Mr. GRAY. I deviated only because I felt sure that, if I did not make our position clear now, some members of the committee would ask me, as they did prior witnesses, and I only wanted to state that, to that extent, the motor vehicle needs regulation.

Now, the bill pending is in direct contradiction to the policy set out in the resolution that I have just read from the annual meeting of the American Farm Bureau Federation. It is in direct contradiction, first, because it designs to place under the Interstate Commerce Commission the regulation of water carriers; second, it divides water carriers into two groups. The first group includes the inland carriers, which are the most often thought of, and the second group includes the ocean carriers as well.

Now, may I devote myself to the second inclusion, then, of the bill, dropping for the moment inland water routes?

In 1933, or possibly early in 1934, the N. R. A. worked out a code. for ocean shipping. In that code, rates, specifications, wages, and all the other usual items contained in codes were included in that code.

Under that code the tramp steamer, which is a life saver in the hauling of bulk commodities, particularly farm commodities, across the oceans, would have been codified off the ocean. I mean to state that, if that code had gone into effect, tramp steamers would have had to post rates; they would have had to give 30 days' notice as to changes in rates; they would have had to comply in every regard with the conference rates and regulations. Most of the regular ocean liners are members of the conferences and comply with those regulations. The President of the United States wisely did not sign that code. Then, after some months, the Shipping Board Bureau in the Department of Commerce evolved a set of rules proposed to be issued and put into operation in a few weeks, and those rules would have done the same thing to the tramp steamer that the shipping code would have done, had it been put into effect, namely, would have made the tramp steamer noncompetitive in the determination of ocean rates. It seems that the Shipping Board Bureau and its contemplated rules, under the Department of Commerce, have been sidetracked or pigeonholed.

We have in the pending bill another measure which is designed to subject all ocean shipping to one regulatory agency, the Interstate Commerce Commission, and the inevitable effect would be that the tramp steamer would be required to come under the same rates, rules, and regulations as the conference steamers voluntarily come under; and the result would be noncompetition in ocean freight rate matters. That brings me back, Mr. Chairman and gentlemen of the committee, to the fundamental contention of the American Farm Bureau Federation, which is this: Our people believe in competition in transportation rather than such an extreme application of the coordination of transportation that under the latter we shall have no competition whatever.

We believe that the point of view of the transportation question should be the welfare of the shippers, of which the farmers constitute a great sector; and that we should not have so much in view the welfare of the investing public or return on investment.

First, then, we challenge the propriety of this bill, because it includes both inland water and ocean water transportation matters, and

reduces the element of competition almost to zero, by requiring the inland water routes and the ocean routes to meet the rate and to comply with the rate that the high cost methods of transportation must have to survive.

Mr. LEHLBACH. Mr. Gray, did your American Farm Bureau Federation take that same position in regard to the Federal Communications Act?

Mr. GRAY. We took no position in regard to the Federal Communications Act.

Mr. LEHLBACH. Well, that involved the same principle of regulating competing agencies.

Mr. GRAY. I understand that it did.

Mr. LEHLBACH. In interstate communication.

Mr. GRAY. I understand that it did; but we took no position on the Federal Communications Act. I don't know just why, but for some reason, I suppose, our Farm Bureau people thought that was not close enough to them to be of supreme economic importance, so they took no position on it.

Now, furthermore, on this bill, Mr. Chairman, the section in the bill that relates to wharfingers is in direct conflict with the interest of a great number or a fair number of our municipalities, which own their own wharves, having invested their own tax money in them. We believe that they should be allowed to operate those wharves to the advantage of their own people and the shipping public which patronizes them.

The municipalities which own their own wharves, if brought under the regulatory influence of the Interstate Commerce Commission, would be required, under the terms of the pending bill, to raise their rates to the highest rates that any privately owned wharf might find necessary to get reasonable returns on his or its investment, so that, if there is any virtue or any advantage to be obtained in or through a municipally owned wharf, it is our belief, in the Farm Bureau Federation, that to place municipally owned wharves under this bill would be destructive of that advantage or of that economic virtue.

Turning to another section, and going through this bill in a hurried manner, because there is no use of much more than merely itemizing the position that we take on these matters, without elaborate argument, in the commodities clause we note there that a carrier by water has certain prohibitions thrown around him as to transporting his own commodities.

Now, it just so happens that cooperative marketing organizations and cooperative purchasing organizations, both of which are legalized by Federal law and State law, and some of which have now developed at least the beginning of their own transport methods and are either renting or owning barges, could not, under that commodity clause, handle their own commodities, which is for the benefit of the people who are members of their own cooperative organizations. That strikes directly at the heart of the cooperative organizations, both State and National and, therefore, we think that section should be entirely deleted.

Passing further on, we find again, the section to which I have already briefly referred, the title of which is "Transportation by Common Carriers in Foreign Commerce", section 323. In relation to that, a moment ago I mentioned the tramp steamer. The tramp

steamer is the competitor on the ocean which keeps the rates down. If it were not for the tramp steamer, the conference zones, which are largely determined by foreign shipping, owned by foreign investors, owned by nationals abroad, and the rates of the foreign zones, consequently, are dominated very largely by foreign interests, the conference lines would have a free field on the ocean, to charge whatever rate their investment seemed to require.

May I give a case in point as to the effectiveness of the tramp steamer to aid agriculture? In 1924, the Gulf ports from Texas to Florida were congested with wheat and cotton, so much so that wheat in the Galveston port was crowded to the top of all the elevators, and every railroad switch back 50 or more miles was crowded with box cars that could not be unloaded. The result was a rapid decrease in the price of wheat, and cotton was similarly congested. The Shipping Board then had a lot of vessels then unused that had not been scrapped. They "spotted"-using the local and technical termseveral vessels in the Gulf ports, to move that wheat and cotton abroad, There was a foreign market for it.

The Shipping Board supplied the vessels to move that wheat and cotton. The losses on those vessels ran from $15,000 to $30,000 of Uncle Sam's money, because the income from hauling the traffic was not as great as the cost of putting the vessel down there and equipping it for the service and towing it back to some unused harbor. The Congress got alarmed at that cost and they caused an investigation to be made by a commission. A former Congressman from Tennessee, who is now a member of the Federal Trade Commission, was either chairman of that commission or a member of it.

The CHAIRMAN. I think the Honorable Wallace White was chair

man.

Mr. LEHLBACH. I think that Mr. Scott, of Michigan, was chairman at that time.

The CHAIRMAN. I think he is speaking of the joint investigating commission-the special investigating commission.

Mr. MANSFIELD. You were a member of it?

Mr. LEHLBACH. Oh, yes; I was a member of it. The majority report of that commission was written by Mr. Davis.

Mr. GRAY. I had forgotten just his connection but I knew he had a connection with that body. The investigation showed that Uncle Sam lost money on spotting what I may call tramp steamers to haul that cotton and wheat to the foreign markets; but the report of the committee, in summarizing the benefits from the action, said that the Nation, as a whole, secured a benefit of approximately $600,000,000.

Now, in the meantime, as those commodities began to move into commerce, the price began to rise again.

Although that is a spectacular example to give of the effectiveness of a tramp steamer in aiding agriculture, I did it to show when, as in the code proposed in 1933 and 1934, and when, as in the action proposed by the Department of Commerce 3 or 4 months ago, or when, as in this proposed bill, efforts are made to crowd the tramp steamer off the ocean or to fix their rates as the rates of the conference line, I say the farmers are frightened when faced with those eventualities; and we want to resist said bill for this reason, if for no other.

First, the bill is in direct conflict with our ideas that the shipper and his welfare should be thought of first of all.

Second, that there ought to be competition in transportation much more than there should be the attempted goal of coordination, which latter, we are firm in the belief, means that rates will increase to the higher cost levels of those methods of transportation which need the higher rates.

Third, we think, as Mr. Brenckman, the witness just ahead of me, said, that there is no public demand, no measurable public demand, for this type of legislation; and, consequently, we think that the bill should not be reported at this time, to the present session of Congress. The CHAIRMAN. What is your organization and how extensive is your organization?

Mr. GRAY. We have State Farm Bureau federations in 40 States, there being 8 States in which there is no such federation. We have county farm bureaus in 1,800 agricultural counties in various, and practically all, parts of the United States.

We have a membership, paid up, with bureaus in different conditions of prosperity, between 750,000 and 1,000,000. No man can tell exactly how many are paid up; but there is a membership of individual farm people of from 750,000 to 1,000,000 in the American Farm Bureau Federation.

Perhaps, Mr. Chairman, that answers your question and puts into the record all the data that you asked for a while ago.

The CHAIRMAN. It does.

Mr. GRAY. I will say, further, that the organization is supported exclusively by membership fees paid to the county bureaus by the individual member, who signs voluntarily in the county farm bureau organization; and the fee varies from $2 in some States to as much as $15 in other States, and is divided three ways. Part is left in the county for local work; part goes to the State federation for Statewide work; and 50 cents only, in every instance, goes to the American Farm Bureau Federation for national work.

The CHAIRMAN. Is that all?

Mr. GRAY. I have finished, unless you have some questions.
The CHAIRMAN. All right.

(Recess, 12:30 p. m. to 2 p. m.)

AFTER RECESS

The committee met at 2 p. m., pursuant to recess, Hon. Schuyler O. Bland (chairman), presiding.

STATEMENT OF C. E. CHILDE, OMAHA, NEBR., CHAIRMAN TRAFFIC COMMITTEE, MISSISSIPPI VALLEY ASSOCIATION

Mr. CHILDE. Mr. Chairman and gentlemen of the committee, my name is C. E. Childe. I live at Omaha, Nebr. I appear here as chairman of the traffic committee of the Mississippi Valley Association which is an incorporated, nonprofit association, with membership in 23 States in the Mississippi Valley, whch is, roughly, the area from the Alleghenies to the Rockies and from Canada to the Gulf.

The purpose of the Mississippi Valley Association is to advance the interest of the Mississippi Valley by the development of its domestic and foreign commerce.

We have considered this bill purely from the standpoint of the public interest, and I shall endeavor to discuss it from that standpoint. It is the view of the Mississippi Valley Association that inland waterways should be free and open to the navigation and commerce of all of our citizens.

We are opposed to the enactment of the Eastman water bill. It would establish a system of governmental restriction of water service and regulation of port-to-port rates, which, we believe, would be injurious to the national welfare, and especially to that of the interior of the United States. High transportation charges have retarded the growth and prosperity of the interior States, more than any other part of the Nation.

Our agriculture and industry must have lower charges in order to compete in domestic and world markets.

You are aware, Mr. Chairman, of the fact that our basic industry in the Mississippi Valley is agriculture, and the markets of our agricultural products are in the consuming areas of the Nation, which means, mainly, in the East and around the seacoast, and in world markets. The transportation hauls are long, for the most part, and the freight rates are high, as between our farms and the markets, for their products. The prices which our farmers get is what the consumers pay, less the cost of transportation. Therefore, if you reduce the cost of transportation, you immediately, to that extent, increase the price and the return which the farmer gets for the products; and thus the amount of money which agriculture has to spend; so, also, with our manufacturing industries. They compete, for the most part, in our country, with competitors who are located nearer to the consumer and who, therefore, have shorter transportation hauls, competitors who are able to use low water rates for the transportation of their raw materials and products to a greater extent than the interior manufacturers, and who, therefore, have advantages in transportation costs, both in our domestic and in our foreign trade.

With those industries located nearer the seacoast, the Eastman bill would unquestionably increase transportation charges and restrict the use of our inland waterways. That, in fact, is its main purpose and is why the railroads are so strenuously supporting it here, in appearances before your committee.

It seems to me that it is sufficient to condemn this bill to point out that it would have the effect of increasing transportation charges, contrary to our established national policy of promoting, encouraging, and developing water transportation service and facilities. I quote from section 500 of the Transportation Act of 1920:

This Congress has been spending and authorizing the expenditure of vast sums of money for the development of navigable channels in the Mississippi River and its tributaries and our other inland waterways. It has created the Inland Waterways Corporation, which owns and operates the Federal Barge Line, as a pioneer transportation agency on the Mississippi River and its tributaries, all this for the purpose of lowering the transportation rates available by water to and from the interior of the United States.

Now, is Congress going to nullify its efforts along those lines by the enactment of legislation which will make transportation on those waterways more costly and more difficult?

I ask your consideration also of the fact that there are no abuses suffered by the public in connection with inland waterway transportation which necessitate or justify the Government stepping in as a