by steps to 44, to 42, and finally to 40, and even the orignal reduction was not made effective until 4 months after the enactment of the bill.

Furthermore, economic conditions today are entirely different from what they were at the time of the passage of the Fair Labor Standards Act in 1938. Then there was a tremendous surplus of labor and substantially all of the industries then placed on a 40-hour workweek were actually working their forces less than 40 hours a week. The immediate impact on them was practically negligible and the adjustments in operations which were required were very slight and yet, as pointed out, the 40-hour week was put into effect only gradually.

Moreover, with respect to manufacturing concerns, which were working more than 40 hours a week, they had the alternative of closing down at the end of 40 hours to avoid overtime payments. In the event of the establishment of a 40hour week by statute for the railroad industry, they would not have that alternative. The railroads are a continuous service industry and they are obliged to continue their operations. Many people are prone to think that the only employees on a railroad who are obliged to work on Saturday and Sunday in the interest of furnishing continuous service are the employees employed on line-ofroad trains. This, however, is far from the fact because in order to operate trains a host of other employees must be performing their tasks. Yardmen must be there to operate the yards; shopcraft employees other than in the back shops must be on the job to service equipment; train dispatchers to direct the movement of trains, car cleaners, ticket sellers, and many others to perform their respective tasks. In order to give continuous service without working anyone over 40 hours, the railroads would have to hire additional men and set up a staggered workweek. In a labor market such as we have now, this is not easy of accomplishment because finding the men and giving them the necessary training will take time. Not only must the railroads obtain the services of additional men, but they would also be obliged to make many modifications of their present methods of operation. They would have to set up new working schedules, new assignments of work, revise innumerable working rules which are geared to the present 48-hour week, and make many other adjustments.

More fundamental than the question of the time element is a consideration of the reason which led to the exemption of all railroad employees from the hours provisions of the Fair Labor Standards Act at the time it was originally passed. This exemption or exclusion of railroad employees met the views of both railroad management and railroad labor. When the original bill was under consideration, representatives of both railroad management and labor took the position that the provisions establishing the short workweek should not apply to the railroad industry and that any question of a reduced standard workweek in that industry should be left to collective bargaining under the terms of the Railway Labor Act. For example, at the joint hearing before the Senate Committee on Education and Labor and the House Committee on Labor, on S. 2475 and H. R. 7200, bills forming the basis of the Fair Labor Standards Act of 1938, Mr. Charles M. Hay, speaking on behalf of railroad labor, had this to say (p. 1141):

"These gentlemen, who understand their problems much better than I, have authorized me to come before you and ask that they be exempted from the operations of this act, and they ask this because they rely upon the principle of collective bargaining."

The reasons which prompted both railroad labor and management to take such a position at that time and which led Congress to follow their suggestion apply with equal force today. Both parties recognized that legislation was not a suitable means of dealing with the question of the establishment of a proper workweek in the railroad industry. Their intimate familiarity with the many working rules painstakingly evolved through collective bargaining which were interrelated with the basic workweek made them realize that these rules would need adjustment at such time as there was to be a reduction in the basic workweek. They knew also that this would best be done by the machinery through which such rules had originally been established, namely, through collective bargaining under the Railway Labor Act. This is borne out by the subsequent course of

events.

No effort has ever been made by any of the standard railway labor organizations so far as we know to bring railroad employees under the maximum hours provis ions of the Fair Labor Standards Act. In 1948, when the 1,000,000 nonoperating railroad employees decided to seek a reduction in the work week from 48 to 40 hours, they resorted not to Congress but to collective bargaining under the Railway Labor Act. Coupled with this demand for a reduction in the basic workweek from 48 to 40 hours was a demand that there be no accompanying reduction in

weekly pay and, in addition, a further increase in hourly rates of pay was demanded. The dispute growing out of this request has been through all the processes of the Railway Labor Act, including, ultimately, submission to an Emergency Board appointed by the President of the United States. As a result of the demand for a reduced workweek, the complexities of the case were such that the parties testified at great length and the hearing before the Emergency Board resulted in a record of approximately 5,000 pages exclusive of exhibits. The emergency board, on December 17, 1948, rendered a report recommending a reduction in the basic workweek from 48 to 40 hours with no reduction in pay for substantially all of the 1,000,000 nonoperating railroad employees, effective September 1, 1949. The board also recommended an increase in hourly rates of pay retroactive to October 1, 1948. The carriers in their showing before the emergency board indicated the many working rules which were based upon a basic workweek of 48 hours and how these rules would have to be changed if the basic workweek were reduced to 40 hours. The board recognized that the working rules were dependent upon the length of the basic workweek, and accordingly coupled its recommendation for the 40-hour week with the following recommendations:

"3. With respect to rules changes:

"(a) That the parties agree before September 1, 1949, on necessary rules revisions through negotiations, as they customarily do when they make their agreements; included among the rules which will need revision to make them conform to the staggered 40-hour workweek recommended are those dealing with the following matters:

Amount of weekly and monthly guaranties.

Sick leave.

Vacations.

Relief days, including their extension to crafts which do not now have them, and Saturday afternoon relief.

"(c) That there may be reasons for making changes in rules on

Distribution of overtime.

Changing shifts.

Starting time.

"(d) That the working rules should conform to the revised workweek and, therefore, employees are not to have the option of continuing former rules which they may regard as more favorable but which are inconsistent with this intent." In order that you may have a better understanding of what is involved in some of these working rules which will need revision, let me explain the operation of one of them. The contracts of employment of certain classes of nonoperating employees contain what is known as a 6-day guaranty rule-in other words, six 8-hour days of work a week. If the railroads went to a standard 40-hour week, such a rule providing for a guaranty of 48 hours of work a week would obviously be inappropriate and inconsistent with a standard 40-hour week. Yet, these working rules being incorporated in collective bargaining agreements, railroad management cannot simply change them through its own independent action but must bargain with its employees for such changes.

In view of the complexity of the situation and necessity for working out changes in working rules which are dependent upon the basic workweek, the Board considered it advisable to postpone the effective date of its recommendations with respect to the reduction of the workweek to September 1, 1949, in order that there might be an orderly transition. Following the Board's report there were extensive negotiations between the parties, and the Emergency Board was reconvened to interpret its decision and assist the parties in reaching an agreement. In this orderly manner the parties were able to settle their differences and signed an agreement dated March 19, 1949. In this agreement the Board's report is accepted and the 40-hour week will be made effective for nearly 1,000,000 nonoperating railroad employees on September 1 of this year. However, the employees through collective bargaining under the machinery of the Railway Labor Act obtained far more than the bare 40-hour week with overtime at the rate of one and a half times the regular rate of pay after 40-hours, which section 7 of the Fair Labor Standards Act would have given them. Out of this proceeding they got not just the 40-hour week but a workweek of 40 hours consisting of 5 days of 8 hours each, with two consecutive days off in each seven insofar as practicable and consistent with continuous service operations which the railroad

industry is obliged to furnish. In addition, concurrently with the establishment of the 40-hour week, all of these employees will get a 20 percent increase in their basic rates of pay so as to provide the same basic earnings for 40 hours as are now paid for 48 hours. Likewise in this settlement the changes in the various rules which I have previously referred to were agreed upon either in language or in principle, which will insure a much more orderly transition from the 48-hour to the 40-hour week for the railroad industry than would have been the case had such a change-over been imposed upon the railroad industry by legislation. I believe this settlement furnishes evidence of a highly convincing nature that the representatives of railroad management and labor were wise when, in 1938, they requested that the industry be exempted from the provisions of the Fair Labor Standards Act and such matters left to collective bargaining. In these circumstances there would seem to be no need and no justifiable reason for modifying the present exemption from section 7 of the Fair Labor Standards Act applicable to all railroad employees.

As you are aware, hearings have been held before the House Education and Labor Committee on H. R. 2033, the companion measure to S. 653. The language of section 13 (c) (2) of H. R. 2033 is the same as in that section in S. 653. A presentation similar to that I am now making before your committee was made to the House Education and Labor Committee. As a result of the hearings on H. R. 2033, the House Education and Labor Committee reported out H. R. 3190, which rejected the provision which would have eliminated the exemption for many railroad employees. The effect of the modified language contained in H. R. 3190 as section 13 (c) (2) is to retain the exemption for all railroad employees from the overtime provisions of the Fair Labor Standards Act. The committee in its report accompanying H. R. 3190 referred to the fact that railroad "nonoperating employees are about to achieve, through collective bargaining, the goal of a 40hour week in railroad transportation.' The committee report then went on to say "in view of the achievement of a 40-hour week in this industry through collective bargaining, no competitive inequities will result from the limitations placed by the bill on the overtime exemptions for carriers by air, water, and highway."

As has been pointed out, the Emergency Board's report has been accepted by the parties, and in accordance with that report the 40-hour week will become effective September 1, 1949.

In restoring the exemption for railroad employees, H. R. 3190 did not use the same language as is found in section 13 (b) (2) of the present act, but modified the language to read as follows: "Any employee of an employer which is an express company, sleeping car company, or carrier by railroad, subject to part I of the Interstate Commerce Act.' This exemption in the present act reads as follows: "Any employee of an employer subject to part I of the Interstate Commerce Act." The reason given by the House committee for this change in language was to eliminate the exemption of pipe-line employees who the report said "can and should be employed in accordance with the hours provisions of the act." We take no exception to the expressed objective of the House committee. However, inadvertently it would appear that this change in language might go further than intended by the House committee and serve to eliminate the exemption for the employees of certain railroad subsidiaries which operate facilities in connection with transportation for the railroads. I have reference to such companies as the Fruit Growers Express and others which furnish cars and perform refrigeration service for the railroads to protect the shipment of perishables. This is a service which if not performed by such subsidiaries of the railroads would have to be performed by the railroad companies themselves through their own employees. These refrigerator car companies and their employees are subject to the Railway Labor Act, the employees are represented by the standard railroad brotherhoods. and the terms of their employment, rates of pay, etc., follow very closely those of the nonoperating railroad employees. The Railroad Retirement Act and the Railroad Unemployment Insurance Act apply to these companies and their employees. Also, the Administrator of the Wage and Hour Division of the Department of Labor has from the first classified these refrigerator car companies as a part of the railroad industry.

Thus the reasons which exist for exempting railroad employees generally from the maximum hours and overtime provisions of the Fair Labor Standards Act apply with equal force to the employees of these refrigerator-car companies. Accordingly, we suggest that any change in the language of the exemption contained in section 13 (c) (2) be such as to make it clear that the exemption would apply to employees in this category as well as all other railroad employees. In view of the purpose of the change in the language in section 13 (c) (2) as recited

in the report of the House Education and Labor Committee, the same objective would have been accomplished by changing the language in the present act to read as follows: "Any employee of an employer, other than a pipe line, subject to the provisions of part I of the Interstate Commerce Act." Such a change would have served to eliminate the exemption for pipe-line employees and in other respects the exemptions already well established by construction of the present language would have remained undisturbed.

It is therefore respectfully submitted that the language in section 13 (c) (2) of S. 653 be modified either by restoring the language in section 13 (b) (2) of the present act or, in the event that the Senate committee should see fit to make the same modification as that intended by the House committee, by inserting as section 13 (c) (2) the following language: "Any employee of an employer, other than a pipe line, subject to the provisions of part I of the Interstate Commerce Act." In so far as the exemption feature contained in S. 248 is concerned, no change is proposed in the language of section 13 (b) (2) of the Fair Labor Standards Act and that bill is of course satisfactory to the railroads in that respect.

There is just one other matter I should like to refer to. In section 3 (m) of both S. 248 and S. 653, what is included within the term "wage" has been amended in such a manner as to exclude the reasonable cost of furnishing board, lodging, and other facilities to seamen and to employees engaged on a common carrier in the preparation and service of food and beverages, while as to other employees the reasonable cost of furnishing these items is still included. In attempting to justify this change, Mr. McComb, Administrator of the Wage and Hour Division of the Department of Labor, testified at the hearing before the House Education and Labor Committee, in answer to a question, that the reason for this proposed change was that railroad employees were obliged to maintain homes even though they receive board and lodging from their employers, and accordingly, he could see no justification in making the reasonable cost of furnishing those items a credit against the minimum wage.

In H. R. 3190, the language of the proposed amendment to section 3 (m) has been materially changed but the effect remains the same. In this connection the report of the committee stated:

"This provision would require the payment of the minimum wage, free and clear, to such employees as seamen, meal-service employees on common carriers, or employees in isolated lumber camps, who cannot, as a practical matter, obtain such facilities other than through the employer."

It does not seem to me that the logic of the Administrator's statement or of the committee's reasoning applies to the matter of furnishing meals. The availability of other facilities does not have any material bearing on whether the reasonable cost of furnishing meals should be included as a part of "wage." We feel that an amendment of section 3 (m) such as that contained in S. 653, S. 248, or H. R. 3190 would constitute an unjustifiable discrimination against railroads and that the amendment of this section should be modified so as to allow the reasonable cost of furnishing meals by a railroad employer to be included as a part of "wage" as is the case with respect to other employers.

Senator DOUGLAS. Is Mr. Haddock here now?

Mr. SETH LEVINE (research consultant, CIO Maritime Committee). No, he is not.

Senator DOUGLAS. Are you representing the Maritime Committee? Mr. LEVINE. I am prepared to go on. Mr. Haddock may arrive shortly.

Senator DOUGLAS. I had a telephone message that he was on his

way.

Mr. LEVINE. If the committee wants to, I am willing to go on, but he will probably be here soon.

Senator DOUGLAS. Very well.

Is Mr. Lyon of the Railway Executives' Association here? (No response.)

Senator DOUGLAS. Chester Thompson. I may say that we are very proud of Mr. Thompson. He was formerly a Congressman from the Rock Island district, and we were very sorry that he left the Government service.

Mr. THOMPSON. Thank you very kindly.

STATEMENT OF CHESTER C. THOMPSON, PRESIDENT, THE AMERICAN WATERWAYS OPERATORS, INC.

Mr. THOMPSON. My name, Mr. Chairman, is Chester C. Thompson, and I am president of The American Waterways Operators, a national trade association composed of members of the barge and towing vessel industry of the United States, operating on the inland waterways and the harbors of the Nation. My office is at 1319 F Street, Washington, D. C.

The members of the barge and towing vessel industry are very much opposed to making seamen subject to the Fair Labor Standards Act as contemplated by S. 653 and other measures pending in both Houses of Congress.

All vessel employees on the shallow-draft waters are regarded as seamen, although they are very seldom actually called seamen. But they are officially classified as seamen by all Government agencies, and are generally accepted as such.

The industry I represent, Mr. Chairman and members of the committee, feels, as they did back in 1938, that the barge and towing vessel industry on the inland waterways just does not yield itself or lend itself to Fair Labor Standards legislation.

Our situation is different as to employment on towing vessels and barges than it is in most other forms of transportation.

At the time the original act was passed by the Congress, the maritime labor unions joined with the employers in that industry and sought, and successfully obtained, a complete exemption of seamen from either the minimum wage or the maximum hour provision of the act, and we see no reason why the act should be changed to make it desirable now that seamen be made subject to any provision of the Fair Labor Standards Act.

It is true that the bill pending before this committee, S. 653, and in the bill reported by the House committee, H. R. 3190, that the exemption of seamen as to maximum hours existing under the present law has been continued. But in both of those measures seamen are made subject to the minimum wage provisions of the law.

Vessel employees-we like to call them that on the inland rivers and on the harbors rather than seamen-work what is known as square watches. They work 6 hours on, and they rest 6 hours, and they work 6 hours, and they rest 6 more.

Obviously, that makes an 84-hour week for those men, and a few women who are employed in the galleys, and as chambermaids, and as mess girls, and so forth, aboard towing vessels.

However, all those employees are given liberal time-off provisions. They are given about 122 days a year off with full pay, to compensate them for the long hours that they work.

The nature of the towing vessel industry, small, compact, flexible craft, and such as do not accommodate large crews. There is no way of taking care of them; there is no way of providing for crews that would make possible the working of shorter hours, so the compensatory time or the time off with full pay has been arrived at.

That theory and that system have been arrived at by collective bargaining.

I might add, in passing, that collective-bargaining agreements apply to at least 75 percent of the employees of the barge and towing vessel industry.