This morning we received the answer from the Commerce Department. I have not even had a chance to see it. It will be filed with the committee.

Senator JOHNSON of Texas. It is pretty difficult to determine what their position is?

Senator WHERRY. Yes.

Now I am saying this for Senator Reed's benefit, because he is on the Appropriations Committee and one of our outstanding members. The Comptroller General did suggest, even to the amended petition, that we earmark more specifically what these funds are to be spent for.

as

My theory is that this is an authorization and that the earmarking really ought to be done when it comes up to appropriations, if the Congress considers it wise to adopt this policy.

Senator JOHNSON of Texas. Thank you, Senator Wherry. We were delighted to have you appear.

Senator Butler, will you take the chair, please?

STATEMENT OF HON. HUGH BUTLER, A SENATOR FROM THE STATE OF NEBRASKA

Senator BUTLER. Mr. Chairman, I appreciate very much the opportunity of speaking for just a moment in support of the statements that have been made by my very able colleague Senator Wherry.

I also want to make as brief as possible the presentation of my point, in view of the respect that I have for the distinguished Senator from Louisiana, who is anxious to get away at an early hour, and who has to be on the witness stand.

I am appearing just to express how strongly we in Nebraska and the Midwest feel that the Inland Waterways Corporation should be continued and refinanced on a sound basis so that it can perform properly the function for which it was created.

I hope the committee will report S. 211 favorably with the amendment sponsored by Senator Wherry for himself and a number of other members of the Senate, including myself. This bill and the amendment have been worked out after careful consultation with officials of the barge lines and with private groups affected by its operations. I believe the bill with the amendment meets the problem.

Fundamentally, the problem of the corporation is to renew and replace its old equipment so that it can continue to give service and to pioneer barge traffic on the new waterways such as the Missouri. No doubt officials of the barge lines will testify as to the need for new modern equipment. Frankly speaking, we have reached the stage where the corporation must have additional financing if it is to continue to operate. The real question before you is whether to continue or to discontinue operations.

I hope the committee will keep in mind that that is the issue and not allow itself to be diverted into side issues.

We of the Missouri Basin feel that we are just as much entitled to having barge traffic pioneered on the Missouri River as was done on the other rivers which benefited from this activity in prior years. Some of them may no longer require the pioneering service of the barge lines. We in the Missouri Basin have not reached that point.

We feel that the Federal Barge Lines should be continued until a substantial volume of barge traffic has been built up on our waterway. Furthermore, I should mention that the development of navigation on the Missouri River is an essential part of the Pick-Sloan plan. Continuation of the barge lines is essential to developing those navigation possibilities. It seems to me that it would be a little foolish to discontinue this service right now, just when construction under the Pick-Sloan plan is proceeding so rapidly.

The amendment, as presented by the sponsors to the original bill, writes some limitations into the activities in which the Federal Barge Lines can engage, so as to make sure that the rights of private enterprise on the waterways are protected.

I believe that the amendment represents a fair reconciliation of the various divergent views. I urge the committee to act favorably on the bill, as amended in this manner.

I would like to emphasize one point regarding which you questioned Senator Wherry just at the close of his statement. That has to do with the statement that has been made by the Commission on Organization of the Executive Branch of the Government, under the subject Federal Business Enterprises.

This report of the Commission states:

This Corporation was first an agency of World War I and thereafter its purpose was to pioneer barge traffic on the newly deepened waterways.

Now that statement is entirely correct, and I ask the committee to keep it in mind in connection with the next statement from the Hoover Commission report which I will also read. In the next paragraph the Commission report states:

Private enterprise now serves this transportation purpose, as indicated by the fact that the company carried about 3,000,000 tons out of a total of over 40,000,000 tons on the rivers it serves.

The Commission then recommends that the Corporation be immediately liquidated.

Now, Mr. Chairman, that statement simply is not according to the facts. Private enterprise does not serve this purpose except on some of the waterways such as the Mississippi.

In particular, private enterprise does not provide adequate barge transportation on the Missouri River. The Commission figures apparently are obtained by lumping together all the operations on all the rivers without making it clear that the Missouri River is in a different category from some of the other rivers.

As the Hoover Commission points out, the purpose of the Inland Waterways Corporation was to pioneer barge traffic.

Until that pioneering is done on the Missouri, I do not see how anyone can possibly say that its purpose has been fulfilled.

Senator REED. As far as I know, Senator Butler, the Inland Waterways Corporation is the only barge line that is operating on the Missouri River, and, if my information is correct, they have a very limited operation there.

Senator BUTLER. That is right.

Senator REED. I do not think they are going north of Kansas City now at all, are they?

Senator BUTLER. They are going as far as Omaha, Senator Reed.
Senator REED. I thought they had discontinued that.

Senator BUTLER. I am going to insert, with your permission, a statement from the Nebraska Farmer. That is not published by a chamber of commerce from Omaha or Nebraska City, or any other town on the river; it is published out-State, and it goes to the farmers of the State. It speaks of a recent bargeload of 30,000 bushels of grain. Also, with the consent of the distinguished Senator from Kansas, Mr. Reed, I would like to insert a letter that he received from Mr. Ingersoll on barge transportation under date of April 11, and with that I will conclude my statement.

Senator JOHNSON of Texas. Without objection, the insertions will be made.

(The documents referred to are as follows:)

[From Nebraska Farmer, January 1, 1949]

SELLING WHEAT DOWN THE RIVER

Now Nebraska farmers' efforts in grain improvement over the years is starting to pay off in a big new way. It is all connected with river transportation and the demand for Nebraska wheat in other States.

Last month the Nebraska Consolidated Mills Co. started the grain-laden barges rolling down the Big Muddy by shipping the first barge load of Nebraska wheat from the new Omaha docks to their mill at Decatur, Ala.

The city of Omaha has just finished an 80,000 bushel elevator on the banks of the Missouri, with facilities for loading barges at the rate of approximately 15,000 bushels an hour.

The barge load of wheat held 30,000 bushels.

The route traveled by the barge is down the Missouri to St. Louis; down the Mississippi to Cairo, Ill.; up the Ohio to Paducah, Ky.; and then on the Tennessee River to Decatur, Ala. The mill is located on the banks of the Tennessee River. This route passes through or skirts the borders of eight States, and covers 1,200 miles. The trip, barring delays, can be made in 7 days. The Federal Barge Lines takes the wheat as far as St. Louis, there it is transferred to the Arrow Transportation Co., a private barge line which takes the shipment on to Decatur, Ala.

The varieties of wheat grown by Nebraska farmers which have proved so desirable are Cheyenne, Pawnee, and Nebred. They have been developed through the cooperation of the Nebraska Grain Improvement Association in the State Department of Agriculture and the Agricultural College of the University of Nebraska. INLAND WATERWAYS CORPORATION, St. Louis 2, Mo., April 11, 1949.

Hon. C. M. REED,

Senate Office Building,

Washington, D. C.

DEAR SENATOR REED: In a recent issue of the Traffic World I have read of your concern with the shortage of transportation for moving grain out of the Western States of Nebraska, Kansas, Colorado, and Oklahoma. I was impressed at the statement that there were at the time 343,350,033 bushels of wheat under loan and purchase agreement, and that the transportation of this wheat would require 200,000 freight car loads.

With a new crop coming along I appreciate that we are faced with a tremendous task of moving this grain out to make room for the storage of the new

crop.

It appears that this is a task which will overburden the Nation's transportation system.

While the great bulk of this transportation will necessarily have to be performed by the railroads because of the grave shortage of dry cargo barge space on the Mississippi River system, I am writing to submit that the Inland Waterways Corporation stands ready to do its part to the best of its limited ability in the performance of this urgent task.

As an indication of the extent to which we can assist in this movement, I cite below the amount of grain this Corporation has transported during the past 9 months:

We take pride in pointing out that this amounts to about 14,379 freight car loads which we have transported in the past 9 months.

The Inland Waterways Corporation is a Government corporation which operates the Federal Barge Lines on the Mississippi River, the Illinois River, the Missouri River, the Gulf-Intercoastal Canal between New Orleans and Mobile, and the Warrior River in Alabama. It also operates a small spur railroad from Port Birmingham to the outskirts of Birmingham, Ala.

The Federal Government began operating the Federal Barge Lines in 1918.1 Since 1918 these operations have been carried on under three agencies: 2

1. September 1, 1918, to February 29, 1920, as the Mississippi-Warrior Service of the United States Railroad Administration.

2. March 1, 1920, to June 2, 1924, as the Inland and Coastwise Waterways Service of the War Department.

3. June 3, 1924, until the present time, as the Inland Waterways Corporation. Mr. William C. Foster, Under Secretary of Commerce, in testifying before the House Committee on Interstate and Foreign Commerce last year, said that Government operation of the Corporation is based on two fundamental principles:

3

1. "* ** * to develop a general over-all common-carrier service along the rivers to a point where it can be turned over to private enterprise."

1 Board of Investigation and Research. Public Aids to Domestic Transportation. Government Printing Office, Washington: 1945, p. 68.

2 Ibid., p. 785.

U. S.

Foster, William C., Under Secretary of Commerce. Hearings entitled "Sale of Federal Barge Lines," before the Committee on Interstate and Foreign Commerce, House of Representatives, 1948, p. 11.

2. "* * that this common-carrier service rendered by the Inland Waterways Corporation is important to the people of the region served, and that the Government should continue to render such service until private enterprise is willing to take over and render similar service."

All of the capital stock of the Corporation is held by the United States Government. Under its original authorization in 1924,' capitalization of the Inland Waterways Corporation was set at $5,000,000. In 1928 the authorized capitalization was increased to $15,000,000 but no more than $12,000,000" had been paid into the Corporation by the Government until last year, when Congress appropriated an additional $2,000,000 to be used for purchase of the Corporation's capital stock. Currently there is $1,000,000 in authorized capital stock for which money has not been appropriated.

Operation of inland-waterway services between 1918 and 1924 resulted in a loss of $4,000,000. The operation of the Inland Waterways Corporation from 1924 to 1938 resulted in a profit of $2,600,000, after setting aside $7,758,000 depreciation charges and expending $4,771,000 for pioneering and development work, rate cases, and other items of exceptional nature. From 1939 through 1947 the Corporation suffered an operating loss of $6,968,486.55.8

In explanation of these losses Mr. Foster stated:" "These losses were due primarily to the fact that most of the transportation facilities of the Inland Waterways Corporation were obsolete or worn out. As a result, in my testimony last year before this committee and before the House Appropriations Committee, I stated that the alternatives facing the Inland Waterways Corporation were rehabilitation of ith facilities with an investiment of approximately $17,000,000, or sale, not under the terms of the act but on a liquidation basis. The House Appropriations Committee, acting consistently with the recommendation of the House Small Business Committee, which took an interest in this problem, decided to embark on the former alternative, and as a result authorized the barge line to start a rehabilitation program and at the same time to solicit interest in the sale of the property."

12

The Inland Waterways Corporation asked the last session of the Eightieth Congress for $3,000,000 to purchase the remaining $3,000,000 authorized capital stock of the Corporation." This money was to be used to improve and replace towing and barge equipment." Congress appropriated $2,000,000. In discussing the appropriation, the Inland Waterways Corporation said: "This reduction, combined with the effect of the unexpectedly serious operating losses sustained during the fiscal year, made it necessary to postpone any further capital improvements during fiscal 1949."

13

Money made available in previous years provided for the first experimental unit of new equipment, the towboat Harry Truman, which was delivered in the late spring of 1948. According to the Department of Commerce," "results of trial operations were very favorable and exceeded even the very optimistic estimates based on preconstruction research and calculations."

4 Public Law 185, 68th Cong., 43 Stat. 360.

Public Law 601, 70th Cong., 45 Stat. 978.

Inland Waterways Corporation, Annual Report for the Calendar Year 1945, p. 9.

7 Public Law 860, 80th Cong., approved June 30, 1948.

10 U. S. Congress. Hearings entitled "Government Corporations Appropriations Bills for 1949," before the House Subcommittee of the Committee on Appropriations, 80th Cong., 2d sess., p. 367.

11 Ibid., p. 387.

12 Public Law 860, 80th Cong., approved June 30, 1948.

13 Thirty-sixth Annual Report of the Secretary of Commerce, 1948, p. xxv.

14 Ibid.