f WHY THE CHAMBER IS OPPOSED TO H. R. 328, H. R. 429, AND H. R. 4978 We urge the committee to vote against H. R. 328, H. R. 429, and H. R. 4978, for the following six specific reasons: (1) It would put the Government more into business. The chamber long has advocated that Government should reduce rather than increase its business ventures. This Government business venture has lost millions of dollars in operating costs alone since it was started as a temporary pioneering project in 1924. (2) It would be presupposing that the several congressional transportation studies now under way would conclude that less-than-bargeload traffic is a proper service for the barge industry to provide. We feel that we would be getting the cart before the horse if any such action were taken as proposed by these bills at this time, before these studies are completed. (3) It would encourage still further expansion of the Federal Barge Lines as more groups seek extensions in their localities at the expense of the general taxpayer, having in mind there what Congressman Jones requested in his bill for an extension on the Cumberland and Tennessee Rivers. That is only a beginning. There would be more to follow if the Federal Barge Lines expanded by the $18,000,000 capitalization. (4) It would open the door to more unfair and uneconomic competition with privately operated barge lines and could discourage their expansion and further development. We say that because we believe there can be no positive assurance that the Federal Barge Lines will not increase its bargeload traffic. Certainly that would be true, because we cannot tell what business conditions are going to be in the future; we cannot tell about management, changes of Secretaries of Commerce, and so on. In other words, many factors could change the present picture and promises so that the competition could increase with the private barge operations. (5) It would permit this Government corporation to increase its competition with other forms of transportation and to further unbalance that freight rate structure through its promulgation of rates which fail to include all costs. (6) It would benefit relatively few shippers for the amount of money involved and even those few would benefit at the expense of the general taxpayer. DEVELOPMENT OF THE CHAMBER POSITION Just a few words about the development of the chamber's position. Our policy calling for the early disposal of the Federal Barge Lines has been developed over a long period. The subject has been before the chamber membership several times. The most recent position taken by the chamber was in 1948. At its annual meeting, held just a year ago, the membership adopted the following policy: The continued operation of the Government-owned barge lines by the Inland Waterways Corporation conflicts with sound policies repeatedly enunciated by the chamber. It represents unfair and uneconomic competition, conducted at great expense to the public, with privately operated barge lines and other competing forms of transportation. Therefore, the operation of Government-owned barge lines should be discontinued at an early date either by liquidation or out right sale of the facilities as a whole or in units. In the meantime, no funds should be appropriated or applied for expansion, modernization or recapitalization of the Inland Waterways Corporation. This 1948 policy was based upon a 1947 study made by the transportation and communication department committee, the membership of which is composed of representatives of shippers, all forms of transportation carriers and the general public. And, if it is permissible,. Mr. Chairman, I would like to submit a copy of this 1947 report for the record. (The report referred to is as follows:) GOVERNMENT BARGE LINES The recommendations in this report of the transportation and communication department committee have been submitted to the committee on policy with a view to consideration by the chamber's membership. Until voted on by the member organizations the report does not commit the chamber for or against the propositions in it. APRIL 1947 (Transportation and Communication Department, Chamber of Commerce of the U. S. A., Washington 6, D. C.) TRANSPORTATION AND COMMUNICATION DEPARTMENT COMMITTEE Powell C. Groner, chairman, president, Kansas City Public Service Co,, Kansas Arthur I. Boreman, publisher, Dry Goods Journal, Des Moines, Iowa. Edward Clemens, executive vice president, Mississippi Valley Barge Line Co., C. McD. Davis, president, Atlantic Coast Line Railroad Co., Wilmington, N. C. C. S. Decker, general traffic manager, the Borden Co., New York, N. Y. Edward P. Farley, chairman of the board, American-Hawaiian Steamship Co., Jack Frye, president, Transcontinental & Western Air, Inc., Kansas City, Mo. Hubert B. Fuller, attorney-at-law, Cleveland, Ohio. W. Homer Hartz, president-treasurer, Morden Frog & Crossing Works, Chicago, Ill. L. O. Head, president, Railway Express Agency, Inc., New York, N. Y. Arthur M. Hill, chairman of the board, Atlantic Greyhound Corp., Washington, D. C. Col. William C. Henry, President and general manager, Northern Ohio Telephone Co., Bellevue, Ohio. Frank W. Hulse, president, Southern Airways, Inc., Birmingham, Ala. John B. Keeler, manager, traffic and transportation department, Koppers Co., Inc., Pittsburgh, Pa. Keith S. McHugh, vice president, American Telephone & Telegraph Co., New York, N. Y. G. Metzman, president, New York Central System, New York, N. Y. J. W. Miller, president, Mid-Continent Airlines, Inc., Kansas City, Mo. Evans A. Nash, president, Yellow Transit Co., Oklahoma City, Okla. L. D. Parmelee, president, Atlantic Gulf & West Indies Steamship Lines, New York, N. Y. G. H. Shafer, general traffic manager, Weyerhaeuser Sales Co., St. Paul, Minn. D. L. Sutherland, president, Middle Atlantic Transportation Co., Inc., New Britain, Conn. Clewell Sykes, president, Yellow Cab Co., Philadelphia, Pa. Ralph Thomas, president, Speaker-Hines Printing Co., Detroit, Mich. Ex Officio Charles P. McCormick, chairman, committee on international transport; president, McCormick & Co., Inc., Baltimore, Md. [Resolution adopted at the thirty-fifth annual meeting of the Chamber of Commerce of the United States, Washington, D. C., May 1, 1947] GOVERNMENT BARGE LINES The continued operation of the Government-owned barge lines by the Inland Waterways Corporation where their purpose as a demonstration has been accomplished conflicts with sound policies repeatedly enunciated by the chamber. It represents unfair and uneconomic competition, conducted at great expense to the public, with privately operated barge lines and other competing forms of transportation. Therefore, the operation of Government-owned barge lines should be discontinued as soon as practicable. In the meantime, no funds should be appropriated or applied for expansion, modernization, or recapitalization of the Inland Waterways Corporation. Government operation of barges on the Mississippi River and other inland waterways in the United States, begun during World War I as an emergency measure and continued after the war ostensibly for a limited period to demonstrate the practicability of river common-carrier transportation and work out certain operating problems, has now continued for nearly 30 years. There is no present evidence of effort by the public authorties to terminate the demonstration and give private enterprise opportunity to take over portions of the operations which are economic. On the contrary, service has been repeatedly extended into new territory, legislation has been passed in recent years authorizing establishment of service on several additional waterways, and the Government has recently enlarged the barge-line fleet, EARLY HISTORY The barge services during World War I were operated by the Railroad Administration. They were confined to the Mississippi River between New Orleans and St. Louis, and to the Intracoastal Waterway and the Mobile, Tombigbee and Black Warrior Rivers from New Orleans to Birmingport, Ala., near Birmingham. In 1920, when the railroads were turned back to their owners, the Government continued to operate these barge lines through the War Department. Four years later, in connection with a study of the whole subject of domestic transportation, the chamber advocated that the Federal barge-line service be put on a business basis so that the demonstration or test could be completed as promptly as possible. It was suggested that 5 years should be a reasonable time to accomplish this. The same year, 1924, Congress passed legislation designed to put the operation on such a basis through the creation of the Inland Waterways Corporation. The Corporation, although still under the direction of the War Department, which was the sole holder of the capital stock, was given many of the characteristics of a private corporation, including the right to use its earnings as a revolving fund instead of depending on annual appropriations by Congress. The act directed the Secretary of War to initiate service above St. Louis "as soon as there is an improved channel sufficient to permit the same," and such service was started in 1926. Except for the mandate to establish service on the upper Mississippi as above noted, the Secretary of War was not permitted to develop and operate any new lines or discontinue any operation until authorized by Congress, but was directed to report the need for any such change. DENISON ACT In 1928 Congress passed the Denison Act, which both paved the way for extension of the Corporation's operations to other waterways and introduced conditions making more difficult disposal of the barge-line business to private enterprise. With respect to extension of service, it contained the following provision: "When the improvement of any tributary or connecting waterway of the Mississippi River, not including the Ohio River, shall have been completed or advanced to the point where within 2 years thereafter there will have been substantially completed a sufficient and dependable channel for the safe operation of suitable barges and towboats thereon; and when the Chief of Engineers of the United States Army shall certify that fact to the Secretary of War, the Secretary of War shall thereupon cause a survey of such tributary or connecting waterway to be made for the purpose of ascertaining the amount of traffic, the terminal facilities, and the through routes and joint tariff arrangements with connecting carriers, that are or will, within such years, probably be available on such tributary or connecting waterway. As soon thereafter as such survey shall have been completed and a sufficient and dependable channel for the safe operation of suitable barges and towboats shall have been substantially completed, the Secretary of War may, if he finds from such survey that water transportation can, in the public interest, be successfully operated on such tributary or connecting waterway, extend the service of the Inland Waterways Corporation thereon as soon as the Corporation shall have suitable facilities available therefor." In accordance with this provision service was inaugurated on the Illinois River in 1931 and the Missouri River from the mouth to Kansas City in 1932. and plans are under way to have the Missouri River service extended to Sioux City. With respect to conditions under which the lines may be disposed of to private operators, the act prohibits this until (1) there shall have been completed in the rivers where the Corporation operates, navigable channels, as authorized by Congress, adequate for reasonably dependable and regular transportation service thereon; (2) terminal facilities shall have been provided on such rivers reasonably adequate for joint rail and water service; (3) there shall have been published and filed under the provisions of the Interstate Commerce Act, as amended, such joint tariffs with rail carriers as shall make generally available the privileges of joint rail and water, transportation upon terms reasonably fair to both rail and water carriers; and (4) private persons, companies or corporations engage, or are ready and willing to engage, in common-carrier service and such rivers. The act authorized disposing of the lines only by "units" and declared that "the facilities of the Corporation on the Mississippi River and its tributaries shall be considered one unit." The act provided further that the facilities of the Corporation shall not be sold or leased (1) to any carrier by rail or to any person or company directly or indirectly connected with any carrier by rail; or (2) to any person, company or corporation who shall not give satisfactory assurance and agree, as part of the consideration for such sale or lease, that the facilities so sold or leased will be continued in the common-carrier service in a manner substantially similar to the service rendered by the Corporation, together with ample security by bond or otherwise to insure the faithful performance of such agreement; or (3) until the same has been appraised and the fair value thereof ascertained and reported to the President by the Interstate Commerce Commission, and the sale or lease thereof has been approved by the President. The Denison Act also authorized the Interstate Commerce Commission to give certificates of public convenience and necessity to applicants, including the Inland Waterways Corporation, for operation on the Mississippi, Warrior, or tributaries, and directed the Commission to require establishment of through routes and rates with other common carriers. SUBSEQUENT LEGISLATION In 1934, 1935, and 1937 this authority was extended to include the Columbia, Snake, Sacramento, San Joaquin, and Savannah Rivers, but thus far Government barge services have not been established thereon. In 1939, under the authority conferred by the second reorganization plan, the Inland Waterways Corporation was transferred from the War Department to the Department of Commerce. The Transportation Act of 1940, which brought water common carriers under Interstate Commerce Commission regulation, superseded and repealed the certificate provisions of the Denison Act, leaving in effect certificates, through routes, and joint rates established thereunder. RECENT GOVERNMENT ATTITUDE In June 1946 the then Secretary of Commerce, expressing the view that steps should be taken to dispose of the barge lines, recommended that additional legis lation needed to permit this be enacted, and estimated that otherwise it would be necessary to spend $11,000,000 for new boats and equipment. However, the suggestion for additional legislation made no progress in Congress. Within the past year the Inland Waterways Corporation has acquired a substantial number of surplus war-built barges. Its president, in October 1946, stated that one of the Corporation's functions is to pioneer on new and improved streams. He held that in the general field of promotion, encouragement, and development of inland waterway transportation facilities much still remains to be done. He stated that, when the Corporation's other functions have been carried out, its common-carrier services are to be transferred to private operation to the best interest of the Government, but that, with the present outlook, it is hard to estimate the time when this will be done. VIEWS OF WATER-CARRIER INDUSTRY Commercial operators of inland water transportation do not subscribe to the need for this continuing experimentation. They hold that they are giving and are prepared to continue to give adequate service on the waterways on which service is warranted. They assert, however, that they are hampered, rather than helped, by the Government barge lines. For example, the surplus barges previously referred to were desired by the private operators but were taken over by the Inland Waterways Corporation through its priorities as a Govenment. agency. The Corporation has recently embarked upon a policy of reducing rates on certain traffic which has a demoralizing effect on the rate structures of privately owned water carriers, inland, castwise, and intercoastal, as well as of the railroads. It has also recently injected itself into services which for many years have been exclusively provided most satisfactorily by privately owned water carriers. The privately owned operators, through their national organization, are emphatically urging early discontinuance of the Government lines competing with them. THE PUBLIC INTEREST It is apparent that the real possibilities and limitations of inland waterway operations cannot be determined while the picture continues to be distorted by the Government operations. The public interest calls for elimiantion of this unfair competition with private enterprise. The public has another direct interest, because of the wastage of public funds. While the Corporation's own figures show severe losses for the last 5 years, its previous annual reports claimed that its operations had usually shown a small margin of profit. However, a report by this committee in March 1940 on Government Barge-Line Accounting demonstrated that this claim was unfounded when proper account was taken of taxes, adequate depreciation allowances and other items a private corporation would have to include in expenses. It showed that instead of the claimed surplus of $2,650,000 as of December 31, 1938, there was at that time a cumulative net deficiency in earnings of $14,000,000. While the Government operation was showing a deficit during the war years, some of the privately owned carriers were getting much better financial results. On the other hand, because of the poor prospects for either a dependable channel or substantial traffic in some of the territory, private capital shows little inclination to operate therein, and public money spent by the Corporation there has been described as being pure waste. OBSTACLES TO DISPOSAL The conditions prescribed by present law for disposal of the Government barge lines appear to be prohibitive. The most serious obstacle is the requirement that the operations on the Mississippi and tributaries be treated and disposed of as a unit. While conceivably purchasers might be found for the Mississippi and Illinois River operations, the Missouri River operations have been wholly unprofitable to date and there is little indication thus far that they will become profitable. Yet, as previously stated, extension of the service to Omaha and Sioux City in an untried area is planned for the early future, and mention has also been made of extension to Montana. |