Senator JOHNSON of Texas. Mr. King, would you support Senate 211 as originally introduced without the Wherry amendment? Mr. KING. I do not think so. Senator JOHNSON of Texas. You would not favor passage without the Wherry amendment? Mr. KING. No, sir. And I do not think the Wherry amendment places any hardship on the barge line. Senator JOHNSON of Texas. You do favor passage with the Wherry amendment? Mr. KING. Oh, yes. I think the whole purpose of the legislation is to let the Government build a saleable concern of the barge line, and I think with the Wherry amendment in it the present mangement can do that very easily. Senator JOHNSON of Texas. You do not think it would be consistent for this committee to pass it with the Wherry amendment and then adopt the Hill-Kefauver-Sparkman proposal? Mr. KING. No; because the ultimate intention appears to be to dispose of the Federal Barge Lines to private enterprise, and there is already sufficient private operation on the Tennessee River. Our own joint rates with Federal provide ample bargeload service to and from Tennessee River points, to and from Federal Barge Lines points. Senator JOHNSON of Texas. So you have the proposition of attempting to build a salable outfit and restrict its operation in one proposal, and then an amendment tending to extend its operation in another.. That is what the Hill-Kefauver-Sparkman proposal does? Mr. KING. That is right. It would extend it. But I think the intention of the legislation is to get the operation ultimately into private hands, and to do that as cheaply as possible, and to do that it should be built into a profitable concern where it is. Any extension of the operation on the Tennessee River, in addition to possible bankruptcy to carriers like us, would involve a lot of expenditure on the part of the Federal Barge Lines. Senator JOHNSON of Texas. And would be inconsistent with the original bill as amended by the Wherry amendment? Mr. KING. That is the way we view it; yes, sir. Senator LONG. Are you offering common-carrier service on these rivers today? Mr. KING. Bargeload service. No less-than-bargeload service. But, as I pointed out in the closing part of my statement, should Federal be able to develop a profitable method handling less-than-bargeload traffic, we will join them in joint rates on that traffic, too. We already join them in rates on other traffic. All bargeload traffic being offered today between Federal Barge Lines points and points on the Tennessee is being handled. Senator LONG. How do you propose to see them get less-than-bargeload service on the Tennessee and Cumberland? It is my understanding that most of those firms there are not able or desirous of having less-than-bargeload service. Mr. KING. Nobody wants to handle less-than-bargeload traffic now, but the present management of the Federal Barge Lines is working on a new arrangement for the handling of less-than-bargeload traffic which may prove profitable. It may make of this heretofore unprofitable business a profitable business. If that becomes profitable-it uses containers-that will make handling of less-than-bargeload traffic much simpler and make it possible for us to join them in joint rates and routes. Senator LONG. Some of these shippers complain that in order to get service on the Tennessee and Cumberland at the present time it is virtually a major operation in order to go seek out the carrier and get him to come and take the bargeload and haul it where they want it taken. It is so difficult and so complicated that a lot of them give it up rather than try it. Mr. KING. There is no case of that kind that has ever come to our notice. Every bargeload of traffic ever offered has been handled, with the exception of those cases where shippers demand rates below the compensatory level, and, of course, we cannot handle that traffic. Senator LONG. Do you solicit traffic there at the present time? Mr. KING. Yes. Senator LONG. How many people do you have employed soliciting traffic on the Tennessee River? Mr. KING. On bargeload traffic? Senator LONG. Yes. Mr. KING. The barge lines do not use very many solicitors. We only have two. Senator LONG. Two in that area you mean? Mr. KING. That is right. Senator LONG. In that specific area? Mr. KING. But to take care of the bargeload traffic that is sufficient. See, the Tennessee Valley Authority maintains quite a staff in its Navigation Section, and they have done quite a little bit of work toward trying to develop bargeload traffic on the river, and every time. they get an inquiry they refer it to us and all certificated carriers on the river. In every instance, bargeload traffic they have been able to dig up has moved unless it had to have less than compensatory rates to move on. Senator LONG. Have you seen that proposed plan for cargo containers for less-than-bargeload service involving the size of the container and methods that would be used in handling? Mr. KING. You mean that Federal is developing? Mr. KING. I have heard it described. I have not seen it. I have seen such containers in other services. Senator LONG. Do you think it is practicable? Mr. KING. It sounds more practicable than anything else that has been devised. If it does not work, nothing else will, or nothing else I can conceive of will. Senator LONG. Thank you. Senator JOHNSON of Texas. Thank you very much, Mr. King. The next witness will be Mr. F. G. Robinson, traffic manager of the Galveston Chamber of Commerce. Will you come forward? Mr. Robinson, we are delighted to have you here. You have a prepared statement. Just proceed. STATEMENT OF F. G. ROBINSON, TRAFFIC MANAGER, GALVESTON CHAMBER OF COMMERCE Mr. ROBINSON. Thank you, Senator. Mr. Chairman, my name is F. G. Robinson. I am traffic manager of the Galveston Chamber of Commerce, and I appear in behalf of that organization as well as the Galveston Cotton Exchange and Board of Trade, the Harris County Houston Ship Channel Navigation District, Houston Port and Traffic Bureau, Houston, Tex., the Texas City Board of Trade and the Texas City Terminal Railway, Texas City, Tex., in opposition to bill S. 211 and as amended. Mr. Chairman, I would like to ask that my prepared statement be included in the record, and if that is done I will then proceed just to orally deal with certain specific matters which will shorten my testimony considerably. Senator JOHNSON of Texas. How long do you expect to consume? Mr. ROBINSON. Just a few minutes. Senator JOHNSON of Texas. Ten minutes? Mr. ROBINSON. About 15. Not over 15. Senator JOHNSON of Texas. All right. Without objection, the statement will be included. (The prepared statement of Mr. Robinson follows:) STATEMENT OF F. G. ROBINSON, TRAFFIC MANAGER, GALVESTON CHAMBER OF COMMERCE My name is F. G. Robinson. I am traffic manager of the Galveston Chamber of Commerce and the Galveston Cotton Exchange and Board of Trade, Galveston, Tex., and appear in their behalf, and I am also authorized to appear in behalf of the Harris County Houston Ship Channel Navigation District and the Houston Port and Traffic Bureau, Houston, Tex., the Texas City Board of Trade and the Texas City Terminal Railway, Texas City, Tex., in opposition to bill S. 211 here in issue. The Galveston Chamber of Commerce, Galveston Cotton Exchange and Board of Trade, Texas City Board of Trade and the Houston Port and Traffic Bureau are voluntary organizations incorporated under the laws of the State of Texas, and whose membership consists of persons, firms, and corporations engaged in the handling of domestic and foreign commerce originating or destined various points in these United States and abroad, at and through the cities and ports of Galveston, Texas City, and Houston, Tex., via rail, water, and highway transportation agencies. Said organizations have for their object and purpose the protection and welfare of their members, and are, therefore, vitally interested in legislation, transportation, rates, etc., affecting such commerce which must be handled in competition with other Gulf ports, and especially the port of New Orleans, the southern terminus of the Inland Waterways Corporation in whose interest the proposed legislation is designed to further subsidize, to the extent of $18,000,000. The Harris County Houston Ship Channel Navigation District, which constitutes Port Houston, was created under the laws of the State of Texas, and its transportation matters are handled by the Houston Port and Traffic Bureau. There is included in the membership of the Galveston Chamber of Commerce and the Galveston Cotton Exchange and Board of Trade, the Galveston Wharves, which is owned by the city of Galveston. The Texas City Terminal Railway is a switching line serving local industries and the port of Texas City. It is interested in the welfare of the city and port of Texas City. My transportation experience exceeds 30 years. During that time I have handled numerous rate and transportation matters, including years of practice before the Interstate Commerce Commission and the United States Maritime Commission, covering both rail and barge rates and ocean rates. The interests for whom I speak are opposed to the proposed legislation for three basic reasons; i. e., (1) it would keep the Federal Government in the trans portation business, and at the expense of the taxpayers, and in direct competition with private transportation agencies; (2) it would project into the future the unfair freight-rate advantages now enjoyed by the port of New Orleans, La., to the positive detriment of the Texas ports of Galveston, Texas City, and Houston, in relation to the vast inland area that lies much nearer those ports than to New Orleans; and (3) that only those, such as New Orleans and other Mississippi and Missouri River points, including the Mississippi Valley Association, receiving direct benefits-and at the expense of others are supporting the proposed legislation. I also wish to state that the Texas Industrial Traffic League, at meeting held in Dallas, June 7, unanimously adopted a motion against increasing the capitalization of Inland Waterways Corporation as covered by the proposed legislation. The league's membership includes chambers of commerce and port organizations in the cities of Austin, Beaumont, Corpus Christi, Dallas, El Paso, Fort Worth, Galveston, Houston, Midland, San Antonio, and Waco, Tex., and manufacturers, jobbers, etc., throughout the State of Texas. Its membership represents over 7,500 shippers and receivers of freight in the State of Texas. I am a director of the league. THE INLAND WATERWAYS CORPORATION You are familiar with the fact that said Corporation was first an agency of World War I and was later set up as a pioneer of barge operations on the Mississippi River, etc., pursuant to statutes enunciated by Congress, some of which I wish to deal with. Section 500 of the Transportation Act, 1920 (U. S. C., title 49, sec. 142), enacted February 28, 1920, covering the policy of Congress to promote and develop water transportation, first paragraph, reads as follows: "It is hereby declared to be the policy of Congress to promote, encourage, and develop water transportation, service, and facilities in connection with the commerce of the United States, and to foster and preserve in full vigor both rail and water transportation." [Emphasis added.] I stress the provision "to foster and preserve in full vigor both rail and water transportation." If that declaration of policy means what the simple words convey, then this question arises: How can "rail transportation" be preserved when it has no Government subsidy and must operate in competition with a Government transportation agency so heavily subsidized as is the Inland Waterways Corporation, and which is exempt from the heavy taxes imposed upon private railroads and are accorded rates less than via rail, not to mention private barge operators operating on the same waterways? Let us now consider the policy of Congress enacted on September 18, 1940, or 20 years later; i. e., the national transportation policy of the Interstate Commerce Act, which reads as follows: "It is hereby declared to be the national transportation policy of the Congress to provide for fair and impartial regulation of all modes of transportation subject to the provisions of this Act, so administered as to recognize and preserve the inherent advantages of each; to promote safe, adequate, economical, and efficient service and foster sound economic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, undue preferences or advantages or unfair or destructive competitive practices; to cooperate with the several States and the duly authorized officials thereof; and to encourage fair wages and equitable working conditions-all to the end of developing, coordinating, and preserving a national transportation system by water, highway, and rail, as well as other means, adequate to meet the needs of the commerce of the United States, of the postal service, and of the national defense." Your attention is directed to the fact that the national policy includes, among other things, a requirement that said policy is for the purpose of promoting "economical and efficient service" and to "foster sound economic conditions in transportation and among the several carriers" all to the end "of developing, coordinating and preserving a national transportation system by water, highway and rail Here again Congress has declared that both rail and water transportation be preserved. Compliance with this national declaration of policy is subject also to the question stated above in connection with section 500. * *". Bearing in mind that the Interstate Commerce Act, also the Shipping Acts of 1916 and 1936, etc., as to ocean transportation are designed to protect ports, localities, etc., against unfair and unlawful preferences and prejudices, including, if you please, fair treatment as between the different transportation agencies, surely it was not intended, under the policy declarations, that only private transportation agencies be held accountable at equal terms and that a Government transportation agency be exempted from "equal terms" and kept alive by continuous transfusions of public taxes, much of which comes from areas actually injured by such an operation, as I will later show. I respectfully urge your careful consideration of this feature, in connection with my subsequent remarks. FEDERAL'S UNSUCCESSFUL OPERATION The Federal Barge Line, operated by the Inland Waterways Corporation, has operated at a substantial deficit, as evidenced by the testimony of Mr. William C. Foster, Under Secretary of Commerce, shown in the printed proceedings of hearings before the House Interstate and Foreign Commerce Committee, on bills H. R. 5318 and H. R. 5476, Eightieth Congress, second session, in February and March 1948. The latest statement concerning its unsuccessful operation is that of the Hoover Committee on Federal Business Enterprises, dated March 31, 1949, page 64, reading as follows: "This Corporation was first an agency of World War I, and thereafter its purpose was to pioneer barge traffic on the newly deepened waterways. "For 23 years, the company has operated at an almost continual loss and, as of June 30, 1947, showed an accumulated deficit of $8,192,104 from operations and insufficient depreciation reserves. The fleet is absolete, and it is estimated that about $18,000,000 would be required for rehabilitation. 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 Under Secretary of Commerce, in a statement to Appropriations Committee of the House, has given an uncertain outlook for the corporation. In 1947, the Committee on Small Business of the House of Representatives recommended that the Government liquidate the business. The General Accounting Office also has recommended that the Government withdraw from this business." The said committee then proceeded to make the following recommendation: "We recommend that the Corporation be put into immediate liquidation and that the annual expenditure of the Government be ended." We concur in that recommendation. The same position was expressed in an editorial of the Dallas Morning News (Dallas, Tex.) of June 7, 1949, which reads in part as follows: "With the private barge lines increasing their fleets of powerboats and barges and showing good profits, there no longer is any excuse for Uncle Sam's remaining in this business. The original yardstick purpose of the Federal line long since has been served. The Federal line, which has been losing taxpayers' money lately, could not be made profitable except by replacing its worn-out equipment with modern vessels at great expense. This is an opportune time for selling out and quitting competition with taxpaying industry." In Rail and Barge Joint Rates (I. C. C. Docket No. 26712, decided July 7, 1948, 270 I. C. C. 591, 595), the Interstate Commerce Commission said: In Inland Waterways Corp. v. N. P. R. R. Co. (160 I. C. C. 794, decided Jan. 15, 1949 p. 802), the Interstate Commerce Commission said: "Federal's earnings have fluctuated widely from year to year, ranging from operating income of $939,361 in 1938 to an operating deficit of $2,666,240 in 1946. For the 23 years from 1925 to 1947, inclusive, in which the Inland Waterways Corporation has been in existence, its aggregate net deficit from water-line operations was $5,575,905, an average of $242,431 per year. Its general balance sheet for 1947 showed an earned deficit of $9,467,706." In considering these deficits, one should not overlook the fact that said deficits do not include Federal or State taxes imposed upon the railroads, private barge lines, and all other private enterprises. An idea as to the increase in the above deficits were taxes included may be determined by considering the following statement of Congressman Charles A. Wolverton, chairman of the committee hearings on H. R. 5318 and H. R. 5476, Eightieth Congress, second session, at page 40 of the printed proceedings, reading as follows: "The CHAIRMAN. Now, as to the total United States Government taxes or the grand total of taxes other than United States Government taxes which I first read and United States Government taxes during the period of 10 years from |