not? MR. HARRISON: I think you have the wrong line there, Mr. Edwards. That figure is $396,381.79, is it THE WITNESS: I do not know. I was trying to follow it correctly across there. Let me look at it again. MR. HARRISON: I think you will find that the figure you intended to refer to is $396,381.79. MR. HARRISON: For the rental of freight cars, and other railroads' property. Q. Mr. Edwards, has your railroad ever paid so-called standard wages? A. No, sir. Q. How about during the period of Federal control? A. Oh, yes, the government paid standard wages during the period of Federal control, and of course we paid them subsequent to government control, for a short while. (Page 3896) Q. Do you remember how much money the Government lost in the operation of your railroad during the period of federal control? A. Oh, it was over a million dollars. Q. How long was that period? A. Twenty months, I believe. Q. And the government lost over a million dollars, you say? A. Yes, sir. Q. Now, for the six-month period after the end of federal control, did the government guarantee the railroad against loss? A. Q. months? A. Yes. And do you know how much the government paid you, on account of loss during that period of six Well, now, my recollection is that we lost around $600,000, but I do not know what the settlement with the government was. Q. period? Do you know how long the money which the government you lasted after the end of that six-month A. Well, I know that we did not have money to meet the payroll, which is the most pressing need for money, in February of 1921, I believe it was. Q. That was five months after the end of the guarantee period, was it not? A. That is about right. Q. You went into receivership thereafter, did you not? A. Yes. Q. And the court, by court order, reduced wages? A. Yes, sir. (Page 3898) Q. In order that the railroad might continue to operate? A. Yes, sir. They cut the wages of every position on the railroad by 50 per cent of the increase which the Government had put into effect. Q. During federal control? A. Yes, sir. Q. So that during the time that you paid standard wages, during the period of federal control, and the guarantee period thereafter, you lost about a million dollars during the period of federal control, which the government paid. A. Yes, sir, and about $600,000 during the six months thereafter. It was altogether a very large sum of money, up over a million. Q. Which the Government paid? A. Yes, sir. Q. And that carried you for about five months? A. Yes, sir. Q. And then you did not have money to meet your payroll? A. Yes, sir. MR. SMITH: That is all. (Page 3899) THE CHAIRMAN: Are there any other questions? MR. FISHER: Yes, I have just one question. Mr. Edwards, is the stock of your road widely held, or is it concentrated in certain hands? THE WITNESS: We have common stock, all of which is owned by the Atlantic Coast Line Railroad Company. That is non-par stock. We have preferred stock also, which is rather widely held, in the amount of some $5,200,000. BY MR. MULHOLLAND: Q. Mr. Edwards, do you know when the Atlantic Coast Line Railroad acquired that stock; how long ago it was? A. Well, it was prior to January 1, 1937, by a few months, because the road, the new road-the new company, that is, took possession, as of January 1, 1927. MR. FISHER: Are the dividends in arrears on the preferred stock? THE WITNESS: No, sir, they are not. The Atlantic Coast Line, under a contract with the preferred stockholders, itself pays the dividends on its preferred stock, and the dividends on our preferred stock have beer. paid regularly by the Atlantic Coast Line Railroad Company. (Page 3900) MR. SMITH: I might explain that a little bit further, if I may, if the Board please. As far as the A. B. & C. Railroad is concerned, the dividends are in arrears, we have never paid them; but as a part of the reorganization agreement, the Atlantic Coast Line Railroad was required to guarantee the holders of the preferred stock, by a separate contract, that if the A. B. & C. did not pay the dividends on the preferred stock. the Atlantic Coast Line Railroad would pay them; so that the Atlantic Coast Line has paid them, under that separate guarantee contract; but the A. B. & C. itself is in arrears; it has never paid a dividend. MR. HARRISON: That explains a lot of your trouble here, does it not? MR. SMITH: No. THE WITNESS: How? MR. SMITH: That does not come out of our money. That comes out of the Atlantic Coast Line. MR. SMITH: I do not understand how. I mean, I do not see how that puts us into trouble. (Page 3901) THE WITNESS: That is the trouble of the Atlantic Coast Line Railroad. MR. SMITH: I would like to say further, if the Board please, that none of those dividends is reflected in these figures. As far as we are concerned, we have never paid them, and they are not a debt of ours, and they are not reflected in these figures. That is a loss that the Atlantic Coast Line Railroad has taken. THE CHAIRMAN: The Board has no further questions. MR. SMITH: That is all. THE WITNESS: Is that all with me? MR. SMITH: Yes. THE WITNESS: Thank you. (Witness excused.) THE CHAIRMAN: Now, gentlemen, before we recess, I would like to inquire whether Mr. William R. McMunn is here, who entered an appearance on behalf of the Bangor & Aroostook? (No response.) THE CHAIRMAN: Apparently not. Is Mr. Andrew P. Martin, who entered an appearance on behalf of the Lake Terminal Railroad, present? (No response.) (Page 3902) THE CHAIRMAN: Is there anybody here who has entered an appearance on behalf of any individual railroad, who wants an opportunity to be heard at this time? (No response.) THE CHAIRMAN: If not, we will take a short recess, and then we will proceed with the Railway Express Agency. MR. SMITH: If the Board please, before you recess, may I inquire as to whether or not there is anything further that is desired from our railroad, or from me? What I mean is, I would like to go back, unless there is something further that somebody would like to ask of us, or would like to have. THE CHAIRMAN: Well, there is simply the statement that was asked for, covering the information stated. MR. SMITH: Will it be satisfactory if I mail that to the Board and opposing counsel? MR. MULHOLLAND: Yes. If you mail our copy to the Hotel, that will be satisfactory. THE CHAIRMAN: Well, aside from that, upon the conclusion of all of the testimony, there will be an opportunity for argument afforded, and those who have submitted testimony, who desire to be heard in argu (Page 3903) ment, will be given an opportunity to be heard at that time. MR. SMITH: I would like to request permission to submit a brief, if the Board please. THE CHAIRMAN: You may do so, and it will be received and given due consideration. MR. SMITH: Thank you. THE CHAIRMAN: We will take a brief recess. (A short recess was taken.) (Page 3904) RAILWAY EXPRESS AGENCY THE CHAIRMAN: Mr. Mulholland, we are ready to consider now the matter of the Railway Express Agency. Opening Statement of Mr. Mulholland On Behalf of the Employees MR. MULHOLLAND: Mr. Chairman, I had not contemplated making any opening statement, but in order to raise the curtain for my friend, Mr. Hartung, and understanding he desires to make an opening statement, there are one or two matters to which I would like to direct the board's attention. In the first place, I think the Board understands that it is our position that we only have one dispute before this board, that is, only one dispute as to the parties interested, that this is not a separate hearing and a separate case granted to the Railway Express Agency. We desire to have an order from the board, if that is deemed necessary, making applicable to this situation the evidence we have already introduced. In other words, we have introduced evidence of comparative wages, where we have brought in statistics as to the wages paid in other industries-all of our general evidence, under our contention, is applicable to the Railway Express Agency. Now, we propose in presenting our case to merely lay before this board that information that is (Page 3905) peculiarly applicable to the employees of this agency. It is our position, as we stated in our opening statement, that the Railway Express Agency is exactly what its name implies, it is an agency of the American railroads to carry on certain of the functions of transportation. I think the board is going to be intrigued with the very interesting form of organization that has been set up to carry on this purpose, and in connection with our presentation we will offer the board the entire setup, including the agreements that are in existence as to the division of the income of the express agency, the owners of the express agency, the manner in which they participate, and all of those matters relating to this very unique corporation and its unique operations. I think that is all I have to say about it, only to impress upon the board again that it is our position that this board should not treat the Railway Express Agency in any other manner than it treats the other carriers who are parties to this case, and just again to impress the board with the thought that all of the testimony that has been introduced heretofore relative to situations that may arise in our present proceeding shall be made applicable to this phase of the investigation. THE CHAIRMAN: Mr. Hartung. (Page 3906) Opening Statement of Mr. Hartung on behalf of the Railway Express Agency. MR. HARTUNG: Mr. Chairman, and gentlemen of the board, you will recall that in his general statement Mr. Mulholland made only a passing reference to the express dispute, suggesting that as Railway Express Agency was an agency of the railroad companies and its stock was entirely owned by the railroad companies, its employees were employees of the railroad industry and should receive the same consideration by this board as that shown to other employees of that industry. In his brief remarks now Mr. Mulholland has extended that contention and renewed it. The same contention was urged in 1941 and the President's Fact Finding Board then found that the employees of the Agency had an advantage over the non-operating employees of the railroads in that their average hourly earnings were substantially higher than the average for the non-operating employees of the railroads, and found that the express employees receive an increase of 72 cents per hour in contrast with a (Page 3907) recommendation of an increase of 9 cents an hour to the non-operating railroad employees. The proper level of wage rates is to be determined not by ownership and control of the employer but by the nature and character of the work performed by the employees. We shall show you that Railway Express Agency is not a railroad company, it does not operate a railroad; it is an express company engaged in a distinct form of transportation-the express business. Its employees are not railroad employees; they are express employees performing entirely different work. As stated in the very brief remarks I made at the opening of this case so many, many weeks ago, we do not employ engineers or firemen, conductors, trainmen, brakemen, yardmasters or, referring specifically to the classes of railroad employees represented in this proceeding, section men, signal maintainers, telegraphers, roundhouse employees, dining car employees, crossing flagmen and marine employees. None of these classes of employees are embraced in express employment. (Page 3908) Of course, there are some classes of employees common to railroads and express companies, such as clerks, stenographers and warehousemen, but these occupations are common to industry generally. Only three of the fifteen railroad labor organizations involved in the railroad case represent any of our employees the clerks, the machinists and the blacksmiths-and the latter two together represent less than 1,000 express employees. About one-third of our employees are vehicle employees, a class of employment non-existent in the railroad industry. About one-third of these vehicle employees are represented by the International Brotherhood of Teamsters, which is not a railroad labor organization. This dual representation of our vehicle employees has been the cause not only of continued jurisdictional dispute but seriously has affected our entire wage structure and our agreements governing the working conditions of our employees. The express business is more than 100 years old and until recently,-1929,-has been conducted by independent express companies. The wages of express employees were established, developed and maintained on the basis of the local labor markets for work of the character which they performed and not with relation (Page 3909) to the wages of railroad employees who did not perform similar work. Then as now the drivers were the largest group of express employees and then as now the railroads had no such employees. I need not stop to enumerate the various other classes of express employment. We shall show that the wages of those employees too were governed by the wages paid to employees in outside industry and not by the wages of railroad employees, and that with very few exceptions the increases and decreases in the rates of pay of express employees became effective at different times and in different amounts from those of railroad employees. By reason of the various increases in wages from time to time granted to express employees by order of the Director General of Railroads and the Railroad Labor Board, through collective bargaining, mediation, arbitration and the findings of fact-finding boards, the wages of express employees reached their highest level in 1941 and generally were higher than the wages of employees performing similar work in other industries. We believed that they should not be increased, but the President's Fact Finding Board did not accept our view and recommended an increase of 72 cents an hour which, as I have said, was one and a half cents an hour less than that recommended for the railroad non-operating employees. (Page 3910) The labor organizations were not satisfied with these recommendations of the Board and refused to accept them. As this Board knows, a re-hearing was held. The Board adhered to its findings and recommendations as a fact finding board, but in a mediatory capacity recommended an increase of 10 cents an hour in lieu of the 9 cents an hour which as a fact finding board it recommended for the non-operating employees, and an increase in the same amount,-10 cents an hour,-for the express employees for whom as a fact finding board it recommended an increase of 72 cents an hour. We declined to make such increase. A strike was called and on December 10, three days after the Pearl Harbor attack, we were required to agree to the increase of 10 cents per hour. As a result of this increase of 10 cents per hour the wages of express employees reached a new all-time high. In 1942, the average pay per employee per straight time hour was 93.12; the average annual pay per employee was $2,267. We shall show you that the wages of express employees compare very favorably with those of employees performing similar work in other industries and generally are higher. In the 1941 case we presented an exhibit showing the comparative wage rates of several classes of our employees in 373 cities scattered throughout the country. We have brought that exhibit down to date and the showing today is even (Page 3911) more favorable in that the increases in comparable employment have been relatively less than those of the express employees. The satisfactory level of express wages is illustrated also by our employment situation. Despite the serious manpower problem, with the exception of a very few points, we have applicants for employment in excess of our needs. The explanation for this rests not only in the high wage level and the fact that the express business is an essential industry, but also in the satisfactory working conditions of our employees, the permanency of our business and the regularity of employment. The express business has been seriously affected by competition in recent years, first by parcel post and later in an increasing ratio by intensive and steadily growing competition from over-the-road trucks, forwarding companies, consolidators and improved 1. c. 1. freight service. Of course, like other business it was seriously affected by the depression which began in 1929. It has not been possible to adjust the costs of operation in harmony with the decreased volume of business, principally due to the ever increasing labor cost, and therefore, |