INLAND WATERWAYS CORPORATION WEDNESDAY, JUNE 15, 1949 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE OF THE COMMITTEE ON Washington, D. C. The subcommittee met at 10 a. m., pursuant to adjournment, in room 1334 New House Office Building, Hon. Lindley Beckworth (chairman of the subcommittee) presiding. Mr. BECKWORTH. The committee will come to order. The first witness in the resumption of hearings this morning will be Mr. Doss H. Berry, general manager of the Baton Rouge Traffic Bureau, Baton Rouge, La. STATEMENT OF DOSS H. BERRY, GENERAL MANAGER, BATON ROUGE TRAFFIC BUREAU, INC., BATON ROUGE, LA. Mr. BERRY. Mr. Chairman and gentlemen of the committee, my name is Doss H. Berry. I am general manager of the Baton Rouge Traffic Bureau, Inc. The Baton Rouge Traffic Bureau is a nonprofit organization representing the port, commercial, and_civic interests of the city of Baton Rouge, and the port of Baton Rouge in all matters pertaining to transportation. Among the membership of the bureau are included the following: City of Baton Rouge, Baton Rouge Chamber of Commerce, port of Baton Rouge, Baton Rouge Port Development Association, and over 60 of the leading industrial and business firms. The Baton Rouge interest that I represent and for whom I speak are vitally interested in the continued operations of the Federal Barge Lines. Not only are the people of Baton Rouge interested in its continued operation, but of the industries both large and small in the midcontinent area and the Mississippi Valley, many are dependent upon water transportation for their very existence. During my many years of experience in practically all phases of transportation, there has never been a time, in my opinion, when it was so important that the Inland Waterways Corporation should be afforded the necessary funds to rehabilitate and modernize the facilities of the Federal Barge Lines in order that it may continue its pioneering work on the Mississippi and its tributaries as set forth in the Inland Waterways Corporation Act, and of course to provide the shippers of less than bargeload traffic with adequate service. At the present time, the Federal is the only barge line offering carload and less-than-carload service to the general public. The other carriers are not interested in this traffic any more. This situation has not been brought about due to a scarcity of tonnage. It is the reverse. Today the records will show that practi 93555- -49 6 77 cally all of the private barge lines are operating to capacity in the handling of bargeload traffic. As long as business continues to be good and the large industries are able to deal in bargeload quantities, it is going to be up to the Federal Barge Lines to handle the less-thancarload and carload shipments in order that the small industry may be able to stay in business. In other words, it is a case of the Federal Barge Lines and small industry to either stay in, or go out of business. If the Federal Barge Lines is put out of business, small industry will also go out of business. If small industry goes out of business, this type of water transportation will forever cease. The economy of Baton Rouge for nearly 200 years has been closely identified with the Mississippi River. In the early days, river transport was the only means available for the movement of north-south commerce in the Mississippi Valley. With the advent of the railroads, there was initiated a life and death struggle between the water carriers and the railroads. As it is well known to you, for at least the first decade of its existence, the powers of the Interstate Commerce Commissioner were limited in the extreme, and this struggle could and did have but one result. This result was the almost complete elimination of river craft on the Mississippi; and for a long number of years water transportation on the inland waterways of the country. This was brought about primarily by two factors: the freight congestion resulting from activities directly connected with World War I and the utter inability of the railroads to handle the immense volume of tonnage tendered them. The railroads were better equipped to meet the emergency created by World War II. But coincidentally, there has come about an unprecedented increase in the cost of transportation, and the end of this economic phenomenon is apparently not yet in sight. And, in my opinion, for what it may be worth, these increases, averaging between 50 and 60 percent over the prewar basis have now reached a point where they are no longer an insignificant factor in the cost of living, but are today a major factor in the picture. They are defeating their own purpose. In considering Baton Rouge from a transportation standpoint, it is necessary to take into account the competition which our wholesalers have to meet in the market on which they sell, the type of transport involved and the type of transport available to their competitors from the primary sources of supply. This competition is principally with New Orleans, Lake Charles, and Houston. At each of these ports there is coastwise water service available from the North Atlantic ports and the interior producing points served by those ports. This commerce moves on straight water rates and on joint water and rail rates. The all-water rates between ports average about 80 percent of the all-rail rates between the same ports. We at Baton Rouge do not have coastwise steamer services available to us, except through one or more of these three competitive points. And it will be borne in mind that this coastwise service from the eastern seaboard initiates its traffic in the most highly industrialized section of the United States. We do, however, and have for years had access to the growing industrial sections of the Mississippi Valley, of which Chicago and St. Louis and their contiguous areas are typical, by means of the service of the Federal Barge Lines on the Mississippi and its tributaries. The large oil, chemical, grain, and steel shippers are not dependent on the Federal Barge Lines for the movement of their products and raw materials for they have, generally speaking, their own barges and motive power. But the small or relatively small shipper is not in this fortunate situation. He is dependent on common carrier service for his traffic moving by water. The Federal Barge Lines is the only common carrier operating on the river which offers carload and less-thancarload service. The other carriers operating on that stream restrict their operations to barge load traffic. In my opinion again, this is unjust discrimination against small business and violative of their certificates as common carriers by water. Only this week at New Orleans there was heard by the Interstate Commerce Commission the complaint of the New Orleans Traffic and Transportation Bureau against the Mississippi Valley Barge Line Co. and the American Barge Line Co. over these unjust restrictions. We at Baton Rouge are located relatively far distant from the origin points of many of the commodities used or distributed by the members of the traffic bureau. Unless we are to continue to receive the common carrier service of Federal, we shall be out of the competitive picture. All that saves us now is the 20 percent differential of Federal's rates under the all-rail rates. The people of Baton Rouge have a substantial amount of money invested in their port and its facilities. It furnishes employment for many. The day the Federal Barge Lines ceases to operate this port and its facilities will become worhless and discontinue operating, many people will be thrown out of work. The disposition of the extensive properties of Federal has been a much discussed matter for several years and a subcommittee of the Committee on Small Business of the Eightieth Congress, first session, considered the matter at length after conducting hearings at various points along the entire stretch of the Mississippi. At the same time another investigation into the matter of barge transportation generally on the Mississippi and its tributaries was under way by the Interstate Commerce Commission in its Docket 26712-Joint Rail and Barge Rates. After assembling a record of many thousands of pages of testimony over a period of years the Commission found the services of the respondent barge lines-and Federal was one of the respondent lines-was in the public interest, and prescribed a formula for dividing the revenue between the barge lines and the rail carriers on joint hauls of traffic. In other words, the only barge line operating on the Mississippi River and its tributaries today that furnishes the public a complete common-carrier service that is accepting and transporting carload, less than carload and bargeload business is the Federal Barge Lines. Private operators are disposed to pick and choose their traffic. They are agreeable to handling the bargeload business, which at present time is most profitable, but are not disposed to accept and transport the less profitable less-bargeload traffic. Obviously less-than-bargeload shippers and receivers are the smaller merchants located not only at the ports along the rivers, but also in the communities away from the rivers. Embargoes by the private operators deprive these merchants of the benefit of water transportation. In order to protect this barge-rail, rail-barge, and rail-barge-rail rate structure, permit me to state that the Congress of the United States went so far as to incorporate in the Transportation Act of 1940, section 307 (a) which makes it the duty of the Interstate Commerce Commission to prescribe reasonable differentials between the all-rail rates on the one hand and the joint barge rates on the other. The largest industrial development in the United States has taken place principally along navigable rivers and canals and along the seaboard where water transportation is available. Certainly the rail lines have lost some traffic to the barge lines; however, the availability of water transportation has attracted industries that have grown and prospered and caused many more to locate. In my opinion, this situation has created many times more traffic for the rail lines than they have lost. While I think of it, I would like to remind the committee that all of the ports of the United States are subsidized in one way or another. There is no other way they could exist under our form of transportation. Prior to World War II it was the consensus of all that we had too much transportation, but after getting into it every ounce of our transportation facilities were taxed to the very limit. Let us not forget the part our transportation facilities played in winning the war. I will not take your time with further discussion of this tremendously important subject, for volumes could be and have been written about the compelling necessity of the Federal's service. We most respectfully ask your support of H. R. 328 and of the so-called Boggs amendment, H. R. 4978, which is substantially the same as the so-called Wherry amendment to S. 211. Futthermore, we ask that the funds necessary to rehabilitate and modernize the Federal's antiquated and obsolete equipment be made available so that the line can continue to render this service so vitally needed along the Mississippi and particularly at Baton Rouge. Mr. BECKWORTH. Mr. Berry, some of the members of the committee may desire to ask you some questions and you may desire to make a further statement than you made. Mr. BERRY. Mr. Chairman, there was one thing yesterday to which Mr. Louis Schwartz testified, that I am afraid some of you might not have properly understood. That is, that Mr. Schwartz told you about the export rates on grain from Kansas City being 31 cents to New Orleans, and that the barge line rates were 141⁄2 cents. That does not mean that that is grain that originates just at Kansas City. Practically all of the grain rates are made on a combination over Kansas City, that is, with the exception of Texas and of Oklahoma. So those lower rates that Mr. Schwartz spoke of, Nebraska and Colorado and Arizona and all of the other States get the benefit of those rates. I was asked about the 20 percent feature. In the time during the depression, in what I would term the hand-to-mouth era of merchandising, a carload of freight was considered quite a large shipment. Under ex parte 96 of the Interstate Commerce Commission, on account of barge-line traffic being inferior service, and much slower, something approximating 20 percent less than the rail rates were worked out. That is what I had reference to about the 20 percent, Mr. Chairman. For a number of years I have observed the operation of the Federal Barge Lines very closely. In fact, some 20 years ago at San Angelo, Tex., I got the Santa Fe Railroad to join the Federal Barge Lines in joint through rates. At one time when I was traffic manager for the West Texas Chamber of Commerce, I took it up with the railroads, and I had these advantages extended to those people. Not only did the barge lines help the shippers, but it has been the policy all of these years for the other carriers to pick the cream of the traffic. When they see some traffic that they want, they proceed to cut the rate down, and of course, with their superior service they get it. Today, just before I came to Washington I had just finished handling a matter there on iron and steel at Houston, Tex. The present rate on iron and steel from Houston to Baton Rouge and to New Orleans is 31 cents a hundred. That is what we call the water-compelled rate. The normal rate on that same steel to New Orleans or to Baton Rouge is 70 cents a hundred. Mr. SULLIVAN. You say the water-compelled rate? Mr. BERRY. That is the rate that the barge lines put in years ago, and then the railroads met that rate and published it. The old base rate was 22 cents. Mr. SULLIVAN. That is the water-compelled rate? Mr. BERRY. Yes, the water-compelled rate. In other words, today, if we tried to transit iron and steel at Baton Rouge to the Southern Pacific Railroad, they will force that route through Alexandria, La., and the rate is 70 cents. But if our people take advantage of the 31cent rate, it has to move Southern Pacific to New Orleans and then into Baton Rouge, but you can obtain no transit whatsoever on it. So the benefits that are derived from water-compelled rates, as to that it would be awfully hard for anyone, unless he is acquainted with the rate structure, to understand that. I had hoped that the Federal Barge Lines would place something like an exhibit before you to show you the territory that they serve, and to show you the saving there is at all of these different places. Another thing that strikes me as rather unusual is that we keep talking about the Federal Barge Lines losing money. It has lost $14,000,000 in all of these years. In the first place, when they first started to operate along in 1924 and 1925, and such as that, it wasn't long until we had the depression. And then the railroads, had it not been for the RFC, would all have gone to the bad. Then the Second World War started, and during this time the Federal Barge Line had to stand back in a modest way, and the other carriers took all of the business. They didn't get anything. I know that, as one of the transportation officers, I immediately started to work and tried to divert a lot of traffic over the barge lines. I sent to General Grove's office, and I didn't even get a reply, because the old feeling is, "that is the Government, and we don't want to give them anything." You certainly cannot expect anybody to get fat if all on earth they ever get is just the crumbs that fall off the table. Then, if they stoop down to pick up the crumbs, somebody is liable to kick them for that. That is the truth about the thing. You cannot do that. This is just being fair, and I am one of those fellows. The railroads say I am truck-minded, and the trucks say I am railroad-minded. Mr. HARRIS. I might say, if Mr. Berry will permit, I assume that that is particularly the reason some have suggested that the Inland |