increase in size group 1, and in size group 4 there was a 48-cent decrease.

More or less the same picture is shown by a comparison of size group 2 to size group 5.

Mr. SIMPSON. Which sizes are comparable to residual oil?

Mr. URHEIM. Four and five. And those prices are apparently going down. They have not gone down enough to be efficient in their competition with residual oil, but it proves the point, I think, that Mr. Campbell made that the pressure is upward on sizes 1 and 2 and downward on the others.

Mr. SIMPSON. In other words, the overall take to the producing company has to be enough to meet their cost of operation. They are now tending to take it off the man who uses groups 1 and 2 in his household, to the advantage of the chap who buys the residual oil in an effort to meet the competition there?

Mr. URHEIM. That is precisely the situation, Mr. Simpson.

The spread between size groups 1 and 5 in the early period was $1.18 a ton; that is, $7.61 for size group 1 and $6.43 for size group 5. That spread is now $2.26 a ton. In other words, it has virtually doubled in the past two and a half years. The point of my statement is to indicate that I think that the small householders and the small domestic consumers are helping to pay for this residual oil that a few customers or relatively few customers on the eastern seaboard are actually getting. That is my statement, Mr. Chairman.

The CHAIRMAN. We thank you very much, sir, for your very fine statement. We appreciate it.

The CHAIRMAN. The next witness is Mr. Harold See, national legislative representative, Brotherhood of Railroad Trainmen, Washington, D. C.

Will you give your name and capacity in which you appear?

STATEMENT OF HARRY SEE, NATIONAL LEGISLATIVE REPRESENTATIVE, BROTHERHOOD OF RAILROAD TRAINMEN, WASHINGTON, D. C.

Mr. SEE. My name is Harry See, and I am national legislative representative of the Brotherhood of Railroad Trainmen, with offices at 10 Independence Avenue, SW., Washington 24, D. C. The headquarters of the brotherhood are located in the Standard Building, Cleveland, Ohio. We represent brakemen, yardmen, conductors, switchtenders, train baggagemen, and other classes of employees on railroads. The brotherhood has approximately 200,000 members employed in train service in the United States and Canada. Mr. W. P. Kennedy is president of the brotherhood.

The members of the Brotherhood of Railroad Trainmen are deeply concerned over the increasing unemployment among railroad workers in the eastern section of the country at a time when the Nation as a whole is experiencing peak production. This increased idleness causes us to look beyond our internal economy for its causes.

The importation of residual fuel oil at the rate of 129 million barrels a year, we feel is partly responsible for the continued rise in unemployment in the eastern section of the country, where the importation of this oil has reduced coal consumption considerably.

We support section 13 of H. R. 4294, because we believe that by placing quota limitations on the importation of oil, there will be an increase in the hauling of coal by the railroads, particularly along the eastern seaboard. We feel that the members of the committee will understand our position in this economic battle. Decreases in shipments of any commodity by rail must necessarily result in lowered rail employment, and conversely, increased rail traffic carries with it increased employment for railroad workers.

Let us take a cold look at what is happening in the coal and rail. road industries partly as a result of the large importation of residual oil. The coal-producing area of our country, generally speaking, the eastern section, is divided by the railroads for convenient reference into three sections: The Eastern, Allegheny, and Pocahontas. For the 5-year period 1948-52 in these 3 regions there has been a loss of 18,175 jobs among railroad train- and engine-men. This figure does not include yard enginemen or yard trainmen or any employees of the nonoperating crafts, only so-called road men. If we include yard employees and members of the nonoperating groups, who are indirectly affected by the loss in jobs among road men, the number of jobs lost rises to the staggering figure of 79,457 for the Eastern, Allegheny, and Pocahontas districts for this same 5-year period.

While we do not ascribe all of this enormous increase in railroad unemployment to any single cause, we cannot escape the obvious sig nificance of an increase in oil imports over the past 5 years to a point where in 1952 a total of 129 million barrels were imported. This is a huge increase over the figure of 53 million barrels in 1948.

The number of cars of coal hauled during the same 5-year period has shown a marked decrease. In the Eastern region in 1948 a total of 1,554,185 cars of coal were hauled as compared with only 1,171,484 cars in 1952, making a loss of 382,701 carloads.

In the Allegheny region 1948 showed a total of 2,252,788 cars hauled and only 1,658,477 cars in 1952, or a loss of 594,341 carloads. In the Pocahontas region 2,234,723 carloads were hauled in 1948, as compared with 1,831,106 in 1952, or another decrease of 403,617 carloads.

The total loss in carload shipments of coal in these 3 regions amounts to 1,380,659 in the 5 years 1948-52.

May I translate for you a few figures to show how the increase in oil imports, and the decrease in coal movements raise havoc with railroad employment. The 128,510,000 barrels of oil imported in 1952 is equal to 30,840,000 tons of coal, based on the ratio of 4.167 barrels of residual oil being equivalent to 1 ton of bituminous coal. Reports of the Association of American Railroads indicate that 85 percent of all coal shipments in these 3 regions move by rail. Assuming that coal had replaced the approximately 129 million barrels of oil imported in 1952, this would have resulted in the increased shipment of more than 26 million tons of coal by rail, using the 85 percent figure of the Association of American Railroads, all of which was lost to rail traffic.

To take the matter further, this loss in 1952 alone of the shipment. of over 26 million tons of coal results in the loss of 436,900 carloads of coal, based on the loading of 60 tons of coal to a car. The AAR states that a coal haul averages about 300 miles per car from the mine

to the consumer on the Atlantic seaboard. Using 80 cars per train for an average, the 436,900 carloads would equal about 5,461 trains. Since railroad operating employees are paid on a 100-mile basis, and the average mine haul is 300 miles, the actual loss would justly be three times the 5,461 trains, or 16,383 trains or train crews.

But this still is not the complete picture. We have spoken so far of only the number of carloads of coal lost. As you well know, the other side of this movement is the bringing of empty cars to mines for the transportation of coal to consumers. Therefore, to obtain the whole effect, and to determine the total number of trains and crews displaced by this operation, the number of 16,383 trains lost must be doubled, since there would be a like number of movements of empty cars to the mines before there could be the same movement of loaded cars out of the mines. By this process we see that the alarming total of 32,766 trains are affected.

There are not less than 5 employees on each train crew, and after multiplying this by the number of trains affected, we discover this equals 163,830 man-days.

Of course if residual oil were not imported, its uses would not totally be replaced by coal. But the increase in railroad employment in road train and engine service would be in direct proportion to whatever degree the importation of oil subsidies and its replacement by coal is effected.

There are nearly as many yard train and engine employees in the service of the railroad industry as there are road train and engineservice employees, so the number of train- and engine-men concerned and affected would be twice the number of only road train- and enginemen. It is easy to see how farreaching the effects of the replacement of coal by imported oil can be when you further consider that these combined road and yard operating employees constitute only oneseventh of the total number of employees on the railroad. The loss in employment in the operating departments has its chain reaction effect to a much more serious degree in the nonoperating side.

While it is true, as I stated before, that no one cause can be singled out as having solely produced these disastrous effects, ordinary commonsense tells us that increased imports of low-cost residual oil have been a very considerable factor. The overall effect of the enormous increase in oil imports upon the general welfare of the American people has been most detrimental. It has profited chiefly a few large oil importing companies. The profit to these corporations has been achieved at the expense of the coal industry and the coalminers of America, the American railroads and their employees and the independent and individual oil producers. We do not believe that this condition can be justified in terms of the national welfare or security. Since the oil importing corporations have been heedless of their public responsibility in this matter, the Congress of the United States is the last resort of those who have been adversely affected by oil imports. The railroad workers of America cling to the belief that wherever there is a wrong, there is a remedy somewhere.

We have full confidence that your committee will find the remedy for this intolerable situation, and that it will be accepted by the two Houses of Congress. We feel the provisions of section 13 of H. R. 4294 will go a long way toward accomplishing this.

Thank you for your time and attention.

Mr. SIMPSON (presiding). The committee thanks you for your appearance and the valuable contribution you have made.

Are there any questions?

Thank you, sir.

Mr. SEE. Thank you.

Mr. SIMPSON. The next, and last, witness according to the paper before me is the gentleman from the Independent Refiners Association of America. Will you come forward, please, and give the committee your name.

STATEMENT OF ELMER E. BATZELL, ON BEHALF OF INDEPENDENT
REFINERS ASSOCIATION OF AMERICA, WASHINGTON, D. C.

Mr. BATZELL. My name is Elmer Batzell.
Mr. SIMPSON. You may proceed.

Mr. BATZELL. I am here as a representative of the Independent Refiners Association of America, for which the firm Myers & Batzell, of which I am a partner, is general counsel. Mr. M. H. Rovineau, of Denver, Colo., had hoped to be here this afternoon to testify before you, but unfortunately at the last moment he was unable to come and asked us to take his place. He asked me to convey to the committee his appreciation of your courtesy in permitting us to express our views before you.

Mr. SIMPSON. Thank you. You may proceed.

Mr. BATZELL. The Independent Refiners Association of America is a nationwide trade association of domestic oil refiners. It has membership in all areas of the United States except the west coast, where petroleum is produced and refined in sizable quantities.

We appear to give you the views of the association on the trade agreements program.

There is a natural reluctance on the part of American businessmen to turn to legislation as the means for solving their basiness difficulties. As one of our members has expressed it, "Legislation is no substitute for the law of supply and demand." It sometimes becomes necessary, however, to look toward legislation when forces which generate the economic problems are beyond the control of businessmen operating in this country and are responsive not to the ordinary laws of supply and demand but to pressures of a diplomatic or quasi-diplomatic nature which serve to upset the traditional balance which is derived through the normal operation of such laws. This could be the case in respect to imports of petroleum and its products.

At the outset it must be made clear that this association has never recommended prohibition of imports into the United States. We do not favor any such program. We think it is clear that the national interest of this Nation requires a continuance of imports if our domestic economy is to be well served and our security interests adequately protected.

On the other hand, it seems equally clear that imports in unlimited quantity relative to domestic demand could so upset the domestic industry that its vigor would be destroyed and its ability to serve hopelessly crippled. The real issue is not whether imports should be prohibited but at what level they should be continued so as to achieve sound national objectives. The secondary issue is how shall this be done.

It seems obvious that a sound, healthy, and vigorous domestic industry must be the prime objective of any national policy. Without oil readily available at home in adequate quantities and at the proper time, the economy of this Nation in peace or national emergency will irreparably suffer. The first line of defense is the domestic industry and the cardinal principle of national policy must be the preservation of that industry.

This preservation means adequate economic return to the elements of that industry, large and small, integrated and nonintegrated, sufficient to keep the component parts healthy, expanding, and dynamic. It means sufficient economic incentive that the independents are not driven from the market place and that they can continue to retain their traditional place in an industry which has been notably competitive, to the continuing benefit of the consumers and the Nation as a whole. Factors which adversely affect the economic climate and which will drive the independent quickly to the wall are not in the national interest and must be overcome.

A secondary objective of policy in the Nation's interest is an awareness of the facts of life abroad. We need friends in this turbulent world. Oil reserves now available to us and our allies must, if possible, be prevented from falling into the hands of our opposition. We believe that this objective must and can be reached without impairing the cardinal principle of a competitive domestic economy.

In present circumstances, a reasonable restriction of imports is essential to the preservation of a competitive domestic industry. We believe this can be achieved now without injury to the secondary objective of maintaining good relationships with our friends abroad.

Prior to World War II, a number of the independent refiners had export markets for their products. The developments of the war and its aftermath, including a continuing export-control policy on the part of the United States, largely deprived these small but important operators of any participation in foreign markets. Today they must depend upon the domestic market if they are to stay alive.

The independent refiner must gain from the products which he sells enough money in the aggregate to cover his direct operating expenses, the depreciation on the equipment which he must install, and the costs of the raw material-crude oil-which he must use to make the products. Since in most instances he owns or controls relatively little crude in relationship to the size of his operation, and owns and controls a relatively limited jobbing and marketing organization, he has no opportunity to dedicate to his refining operation the profits which may arise out of his production or marketing operations. His refining operation must stand or fall on its ability to sustain itself and if he cannot achieve this result, he will be driven out of business.

An immediate threat to the life of the indpendent refiner lies in the rapidly increasing importation of residual fuel oil into the United States. Total product imports into this country, of which residual fuel oil constitutes by far the largest part, have risen well over 200 percent in the last 7 years. During this same period product exports, excluding the military, have generally held even or declined.

In 1947, import of products reached the highest level in all preceding history-an average of 169,500 barrels per day. This level was