Senator SIMMONS. You do not want the Government to bear the expense of building, but to loan the money?

Mr. LYNDE. At times to lend the money, at times to make contracts, for instance, for the payment of charges, for freight moving in and out of the service will insure a revenue so as to pay for the interest and the principal on bonds which municipalities offer. There are a number of different expedients which have been used, but the Government assistance we find to be essential.

Senator FLETCHER. Do you know how much the Government has loaned already in that connection?

Mr. LYNDE. I can not tell you. I am not advised as to that. Other witnesses will follow that up.

Senator SIMMONS. What is the size of the fund that is available for that purpose?

Mr. LYNDE. The present stock of the corporation, as stated in the Inland Waterways Corporation act, which we are seeking to amend, is $5,000,000. The amendment Senator Shipstead offered authorized an increase of that stock to $15,000,000. I think the actual funds which were turned over to the corporation from war-time investments, and matters of that kind, amount to a total of about $18,000,000, so that the $18,000,000 is represented by an outstanding capital of $5,000,000. I think the total investment is $18,000,000, but I am not familiar with the figures or the details, and I would rather other witnesses would cover that.

Going on with this, Senators will remember that this amendment states:

It is hereby declared to be the policy of Congress to continue these operations. Until these results, of which I just made mention, are brought about. Then we follow with this suggestion:

Upon the request of the Secretary of War, the Interstate Commerce Commission shall initiate and conduct a public hearing at which interested persons may appear to determine whether the foregoing have been substantially accomplished and upon such determination to prepare proposals for the adequate continuance of the joint rail-and-water service of the corporation by sale or lease of all or any part of the facilities then operated by the corporation. And the Secretary of War shall thereupon transmit such proposals to Congress with his recommendation thereon.

In other words, we suggest that form of machinery to bring to a termination the Government conduct of this line when, and only when, the conditions I have discussed have been brought into existence. That is the proposal which the executive committee of the Valley Association has approved and indorsed, and I think represents to a large extent the sentiment of the valley.

Senator SIMMONS. That would mean that this system of transportation they have over there should not be turned over to private capital unless Congress consented to it?

Mr. LYNDE. That is the form of suggestion we submit here.

Senator SIMMONS. The action of the War Department is to be approved first by Congress before this transfer from Government ownership to private ownership can take place. Is that what it means?

Mr. LYNDE. Subject to this qualification. We set up the machinery by which the Interstate Commerce Commission will conduct a public

hearing to determine whether these conditions have been brought about, and then the matter may be disposed of.

Senator SIMMONS. But they can not act without the approval of Congress.

Mr. LYNDE. That is the suggestion that is submitted here in this amendment.

We propose, as a means, really, of accomplishing the first of these conditions, which was the creation of the situation where there could be a broad interchange of business, these joint rail and water carriers, this amendment:

Any person, firm, or corporation, including this corporation—

That means the Government barge line itself

Any person, firm, or corporation, including this corporation, engaged or about to engage in conducting a common-carrier service upon any of the navigable waterways of the Mississippi system, may apply to the Interstate Commerce Commission, and upon a hearing and showing as required under section 1 of the act to regulate commerce, obtain a certificate of public convenience and necessity.

I do not have to say, I am sure, that if the Government operation itself applied there would be a conclusive right to that certificate, but we use language which would cover not only the application of the barge line itself, but any private enterprise which may hereafter seek to avail itself of this statute. [Continuing:]

And the Interstate Commerce Commission shall thereupon by order direct all connecting railroads and their connections to join with such water carrier in through routes and joint rates as provided in subsection 3 of section 15 of the act to regulate commerce as amended, and the commission shall in such order fix reasonable differentials between all-rail and joint rail-and-water rates to apply until changed by order of the commission.

Joint rail and water rates as herein used shall be deemed to include every movement of traffic in which a water line can participate.

We submit that that form of statute, if enacted into law, would open the door so that private enterprise, after it had demonstrated that there was some reasonable requirement or demand of the public that there was a reasonable investment to insure continued operation, and that there was an economic necessity, in other words, for its existence, could go to the commission and open that door and permit the movement of traffic over that line on fair and reasonable terms with the railroads.

As at present, the matter is very largely one of volition, and I do not have to state that there is a great deal of at least inertia in the formation of those tariffs.

We have one more amendment which we desire to suggest for the purpose of broadening the operations of this line. As was explained by Mr. Newton, we drew this original act giving broad power of operation over any of the tributaries of the Mississippi. Then we found that the Ohio people objected to this situation, so we redrew the matter to limit it to certain specific streams, where we knew and were advised by our own people, whom we represent here, that there was a very strong demand and where we knew, as advised by the surveys of the Department of Commerce, there was a large amount of tonnage now available and pressing for transportation. The amendment we suggest, therefore, in view of that situation, is this.

This would be a subsection of the present second section of the transportation act:

In addition thereto, the corporation shall, as and when there is or will be, in the judgment of the Chief of Engineers sufficient channel to permit the same, and the Secretary of War deems it within the capacity of the corporation and advisable in order to give the public proper service, extend its operations to the Missouri River, the Illinois River, including the Illinois Waterway, the Hennepin Canal, and the St. Croix River, which together with the Upper and Lower Mississippi shall for the purpose of this act be deemed to be the Mississippi system, and shall operate and continue in the public interest on such system an adequate common-carrier service.

In part, of course, that is a reenactment of the present provisions of the statute, but merely defined and broadened to include these specific streams, the corporation now operating on the Upper Mississippi and the Warrior Rivers, and under the terms of the statute of course limited to that operation until Congress broadens it and applies it by some amendment along this line to other streams. I think those are the amendments we would submit. Senator SIMMONS. There was one part of your statement I do not know that I fully understand. I think I do, but I want to see if I do. Do I understand you as offering an amendment or suggestion that when this Government line is established, private enterprise desiring to operate ships along that line shall secure, just as is necessary now under the railroad act for private capital desiring to build a railroad to secure, a certificate of convenience or necessity before they can operate?

Mr. LYNDE. Not before they can operate, Senator, but before they can get an order from the commission forcing through, in one sense, a set-up of general rail and water rates. This does not limit the right to operate.

Senator GOULD. Does the Interstate Commerce Commission have any authority over the rates you charge here?

Mr. LYNDE. It has authority over joint rates.

Senator GOULD. Would the rates be classified as railroads classify them?

Mr. LYNDE. Yes, sir; they are to-day.

Senator GOULD. First, second, and third class?

Mr. LYNDE. Yes, Senator; they are.

Senator GOULD. The statement has been made here that this boat line could handle commodities there for about one-tenth of what the railroads could handle them.

Mr. NEWTON. About a fifth-a fourth or a fifth.

Senator GOULD. The Government has built the water line making it possible to operate the boats. What you want is for the Government to furnish the equipment to operate here on this river which they are paying out a very large amount of money to make available and to make possible the operation of steamboats, barges, etc. That is the idea, is it not?

Mr. LYNDE. Not quite, Senator. If we were here asking for equipment capable of moving all of the transportation that would offer, we would be asking for a great deal more money than is suggested or has ever been discussed in this connection; but we have found, and I think experience has demonstrated, that there has to be a pioneer, and, furthermore, that that pioneer enterprise when conducted by the Government is successful or will be successful

in bringing about conditions which will make it possible for private enterprise to take over the job.

There are certain things that have to be done by the Government, certain conditions that have to be created. When those are created, then we feel that the Government operation should cease. All that

we want now and all that we are asking here is certain additional appropriations, certain broadening of power, so that the Government can go ahead and complete that preparatory job, and then get out of the field and leave it to private enterprise.

Senator GOULD. Get out of the field if it becomes a prosperous enterprise? Private interests may take it over then? Otherwise, the Government will have to carry it along? Is that the idea?

Mr. LYNDE. That, of course, is a matter for subsequent determination on the facts; but from our standpoint the record of the experience so far is a demonstration that there is no danger of the thing not succeeding. It has succeeded up to date. It is performing a service for which there is a great demand, and it is not performing it at a loss. On the contrary, it is making money. Now, if the Government can do that, with all of the incidents of Government operation, we feel that private enterprise is bound to do it successfully. That is our view of the matter.

Senator GOULD. You really think it is going to be a feasible investment anyway, do you not?

Mr. LYNDE. We are absolutely convinced of that, Senator. I can not make that statement too strong. That is the united sentiment of all of our people who are in close touch with this matter. Furthermore, as I say, the accounts of this corporation are kept exactly like railroad accounts. They are kept on the forms that the Interstate Commerce Commission prescribes, with all of the detail that the commission requires of railroads. They are on file; they are matters of public record, and they show that the operation has been successful. Senator GOULD. If you can haul this freight and different commodities for a fifth of what a railroad can haul them for, you have some basis to figure on. You have some idea of whether that onefifth part of what the railroads are charging is really going to pay the operating expense and all the overhead or not; have you not? You have something to figure from?

Mr. LYNDE. We have the experience up to date to figure from, Senator.

Senator GOULD. If it is a good thing, your position is that private capital ought to be let in there, the same as in the case of other corporations. The Government must take all the chances; and if it is a success, if it is a good thing, then your company takes it over and operates it.

This is the way it looks to me: Here is the Government, which made the waterway. They have provided the long river and given this enterprise a chance to operate there. You are asking them to equip that to do business at a fifth part of what the railroad companies can do it for. On the other hand, suppose the railroads go to the Government and say, "Here, you build us a track from the east to the west, right through here; you build this line for us, and then furnish us money enough to equip it"-do you not suppose that they could haul stuff a good deal cheaper than they do to-day?

Mr. LYNDE. Unquestionably; but, of course, the railroads already have received a very large amount of aid from the Government. That is what I would say in the beginning. In the second place, the Government has not completed the job of making this channel. The channel is insufficient. It is in process. It is going ahead. That is one of the difficulties. That is one reason why it is easier and better for the Government to conduct its operation during this period of difficulty and during this period of uncertainty as to its completion. Only the Government, only the House and the Senate, can know whether this job ever will be completed, because it is dependent upon future appropriations. During that period, until the job is done, we feel that the Government should conduct the operation.

Senator GOULD. Yes; but you would not go ahead with this, you would not expect this appropriation-this subsidy, I call it-unless the Government does complete the dikes on the Mississippi River; would you?

Mr. LYNDE. No.

Mr. NEWTON. We expect them to do it.

Senator GOULD. You would not go ahead with this barge enterprise unless the Government goes ahead and perfects the dikes and the flood control of the Mississippi River?

Mr. LYNDE. I think the Mississippi Valley feels that Congress has expressed itself on that subject. We are confident that they will go ahead and carry out this thing.

Senator GOULD. There is no question that we will appropriate money for the Mississippi River improvement. Let us assume that that is all fixed. Then you will come on, and you will say, "Here, we will put on a barge line now. You have made the waterway here feasible. You have got the competition with the railroads all fixed now. Give us the equipment, and we will do business that will knock the railroads sky-high." Is not that about the idea?

Mr. LYNDE. No, sir; most emphatically not. This line is not in competition with the railroads at all. It is a supplement to the railroads.

Take the rate situation as it is to-day: The rail rates are published from Chicago to New Orleans. There is an all-rail rate; then there is a joint rail-and-water rate from Chicago to New Orleans by way of St. Louis or Cairo, depending upon where the interchange is made. The joint rail-and-water rate is less than the all-rail rate simply and solely by the amount that has been determined by the Interstate Commerce Commission as the reasonable difference between the cost of operating rail and water service; and that is a fixed differential that applies in there.

Senator HAWES. As a matter of fact, Mr. Lynde, the railroads have practically not built a mile of increased trackage in the last ten or fifteen years, and they are not proposing to do so, while the transportation business of the country is largely increasing all the time? Mr. NEWTON. It doubles about every ten years.

Senator HAWES. In other words, the railroads could not carry the transportation that is coming on now; and this transportation is to take charge of the heavy, slow freight that moves on a river? Mr. LYNDE. Unquestionably, Senator.