Senator REED. Mr. Hayes, can you conclude pretty promptly now? Mr. HAYES. Yes, sir. I have a proposed amendment in place of the Wherry amendment which I should like to submit.

(At this point, Senator Myers assumed the chair.)

Mr. HAYES (continuing). The significant language only I will quote, not the introduction:

SEC. 2 (a). Inland Waterways Corporation shall not increase its bargeload business for any traffic, or for any waters, or for any shipper, unless no privately owned water carrier is willing and able to furnish bargeload service therefor.

May I say that it seems to me that only so can the principle which has been embraced by every witness be vindicated, namely, that Government should pioneer but should not compete with private industry.

You have been very kind in permitting me to exceed the time you originally announced, and while, as must be clear, I have more to say-some of my time was used in interrogation-in justice to and in appreciation of your courtesy I will suspend.

Senator MYERS. Thank you, sir.

Mr. Williams, manager, transportation bureau, Chamber of Commerce of Philadelphia.

STATEMENT OF SAMUEL H. WILLIAMS, MANAGER, TRANSPORTATION BUREAU, CHAMBER OF COMMERCE, PHILADELPHIA, PA.

Mr. WILLIAMS. Mr. Chairman and members of the committee, my name is Samuel H. Williams. I am manager of the transportation bureau, Chamber of Commerce of Philadelphia, which is an organization of all types of business enterprise of the Philadelphia area and has as its object, among others, the promotion and protection of the commercial and industrial interests of the city and port of Philadelphia, including matters pertaining to traffic and transportation. The Chamber of Commerce of Philadelphia is fundamentally opposed to Government operation or the subsidization of any form of domestic transportation service and takes the position that the Inland Waterways Corporation should be promptly liquidated.

Under the proposed legislation before your committee, S. 211, the Government would appropriate the additional sum of $18,000,000 for the purpose of continuing the Government-owned and operated Federal Barge Lines in direct competition with privately owned and operated water carriers on the Mississippi River and its tributaries and with privately owned and operated railroads and motor carriers.

The proponents are so eager to overcome this valid reason of opposition that they now propose to appease the private water carrier operators by curtailing the profitable part of the Federal operations and expanding those which are unprofitable. This proposal is contained in an amendment which reads as follows:

(h) Except with respect to traffic in grain and soybeans the traffic originating at or destined to points on newly improved rivers, including the Missouri River, the Corporation shall not substantially expand its bargeload traffic where privately owned barge lines and terminals are ready, willing and able to provide adequate service.

In substance it is proposed that the private operators and common carriers have the responsibility of handling only the "cream" and profitable traffic and the taxpayers, through the Government, pay the expense for handling those portions which are unprofitable.

The operation of this Government service constitutes unfair competition to the port of Philadelphia and other ports of the Nation. This subsidized transportation system is diverting traffic of the competitive interior that would otherwise move through the port of Philadelphia.

Furthermore, its operation is contrary to the spirit of the Merchant Marine Act, of 1936, which in section 605 prevents Government subsidy to vessels engaged in domestic coastwise and intercoastal trade. Prior to the war, the port of Philadelphia had a number of valuable coastwise services it does not have today. These included the Merchants and Miners Transportation Co., which served Boston, Savannah,, Jacksonville, Miami, and West Palm Beach; the Philadelphia and Norfolk Steamship Co., which served Norfolk; the Southern Steamship Co., which served Houston; and the Ericsson Line, which served Baltimore. These lines have not resumed operation because they have found it uneconomical to do so. We do not and will not expect the Federal Government to subsidize such operations. Neither should localities in any other section of the Nation expect such subsidies.

The original authorized capital stock of the Corporation in 1924 was $5,000,000. It was increased in 1928 to $15,000,000. Under the proposed legislation it would again be increased to $33,000,000. It was initiated as an experiment. Contrary to the principles of private enterprise the experiment has been continued for 25 years. Under such conditions, the taxpayers of the country should not be expected to continue to contribute funds so that the Government's competition with private citizens of the Nation may be perpetuated. Instead, your committee should be concerned only with how the Government may immediately get out of the barge business.

Therefore, we respectfully urge that the proposed bills and any similar legislation be rejected by your committee.

Senator MYERS. Thank you, Mr. Williams.

Any questions, Senator Reed?

Senator REED. No questions.

Senator MYERS. Thank you very much. I am sure your testimony will be quite helpful to the committee in arriving at a decision on this legislation.

I would like to insert in the record at this point a statement of Mr. Frederick E. Brown, American Barge Line. He desires his statement to be incorporated in the record.

(The statement referred to follows:)

STATEMENT OF FREDERICK E. BROWN, AMERICAN BARGE LINE Co.

We are opposed to S. 211 extending the Federal Barge Lines' services to the Cumberland and Tennessee Rivers for the following reasons:

1. The American Barge Line Co. owns and operates 13 towboats and 200 barges and has an invested capital and surplus of $5,345,000. The company, as a common carrier, holds a certificate of public convenience and necessity from the Interstate Commerce Commission, effective December 22, 1947, granting it rights to operate, and the company does operate on the Ohio and Mississippi Rivers between Pittsburgh and New Orleans, and on the Mississippi River north to St. Paul and Minneapolis and on the Illinois River to Chicago. The certificate also grants it rights to operate on the Cumberland and Tennessee Rivers. 2. As stated above, the American Barge Line Co. holds a certificate granting it rights to operate on the Cumberland and Tennessee Rivers. However, it has been operating on the Tennessee River continuously since 1935, and on the

Cumberland River prior to this date, offering its common-carrier service to the shipping public since the start of its service on these rivers, and has been soliciting traffic to and from these rivers since the start of its service.

3. American Barge Line Co. has handled all of the traffic that has been offered to it for movement to and from these rivers except in rare and minor instances, in which it is our belief the traffic was handled by other privately owned common carriers serving these rivers. Certain surveys show that there is a large volume of carload traffic to be handled to and from these rivers, but in spite of these surveys our inquiries for carload service have been practically negligible. Should a volume of carload traffic materialize, which can be economically transported on these rivers, we are confident that privately owned common carriers on these rivers would be glad to initiate proper rates and dependable service. For the record, we herewith submit a statement showing the tons handled by American Barge Line Co. during 1947 and 1948, which amount was approximately 19,000 tons on the Tennessee River in 1947 and approximately 34,000 tons in 1948, and on the Cumberland River approximately 35,000 tons in 1947 and approximately 26,000 tons in 1948. We feel confident that our tonnage on the Tennessee River in 1949 will double that of 1948.

4. We believe the extension of the Federal Barge Lines to these rivers has no economic justification. We feel that should they extend their services to these rivers, they would endeavor to take the traffic from us, which we, as a private carrier, pioneered and developed and are now serving.

As a privately owned common carrier, we are willing and able to extend our facilities on these rivers to accommodate any traffic that can be economically and efficiently handled thereon.

American Barge Line Co., net tons to and from points on Tennessee and Cumberland Rivers, years 1948 and 1947

Senator MYERS. I have another statement of Mr. J. M. Hood of the American Short Line Railroad Association to be inserted in the record. (The statement referred to follows:)

STATEMENT OF J. M. HOOD, PRESIDENT, AMERICAN SHORT LINE RAILROAD

ASSOCIATION

My name is J. M. Hood. I am president of the American Short Line Railroad Association, with offices at 2000 Massachusetts Avenue NW., Washington 6, D. C. The association is a voluntary, nonprofit organization of 320 common carriers by rail, operating in 45 States. During 1948 these 320 railroads operated 19,300 miles of first main track; employed more than 75,000 persons; had invested in their properties 14 billion dollars; earned for transporting persons and property more than one-half billion dollars; and paid taxes in the amount of $60,000,000.

I am appearing here in opposition to the enactment of S. 211 as proposed to be amended, by direction of these 320 railroads. When the representatives of these lines met for their 1948 annual meeting, a Federal legislative program was adopted, which, among other objectives, seeks "abolition of Inland Waterways Corporation as a Government Agency and discontinuance of barge line operations by the Federal Government."

Obviously such proposals as are now being considered by your committee are diametrically opposed to the fundamental policy of the members of this association. Basically, our people believe in equality of regulation; equality of opportunity for service for all competing forms of transportation.

It is here proposed to increase the capital of the Inland Waterways Corporation and appropriate an additional $18,000,000. There is no economical justification for the squandering of Government money, which must be supplied by taxpayers, including the carriers here represented, for intensifying and continuing an experiment which has been conducted for more than two decades with annual losses, and which has failed to show to a substantial degree that transportation can be provided by a Government barge line at a cost as low as is availble to shippers through privtely operated carriers, both on land and water.

By cost is meant the actual bill footed by the country's economy, whether it be paid in freight rates alone or in a combination of the transportation charge, plus the tax contribution, plus the loss of taxes through the removal of terminals and equipment from the classes of property subject to taxation.

Another objectionable feature is that the bill as proposed to be amended, if enacted, woudl prohibit the discontinuance of operations by the Inland Waterways of any type of service, or via any route, for a period of 5 years. While, of course, Congress at its discretion can at any time further amend the act, it would seem highly objectionable to require unproztable and little used operations to continue for a period as lengthy as 5 years.

The whole theory of Government operation of any type of transportation is so antagonistic to the American way of doing things and inimicable to the continued advancement of the general welfare, that it is the hope of these 320 common carriers by rail that the Congress take no action with respect to this bill.

Senator MYERS. Mr. J. L. Stanton.

STATEMENT OF J. L. STANTON, DIRECTOR, EXPORT AND IMPORT BUREAU, BALTIMORE ASSOCIATION OF COMMERCE

Mr. STANTON. My name is Joseph L. Stanton. I am director of the export and import bureau of the Association of Commerce in Baltimore. I have a prepared statement here, Senator Myers, which I would like to have introduced.

Senator MYERS. Give it to the clerk, and he will distribute it.
You may proceed, Mr. Stanton.

Mr. STANTON. Thank you, Mr. Chairman. I will not read this statement. I want to enlarge on a few points therein.

Senator MYERS. Suppose, then, we incorporate the entire statement in the record at this point.

(The statement referred to follows:)

STATEMENT OF JOSEPH L. STANTON, DIRECTOR, EXPORT AND IMPORT BUREAU BALTIMORE ASSOCIATION OF COMMERCE

Baltimore, second tonnage port of the United States, has a vital interest in the further capitalization of the Federal Barge Lines operating on the Mississippi River.

The basic objection of the port of Baltimore to the present pending legislation is based on our traditional position of opposition to publicly subsidized operations competing in the same field with private operations. A second and equally important reason for opposing the further capitalization of the Federal Barge Lines is based on the fact that this water carrier, operating at a loss, is in direct competition with the rail routes serving the port of Baltimore, the only means of inland transportation which Baltimore enjoys.

A great portion of the millions of tons of freight passing through the port of Baltimore either originates or is destined to the inland areas of the Midwest. While we naturally accept and do our best to meet the competition for those commodities destined for export that originate in the Midwest, we realize that we can successfully compete only as long as the conditions facing our carriers are the same as the conditions facing the carriers serving the Gulf ports. In other words, competition between Gulf ports and the Atlantic ports wherein a federally subsidized water carrier serves the Gulf and does not serve the eastern ports obviously presents a situation that is extremely difficult to meet.

Such a competitive problem affecting the commerce of the port of Baltimore not only jeopardizes the welfare of the 40,000 persons whose livelihood is derived from port operations, but the $200,000,000 which the port operations annually contribute to the over-all economy of the city of Baltimore.

The trunk line railroads connecting the agricultural and industrial Midwest with Baltimore and the other Atlantic ports not only are faced with the necessity of carrying on efficient paying operations, but are further handicapped by the necessity of an annual outlay of many millions of dollars in local, State, and Federal taxes. It is rather ironical that a portion of the taxes paid by these railroads serving the Atlantic ports goes toward the operating expense and deficits incurred by the rival Federal Barge Lines which is in direct competition with them for the carriage of export and import commodities. In other words, Baltimore's railroads are helping to pay for their own competitive destruction. The sum of $18,000,000 which is being requested in this legislatioon is comparatively small in terms of Federal spending. However, with the additional emphasis that the Congress is now placing on economy at the Federal level, the elimination of this proposed appropriation would result in a substantial cut in Federal spending.

It is not the purpose of this witness to attempt to go into a long statistical analysis of the operations of the Federal Barge Lines since its inauguration in 1924 to prove that this experiment in inland waterways transportation has been expensive to the taxpayers and is subject to elimination without damaging effects on the transportation system of our country.

It is our belief that the very careful scrutiny given to the entire Federal Barge Lines' operations by the Commission on Organization of the Executive Branch of the Government (the Hoover Commission) has amply proven the case against the Federal Barge Lines. The adoption of the Hoover Commission recommendation that the Federal Barge Lines be discontinued as a "ublic operation and turned over to private business is unquestionably sound both economically and from a transportation viewpoint.

The committee is urged to follow these recommendations and thereby eliminate a drain on the taxpayers of the country, restore the competitive situation for the carriage of inland freight to our seaports, and remove the Federal Government from this field of private business.

We have noticed that the proponents of additional capitalization for the Federal Barge Lines are placing great emphasis on the use and potential use by the small shipper for less-than-bargeload lots. In connection with this, we should like the committee to consider the fact that the carriage of commodities by barge is economically unsuited to small shipments. Of all tonnage handled on United States waterways in 1934, 81⁄2 percent constituted package freight of less-thanbargeload lots. By 1946 this portion of package freight had decreased to 4% percent. It has been repeatedly demonstrated that carloading companies (typical taxpaying American business enterprises) can handle package freight more economically than a federally subsidized carrier operating in a field adapted to bulk carriage. Privately operated barge lines serving roughly the same areas as the Federal lines and faced with the reality of carrying on an economical operation, are convinced that package freight is not suited to barge haul and therefore have concentrated on the movement of bulk commodities.

This committee is well aware of the highly competitive situation for export and import freight now existing between the Gulf ports and the Atlantic seaboard ports. This competitive situation is such that any factor that allows a freight saving to the Gulf and does not provide a similar freight reduction to the Atlantic ports necessarily has a strong influence on the movement of export and import freight.

Baltimore is especially concerned about this situation which permits a freight rate subsidized by public money to be established at a lower level than can be offered by the railroads to the port of Baltimore. The interest of Baltimore is probably greater than that of the other Atlantic seaports for the very sound