they can use trucks where they can get cheaper rates than the railroads can make.

Mr. HOLMES. The probability is that we would receive very little benefit, is it not, from a repeal of the long-and-short-haul provision of section 4?

Mr. WILSON. Well, I do not know about Worcester, particularly, but I know there are cases in New England where the shippers do get benefits from rates made by carriers to meet motor-truck competition; some water competition, but particularly motor truck, and we have many cases arising where shippers in New England want rates adjusted. For instance, on soap and soap articles, and things of that sort, where carriers found it necessary, to make one class to trunk line territory, that is, Pittsburgh and points east thereof but could get higher rates, to central freight association territory. The shippers were willing to pay a higher rate, to C. F. A. territory, but there are certain requirements to be met that make it impossible to make those two bases effective without some departure from the requirements of the fourth section, long-and-short-haul clause; the Commission declined to give that relief because of the technical requirements of the long-and-short-haul clause.

Mr. HOLMES. Take the shipment of pig iron and iron rods; quite a bit of that is used in my city alone, coming from Chicago, Pittsburgh, and other places in Pennsylvania. Would the rate be affected at all on shipments from Pittsburgh to Worcester by the elimination of the short-and-long-haul provision?

Mr. WILSON. Not to any extent. Iron and steel, and pig iron, but the rods

Mr. HOLMES. Iron rods.

Mr. WILSON (Continuing). I think that the iron and steel rods are subject to the mileage rates fixed by the Interstate Commerce Commission some 10 years ago, and I see no reason why they would be affected by any change in the fourth section. As to the district east of Pittsburgh-I do not think it will affect it at all. But suppose they make a scale of rates and ask for fourth section relief

Mr. HOLMES (interposing). But it would affect Worcester if the provision contained in the fourth section was eliminated, would it not, from Worcester to points west of Chicago?

Mr. WILSON. I do not think so. You mean affect them adversely on account of the elimination of fourth section?

Mr. HOLMES. Well, for instance, Worcester would be placed at a disadvantage, I mean, with cities like Pittsburgh and other points east of Chicago and in that area.

Mr. WILSON. No; I do not think that it would. The rates from from Worcester, would be, as now, a little higher.

Mr. HOLMES. Yes.

Mr. MARTIN. But this would not affect it any.

Mr. HOLMES. You understand I am asking for information.

Mr. WILSON. Yes.

Mr. HOLMES. How it will work out in the New England district. Mr. WILSON. You perhaps have in mind, although I do not know, the rate schedule that was changed several years ago. The rates on on some kinds of iron and steel-I do not remember just what they were-from Worcester and certain eastern territories were lower than the rates from Pittsburgh. That was straightened out, because the

rates were below what they should have been; there is no reason to have rates lower from Worcester to Chicago than from Pittsburgh to Chicago.

Mr. HOLMES. That is on the long haul, from Worcester to Chicago

Mr. WILSON. Yes.

Mr. HOLMES. That from Pittsburgh to Chicago.

Mr. WILSON. That would not really be affected by this, because that was straightened out. And, I do not think that situation was ever right, the rates that were in effect before the change was made. Mr. HOLMES. The reason I make the inquiry is because I want to get information. I have absolutely an open mind on the subject. Mr. WILSON. It looks to me, Mr. Holmes, that Worcester would be helped, and the railroads and the shippers would want the longand short-haul clause of the fourth section changed, so that the railroads and the shippers would be free to deal with the problem. Now no railroad can change the rate to meet a competitive situation without coming to the Interstate Commerce Commission and asking for fourth-section relief, even though the railroads and the shippers agree, and the shipper wants to use the railroad. We think it will help to change the situation to provide a plan whereby the railroads can change the rate on 30 days' notice without having to go to all this trouble with the Interstate Commerce Commission.

Mr. HOLMES. We are so situated geographically that we have got to have everything hauled in and hauled out again and where we have nothing but railroads to depend upon.

Mr. WILSON. I see your point, Mr. Congressman, and I want to make it as clear as I can.

Mr. HOLMES. That is why I wanted you to elaborate a little more on the effect it would have on an industry, particularly, whether the repeal of the fourth section would be beneficial to that district which I spoke of.

Mr. WILSON. Suppose we put it this way; let us say, that today you have from Worcester and surrounding districts a group of rates to Chicago. Now whatever that may be it is necessary for the railroads, in order to make any rates that they want to change from Worcester to Chicago to have relief from the fourth section provision. Suppose that the shipper wants it and the railroad wants it. Now the railroad, unless it gets permission from the Interstate Commerce Commission has not authority to publish that rate in violation of or a departure from fourth section provision of the Interstate Commerce Act. Now that is the situation as it exists today. Therefore those rates could not be made effective, if the railroad and the shipper agreed, until an application had been made and the railroad secured a ruling from the Interstate Commerce Commission, which may require 6 months, or a year, and sometimes more. Now that is the situation today.

If the long- and short-haul clause of the fourth section is eliminated from the Interstate Commerce Act, the railroads can immediately publish those rates; they would not have to wait for permission to depart from fourth section provision of the act because that provision would be repealed. It would not be necessary then to go through the long procedure of getting up data, holding hearings, and so forth, before the railroads could publish the rates. All of that

could be developed by the Interstate Commerce Commission, after the rates had been published by the railroads, as the Commission could suspend that rate before it became effective after its publication, if such were called for.

It seems to me, Mr. Congressman, it would be beneficial to your section. I understand the people there want it.

Mr. HOLMES. I know there has been quite a lot of controversy in Worcester relative to railroad rates in years gone by, because the people in my territory feel that they are discriminated against and they feel that there has been very little relief afforded from that situation.

Mr. WILSON. Yes. I know the iron and steel case, Mr. Holmes; some of the people in that section wanted the old basis of rates on iron and steel to remain from Worcester. Those rates could not be maintained without a great deal of difficulty; the rates on iron and steel from Worcester to Chicago and western points, were lower than from Pittsburgh, and the Commission established a mileage scale of rates. But this would not affect that.

It seems to me, Mr. Holmes, that the situation would be better for the railroads and the shippers if they could change the rates to meet a competitive situation that arose without having to apply for fourth section relief.

Mr. HOLMES. That is the point I wanted you to elaborate on, the effect it was going to have, whether it would be beneficial or not." Mr. MARTIN. Mr. Wilson, have you finished?

Mr. WILSON. Yes.

Mr. MARTIN. Mr. Holmes, do you have any further questions? Mr. HOLMES. No.

Mr. MARTIN. We thank you.

Mr. WILSON. Thank you, Mr. Chairman.

Mr. MARTIN. Mr. Johnson, of the New York Central.

Mr. HOLMES. I had asked for some statistics relative to the New York Barge Canal.

Mr. MARTIN. I beg your pardon.

Mr. HOLMES. I asked to have some statistics, relative to the cost of operating and maintaining the New York State Barge Canal. I wonder if we could have those now.

Mr. WILSON. Mr. Kerr, I understand, has those.

Mr. HOLMES. I would like to have them in the record.

Mr. KERR. New York State Barge Canal costs. The capital cost on July 1, 1933, was $176,778,411, and at rate of 4 percent per annum, the 1933 carrying cost to the State was $7,071,136, which is equivalent to 6.84 mills per ton per mile.

The operating and maintenance cost to the State in 1933 was $2,788,432, which is equivalent to 2.70 mills per ton-mile.

The estimated boatmen's charge for conveyance, that is to say the charge directly paid by the particular shipper was 4.50 mills per ton per mile.

Thus the total true cost of moving freight via the New York State Barge Canal was approximately 14.04 mills per ton-mile. The average gross ton-mile revenue (the charge against the shipper) of the class I railroads of the United States in 1933 was 9.99 mills per ton-mile; thus the true cost of moving freight via the New York State Barge Canal was 4.05 mills greater than via railroad, the difference being that New York State taxpayers paid 9.54 mills as a subsidy and

the shipper directly paid but 4.50 mills when the movement was via the barge canal.

Mr. WILSON. That is in keeping with what I said before.

Mr. MARTIN. Were they able to divert traffic from the rail carriers at that higher rate?

Mr. KERR. I beg your pardon.

Mr. MARTIN. Were they able to divert traffic at that higher rate? Mr. KERR. Yes; a great quantity of the traffic has been moved by the New York State Barge Canal; particularly sugar.

Mr. MARTIN. I understood you to say that they did that with the higher rate?

Mr. KERR. Because the shipper only paid to the extent of 4.50 mills, and the taxpayer paid the rest.

Mr. MARTIN. I beg your pardon.

Mr. KERR. The shipper only paid the rate of 4.50 mills per ton per mile whereas the taxpayer had to pay 9,54.

Mr. MARTIN. I did not understand your entire statement from this end of the table.

Mr. WILSON. May I make a short statement?

Mr. MARTIN. Yes.

Mr. WILSON. Your people have the benefit of a combination rate, Mr. Holmes, now. You can ship to the port by rail or by truck and reship by water and that is a service that would not be affected by this change.

Mr. HOLMES. Of course that is an additional expense in handling. Mr. MARTIN. There is an additional expense, but when you get into through water, and truck transportation, the idea is that this is still effective.

Mr. HOLMES. This does not change it.

Mr. WILSON. No, that would not be affected by this change.

Mr. BURGESS. May I just add a word there?

Mr. MARTIN. Yes.

Mr. BURGESS. The fact is that if this bill were enacted there would still remain in effect the combination of rates at the longer-haul points the aggregate of the intermediate rates--as the maximum that could be applied from Worcester.

Mr. WILSON. That is not affected?

Mr. BURGESS. That would remain.

Mr. WILSON. That would remain as it is now.

Mr. BURGESS. Yes. So that Worcester would have the benefit of its local rail rate to or from Boston plus the water compelled rate at Boston. You would still get the benefit of that combination or aggregate of rates as the maximum to or from Worcester for all-rail movement.

Mr. HOLMES. This would not change that.

Mr. BURGESS. No, it would not change it, Mr. Congressman except that if your water competitive rate to or from Boston should be again reduced its combination with the local rail rate between Boston and Worcester would produce a reduction in Worcester's rail rate. Mr. HOLMES. That is what I wanted to understand.

Mr. MARTIN. Anything further?

Mr. HOLMES. That is all I have.

Mr. MARTIN. We will next hear Mr. Johnson, representing the New York Central Railroad.

STATEMENT OF C. I. JOHNSON, ASSISTANT GENERAL FREIGHT AGENT, NEW YORK CENTRAL RAILROAD, 466 LEXINGTON AVENUE, NEW YORK CITY

Mr. JOHNSON. My name is C. I. Johnson. I am assistant general freight agent of the New York Central Railroad, at 466 Lexington Avenue, New York City.

My experience extends over a period of substantially 40 years, the greater portion of that time being spent with the New York Central Lines.

I am speaking for the New York Central Lines in connection with this proposed bill, and in support of the testimony offered by Vice Chairman Wilson of the Trunk Line Association on behalf of the eastern trunk lines.

The particular situation in which the New York Central Lines are interested is the route of the New York Central Lines between Pittsburgh, Pa., and New York City through Youngstown and Ashtabula, Ohio, and Buffalo, N. Y., as disclosed by the map which I desire to present at this time for the purpose of clarification.

Mr. MARTIN. That may be submitted for the files of the subcommittee.

Mr. JOHNSON. The New York Central Lines between Pittsburgh, Pa., and New York City is substantially 682 miles in length, and is approximately 54 percent longer than the short-line route of the Pennsylvania Railroad, which is the rate-making route between New York and Pittsburgh, Pa., 442 miles.

Under any system of rates devised to reflect distance there would be a fourth section departure at Youngstown, Ohio, and points in that vicinity, unless the New York Central Lines will apply to and from Youngstown, Ohio, and points in that vicinity on the one hand and New York City on the other, the same rates as published by the Pennsylvania Railroad between New York and Pittsburgh.

There is no demand on the part of shippers or receivers at Youngstown, Ohio, and points in that vicinity, for the same rates as published to and from Pittsburgh, Pa. The shippers and receivers at Youngstown and at Pittsburgh are satisfied with the adjustment of rates whereby a fourth section departure is created at Youngstown, Ohio. There have been no recent complaints against this situation. The Interstate Commerce Commission in prescribing fourth section relief usually place some limitations thereon; these are, first, the indirect route cannot be in excess of 170 percent of the short-line route, where the distance via the short-line route does not exceed 150 miles.

Second, the indirect route may not be in excess of 150 percent of the short-line route where the distance via the short-line route between competitive points is in excess of 150 miles but not over 1,000 miles.

Third, the indirect route may not be in excess of 133% percent of the short-line route where the distance via the short-line route is over 1,000 miles.

Mr. MARTIN. May I refer back to your second limitation?

Mr. JOHNSON. Yes.

Mr. MARTIN. Your second covers your case between New York and Pittsburgh?

Mr. JOHNSON. The second would apply to us, the distance being 685 miles