Mr. INGERSOLL. Well, most of them were gone before I came into the picture.

Mr. BECKWORTH. It would not be your plan to hire any more solicitors, I suppose?

Mr. INGERSOLL. We definitely need quite an increased staff if we are going to set up to handle carload freight efficiently. We have not gone out and aggressively solicited carload and merchandise freight in the last few years, because we are not able to do justice to the shipper with the equipment in the service that we have; and I have been reluctant to try to entice new shippers into using our service for fear that they will be disappointed and driven from the river. I would rather wait until we are able to take care of them so that when we ask a man to ship by the barge line, he will be taken care of.

But generally speaking, at present, those who were willing to take the chance on Federal's unsatisfactory service are the ones who are shipping.

Mr. BECKWORTH. When you rehabilitate, though, you feel that you can conscientiously go out and solicit more business?

Mr. INGERSOLL. We propose to put into effect something which has never existed on the river, and that is fast scheduled service. We propose to put into effect an operation which will permit us to say to a shipper, "If you ship your cargo a week from Tuesday, we will pick it up on such and such a day and deliver it on such and such a day." That has never been possible on the river before, for a hundred years. And the three different reasons it has not been possible have been:

First, the weather, which has held up the movement of boats on the river from time immemorial when fog took place. The war, and the radar which has developed out of the war, has made it possible now to look a very short distance ahead to where we can prevent weather delays and we can operate boats on the river without regard to the weather. That is almost within our grasp.

One of the other principal causes that you have not been able to depend on river transportation has been, over the years, the undependability of power plants. However, within the last 20 years, towboat engines have been made more and more successful. The war, and the great production of machinery during the war, has made marine engines as dependable as they are on railroads. We can see now an operation of towboats without machinery failure. That is within our grasp.

The third, and perhaps the most serious cause of undependability of river transportation, has been the variation in the speed of the current. When towboats take 2 weeks to go from New Orleans to St. Louis in low water and 3 to 4 weeks in high water, it is impossible to make a schedule or to assure a shipper when his traffic will move. With modern streamlined equipment that moves at high speed, such as the oil companies and automobile carriers and, most recently, the Federal Barge Lines have put into service, it is possible to discount the variation in the speed of the current and be able to operate boats as regularly and uniformly as railroads. We have now within our grasp for the first time in a century scheduled operation on the river. What that will mean to the traffic of a barge line that is handling any and all commodities is quite obvious. Many, many shippers who would like the saving, but who have never before been willing to

take the chance of the uncertainty of delivery, will begin to use the river.

Mr. BECKWORTH. I understand now what you have said. You feel, then, justified in hiring, if necessary, solicitors to go out and state to the people about what you have stated here, with the idea in mind of getting additional business.

Mr. INGERSOLL. Yes, sir. When we have something to sell, we will get out and sell it.

Mr. BECKWORTH. And that would be one of the ways that you would hope to be able to pull this thing out of the red and put it into the black?

Mr. INGERSOLL. Mr. Beckworth, if we can break even this year with the fleet we are operating, I have no doubt whatever of being able to make a profit with decent equipment.

Mr. BECHWORTH. Mr. O'Hara?

Mr. O'HARA. Captain Ingersoll, it is true, under the policy which has been established by Congress in the past, that the Federal Barge Lines have been operating not as a fleet competitor with another type of transportation but rather within the limitation of what Congress has set? Is that not true with reference to policy as to the operation of the lines?

Mr. INGERSOLL. Yes, sir, it has had a very anomalous position through all these years as a carrier. It has never operated on the same concept of traffic as that on which a private carrier operates.

Mr. O'HARA. With reference to the private carriers that operate on the river, speaking now of other barge lines, are most of them making money, or at least breaking even?

Mr. INGERSOLL. The vast majority are making money.

Mr. O'HARA. You spoke of the report of the Small Business Committee. As I recall it, there was a report, an investigation made and a report filed, by a Small Business Committee, I believe, in the Eightieth Congress. Is that correct?

Mr. INGERSOLL. Yes, sir.

Mr. O'HARA. As I recall it, that report also urged the continuation of the Federal Barge Lines. Am I correct in that?

Mr. INGERSOLL. They urged some rehabilitation and negotiation for sale, but in any event the continuation of the service.

Mr. O'HARA. The development of St. Louis to Kansas City and Kansas City to Sioux City and Sioux City to Omaha operation is, of course, dependent upon continued improvement of the river channels, of those facilities?

Mr. INGERSOLL. The channel as far as Omaha is concerned, which is about 120 miles below Sioux City, is very close to being completed to commercially feasible condition. Within 2 years, I am satisfied, if the engineers go ahead with their present schedule, commercially feasible navigation will be possible on the Missouri as far as Omaha. But from Omaha to Sioux City, the last 128 miles, it is at least 5 years away, probably longer.

Mr. O'HARA. That is because of the channel improvement that is necessary to reach the Sioux City terminal. Is that correct?

Mr. INGERSOLL. Yes, sir.

Mr. O'HARA. Now, as a matter of the development of your service, do you furnish the terminal facilities, or are those furnished by the State or municipal authorities themselves?

Mr. INGERSOLL. It has been customary for the municipality in most cases to build a terminal. For many years the Inland Waterways Corporation operated 21 terminals, most of which were owned by municipalities, and only two of which were owned by the Inland Waterways Corporation. During the past 2 years we have gradually passed over the operation of those terminals to local private terminal operators, so that we are now down to operating only two terminals. ourselves.

Mr. O'HARA. What two are those?

Mr. INGERSOLL. One at Mobile and one at Dubuque.

Mr. O'HARA. How does it happen that you just operate those two?

Mr. INGERSOLL. We have not been able to make arrangements with somebody to operate them.

Mr. O'HARA. I see. Now, you were asked with reference to the value of the assets of the barge lines, and I think you said with the exception of the railroad operations so far as value was concerned it was

zero.

Mr. INGERSOLL. If to go with the operation is the obligation to perform the service. If the equipment were sold piecemeal, it could be sold for quite a bit.

Mr. O'HARA. You find that the difficulty, Captain, in the negotiations with which you are familiar, as to the sale of this, is the imposition of the condition as a part of the sale of the furnishing of the service which has been rendered by the Federal Barge Lines to the entire river operation?

Mr. INGERSOLL. Yes, sir.

Mr. O'HARA. That is the big hurdle that the private interests do not want to assume; is that correct?

Mr. INGERSOLL. That is right; yes, sir.

Mr. O'HARA. And you feel, as a matter of general public interest, that in the operations of this barge line there should be at the present time additional money appropriated and allotted by the Congress for new equipment to continue the service and to develop the service and do such pioneer work as has not been yet completed, and then sell the service to some private party who would be in a position to buy. Is that your position?

Mr. INGERSOLL. Yes, sir. I think that during the last 40 or 50 years, as public opinion in the Mississippi Valley, reflected through the Congressmen and Senators who came from that area, has resulted in the development of the channels of the Mississippi, the Illinois, and the Missouri and also the Ohio and the Tennessee and other rivers, the public opinion behind that has intended that those funds be used to develop the river channels for the benefit of the general public. But I know that the general public has only gotten a rather second- and third-hand benefit. There are those who take the opposite extreme, and say that the general public gets no benefit whatsoever from bargeload traffic on the river. A company that I worked for a number of years handles a lot of coal for the power company in Chicago. Now, the general public, if it gets benefit from that, does not know about it; but I satisfied that in the long run the rates of that power company are affected by getting a benefit from water transportation in the supply of its coal.

However, the most direct benefit that the general public can get is to be able to ship in small quantities. And I believe that the people who have wanted the rivers developed also want the small shippers to be able to ship on the river and get their benefits first-hand instead of second- and third-hand.

Compared to the vast scope of the development expense in the Mississippi Valley, the job of putting this thing on its feet is a small item, very small, compared with the effect on the area concerned and the rate structure involved.

This is a matter, I think, of pretty high policy. I think it is a thing that the Congress has to think about pretty carefully, as to whether the effort to provide service directly to small shippers should be continued or abandoned. We are at a fork in the roads here. Up until the war there were a number of operators who were trying to provide service to small shippers direct, not only on the Mississippi but on the Great Lakes and elsewhere. During the war and since the war, that service has been discontinued very rapidly, all around the country. On the Great Lakes it has disappeared, and it has reduced to a minimum around the coast. On the Mississippi River system, Federal is about the only operator that is doing anything with it. If Federal drops that service, it would be very difficult for any one to start it again. It is a tremendous job to organize the rate structure, particularly joint rates. Federal has been in litigation on these joint rates for 16 years. I do not think any private barge line would have the patience to even try to carry through that kind of litigation. If this kind of spreading of the benefits of water transportation to all the shippers who are interested is to be continued, Federal is the only one that can do it. I think it can do it successfully. I think it can do it with a profit. And with a pencil and paper I can show in detail how that can be done. I do not think it has to be subsidized. I think it can be put on its feet and can carry on itself. It could have carried on itself up to now. In the middle thirties it was operating successfully and had money in the bank and could have kept on reproducing itself and been successful. Mr. ROGERS. Will the gentleman yield right there?

Mr. O'HARA. Yes; I am all through.

Mr. ROGERS. What policy do you believe in? Do you believe in Government operation at a loss, or private enterprise at a subsidy?

Mr. INGERSOLL. I would immediately ask the question as to what is your goal and where you are going ultimately. I would not favor either Government operation at a loss or subsidy of private navigation on the river as a permanent proposition.

Mr. ROGERS. If you had to take a choice, which would you take?
Mr. INGERSOLL. As a permanent proposition?

Mr. ROGERS. Yes, as a policy.

Mr. INGERSOLL. I would not favor either one of them. But I think that if you had to make the choice, I would rather see Government operation at a loss, because the minute you start to subsidize private operators, they no longer are free enterprise.

Mr. ROGERS. I thought you would rather have free enterprise if it could be subsidized rather than Government operation at a loss. That is my conception. I do not know whether I have any authority for it. Mr. INGERSOLL. I would like to cite an example. The Federal Barge Line was operating at a loss on the upper Mississippi in the years before the war. I worked for a barge company which was just started

then, and it went up in that area and started operating in competition: with the Federal Barge Line, which was operating at a loss, and made money and grew and flourished and expanded. I never have been able to see quite clearly where the Federal Barge Lines' operating at a loss has hurt free enterprise. It just has not worked out that way.. But the surest way to ruin free enterprise on the river would be to subsidize it.

Mr. ROGERS. Thank you, Captain.

Mr. HARRIS (presiding). Captain Ingersoll, we appreciate very much the very frank and fine testimony that you have given this committee.

I realize, and we all recognize, that it is quite a problem to try to explain this matter, but the manner in which you have approached it and the information you have tried to give to the committee have been very helpful. You have made a good witness, and your statement has been appreciated. We have been glad to have you.

Mr. INGERSOLL. Thank you, sir.

Mr. BECKWORTH. The next witness is our colleague, the Honorable Frank Karsten, of St. Louis, Mo. Frank tells me he has only about a 5-minute statement.

We do not have much more time, but we shall be delighted for you to proceed, Representative Karsten.

STATEMENT OF HON. FRANK M. KARSTEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSOURI

Mr. KARSTEN. I greatly appreciate this opportunity of coming up here. I am not going to trespass on your time, but I do have a few observations and a statement I would like to make.

Coming from St. Louis, I am particularly interested in the rehabilitation and the continuation of the Federal Barge Lines.

At the inception of the Federal Barge Lines, St. Louis was the head of navigation on the Mississippi River for this type of service and for many years the channel between St. Louis and New Orleans was unstable, undependable, and operation of towboats was subject to the fluctuations in river stages between St. Louis and the mouth of the Ohio. As the development of channels in the Mississippi Basin progressed, a dependable channel was assured to St. Louis, making possible year-round navigation up to this point. In 1928 navigation was begun between St. Louis and the Twin Cities, but this was only on the same developmental basis until the 9-foot channel was put through the Illinois Waterway from St. Louis to Chicago. This developed rapidly until it is now the busiest artery of traffic north of St. Louis. The Federal Barge Lines began operations north from St. Louis on the Missouri River in 1935. Development of the channel to Kansas City progressed until the war interrupted construction on this stream. Floods and ice undid much of the work of the Army engineers. The resumption of this work after the war has brought the completion of the channel to Omaha within sight.

As these important arteries of our traffic, radiating from St. Louis to Chicago, the Twin Cities and Omaha, have been developed, the importance of St. Louis as an interchange point and "marshaling yard" for barges has vastly increased until our port is now the hub of