population and provide the jobs for the people that are needed for a normal, healthy, economic growth. It is because of our freight rates that both the raw materials and the manufactured products in the interior are restricted and curtailed as to markets, both domestic and foreign, and it is because of high freight rates that agricultural and industrial producers have had to take lower prices, which has in turn had a depressing effect on wages and profits and general prosperity.

And high freight rates have meant that the consumers have had to pay higher prices, and thus the cost of living has been increased and the standard of living has been reduced.

RETARDED VOLUME OF COMMERCE RESULT OF HIGH RATES

The retarded volume of commerce which the high freight rates of the interior have brought about is the principal cause, in our opinion, for the lack of prosperity of the railroads and the other transportation agencies as well.

We are a shippers' organization and wish to present to you to the best of our ability from a shipper's point of view what we think is needed and what is not needed in transportation legislation at this time.

SOUND, ECONOMICAL TRANSPORTATION OF ALL KINDS NEEDED

We want sound and economical transportation of all kinds at the lowest possible cost to the shipper and consumer and at a profit to the carrier. We are for rail, highway, water, pipe-line, and air transportation, if you please. We are not interested in favoring one above the other, because the public needs them all.

WATER TRANSPORTATION

Our organization has been active in promoting inland waterway development on the Mississippi, Ohio, Illinois, Missouri, and other interior navigable waters, because water transportation is inherently cheaper; it is the lack of low-cost water transportation which has been the principal handicap of the interior as compared with the coastal and Great Lakes areas. Now, water transportation has its disadvantages. It is slow. It is less flexible than other forms. It is limited as to the channels which can be used, but the combination or coordination, if you please, of water transportation on our inland waterways with rail and highway and pipe-line transportation can serve the people of the whole interior of the United States, not only in the Mississippi Valley Basin but in the intermountain country, and give all that area a lowering of freight rates and bring it nearer to an economic equality and thus promote the development of the interior.

DEVELOPMENT OF ALL MODES OF TRANSPORTATION FAVORED

We favor the development of rail, highway, and pipe-line transportation to the fullest extent that they can serve the public interest and we favor the removal of all injurious and unnecessary and expensive regulation and restrictions, and the elimination of wasteful and uneconomical practices from all transportation agencies, including the railroads.

Mr. BULWINKLE. Mr. Chairman

The CHAIRMAN. Mr. Bulwinkle.

Mr. BULWINKLE. Does the gentleman wish to proceed and make his statement without being interrupted?

Mr. CHILDE. In the interest of time, I perhaps could go more rapidly without interruptions, but if the gentlemen wish to ask me questions to clear up any point that I do not make clear, I will be glad to answer them.

Mr. BULWINKLE. All right, I wish right there that you would make one point clear, Mr. Childe.

Mr. CHILDE. Yes, sir.

ELIMINATION OF UNECONOMICAL PRACTICES

Mr. BULWINKLE. And that is this: You said you favored the elimination of uneconomical practices in the transportation systems, did you not?

Mr. CHILDE. Yes, sir.

Mr. BULWINKLE. Well now, name those uneconomical practices, so far as the railroads are concerned.

Mr. CHILDE. I have in mind first the unnecessary and wasteful competitive practices which have arisen. I have in mind the operation of obsolete or obsolescent facilities of the railroads; I have in mind such things as make-work wage bills or wage practices-in short the many things which have been pointed out to you and to the country generally by the investigations in the past few years of the Coordinator of Transportation.

Mr. BULWINKLE. Well, what would you suggest the railroads do? Mr. CHILDE. Well, I intended to cover that in my statement.

Mr. BULWINKLE. All right, sir.

Mr. CHILDE. And perhaps the best way for me to answer you would be to proceed.

Mr. BULWINKLE. All right.

Mr. CHILDE. But if I do not cover it, I hope you will call my attention to the omissions.

Mr. BULWINKLE. All right.

OPPOSED TO REGULATIONS AND RESTRICTIONS WHICH INCREASE RATES

Mr. CHILDE. We are opposed to the regulations and restrictions on any transportation agency which would have the effect of raising transportation costs or interfering with needed transportation service, because the public has to pay for those higher costs.

I would like to read the resolutions which were adopted at the last annual meeting of the Mississippi Valley Association at St. Louis, November 1938, pertaining to the subject we have before us here. They are short :

We favor adequate railway transportation as the largest unit in the necessary transportation system for the interior, and we recognize the additional costs imposed upon the railroads must be added to the freight bill to be paid by the producer and consumer.

We are therefore opposed to any bills which would unnecessarily increase the cost of railroad operation.

We advocate the development of all forms of transportation, whether railways, waterways, highways, airways, or pipe lines. We believe that each form of transportation should be permitted to so develop as to be of the greatest service to the producing and consuming public at rates commensurate with the cost of service performed by each.

In order that agriculture, commerce, and industry located inland from river ports may enjoy the economies of low-cost water service, we urge the extension of joint rail, water, and truck rates.

The greatest expedition and economy is desirable in the handling and disposition of proceedings involving reorganization of railroads under existing bankruptcy laws, but the Mississippi Valley Association refrains from urging the enactment of legislation requiring a general scaling down of railroad stocks and bonds in such reorganizations.

Legislation should be enacted permitting the rail lines to work out a program of consolidations, joint operation of facilities, and pooling of traffic without iterference by the Interstate Commerce Commission unless in the judgment of the Commission the public interest is thereby adversely affected.

The railroads should be relieved of their land-grant obligations.

A permanent labor policy should be established which shall call for the rendering of efficient service at fair wages, with due regard to general wage levels. Existing legislation should be so broadened as to permit the interests of the shipping public to be presented and given consideration in proceedings involving railroad wage controversies.

The Mississippi Valley Association reaffirms its opposition to regulation of port-to-port rates, operations, and terminal services of our water carriers and the charging of tolls upon waterway craft or commerce. These waterways are free public highways, where any person who owns a boat may operate. Competition has and will regulate the rates. Therefore Federal regulation of rates on inland waterways is not needed, not wanted, and would be contrary to the best interests of the public.

The Mississippi Valley Association reaffirms and continues its opposition to the repeal of the long-and-short-haul provisions of the Interstate Commerce Act. The Mississippi Valley Association is opposed to revision of the rate-making rule in section 15a of the Interstate Commerce Act as proposed by the railroads, but is not opposed to the complete repeal of section 15a.

The present provisions of the Inland Waterways Corporation Act, prohibiting transfer of the Federal Barge Lines to private operation until fulfillment of conditions specified in the act, should be retained and Government operation of the Federal Barge Lines should be continued until these conditions are fully met. The Mississippi Valley Association is opposed to amendment or repeal of the provisions of the Panama Canal Act, forbidding ownership or operation of a water carrier by a railroad which parallels or competes with such water carrier or water route.

The railroads generally should not be relieved of their existing obligations to stand the cost of altering railroad bridges and approaches which obstruct or interfere with navigation.

The attention of railroads, Members of Congress, and the public generally should be called to the desirability of establishing by legislation or otherwise a policy of allowing the railroads liberal earnings during times of prosperity to be retained and used as reserves to sustain the properties and services of the railroads in times of depression.

Mr. WADSWORTH. May I ask a question?
The CHAIRMAN. Mr. Wadsworth.

COST OF CHANGING BRIDGES

Mr. WADSWORTH. Why do you believe that the railroads should be held to that obligation of standing the cost of changing a bridge in the event that traffic makes that change necessary and for which the railroad is not at all responsible?

Mr. CHILDE. The present practice as we understand it, Mr. Wadsworth, is that where a change is made which could not have been foreseen by the railroads and for which they are not responsible, it is the practice now of the War Department to recommend that the cost be borne by the Government. Where, however, the railroads have knowingly, or should be charged with knowingly, obstructed navigable waters by bridges which interfere

Mr. WADSWORTH. But, it was done in the first instance with the permission of the Government.

Mr. CHILDE. Yes, perhaps; but I know of cases

Mr. WADSWORTH. Is it not more than "perhaps?"

Mr. CHILDE. I say "yes," perhaps, but I know of cases where the railroads, in my opinion, should be charged with knowledge that their bridges were obstructions to navigation.

Mr. WADSWORTH. After all those bridges could not have been built without an act of Congress authorizing them and those acts are submitted to the War Department which has jurisdiction and are approved or disapproved by the Department.

Mr. CHILDE. Yes, Congressman; but the fact remains that each individual case stands on its own merits and where a railroad has obstructed navigation by a bridge and where the waterway crossed is clearly a navigable stream and an artery of commerce that should have been kept clear, there is a case where the railroads should be charged at least with part or perhaps all of the cost of alterations.

Now, our opinion is simply this, that instead of enacting legislation which would extend blanket relief, each case should be considered on its merits as it is now by the War Department. That in substance is all there is to our position.

Mr. WADSWORTH. What interest has the Mississippi Valley Association in whether the railroads pay or do not pay?

Mr. CHILDE. It is simply a matter of equity and justice, as we see it. It is not a large matter one way or the other. It is something like relieving them of their land-grant obligations. It is not a large matter in the aggregate, but when the equities are such that the railroads should have relief, we think they should have relief and have so recommended.

Mr. MARTIN. Mr. Chairman

Th CHAIRMAN. Mr. Martin.

LOSSES ON THE FEDERAL BARGE LINE ON INLAND WATERWAYS TO THE GOVERNMENT

Mr. MARTIN. How much is the Government in the red on the Mississippi Valley inland waterways?

Mr. CHILDE. I do not know what you mean by that.

Mr. MARTIN. What is the deficit on the operations of the Inland Waterways Corporation? I recall in the hearings before the subcommittee on the Pettengill bill, and that has been 2 years ago, that there was a very large deficit, and that the inland waterways were operated at a continuing loss to the Government.

Mr. CHILDE. You mean the Federal Barge Line, Mr. Martin?
Mr. MARTIN. Yes, sir.

Mr. CHILDE. The Federal Barge Line is not in the red at the present time and has not been for some years. Last year it made a greater profit than it ever did in its history, something like $1,000,000, and while you may hear disputes as to its methods of bookkeeping, there is no question about the profit.

Mr. MARTIN. It showed a bookkeeping profit?

Mr. CHILDE. Yes; and an actual profit, and I recall reading in a recent issue of the Traffic World an article by former Commissioner Woodlock, of the Interstate Commerce Commission, now a Wall Street financial writer, protesting because the Federal Barge Line had accumulated a surplus of some millions of dollars, and making the point that the Federal Barge Line has no right to hold out all those millions from its profits when it does not need them and it is public money.

The fact is that the barge line has been accumulating a surplus and has a substantial surplus now over its capital.

Mr. MARTIN. Mr. Chairman, will General Ashburn testify?
The CHAIRMAN. Yes.

Mr. MARTIN. I think that it is advisable for the committee to go into that with him. I know that the figures were given. I cannot remember them now but I know that the figures were given as to the Government losses on operations.

The CHAIRMAN. That matter will be fully explained.
Mr. MARTIN. I beg your pardon?

The CHAIRMAN. General Ashburn will explain that fully from his standpoint.

Mr. CHILDE. I hope that you will go into that, with General Ashburn. He is better qualified to talk about it than anyone else. It is a fact, to my knowledge, that the Federal Barge Line has been made a sort of a whipping boy in these controversies and held up as a horrible example of Government subsidized operations, while quite the contrary is the fact.

SUBSIDIES OF WATERWAYS

Mr. MARTIN. That is pretty much true with all forms of water transportation. We would not have any water transportation if the Government had not subsidized it.

Mr. CHILDE. Well, if you mean if the Government had not constructed the channels and harbors, that would be true.

Mr. MARTIN. And subsidized them by; paying as high as $5,000 a pound for the handling of mail, and things like that.

My understanding is that water transportation has always been subsidized in one way or another.

Mr. CHILDE. If you define your term as meaning that the Government has constructed the harbors and the channels, and the lighthouses, and so forth, that is true; but the word "subsidized," you know, is used as a kind of a bad word, and it is necessary to define it or there is liable to be misunderstanding as to what its significance is. Mr. MARTIN. We have got a lot of other words, too, that ought to be redefined.

Mr. CHILDE. But the fact is, Congressman, and I shall try to bring it out here, that water transportation is inherently the cheapest form of transportation. It is cheap partly because operating costs are lower on the water than they are on any other channel of commerce and it is true in part because the Government has provided the channels, the highways, on which water commerce moves; but that, of course, is equally true of water commerce on the oceans, the Great Lakes, or the rivers.