The CHAIRMAN. The committee will come to order. An amendment was introduced on the floor of the House, to House bill 13884, and adopted as section 10 of that bill, providing for the leasing of the floating dry dock at New Orleans. We will be glad to hear first from the proponents of the proposition. Who represents them?

STATEMENT OF J. E. BARNES

Mr. BARNES. Senator, that will take me in. I am interested. I represent Todd's shipyard.

The CHAIRMAN. Very well, Mr. Barnes; proceed.

Mr. BARNES. I represent the Todd Shipyards Corporation.

The Todd Shipyards Corporation is very broad in its scope. It

has four plants in New York.

The CHAIRMAN. Are you an official of the company?

Mr. BARNES. I handle all of the Government business of the company. While I have no official title

The CHAIRMAN. You are counsel for the company?
Mr. BARNES. No; I am not an attorney.

I have handled their

business here for about 13 years. All Government matters I have taken care of here for all these years.

The CHAIRMAN. I see.

Mr. BARNES. I will say, however, that Mr. Heisley, the vice president of our plant in New Orleans, is present.

The corporation is very broad in its scope. We have 4 plants in New York Harbor, 1 in Mobile, and are building 1 in New Orleans, and we have 1 in Seattle.

We had built a plant in Tacoma, Wash., which we had to abandon after the war was over, and there was no work.

Naturally, to maintain those yards, we have a very large trade, and we put our yards around in the nature of service stations to ships operating.

If this were a matter entirely local to New Orleans, perhaps we would not be here.

It might be of interest to you to know that the United States Shipping Board, the Emergency Fleet Corporation, is operating 105 to 107 ships on the Gulf. These ships are being operated at a loss to the Government of approximately $4,000,000 a year, not counting the depreciation of the ships; simply principal operating losses. The Mississippi Warrior service and other Government owned and operated organizations, require from time to time appropriations from the Government.

The Navy built the dock now in question, I think, some 27 years ago. It may have been used some at the time it was constructed, but my opinion is that it has been a source of loss to the Navy all these years. The estimated loss at this time in operation is around $35,000 to $40,000 a year. The only work that the dock is doing at this time, as I understand it, is docking a few barges belonging to the Mississippi Warrior service. No private organization could take that dock and dock those vessels because they are too small for that dock. They are small barges, and this is a dock of some 16,000 tons capacity, and I imagine it would take more to steam it up and get it ready to sink than they could get for docking.

We did

About six years ago we started a plant in Mobile, Ala. that at the request of a number of our customers whose boats were running on the Gulf. At that time the dry docks on the Gulf were charging a rate of 20 and 21 cents a ton for docking ships, which the operators thought, and no doubt was, an excessive charge.

The charges in New York, owing to a dock war, were 5 cents a ton. As a consequence, a great number of vessels were not having any work done at all upon the Gulf, but were going up to New York and other ports where repairs could be made cheaper.

We have had considerable work in Mobile, and recently added a 6,000-ton dock to the facilities. It might be of interest to this committee to know that the port of Mobile, which is the twenty-first port in importance in the United States, has imports and exports of about 900,000 tons per annum. It has now and has busy 40,000 tons of dry docking plants-that is, 40,000 lifting tons.

New Orleans has a population of half a million, and is the gateway to the entire midwest, and the matter of the development of the port of New Orleans is not altogether of importance to New Orleans alone, because the entire Mississippi Valley and all of the grain and all matters for export, come down and go out through that port from the Mississippi Valley.

The Mississippi Warrior service that is costing the Government heavily, which the Congress, I think, appropriated last year $15,000,000 to extend, also has its terminus at New Orleans and at Mobile.

We have recently, within the last few months, purchased additional property in Mobile to extend our plant there, because we know that the development of that harbor is bound to increase, because the business of the valleys of the Mobile River, and so forth, is growing very fast.

New Orleans, as I said before, which is now the second port in the Union, has imports and exports of 7,500,000 tons, and has about 31,000 tons of docking, not counting the Navy dock. If the Navy dock was put in, it would give them about 45,000 tons, against the port of Mobile with 40,000 tons.

We are satisfied that there are a number of ships that now use the port of New Orleans that can not dock there safely in the docks that they have at the present time. The Navy dock is available when other docks are not available, but the ship operator, because of the fact that the Navy carries no responsibility in case of accidents in docking, and so forth, and owing to the excessive cost of bringing workmen from the other yards to do work on that dock, are not using the dock.

The CHAIRMAN. What does the Navy charge for the use of the dock?

Mr. BARNES. They charge the same rate we charge. You see, when we reduced our rate in New Orleans, necessarily the other yards had to reduce their docking rates, and we claim that because the rates were so high and because of the excessive cost in drydocking and repairs, was the reason why the work was not being done there. The CHAIRMAN. What is the rate there now?

Mr. BARNES. The rate there now is 14 and 16 cents a ton. I think the rate in Norfolk is around 11 and 12 cents a ton.

The CHAIRMAN. You have a dock now in New Orleans?

Mr. BARNES. No; we are building a plant in New Orleans at this time. About three or four years ago we put in what we call a shore station, and we had no dock. We have now decided that the business would justify us in putting in a water plant. Our plant, by the way, adjoins the Navy plant in New Orleans-or in Algiers. We come right up to the plant.

Senator SWANSON. You mean for the construction of ships?

Mr. BARNES. No, for the repair of ships.

Senator SWANSON. It is limited to the repair of ships?

Mr. BARNES. Limited to the repair of ships, and we have expended on that plant about a million dollars so far.

I might say, by the way, that this bill was passed in the House some two or three years ago, and we were interested in having this dock, because we did not feel that we would like to put a new dock in New Orleans with this dock idle alongside of us. We thought that inasmuch as the Government owned this dock, the same taxpayers who were suffering a loss on the operation of the merchant marine ships and on the operation of the Mississippi-Warrior ships, were the same taxpayers who were suffering loss on the dock in this yard that is obsolete and has been of no use for a number of years.

Senator SWANSON. You mean there has been made no use of it for a number of years?

Mr. BARNES. None.

Senator SWANSON. What was the amount of the greatest receipts the Government ever obtained from its operation in any one year? Mr. BARNES. The Navy is represented here, and these gentlemen can tell you. I know there were losses.

Senator SWANSON. What do you contemplate paying the Government for this?

Mr. BARNES. I would suggest-and I would suggest to this committee of course this dock should be put up to the highest bidder. Senator SWANSON. Yes.

Mr. BARNES. I do not think my corporation should be given any cinch on this dock.

Senator SWANSON. Yes, I know; but really there would be only one corporation bidding for it, would there not?

Mr. BARNES. I would not think

Senator SWANSON. Of course we are bound to do it under the law, but before we authorize that, we would like to form an idea of what we would get for our property. Naturally, they could not do anything but put it up, as I understand, for sale to the highest bidder. Mr. BARNES. To be perfectly frank with you, Senator and the committee, I think we would be satisfied, as far as we are concerned, if any of our competitors in New Orleans could come and take this dry dock and put it to use, so as to aid the trade down there. We will be satisfied, if they will assume the loss that the Government is now suffering, for them to take it. In addition to that

Senator SWANSON. The loss by the Government how?
Mr. BARNES. Between $35,000 and $40,000 a year.

Senator SWANSON. Simply keeping the dock in repair?
Mr. BARNES. And operating it, to a certain extent.

The CHAIRMAN. Why should they assume losses? Do you not expect, if you get the dock, to make a profit out of it?

Mr. BARNES. Yes; we would not take it if we did not expect to make a profit out of it.

Senator STEIWER. I think you merely meant that as a measure of compensation

Senator SWANSON. What do you think is a fair price?

Mr. BARNES. I think anybody that took it should pay a fair

amount.

Senator SWANSON. What would be a fair amount?

Mr. BARNES. Around $35,000 or $40,000 a year.

Senator SWANSON. Then would the Government still have to have these losses?

Mr. BARNES. No; I am sure that would absorb the losses.

Senator SWANSON. To what extent would the Government have to suffer losses then?

Mr. BARNES. The Government would have no loss.

The CHAIRMAN. The Government would not have to keep the dock up?

Mr. BARNES. The Government would not have to go to the expense of keeping it up.

Senator SWANSON. The Government, under that proposition, would save $35,000 that it is now losing, and be making $35,000 profit?

Mr. BARNES. I do not think they would do that. I do not think anyone could say

Senator BROUSSARD. Is it not a fact, Mr. Barnes, that this amendment provides that you shall keep it in repair and deduct that amount?

Mr. BARNES. That is right.

Senator BROUSSARD. Suppose it cost $35,000 to keep it in repair. If you could do it for $35,000, you would get the dock free, would you not?

Mr. BARNES. No; we would be paying $35,000 for it.

Senator BROUSSARD. If you just kept it in repair, as you have to do with your own plant?

Mr. BARNES. No; instead of Congress having to appropriate money from year to year to keep it in repair, under the terms of this bill the Navy Department takes the money out of the rentals received for this dock, and keeps it in repair.

Senator BROUSSARD. If it costs $35,000 a year to keep it in repair to-day, while you are using it will it cost you more or less to keep it in repair?

Mr. BARNES. As a rule, it costs less to keep a dock in repair that is in use.

Senator BROUSSARD. How much less?

Mr. BARNES. I should say 15 to 20 per cent less.

Senator BROUSSARD. Then, unless you paid over $30,000, the Government would not be doing anything except keeping it in repair, and you would have a free dock?

Mr. BARNES. No; I do not see how you could figure it as a free dock, if we were paying a rental of $40,000 or $50,000 a year for this dock.

Senator BROUSSARD. But if you owned the dock you would have to keep it in repair, would you not?

Mr. BARNES. Yes.

Senator BROUSSARD. Would you keep it in repair if you rented it, or would the Government do it?

Mr. BARNES. The Government puts it in repair.

Senator BROUSSARD. And the money comes from the country?

Mr. BARNES. From the country; and then any surplus rent—if it costs $10,000 to keep it in repair, the surplus, under this bill, goes back to the Treasury.

Senator BROUSSARD. What would be the surplus? You know something about docks.

Mr. BARNES. I think the surplus going back to the Government would be around-of course, I am not going to tell our competitors here what we would bid on that dock; you would not expect that, but I assume that the Government would be getting back-instead of losing $35,000 or $40,000 a year that the Government would be saving that loss, and getting a return of around $15,000 to $25,000 a year for that dock.

Senator SWANSON. What did this dock cost?

Mr. BARNES. I would not know.

Senator BROUSSARD. Here is what I want to come to.

owned this dock you would have to keep it in repair?

Mr. BARNES. Yes.

If you

Senator BROUSSARD. As it is, you will lease it and you will have no invested capital, and you figure that on a $35,000 lease of the Government, the Government gets $15,000?

Mr. BARNES. I do not say $35,000. I am not saying what that dock is going to bring.

Senator BROUSSARD. Assuming that

Mr. BARNES. I am assuming that the Secretary of the Navy would not lease that dock unless they would get an adequate return for it. Senator BROUSSARD. Would you bid on this if we put an amendment in here giving the right to the city of New Orleans and the State to tax you on the property?

Mr. BARNES. Tax us?

Senator BROUSSARD. To tax the lease, just the same as your competitors are taxed?

Mr. BARNES. Yes; absolutely. I think the lease is taxable under your law. I know we pay a heavy tax on the property we have in New Orleans, and it is all leased.

Senator BROUSSARD. But it is not Government property.

Mr. BARNES. It is State property.

Senator BROUSSARD. What property?

Mr. BARNES. The water front. It belongs to the dock board, and we are paying taxes on that of 4 cents a foot.

Senator BROUSSARD. Do you consider this amendment, section 10, to include the wharves and front?

Mr. BARNES. No part of that.

Senator BROUSSARD. That is leased to the city.

Mr. BARNES. I might say that the dock is a self-contained dock. It has a steam plant on it and is operated purely from itself.

Senator BROUSSARD. I am putting that in the record because I want the committee to know that the city of New Orleans controls the wharves. The State owns that property, which is under the control of the State, and the wharf in front of this property is now under lease to the dock board at New Orleans.