We regard this provision with definite distrust and alarm for it gives to a Government agency the right to fix our minimum rates so close to contemporaneous competitive rates of railroads and trucks as to divert our business to other agencies. When we presently discern such a slippage we lower our rates. Obviously such lowered rates are remunerative or we would let the business go.

Taken in connection with the direction given to the proposed Transportation Board to determine the relative economy and fitness of water carriers for transportation service and to discourage that which it finds undesirable (note Par. 5 (a), sec. 50, p. 157), the minimum rate-making power becomes a perfect weapon for such discouragement. As we visualize this law the word "discourage" means the power to "destroy." Why should Congress direct its agent to "discourage" any form of carriage?

I earnestly maintain that the minimum rate-making power is not necessary to the protection of the revenues of inland water carriers for hire, is a definite discouragement to the investment of capital in such ventures, is neither required nor desirable in the maintenance of low-cost transportation on inland waterways, which is certainly desired and desirable in the movement of commerce, and no such restrictions should be enacted into law.

The whole scheme of certificates and permits for so-called common and contract carriers is a recognized weapon by which water transportation can be restricted; is burdensome, expensive, and destructive of normal operations on inland waterways.

The provisions of section 43 (4), p. 138, authorizing the Commission to attach "conditions and limitations" to a certificate of a common carrier, not only at the time of issuance but "from time to time thereafter," and to revoke in whole or in part such certificates for alleged infractions of the law or of the Commission's regulations will virtually dry up any opportunity for the public sale of what would otherwise be good marketable securities. Under the securities and exchange law the mere display in an advertisement of securities of the tenure of the water lines' operations under such a certificate would of itself discourage investment. It invalidates and makes worthless the charter of the State to do business. It subjects water lines to cruel and unusual punishment. A railroad may be fined for disobedience, but no Federal agency can order it to cease operations.

Under this law the Commission can both fine the water carrier and order its temporary or permanent discontinuance, certainly a remarkable way of putting into operation the declaration of policy contained in section 1.

Furthermore, it would absolutely bar a water line from exercising its constitutional right of appeal to the Federal courts against an order of the Commission, for such an appeal would necessarily involve disobedience, which is immediately punishable by suspension or revocation of the line's certificate to operate.

The power given in this paragraph permitting the Commission to attach "limitations as to extension of the route," and other provisions requiring that no such extension can be made or any new port served without a prior public hearing is definitely restrictive and serves no public purpose that we can discern. Every such application will be opposed by the organized railroads and will be attended with the burdensome expense heretofore described. Once this certificating scheme becomes law, ordinary initiative is "gone with the wind." The restraining hand of five men replaces the will to accomplish now exercised by hundreds.

No such scheme of limitations and restrictions through a system of certificates and permits has been found necessary in the regulation of coastwise and intracoastal commerce under the Intercoastal Act of 1933. Its introduction here warrants, in my judgment, a much stronger justification than mere railroad demand.

The provision of section 45 prohibiting any common carrier to act in any other capacity, except by permission of the Commission, is unsound, destructive to revenues, and offers no discernible public benefit. It seems to contemplate the necessity of a system of "channeling." This same idea was introduced by Commissioner Eastman in his water carrier bill of 1935, which was discussed but not adopted by the Congress.

This prohibition strikes at the very fundamentals of successful operation of carriers for hire on inland waterways. In the ordinary course of business every common carrier of any importance operates over the same routes and in the same tows under special contracts as a tower for hire and frequently as charterer. What public need suggests the prohibition of or interferences with these contracts is hard to conceive. It has as much logic as would be involved in a law prohibiting a railroad corporation from running without special prior permission both freight and passenger trains over the same lines or employing in its trains cars or locomotives which it does not own.

The whole structure of the regulatory sections of this act, its attempt to apply railroad regulations to an agency fundamentally different in both structure and operation and the obvious lack of any clear conception of the meaning, in waterway operations, of the terms which are used, causes us to urgently request of this committee that a more careful study of inland-water transportation be undertaken before the pains of such regulation are rudely thrust upon an industry which has been developing in response to obvious public need and against which no public criticism has been offered.

TOLLS

Now, the balance has to do with tolls, and I particularly request the committee to read that, because I know from my own experience that the discussions we have had here concerning tolls is based upon a conception which is not warranted, because ever since the beginning of the century Congress has had its own agency which has reviewed these improvements in a very, very careful way, and the construction under which the Board of Engineers for Rivers and Harbors authorizes and recommends the improvement of rivers is the very fact that after consideration they find that the public savings of transportation which will occur on these improved streams is more than sufficient, and when I speak of the public savings, I use the formula that they use, the difference between present railroad costs and the common costs at which transportation will be carried on upon the improved streams; that these public savings are sufficient to amortize the entire investment as

if it were bonds, and to pay the interest, the maintenance, and the operation charges.

I have appeared before the Board of Engineers in the last 10 years in a great many large projects, which have been completed and some of which are not. I have never known them to vary from the requirement that those things be shown before they authorize an improvement, except one or two which were recommended on the grounds of national defense.

So we are getting, according to the law which is now in effect and. which has been in effect for this entire century, the public of the United States is getting a return from the investment of the Government in improvement in waterways.

Why, then, try to secure a double return through tolls which have no other purpose and will have no other effect than to utterly dry up the traffic on these streams, and after our improvements are all finished these streams will be left in the same condition of disuse as they were before they were navigable, because no such scheme of tolls as is here laid out could possibly be laid against the traffic of this country on its inland waterways without complete destruction of all of the savings of water transportation. That is the reason that I oppose it.

LENGTH OF TIME REQUIRED TO GET DECISIONS FROM COMMISSION

The CHAIRMAN. I would like to ask one question. How long was: that rate case of yours pending before you got a decision; or have you had a decision?

Mr. BRENT. We have not had a decision.

The CHAIRMAN. And when was the case instituted ?

Mr. BRENT. It was instituted in April of 1938. We have not yet gotten a decision and I may also explain that under the pleadings, and under the rules of practice in asking for a certificate of convenience, the railroad interests have so narrowed the pleadings that one cannot talk about the rates in any real sense that are proposed to be made. Therefore if eventually we get a satisfactory decision and this man is permitted to operate in connection with my line, I must then file a joint tariff which runs the gauntlet of suspension for another 7 months. So you can see the discouragement. As manager of the Federal Barge Lines for 9 years, I did my utmost to build up joint rates with the railroads. Now, being barred as an independent line from having any relation with the railroads, I am trying to build up relations with the trucks. It is not an encouraging situation.

The CHAIRMAN. How many constituted this joint board that held the hearings?

Mr. BRENT. One representative of the Railroad Commission of Florida and one of the Railroad Commission of Georgia. The CHAIRMAN. Have they agreed on their report?

Mr. BRENT. They agreed on their report. They recommended that it be dismissed, saying that it would increase the competition against the merchants of Jacksonville and Savannah, although I may point out the fact that no representative and no merchant of either Jacksonville or Savannah was there opposing the application.

The CHAIRMAN. Well, we thank you, Mr. Brent. Mr. BRENT. All right. I will file the whole statement. (The balance of the statement above referred to is as follows:)

The provisions of section calling for the introduction of a system of tolls on inland waterways, the attempt to distinguish between so-called "natural" and "artificial" waterways, the application of tolls to waterways classed as artificial, leaving free from tolls all other waterways and harbors, not only reverses the congressional policy of 100 years, but introduces a most undesirable possibility for unjust discrimination between sections and routes of transportation. It would seem that the framers of this proposed legislation rest their suggestions on the assumption that the people of the United States are getting no present return from their Federal investment in river and harbor improvements. This is a wholly new and strange conception.

Around the beginning of this century Congress, by legislative act, created the Board of Engineers for Rivers and Harbors and designated this Board as its agent to study and pass upon the desirability, in the public interest, of improvements of this character, upon which Congress has since authorized the expenditure of large sums of money. The conception under which these improvements have heretofore been recommended by the Board of Engineers has been that the public savings derived from the low-cost transportation performed on these improved lakes, rivers, canals, and other waterways, constitutes full repayment to the Federal Government for these expenditures. It is on this conception that all these projects have been considered since the creation of the Board.

I have personally presented numerous studies of proposed inland waterway improvements before the Board for its consideration. Their requirement is that it shall be shown that over the improved stream or canal under consideration there will move in the natural direction of commerce a tonnage of given proportions at a demonstrated public saving, which by their designation contemplates the difference between the existing cost of rail transportation and the cost at which the traffic can be handled by water. These savings, in the aggregate they require to be sufficient to amortize the investment over a period of years, pay the interest, as if the improvements were made through the sale of bonds, and to meet the entire cost of maintenance and operation of the improvements. It must also be demonstrated that the estimated cost of transporting this tonnage by water over the improved stream will be sufficient to adequately support a private enterprise engaging in such water transportation. Without these facts can be clearly shown the Board of Engineers for Rivers and Harbors will not give its approval to any such project, and few have been authorized since the creation of this Board which have not had its approval, except those which have been proposed purely for national defense.

Any study of the tendency of freight rates in the vicinity of completed inland waterways improvements will show the working out of this theory in practice and will demonstrate fairly that the public is receiving payment for these expenditures in the reduced cost of transportation.

Now this bill proposes to reverse all of this. The Board of Engineers for Rivers and Harbors is to be relieved of its duties and the proposed transportation board is to take over the work under instructions which will inevitably make further waterway improvements almost impossible to secure. And, in addition to the public savings which the completed waterways are now affording, another complete scheme of repayment is to be attempted to be exacted from the traffic carried on these waterways, restricting or destroying these public savings. It completely reverses the prior conception, because under any such scheme as here outlined water transportation cannot help but be so burdened by tolls as to wipe out any possibility of public savings. It is calculated to return every completed stream to the condition of disuse prevailing in its unnavigable state. Beside the disposition to apply these tolls only to improved streams, leaving the Great Lakes, and the harbors and channels improved for deep-sea ships free of tolls certainly does not show any sincere desire to recoup the Treasury for the expenditures already made, because substantially half of the entire expenditure has been made on the harbors and connecting channels of the Great Lakes, and the deep-sea harbors, all of which would be exempted from tolls.

The inevitable discrimination against sections is clearly apparent. For example, one of the principal desires of the people of the Northwest for the improvement of the upper Mississippi River was to have a channel which would permit grain to move from Minneapolis, which is the greatest inland center of grain storage, to New Orleans for export in competition with the route from Duluth down the Lakes. The rates charged by the Federal Barge Lines from Minneapolis to New Orleans have been based with that end in view. Now that the improvements are about completed and the grain is beginning to move there is to be a toll placed upon the traffic which moves the full length of the Mississippi-a toll which will wipe out the savings of water transportation, while the route from Duluth down to New York or to Montreal will remain toll free. In our judgment such a scheme will be coldly received in the graingrowing States.

Gasoline can be moved from Houston or Port Arthur, Tex., in the tankers of the great oil companies to all the harbors of the Atlantic coast without the imposition of a cent of toll, while the business of a large number of independent oil companies developing throughout the Mississippi and Ohio Valleys will be taxed to the extent of a prohibitive toll every foot of the way from Houston to Pittsburgh. These large inland areas will be seriously handicapped.

It seems to me that it would require much explanation to make such proposed legislation either fair, logical, or in the least palatable to the public which has long plead for the completion of these streams in order that they might get the promised savings which they are now beginning to experience.

In our judgment this whole provision is inherently destructive to low-cost transportation and definitely opposed to the best interests of the public.

I desire earnestly to request the committee to completely eliminate Title IVDiscontinuance of Federal Barge Operations. These operations have been very clearly explained to the committee by General Ashburn. The operation from its inception and each addition to it which has since been made has been in response to public need. The growth of the business is the most convincing evidence of the value which the public attaches to the operations of the line.

Throughout these hearings I have heard no one, other than the railroads, ask for the extinction of this line. The restrictions as to the sale or lease of the line as a going concern, provided in the Shipstead-Dennison Act of 1928, have not been met. I can offer no objection to a review of the conditions at this time, for in my knowledge of the situation it will be found that sale or lease of the line at this time is not possible and its wanton destruction as desired by the railroads would create throughout the central valleys a bewilderment and resentment which is not in my judgment either desirable or necessary to contemplate. The merchants and business houses of hundreds of cities and towns so remote from the river as to be given no consideration in a cursory examination of the project would be seriously affected in their mercantile transactions, which under present conditions are carried on in the faith of the continuation of the savings which the joint barge-rail rates of the Federal Barge Line provide.

Making a more specific application to the city of New Orleans, the Federal Barge Lines have been responsible for a gradual reduction in the whole freight rate structure of the lower Mississippi Valley which has since 1918 brought through the port a substantial tonnage which has increased year by year. In the city of New Orleans the Federal Barge Lines regularly employ over 500 people. The line's pay rolls, purchases of supplies and equipment and payment for repairs amounts to over a $1,000,000 a year to the citizens of New Orleans. The rental paid for their general office building is a part of the income of the Tulane-Newcombe educational fund. The destruction of the line would be as serious to the city of New Orleans as the complete elimination of one of its major railroad lines. Some better reason for such wanton destruction should, in our judgment, be shown than has thus far been offered.

The Federal Barge Lines operate both as a competitor and as connection of the Coast Transportation Co. In both these relations I have found their policies eminently fair and constructive.

The CHAIRMAN. The committee will stand adjourned until 10 o'clock tomorrow morning.

(Thereupon, at 1:03 p. m., the committee adjourned to meet at 10 a. m., the following morning, Wednesday, March 22, 1939.)

130981-39-pt. 4-25