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THURSDAY, JULY 27, 1950.




Mr. Gary. We commence hearings today on supplemental estimates of appropriation for the Post Office Department for the fiscal year 1951, contained in House Document No. 659.




The first item is a request for an additional amount of $148,000 for general administration. At this point in the record we will insert the tables appearing on page 2 of the justifications.

General administration, 1951 Post Office Department Appropriation Act, 1951, H. R. 7786-- $16, 000, 000 Estimated obligations (as of June 9, 1950).

16, 148, 000 Estimated additional supplemental appropriation.

148, 000 Analysis of supplemental appropriation Activity and account Coordination and control: Inspection service:

requested Inspectors --

$79, 000 Clerks, inspection service.

3, 700

$82, 700 Direction of postal operations:

Transportation of mail: Salaries, Bureau of Transportation - 65, 300 Estimated additional supplemental appropriation --

148, 000 Mr. Gary. It appears that the regular appropriation for 1951 is $16,000,000.

The estimated obligations as of June 9, 1950, are $16,148,000, leaving a deficit of $148,000 which is requested in this item.

Who will justify this request, Mr. Strom?

Mr. STROM. I will summarize briefly what it is for and Chief Inspector Garner and Associate Solicitor Wiprud will testify as to the details.



Of the $148,000, $82,700 is due to salary increases authorized by Public Law 500; $65,300 is for funds needed for continuation of the Railway Mail Pay case.

Mr. Gary. Will you explain Public Law 500?

Mr. STROM. That is the law which authorizes longevity salary increases for the postal field employees who were not provided for in Public Law 428. This was a corrective measure to include all postal field employees. Chief Inspector Garner will justify the $82,700 for the inspection service.

Mr. GARNER. Mr. Chairman, this act of May 3, 1950, Public Law 500, provides for the mandatory promotion after 13, 18, and 25 years, respectively, of postal field employees on account of longevity steps of $100 in each of those grades, A, B, and C. The A grade is after 13 years of service, the B grade after 18 years, and the C grade after 25 years of service.

We have 566 post office inspectors who are to be promoted this fiscal year or have already been promoted in the past fiscal year to one of these grades, averaging $153 per inspector. The total cost is $79,000 for the 566 promotions.

We have 33 promotions to these grades of clerks, averaging $112 per promotion, totaling $3,700. Those two figures total $82,700.

(Discussion off the record.)

Mr. CANFIELD. Mr. Strom, inasmuch as the Appropriations Committee of the Senate did not make a report to the full Senate on the omnibus appropriations bill until late in June, I do not understand why this situation could not have been presented to them in time for some consideration.

Mr. Strom. I do not know why it was not presented because, as you know, Congressman Canfield

Mr. CANFIELD. You see what I have in mind?

Mr. STROM. Yes. The presentation is made by the Bureau of the Budget to the Congress. In other words, we cannot submit our justifications until the document has been presented by the Bureau of the Budget. I do not know the reasons the Bureau of the Budget did not submit it until now. It is my understanding that they wait until they get a call for estimates.

Mr. CANFIELD. Mr. Chairman, I should like to get clear one point here. It is not my understanding that the Bureau of the Budget is precluded from sending requests to the Appropriations Committees of the Congress until they are asked for. That is not the situation, is it?

Mr. STROM. I am not familiar, sir, with the details. As I said, it was my understanding that they waited until they had a request. Whether that is a fact or not, I do not know.

Mr. Gary. They probably held them up until they got other requests, knowing that there were some other requests coming up.

Mr. STROM. I believe that is the situation.

Mr. Gary. It is customary to accumulate requests so that they can be incorporated into one bill. This prevents a multiplicity of bills on the floor of the House. The Budget Bureau evidently held up your requests until the others were received for this supplemental bill.

Mr. STROM. I can state this. Insofar as the inclusion in Document 659, it was presented on two different occasions to the Bureau of the Budget and they combined the two requests in one document. In other words, they held up the submission of June 9 until they received the latter one.

Mr. CANFIELD. At the very time that the Bureau of the Budget was withholding this request there was a rather general understanding here on Capital Hill that there would be an early adjournment of the Congress. That, of course, was prior to the Korean crisis.



Mr. Gary. What about the other item, $65,300?

Mr. STROM. The $65,300 item is to enable us to continue the employment of persons in connection with the completion of the railway mail pay case. This will be justified by Associate Solicitor Wiprud.

Mr. WIPRUD. Mr. Chairman, it might be helpful to the committee if I briefly reviewed what this case is all about. The pending case is before the Interstate Commerce Commission and involves petitions of the mail-carrying railroads of the United States for a 95-percent increase in mail pay.

Translated into dollars, if the railroads' petitions are granted, they would receive, including the 25-percent interim which was allowed by the Commission on December 4, 1947, $500,000,000 in retroactive pay, and rate increases over and above that which they presently receive of approximately $200,000,000 a year, which would make the total annual bill of the Post Office Department for transportation of mail by railroads approximately $400,000,000. It has been 20 years since there has been a general railway mail pay

In that time there has been no mail pay rate unit in the Department, as the committee will recall from past testimony, and it was necessary for the Department to set up a temporary unit to handle this case.

It took time to get men and to organize these men and to prepare for trial, and to get the railroads to agree to a cost study. As I have said, it has been over 20 years since there has been a cost study in connection with the transportation of mails.

The present cost study is divided broadly into an operational study, which study was made for the purpose of determining the space in passenger trains properly assignable to mails and other traffic. That study, Mr. Chairman, was made for a test period, October 18 to 24, 1948, and involved every train on every railroad in the United States.

We have studied 123,000 head-end movements and the results were reported on several hundred thousand forms, jointly to the railroads and to the Post Office Department, the study being a joint study.

In addition to the operational studies, there were special studies, such as the cost of switching to determine the amount of this cost allocable to the transporting of mails; passenger train car repairs, train supplies and expenses; station structure use; and station labor expense. Station labor expense itself amounts to about 25 percent of the total mail costs.

To obtain this information took time. The Commission, the railroads, and the Department fixed a cut-off date of April 30, 1950, when all this information had to come in. Of course, it had to come from the railroads because they operate the trains and they conducted most of the studies.

Most of that information is in, although all of it is not in. There is some even yet to come in. But, as stated, we made a cut-off date of April 30, 1950. So we have had 2 months and 27 days to analyze and summarize the information and put it in evidentiary form—this vast amount of material.


Originally it had been the purpose of the Department to go to trial in June 1950. But the railroads in November 1949 tried to obtain a Commission order for a second interim increase and it took the energy of all of us for 4% months to ward off this request for another interim increase in mail pay. We insisted that the case go to trial on the merits. That occasioned a 4-month delay which prompted the Commission to set the case down for trial on September 19, 1950.

As I have said, Mr. Chairman, the cut-off date was April 30, 1950, on all of the material that is to be in our hands, and that material cannot be worked up and put in evidentiary form to do justice to the Department's case in less than 6 months. The Commission, last March, fixed September 19, 1950, as the date for trial, with the understanding that, if it was not possible to process this material, they would consider an extension of the time. We have a request in for a 60-day extension, which would bring this case on for trial November 19, 1950.

That, Mr. Chairman, in broad outline is the situation and is the occasion for the need of this additional sum of money to carry on this work.

Mr. Gary. When do you think you are going to complete this case?

Mr. WIPRUD. We are going to trial on November 19, 1950 if the extension is granted. In view of the fact that the Commission has required the parties, some 5 weeks in advance of the hearings, to exchange all exhibits on their affirmative case-not only the exhibits, but their prepared testimony, we believe that the case can actually be tried in a matter of weeks. It has been a matter of many months in past hearings, but by the exchange of exhibits between the railroads and the Post Office Department and the exchange of all testimony, which will be in written form, the task will be that of rebuttal evidence to the affirmative case on both sides.


• Mr. CANFIELD. Mr. Wiprud, when you say, “We have been studying, we have been analyzing, we have been compiling,” to whom do you refer?

Mr. WIPRUD. That refers to our mail pay unit. This is the unit that has been set up especially for the purpose of handling this case. It is composed of about 56 employees.

Mr. CANFIELD. When you say “we” do you mean employees of the Post Office Department alone?

Mr. WIPRUD. That is correct.



Mr. CANFIELD. And yet you say that this is a joint enterprise?

Mr. WIPRUD. The gathering of the information was done jointly and it had to be. The railroads operate the trains. They handle a vast amount of mail at the terminals. They perform the work, and so they have all the information dealing with the trains that are running and what it cost to run the trains, the cost for help, and so forth. The joint study is joint in this sense, that the expense is jointly borne and the studies are jointly supervised. One copy of the study is supplied to the railroads, and another copy is supplied to the Department.

The Department takes this vast amount of material and works it, processes it, and that is our case. The railroads may have a wholly different concept of how to use this material. They present their

We certainly do not agree with them on their demands for a $500,000,000 retroactive pay or for a $200,000,000 annual increase in mail pay. But that is their case and that is the case that we have to combat.

Mr. CANFIELD. As I recall, the Department has been quite optimistic for some time about the probable outcome of this case. I hope it still is.

Now, Mr. Wiprud, do you have any idea what the railroads of the United States are spending to fight this case before the Interstate Commerce Commission?

Mr. WIPRUD. I think, Mr. Congressman, it would be very difficult to make even an estimate of that for this reason, that they draw upon the talent of all the railroads of the United States for cost findings, transportation economics, and for their law staff. The law staff is composed of quite a number of lawyers; I should say almost 16 lawyers, drawn from the leading railroads of the United States. Their cost section is in large part composed of men from the comptrollers' offices of the various railroads. So I think it would be rather difficult to estimate what they are actually spending in the preparation of the case.


Mr. CANFIELD. Would you hazard the opinion that the railroads are spending several times as much as is represented by the funds appropriated by the Congress to the Post Office Department to uphold its side of this case?

Mr. WIPRUD. I believe, Mr. Congressman, taking into consideration the type of talent they are putting into this case, it would easily be several times what the Government is spending on the case.

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Mr. CANFIELD. Do your studies embrace a consideration of the so-called empty-car-return problem?

Mr. WIPRUD. Yes, indeed. We have made quite an exhaustive study of that and it will be an important feature of our case. The Postmaster General, as you may know, has requested that Congress

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