A measure of the services performed by the Inland Waterways Corporation is reflected in the following table. Details showing number of tons of merchandise and bulk traffic transported and number of tons towed for others on the Federal Barge Lines, for calendar years 1924 to 1946, inclusive Source: U. S. Congress. Hearings entitled "Sale of Federal Barge Lines," before the Committee on Interstate and Foreign Commerce. House of Representatives, 80th Cong., 2d sess., p. 48. In re S. 211 JANUARY 17, 1949. LEGISLATIVE REFERENCE, Congressional Library, Washington, D. C. GENTLEMEN: Will you please prepare an outline for me on the background of the Inland Waterways Corporation, which I may use in presenting bill S. 211 before the Interstate and Foreign Commerce Committee? It is not necessary to prepare a voluminous report, as an outline or summary will be quite sufficient. Thanking you, I am Cordially yours, KENNETH S. WHERRY. Senator JOHNSON of Texas. I want to ask Senator Butler just one question here: Have you made any analysis of what this might cost the Government if we enacted legislation as proposed, per year, for the next 5 years? Senator BUTLER. No; I have not gone into that detail, Mr. Chairman, I will admit rather frankly, but it cannot be any considerable sum, and it is simply an expenditure that is necessary to complete a project that has been undertaken. Senator JOHNSON of Texas. I notice the Department of Commerce says: Because of the obsolescence and deterioration of this equipment, and the inefficiency of the terminals, the Corporation has lost and is losing considerable money. Is it your thought that some of this loss could be recovered by improving the equipment and the terminals, and modernizing and rehabilitating it, or do you think we will just perpetuate what we are losing and add to it for another 5-year period? Senator BUTLER. I think it would help materially to operate with modern equipment. Nobody can operate a business with antiquated equipment of any kind. Senator JOHNSON of Texas. Do you have any information on how much our losses have been per year in the past? Senator BUTLER. No; I have not the figures, Mr. Chairman. Senator Long, will you come around? STATEMENT OF HON. RUSSELL B. LONG, A SENATOR FROM THE STATE OF LOUISIANA Senator JOHNSON of Texas. Senator Long, we are delighted to welcome you. You may just proceed in your own manner and take such time as you may find necessary. Senator LONG. I will not take more than 35 minutes by the clock. Mr. Chairman, I would like to state at the outset that my friend and predecessor, the late John Overton, was very interested in this matter, and he sponsored the original bill in the previous Congress, to increase the capitalization of the Federal Barge Lines. I do not believe there was a man in Congress who had any more thorough knowledge of the problems of our waterways than the late John Överton, and I am happy to be able, in my small way, to help carry on a work in which he was very greatly interested. The purpose we have in mind, in increasing the capitalization of Federal Barge Lines, is to permit it to continue the function it has served in the past-that is, the development and expansion of our inland-waterway transportation system, and also to continue to improve the service and to experiment in developing that service. It might be well to point out what the Federal Barge Lines has accomplished up until now. When it was set up and began operations in about 1924, there was very little transportation moving on the waterways-the Mississippi and its tributaries. For example, if you take the 1920 figures, there was really no common-carrier service operating out of New Orleans, and the total tonnage operating from New Orleans was 875,000 tons. In 1940 there were 8,181,000 tons operating, which is an increase of about 800 percent over what was operating on the Mississippi out of New Orleans at the beginning. This was in large measure due to the activities of Federal Barge Lines in pioneering and developing the service and developing a river towboat that would be adequate, with twin screws, to replace the old stern-wheelers that we had before that time. In Vicksburg, in 1920, the tonnage was 78,000. Today the tonnage is 324,000. In Minneapolis there was no adequate channel at that time, and no service. After the channel was opened up, in line with the Federal Barge Lines function to pioneer in that area, Minneapolis is now shipping 975,000 tons, almost a million tons a year. Chicago had not had the development of the Illinois waterway, in which the Federal Barge Lines assisted in pioneering, and Chicago is now shipping, on inland waterways of the Mississippi and its tributaries, 4,400,000 tons. That was the purpose of the Federal Barge Lines, and I believe that anyone familiar with its history will state that it very well accomplished that purpose. Prior to that time, the shippers had been virtually driven off the river by ruinous competition. The waterways needed to be modernized; they needed new types of equipment; they needed experimentation, and the Inland Waterways Corporation did supply that. In providing this service over a period from 1924 until 1939—a period of 15 years-the Federal Barge Lines did it at a profit, although it was designed as a service institution which was not really for the purpose of making a profit. It is my understanding that it had an operating surplus of about 211⁄2 million dollars in 1939. During the war period, Federal Barge Lines was called upon to perform innumerable services that the ordinary profit-seeking corporation would not have cared to handle. Federal Barge Lines was deprived of 60 of its best barges, with the result that, coming out of the war, the equipment, with very few replacements, was completely obsolete. If you have seen the kind of equipment they have, most of which should probably, in my opinion, be sunk in place, I believe you would agree with me that no one could be expected to operate at a profit with that kind of equipment. Now what we would like to do is to put Federal Barge Lines on a basis upon which they can operate efficiently, with modern equipment, without loss, and the only way to do it is to pass the bill that we have proposed, to increase the capitalization in order to enable them to obtain modern, efficient equipment. Senator JOHNSON of Texas. Assuming they do that, do you think we can operate for this next 5-year period without loss? Senator LONG. I am positive of it. Senator REED. I think they estimated $2,000,000 loss next year, even if they get it. Senator LONG. Up until the time you get the service started you probably would lose some money, but I believe once you get it going it can show a profit, and I will tell you why: This new equipment would require less men to operate; it would carry more tonnage; it would use much less fuel; and it would reduce shipping time. For example, with the kind of equipment we have in mind, we have some integrated tows already that have proved it can be done. You will cut the shipping time from New Orleans to St. Louis from 6 days down to 4 days. That means a saving in wages and also in the cost of fuel. Because there is much less resistance to the water with new type of equipment, you will reduce shipping time from St. Louis back to New Orleans from 3 days down to 2 days. However, the whole purpose of this is to provide a service that you would not have if you did not have the Federal Barge Lines operating. For example, on the Mississippi River today the Federal Barge Lines is the only common carrier, and you could say the only carrier, that will provide for a less-than-bargeload lot shipment. The other carriers have not found that they could profitably handle anything in less-than-bargeload lots. That would have the effect of denying the benefit of cheaper water transportation to all the small merchants up and down the Mississippi River if the Federal Barge Lines were out of operation. There are a few large corporations that can ship in bargeload lots, but, as against those few, you have 60,000 merchants who either ship or receive, who are not able to ship in bargeload lots. All those merchants would lose the benefit of water transportation if the Federal Barge Lines were not in the field. We wish to continue that service for those people, but we do not propose to continue it indefinitely at a loss. We say this: That the service should be pioneered, and it should be developed, and you will notice Federal Barge Lines proposes to obtain containers for cargo in order to reduce handling costs. I believe that handling costs can be reduced to a third or a fourth of the present handling cost of loading or unloading cargo moving on the river. Much cargo could be properly put into large containers, and instead of having them loaded sack by sack, on and off, about five or six times before the cargo reaches its destination, you would simply have a crane lift one huge container aboard, and then when it gets to its destination lift it off again, put it on a truck, and take it to its destination. We want to develop the inland waterways system with the Federal Barge Lines, and you must keep in mind that this development cannot be profitable, and that is the reason why the Federal Barge Lines are the only ones who, in a practical way, can do it. For example, at the present time, by law, the Federal Barge Lines are prevented from operating on the Tennessee and Cumberland Rivers. The Federal Government has spent about $800,000,000 to develop those two rivers, and it has allocated about $125,000,000 of that $800,000,000 to navigation. Yet to this day there is not one common carrier offering service on the Tennessee and Cumberland Rivers. Five common carriers have the rights to operate there. Yet they are not soliciting business, and they do not find it profitable to offer any service or go in there and develop. An amendment has been offered by Senator Hill to permit the Federal Barge Lines to develop traffic and trade on the Tennessee and Cumberland Rivers, and then, in line with its past tradition, as the trade has been developed and can be profitably handled, the other barge lines can move in and take their share of it, and the Federal Barge Lines can gradually leave the field. We expect the Federal Barge Lines to continue to handle unprofitable work, to develop it up to the point where it can be profitably handled, and we want to see them handle just enough profitable bargeload traffic to prevent a great loss in providing this service. The Missouri River has already been discussed. The Federal Barge Lines is the only possibility of developing service on the Missouri River after it has been opened to navigation. You will note that the Tennessee and Cumberland Rivers, in some sections, have been opened to navigation as long as 12 years, and yet there is no common carrier service. Certainly, if we are to spend hundreds of millions of dollars. to open up the Missouri, it would be forth spending $18,000,000 to establish an organization that could develop and pioneer the service there until the private organizations could move in and offer the service in a private enterprise capacity. The Arkansas River needs to be developed. It could be developed as far as Tulsa, and possibly even farther than that. Once again, when it is developed, someone will need to pioneer the service into that area, and the Federal Barge Lines is the only possibility. I do not believe that any of the common carriers who will testify here would suggest to you that they themselves could afford the loss that would be incurred in pioneering that service, or that they would find it good business to pioneer the service once these rivers have been opened. We have a project to open the Red River as far as Shreveport, La., and it is proposed that it be opened up into your great state of Texas, Mr. Chairman, and on up to Oklahoma ultimately, and if that project is to be undertaken, I do not believe there is any possibility of the full utilization of that river unless we have something like the Federal Barge Lines to pioneer. Pearl River in Louisiana is being opened up and will have the same problem. The Tombigbee system is proposed. You will have the same problem getting transportation pioneered there. Then you have the Apalachicola, Chattahoochee, and Flint system, which is being built also, and certainly you will want to pioneer the service in there when you get it opened to navigation. Then, too, you will want an organization to establish joint railwater rates, so that when you open up a waterway, not just the city that borders the waterway but the other communities around it will have the opportunity of gaining the benefit of water transportation. The only way you can do it is to have an organization that will set up a rate structure, as the Federal Barge Lines has done, to get the railroads to carry the freight from the port on to the inland point. In addition to that, as I have already pointed out, to enable all the smaller merchants in these areas to obtain the benefit of water transportation, you will need someone to offer less-than-bargeload service, just as the Federal Barge Lines is the only one to offer that service on the Mississippi. So the Federal Barge Lines, in my opinion, would be the only possibility of offering that service. It has been pointed out that the Federal Barge Lines has, over a period of 25 years, accumulated an operating deficit of about $8,000,000. I believe that was largely due to war conditions and the fact that the Government more or less took from the Federal Barge Lines its most modern equipment during the war. There have been very few replacements since that time. I believe, with this new modern equipment, as I have pointed out, it can be operated at a profit. Senator JOHNSON of Texas. Would you care to make any estimate on what the net will be during this next 5-year period under the pro |