The rate from New London, Conn., to Evansville, carloads, other than in bales, is $15.60 per thousand as shown, but this is an improper comparison as there are no shipments in carload lots either from Denver or New London. In other words, the rates are not carload rates, as he has indicated in his speech.

To illustrate how this sort of thing can be worked out, suppose I am trying to show that the rates are too low in the West as compared to the East. Here is what I could do. I could say (these are actual figures) on crude oil the rate from Moline, Kans., to Garnett, Kans., that is 100 miles, is 6 cents per hundred pounds in western territory, whereas the rate from Cygnet, Ohio, to Jackson, Mich., 102 miles, the same distance, is 14 cents per hundred pounds. What a terrible discrimination against the East.

On brick, from Pittsburg, Kans., to Wichita, Kans., 167 miles, the rate in cents per ton, per thousand pounds, is $1, but if you want to ship from Canton, Ohio, to Chillicothe, Ohio, 169 miles, just 2 miles farther than the Kansas distance, the rate is $2.53 per ton, twice as much as the rate in Kansas.

If I am interested in the movement of gasoline from Wichita, Kans., to Kansas City, Mo., 200 miles, the rate is 16 cents in Kansas, but if I ship it from Toledo to Cincinnati, 197 miles, the same distance, the rate is 22 cents per hundred pounds.

On green hides, from Arkansas City, Kans., to Chicago, 671 miles, the rate is 372 cents, but for some distances in official territory it is 43 cents.

I don't intend to protract that, but you can prove anything by handpicked rates.

The CHAIRMAN. The manufacturer who isn't a rate expert, however, is behind the eight ball.

Mr. FLETCHER. He most probably has a rate expert, Mr. Chairman. I don't think they are uninformed about it.

The CHAIRMAN. Considering those figures, a manufacturer would have to be a rate expert or have one to determine the f. o. b. price of his material no matter where it went.

Mr. FLETCHER. That's right. He has his experts. These shippers know the rates.

I just want to conclude and thank you for your patience in letting me make this statement.

I want to conclude what I have to say on this subject with a few general summarizations on this matter of making rates.

We have these arrangements. They have been long in effect. Every informed shipper and all the agencies of Government who have dealt with this question realize that you cannot make rates in any other way; you cannot have one rate on one railroad from Chicago to New York and a different rate on the same commodity between the same points on another railroad. The shippers throughout the country have repeatedly stated publicly and privately that it is necessary to the orderly conduct of business that some system of this kind should be maintained for the making of rates. For 50 years the Interstate Commerce Commission has known how this is done and has approved it.

Some years ago, you remember, Congress passed a resolution for the Commission to investigate the Transcontinental Freight Bureau and their method of originating rates, and an exhaustive report was

made to Congress by the Commission, pointing out the fact that nothing had been done which was illegal and the way it was handled was necessary to the commerce of the country.

Every shipper knows that there is active and intense competition between the railroad industry and between railroads and other forms of transportation. The railroads have sometimes complained about the competition with other forms of transportation, having the idea they haven't been given equal treatment, but I am not considering that question now.

Particular sections of the country have complained and are complaining about rate discriminations, and the Interstate Commerce Commission is competent to handle that and is now handling it. There is a rate case now pending before the Commission in which the class rates of the country are under review. I think the testimony has all been taken, the arguments have been made, I know, oral arguments have been made, and briefs filed, and the matter is now in the bosom of the Commission awaiting decision.

Shippers, large shippers, small shippers, all railroad men, Interstate Commerce Commission, Office of Defense Transportation, are perfectly familiar with the method in which rates are made, thoroughly in accord with the view that no other way can be adopted whereby there can be anything like orderly conduct of affairs otherwise than by the preservation of these bureaus with their powers to initiate rates and file them with the Interstate Commerce Commission, subject, of course, to the power of the Commission to suspend and to investigate.

Well, Mr. Chairman, that's my story.

The CHAIRMAN. Thank you very much.

(Whereupon, at 12: 30 p. m., the hearing adjourned.)

DEAR MR. PELLEY: This subcommittee will be very pleased to hear the testimony of the Association of American Railroads at a session scheduled tentatively for the week of April 10, or the week of May 15, whichever date you prefer. Mr. Fort and Mr. Hall indicated to me that the association desired to appear before us, and I regret that prior commitments, including a 3-week field investigation on the west coast have prevented holding immediate hearings.

The subcommittee is profoundly interested in the mobilization of our scientific and technological resources for war, and in their potentialities for full development in the post-war period. We believe that there are tremendous opportunities for progress in the field of railroad technology, and we would be grateful if the association would address itself generally to a discussion of the factors impeding railroad technology in the past, current possibilities, and constructive suggestions for the future.

It is the practice of the subcommittee to request witnesses to submit in advance a prepared statement which is inserted into the record of the hearings. At the hearing itself, witnesses are asked to summarize the salient features of the statement, and to answer further questions amplifying various points. We are enclosing a list of questions covering matters of especial interest to us, and we would very much appreciate it if the association would include answers to those questions in its statement. This would, of course, be in addition to any general statement the association desires to include in its prepared statement. It would be convenient for us to receive the statement by April 5, or May 10, if the association wishes to testify at the later date. If you feel, however, that a longer period of time is needed to collect the information requested, we would be glad to have you indicate which topics require lengthier preparation and at what dates we might expect to receive the materials bearing upon each of them. I know that your assistance will be of tremendous value to the subcommittee in its investigations.

Sincerely yours,

H. M. KILGORE, Chairman.

EXHIBIT No. 389

Hon. H. M. KILGORE,

ASSOCIATION OF AMERICAN RAILROADS,
Washington, D. C., June 1, 1944

Chairman, Subcommittee on War Mobilization,
Committee on Military Affairs, United States Senate,

Washington, D. O.

DEAR SENATOR KILGORE: Your letter of March 18, 1944, graciously invited the Association of American Railroads to present testimony on a day to be named, with respect to the matters under investigation by the subcommittee, these having to do particularly with the mobilization of scientific and technological resources for war and their potentialities for full development in the post-war period. The association was invited to file, in advance of the hearing, a statement for insertion

in the record and to respond to a list of questions which was attached to your letter.

In compliance with your suggestions, the Association of American Railroads is filing a somewhat extended statement of the research and planning which have made possible the present efficient operation of railroads, as evidenced by their record of wartime service, and the plans for continuing work of this sort to provide better rail transportation for the future.

The idea sometimes expressed that railroads have not shared fully in technological progress and development is not borne out by the facts. Railroad research, it is true, is not organized and conducted in the same centralized way as research in some manufacturing industries. It is decentralized, carried on in many different ways, at many different places and in relation to different phases of railroading, as it should be and, by the very nature of the railroad business, must be.

But railroad research, taken all together, has met the true test of effective research-the test of results. Since the period of the First World War, for example, the over-all efficiency of railroad operations, no matter how it may be measured, has much more than doubled-a truly remarkable result for an industry which is no longer in its rapidly developing early stages.

The research behind such results, and that projected for the future, are outlined in the accompanying statement, as follows:

Part I, the organization and activities of the Association of American Railroads, with special reference to research and technological development.

Part II, the nature and accomplishments of railroad research. There are appended as exhibits separate statements outlining the work done and results secured, together with present projects and something of the plans for the future, in nine principal fields of railroad research.

Part III, the result of technological advances on the railroads as demonstrated in their wartime preparedness and performance.

Part IV, a statement regarding the so-called western agreement, about which special inquiry was made in your letter of March 18.

Following the general statement and the exhibits, there are forwarded with this letter of transmittal the specific replies of the association to the list of questions included in your letter of March 18.

It is understood that on a date to be later announced officers of the association will explain briefly the matters covered by the general statement and the answers to the list of questions.

Sincerely yours,

J. J. PELLEY, President.

EXHIBIT No. 390

STATEMENT SUBMITTED BY THE ASSOCIATION OF AMERICAN RAILROADS TO THE SUBCOMMITTEE ON WAR MOBILIZATION, COMMITTEE ON MILITARY AFFAIRS, MAY 31, 1944

PART I. THE ASSOCIATION OF AMERICAN RAILROADS

ITS ORGANIZATION

AND ACTIVITIES, WITH SPECIAL REFERENCE TO RESEARCH AND
TECHNOLOGICAL DEVELOPMENT

The Associaiton of American Railroads is the organization of the principal railroads of the United States, Canada, and Mexico for dealing with matters of common concern in the whole field of railroading. Its membership represents 96 percent of the railroad mileage in those countries and 99 percent of the business done by the railroads. Numerous other railroads in North America and all over the world are associate members, receiving the benefit of the reports of the association's research committees.

The associaation has no existence separate and apart from its constituent ⚫ members. It is, rather, an agency of its members for the carrying on of many lines of railroad work which can be done better collectively in this fashion than by the railroads singly and separately. In none of these lines of work does the association undertake to control or dictate the policy of its members, nor to take over any of their functions except those which, by agreement, may be entrusted to it.