nomic movement of this commerce being developed under the port's That is why it is important that the legislation before your honorable committee should receive favorable consideration. Mr. Chairman, having been with the line for 25 years, I have observed its success, and some of its difficulties and some of its failures. The statement has been made about the loss of $14,000,000 beginning in 1924. I hope you gentlemen of the committee will have the opportunity of studying the reports of the Corporation and seeing in these reports the conditions that existed down through the years responsible for the loss of the $14,000,000.

In 1924, and not very long after that, we had sand bars on the rivers, and barges grounded, and those things cost a lot of money. We had a lot of strikes on the river, labor difficulties, and we had fog, and we had ice in the river, and there was a lot of other trouble. The rail lines consistently reduced their rates to meet water and truck competition, and they were permitted to do so until the revenue of the Federal Barge Lines was reduced to a minimum. That reduced the revenue.

Now, the lines had a lot of difficulties. I sat back there and I listened to the General Accounting Office witness this morning, who suggested some more red tape to add to the burden of red tape the Corporation "enjoys" today. When this Corporation was formed in 1924, I heard Congressmen and Senators on the floor of this Congress say that they wanted to create a corporation that would be free of all Government red tape. They wanted it to have a pattern just like a private corporation. They wanted no entanglements of any kind, and it would be subject to ICC inspection and regulation and subject to accounting and audit. And, yet, down through the years Congresses on top of Congresses have added burdens to the Corporation, making them subject to different conditions imposed against most agencies. I will give you an example. What corporation today, private corporation, gives its employees 26-day vacations? The employees of that Corporation were subjected to that, due to laws passed by Congress.

There was a lot of other legislation that was passed. Up to a certain point the Corporation was exempted from many of these laws, and I was an employee; and, gentlemen, I enjoyed and benefited by them and I do not begrudge employees getting all of the benefits, but I never asked my Congressman for the benefits; but I enjoyed them. But these benefits cost the lines a lot of money.

But all these things were creating burdens on the Corporation.

Later on, Congress made them subject to the Bureau of the Budget, and they had to come and knock at the door to find out if they could spend a dollar for this or a dollar for that, although they have been operating economically and properly for years. No corporation can survive the red tape heaped upon it like this one.

Then the war came along, and consumer demand was so great that production could not keep up; and, therefore, the buyer ordered his goods as fast as he could, and the result was that the carload and lessthan-carload traffic went to the trucks and to the railroads. What did the Corporation get? A lot of bulk commodities, of course, but they handled a lot of cheap land-grant Government tonnage that some of the Government agencies were willing to give to them. And, yet, the Corporation could have handled very profitable high-class Govern

ment traffic during the war, and it did not. I know, because I solicited the business. Government agencies just would not favor the lines with their shipments.

So, all of these burdens have been created by outside interests, outside influences, and conditions that the Corporation never had any control over; they did not create themselves.

It is a $14,000,000 loss which people complain about. Since 1924 the corporation has been saving the people of these United States millions and millions of dollars, far surpassing this $14,000,000. People in California have been shipping their canned peaches and fruit and salmon and fish and lumber by Pacific coast steamers and thence by barges up the river to Memphis, St. Louis, Minneapolis, St. Paul, and Kansas City, even up to Indianapolis in the interior; at savings in freight rates.

Rice from Texas, Louisiana, and Arkansas has been moving by rail to Baton Rouge and New Orleans, and by barge up the river to Battle Creek, Mich. There they make the famous rice crispies, and they come back to us "shot out of cannons." There are thousands of tons of rice involved. The Texas people have been enjoying untold benefits in differentials and savings in rates; north Texas as well as south Texas; carloads on top of carloads moved out of the Rio Grande Valley, of canned grapefruit and canned citrus.

The same holds true for Florida. I remember at one time when the rate from Florida on canned grapefruit was 90 cents a hundred pounds to St. Louis, Mo. That was by rail. Look at the rate today and see that the railroads have beaten down and beaten down that rate until the Corporation found out that it couldn't handle this at a profit. The last barge rate on this commodity, I recall, was 45 cents from Florida to St. Louis.

That is an example of what the Corporation has done for the people of the United States. Commerce has moved from New England— textiles, products of industry and manufacture, have moved by the coastwise lines to New Orleans and have gone up the river. The people of the United States have benefited generally from the operations of this Corporation.

When I think of the billions we are throwing away in other directions, and here is only $14,000,000 that this Corporation has lostMr. SULLIVAN. In 25 years.

Mr. BOURGEOIS. Yes, and the loss is created by conditions that the Corporation itself did not create. When I think of that, I am amazed. I will submit to you, gentlemen, that this is good legislation, and it is in the public interest.

Mr. SULLIVAN. Referring back to where you said that the Government was willing to give the barge lines, during the war, land-grant shipments, you are referring to munitions and other things?

Mr. BOURGEOIS. To wagon wheels and drums and big culverts and all bulky stuff that they couldn't make any money out of, I refer to that. It handled a lot of oil-make no mistake about that-but it never handled its full capacity of Government matériel, as we called it, during the war.

Mr. SULLIVAN. The Government itself did not use the facilities of this agency that was set up by the Government?

Mr. BOURGEOIS. At least not, in my judgment, to the extent it should have used it, because there was a lot of empty equipment that

was moving back up the river or coming down the river that it could have used, and the Government had big tonnage to move during the

war.

Mr. SULLIVAN. When you say "land-grant freight," what do you mean by that?

Mr. BOURGEOIS. By "land-grant freight," I mean the land-grant rates by railroads, as we understand it, apply in this way: the Government has given the railroad a right-of-way free, and in return the Government enjoys a free passage on its cargo or its commerce over that particular area. Therefore, the Federal Barge Lines, in order to compete with that, has to either meet that rail land-grant rate or name a rate lower than the land-grant rate. Of course, as we know, that is rather cheap transportation today.

Mr. SULLIVAN. At what period did the Barge Lines start to show an improvement in their financial condition? Was it just this year?

Mr. BOURGEOIS. Congressman Sullivan, if you look at the reports, if my memory is right, you will see a profit from around 1924 running up to something like 1939, with perhaps a bad year here and there due to ice or fogs or sand bars. Then throughout the war, if I recall clearly, they lost money. And then only this particular year, the last 10 or 11 months, have they gone back into the black. During the war they lost money.

Mr. SULLIVAN. To what do you attribute the improvement?

Mr. BOURGEOIS. To a tightening of the lines, in that the line has, first of all, a new towboat and some new barges, and they have divested themselves of terminals on the river, and have contracted with private terminal operators to load and unload their barges at a fixed cost per ton. Heretofore, a terminal on the river owned and operated by the Federal Barge Lines had to have Government employees, and they had to have a big personnel just to keep a record for all of them. The President of the Corporation, as I understand it, has attempted to divest the line of all of these terminals, letting a private company operate them. The private company is freer to load and unload, and probably saves some money on the overhead because he has no red tape to contend with. That is probably one of the reasons that they have saved money.

Then they had to put some embargoes stopping service at certain terminals along the river because of the shortage of money. They had to tighten the lines. The moment the capital runs out, they tie the barges to the bank and we are without service at all.

Mr. SULLIVAN. Thank you.

Mr. BECKWORTH. You mentioned the things that had been done which enabled them to be in the black. Do you know of many other things which might be done that would tend to do the same thing? Mr. BOURGEOIS. Yes.

Mr. BECKWORTH. In the event we do not pass this particular bill. Mr. BOURGEOIS. Well, Mr. Chairman, you can appreciate that you have got to have some capital to improve the equipment.

Mr. BECKWORTH. My question is: Do you foresee a good many other things which might be done that would enable them to do a better job?

Mr. BOURGEOIS. There is not very much more that they can do in the condition that it is today, with the money it has today. I think

that they have about reached their limit of improving their efficiency. If they could get a few more new barges, and probably put in a container system that may prove efficient and profitable to handle carload and less-than-carload lot business, a lot of little things can be done. But what they need for the over-all picture is complete new equipment. Money in the bank is needed so they can have confidence to go ahead and make a lot of improvements.

Mr. BECKWORTH. Did you mention some northeast Texas rates? Mr. BOURGEOIS. Dallas and Fort Worth; all of your beer out of St. Louis goes over by barge-rail to Dallas and Fort Worth.

Mr. BECKWORTH. What are some of the other commodities you have in mind?

Mr. BOURGEOIS. Pipe, and, of course automobile parts, automotive equipment, canned goods, glass bottles, and I could name a hundred more items, but I don't have the record here. But the north Texas business, as I say, in the tough days of the depression, they did handle almost 200 to 300 carloads a month for Dallas and Fort Worth.

Mr. BECKWORTH. Do you feel it would have been disastrous to have sold the Corporation 2 years ago or a year ago when we were considering the legislation?

Mr. BOURGEOIS. My personal opinion is that it would have been disastrous. You could have kissed your Trinity River improvement program good-bye, and the Congressmen from Arkansas could have abandoned all of their hopes for service on those rivers, and every improvement of inland waterways would have gone by the board, because then that would have been the key for everybody to oppose inland waterway navigation improvement.

Mr. BECKWORTH. If the $18,000,000 is made available and the progress is made as has been described by some of the witnesses, do you foresee that possibly within 5 years there would be private interests who would be willing to purchase this Corporation?

Mr. BOURGEOIS. I am confident, Mr. Chairman, that private interests, the moment they see the line operating on a profitable basis, will not hesitate to take it over and to buy it in.

Now, if you say sell it in 5 years, not matter what happens, I say I am willing to gamble, as far as my personal opinion is concerned, give it the proper equipment and let it put itself on its feet, and then start the 5 years from then, and I guarantee you it will make money and it will invite private investors to take it over.

Mr. BECKWORTH. The previous witness entertained the fear that had we placed a provision in the bill when it was considered before, to the effect that none of the service would be discontinued, it would have been unenforceable. Do you think this fear to be well-founded? Mr. BOURGEOIS. The position we took on the Wolverton bill when that was introduced, we knew of the individuals who were forming the syndicate to buy it; but the moment one or two of the private barge operators stopped taking carload and less-than-carload-lot freight, the shippers became alarmed. They became alarmed, and they decided that this private syndicate buying this line would take it and later only handle bargeload business. Then the private operators heard about the syndicate and they too became alarmed as they did not want to see this Government-owned equipment used only to handle bargeload freight against them.

Now, as to segments of the line not being profitable: In my opinion the section of the Warrior River has been a tough proposition. The financial reports will show that. But all of the others, I think can make money, and I think that a private owner could give that

assurance.

But here is the position we took at New Orleans: We took the position that we would not ask the Government to demand of the private owner to put up a bond. The position we took was: We demand of the purchaser this agreement: that the Government would have a recapture clause, and if at the end of a year or two the private owner cease to give substantially the same service of the Federal Barge Lines, the Government could recapture it and take it back. That is the position we took.

Mr. BECKWORTH. Thank you for your statement.

The next witness will be Mr. Joseph D. Henderson, the national managing director of the American Association of Small Business. STATEMENT OF JOSEPH D. HENDERSON, NATIONAL MANAGING DIRECTOR OF THE AMERICAN ASSOCIATION OF SMALL BUSINESS

Mr. HENDERSON. My name is Joseph D. Henderson. I am national managing director of the American Association of Small Business. Many of our members are engaged in building, repairing, operating barges, and towing vessels. Others are interested in barge transportation from the viewpoint of shipping and receiving freight. At a hearing before Subcommittee No. 2 of the Committee on Small Business of the House of Representatives, Eightieth Congress, first session, pursuant to House Resolution 18, part 1. of Subcommittee Hearings on Government Competition With and Financing of Business, the following resolution of the board of directors of the American Association of Small Business, approved at its monthly meeting, April 23, 1947, was presented:

Whereas the American Association of Small Business is opposed to all Government in business;

Whereas all business and especially small business and the members of the American Association of Small Business in particular, may be relieved of a portion of Federal taxation, competition, directives, and regulations when the Federal Government releases its controls on all business: Therefore, be it

Resolved, That we agree to the sale of the Federal Barge Lines to private enterprise, provided the same rates, services, and schedules now enjoyed by small-business enterprises using the facilities of the Federal Barge Lines will be maintained.

Today we are presenting testimony concerning the views of our members regarding H. R. 328 and H. R. 4978, usually referred to as the Boggs of Louisiana inland waterways amendments of 1949. The American Association of Small Business is an organization including in its membership over 100 separate trade and professional classifications. Our membership extends from New York to California and from the Great Lakes to the Gulf of Mexico. In addition, it may be said that thousands of individual citizens of our country interested. in and being served by small business are directly affected by inland waterway transportation facilities.

Today more than ever before in the history of our country, serious consideration must be given to the expenditure of funds by the Congress.

The American Association of Small Business has gone on record