going to try to meet as you have intimated in your question there. We will give him some money where if he is hard working, ambitious, honest and has a touch of genius to make his business a success, he can be financed.

PLANS FOR A "VENTURE CAPITAL" BANK

There is a man by the name of Dr. Caplin who has a plan for a general bank. The idea is that this bank can supply venture capital-I am talking now about that secondary, that I mentioned a moment ago. That has been submitted to my business group and we are investigating it now. There has been an indication by some of the insurance companies that they would buy stock in such an organization, which would permit them to get into this venture capital field. In some of the States they are trying it out on their own hook. The State of Maine has set up a company to do this very thing.

I was out in Chicago last week speaking with a group of bankers out there dealing with this question and listened to some of the speeches they had to make. Many of them think they are furnishing in the main financing for any business that really has a prospect of success. There is a certain element of truth in that, although there are parts of the United States where they can use some such plan as the Vincent plan for small business. There is no doubt about that. On the west coast small business is taken care of better than anywhere else, and also in Arizona. The Pennsylvania Co., as well as the Chase National Bank, have new departments for making loans to small business. It is elaborately staffed and apparently seriously undertaken.

I had a letter from the president of the Pennsylvania Co. last week. He said the response after indicating they are available was extraordinary. It was very interesting and very encouraging.

Mr. PRESTON. That is an interesting report, Mr. Secretary. I am glad to know you are so closely in touch with that problem.

In connection with the Reconstruction Finance Corporation, when I spoke of liberalizing its rules and regulations for making loans, the thing I really had in mind is the fact that they will lend generally speaking only about 60 percent of the value of the collateral offered by the borrower. Now a loan that is just two-thirds enough will not do a man any good when he is in financial distress. That has been the observation I have made, which seems to prove they do not go quite far enough and that they are just a little too tight in making their commitments. Even a 70-30 proposition would make a vast difference and frequently save a man, where a 60-40 proposition would not. I have detected no liberalization whatsoever in their lending policy. I think they undoubtedly became small during the lush years and they cannot seem to appreciate the fact that our tax system is draining off all of that reserve and a man just cannot keep on hand any money any more unless he wants to pay a terrific penalty.

Secretary SAWYER. Most of them do not keep enough on hand to indulge in a large program of expansion. That used to come from the sale of stocks you know. That source has not dried up completely but it is not what it used to be.

Mr. PRESTON. Thank you, Mr. Secretary. That is all, Mr. Chair

man.

Mr. ROONEY. Mr. Stefan

COMMENDATION OF SECRETARY SAWYER'S TRIPS

Mr. STEFAN. I want to join with my colleague from Georgia, Mr. Preston, in commending you, Mr. Secretary, for going out in the country and seeing what is going on. People seemed to have been very happy to have had you come and talk to them and listen to their problems.

PROBLEM OF A FEDERAL POLICY ON TRANSPORTATION

Your report is probably one of the best we have received for a long while from a chief of a large department such as yours. I am interested in one of your statements on page 6 of your prepared statement, that you have reviewed the major programs and objectives for the immediate future; the first one being the Federal transportation policy. This matter has been very close to my heart for a long, long while.

IMPORTANCE OF TRANSPORTATION AS A COST FACTOR

You know, when the price of eggs was around 18 cents in Nebraska eggs were selling for 69, 79, 89 cents here in the East. I always felt that if we could solve our transportation and distribution problem, we could solve much of our economic ills. I am glad you have made that particular program your No. 1 job for the future. You indicate that you have recently sent to the President the suggestion for a unified and coordinated Federal program for transportation. You also state that the study has made clear to you that immediate attention needs to be given to the examination and resolution of important issues involved in the Federal Government's activities of promoting and regulating transportation. In another statement you say the Government spends annually more than $1,800,000,000 for various purposes, directly involving transportation.

When we had the agricultural bill before us, several Members of Congress from the Middle West told Members from industrial sections that if a farmer in Nebraska gave away everything he raised to the consumers, in New York and other places, the consumer would still pay perhaps 60 percent or more for his food that comes from the farm. So this is a very important item. When I was a member of a committee known as the Congressional Air Policy Committee, with which you are familiar, we had before us many transportation experts. After listening to them we endeavored to put in the recommendations among the policies and recommendations of the Board-some recommendation that the Government set up a separate office of transportation.

BILL TO SET UP A DEPARTMENT OF TRANSPORTATION

At that time I talked to some of the leaders in the present administration, both downtown and here on the Hill, and they were interested

in this idea. Some of them favorably and some of them in a sort of exploratory mind. To get some exploration on it, I introduced a bill to set up a transportation branch of Government, to tie in all of our transportation problems. I handed you a copy of that bill. I introduced that bill a couple of years ago and reintroduced it this year. Would you care to comment on it at all?

Secretary SAWYER. Do you mean on the bill?

Mr. STEFAN. Yes.

Secretary SAWYER. I have not had a chance to read the bill, but I know generally the objective.

Mr. STEFAN. It is generally known what it is. It has been discussed a great deal.

NEED FOR UNIFICATION OF FEDERAL ACTIVITIES CONCERNED WITH
TRANSPORTATION

Secretary SAWYER. In my report to the President on this comment on the Hoover Commission recommendation, we said we did not favor a separate department, which I believe is suggested in your bill, but we did feel that it was highly desirable to bring to one point the transportation activities of the Government. As you probably know, in the report which you referred to which I made on the 1st of December dealing with these issues, I suggested that a prime objective should be to bring to one point in the Government all the promotional activities dealing with transportation. I did not suggest that the regulatory activities be put in one spot. That report has gone to the President. He has asked for comment from the affected agencies, and I assume he will ask for comments from the affected business interests, and eventually I imagine something will be done about it. Mr. STEFAN. Mr. Secretary, if you are going to unify transporation as you suggest here, how are you going to unify it without setting up a separate branch of transportation?

Secretary SAWYER. I think you will have to, but you suggested a separate department.

Mr. STEFAN. There is not much difference in opinion there; is there?

Secretary SAWYER. No; I think on principle we are in agreement. It should go at one spot. It should coordinate aviation, railroad, trucks, sea lines, inland waterways, and so forth.

Mr. STEFAN. We are not very wide apart then; are we?
Secretary SAWYER. On that one theory we are not apart at all.

LOCATION OF UNIFIED ORGANIZATION

Mr. STEFAN. Where would that department go?

Secretary SAWYER. I do not know. The Hoover Commission suggested it go to Commerce. In my letter to the President I made no recommendation as to where it would go except that it be put in one place in the Government.

Mr. STEFAN. Naturally, I am pleased that you feel that our objectives are almost the same but that we only differ in the mechanics of it. I feel perhaps the bill is too simple because of some opposition to it, but I cannot figure out how you are going to unify it unless you set up a special branch of some kind for transportation.

Secretary SAWYER. I am one of those who believe that wherever a function can be performed by an existing agency it is a mistake to create a new one. To me, at least, that is pretty sound.

Now, for that reason, it does seem that somewhere within the present framework of government it should be possible to set up such an agency without creating a wholly new department.

Mr. STEFAN. You and I do not agree on that, of course, because we would have to change a lot of laws and all that business. However, the Hoover Commission did not recommend a separate bureau of transportation.

Secretary SAWYER, The Brookings Institution did, but the Hoover Commission did not.

Mr. STEFAN. Neither did my own Aviation Policy Board.

INVESTIGATION OF TRANSPORTATION COSTS

Secretary SAWYER. You mentioned that, even if the farmer gave his products away in the Middle West, the cost of his products in the East would still be high.

One of the things we are doing in the Department is making an investigation of distribution costs. There is a great deal of discussion about that subject, and that is one of the things the Department of Commerce is doing right now.

Mr. STEFAN. I am glad to hear that because it is a problem that has to be solved if we are going to solve our economic ills in the United States.

Secretary SAWYER. That is certainly a problem that must be investigated. One of the reasons that distribution costs are high is because people are getting a great deal more than they got before in the way of services and so forth, but the transportation item is an item that can be investigated to great advantage, as you have intimated.

Mr. STEFAN. The members of this committee are interested in that particular item. We have given considerable encouragement to the antitrust divisions of the Department of Justice along those lines, as you know, and according to the witnesses before this committee they need a little strengthening in the way of new legislation. It might help them in some of their antitrust investigations.

MAJOR PROBLEMS FACING THE DEPARTMENT

Let us talk about appropriations if you do not mind, Mr. Secretary. First, when you refer to the major problems before you in your statement, you refer to three numbered items commencing with the "Transportation" item followed by the "President's Committee on Business and Government Relations," the "Small-business programs," "Industrial mobilization, international economic policy" those are the major problems you say that are facing you?

Secretary SAWYER. Those are new in effect. They are new to what are already the regular programs in the Department.

Mr. STEFAN. After your 16,000-mile trip you tell the committee you have undertaken to adjust your program in response to the needs and problems of the business people you have talked to, and you

reflected those problems in your general statement throughout. Are there any others?

Secretary SAWYER. In my report to the President. There were a number of things that came up for consideration and suggestion in that connection, and I have mentioned some of them. One, of course, is this matter of procurement which has been already discussed. Another is the matter of taxation which I have touched upon briefly. There is this transportation and distribution-cost activity which you have suggested.

FEDERAL BARGE LINES

You may know that in connection with inland waterways we have been able to bring about quite a saving there. I believe we have saved about 1.5 million dollars since I was Secretary of Commerce. I do not claim credit for that, but there we are now considering an offer from a group in the South to lease the Federal Barge Lines. That is one of the problems of both transportation and distribution, affecting small business, and especially the movement of commodities from the Middle West which we are undertaking and working on, and which I am sure you will be interested in.

Mr. STEFAN. Are they going to expand?

Secretary SAWYER. We are meeting with them to consider their proposal. A businessman from Birmingham has headed it up, and they are making a suggestion to us that we make a deal with them whereby we lease them all except the terminals of the barge line and they will try to work it on a private basis. We are not, by any means, committed to it, but we are just giving it consideration.

Mr. STEFAN. Where do those inland waterways run that are going to be leased to private industry?

Secretary SAWYER. As I say, and I would like to make it very clear, we have not decided. They are chiefly up and down the Mississippi River.

Mr. STEFAN. Are they still operating up to Sioux City, Iowa?
Secretary SAWYER. I think so.

Mr. STEFAN. Are they in operation now?

Secretary SAWYER. Do you mean at this moment?

Mr. STEFAN. Yes.

Secretary SAWYER. The lines are operating.

Mr. STEFAN. Will you please put in the record a statement of tonnage handled by the Inland Waterways Corporation.

(The statement requested is as follows:)

Submitted herewith are two schedules, one showing the over-all tonnage by commodities northbound and southbound for the Missouri River operation during calendar year 1949, and the other is a summary of the tonnage and trips to and from Omaha and Sioux City for the same period, which I believe will take care of the information requested.

The channel situation on the Missouri River is approximately as follows:

1. There is, at the present time, a dependable 6-foot channel from the mouth of the Missouri River to Kansas City. Approximately 86 percent of the river contains a 9-foot channel. Completion of the remainder will depend on current and future appropriations to the Engineer Corps. It is estimated that if these appropriations are provided at the rate recommended in the President's budget message for 1951, a 9-foot channel would be completed during the fiscal year 1955. 2. There is, at the present time, a 6-foot channel (not dependable) between Kansas City and Omaha, although there is not sufficient width in several places. Based on the cost of the original survey, the work is approximately 86 percent