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Commissioner MCCHORD. Yes, sir; I think so.

Senator KELLOGG. And it is, I suppose, difficult for them to purchase equipment now?

Commissioner MCCHORD. Oh, no; they can not do that.

Senator KELLOGG. They can not get them built at the shops, can they?

Commissioner MCCHORD. No, sir; they can not get that done. Senator KELLOGG. Many of the roads do not want the money; is that not it? Some have money to buy their equipment and can not buy it?

Commissioner MCCHORD. Yes.

Senator KELLOGG. I think I understood you to say that the most efficient way to handle the business of the country was to allow the business to take its ordinary channels?

Commissioner MCCHORD. I mean in the operation of the railroads. Senator KELLOGG. And not make any priority orders at all unless there is absolute necessity for it?

Commissioner MCCHORD. Unless there is necessity; oh, yes, sir. Senator KELLOGG. That is, the fewer the priority orders, the more efficient the operation of the road?

Commissioner MCCHORD. Yes, sir; I think so.

Senator KELLOGG. You stated in your separate report that "at the present time there are several Federal agencies authorized by law to issue orders or directions with respect to transportation," and then, in substance, as I understand it, that some three or four departments of the Government were separately issuing priority orders. Do you know to what extent priority orders were issued?

Commissioner MCCHORD. No, sir; I do not. I know it occurred to me once, or to the commission, that we should have a conference with Dr. Garfield and Mr. Hoover and Mr. Lovett, and we did have quite a conference. We had learned that there was some conflict, and that some of the Army officers were issuing priority orders, and it was our thought that we should have coordination of those three legislative boards, and that they should know what the other was doing, and we spent one whole afternoon, or part of an afternoon, but nothing came of it.

Senator KELLOGG. In other words, the War Department, the Navy Department, and the Shipping Board, and the Food Administration, and Judge Lovett were all issuing priority orders of that kind? Commissioner MCCHORD. That is my understanding-some sort of orders; all tinkering with transportation in interstate commerce. Senator WATSON. And the car-service commission. Commissioner MCCHORD. Yes.

Senator KELLOGG. And necessarily that causes delay and confusion. Commissioner MCCHORD. I should take it so.

Senator KELLOGG. Do you not understand that under this act the power existed to put that all into the hands of one director—the act which I read you a few moments ago?

Commissioner MCCHORD. No, sir; I did not so understand.
Senator KELLOGG (reading):

That during the continuance of the war in which the United States is now engaged, the President is authorized, if he finds it necessary for the national defense and security, to direct that such traffic or such shipments of commodities as in his judgment may be essential to the national defense and

security shall have preference or priority in transportation by any common carrier by railroad, water, or otherwise.

Commissioner MCCHORD. I assumed that that referred to war materials.

Senator KELLOGG. I do not think that was the intention of Congress. I think the intention of Congress was to put it all in the hands of the President. Of course, I can only speak for one.

Commissioner MCCHORD. Congress went a little farther than that and passed another law giving him power to take them all over, under which he acted.

Senator KELLOGG. However that may be, those priority orders should all have been in the hands of one power?

Commissioner MCCHORD. I do not know about that. It does occur to me that the other parties, who had something to do with transportation, should know just what each is doing, because there ought not to be any crossing of wires. It is a pretty delicate operatio: to run a railroad with three or four legislative bodies dealing with it.

Senator KELLOGG. Rather. Now, you stated that you found when you first took up this subject, that the railroads were all stealing each other's cars; that is, these cars that passed from one line to another under pressure of business.

Commissioner MCCHORD. During the Civil War, I understand when they stole horses they called it pressing them into service.

Senator KELLOGG. The railroad company, instead of returning the car when empty, would keep it and use it?

Commissioner MCCHORD. Yes, sir; and in self-defense.

Senator KELLOGG. And that was going on to a great extent before the war?

Commissioner MCCHORD. Yes, sir; it was the rule.

Senator KELLOGG. But during many periods of congestion, as I remember in years past, that has gone on to a great extent, too. Commissioner MCCHORD. Possibly so.

Senator KELLOGG. On the subject which Senator Cummins asked. you about, compensation to the railroads, have you considered any plan with regard to that?

Commissioner MCCHORD. No; I have not, Senator, nor has the commission. I take it the time will come when the commission will probably get together and thrash it out, and may have a plan; I do not know. We usually do things that way. We do not take one commissioner's judgment about the thing. We want the united wisdom, if there is any, of the entire commission.

Senator KELLOGG. That is one of the most important questions now confronting the country, is it not?

Commissioner MCCHORD. Yes, sir; I take it that comes under the President's address to Congress, and for that reason I thought we might refrain from considering it.

Senator KELLOGG. I have nothing else to ask.

Senator CUMMINS. There is one point I wish to make clear, Mr. Commissioner. If I understood your answers correctly on this subject, they were to this effect: That in 1915-16 the railway equipment was reasonably sufficient under the system then prevailing-that is, of individual separate corporations-and that the present equipment would be sufficient for use under a unified system?

Commissioner MCCHORD. Yes, sir. It may be, and I think it is more than likely, that we should have more engines, more locomotive power, but as to cars, I think we have sufficient.

Senator LA FOLLETTE. Just on that point, would it be possible for you to furnish the committee something more definite in regard to motive power than the necessities of the present situation?

Commissioner MCCHORD. I will try to do that. I think there are about 68,000 engines. I will try to get some data on that.

Senator LA FOLLETTE. Will you add that when you come to revise your testimony, going into that as fully as you are able to, with such information as you have acquired in the meantime?

Commissioner MCCHORD. Yes; I shall be glad to do so. I would like to file as part of my statement Exhibit E, filed with the carservice report. It is a report made by three members of the railroad committee after the committee was taken away from Washington, which reviews from a railroad standpoint just what happened. It is a matter of three pages.

The ACTING CHAIRMAN. Without objection, that will be inserted in the record.

The exhibit referred to is here printed in full, as follows:

EXHIBIT E.

NEW YORK, January 11, 1917.

SPECIAL REPORT OF INDIVIDUAL MEMBERS OF COMMISSION ON CAR SERVICE.

To the members of the executive committee:

It is well established that the observance of car service rules with respect to returning equipment promptly to owners has in the past been to a great extent superseded by use or appropriation of cars by individual lines governed only by expediency. Å disregard for the spirit and letter of the rules on the part of a great many railroads has gradually led to an unsatisfactory observance of such rules in so far as they relate to the railroads collectively. This brought about a condition which rendered it impossible for some of the roads that had amply provided themselves with sufficient equipment to perform their obligations to the shippers directly served by them and their duties as carriers to the general public.

The result of the inability or indisposition of the railroads to regulate these matters on an equitable and just basis was reflected by considerable discontent and numerous complaints from shippers in certain localities. Because of the existing situation the Interstate Commerce Commission considered it necessary to take cognizance of the matter and institute an investigation with specific reference to coal cars, but it was extended to include all classes of equipment. This investigation was initiated by Commission McChord in an informal manner in Louisville, Ky., on November 3, 1916. From the testimony of railway officials called before the commissioner and from the evidence of certain shippers he felt justified in requesting the chief executives of the railroads to in some way evolve a plan by which the existing manifestly unfair distribution of freight equipment might be promptly corrected and its recurrence prevented.

In the midst of the transpiring of these events the fall meeting of the American Railway Association was held on November 15, 1916, in New York, having been transferred from Denver because of the serious car situation. At this meeting the association adopted by resolution certain changes in car service and per diem rules to better secure the use of equipment by car owners, providing also penalties for their enforcement by the commission on car service, and these rules were subsequently ratified by letter ballot of members of the association.

The regular meeting of the American Railway Association had been preceded by a conference of executives which had informally approved the action confirmed by the association on November 15. On that date the association named an emergency committee (for a short time known as the conference committee on car efficiency)

to act with Commissioner McChord at Washington in dealing with the situation. It was stated at that time by the president of the association that very arbitrary action would have to be taken by this committee and that it was apparent a crisis had been reached where the railways would have to demonstrate their ability to properly handle their own affairs or some other body would do it for them.

This special committee, with the then existing commission on car service, met Commissioner McChord at Louisville, at which time the commissioner was informed that the American Railway Association had delegated full authority to its emergency committee to handle the car interchange question and to cooperate with the Interstate Commerce Commission at Washington in obtaining reliable information and applying the proper remedies. The members of the emergency committee then took up the work at Washington, and until January 1, 1917, prosecuted it in close cooperation with the Interstate Commerce Commission, Mr. F. B. Dow, attorney of that commission, sitting constantly with the railway committee. Through Mr. Dow, Mr. McChord and the other commissioners were kept informed of the details of the work.

One of the first accomplishments was a joint conference between a representative of the Interstate Commerce Commission, representatives of the shippers, and the emergency committee, which resulted in the approval by the Interstate Commerce Commission of the filing of tariffs, effective on short notice, providing for progressive demurrage, and, by the substantial increase in demurrage rates thus secured, delay to cars at destination will be materially reduced. During the deliberations on this very important matter the question of an increase in the per diem rate was brought up, and it was clearly evident that the powers possessed by the emergency committee, which were subordinated to those of the commission on car service, were unsatisfactory to the Interstate Commerce Commission. Approval by that commission of the higher demurrage had been predicated upon improved car distribution as between the railways and upon an imposition of a much higher per diem rate. As there was considerable difficulty and delay in securing approval of the increase in per diem from 45 cents to 75 cents, the situation was brought to the attention of the executive committee, which committee was impressed with the necessity of investing the emergency committee with increased powers and greater initiative. The executive committee consequently abolished the special emergency committee and reconstituted the commission on car service, which then became the cooperative committee working with the Interstate Commerce Commission at Washington. The only change in personnel between this committee and the former emergency committee was in the chairman, who was the chairman of the former commission on car service.

This reconstituted commission on car service resumed its activities and by cooperation with the Interstate Commerce Commission brought about a conference between the representatives of the shippers and railway traffic officials with a view of establishing reconsignment tariffs that would eliminate well known and long continued abuse of this privilege. The final recommendations of the carriers have been filed with the commission, which will submit them to shippers, and this question is still a pending one between the commission on car service and the Interstate Commerce Commission.

The commission on car service also succeeded in bringing about a uniform agreement between Atlantic and Gulf ports as to reduction in free time at seaboard. It has not been thought expedient to request the Interstate Commerce Commission to approve the filing of tariffs embracing these reductions to go into effect upon less than statutory notice, but these tariffs will be filed in the usual manner.

Concurrent with these events the commission on car service obtained from the railroads weekly reports showing comparisons between cars on line and cars owned, car accumulation reports, status of embargoes, reports of car interchanges, and other data bearing on excess equipment, its location, physical condition and employment. Predicated on these statements the commission on car service issued divers requests directing the readjustment of equipment as between the carriers.

Also associated with these activities the commission on car service performed its duty to the American Railway Association as outlined in the per diem and car service rules. It endeavored to make its activities conservative but effective through the establishment of agencies from which could be obtained first-hand knowledge as to conditions existing on certain railways which appeared from the reports to be abnormal. It was found that the Interstate Commerce Commission had in the field inspectors who were reporting directly to that commission on cases of car abuse, and as the commission on car service also had inspectors at work, special arrangements were made by which the inspectors of the Interstate Commerce Commission and those of the American Railway Association might work in harmony for the common good.

Many complaints reaching the Interstate Commerce Commission by mail and telegraph from shippers and from individual railways were turned over to the commission on car service for investigation; it was possible to show the Interstate Commerce Commission that many of these complaints were unfounded and that car abuse was in some cases apparent only, and it is gratifying to note that through the activities of the commission on car service there was a marked decrease in the number of such complaints received. The Interstate Commerce Commission was freely furnished with statistics of car location, car accumulations and car interchanges, which were available from special reports made by the carriers to the commission on car service.

In connection with the work of car distribution, representatives of individual carriers appeared on request before the commission on car service, which went over their local situations in detail and impressed upon them the necessity of giving their whole support to the work of redistributing the cars to sections where most needed, regardless of their traffic conditions. It was found necessary in many of these cases to dispose of countless reasons advanced why the desired help could not be extended, and in nearly every instance promises were secured that the individual carrier would give its earnest cooperation. Close attention was given to the situation at large cities where cars had accumulated under load and the formation of local committees was secured to adjust such situations as well as to improve conditions at seaports where a large number of cars were being held.

In the matter of car relocation, the commission on car service faced a very difficult problem. Because of the unusual drift of traffic, as well as the past neglect of the carriers themselves to strictly observe car service rules, the equipment had been badly scattered, the excess of open top equipment being largely in the west and the excess of box car equipment principally in New England and the east. On account of the shortage of coal cars threatening a fuel famine, Commissioner McChord had already notified the roads to return open top cars, and one of the first acts of the commission on car service was to issue its own request to the carriers in confirmation of the notice of the commissioner. Because of threatened serious loss to the fruit industry, the commission on car service issued a similar request to return fruit refrigerator cars to home territory.

The diversion penalty on freight cars was adopted by a large majority vote of members of the American Railway Association, but it was found expedient to postpone its effective date until January 1 so that the commission on car service might have time to comprehensively analyze from current reports the existing situation.

As the commission on car service, in confirmation of the notice of Commissioner McChord, had already requested the return of open top cars to owners and had also made a similar request with respect to refrigerator cars, there were no grounds for further postponing the diversion penalty as to such classes of equipment, and this penalty, by rule of the association, went into effect January 1, 1917. The commission on car service feels that it should materially aid in accomplishing the result desired by the Interstate Commerce Commission in readjusting the open car situation. In dealing with the box car situation, the commission on car service gave careful consideration to the means that might accomplish the desired result in the shortest space of time. It would have been possible to have issued an order similar to that covering open top and refrigerator cars and require the return of box car equipment to owners, not suspending the diversion penalty as to such equipment. The box car equipment, however, was very widely scattered as to ownership, some lines having as low as one-tenth of home box cars on home rails. Under these conditions the imposition of the diversion penalty would have imposed such a degree of car inefficiency through restricting the available car supply as to seriously increase the existing car shortage. Under such an order also the only equipment which would be available to move to western and southern roads would be their own cars, many of which were tied up under load or were upon the lines of their immediate neighbors in the same territory or upon roads which did not have an excess of box car equipment above ownership. An attempt was, therefore, made to shift box cars in large lots without regard to ownership, first getting the excess of such equipment out of New England territory and requiring lines between (hicago and New York to deliver a specified excess of box cars to western and southern roads. Had the commission on car service received the immediate assistance of every one of these lines, as it had a right to expect, and if these lines had shown a disposition to make some sacrifice of their own interests to help the deficiency roads, many of which were in a really desperate condition, this policy would have resulted at once in a large redistribution of the box car equipment. Some of the roads have cooperated to a large extent, some have done something in the desired direction and some have done very little. The commission on car service can not feel any responsibility for the failure of such roads,

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