Foreign Commerce on June 8, 1949, in regard to amendments to S. 211, and request that it be accepted as our comments in regard to the relevant provisions of the House bills, H. R. 429 and H. R. 4978. We have been informed by the Bureau of the Budget that the report is in accord with the President's program respecting the Inland Waterways Corporation as enunciated in his budget message. In addition, there is also attached a report concerning a rehabilitation program for the Corporation, together with a report on the integrated tow unit placed in service in May 1948. The rehabilitation program outlined in the attached report is based on the advice we received from the Bureau of the Budget on May 24, 1949, that authorization of a sum not to exceed $10,000,000 for additional capital for the Corporation would be in conformance with the program of the President. Sincerely yours, C. V. WHITNEY, Acting Secretary of Commerce. REPORT OF DEPARTMENT OF COMMERCE CONCERNING LEGISLATION FOR REHABILITATION OF INLAND WATERWAYS CORPORATION The proposed bills, H. R. 4978, H. R. 429, and H. R. 328, would authorize an additional $18,000,000 of capital stock for the Inland Waterways Corporation. However, inasmuch as the Bureau of the Budget has advised us that an authorization of $10,000,000 for increased capital would be in conformance with the program of the President, the rehabilitation program summarized in this report is based upon such limitation. As has been developed in great detail in congressional hearings, in the report of the Small Business Committee and in other documents, a large portion of the equipment of the Inland Waterways Corporation is in such a state of obsolescence and deterioration that major replacements are immediately necessary in order to prevent curtailment of the service on account of forced retirement of equipment. Funds obtained by the subscription of stock authorized by the proposed bill would, when provided for by appropriation, be used for the rehabilitation and replacement of such obsolete and run-down equipment. At the present time, there are in service on the Mississippi unit 12 vessels and 125 barges which should be retired immediately but which cannot be spared because of the necessity for maintaining service. There are in addition three comparatively new Defense Plant Corporation (DPC) towboats, three vessels recently converted from steam to Diesel power, two comparatively new, but small, Diesel vessels and 99 barges, all of which are fairly efficient and have considerable useful life left. Principally because of the obsolescence and deterioration of floating equipment and the inefficiency of the principal terminals, the Corporation has lost considerable money. The salient features of the rehabilitation program necessary to provide proper common carrier service to the areas served are approximately as follows: 1. Additional integrated towboats and additional barge capacity.—Following the pattern of the successful experiment in the use of the integrated tow, equipment of this sort should be provided to furnish a reasonably frequent service between New Orleans, Chicago, Minneapolis, and Omaha. This will require the construction of a towboat especially designed for Illinois and Chicago River service and a towboat especially designed for Missouri River service; adaptation of the Harry Truman for upper Mississippi River service; and the conversion of three DPC steam towboats for integrated tow service on the lower Mississippi River. These six towboats and 70,000 tons of additional barge capacity would be sufficient to handle all merchandise traffic and package freight in present volume, together with some of the present bulk traffic volume (enough to fill out to full capacity tows not fully utilized by merchandise traffic). This equipment could handle all traffic, both bulk and merchandise, through the low bridges into the Chicago area and all traffic on the Missouri River. The construction and adaptation of the foregoing towboats would cost $1,450,000 and the necessary additional barge capacity of 70,000 tons would cost $6,190,000. Attached herewith is a report on the integrated unit placed in service in May 1948. Performance records during the experimental period ending in November 1948 indicate substantial economies over conventional equipment. Similar equipment is contemplated in the program outlined herein. 2. Improvements to towboats and barges.- Certain capital improvements are required in the existing fleet to secure the maximum efficiency. The three towboats to be used in integrated tows should be fitted with water walls in the fireboxes for more efficient steam generation. These and four other towboats should be equipped with radar for fog navigation. Steering mechanisms on three towboats should be replaced. The total cost of these improvements will be $137,000. The first experimental fleet of integrated barges requires some alterations to conform to changes in design to be embodied in new construction. Fixed connections should be installed on all conventional barges to reduce time and manpower necessary to assemble and deliver barges. Covers should be installed on six coal barges to increase grain capacity on the upper Mississippi River. The total cost of these improvements will be $183,200. 3. Improvements to operating bases.-The shops and stores facilities at St. Louis and New Orleans need various minor improvements to promote efficiency, economy and speed in operations. A small service barge should be provided at each of these points to enable line towboats to be stocked and serviced in the stream to expedite turn-around. The total cost of these improvements will be $52,300. 4. Rehabilitation and improvement of terminals.- Most of the terminals are in fairly efficient condition to continue to handle merchandise freight in the conventional manner, piece by piece. Some deferred maintenance is in order at a few terminals in order to place them in condition for transfer to private operation. At the St. Louis and East St. Louis terminals, which are the hub of the entire operation, a major task of repair and rehabilitation is necessary to even continue them as a reasonably efficient conventional operation. Considerable expenditures will be required to restore the St. Louis terminal to usable condition. The traffic volume at the East St. Louis terminal will justify a modernization of this equipment to provide faster and cheaper freight handling. An allowance of $997,500 has been made in this program to cover these needs. 5. Purchase of trailer bodies and trailer body containers.-The development of truck-barge traffic built around the use of 12-ton trailer-body containers gives the most promise for the successful handling of package freight. It is suggested that during the experimental stage when this program is being tried out at only Chicago and New Orleans, and connecting with existing common carrier service to Houston and Mobile, that only 300 such containers worth $485,000 be purchased to go with 30 flat-bed trailer bodies for use in pick-up and delivery service at Chicago and New Orleans. 6. Railroad equipment. The Corporation operates a rail-switching facility between Port Birmingham and Ensley, Ala. One locomotive and 50 cars are required at the present time for this operation, the need for which has been urgent for some time. The railroad department is unable to handle all the coal traffic offered. Recently plans have been formulated by private enterprise to import iron ore from South America and Sweden for use in the steel mills in the Birmingham area. Preliminary estimates place this tonnage at from 300,000 to 400,000 tons per year. The total cost of the equipment required at the present time is $400,000. The program outlined above contemplates an investment by the Government of $10,000,000 in additional capital stock for the rehabilitation of the Inland Waterways Corporation. It should be noted that this program does not contemplate any expenditures on either the Warrior or Tennessee Rivers or the proposed connecting waterway via the Tombigbee cut-off. The remainder of the program is to be financed in succeeding years from operations as follows: Improvements to barges... Railroad cars_ 45,000 tons integrated barge capacity. 4 integrated towboats___ Terminal improvements. Container program - Total__ $73, 500 250,000 3, 825, 000 2,500,000 1, 500, 000 2, 500, 000 10, 648, 500 REPORT OF THE DEPARTMENT OF COMMERCE ON AMENDMENTS TO S. 211 Under existing law it is declared to be the policy of Congress to provide for the continuation of the transportation services of the Inland Waterways Corporation until such time as private persons, companies, or corporations are ready and willing to engage in such operations. Several bills, such as H. R. 5318 and H. R. 5476, were introduced in the Eightieth Congress to accelerate the sale of the facilities of the Inland Waterways Corporation to private interests. Section 2 of the proposed amendment to S. 211, introduced on March 23, 1949 by Senator Wherry and others, provides that no part of the "carrier operations" of the Corporation shall be discontinued or disposed of for a period of at least 5 years following the enactment of the amendment. This provision would preclude the disposal of either the Mississippi River system or the Warrior River system, or both, for the next 5 years. For some time the Department has felt that the sale of the constituent units of the Inland Waterways Corporation to private interests would be appropriate if an offer is made for such disposition that would prove advantageous to the Government and the public at large. The purchaser would be obliged to continue to operate the facilities in comomn carrier service in a manner substantially similar to the service rendered by the Corporation. It is realized, of course, that such sale cannot be made at the present time in view of the existing statutory limitations on such sale. The Department is of the opinion that it should not be precluded at the present time from seeking legislation regarding the sale of either the Mississippi River system or the Warrior River system, or both, if a propitious opportunity for such sale presents itself and accordingly we are not in favor of the 5-year limitation. Section 3 adds two new subsections (g) and (h). Subsection (g) provides in part that the activities of the Corporation "shall be primarily in the fields of pioneering and research in the development of its carload and less-than-carload traffic." Subsection (h) provides in part that except for certain commodities the Corporation shall not "substantially expand its bargeload traffic where privately owned barge lines and terminals are ready, willing, and able to provide adequate service." Subsections (g) and (h) do not appear to alter the existing declared policy of the Congress as implemented by the Corporation (a) to foster and develop the movement of river traffic where adequate service is not offered by other barge lines, and (b) to develop a well-rounded, self-sustaining, common carrier operation. For some time now the Corporation has been of the opinion that in order more adequately to serve the public on an over-all common carrier basis, it is essential that merchandise tonnage be expanded and accordingly we have made extensive plans in that direction. At the present time, the ratio of merchandise tonnage to bulk tonnage is approximately 1 to 4. It is expected that in the event the necessary new equipment is authorized by the Congress to enable the Corporation to handle merchandise traffic on a profitable basis, the ratio of merchandise tonnage to bulk tonnage will be increased considerably. It is the declared policy of the Congress that the Corporation should develop a common-carrier service on a self-sustaining basis toward the end that such operations may be disposed of to private enterprise who will continue the commoncarrier service in a manner substantially similar to the service rendered by the Corporation. It is in this regard that the Corporation has adopted the policy to engage in bargeload traffic only to the extent necessary to enable it to insure a regular and dependable service adequate for its common-carrier operation on a self-sustaining basis. Consistent with this policy the Corporation will not engage in solicitation of bargeload traffic with the intent of diverting traffic from other barge lines furnishing comparable service. By the same token, being engaged in a common-carrier service under the Interstate Commerce Act, it cannot refuse to furnish bargeload service to any shipper when such request is made. In our previous report to your committee on the bill S. 211, there was submitted for your consideration the salient features of the rehabilitation program necessary to provide proper common-carrier service to the areas served consistent with the foregoing policy. In view of the foregoing, we do not understand that the words "primarily" and "substantially expand" in the proposed subsections (g) and (h), respectively, would constitute an added limitation on the activities of the Corporation, but rather a reaffirmation of the activities of the Corporation. Construed in this fashion, the amendments do not appear objectionable. However, we feel that the provisions of subsections (g) and (h) are not needed to give public assurances that the policy of Congress will be carried out by the Corporation. The Congress annually reviews in great detail the operations of the Corporation when the Corporation submits to the Congress requests for authorization of expenditures. Under the bill, S. 211, originally introduced on January 5, 1949, by Senator Wherry and others, Congress authorizes to be appropriated the sum of $18,000,000 for the purpose of paying for the increased capital stock of the Corporation in the same amount. It is clear that the Congress has complete control on a continuing and yearly basis as to the expenditures and the operation policy of the Corporation. Such control should be sufficient assurance to all concerned that the Corporation will continue to operate in the public interest. Accordingly, in view of the lack of need for these amendments, and the possibility of future misinterpretation, we feel that it would be desirable to omit them. Section 4 proposes to amend section 4 (a) of the act creating the Inland Waterways Corporation by diversifying the representation and increasing (from six to nine) the number of members of the Advisory Board. The Department is in complete agreement with the purpose of giving appropriate representation on the Advisory Board to privately owned carriers and shippers on the Mississippi River system. However, we believe that discretion should be left to the Secretary to appoint members to the Advisory Board who will serve in the best interests of all concerned consistent with the declared policy of the Congress. A step in this direction has already been made with the recent appointment of a representative of a privately owned carrier to membership on the Advisory Board. Representatives of shippers and the public have been on the Advisory Board over a long period of time. Accordingly, the Department is not in favor of the specific limitations contained in section 4 as to the proposed required representation on the Advisory Board. In addition to the foregoing amendment introduced by Senator Wherry, there was also introduced in the Senate by Senator Hill and others an amendment to the bill, S. 211, authorizing the Corporation to operate on the Tennessee and Cumberland Rivers and on the Ohio River up to the confluence of the Ohio and Cumberland Rivers. If the amendment were enacted a survey would be undertaken to determine whether or not there is need for common carrier service on these rivers. In the event it is determined that such a need exists, an application would then be made to the Interstate Commerce Commission for operating rights on these rivers. The Department offers no objection to the amendment. Hon. ROBERT CROSSER, INTERSTATE COMMERCE COMMISSION, Chairman, Committee on Interstate and Foreign_Commerce, House of Representatives, Washington, D. C. MY DEAR CHAIRMAN CROSSER: Your letter of January 12, 1949, addressed to the Chairman of the Commission, and requesting comments on H. R. 328, introduced by Congressman Boggs of Louisiana, "To amend the act entitled 'An act to create the Inland Waterways Corporation for the purpose of carrying out the mandate and purpose of Congress as expressed in sections 201 and 500 of the Transportation Act, and for other purposes', approved June 3, 1924, as amended," has been referred to our legislative committee. After careful consideration by that committee I am authorized to submit the following comments in its behalf: H. R. 328 would have the effect of increasing the capital stock of the Inland Waterways Corporation by $18,000,000 and of authorizing an appropriation of that amount for the purpose of paying for such subscription. The question involved in this proposal is one of policy for the Congress, and we have no information which would enable us to express a helpful opinion thereon. Respectfully submitted. Hon. ROBERT CROSSER, WALTER M. W. SPLAWN, TREASURY DEPARTMENT, Washington 25, March 30, 1949. Chairman, Committee on Interstate and Foreign Commerce, Washington, D. C. MY DEAR MR. CHAIRMAN: Further reference is made to your letters of January 12, 1949, and January 13, 1949, respectively, requesting statements of the views of this Department of H. R. 328, a bill to amend the act entitled "An act to create the Inland Waterways Corporation for the purpose of carrying out the mandate and purpose of Congress as expressed in sections 201 and 500 of the Transportation Act, and for other purposes," approved June 3, 1924, as amended; and H. R. 429, a bill to increase the capital stock of the Inland Waterways Corporation and to extend the service of such Corporation to the Tennessee and Cumberland Rivers. This Department is not in a position to comment on the merits of the bills. However, it is noted that an identical second section contained in each bill relating to the purchase of the capital stock of the Inland Waterways Corporation by the United States makes no provision for reimbursement to the Treasury for the amount of the capital stock so purchased. It is believed that corporations, the stock of which is subscribed for by the United States and paid for by the Secretary of the Treasury, should pay an annual dividend on such capital stock at a rate to be determined by the Secretary of the Treasury, taking into consideration the average rate of interest on marketable obligations of the United States during the year for which the dividend is paid. Accordingly, it is recommended that there be added at the end of section 2 the following language: "The Corporation shall pay annual dividends to the United States Treasury on the amount of its capital stock issued pursuant to this act. These dividends shall be computed on the basis of the average daily balances of the capital funds invested by the Treasury in such stock and shall be at a rate determined by the Secretary of the Treasury taking into consideration the average interest rate on outstanding marketable obligations of the United States during the year for which the dividend is påid." The Department has been advised by the Bureau of the Budget that there is no objection to the submission of this report to your committee. MY DEAR MR. CROSSER: This is in reply to your letter of January 12, 1949, requesting the comments of the Maritime Commission on H. R. 328, a bill to amend the act entitled "An act to create the Inland Waterways Corporation for the purpose of carrying out the mandate and purpose of Congress as expressed in sections 201 and 500 of the Transportation Act, and for other purposes," approved June 3, 1924, as amended. Primary examination indicates that the bill is not one directly affecting the duties of the Maritime Commission. No comments, therefore, will be submitted by the Commission unless further examination discloses a concern on the part of the Commission or you still desire a report thereon. Sincerely yours, W. W. SMITH, Chairman. GENERAL ACCOUNTING OFFICE, Hon. ROBERT CROSSER, Chairman, Committee on Interstate and Foreign Commerce, "House of Representatives. MY DEAR MR. CHAIRMAN: Further reference is made to your letter of January 13, 1949, acknowledged January 25, transmitting a copy of H. R. 429, Eighty-first Congress, entitled "A bill to increase the capital stock of the Inland Waterways Corporation and to extend the service of such Corporation to the Tennessee and Cumberland Rivers," and requesting a report and any comment I may desire to make concerning the said bill. Sections 1 and 2 of the bill are identical to S. 211, Eighty-first Congress, entitled "a bill to amend the act entitled 'An act to create the Inland Waterways Corporation for the purpose of carrying out the mandate and purpose of Congress as expressed in sections 201 and 500 of the Transportation Act, and for other purposes,' approved June 3, 1924, as amended," as to which a report is being made today to the chairman, Committee on Interstate and Foreign Commerce, United States Senate. The Inland Waterways Corporation, a wholly owned Government Corporation, was created by the act of June 3, 1924 (43 Stat. 360) (49 U. S. C. 151), "For the purpose of carrying on the operations of the Government-owned inland, canal, and coastwise waterways system to the point where the system can be transferred to private operation to the best advantage of the Government," etc. This Office has heretofore reviewed the affairs of the Corporation for the two fiscal |