STATEMENT OF CHESTER C. THOMPSON, PRESIDENT, THE AMERICAN WATERWAYS OPERATORS, INC., WASHINGTON, D. C.

Mr. THOMPSON. That is correct, Mr. Chairman.

Mr. WILLIAMS. You may proceed.

Mr. THOMPSON. Mr. Chairman, as you have indicated, my name is Chester C. Thompson. I am president of the American Waterways Operators, Inc., a national association of domestic water carriers and operators serving the inland rivers, intracoastal canals, and waterways, the bays, sounds, and harbors of the United States. Members of the association, which maintains its principal office at 1319 F Street NW., Washington, D. C., constitute a substantial and important factor in the national transportation system and, as such, are an important element in the national defense program.

Mr. Chairman, I would like to state at this point for the record that this inland water carrier industry is unanimous in its opposition to this pending legislation, H. R. 6141 and H. R. 6142, and had originally scheduled numerous witnesses to so testify, but in the interest of saving the committee's time, and the possibility of avoiding repetition, its list of witnesses was very substantially reduced; but I would like the record to show that we could have gotten in many witnesses who would similarly testify.

Mr. WILLIAMS. In view of that, Mr. Thompson, it might be well for you to state for the record in a little more detail just how many people, how many organizations, how many businesses, and so forth, your organization represents.

Mr. THOMPSON. The membership of the American Waterways Operators consists of about, approximately 200. They are all types of carriers, regulated common carriers, contract carriers, and unregulated carriers, private carriers, and builders and repairers of commercial floating equipment used on the inland waterways and the harbors of the Nation.

It is the American Waterways Operators, the largest of the organized waterways groups in the country, numerically.

I have no right, of course, nor do I attempt to speak for other organizations; but it is my understanding that all organizations of water carriers and all water carriers in the United States are opposed to this legislation.

Mr. Chairman, perhaps it would be appropriate for me to qualify myself, at least in a measure, as a witness on this important legislation. From 1939 to 1944 I served as Chairman of the Advisory Board and President of Inland Waterways Corporation, which operated the Federal barge lines and a short-line railroad in Alabama known as the Warrior River Terminal Company. During those years Federal barge lines was the largest operator of barge and towing vessels in the Nation, its services being confined to the Mississippi River and its tributaries-other than the Ohio-and the Warrior Tombigbee system between Mobile and Port Birmingham (Ala.) with a connecting service between Mobile and New Orleans (La.).

Inland Waterways Corporation at that time was wholly owned by the United States Government and under the supervision and "housekeeping" of the Department of Commerce. My tenure of office with that agency was before the enactment by the Congress of the Govern

ment Corporations Control Act; thus, it was not necessary to seek appropriations from Congress for its operations and it was permitted to use its own revenue to discharge operating and other expenses. As this committee knows, Inland Waterways Corporation was sold to private enterprise in 1954 and it is now functioning successfully as Federal Barge Lines, Inc., which, incidentally, is a valued member of the organization I now represent.

In 1944 I became president of the American Waterways Operators, Inc., and am still serving in that capacity. This has provided me with an opportunity to observe the operation generally of barge and towing vessels in all sections of the United States and to become familiar with the continued and unprecedented expansion thereof, which is particularly true since the end of World War II.

The association, as I have said, represents all types of water carriers which, under the constitution and bylaws, elect directors to represent them in the management and determination of policies-legislative and otherwise. These include regulated common and contract carriers, unregulated carriers, private carriers, terminal operators, and builders and repairers of equipment, operating on all segments of the 29,000 miles of the inland waterways system of the Nation.

The nature of the traffic on the inland waterways is primarily of a bulk nature such as coal, coke, stone, sand and gravel, cement grain, ores, petroleum and petroleum products, dry and liquid sulfur, chemicals and several other commodities of the same general nature. There is also a substantial growth in the transportation of automobiles, motortrucks, canned goods, iron and steel articles, canned foods, cotton products, lumber, machinery, sugar, rice, paper and paper products, soap, beverages, and others too numerous to mention.

While the industry I represent definitely is small business, its portion of the total freight available for transportation has nearly doubled between the years 1939 and 1954-the last year for which official figures are available. In the year 1939, 3.7 percent of the total Nation's traffic was transported on the inland waterways. It amounted to 20 billion ton-miles. By 1954 the percentage of the total freight increased to 7.3 percent which amounted to approximately 82 billion ton-miles of freight service.

To do this "job of hauling" obviously it was necessary to increase the capacity of the inland fleet, both in dry cargo and tank equipment. All of this was done without any specific aid in the form of Government financing, and it is continuing at a very satisfactory and rapid rate. The inland water carrier industry has been a leader in the use of technological developments, making for more efficient handling of water-borne commerce and resulting in much better service to its customers. The expansion of traffic has been generally uniform, with respect to the commodities transported. In fact, more shippers are becoming aware of the economy and efficiency of inland water transportation and are, thus, availing themselves of it.

Plant expansion and relocation of industries and distributorsparticularly in the past decade-has been most noticeable. Billions upon billions of dollars have been utilized in the building of business and industrial facilities on the inland waterways, including virtually all types of industry and distribution known to the economy of the Nation. This trend is increasing so that seldom does a week go

by that a major corporation of the country does not announce a new plant or facility on some inland waterway. There is no doubt that this commercial expansion on the navigable waterways of the Nation will continue, inasmuch as management no longer puts all of its "transportation eggs" in one basket.

Under the constitution and bylaws of American Waterways' organization, matters of policy, particularly those affecting legislation, are determined by its board of directors, which consists of 31 members. These directors represent all classes, types, and sizes of inland water carriers and operators serving the navigable waterways and harbors of the Nation. At its quarterly meeting on May 11, 1955, the board unanimously voted to oppose the Presidential Advisory Committee report and recommendations, as well as any legislation that might be introduced to implement them. Therefore, I am here at the specific direction of our board to testify in connection with the consideration by this subcommittee of H. R. 6141 and 6142.

Basic to our reasons for being here--for there being an Advisory Committee report, legislation to implement the recommendations of that report, or for this hearing-are certain facts that do not appear on the face of the proposed legislation but, nevertheless, which have an important bearing on the legislation. It is pertinent, therefore, to review very briefly our reasons for being here.

The facts, as I have been reliably informed, are that the administration, at the highest level, was approached late in 1953 or early in 1954 by representatives of the rail carriers and urged to do something, and to do it quickly with respect to the railroad problem. A substantial number of papers, all documented, were furnished in support of this plea, all having to do with the inroads that competitors were making on railroad traffic, subsidization of these competitors by the Federal Government, and the need for more managerial discretion on the part of the railroads.

It is not our purpose to deny that there exists a railroad problem. It is our purpose, however, to assert as vigorously as possible that if a railroad problem exists the barge and towing vessel industry did not contribute to it except perhaps through legitimate and lawful competition, exercised within the framework of the national transportation policy; further, that the railroads have no right to attempt to meet and solve their problems through legislation designed to allow them to destroy barge and towing vessel competition on a selective basis.

After careful study of the pending legislation, it is our opinion that the railroads seek the right to destroy barge competition by destroying the present national transportation policy safeguards, which directly preserve the inherent advantages of the various modes of transportation by prohibiting unfair and destructive competitive practices. The legislation under consideration might conceivably help solve the railroad problem, but it is not in the interest of the barge and towing vessel industry to solve it by destroying parts of that industry. Furthermore, we do not believe it to be in the public interest.

In order to defend our industry against the direct and outrageous assault being made upon it by the roalroads in this pending legisla

tion and in a high-powered, well-financed advertising and public-relations campaign designed to obtain enactment of the legislation, I think it is pertinent to briefly examine the railroad problem as well as the seriousness with which the railroads are trying to solve it by action within their own industry.

Undoubtedly a part of the railroad problem is the annual deficit incurred on passenger-train operations, which reached the staggering sum of $705 million in 1953. Barges and towboats carry no passengers; therefore, our industry makes absolutely no contribution toward creating that annual loss in railroad operations. It would appear that the railroads have made no serious overall attempt to solve that facet of their problem, inasmuch as the Interstate Commerce Commission has recently found it necessary to exercise its own initiative to study this problem.

The recent proposal by Mr. Robert R. Young, president of the New York Central Railroad, that the railroad industry spend $100 million annually in the advertising and public-relations program to sell their industry to the public, suggests an interesting analogy of what we in the barge and towing-vessel industry are faced with in defending ourselves against the integrated railroad giants of the transportation industry. There are not 5 operators of barges and towboats in the United States whose combined capital assets are equal to what Mr. Young proposes be spent for advertising and public relations in 1 year. The barge and towing-vessel industry is unintegrated; it is made up of small business-most of them individually owned.

The sudden emergence of a railroad problem that demands immediate solution is probably as much psychological as anything. If it were seriously concerned, an industry losing over $700 million in 1 operating department would hardly propose that it spend another $100 million for advertising and public relations before it sought a solution to its financial loss.

The situation suggests that the loss of position by the railroad industry may be the real basis for this problem. The railroads lost position in the transportation field in 1954 when, for the first time in their history, they failed to carry over 50 percent of the total commerce transported within the continental limits of the United States. Undoubtedly this was a tremendous blow to their pride of position but, again I say, they have no right to be allowed to recoup their position at the expense of other modes of transport and of the national and public welfare.

The present national transportation policy, as written by the Congress, proceeds from an initial premise that the transportation industry is public in nature and monopolistic in character; therefore, competition within itself is not a satisfactory regulator to safeguard either the various modes of transportation, given segments of the industry, or the public interest. Accordingly, the Congress decided, in 1887, that segments of the transportation industry required economic regulations, basically to protect the interests of the public. Other segments, some defined by law and some simply defined by omission from the regulatory laws, are left free of regulation in the public interest.

The areas and the limits for regulation were precisely defined on the basis of standards that the Congress had to go by in making the major amendments to the Interstate Commerce Act in 1940. These amendments generally were designed to make more definite the regulatory standards under which economically regulated carriers would operate. Congress in 1940 felt that experience indicated a continuing need for regulation and more definitely defined regulation for the segments of the transportation industry subject to regulation. This cannot be classified as a static policy. The policy and framework of economic regulation have been examined over and over, and determined assaults have been made upon it time and time again; however, it stood up under both reexamination and assault.

Paramount in the thinking of the Congress in establishing the present law and the present national transportation policy was the expressed need

to recognize and preserve the inherent advantages of each (mode of transportation) *** to promote * * * and foster sound economic conditions in transportation and among the several carriers

I am further quoting from the policy

to encourage the establishment and maintenance of reasonable charges for transportation services; *** without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices * ** This was a redefinition and strengthening of the policy instituted by the original Interstate Commerce Act of 1887.

Before discarding 69 years of transportation experience and destroying the policy under which it was built, certain tests should be applied to determine whether there has been accomplished in transportation in the United States what our predecessors set out to do in 1887. If that broad goal-or parts of it-have been accomplished, is it for the good of the country? Is it as good as reasonably could be expected? Have the inherent advantages of each mode of transportation been preserved, and have the various modes of transport been allowed to exploit such advantages as fully as is good for both them and the public welfare? On the basis of the records established in commerce handled and the public service rendered, it is not possible to arrive at a negative answer to this basic question.

Under existing policy each of the various modes of transportation have prospered. The ease with which the railroads have acquired the necessary financing to effect the transition from steam to diesel locomotives, from manual to mechanized roadbed maintenance, from 60- to 110-pound rails, from manual to pushbutton yard operations, and from standardized to multipurpose freight cars, all indicate prosperity and general overall healthiness of the industry.

With negligible additions of trackage, if any at all, since 1942 the railroads have carried more commerce annually than was carried by all forms of transportation combined in any previous year in the United States. It is quite true that the railroads' share of the total transportation has shown a steady percentage decline since it reached a peak in excess of 70 percent in 1943. This was to be expected. Percentagewise it might be expected to drop further as the inland waterways and the motor truck fleets grow, as pipeline operations increase, and as offshore shipping and airlines perfect their fleets and operating techniques.

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