Now, you give us a great waterway and there is another serious effect about it. If you are going to develop the inland part of this country we must have cheaper rates. Of course, our factories are able to go away, but you can not move your farms away. The farms are a thousand miles inland, and the testimony of those who will follow me will show you that there are times when our wheat can not compete on the world market because of the lack of a water rate. If we do not have water rates, the difference between the rail haul and the water haul makes it impossible to get over that. There is no doubt about what the effect will be.

Of course, you have got the question-somebody raises the question-often as to what its effect will be on the railways. Of course, there is nobody in our organization wants to hurt the railways. We want to help the railways; but what we want is a system of transportation that is capable of carrying our commerce that is made up of the railways and the waterways and the highways. We want them all cooperating; and we know that it will not hurt the railways, we know it will help the railways, to develop industries in the interior of this country. It is not going to hurt the rest of the country, but it will give the interior of this great country a chance to grow.

Do you realize that there is not a city in the United States outside of St. Louis that has reached a half a million population that is not located on a lake or on the ocean or on the Gulf, or close enough to one or the other to get the benefit of the water transportation? Yet we are on the banks of the greatest river in the continent. We want to get the benefit of the potential water rates. We do not want potential rates, but what we want is water transportation where the river could carry our products; so that it would carry the lumber and field products and farm products; so that it can carry all those things that can go on a river line that are not very profitable to the rail lines, and that we think ought to go on the river line.

Senator HAWES. As a matter of fact, you are receiving no opposition in this at all from the railroads, are you?

Mr. NEWTON. Very little. It shows up in places. We have railroads that are not yet convinced, but we are getting a little cooperation from the railroads.

Senator HAWES. The railroads in our particular vicinity are favorable to your enterprise?

Mr. NEWTON. They are giving us some opposition. We have some railroad men yet who seem to oppose it; some that do not seem to be sold on it; but the Illinois Central, I have been told repeatedly, have made far more success since the barge line paralleling the Illinois Central through Illinois was established.

Senator HAWES. You are receiving no opposition from the Missouri Pacific?

Mr. NEWTON. I think there is some opposition because they run parallel. But I find it is true that railway officials generally recognize that there is no danger in it; but their boards of directors oftentimes have not been sold on us. They still have the old idea.

Senator HAWES. The practical men, though, are not opposing it? Mr. NEWTON. No; the practical men see it; but they say they can not do all the things they would like to do because their boards of directors are not sold on it. They are not in close touch.

There

is no question about it. It takes some time. The Missouri Pacific has built great elevators on the banks of the Missouri River.

But here is an expression that I would like to call the attention of the committee to, because I could not begin to express this as it is expressed here. Norman F. Titus is the head of the department of transportation in the Department of Commerce. Here is what he said recently:

Cheap transportation by water for materials at any point will make industry thrive in that location.

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Now, that fits our case. We have got the farms out there. We need the industries and need to develop the industries that our resources will permit and I do not think there would be a man, even in Baltimore, who would be selfish enough to want to force us, when we are sending goods to the western coast, to send them all the way to Baltimore on the eastern coast and then all the way around through the Panama Canal, simply for want of terminal facilities. I do not think there is a man who would want to see that economic waste, when we have the great river there that will carry those goods down to the Gulf and around to the western coast.

Here is another thing that I want to call to the attention of the committee, to show how important it is to our section of the country. It is to the interest of the whole United States, of course, to develop that western country. It is to their interest to solve the farm problem, and if you can fix it so that the industries will develop alongside of the farms, you are going to increase the tax-paying power of all that country, and the whole United States is interested in that; and we insist that this will not hurt the railways, that it will help the railways when you build factories there; and make manufactured products; and you can take a lot of heavy freight away from the railroads, but you are going to increase greatly the amount of highpriced freight that the railroads will carry, such as they never had before.

But while we are in favor of the railroads, we think that you ought to give some consideration to the shipping public. If we can get the public in the Middle West where they can have half of the bulk of our freight hauled at one-fifth of what they are paying now, it will be possible to carry

Senator RANSDELL. May I ask you if any industries have already left the West?

Mr. NEWTON. They are doing it all the time.

Senator RANSDELL. I had understood that they were doing that. Mr. NEWTON. They are leaving there all the time. These other gentlemen will tell you more in detail about that. We have factories in the Middle West, and they are compelled, in order to supply the west coast, to put up factories on the Atlantic seaboard. Some of them have been driven to the Gulf coast. There are branches, and some of our factories now have the bulk of their stocks moved away; and others will not locate there. If we had factories there close to the farms, those employees in the factories would make a market for the production of the farms, and the population on the farms would increase and use the production of the factories.

Senator RANSDELL. And no part of the country would suffer from that?

Mr. NEWTON. Of course, they would not. You might say it would be a loss to England to have us send the production of our factories over there. We would not want to create an artificial condition that would force them to build factories with us. What we want is to have the chance that the rest of the country has. That is all we are asking for; and if we can get the benefit of this cheap water transportation through this betterment of the river system, we are going to build up the interior of the United States, and we are going to give the farmers relief such as they have never had before.

One other thing. The future market is to the south of us. I went into this matter with the Department of Commerce, and I was astonished when I got the result.

Senator FLETCHER. As to that, let me get clear.

Mr. NEWTON. Yes.

Senator FLETCHER. I can see how the Government's obligation is to provide for you a channel, and that ought to be done, and that can be done, by the Government; but it would seem that local interests ought to provide your terminals.

Mr. NEWTON. They do.

Senator FLETCHER. Can you not get that from them?

Mr. NEWTON. There is no trouble about terminals.

Senator FLETCHER. Then you do not need any Government action with reference to those terminals. First, you want the channel; second, you want terminals

Mr. NEWTON. That comes third.

Senator FLETCHER. And third, you want the cooperation.

Mr. NEWTON. Yes.

Senator FLETCHER. The Government can give you the channel. Mr. NEWTON. Yes.

Senator FLETCHER. You must get local interests to provide your terminals.

Mr. NEWTON. Yes.

Senator FLETCHER. You can do that?

Mr. NEWTON. Yes.

Senator FLETCHER. Then, in regard to this cooperation and exchange, etc., between the railroads and the waterways, have you any legislation in mind by which that can be accomplished?

Mr. NEWTON. Yes; we have, and I am going to present it here. We have legislation that will make it necessary.

Senator FLETCHER. I do not think you can expect voluntary cooperation to any great extent by railroads, when you say you are going to reduce their rates to one-fifth of what they are now.

Mr. NEWTON. We are not going to reduce their rates. You do not hear much protest from us about high rail rates. We do not believe they can reduce them.

Senator FLETCHER. I think if you had that barge line in private hands, they would reduce their rates quick enough, to get rid of you, and then raise them again.

Mr. NEWTON. That we want protection against. That is what we have to get, that protection of the law. There is no doubt but what the waterways are capable of carrying a great quantity of our freight at one-fifth, or at least one-fourth, of the rail rate; and we want the railroads to be paid a compensatory rate for their service. We do not want war between the railroads and the waterways; but we think

if we could get a rate of one-fourth or one-fifth of what we are paying, and then pay the railroads a compensatory rate, it will help us.

Senator RANSDELL. Is it not a fact that on the Great Lakes, where there is a perfectly colossal commerce, the water-borne commerce is said to pay only about one-tenth of the average railroad rate of the entire United States?

Mr. NEWTON. Yes; I think the average rail rate is 11 mills per tonmile, and the lake rate is 1.1 mills. It is about one-tenth of it.

Senator RANSDELL. But that does not seem to hurt the railroads. Mr. NEWTON. Not at all. Nearly all of our railroads are east and west lines. The only railroad you would expect to be hurt is the Illinois Central, and the Illinois Central has made greater returns since we established the barge line than it ever had before. We are carrying the heavy freight, and they are getting a lot of profitable business that they never had before, and it is directly due to the channel there; and the other railroads running east and west are the feeders. We have 21 railroads running into St. Louis, and practically every one of them would be benefited.

Senator RANSDELL. Have you brought out the fact. that many of them thought they were greatly injured by the Panama Canal? Mr. NEWTON. I have not brought that out; but we want to get the benefit of the canal. We have not been able to do it thus far. Our commerce with France last year was $152,000,000. That is exports and imports according to the records of the Department of Commerce.

Our commerce with Cuba was $250,000,000, nearly $100,000,000 more than it was with France.

Our commerce with Germany was $189,000,000.

Our commerce with the West Indies was $307,000,000.

Our commerce with Belgium was $73,000,000; our commerce with Mexico was $169,000,000.

Our commerce with Russia was $13,000,000.

Our commerce with South America was $507,000,000.

Our commerce with the nations all of which I have just named, France, Belgium, Germany and Russia-the total commerce-was $441,000,000.

Our commerce with Central and South American States was $1,344,000,000; and yet, with that great future market to the south of us, the European countries, with their cheaper water rates, some of them will manufacture goods and take the market away from the Central West if you do not give us the benefit of cheap. water transportation so that we can get down there.

Farm products from Canada sell cheaper there; hay, for instance, sold in Cuba cheaper than they could get it from the Missouri Valley farms.

Those are serious problems that we have got to meet.

Senator FLETCHER. If you were dependent on foreign ships to move yuor commerce to those countries, the foreigner would likely still take your market from you?

Mr. NEWTON. We are in favor of developing the merchant marine. That is one thing the whole of the interior is on record of being in favor of. We recognize that we need a merchant marine, and we have declared for it; and this whole association of 23 States is for it, and we hope to help you with the Members of Congress to do the things.

that are necessary. We think that our commerce ought to go into foreign ports under the American flag, where the American ship will take her place alongside the ships of Great Britain and other countries. We want these fundamental principles established. We want to go out of Government operation, but you can not go out until you have a channel, and until you have an exchange of freights and properly and equitably adjusted so that the man in Michigan can ship freight down to St. Louis as it is now, and finally run it down and reach a seaport; so that he can get a bill of lading from his town in Michigan to a point in Texas or on the Pacific coast; so that he can get the benefit of the Panama Canal; so that we can send our freight by cheap water transportation, so that it can go to the east or west coast or to South America, and have the same sort of a deal.

You can see the disadvantage we are placed at. As the situation stands now, the one thing we want is to have a declaration of policy like section 500 written into the law, simply to see that it comes as soon as that channel is established, and the rates have been adjusted; so that you can treat a barge line just like you treat a railway trunk line, and interchange the freight between them on an equitable basis. Do you now realize that this Government barge line of ours has been gathering up freight in every State between the Alleghenies and the Rockies; and some of it east of the Alleghenies, because they have been using the barges there? These witnesses we have here are going to give you the astounding facts as to what that little barge line has done.

Do not misunderstand me. We are asking for a $10,000,000 increase of equipment. We are not asking this Congress to make enough increase in the equipment to meet the demands of the

commerce.

A survey has shown that there are 7,000,000 tons of freight on the banks of the Mississippi and at Chicago. The record of the barge line shows that 60 per cent of the barge-line freight originates off of the river in the interior. Now, if that is true, you have about 12,000,000 or 15,000,000 tons on the banks of the river, and a recent survey that we had two or three days ago shows that there is about 8,000,000 tons up the Missouri River ready to go on a water carrier. There is probably 20,000,000 to 25,000,000 tons of freight that the barge line ought to have now. It carried 1,250,000 tons last year. This would probably enable us to carry 2,500,000 tons.

We are not asking the Government to give us enough equipment to carry all that freight, but we have not enough equipment now to extend on the Missouri or the Illinois. We have not enough equipment to make a successful return where we are.

You never are going to be able to sell this investment of the Government until you get these conditions where you can insure a success. If you could write into the law now that as soon as the channels are completed, and as soon as they make some provision which will necessitate the adjustment of rates between rail and water lines so that the Interstate Commerce Commission will have a mandate to proceed, then it can be done with reasonable speed. If you had those two things, the people up and down this river will build the terminals just as fast as they can be built. There is no trouble about getting the money when you have a stability of the service, and as soon as that is done, we want to go out of Gov