Calif.

STATEMENT OF JACK R. FITZWATER, MANAGER, TRAFFIC AND TRANSPORTATION, VARIAN ASSOCIATES, PALO ALTO, CALIF.

Mr. FITZWATER. Thank you, Mr. Chairman, for the time allotted our company in support of H.R. 10831.

My name is Jack R. Fitzwater. I am the manager, traffic and transportation, for Varian Associates, Palo Alto, Calif. Varian Associates manufactures various electronic instruments, marketed throughout the United States.

I am authorized to testify to the matters stated herein, and these statements are made in connection with and in support of the bill introduced to assist the freight forwarders in obtaining equality, identified as H.R. 10831.

As manager of traffic and transportation, a position I have held for 7 years, my department has complete responsibility in the matter of routing all inbound shipments purchased f.o.b. shipping point. My department also has responsibility with all divisions in the recommendation of routing of manufactured products. We have manufacturing facilities located in Portland, Oreg., Walnut Creek, San Carlos, Palo Alto, Monrovia, and Newport Beach Calif.; Salt Lake City, Utah;

La Fox, Ill.; Beverly, Mass.; Union, N.J.; and Lexington, Ky. Our domestic transportation charges absorbed by us is in excess of $500,000 per year.

Our company is in favor of H.R. 10831 for the following reasons:

1. We believe it will improve freight forwarders' services, enable freight forwarders to operate a better and more extensive service to the shipping public.

2. We believe this bill sets no new precedents since freight forwarders have already been operating under contract with motor carriers. This type of operation has been successful. Extension of principle to forwarders will simply expand operation to improve freight forwarders' services.

3. We feel that small-lot shippers will benefit since forwarders handle basically small lots, which they consolidate. Small shipments are a problem for all carriers. Forwarders help to solve this problem. Railroads have substantially abandoned les-than-carload service and the only way an 1.c.l. shipper may obtain rail service is through a freight forwarder.

4. Motor carriers and railroads make contracts under what is known as plan 1, piggybacking. Additionally, they operate under joint rates, and a recent Supreme Court decision gives motor carriers the right to ship trailers by rail at tariff rates, the same as forwarders pay. This places forwarders at a severe competitive disadvantage with their principal competitors, the long-haul truckmen. The bill makes for competitive equality. It will also preserve healthy competition. We need all forms of transport, competing under equal rules.

Heretofore, the freight forwarder and any shipper who could qualify under the tariffs could use piggyback service by rail, but the tariff provisions made it impossible for the truckers to enjoy the same benefits. This, I feel was not equitable since one mode of transportation was underprivileged to the advantage of another. To combat this situation, the truckers began to enter into contract arrangements with the railroads. This arrangement was denied the forwarders. In the meantime, the truckers maintained through the U.S. Supreme Court that they were entitled to the provisions of the piggyback tariffs and the Supreme Court upheld that principle with the result truckers are now free to use both methods; piggyback and contract or joint rates.

We sincerely believe that if the forwarders are not granted equal opportunity with motor carriers, the results will continue to be discriminatory and handicap their ability to serve the shipping public. Thank you.

Mr. FRIEDEL. I want to thank you, Mr. Fitzwater. I have no questions. Mr. Devine.

Mr. DEVINE. No questions.

Mr. FRIEDEL. Mr. Kuykendall.

Mr. KUYKENDALL. No questions.

Mr. FRIEDEL. Thank you very much.

Mr. FITZWATER. Thank you, Mr. Chairman.

Mr. FRIEDEL. Our next witness will be Mr. H. L. Graham, supervisor of shipments, the Hobart Manufacturing Co., Troy, Ohio.