legislation. I think it would benefit the shippers, the consignees, as well as the general public. I would like to ask permission to extend my remarks and just wanted to come here and express my interest in the passage of this legislation, whether it be for the full $33,000,000 or whatever is agreed upon; but I do know that these benefits are needed and badly needed in my area. One other point before I go. May I say that the Federal Barge Lines serves the small man, the small merchant, and that is the only way that he can get the river transportation facilities available to him for small shipments, because of the fact that the other lines only operate in barge-load quantities. I just want to say that I appreciate this opportunity, Mr. Chair man. Mr. BECKWORTH. Without objection, your full statement will be made a part of the record and the committee does appreciate your coming here. Mr. GATHINGS. Thank you very much, Mr. Chairman. Mr. BECKWORTH. Without objection, the Chair will include as part of the record, several communications which have been sent to the chairman of the full committee in connection with this legislation, as well as a statement by Hon. Henry D. Larcade, of Louisiana; one by Mr. J. M. Hood, of the Short Line Railroad Association; and one by Mr. Samuel H. Williams, of the Philadelphia Chamber of Commerce. (The letters, reports, and statements above referred to are as follows:) Hon. ROBERT CROSSER, TREASURY DEPARTMENT, Chairman, Committee on Interstate and Foreign Commerce, MY DEAR MR. CHAIRMAN: Further reference is made to your letter of June 3, 1949, requesting the views of this Department on H. R. 4978, 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. The bill, which would provide for the purchase of additional capital stock of the Inland Waterways Corporation by the United States, makes no provision for the reimbursement to the Treasury for the amount of the capital stock so purchased. This Department believes that corporations, the stock of which is subscribed for by the United States and paid for by the Secretary of the Treasury, should make an annual payment to the Treasury 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. Accordingly, it is recommended that there be added as part of the proposed amended section 2 of the act approved June 3, 1924, the following language: "Hereafter the Corporation shall pay interest annually to the United States Treasury on the amount of its capital stock. This interest 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." The Department was advised by the Bureau of the Budget that there was no objection to the submission to the House Committee on Interstate and Foreign Commerce of a report similar to this report relative to H. R. 328, a bill similar to H. R. 4978. Very truly yours, E. H. FOLEY, Jr., Acting Secretary of the Treasury. INTERSTATE COMMERCE COMMISSION, Hon. ROBERT CROSSER, Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D. C. MY DEAR CHAIRMAN CROSSER: Your letter of June 3, 1949, addressed to the Chairman of the Commission and requesting a report and comment on H. R. 4978,. 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: Section 1 of this bill 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. Section 2 would prohibit discontinuance of the carrier operations of the Corporation for at least 5 years after enactment of the bill. Section 3 would specify the primary activities of the Corporation and place certain restrictions on its operations in competition with privately owned carriers. Section 4 would lay down conditions to be observed in the appointment of members of the Corporation's advisory board. The questions involved in these proposals are matters of policy for the Congress, and we have no information which would enable us to express a helpful opinion thereon. Respectfully submitted. WALTER M. W. SPLAWN, CHARLES D. MAHAFFIE, Legislative Committee. STATEMENT BY REPRESENTATIVE HON. HENRY D. LARCADE, JR., REPRESENTATIVE FROM LOUISIANA I wish to submit a statement to your committee in support of H. R. 4978, introduced by Representative Boggs, of Louisiana, in support of the Inland Waterways Corporation and the Federal Barge Lines. I have for many years been interested in the development of the Nation's waterway facilities and waterway transportation, and during my service in the Congress, I have devoted much time to these subjects. I have the privilege of serving at this time as chairman of the Rivers and Harbors Subcommittee of the Public Works Committee of the House, and therefore the legislation sponsored by my colleague from Louisiana is of special interest to me in connection with the committee's work. There are a number of vital rivers and harbors projects now pending and the relation of these to continued operation and expansion of inland waterway transportation is very close-so close, indeed, that the success of these projects depends very largely upon adequate water transportation. This is particularly true in the case of the Federal Barge Lines which are rendering an outstanding service to the inland ports of the Mississippi Valley and to business interests in communities not having waterway service, but benefiting from combined barge and rail facilities. It is true that the Federal Barge Lines have operated at a loss for a number of years, but it is also true that their operation has saved millions of dollars for the smaller shippers. These are the ones for which the service of the Federal lines is principally intended, since the latter do not limit their operations as do the private lines which to a large extent handle only bargeload business. Certainly these small shippers are just as much entitled to protection as are the larger interests. The Federal Barge Lines, furthermore, have done much to develop industries in the Mississippi Valley, thus creating new business from which public and private barge lines and the railroads all gain. The healthy competition that has resulted has in turn served to reduce transportation rates which is a most important factor in commercial and industrial progress. The situation is one involving not only the Mississippi Valley, but a much wider area. In the matter of rates, for instance, the completion of the Federal Barge Lines is reflected in the movement of various commodities from the Atlantic seaboard and from the Pacific coast to Mississippi Valley destinations. The port of Lake Charles is located in my congressional district and therefore, naturally, I am concerned over the effect that the discontinuance of the Federal Barge Lines would have upon that port, as well as upon the port of New Orleans, and the State of Louisiana, but I am also concerned over the effect that it would have upon waterway transportation development over the country. As I have previously pointed out, encouragement must be given this development if improvement of the Nation's rivers and harbors, vital to national defense as well as to commerce, is to be realized. If the Federal Barge Lines go out of business, it will mean that not only will thousands of small-business men suffer, but the whole program for expansion of inland waterway transportation will suffer. We all realize the importance and necessity of the private barge lines. Congressman Boggs has taken this into consideration, and his bill is designed to give the private operators the protection to which they are entitled. I see no reason why the Federal and private lines cannot work together for their mutual good, with the Federal lines centering attention upon the handling of less-than-bargeload cargoes and the private lines having the right-of-way in bargeload business. Congressman Boggs' measure provides a basis for such cooperation. Rehabilitation of the Federal Barge Lines by construction of some new vessels and overhauling of others is fully justified on all grounds. I trust that this legislation to continue the Inland Waterways Corporations and increase the capitalization, in order to maintain and improve the Federal transportation equipment, will be approved by Congress and enacted into law, STATEMENT OF J. M. HOOD, PRESIDENT OF THE AMERICAN SHORT LINE RAILROAD ASSOCIATION My name is J. M. Hood. I am president of the American Short Line Railroad Association, with offices at 2000 Massachusetts Avenue NW., Washington 6, D. C. The association is a voluntary organization of 320 common carriers by rail, operating in 45 States. Its sole source of financial support is the dues and fees 'paid by its members on a formula basis. I am appearing here in opposition to the enactment of H. R. 328, H. R. 429, or H. R. 4978, each of which contains part or all of the proposals to which detailed objection is voiced in succeeding paragraphs. My appearance in opposition to these proposals was directed by the representatives of the member lines of the association at their thirty-fifth annual meeting during October 1948. Basically, our people believe in equality of regulations; equality of opportunity for service for all competing forms of transportation. Specifically, they favor the abolition of the Inland Waterways Corporation as a Government agency and discontinuance of barge line operations by the Federal Government. Each of these bills proposes an increase in the capital of the Inland Waterways Corporation and an additional appropriation of $18,000,000. There is no economical justification for the squandering of Government money, which must be supplied by taxpayers, including the carriers here represented, for intensifying and continuing an experiment which has been conducted for more than two decades with annual losses, and which has failed to show to a substantial degree that transportation can be provided by a Government barge line at a cost as low as is available to shippers through privately operated carriers both on land and water. By cost is meant the actual bill footed by the country's economy, whether it be paid in freight rates alone or in a combination of the transportation charge, plus the tax contribution, plus the loss of taxes through the removal of terminals and equipment from the classes of property subject to taxation. Another objectionable feature is that one or more of the bills proposes to prohibit the discontinuance of operations by the Inland Waterways of any type, or via any route, for a period of 5 years. While, of course, Congress at its discretion can at any time further amend the act, it would seem highly objectionable to require unprofitable and little used operations to continue for a period as lengthy as 5 years. The whole theory of Government operation of any type of transportation is so antagonistic to the American way of doing things and inimicable to the continued advancement of the general welfare that it is the hope of these 320 common carriers by rail that the Congress take no action with respect to any of these bills. STATEMENT OF SAMUEL H. WILLIAMS, MANAGER, TRANSPORTATION BUREAU, CHAMBER OF COMMERCE OF PHILADELPHIA My name is Samuel H. Williams. I am manager of the Transportation Bu reau, Chamber of Commerce of Philadelphia, which is an organization of all types of business enterprise of the Philadelphia area and has as its object, among others, the promotion and protection of the commercial and industrial interest of the city and port of Philadelphia, including matters pertaining to traffic and transportaton. The Chamber of Commerce of Philadelphia is fundamentally opposed to Government operation or the subsidization of any form of domestic transportation services. The Inland Waterways Corporation should be promptly sold to private enterprise or liquidated. Under the proposed legislation before your com mittee, H. R. 328 and H. R. 429, the Government would appropriate the additional sum of $18,000,000 for the purpose of continuing the Government-owned and operated Federal Barge Lines in direct competition with privately owned and operated railroads and motor carriers. It also operates in direct competition with privately owned and operated water carriers on the Mississippi River and its tributaries. The operation of this Government service constitutes unfair competition to the port of Philadelphia and other ports of the Nation. The original authorized capital stock of the Corporation was $5,000,000. It was increased in 1928 to $15,000,000. Under the proposed legislation it would again be increased to $33,000,000. It was initiated as an "experiment." Contrary to the principles of private enterprise the "experiment" has been continued for 25 years. Under such conditions the taxpayers of the country should not be expected to continue to contribute funds so that the Government competition with citizens of the Nation may be perpetuated. Instead your committee should be concerned only with how the Government may immediately get out of the barge business. We respectfully, therefore, urge that the proposed bills and any similar legislation be rejected by your committee. STATEMENT OF LLOYD L. HARVEY, MANAGER, TRADE PROMOTION OFFICE OF THE PORT OF NEW YORK AUTHORITY, WASHINGTON, D. C. Mr. BECKWORTH. The next witness will be Mr. Lloyd L. Harvey, manager of the Washington office of the Port of New York Authority, Washington, D. C. Mr. Harvey. Mr. HARVEY. Mr. Chairman and gentlemen of the committee, my name is Lloyd L. Harvey. I am manager of the trade-promotion office of the Port of New York Authority, located at Washington, D. C. The Port of New York Authority is a bi-State commission of the States of New York and New Jersey created in 1921 to develop the commerce and facilities of New York Harbor. I am appearing in opposition to the legislative proposals pertaining to the Inland Waterways Corporation, also known as the Federal Barge Lines, as reflected within House bills 328, 429, and 4978. The Port of New York Authority strenuously objects to any proposal appropriating additional capital or extending the operation of the Inland Waterways Corporation under Federal subsidy and control because: 1. It is discriminatory to United States ports as it serves only the port of New Orleans. 2. It violates the right of free enterprise by the fact that it competes with private industry, thereby discouraging any substantial investment by private barge lines in new barges, towboats, and the extension of our operations. 3. The net loss of the Inland Waterways Corporation during the calendar years from 1926 to 1947, a period of 21 years, exceeded the net income by $4,727,890. 4. The most recent reports, during the last 3 years, disclose a weakness in the operation of the Inland Waterways Corporation for these reports show that during the calendar year of 1946 there was a net loss of $2,600,000. In 1947 the operating loss amounted to 2,000,000, and during the fiscal year of 1948 there was a loss of $2,050,484. I will not go further into these deficits, as they were brought out by Mr. Fred Smith, of the General Accounting Office. 5. The practice by the Federal Barge Lines to cut their rates, despite annual operating deficits, has resulted in substantial diversion of traffic from the private carriers serving the port of New York. I might add we have the New York Canal and the Hudson River on which there are private lines operating and have handled in the past, some years previous to the war, quite a substantial movement of sulfur and various other commodities which move through the Great Lakes, or coastwise movement to New York and then up the river and the New York Canal, to the industries using them; but the barge line, as was brought out by Captain Ingersoll when he appeared as a witness last Monday-he confirmed these points that I have brought out in my statement, in that he cited a dozen or more examples where cargo has moved from New Orleans to New York. He cited New York, Philadelphia, Baltimore, and some other eastern points where it had moved cheaper by $21 a car and more, than it could be handled by the railroads under the same operations. As the Inland Waterways Corporation is operating under a deficit, that is the reason private lines will not engage in that type of operation, and we do not believe it should be permitted. 6. The subsidizing of these deficits of the Federal Barge Lines at national expense is manifestly unfair to the competing private carriers at New York Harbor. As private industry could not survive with comparable deficits, why should the Inland Waterways Corporation be permitted to operate under Federal support while continuing to be a drain on the United States Treasury? The port authority does not oppose waterway projects if they can prove themselves out in terms of savings to navigation and commerce, consistent with the expense of the project. We know that waterway improvements in other sections of the country often have some tendency to divert trade from the port of New York, but if these projects can be economically justified, the interest of our port must give way. However, the port authority does oppose such projects if, as in the case of the Inland Waterways Corporation, they operate at annual deficits which are subsidized at national expense. The proponents of this legislation have placed great emphasis upon the necessity of the service of the Inland Waterways Corporation. However, we deny this need from the standpoint of the requirements of the shipping public, as adequate water transportation is presently |