264 miles by highway. It was his claim that the Alaska Railroad undercut his rate by charging a $9 rate from Seward to Anchorage, and then by paying $10 to have the traffic hauled to the destination, Fort Greeley at Big Delta, making a rate of $19 as compared with his $21 rate.

I believe he stated that he was offered, or given an opportunity to haul it for $10 from Anchorage to Fort Greeley.

Do you recall any instance of this sort, Mr. Kunz?

Mr. KUNZ. We've tried to pinpoint that particular instance, and we've been unable to. What I did do was to have the rates checked back to 1956, and our rate has not changed since that time, and the rate is $19.80 a ton, and it has been that all the time.

Mr. BARTON. Since 1956?

Mr. KUNZ. 1956 is as far back as we went, yes.

And as to the beyond, the only rate that we've ever published, I'm quite sure, is one we spoke of a short time-a little earlier here, of, in connection with truckers from Fairbanks to Big Delta, Fort Greeley, which is 60 cents-it's 60 cents, and I'm quite sure that 60 cents has never been changed.

Mr. BARTON. You mean recently?

Mr. KUNZ. Right. In fact, I think that is the rate that has been in effect since we've had a rate to Big Delta, in connection with the

Mr. BARTON. When you say 60 cents, you mean 60 cents a hundred? Mr. KUNZ. Yes, sir; $12 per ton.

Mr. BARTON. Yes, sir.

During the noon recess, Mr. Kunz and Mr. Anderson, I showed you a letter that had been written by you to a truck line. You have the letter here I loaned it to you for your examination.

Mr. KUNZ. Yes, sir; I have it here.

Mr. BARTON. Mr. Kunz, tell us generally to whom this letter was written, by whom, and what was the occasion of writing it, please, sir?

Mr. KUNZ. Well, this was in, to pinpoint the time, it was in January, of this year

Mr. BARTON. Of 1958? Isn't it? Mr. KUNZ. Of January 1958; excuse me, that's correct. Well, there's a little history behind this. We had in our operation a piggyback arrangement with trucklines, with some trucklines, and it was not a big thing at the time; we were not well equipped with proper equipment for piggybacking. During the

Mr. BARTON. What is piggybacking?

Mr. KUNZ. I should say a substituted service, where the motor carrier substitutes for the rail for his service. We would load his vans and trucks onto our flatcars and haul them to destination.

Under this, this thing was a growing thing, and certainly the management felt that some program was necessary, and wanted to get an expression from the truckers and to induce them to use the railroad on a year-around basis, in order that we could set up to have them satisfactory.

As it was at that time, during the breakup period those motor carriers that used the railroad had to use inferior equipment, they had to reload it on flatcars and blocked up with ties and such things as

that. We wanted to put better equipment in there. We felt that in order to do that we had to have some guarantee that we would have enough business to warrant good equipment. And for that purpose we made a contract, and offered it to the truckers for their consideration, and in this contract they would provide us with 60 percent of all their business that was for points on the rail.

Mr. BARTON. For the breakup period only?

Mr. KUNZ. No, for the year around, for the year around-60 percent of their year-around business.

Mr. BARTON. Oh. I direct your attention to article 3 of your paragraph there of your statement there I believe it says 80 percent, doesn't it, Mr. Kunz?

Mr. KUNZ. Well, that is right; there was 80 percent, and at the same time we talked with some of these carriers and 80 percent seemed to be too large a percent because of their operations that they had to carry on to Valdez and places along the Valdez Highway and for their purpose we cut it and made it 60 percent.

And that was offered to them, and it was refused by one carrier, particularly, and as a consequence it was decided that we would eliminate this and withdraw it, which we did, and we have no such thing in effect today.

Mr. BARTON. Your proposal, I think to James Burke & Co., was if they would offer you 80 percent of their traffic in piggyback form, you would do what for them-what would be the benefits to them? Mr. KUNZ. Well, for one thing, the rates were better than the regular rates.

Mr. BARTON. What do you mean by that, Mr. Kunz?

Mr. KUNZ. Well, using the substituted service, we had established a set of rates for different maximum weights of vans, and these rates were less than the published tariff rates.

Mr. BARTON. Those that didn't sign the agreement would pay a higher tariff rate than was being offered here?

Mr. KUNZ. They would if they used the railroad service.

Senator BARTLETT. May I inquire a bit further. I am a bit puzzled as to why the railroad would offer them a better rate than other shippers?

Mr. KUNZ. Well, we considered them nonshippers.

Mr. ANDERSON. Mr. Chairman, this thing revolves around the breakup, as you started to question.

We can maintain about so much equipment on the railroad, to pay for itself. What I'm getting at is, for the man that piggybacked with us 12 months of the year, we knew that it would take so much of this specialized equipment. Then for the breakup season to come along for a period of 5 to 7 or 8 weeks, all truckers would come to us, and want us to piggyback for them. We did not have the equipment, because we cannot stock our railroad with equipment for a peak period of 6 or 7 or 8 weeks.

Senator BARTLETT. The reason they might seek to do this, Mr. Anderson, is because the load limits are reduced on the highways during that time?

Mr. ANDERSON. Yes, sir; that is correct. So in order to try to establish something of a normal pattern, a regular pattern of traffic, and of usage for our equipment, and to give the user of this equip

ment a good equipment to use, we proposed this to them. They turned it down, and we withdrew it, and it has never been in effect. Mr. BARTON. Mr. Anderson, do you know of any comparable arrangement in the south 48 States between railroads and truckers, such as you have proposed here?

Mr. ANDERSON. No; I can't say that I do know of an arrangement of that kind. I know of plenty of arrangements, Mr. Barton, where specialized equipment is provided for certain patrons.

Mr. BARTON. This specialized equipment is not furnished however, on the agreement that they will furnish a certain proportion of their traffic to the railroad?

Mr. ANDERSON. It naturally follows that they will. It isn't spelled

out.

Mr. BARTON. Your proposal here takes the form of what is called an agreed rate, a guaranteed rate, which has been used in Canada and England, and which has been proposed, I believe, but has not been accepted yet, in the United States?

Mr. ANDERSON. That is correct.

Mr. BARTON. Another minor point made among the points made yesterday was that the Alaska Railroad advertised that it gave storedoor delivery to its customers.

Do you still advertise and give store-door delivery, Mr. Anderson? Mr. ANDERSON. Yes, sir; we do.

Mr. BARTON. At no additional charge?

Mr. ANDERSON. That is correct.

Mr. BARTON. Now we come to some points made more about leases; the statement was made that the Alaska Railroad leases to certain oil companies in Fairbanks, and as a result of these leases the Alaska Railroad has some control over the policy of petroleum products distribution in the areas which these oil companies serve.

Mr. ANDERSON. The oil companies that we have leases with, Mr. Barton, are Standard Oil, Union Oil, Texaco, and I hardly believe that it's necessary for me to intimate that I cannot influence the practices of organizations of that size, and I wouldn't even attempt to. Mr. BARTON. Is there any notice period in which you can terminate those leases?

Mr. ANDERSON. Yes, sir; I think that we have a termination agreement on all of our leases-60 days.

Mr. BARTON. Sixty days. You do not think then that the Alaska Railroad is in such a position that it can tell these oil companies what they should do in certain matters to the point that this 60 days would be used against them?

Mr. ANDERSON. That is correct.

Mr. BARTON. It was further stated that, by a gentleman that shipped propane gas in tanks, that propane moves from Seward to Anchorage and Fairbanks by railroad tank car, and this is done much cheaper than by truck because he believes that the shipper owns the tank cars and there has been an adjustment in railroad rates that makes it easier and cheaper to ship by tank car rather than by small tanks containing propane gas.

Mr. ANDERSON. Well, at least we have proposed this, and we have published it, and hope some day to be in that business. We have a rate into Fairbanks, for example, of $1.36, which is a higher rate

than the petroleum products as has already been testified here, and it doesn't appear to be an unreasonable rate or-I think that you could say that that rate is made on a very reasonable basis.

Mr. BARTON. Do the shippers in fact own the tank cars, Mr. Kunz?

Mr. KUNZ. Yes; they're private tank cars.

Senator BARTLETT. Probably leased from some private company? Mr. KUNZ. They've been shipped in from the south 48.

Mr. BARTON. It was further stated that there were some peculiarities in the rate structure of the Alaska Railroad.

For instance, it was stated that groceries from Seward to Fairbanks moved at $15 a ton, whereas petroleum products moved between those two same points at $28 a ton, making it difficult, if not impossible, for the competing truckers to handle groceries from Valdez to Fairbanks. What are your comments on that, Mr. Kunz?

Mr. KUNZ. Well, we have-you know, one of the things that a railroad can do is to haul large quantities, and by so doing haul it at a cheaper rate. We have a rate on groceries for 60,000 pounds, which rate is $23.40 from Seward to Fairbanks. Our petroleum rate is $23. We believe that's a reasonable rate.

Mr. BARTON. In other words, you have no rate from Seward to Fairbanks on groceries of $15 a ton?

Mr. KUNZ. No, sir.

Mr. BARTON. And no petroleum products rates from Seward to Fairbanks of $28 a ton?

Mr. KUNZ. No, sir.

Mr. BARTON. What effect, Mr. Kunz, has the store-door delivery of the Alaska Railroad had on the business of the local draymen that formerly handled that traffic?

Mr. KUNZ. Well, I'd have to guess. I don't know. But presumably, if they were not able to get some other type of work with their trucks, it would have taken from them a considerable amount of their

revenue.

I think that some of these local draymen have done very well by supplementing what they did have with other types of transportation. Mr. BARTON. Well, do you not find it cheaper to use local draymen than to perform the service yourself?

Mr. KUNZ. No, we've tried that, and we had two real bad cases; at Anchorage we put it out, bid it out, and it did not work out. Mr. BARTON. What do you mean when you say it did not work out?

Mr. KUNZ. Well, we had so much difficulty with poor service by this particular drayman that got that performed the service for us, which probably was the reason he was unable to continue. His method of operation wasn't satisfactory, and he had to-well, I think he went broke on the thing. At least, he found it not a profitable

venture.

Mr. BARTON. And you didn't see fit to try some other drayman? Mr. KUNZ. Well, I think the answer to that would be that we received so much complaint bcause of this that we felt we could do better, do a better job ourselves.

Mr. BARTON. Mr. Chairman, this covers the points that were raised in Valdez, and concludes the questions I have on them.

Senator BARTLETT. Are there any further questions?

Mr. MOULDER. I have one further question.

Is it common practice for railroads to engage in delivery service from door to door all over the country now?

Mr. KUNZ. Yes, sir; yes, it is.

Senator BARTLETT. Thank you, Mr. Anderson and Mr. Kunz. The Chair will offer for the record a letter received by mail today from R. L. Shake, general chairman and legislative representative, Brotherhood of Railroad Trainmen, of the Alaska Railroad, who in furnishing the letter also represents the Brotherhood of Locomotive Firemen and Enginemen of the Alaska Railroad, endorsing S. 1508. GENERAL GRIEVANCE COMMITTEE, BROTHERHOOD OF ALASKA TRAINMEN,

THE ALASKA RAILROAD, Anchorage, Alaska, October 26, 1959.

Mr. CHAIRMAN: We did not intend to offer testimony on S. 1508, however, since hearing the Alaska Railroad taken to task, by the trucking interests, we wish to offer this testimony, for the record, and concerning S. 1508.

It is extremely important to us as operating employees, of the Alaska Railroad, that S. 1508 become law inasmuch as certain laws covering safety of operation and grievance procedures would come into being by virtue of an amendment sponsored by the Railway Labor Executive Association, namely the Hours of Service Act of 1908, the Safety Appliance Act of 1903, as amended, and the Railway Labor Act of 1926.

The Hours of Service Act is a law which forbids a railroad to hold a train crew on duty more than 16 consecutive hours, the reason and necessity of this law being obvious, to assure the traveling public that the crew, handling the train, will be wide awake and mentally alert. On the Alaska Railroad we have, written into our working agreement, rules to the effect that the hours of service law will be adhered to, however, this rule is very often violated, not only by th management, but also by the employees themselves, and this law will never be adhered to unless the Alaska Railroad is regulated by the ICC and the management, of the railroad, as well as the employees involved, are subject to prosecution under the law.

The Safety Appliance Acts being laws enacted to require the railroads to maintain their equipment to a certain standard of repair. There is nothing to require the Alaska Railroad to do this and therefore our members are subjected to hazards that have been nonexistent in the contiguous 48 States for 30 years. Trains are moved out of terminals where repair facilities are available with missing grab irons, sill steps, hand holds, bent ladders, inoperative hand and air brakes, and many other violations.

This endangers not only the men employed on the train but also the traveling public and this traveling public, in Alaska, are surely entitled to the same degree of safety as are the citizens of the other States.

All of the promises, by the railroad, that the equipment will be kept up to standard will not suffice for one inqury that might be prevented by adherence to the Safety Appliance Act.

Under the Railway Labor Act the employees of the Alaska Railroad would have an opportunity to have their grievances heard by well-experienced railroad men and a decision handed down which is consistent with practices of the industry.

At the present time the employees have no recourse other than final appeal to the Secretary of the Interior to settle wage problems and many other grievances. While we highly respect the caliber of man who would be named Secretary of the Interior, we realize that he can only go upon the recommendations of his subordinates and therefore we are possibly left at the mercy of a recommendation made by some possibly prejudiced and biased local official, quite possibly the very person whose final decision had necessitated the appeal in the first place. I do not claim to be qualified to comment on all the ins and outs of rate fixing, tariff writing, etc., but I would like to state that the vast majority of the operating employees feel that it is imperative that the railroad be regulated