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at such times as may be determined by the President. This proposed legislation, in addition, is so phrased that the President may use the authority to transfer the equipment as a part of any overall financial settlement that may be proposed in the future between the country concerned and the United States.

The Security Treaty between the United States and Japan, under which United States forces are maintained in Japan, contemplates the increased assumption by Japan of responsibility for its own defense. Japanese security forces have been using equipment loaned by the United States for training purposes. The object of the proposed legislation is to permit the transfer of equipment to the Japanese Government, in accordance with mutually acceptable arrangements which may be worked out between the two Governments.

Under the words "procured prior to July 1, 1953," in the proposal, it is intended that any military equipment and supplies currently in the possession of the Department of Defense which were purchased with appropriated funds prior to July 1, 1953, could be transferred, and any military equipment and supplies not yet delivered but which were contracted for prior to July 1, 1953, and for which funds were obligated prior to July 1, 1953, could also be transferred.

Because this proposal involves military programs and plans, it is requested that the Department of Defense be permitted to present the justification of this legislation by testimony to be given before the appropriate committees of the Congress in executive session.

COST AND BUDGET DATA

This transfer will not include any grants of money but of assets already procured. DEPARTMENT OF DEFENSE ACTION AGENCY

The Department of the Army has been designated as the representative of the Department of Defense for this legislation. Sincerely yours,

JOHN G. ADAMS, Acting General Counsel.

CLARIFYING AMENDMENTS ΤΟ WALSH-HEALEY PUBLIC CONTRACTS ACT

Mr. KENNEDY. Mr. President, I introduce for appropriate reference a bill to amend the act of June 30, 1936-the Walsh-Healey Act. I ask unanimous

consent that a statement by me relating

to the bill be printed in the RECORD.

The VICE PRESIDENT. The bill will be received and appropriately referred; and, without objection, the statement will be printed in the RECORD.

The bill (S. 2471) to amend the act of June 30, 1936-the Walsh-Healey Actintroduced by Mr. KENNEDY, was received, read twice by its title, and referred to the Committee on Labor and Public Welfare.

The statement by Senator KENNEDY is as follows:

STATEMENT BY SENATOR KENNEDY

I have today introduced a bill providing for several clarifying amendments to the Walsh-Healey Public Contracts Act.

The Senator from Maine [Mr. PAYNE] and the Senator from Rhode Island [Mr. GREEN] have also introduced legislation which I have supported to expedite proceedings under this act, and it is my understanding that consideration is to be given this legislation at an early date by the Senate Committee on Labor and Public Welfare. The purpose of my bill is to supplement their bills and to give to the committee an opportunity to consider the various changes needed to expedite Walsh-Healey proceedings.

I have previously pointed out to the Senate that a strong and effective Walsh-Healey Act was an important step in the achievement of a strong national economy without undesirable industry dislocation. The purpose of this amendment is to clarify the definition of certain key terms used in the act in order to bolster the present, and I believe proper, administrative interpretation of those terms. Secondly, this bill attempts to meet one of the most frequent complaints about the Walsh-Healey Act; namely, the lag between wage levels and administrative findings. Under this bill, the Secretary of Labor is called upon to make such redeterminations from time to time as are necessary to reflect with reasonable accuracy prevailing minimum wages, and the procedures for periodical reviews of existing wage determinations are spelled out.

Business and labor groups in New England-including the New England Council's annual tabulation of business leaders and the report of the New England Governors' committee on the textile industry-as well as other organizations and individuals in all parts of the country have recognized the need for improving the Walsh-Healey Act. This act is an important foundation of our labor-standards legislation, necessary to protect fair-minded employers in all parts of the country from depressed wage competition.

USE OF AGRICULTURAL COMMODITIES TO IMPROVE THE FOREIGN RELATIONS OF THE UNITED STATES

Mr. SCHOEPPEL. Mr. President, on behalf of myself, the Senator from New Mexico [Mr. ANDERSON], the Senator from Kentucky [Mr. CLEMENTS], the Senator from Mississippi [Mr. EASTLAND), the Senator from North Carolna [Mr. HOEY], the Senator from South Carolina [Mr. JOHNSTON], the Senator from South Dakota [Mr. MUNDT], the Senator from Vermont [Mr. AIKEN], the Senator from Minnesota [Mr. THYE], the Senator from Idaho [Mr. WELKER], and the Senator from North Dakota [Mr. YOUNG], I introduce for appropriate reference, a bill to authorize the President to use agricultural commodities to improve the foreign relations of the United States and for other purposes.

The VICE PRESIDENT. The bill will

the senior Senator from New Jersey [Mr. SMITH], I introduce for appropriate reference a bill to amend the Trading With the Enemy Act, as amended, and for other purposes.

The Committee on the Judiciary held rather extended hearings on the whole question of alien property, and as a result of those hearings there has been contrived what might be called a package bill which reflects the results of a great variety of bills introduced by Members of the Senate.

The VICE PRESIDENT. The bill will be received and appropriately referred. The bill (S. 2477) to amend the Trading With the Enemy Act, as amended, and for other purposes, introduced by Mr. DIRKSEN (for himself and other Senators), was received, read twice by its title and referred to the Committee on the Judiciary.

HOUSE BILL REFERRED

The bill (H. R. 4017) to provide for the conveyance of certain land and improvements to the England Special School District of the State of Arkansas, was read twice by its title, and referred to the Committee on Agriculture and Forestry.

CONSIDERATION OF NOMINATION OF ROBERT D. COE, TO BE AMBASSADOR TO DENMARK

Mr. WILEY. Mr. President, the White House sent to the Senate today the nomination of Robert D. Coe, of Wyoming, to be Ambassador of the United States to Denmark. I give notice that the nomination will be considered by the Committee on Foreign Relations, after 6 days have expired, in accordance with the committee rule.

ADDRESSES, EDITORIALS, ARTICLES, ETC., PRINTED IN THE APPENDIX

On request, and by unanimous consent, addresses, editorials, articles, etc., were ordered to be printed in the Ap

be received and appropriately referred. pendix, as follows:

President to use agricultural commod-
The bill (S. 2475) to authorize the
ities to improve the foreign relations of
the United States and for other pur-
poses, introduced by Mr. SCHOEPPEL (for
himself and other Senators), was re-
ceived, read twice by its title, and re-
ferred to the Committee on Agriculture
and Forestry.
Subsequently,

Mr. SCHOEPPEL, from the Committee on Agriculture and Forestry, to which was referred the bill (S. 2475) to authorize the President to use agricultural commodities to improve the foreign relations of the United States, and for other purposes, reported it favorably, without amendment, and submitted a report (No. 642) thereon.

AMENDMENT OF TRADING WITH THE ENEMY ACT, AS AMENDED Mr. DIRKSEN. Mr. President, on behalf of myself, the junior Senator from New Jersey [Mr. HENDRICKSON], the Senator from New York [Mr. IVES], and

By Mr. JOHNSON of Texas: Article discussing the effects of the Texas

drought, written by Charles Lucey, and pubJuly 20, 1953. lished in the Fort Worth (Tex.) Press of

By Mr. CLEMENTS:

Article by Barry Bingham, published in the Louisville (Ky.) Courier-Journal of April 26, 1953, reporting on conditions in Vietnam.

Article by Barry Bingham published in the Louisville (Ky.) Courier-Journal of June 7, 1953, in the form of a report on Pakistan.

By Mr. WILEY:

Editorial from New York Times of July 24, 1953, and resolution of the Wisconsin Pipe Trade Association regarding the Bricker amendment.

Editorial entitled "Why This Bricker' Frenzy?" published in the Milwaukee Journal, and statement prepared by Senator WILEY entitled "The Fallacies of the Judiciary Committee's Majority Views on the Bricker Amendment."

By Mr. DIRKSEN:

Editorial entitled "Taking Them as They Are," published in the Christian Science Monitor on July 16, 1953, with reference to a report from a study group in France criticizing the French fiscal system and recommending severe curtailment of economic aid.

By Mr. POTTER:

Article entitled "New Orleans: Clean Port, Lower Costs," from the New Orleans Port Record.

An editorial headed "Merchant Shipping," published in the El Paso (Tex.) Times.

By Mr. KERR: Editorial entitled "Social-Security Law Full of Holes," published in the North Star, of Oklahoma City, Okla.

By Mr. BUTLER of Maryland: Article entitled "How To Grab 20 Acres for $1.25," relating to Federal lands subject to mining laws, published in a recent edition of the Reader's Digest.

Editorial entitled "Downward Trend in a Mighty Fleet," published in the Baltimore Sun of July 24, 1953, discussing the American merchant marine.

Article entitled "Equal Rights Fight Is On," published in the New York Times of July 19, 1953, relative to the proposed equal rights amendment to the Constitution; and letter addressed to him by Hazel Palmer, under date of July 17, 1953, on the subject of equal rights for men and women, which will appear hereafter in the Appendix.

Article entitled "State Prepares To Lift Peace Cross Roads; AAA Demands Action"; and editorial entitled "Where Droughts Are

and enhancing his white brothers' finest way of life.

The Choctaws exalted him as one of their noblest chiefs-white men approved and welcomed his leadership with highest respect. Now he is gone. No more will we see his face, or hear his voice around the council fires. His feet have sped across the wide river, over the great prairies. His soul has soared beyond the purple mountains. A chief he lived, a chief he died. A chief he will ever be to inspire in us a greater faith-a finer courage-a nobler aim. Strive as we will, we cannot hope to do more.

SALE OF INLAND

WATERWAYS CORPORATION TO THE FEDERAL WATERWAYS CORP. OF DELA

WARE

Mr. CAPEHART. Mr. President, I ask unanimous consent to have printed in the body of the RECORD a statement which I have prepared in connection with the sale of the Commerce Department's Inland Waterways Corporation to a private company, together with a press release issued by Secretary Weeks,

Welcome," published in the Washington and a copy of a letter which he sent to Evening Star of July 23, 1953.

By Mr. SPARKMAN:

Article entitled, "Can Boswell Win His Sixth Title," written by Ali Van Hoose and published in the magazine section of the Birmingham News of last Sunday.

Article entitled, "Hi Neighbor," written by Steele McGrew, dealing with the TVA.

Letter written by Mr. C. D. Boartfield, of Huntsville, Ala., on the subject of the Tennessee Valley Authority.

By Mr. KEFAUVER: Editorial entitled, "The Bricker Amendment Again," published in the New York Herald Tribune of July 7, 1953.

A statement prepared by him on the 20percent excise tax on moving-picture admissions.

THE CHIEF GOES WEST-DEATH OF BEN DWIGHT

Mr. KERR. Mr. President, I wish to pay tribute to the memory of one of Oklahoma's finest sons. For many years Ben Dwight was one of my most trusted and devoted friends. He passed away a few nights ago. He will long be missed by thousands of Oklahomans who knew and cherished and trusted him.

I have expressed my sense of deep loss and regret in a brief statement which I ask to have printed in the RECORD as a part of my remarks.

There being no objection, the statement was ordered to be printed in the RECORD, as follows:

THE CHIEF GOES WEST

Down the long trail of his fathers, out of the midnight of death into the light of an eternal dawn, his gallant spirit moves aloft.

He had known for many moons that he must go, but he was unafraid. He spent his time making plans for others with an abiding faith that the great chief of all would care for him.

He trusted the white man's God, knowing he could do so without forsaking his own. He never appeased an enemy, or failed a friend-yet he did not hate the one, nor impose upon the other.

Ben Dwight was a blessing to all—a burden to none. As he remembered and cherished the virtues of his friends, so shall his virtues never be forgotten by so many who knew and loved him.

He honored the highest precepts and traditions of his Indian forebears while adopting

each Member of Congress.

There being no objection, the matters were ordered to be printed in the RECORD, as follows:

STATEMENT BY SENATOR CAPEHART Secretary of Commerce Sinclair Weeks, with the approval of President Eisenhower, has removed the Federal Government from direct competition with private barge lines by selling the Commerce Department's Inland Waterways Corporation to the Federal Waterways Corp of Delaware, à private company.

The Secretary's action is concrete evidence that the Eisenhower administration is keeping its pledge to remove Uncle Sam from business which better can be done by private industry.

FINANCIAL TERMS OF SALE

The sale is a good business transaction for the public from any way one looks at it.

Secretary Weeks has taken the Government-owned barge line, on which from 1939 through 1952 the taxpayers have lost $9,749,000 in 12 of the 14 years, and not only gets a sales price of $9 million but, in addition, he has arranged for the United States Government to retain quick assets of the Corporation, which, after deduction of current liabilities, should net approximately $2,700,000 in cash and accounts receivable.

Taxpayers no longer will be making up losses. Instead, the private corporation will pay taxes.

The sale is a good thing for the users of the system, especially those shipping less than bargeload freight. The contract provides that the purchaser shall continue to furnish cargo service similar to the current arrangement.

The purchaser will take over the current labor contracts.

So the administration at a stroke has carried out constructive action that is good for the public, good for the customers and good for the workers.

The Federal Waterways Corp. of Delaware is a new and wholly owned subsidiary of the St. Louis Shipbuilding & Steel Co., of which Herman T. Pott, of St. Louis, is the president. Mr. Pott is chairman of the board of the Federal Waterways Corp.

The sale calls for the purchaser to put in $1 million in new working capital and in addition to pay the purchase price of $9 million over a period of 10 years, plus interest at the rate of 34 percent annually.

The agreement provides that the purchaser may prepay any or all installments and

accrued interest. The agreement also restricts the payment of dividends until the entire purchase price of $9 million, plus accrued interest, has been paid.

DESCRIPTION OF BARGE LINES

Before I discuss further details of the sale and the interesting history of the transportation experiment, I should like to describe the Federal barge system, which in recent years often has been called a "white elephant."

The Inland Waterways Corporation was created by Congress in 1924. It operates a common carrier transportation service on the Mississippi, Illinois, Missouri, and Warrior Rivers, with 20 towboats, 4 tugs, and 253 barges on 3,300 miles of inland rivers.

PURPOSE IN CREATION OF SYSTEM

The purposes of the Corporation's creation

were:

(a) To develop common carrier barge transportation,

(b) To exploit the possibilities of water transportation, and

(c) To make available the benefits of resulting economies to the widest possible number of shippers, both large and small, at river ports as well as in the hinterland.

The laudable original purposes long since have been served. In recent years the losses incurred by Government operation have been a drain on the taxpayers.

WIDE DIFFERENCES OF OPINION ON LINES Although recent administrations, on occasion, have professed that they were willing to sell the Corporation, they never have succeeded in getting a customer to sign on the dotted line.

Federal ownership of the barge system has caused wide differences of opinion.

Advocates of planned economy and State control have clung to the idea. They have repeatedly sought large public expenditures to rehabilitate equipment and to expand operations. But the Congress in the last two sessions has refused to dump any more of public funds into the venture.

Other groups, also, in the past have favored operations. Back in 1917 the original champions turned to the idea as a means of more effectively utilizing our domestic waterways. Later in World War I, railroad congestion of military freight caused the Government to enter the barge business for relief.

CONDITIONS HAVE CHANGED SINCE CREATION

But these earlier reasons have lost their force. In the initial period there was scarcely any private barge service on the inland waters. Channels had not been dredged. River terminals were few. Equipment had not been developed to meet the requirements of modern barge transportation.

Today there are several thousand miles of improved waterways. Modern types of floating equipment are at hand. Approximately 100 private barge lines are in operation.

SMALL SHIPPERS FULLY PROTECTED Small shippers need not fear the current transfer to private industry. For their protection Secretary Weeks had safeguards written into the contract which provide for a continuance of common-carrier service "in a manner substantially similar" to the service which the Inland Waterway Corporation has been providing since its inception. Common-carrier service is defined and provided for in the contract briefly as follows:

1. Adequate provision for transporting such less-than-bargeload and less-than-carload shipments as can reasonably be anticipated, and the active solicitation of such shipments.

2. The maintenance as authorized by law of such joint tariffs with rail carriers as shall make generally available the privileges of joint rail and water transportation upon terms reasonable and fair joint tariffs with

motor carriers whenever feasible in the pro- contract. A default in common-carrier servmotion of transportation service.

3. Alertness to make reasonable arrangements for interline traffic with other transportation services.

4. The maintenance of transportation service in specified districts and divisions and the making of specified minimum trips as follows:

(a) From the port of New Orleans, La., to the port of St. Louis, Mo., and return (designated as the lower district), 125 trips per annum in each direction.

(b) From the port of St. Louis, Mo., to the ports of St. Paul and Minneapolis, Minn., and including Stillwater, Minn., on the St. Croix River and Port Cargill and Black Dog, Minn., on the Minnesota River, and return (designated as the Upper District), 40 trips per annum in each direction.

(c) From the port of St. Louis, Mo., to the port of Chicago, Ill., and return (designated as the Illinois District), 75 trips per annum in each direction.

(d) From the port of St. Louis, Mo., to the port of Omaha, Nebr., and return (designated as the Missouri District), 16 trips per annum in each direction.

(e) From the port of New Orleans, La., to Port Birmingham, Ala., and return (designated as the Warrior River Division), 18 trips per annum in each direction.

(f) From Port Birmingham, Ala, to the city of Ensley, Ala, and return (designated as the Railroad Division), such trips as may be necessary to transport cargoes in reasonable quantities delivered at or destined to Port Birmingham, Ala., and such on-line cargo in reasonable quantities as may be offered for transportation.

(g) In the event transportation to Sioux City, Iowa, becomes practical and feasible, the purchaser will extend service to this area to provide such services as are justified in the light of demand therefor and cargo available.

The contract further provides that at intermediate ports and landings, calls will be made and barges spotted whenever a reasonable quantity of cargo is offered for transportation.

Let me repeat, small shippers and those who enjoyed the benefits of small shipments will receive the same type of service they have had in the past. And in addition they will get all the advantages of progressive, efficient, private management.

SECURITY FOR PERFORMANCE OF SERVICE As security for the performance of the purchaser's obligation with respect to service, the contract provides that until such time as the entire purchase price, plus accrued interest has been paid, that the purchaser shall utilize funds provided by depreciation and/or amortization, excess self-insurance reserves, and net income after taxes from operations for the following purposes in order of priority:

1. To maintain necessary working capital. 2. To meet payments and interest, if any. under the purchase contract.

3. To repay loans, or to rehabilitate existing facilities or to acquire other facilities, until the facilities have been rehabilitated or built up to a point where the purchaser has carried out his service obligations and appears reasonable to continue such service.

4. The balance may be used for increasing working capital and/or for making advance payments on the principal due.

The purchaser may pay no dividends until the entire purchase price and accrued interest have been paid.

The agreement further provides for the payment of damages by the purchaser to Inland Waterways Corporation for defaulted trips, unless excused, ranging from $1,000 to $3,500 per defaulted trip.

A default of 50 percent of required trips in any one year in any one district or division, if not excused, will be deemed a total default of the conditions of performance of the

ice on 30 percent of the required trips in any one year on which common-carrier service is to be provided will, if not excused, also constitute a total default.

Under the terms of the agreements, 14 percent of the total tonnage each year, or 375,000 tons, whichever is lower, must comprise less than barge-load traffic. Default on this requirement will mean the payment of damages to Inland Waterways Corporation of $2 per ton of deficiency. A deficiency of more than 150,000 tons will be deemed a total default.

In the event of breach of contract the Government has recourse to the courts to enforce performance or to recover damages, or by written notice to terminate the agreement and repossess the facilities sold, possess new facilities acquired, and demand the surrender of any retained net earnings.

OPPOSITION TO GOVERNMENT OWNERSHIP Opposition to Federal ownership and operation has increased over the years. Private transportation companies have strenuously objected to competition from a Federal corporation that paid no taxes.

In recent years there has developed increasing public opinion against all sorts of Government ownership. Antipathy for big government has been reflected in both the Republican and Democratic Parties. During the election campaign, Republicans repeatedly promised to do everything possible to remove Uncle Sam from competition with private business-a competition which was curtailing private investment opportunities and destroying private jobs.

ECONOMY-MINDED OPPOSITION

The case against the Federal barge lines was very strong among economy-minded people, who pointed out that in most years since the Corporation's start it had operated

in the red.

From 1939 through 1952, the system piled up losses totaling $9,749,000, losing money in 12 of the 14 years.

SECRETARY WEEKS PROMISES ACTION Shortly after he became Secretary of Commerce, Mr. Weeks, in a public statement on February 8, 1953, announced that he would try to sell the Inland Waterways Corporation. He declared: "Operation of the Federal Barge Lines is the type of Federal activity which could be better performed by private enterprise. This is an instance in which Government should get out of business, with resultant savings to the taxpayer."

Unlike some of his predecessors, he really Sinclair Weeks stuck to his principles. tried to sell the properties. He succeeded where all others refused or failed. And he made a good bargain for the Government. In announcing the sale, Secretary Weeks in a public statement declared:

"The sale is a good business transaction for the taxpayers. It not only will add a substantial sum to the United States Treasury but it also will place the property where for the first time it will yield annual tax revenues to the Government.

"The sale is a good thing for the users of the system, particularly those shipping less-than-bargeload freight. We made provision in the contract for cargo service substantially similar to that furnished now.

"From 1939 through 1952, the system piled up losses totalling $9,749,000, losing money in 12 of the 14 years. We liquidated a Government-operated system, in which losses over the years had been made up by the taxpayers, and we obtained for the public the highest sales price ever offered for it.

"Recent administrations have repeatedly said they would take the Federal Government out of the barge business. But they never did.

"As soon as the new administration arrived in Washington we promised to do our best to sell the barge line so that Government no longer would compete with private

industry. Today's action is proof that we have kept our promise.”

HISTORY OF FEDERAL BARGE LINES

The significance of this major accomplishment is better appreciated if we recall in more detail the salient points in the history of this Government experiment in operating barge lines.

The Inland Waterways Corporation-as I sketched briefly earlier-was the outgrowth of a study undertaken by the Council of National Defense in June 1917, looking to the more effective utilization of domestic waterways. The Federal Control Act of March 21, 1918, authorized the acquisition of boats, barges, and other transportation facilities on inland canal and coastwise waterways.

The Director General of Railroads thereupon commandeered all privately owned floating equipment on the New York State Barge Canal and on the Mississippi and Warrior Rivers. He simultaneously set up a field organization for the conduct of those respective activities.

The Wilson administration declared that the unprecedented wartime demands for transportation to supply our troops overseas had caused such a congestion on the railroads that it had become necessary to turn to inland waterways for relief.

The Railroad Administration began operations on the lower Mississippi with the first sailing from St. Louis on September 28, 1918. The hastily acquired fleet consisted of 5 towboats and 29 barges. Service on the Warrior River was begun in December 1918, with 1 towboat and 2 self-propelled barges and 10 coal barges.

ACTION BY REPUBLICAN ADMINISTRATIONS The operations commended by the Railroad Administration were continued to February 29, 1920, when the Harding adminis

tration transferred the Government-owned facilities to the Secretary of War for operation under the terms of the Transportation -Act of 1920.

The facilities acquired by the Railroad Administration, as a wartime measure, were continued in operation under mandate of Congress by the Secretary of War as a national defense measure and as an experiment until June 3, 1924. Then, in the Coolidge administration, the facilities were transferred to the Inland Waterways Corporation, created by an act of Congress.

It is interesting to note that the Secretary of War, who transferred the barge system to the Inland Waterways Corporation, was the late John W. Weeks, father of Sinclair Weeks, the Secretary of Commerce, who has written the final chapter to the story of that Government Corporation.

EARLY CORPORATION OPERATIONS

In creating the Corporation, the Republican Congress, mindful of the fact that operations in the Wilson administration had been conducted at a loss of over a million dollars a year, enunciated the policy that the Corporation should enjoy the same rights and privileges as a privately owned transportaion company.

When the Corporation was set up in 1924, its operations extended from New Orleans to St. Louis on the Mississippi River; from New Orleans via the inland waterways to Mobile, thence up the Warrior River system to Port Birmingham, Ala. Subsequently the service was extended on the upper Mississippi from St. Louis to Minneapolis; on the Illinois waterways system from St. Louis to Chicago; and on the Missouri River from St. Louis to Omaha.

In 1926 the Corporation purchased the capital stock of the Warrior River Terminal Co., a rail line switching facility, extending from Port Birmingham to Ensley, Ala., a distance of about 18 miles, where now it connects with the Birmingham Southern Railroad, thereby enabling exchange of traffic with rail lines serving the Birmingham district.

River-rail terminals are available at the principal ports along the 3,300 river-miles of the Corporation's operations, thereby permitting interchange of traffic between river and land carriers.

CAPITAL STOCK

The Corporation's originally authorized capital stock of $5 million was increased in 1928 to $15 million all of which has been appropriated. On July 1, 1939, the Corporation was transferred to the Secretary of Commerce under Reorganization Plaǹ No. 2. Over the years the barge line has depreciated greatly. The fixed assets have a book value-based on a 20-year depreciation schedule-of $9,100,000, approximately, but the Interstate Commerce Commission's appraisal assigns a value of only $2,900,000. This latter figure covers railroad property only, no commercial value being assigned to waterline facilities.

TONNAGE FIGURES, 1924-52

An analysis of tonnage in the calendar years 1924 to 1952 reveals the following facts:

[blocks in formation]

HISTORY OF PURCHASE PROPOSALS

The record of various purchase proposals made to previous administrations also is enlightening and significant.

Commerce Department files disclose that over the years many communications were received by various Secretaries of Commerce from prospective purchasers or lessees. Many conferences were held. None resulted in offers that were accepted. Formal proposals were presented to the Secretary of Commerce by the following:

1. A committee of businessmen representing all segments of the Mississippi Valley, submitted a proposal in January 1948 for the purchase of the Mississippi Division of the Federal Barge Line. They offered a sum not to exceed $2 million for the operating rights, tariffs, 6 towboats, 1 tug, and 99 barges.

They promised that an additional $4,400,000 would be paid for equipment under construction and a minimum working capital of $1 million was to be provided. The record says that due to sectional difficulties the committee disbanded before its offer could be fully considered by the Secretary of Commerce.

2. A Mississippi Valley syndicate, acting for 14 privately owned barge lines, offered to lease the facilities of the Corporation for a period of 5 years with renewal rights for another 10 years and an option to purchase at any time after the first 5-year period.

The proposal was rejected on February 14, 1950. The Secretary of Commerce, at that time, gave as reasons inadequate provision for rehabilitating the barge line and because the proposal would leave the Government encumbered with responsibilities and financial liabilities.

3. A former Army officer on June 15, 1950, offered to purchase the assets and rights of the Corporation for $6 million, half cash within 6 months after acceptance of offer and the balance payable over a period of years in annual installments of 50 percent net profits before taxes. The Assistant Secretary of Commerce requested additional information on July 3, 1950, but Commerce Department files do not disclose any further communications from the prospect.

4. A group of businessmen from St. Louis and New York in January 1951 submitted a proposal involving the payment of $772,000 cash plus long-term notes for $6 million, payable $300,000 annually for 9 years and $3,300,000 at the end of the 10th year.

They agreed to complete acquisition of equipment on order ($1,500,000), to place immediate orders for new equipment to cost $3,500,000 and to proceed with plans for acquisition of additional equipment, costing $5 million to $7 million.

On February 12, 1951, the Acting Solicitor of the Department of Commerce advised them that the Secretary of Commerce had decided not to accept the offer.

scribing the physical and financial conditions of the corporation was prepared with facts that would arouse the interest of prospective buyers.

LETTER TO PROSPECTIVE BIDDERS

Robert B. Murray, Jr., Under Secretary of Commerce for Transportation, under whose direction the Federal barge lines operated, and Corporation Board Chairman Louis S. Rothschild then contacted potential customers. Secretary Murray enclosed in each brochure a copy of the following letter:

"In accordance with my recent letter to you, there is attached hereto material descriptive of the property, conditions of transfer and history, financial and otherwise, of the Inland Waterways Corporation which I have assembled for the benefit of prospective purchasers.

"The Secretary, in his press release of February 8, 1953, stressed his intention of disposing of the Corporation as an appropriate instance of turning a Government-operated business over to private enterprise. For this reason he has stated that while consideration would be given to proposals to lease the facilities with a firm offer to purchase, preference will be given to proposals providing for outright purchase and prompt payment in

full.

"Proposals in accordance with the attached conditions for disposal of the facilities of the Inland Waterways Corporation should be submitted in duplicate not later than June 1, 1953. The Secretary reserves the right to reject any and all proposals received."

Eventually seven firm proposals were made by bidders up to that date, among them that by Mr. Pott, the purchaser. BUSINESSMEN STOPPED GOVERNMENT'S COMPE

TITION

Thus businessmen in the Eisenhower administration, using business sales methods, took the Government out of business competition with private business. They removed a load from taxpayers and drove a good bargain for the public. Moreover, all who patronize the lines will have the continuing advantages which alert, efficient private management always offers in comparison with the slow motion of diffident or neglectful bureaucracy.

A HALT TO INTRUSION ON PRIVATE BUSINESS

I am sure that the public and this Congress is in hearty agreement with the action of the Secretary of Commerce in the Eisenhower administration, whose sale of the Federal barge line has called a halt to Government's intrusion in one area of private enterprise.

But Secretary Weeks has done even more for the public-he has served customers, workers, and taxpayers. That's the keynote of the administration's economic policiessound measures that benefit all the people.

SINCLAIR WEEKS

Secretary of Commerce Sinclair Weeks, with the approval of President Eisenhower, today sold the Government barge line to the Federal Waterways Corp. of Delaware.

5. The current purchaser, Herman T. Pott, PRESS RELEASE BY SECRETARY OF COMMERCE on July 3, 1952, made a tentative offer of $3 million to purchase the Corporation. At a conference with the then Secretary of Commerce the proposal was rejected and an alternative plan was suggested by Mr. Pott, combining leasing of the equipment with an option to purchase. But nothing came of it.

SECRETARY WEEKS' SALES CAMPAIGN

As soon as Secretary Weeks assumed office on January 20, 1953, he announced his determination to sell the system-and he did. He got a higher price for the public than any of the offers just described.

But the achievement was the result of aggressive salesmanship and patient negotiation. Secretary Weeks' announcement of the proposed sale prompted nibbles from all sections of the country. In all, 200 inquiries were received from prospective bidders as to terms and conditions. A brochure fully de

In addition to the sales price of $9 million, the United States Government retains quick assets of the Inland Waterways Corporation which, after deduction of current liabilities, should net approximately $2,700,000 in cash and accounts receivable.

The Federal Waterways Corp. of Delaware is a new and wholly owned subsidiary of the St. Louis Shipbuilding and Steel Co., of which Herman T. Pott, of St. Louis, is the president. Mr. Pott is chairman of the board of the Federal Waterways Corp.

"The sale is a good business transaction for the taxpayers," declared Secretary Weeks. "It not only will add a substantial sum to the United States Treasury but it also will

place the property where for the first time it will yield annual tax revenues to the Government.

"The sale is a good thing for the users of the system, particularly those shipping lessthan-bargeload freight. We made provision in the contract for cargo service substantially similar to that furnished now.

"From 1939 through 1952, the system piled up losses totaling $9,749,000, losing money in 12 of the 14 years. We liquidated a Government-operated system in which losses over the years had been made up by the taxpayers, and we obtained for the public the highest sales price ever offered for it. "Recent administrations have repeatedly said they would take the Federal Government out of the barge business. But they never did.

"As soon as the new administration arrived in Washington we promised to do our best to sell the barge line so that Government no longer would compete with private industry. Today's action is proof that we have kept our promise."

Involved in the sale are physical facilities consisting of 20 towboats, 4 tugs, and 253 barges, in addition to 20 barges and 1 towboat now under construction.

The sale calls for the purchaser to put in $1 million in new working capital and in addition to pay $9 million over a period of 10 years, plus interest at the rate of 34 percent annually.

The agreement provides that the purchaser may prepay any or all installments and accrued interest. The agreement also restricts the payment of dividends until the entire purchase price of $9 million, plus accrued interest, has been paid.

In support of the interest of the people of the area, the administration obtained an agreement from the purchaser to continue common-carrier service in a manner substantially similar to the services rendered by the Inland Waterways Corporation. It is required that there be

1. Adequate provision for transporting such less-than-bargeload and less-thancarload shipments as can reasonably be anticipated, and that there be active solicitation of such shipments.

2. Maintenance of such joint tariffs with rail carriers as shall make generally available the privileges of joint rail and water transportation upon terms reasonable and fair to both rail and water carriers, and maintenance of reasonable and fair joint tariffs with motor carriers whenever feasible in the promotion of transportation service. 3. Arrangements for interline traffic with other transportation services.

4. Transportation service in specified districts and divisions and the making of specified minimum trips as follows:

(a) From the port of New Orleans, La., to the port of St. Louis, Mo., and return (designated as the lower district), 125 trips per annum in each direction.

(b) From the port of St. Louis, Mo., to the ports of St. Paul and Minneapolis, Minn., and including Stillwater, Minn., on the St. Croix River, and Port Cargill and Black Dog, Minn., on the Minnesota River, and return (designated as the upper district), 40 trips per annum in each direction.

(c) From the port of St. Louis, Mo., to the port of Chicago, Ill., and return (designated as the Illinois district), 75 trips per annum in each direction.

(d) From the port of St. Louis, Mo., to the port of Omaha, Nebr., and return (designated as the Missouri district), 16 trips per annum in each direction.

(e) From the port of New Orleans, La., to port Birmingham, Ala., and return (designated as the Warrior River division), 18 trips per annum in each direction.

(f) From Port Birmingham, Ala., to the city of Ensley, Ala., and return (designated as the railroad division), such trips as may be necessary to transport cargoes in reason

able quantities delivered at or destined to Port Birmingham, Ala., and such on-line cargo in reasonable quantities as may be offered for transportation.

(g) In the event transportation to Sioux City, Iowa, becomes practical and feasible, the purchaser will extend service to this area to provide such services as are justified in the light of demand therefor and cargo available.

The contract further provides that at intermediate ports and landings, calls will be made and barges spotted whenever a reasonable quantity of cargo is offered for transportation.

The agreement further provides for the payment of damages by the purchaser to Inland Waterways Corporation for defaulted trips, unless excused, ranging from $1,000 to $3,500 per defaulted trip.

A default of 50 percent of required trips in any one year in any one district or division, if not excused, will be deemed a total default of the conditions of performance of the contract. A default in common-carrier service on 30 percent of the required trips in any one year on which common-carrier service is to be provided will, if not excused, also constitute a total default.

Under the terms of the agreement, 14 percent of the total tonnage each year, or 375,000 tons, whichever is lower, must comprise less than bargeload traffic. Default on this requirement will mean the payment of damages to Inland Waterways Corporation of $2 per ton of deficiency. A deficiency of more than 150,000 tons will be deemed a total default.

In the event of breach of contract the Government has recourse to the courts to enforce performance or to recover damages, or by written notice to terminate the agreement and repossess the facilities sold, possess new facilities acquired, and demand the surrender of any retained net earnings.

Breach of contract includes (1) default on principal installments; (2) failure to maintain minimum working capital of not less than $600,000 net; (3) total default in providing transportation service; (4) failure to perform any other covenants or agreements of the contract; and (5) assignment to creditors or bankruptcy.

Over the years the barge line has depreciated greatly. The fixed assets have a book value, based on a 20-year depreciation schedule-of $9,100,000, approximately, but the Interstate Commerce Commission's appraisal assigns a value of only $2,900,000. This latter figure covers railroad property only, no commercial value being assigned to waterline facilities.

The Corporation operates the most complete common carrier service by barge offered on the Mississippi, Illinois, Missouri, and Warrior Rivers. All types of freight, except livestock and perishables, are handled on 3,300 miles of inland rivers. Operations are conducted through numerous private terminals as well as through 20 general merchandise facilities.

The Corporation also operates a railroad switching facility, approximately 18 miles, between Port Birmingham and Ensley, Ala., to serve the industrial area in and near Birmingham, Ala., and to provide a connecting link between the Corporation's Warrior River barge service and the trunk-line railroads serving the Southeast.

The Inland Waterways Corporation had its origins in a study by the Council of National Defense in June 1917 looking to the more effective use of domestic waterways.

Under the Federal Control Act of March 21, 1918, the Director General of Railroads commandeered privately owned floating equipment on the New York State Barge Canal and on the Mississippi and Warrior Rivers and initiated the construction of new floating equipment. The unprecedented wartime demands for transportation to supply United States troops overseas caused such

a congestion of the railroads that it became necessary to turn to inland waterways.

Operations commenced on the lower Mississippi with the first sailing from St. Louis on September 28, 1918. The hastily acquired fleet consisted of 5 towboats and 29 barges. Service on the Warrior River began in December of that year with 1 towboat, 2 selfpropelled barges, and 10 coal barges.

The operations begun by the Railroad Administration on inland waterways continued to February 29, 1920, when the Governmentowned facilities were transferred to the Secretary of War for operation under the terms of the Transportation Act of 1920.

On July 19, 1924, Secretary of War John W. Weeks, father of Sinclair Weeks, now Secretary of Commerce, signed an order under the Transportation Act transferring to the newly created Corporation all inland waterways' assets and facilities under his control.

On February 8, 1953, Secretary of Commerce Weeks announced his intention to take the Government out of the barge-line business. At that time he invited inquiries from private sources interested in the possibility of purchasing the business.

He received approximately 200 inquiries from all sections of the country, and each inquirer was sent a brochure describing the physical and financial condition of the Corporation and setting forth the terms and conditions of sale. Seven firm offers were

finally received by the Secretary and after scrutiny the successful bidder was Federal Waterways Corporation.

MEMORANDUM FOR MEMBERS OF THE CONGRESS THE SECRETARY OF COMMERCE, Washington, July 24, 1953. As we expect later in the day to announce--with the approval of the President-the sale of the Inland Waterways Corporation, it occurs to me that you might like to have firsthand the story of the transaction.

The law (49 U. S. C. 151-157) authorizes us to sell the facilities of the Corporation and we have been careful to carry out the intent of the Congress.

For some years there has been considerable talk of selling the business, but although five specific attempts to purchase were made since 1948 and prior to January 20 this year, these attempts were all abortive and the new administration found the problem before it when we took office last January.

The problem seemed difficult, first because the Corporation for the last 14 years netted a loss of $9,749,000, having made a profit during that period for only 2 of the 14 years.

Furthermore, the difficulties were not lessened by a report of the Interstate Commerce Commission made to the President on December 17, 1952, in which it was observed that because of statutory requirements as to continuation of service, the value of the property was very substantially impaired and the notation was made that unless legislative restrictions as to such continuation were removed, a "sale is now impossible."

We proceeded, however, to solicit bids for delivery on June 1, and of the total of 7 which came in on that date, we determined, after study, that 3 were entitled to further consideration.

And after such consideration, we have now, as indicated above, sold the property to the Federal Waterways Corp., a wholly owned subsidiary of the St. Louis Shipbuilding & Steel Co., which was the highest bidder.

Before outlining the terms of sale, it is well to have understood exactly what we are selling.

The fixed assets have a book value-based on a 20-year depreciation schedule-of $9,100,000, approximately, but the Interstate Commerce Commission's appraisal-noted above-assigns a commercial value of only $2,900,000. This latter figure covers rail

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