erty $8,361,076,000, of which $6,002,053,505 represents the actual net increase in investment in roadway and equipment. Thus the net increase in debt during the 13-year period was less than one-fourth as great as the increase in investment.

While the Government has put more than $31,000,000 in the Federal Barge Lines and which certainly cost the Government and its taxpayers something, General Ashburn sets up absolutely nothing on his books to cover such capital cost. If the railroads could get capital free of any charge like does the Federal Barge Lines, of course the general's criticism of the bond interest paid by the railroads would fall; 4 percent on $31,000,000, would be equal to an annual charge of $1,240,000.

General Ashburn says he gets no other subsidies. He gets the free use of governmentally improved and maintained waterways upon which to operate. Taking the most favorable of his operations, the lower Mississippi River, according to a report of the Mississippi Valley Committee (now a part of the National Resources Board) submitted to Secretary Ickes on October 1, 1934, the taxpayers' subsidy will, when present authorized improvements are completed, amount to 6 mills per ton water-mile which, because of the meandering course of the river, is equal to 9 mills per ton rail-mile. This 9 mills per tonmile subsidy, entirely apart from the freight charge the particular shipper by water pays, is approximately the entire average freight charge of such competing railroads as the Illinois Central, Missouri Pacific, Mobile & Ohio, and Louisville & Nashville, but out of which, unlike the Federal Barge Lines, they must pay the costs of capital, taxes, and construction and maintenance costs of their highways.

As to taxes, the railroads paid out in 1933 and 1934, 8.1 and 7.3 cents, respectively, out of each dollar taken in. General Ashburn's line, being practically tax exempt, paid out a total of $1,003 in 1933, equal to two one-hundredths of 1 cent per dollar of revenue, and of this amount $991 represented Federal check taxes which he apparently could not escape.

In addition to such subsidies or exemptions, borne by railroads, there might be mentioned the fact that the Federal Barge Lines enjoy the free use of the United States mails and Federal radio systems, pay an average wage of but 39 cents per hour as contrasted with 591⁄2 cents per hour for the railroads, the latter to all intents and purposes being Federally regulated.

Notwithstanding freedom from a charge for capital cost and other subsidies or exemptions, the Mississippi-Warrior Service operations of what is now the Inland Waterways Corporation show, according to their own reports, an operating deficit of $4,017,220 during the 16-year period 1918 to 1933, inclusive. His annual report for 1934 is long past due but the gossip is that, although the general had to face few of the costs of the railroad competitors, his loss in 1934 was many hundreds of thousands of dollars.

Producers of beet sugar in Colorado, Montana, Idaho, Nebraska, and other Western States and in Southeastern Michigan and portions of Indiana and Ohio, and the cane-sugar producers at Savannah, Ga., may be cited as a typical example of waterway discrimination. They must produce and market at interior points in competition with refiners at New Orleans and the North Atlantic ports having practical and actual all-water service to the inland ports on the Ohio River

the Mississippi River and its tributaries, and on the Great Lakes. One can well imagine the difficulties experiences by such interior producers in producing and successfully marketing their sugar with the uncertain or unknown water and storage charges being paid by, or the rebates being paid to their competitors, or the rail carriers upon whom they are dependent ascertaining what rates are necessary to protect them, or the Commission who is charged with the duty of regulating such rail rates determining what is or is not justified under all of the circumstances. One has only to read the Commission's decision in Sugar cases of 1933 (195 I. C. C. 127), to find out that these are real difficulties and should be regulated along with the railroads. In this decision, decided July 3, 1933, the Commission said:

Just what rates the water carriers are charging is impossible to say. Being unregulated, they do not have to publish their rates, are free to change them at will without previous notice, may pay rebates, give allowances, make absorptions, provide storage, perform special services, allow special privileges, and otherwise, secretly or openly, favor individual shippers. The record indicates that these things, representing concessions of several cents per 100 pounds, are indulged in to a very considerable extent by water carriers from New York.

I might add here that the Commission in the proceeding referred to, while saying that some questions of doubt should be resolved in favor of the railroads, showed little sign of being pro-railroad. It did not permit the railroads to establish the rates sought as necessary to meet the competition of the unregulated water lines and the sugar traffic to the interior ports is still almost entirely in the hands of the unregulated water carriers to the detriment of the railroads and the beet and other sugar producers who are dependent upon rail transportation and who, like the railroads, don't know what is being paid for the water transportation.

The Interstate Commerce Commission, which is charged with the duty of regulating the railroads in the interest of the general public, doesn't know and at present has no means so far as I am aware of compelling the production of such information.

The Interstate Commerce Commission, under the Inland Waterways Corporation Act as amended, commonly known as the "Denison Act", is required to establish upon request of certificated lines operating on the inland waterways, through routes and joint rates, minimum differentials under the all-rail rates, and divisions, with the railroads and the latter are compelled to join therein even though the particular railroad serves the origin and destination with its own rails and it is thus short-hauled; and yet, the Commission is given no control over other operations of the same water line, who may defeat through devious devices the very things that the Commission is required to give them in connection with the railroads.

Right now the Commission is engaged, as a result of complaints of both water lines and railroads, in a general investigation of through routes and joint rates and differentials between the inland water carriers and the railroads. No one knows and no one can find out, except the particular barge line and the recipient of the favor, exactly what is going on. The Commission is badly handicapped in its regulation of the all-rail rates and the joint water-rail rates by reason of its lack of this knowledge and its inability to get it. Even in cases where the water lines have invoked and are invoking the aid of the Commission against the railroads, many of them are reluctant

to furnish and may absolutely refuse to furnish information as to their charges. One water carrier is now before the Commission invoking its aid to require the railroads to increase the rail rates on sugar, soap, cotton, and perhaps other commodities and yet the very water competition which brought about the present rail rates on such commodities is wholly unregulated and the charges are unknown or uncertain.

There is not the slightest doubt but that all of this has resulted in a most chaotic situation, has depressed the charges of both rail and water lines in many instances below reasonable levels, and without any real benefit to the general public. True it is that particular or favored shippers, sometimes particular boat lines and localities, may have reaped some temporary benefit; but, if it keeps up, it may mean the destruction of the railroads and the water lines themselves through a depletion of revenues to a state of exhaustion.

It is particularly burdensome in the interior because the inland. waterways are not generally natural waterways, but must be and are constructed and maintained at heavy public expense; and, further, because of the ease of entering such a service, the water lines very largely operating free from taxation other than Federal income taxes, sometimes paid by other than the federally owned barge line, and on basis of low average wage scales. It may be said as to the latter that the three large barge operators on the Mississippi, Warrior, and Ohio Rivers averaged 38 cents per hour in 1933 as contrasted with an average wage of 59%1⁄2 cents per hour paid by the class 1 railroads. The selfish interest of a few favored localities should not, we feel, be permitted to becloud the issue.

And I want to refer right here to this Ohio Valley situation concerning which there has been so much testimony, and there has been a good deal of testimony about taxes. The railroads in the counties that border the Ohio River from Pittsburg to Cairo, in a normal year pay over $8,000,000 in taxes in those counties alone. These barge lines on the Ohio River, largely escape any taxation at all except where they make some money and the Federal income tax gets them. I referred before the Senate committee to the American Barge Line, with approximately $2,000,000 in floating equipment, paying in the year 1931 a total tax of $109, which was approximately one-third the amount I paid on my home property in Louisville, Ky. By incorporating in Delaware, they largely escape the payment of any taxes on floating equipment. That is one excuse General Ashburn gives for not paying taxes. He says, "Why should I pay taxes? In the first place, I am a Government institution and tax exempt; in the second place, my competitors do not pay them."

While the association and the carriers generally take a neutral position in respect of the reorganization of the Commission, they do take the stand that the Interstate Commerce Commission, however organized, should have jurisdiction over the water and motor carriers as well as the rail carriers. The rail, water, and truck operations interlock to such an extent that we believe a single commission provides the practical method of regulation.

Section 500 of the Transportation Act declares it to be the policy of Congress to promote, encourage, and develop water transportation and to preserve in full vigor both rail and water transportation. The Commission now has power to prescribe maximum rail and water

rates and minimum differentials. The water carriers proposed to be regulated, except those in foreign service, operate almost invariably between the same points as the rail lines. The question may reasonably be asked how is the Commission going to effectively regulate the all-rail and rail-water rates if the all-water service is to be regulated by a separate body. We feel that it cannot be effectively accomplished nor will the public interest be protected unless the regulation is by one body.

It has been said in some circles that the railroads in supporting the proposed water-carrier bill will be given an opportunity to throttle the water carriers. Nothing could be further from the truth. The railroads are pretty well in a strait-jacket when it comes to anything like that. The Commission not only has the power to suspend any rate the railroad might publish, but to prescribe minimum rates. It has frequently exercised both of these powers against the rail lines in efforts of the latter to meet legitimate water competition. The real truth is that, unless the proposed bill in substantially its present form is adopted, the water carriers will eventually throttle themselves with their cut-throat methods and may carry the railroads down with them.

There can be but little question but that the wharfingers should be regulated in the public interest. Where the railroad operates as a wharfinger, it must file its schedules with the Commission and maintain them, but this is not true as to the private operator. A port is merely a gateway through which export, import, coastwise, and intercoastal traffic must move to and from interior points in the United States. Generally speaking, one port is competitive with other ports, usually many ports, in the movement of such traffic to or from the same interior point or to or from interior points competitive therewith. It is therefore apparent that discriminatory practices on the part of wharfingers at one port may seriously react to the disadvantage of the general public. These wharfingers serve as an important part of the through transportation service performed in connection with foreign, coastwise, and intercoastal traffic and should be regulated in the public interest.

Not only should the common carrier water line be regulated in the same manner as its rail competitor, but such common carrier should have protection against the contract and private water carriers. Much of the trouble of the present and recent past is and has been due to the practices of these private and contract carriers.

Certain water carriers perform a mixture of common-carrier and contract-carrier service, thus enabling them to pick and choose and operate generally to the disadvantage of the legitimate commoncarrier line taking practically all business as it is offered, serving all of the public alike, and usually operating under published and maintained rates and according to regular schedules. If the commoncarrier water line is to serve the public efficiently then it ought not to be subjected to the unregulated practices of the contract lines and the minimum charges of the latter should be known and maintained. The proposed bill will accomplish this.

Likewise, the so-called "private water operator" should be limited, generally, to the carriage of goods of its owner, and should not be permitted to raid the traffic of legitimate common and contract water operators by picking up and carrying return loads at absurdly low

charges. Manifestly, water transportation cannot long be maintained, and there will be defeated the policy of Congress to promote, encourage, and develop water transportation, if the private operators who are generally very large private industries are permitted to take away from the regular operators who have no large reservoir of company-owned tonnage to handle.

Congress long ago recognized the unwisdom of permitting railroads to build new lines or to extend their lines into territories already adequately served. No such restriction is present with water carriers. Regardless of the amount of tonnage reasonably to be expected or the number of water carriers already competing for the available traffic there is nothing to prevent a new water carrier entering the field nor to shift its service from one section to another. There have been numerous instances of this kind. This is a very easy thing for a water carrier to do with a public waterway already provided, and, as already indicated, practically free from ordinary taxation and operating on a basis of relatively low wage scales. While a difficult matter to prove, it is my firm conviction that such cutthroat competition with resultant exhaustion, coupled with obsolete equipment, had far more to do with the virtual disappearance several decades ago of water carriers from the inland waterways than the alleged ruthless rate-cutting methods of the railroads. Manifestly, if it is to the best interests of the country that railroads should not extend lines into territories already adequately served, then water lines should not be permitted to enter services already fully tonnaged by the existing water carriers.

I may say that the reason for the passage of the original Interstate Commerce Act regulating the railroads was the discriminatory practices then engaged in under which the same charges were not made to all alike under similar circumstances and conditions, resulting in much dissatisfaction and complaint. Other forms of transportation are now very active in the field competing for the available traffic along with the railroads between the same points as are served by the railroads, but these other forms are practically free from any regulative restrictions such as face the railroads and certainly do not have to contend with the same capital and tax burdens as the railroads. They are free to and do indulge in all of the discriminatory practices for which the railroads were long ago condemned, no longer permitted as to the railroads and very properly so. It can hardly be said to be in the public interest if other forms of transportation are permitted to discriminate in their charges, pay rebates, and the like, or to engage in raids upon the business of legitimate operators in order to obtain some transient advantage.

These three great forms of transportation-rail, water, and motorall have their proper place in the transportation field, and to a large extent not only compete with each other, but interlock forming three great complementary arms of the transportation business necessary to properly and efficiently serve the business and public of this country. This cannot be accomplished unless substantially the same regulation applies to each form.

It is not a sufficient answer, in my judgment, to say that the railroads have had years within which to experiment before strict regulation was provided and that the motor trucks and busses and water lines should have the benefit of a similar period of experimentation.