WATERWAYS AND 
 INLAND SEAPORTS 
 
 t 
 
 By 
 
 ¥ BRIG. GEN. T. Q. ASHBURN, U. S. A. 
 
 CHAIRMAN AND EXECUTIVE 
 INLAND WATERWAYS CORPORATION 
 
 WASHINGTON 
 
 GOVERNMENT PRINTING OFFICE 
 1925 
 
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 INTRODUCTION 
 
 The interest in inland and coastwise water transportation that has 
 developed in the past five years, during which time the Government 
 has been operating a barge line upon the Mississippi River, the 
 coastal waters of Louisiana and Alabama, and the Warrior River, 
 the numerous inquiries, the mass of inaccurate and misleading state¬ 
 ments that have been put forth, the almost peremptory demands of 
 the friends of inland waterway transportation to have the question 
 discussed fully and fairly, and their designation of me as the one to 
 make such a statement led me to accept the invitation of the Chicago 
 News to prepare the following series of articles. The effort has been 
 to present the case fairly and to emphasize the need of coordination 
 and cooperation of rail, water, and highway transportation. 
 
 Whether or not this has been done, the reader may judge. 
 
 The following editorials from the Chicago News are appended: 
 
 WATERWAYS IN NATIONAL PROGRESS 
 
 Despite the earnest pleas of two Chief Executives, Congress has done nothing 
 in the last seven years toward the promotion of mutually beneficial cooperation 
 between the railroads of the country and waterways already in existence or 
 capable of development. That cooperation is bound to come sometime, despite 
 present short-sighted policies, and equally certain, as Secretary Hoover has 
 said emphatically, is the construction of the proposed Lakes to Gulf water¬ 
 way and the St. Lawrence seaway. 
 
 Waterway development, not in wasteful opposition to the railroads, but in 
 intelligent and helpful conjunction with them, presents a question as vital and 
 pressing as any the people of the United States, who complain of high freight 
 rates and insufficient markets, are called upon to settle. In dealing with it 
 science and experience, not prejudice or fixed ideas, should be consulted and 
 followed. 
 
 Unfortunately there is little knowledge among lawmakers of the potentiali¬ 
 ties of waterway development. Too often the inveterate opponents of water¬ 
 ways make sweeping statements against the most rational river and canal im¬ 
 provement projects. Their bold assertions, made with an air of absolute con¬ 
 fidence, not infrequently mislead the public. 
 
 The greatest need in the discussion of the waterway problem is for facts. 
 Realizing that, The Daily News has asked Brig. Gen. T. Q. Ashburn, chairman 
 of the Inland Waterways Corporation of the United States, for a series of 
 articles on waterways generally and barge traffic in particular. The first cf 
 these articles was published yesterday. Others will follow. 
 
 General Ashburn is regarded in business circles as the best informed man 
 in the country on inland water-borne commerce, and Congress has almost in- 
 varibly approved his recommendations concerning river and harbor improve¬ 
 ments and canalization enterprises He does not indulge in vague generalities; 
 he illustrates his propositions in a concrete and convincing manner. His 
 articles are both attractive and informative. 
 
 LESSONS OF THE MISSISSIPPI BARGE LINE 
 
 In the series of improving articles on waterways and inland seaports which 
 Brigadier General Ashburn is contributing to The Daily News, general proposi¬ 
 tions concerning water transportation in conjunction with land carriers are 
 
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 illustrated by concrete facts and figures supplied by the Mississippi barge line, 
 which is operated by a governmental agency under the direction of the War 
 Department. The articles have answered many questions frequently asked 
 by shippers and by students of transportation, and have met various objec¬ 
 tions to waterway development advanced by short-sighted railroad executives. 
 
 General Ashburn is satisfied that the barge line can establish itself on a pay¬ 
 ing basis and be turned over eventually to a private corporation on terms fair 
 to the Government and the taxpayers. He has no doubt that a permanent 6 
 per cent return on the total postwar investment by the Government will be 
 possible. He points out that, in addition to this benefit, the barge line will 
 have demonstrated the feasibility and economy of water transportation under 
 efficient management. 
 
 The barge line has had to overcome many difficulties, and to appeal to the 
 Interstate Commerce Commission for rulings in its controversies with railroads 
 over joint rates. Some carriers have cooperated with it on fair terms, while 
 others have been reluctant to do so. Little by little, however, obstacles have 
 been removed, and the barge line, with its present facilities, can carry 1,000,000 
 tons of freight a year at a saving of about $1,350,000 to the shippers and the 
 public. If the fleet were properly balanced, the tonnage could be doubled. 
 So could the saving. 
 
 The barge line deals with scores of railroads, and asks nothing of them but a 
 fair deal in the fixing of their shares of the joint rates. It is not taking 
 freight away from the railroads to their detriment; it is bringing them new 
 business by promoting industry and commerce, and by lowering transporta¬ 
 tion charges. It is furnishing an object lesson to Congress, to the States inter¬ 
 ested in waterway projects, and to intelligent, forward-looking corporations 
 seeking opportunities for investment. 
 
 On the other hand, the Traffic World, in a biting editorial, accuses 
 me of bad logic and loose statements, and such well might be said if 
 the statements to which exceptions were made—the logic that was 
 attacked—had been mine. 
 
 As a matter of fact, the sole portion of these articles attacked was 
 an excerpt from a speech delivered by the Hon. Benjamin G. Hum¬ 
 phreys in January, 1921, on the floor of Congress, under decidedly 
 different conditions from the present. It was inserted to illustrate 
 the conditions which existed at that time and the line of argument 
 of the proponents of waterways as to why such conditions did exist 
 and should be changed. 
 
 In a letter to the editor of the Traffic World I stated that if his 
 concluding paragraph had been modified by the substitution of the 
 word “ transportation ” for “ inland waterways ” he had so suc¬ 
 cinctly stated the viewpoint of the writer as to be susceptible to the 
 charge of plagiarism. His concluding paragraph was as follows: 
 
 We have no quarrel with advocates of inland waterway [substitute the word 
 “ transportation ”] expansion, as long as they stay within the facts and do 
 not use distorted logic. Indeed, there are many things to be said in favor of a 
 reasonable policy of inland waterway development. But we insist that advo¬ 
 cates of waterways consider the transportation problem as a whole and not 
 from the narrow point of view of the advocate of this, that, or the other 
 project, regardless of its bearing on the whole situation. One can not consider 
 the problem as a whole without keeping in mind that the railroads will always 
 have to be depended on to carry the bulk of the traffic in this country, and, in 
 order to enable them to do this to the satisfaction of industry, they must be 
 allowed to make some money out of their business. Waterways are all right 
 as a supplemental transportation agency if they can be developed and used 
 on a reasonable commercial basis. But when one talks of their value as a 
 means of depressing rail rates, he shows that he has no comprehension of the 
 greater transportation problem, and either no realization of the function of 
 the Interstate Commerce Commission or no confidence in that body. 
 
V 
 
 The collection of these articles and their printing in pamphlet 
 form for easy and continuous reading follows the declared policy of 
 Congress in section 500, transportation act, to wit: 
 
 It is hereby declared to be the policy of Congress to promote, encourage, and 
 develop water transportation, service, and facilities in connection with the 
 commerce of the United States and to foster and preserve in full vigor both 
 rail and water transportation. 
 
 T. Q. A. 
 

 
 
 
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WATERWAYS AND INLAND SEAPORTS 
 
 I 
 
 NOAH ORIGINAL WATERWAY MAN 
 
 The*original, ardent, dyed-in-the-wool advocate of water trans¬ 
 portation was Noah; the prototype of the modern barge was the 
 ark, and the first satisfactory terminal was Mount Ararat. 
 
 Noah was a common carrier; he advertised that he would sail at a 
 certain date and carry certain commodities, and he did. Like his 
 descendants who advocate the full utilization of water as a means of 
 transport as a necessity, he was sneered at, opposed, and accused of 
 being a one-ideaed man; in other words, a nut. 
 
 From the time he laid the keel of the ark till the time when the 
 floodgates of heaven were opened and the rains descended and the 
 floods came he was surrounded by wise men who counseled him: 
 44 See here, Noah, old top, you’re never going to need this thing, even 
 if it does float on the water (and we don’t think it will), how are 
 you going to steer it, and where are you going? Haven’t we got our 
 legs and our beasts of burden as means of transportation? What 
 was good enough for our fathers is good enough for us. Stop 
 spending your good simoleons and wasting your time over something 
 which, at the best, is only an experiment and will never be needed any¬ 
 how ! Take our advice, old man, and quit while the quitting is 
 good! ” 
 
 MOUNT ARARAT FIRST SEAPORT 
 
 But old Noah kept hammering away. He didn’t know where he 
 was going, but he did know there was going to be need of water 
 transportation—and he was right. A more unlikely seaport than 
 Mount Ararat would be hard to imagine, and yet it did become, so 
 far as history records, the first and most successful seaport in the 
 world. 
 
 From that time to this, a lapse of thousands of years, every man 
 who throws himself whole-heartedly in the struggle for inland and 
 coastwise waterways transportation meets the same objections and 
 criticisms that old Noah met; but they have continued as deter¬ 
 minedly as the old man, and time and experience are dumbfounding 
 their critics, even as Noah did when his ark, with its precious burden 
 of freight, rose upon the crest of the waters and saved the faithful 
 few of those days who believed in water transportation. 
 
 EXPANSION OF CIVILIZATION AND TRANSPORTATION 
 
 The expansion of civilization is coincident with the expansion of 
 transportation. Wherever civilization may have first appeared, it 
 spread solely through contact with the outside world; and only as 
 
 (1) 
 
2 
 
 fast as such contact could be made. First such contact was made 
 by means of the legs of the human being, then through the animals 
 he trained to transport him; then through the slow-running vehicle, 
 developing into the railroad trains, the automobile, and the air¬ 
 planes of to-day. 
 
 The log that drifted downstream, the sluggish flat-bottom raft 
 propelled by poles, developed into the ocean racers and the mar¬ 
 velous towboats of to-day. 
 
 In its ultimate analysis, all communication between individuals, 
 between communities, between states and nations, is some form of 
 transportation. Speech is the transportation of sound through the 
 air—the telephone, the telegraph, the wireless, the heliograph, all 
 depend upon the transportation of sound or signals—and so, as 
 civilization expanded, its onward course was marked and limited by 
 the development of transportation. 
 
 With the growth of civilization began the growth of trade and 
 commerce. As these took the form of water carriage and venture¬ 
 some voyages, the necessity for agreements between neighboring sea 
 cities became apparent—harbors and lighthouses must be constructed 
 for the safety of trade—and so began that slow growth of mutual 
 agreement, mutual accommodation, which is to-day the basis of so 
 much international law as exists. 
 
 NECESSITY DEVELOPS TRANSPORTATION 
 
 Transportation brings from one end of the world to the other the 
 products of nature and of men, and as the necessity of these products, 
 be they raw or manufactured, grows, so must transportation facili¬ 
 ties advance. 
 
 Civilization brings in its train the demand for necessities, com¬ 
 forts, and luxuries, in the order named. Nature has ordained that 
 the raw material needed in the manufacture and production of neces¬ 
 sities, comfort, and luxuries should grow in widely separated por¬ 
 tions of the globe. Certain kinds of grain, rice, sugar cane, etc., 
 grow only in certain localities; various kinds of ores are produced 
 at one place and turned into steel, iron, etc., at another place. The 
 silks of China and Japan are as actual necessities to our women folks 
 to-day as are the farming implements of America, the products of 
 our great steel industries, our locomotives, all of our exports, to 
 South America, Europe, Asia, Africa, and Australia. 
 
 Now the laws of economical production demand that great manu¬ 
 facturing centers shall be located where cheap raw material can be 
 obtained, and where the cost of distribution of the manufactured 
 ' article is cheapest. A combination of these two elements, where the 
 raw material is an import, naturally suggests a seaport. If the dis¬ 
 tribution can also be made from that seaport, so much the better. 
 The sea is a universal highway, and the cheapest means of trans¬ 
 portation known is by the sea. The reason for this is self-evident. 
 
 Consequently, every inland city, located upon a navigable water¬ 
 way, dreams of the time when it shall be an inland seaport, and if 
 our navigable highways are developed as they should be, it will only 
 be a matter of a few years till such cities as the twin cities of St. 
 Paul and Minneapolis, Cincinnati, Pittsburgh, St. Louis, Kansas 
 
3 
 
 City, Omaha, Montgomery, Albany, Cairo, Memphis, Birmingham, 
 Vicksburg, and many others will be actually, if not geographically, 
 seaports. 
 
 SHOES CITED AS AN EXAMPLE 
 
 One little example will illustrate what a tremendous advantage 
 this would be: 
 
 Where are the great tanneries of this country located? In the 
 East, near the seaboard, and in Chicago. Why are they located 
 there? Because the tanned hides of our own country can be dis¬ 
 tributed from Chicago economically through the Great Lakes; and 
 domestic raw hides can reach the eastern seaboard, via Duluth or 
 Chicago; while the raw hides of South America can reach the eastern 
 coast by sea. The greatest domestic demands for leather goods are, 
 of course, in the center of population, densest in the East, and next 
 dense around Chicago. Logically then, the center of the manufac¬ 
 ture of leather must be near the seacoast, where the raw material 
 can be economically collected, and the manufactured material eco¬ 
 nomically distributed, or else in the north Mississippi Valley, in 
 which Chicago is included. St. Louis is a large shoe manufacturing 
 center. Where does the leather come from ? The East! Who buys 
 the shoes? Largely the inhabitants of the Mississippi Valley. If 
 it is realized that when you buy a pair of shoes in St. Louis you are 
 paying the freight on raw material that went to New England when 
 it could have been shipped only to St. Louis, and that you are paying 
 the freight on leather from New England that might have been pro¬ 
 duced in St. Louis; that the price you pay for shoes of St. Louis 
 manufacture must be fixed by the manufacturer on a basis that will 
 give him a fair profit over the cost of manufacture plus the freight 
 of raw material both ways from New England; then you will know 
 that the only reason the St. Louis manufacturer competes with the 
 New England manufacturer in this particular commodity is because 
 of the freight the New England manufacturer has to pay on his 
 finished product to distribute it to St. Louis territory. It is a fact 
 that the price at which you buy your shoes is fixed by something 
 over which your manufacturer has no control; that is, transportation. 
 
 OPPORTUNITY FOR RIVER CITIES 
 
 The river cities of the Mississippi Valley have to-day in their 
 grasp the same facilities as the seaports of New England. 
 
 To continue my illustration about the shoes, and confining it to 
 St. Louis because it is a great shoe manufacturing center: Suppose 
 there were great tanneries located there; hides from South America 
 could be delivered there as cheaply as at New England, via ship to 
 New Orleans and by barge line to St. Louis. They could be con¬ 
 verted into leather, and the leather into shoes, and the shoes shipped 
 to South America and sold as cheaply as they are now sold at St. 
 Louis, because the necessary costs of transportation of the raw ma¬ 
 terial and the distribution of the finished product have been cut in 
 two, and the people of the Mississippi Valley would be getting their 
 shoes and their harness and their other leather goods cheaper by the 
 cost of transportation of 2,000 miles by rail. Your St. Louis shoe 
 41711°— 25 -2 
 
 1 
 
4 
 
 manufacturer would then find a ready market for his product farther 
 away from home, where his cost of manufacture, plus the transpor¬ 
 tation, would be less than the New England cost of manufacture 
 plus his transportation. 
 
 You can take this particular example and apply it to any par¬ 
 ticular article Qf manufacture of your home city, and see how it 
 works out. I recommend it as being worthy of a few moments 
 concentration. 
 
 II 
 
 Now, what I have said about the cities along the Mississippi 
 Valley being on a parity with seacoast towns is strictly true only 
 in a limited sense. 
 
 COMMON, CONTRACT, AND PRIVATE CARRIERS 
 
 It is true in so far as the natural location and navigable waterway 
 is concerned, but how far it is true depends entirely upon the trans¬ 
 portation facilities which operate upon that navigable waterway as 
 a common carrier. A common carrier is one who holds himself out 
 for hire, carrying any and all commodities offered at rates available 
 and published to the public. He differs from a contract carrier, who 
 transports for a favored few at what rates he can get, or a privately 
 operated carrier which transports its own commodities only. Of the 
 three carriers the one of infinitely greater public benefit is the com¬ 
 mon carrier, the one which is obligated to take anybody’s goods as 
 offered. The United States has only one common carrier operating 
 upon the Mississippi River, and that is the Government Barge Line. 
 The law creating the Inland Waterways Corporation provides that 
 this line shall be operated precisely as if it were privately owned, 
 and is a demonstration intended to prove that water transportation 
 is economical, feasible, and of immense public importance. Too 
 many people are inclined to look upon it as an eleemosynary institu¬ 
 tion, and because it is operated by the Government to demand special 
 privileges that no private transportation agency would give. 
 
 Let me assure you, my readers, that upon the success of this barge 
 line operated by the Government as a private organization, depends 
 your hopes of cheap water transportation, your seaport ambitions, 
 and the consequent reduction in price of all necessary commodities. 
 
 THE UNITED STATES AS AN OPERATOR 
 
 The barge line is but in its infancy. It has had Government sup¬ 
 port because in no other way could waterway transportation survive 
 the vicious onslaughts of its opponents. The Government has spent 
 untold fortunes in the development of waterways under the theory 
 that their development will bring about the desired results of cheap 
 transportation, and plenty of it. If the war hadn’t come along and 
 forced water transportation back on the map, you wouldn’t have any 
 inland transportation on waterways of national importance. Con¬ 
 ceived as a war measure, carried on as an experiment after the war, 
 hampered by every conceivable opposition, an opposition that would 
 have driven any private corporation out of business, it has demon- 
 
5 
 
 strated that where there are navigable rivers or canals, where there 
 are suitable and sufficient carriers, where there is a balanced traffic, 
 where there are interchange relations with the railroads (which 
 waterways merely supplement), and a fair division of revenue 
 secured for joint performance of transportation, that water trans¬ 
 portation is feasible, economical, and a necessity. As it develops 
 so will the seaport advantages of inland cities become more and more 
 real. 
 
 HOW RIVER CITIES MAY UTILIZE THEIR OPPORTUNITIES 
 
 These seaport advantages will become realized for all cities upon 
 navigable streams if, when the aforementioned five essential condi¬ 
 tions for success are fulfilled, the lines now operated by the Govern¬ 
 ment pass into private or corporate control, and the money so re¬ 
 ceived is applied to the creation of new transportation facilities upon 
 other navigable streams. In this way the initial war expenditure 
 of $13,000,000 can be utilized over and over to the great and increas¬ 
 ing profit of all of our citizens. The advantage of governmental opera¬ 
 tion of waterways until they are commercially successful is apparent 
 when it can be said without dispute that had not the Government 
 carried on the Mississippi-Warrior service until practically all five 
 essential conditions of success were fulfilled, no other organization 
 would have attempted it and carried it to success, because the initial 
 losses, delays, etc., were intolerable to an organization whose sole 
 purpose was to realize a return upon an investment. 
 
 OBJECTIONABLE FEATURES OF GOVERNMENTAL OPERATION 
 
 But governmental operation of transportation facilities had three 
 distinct and highly objectionable features, at least in so far as the 
 operations up to June 3, 1924, were concerned. 
 
 A transportation agency, to gain public support, must offer some 
 assurance of being durably established, of being dependable, as 
 well as economical. Trade moves in well-established lanes, and in 
 order to divert traffic to other lanes (even when the old lanes are 
 thoroughly congested) the shipper must have assurance of service— 
 good, continued, cheap service. So long as the maintenance of the 
 barge line on the Mississippi, on the New Orleans-Mobile coastal 
 route, on the Warrior River, depended upon the whim of Congress, 
 so long there remained in the minds of the shipper four questions: 
 
 (a) How long will it be operated by the Government? 
 
 (Z>) Will the Government dispose of it, and how T ? 
 
 ( c ) If the Government disposes of it, will it be continued along 
 the same lines? 
 
 ( d) Is it good business policy for me to use this line until these 
 conditions are ascertained? 
 
 The second objection to governmental operation was that so long 
 as it lasted under the conditions which then existed, so long was 
 political pressure brought to bear upon those responsible for its 
 operation for discrimination in favor of individuals, communities, 
 cities, etc., to the detriment of the people at large, and in violation 
 of every principle of economic transportation. 
 
6 
 
 BIG DRAWBACKS CITED 
 
 The third, and to my mind, the most objectionable feature of all 
 was the inability to properly finance the undertaking in a thoroughly 
 businesslike way. 
 
 To illustrate, the barge lines mentioned represent at to-day’s valua¬ 
 tion by the American Appraisal Co. of Milwaukee, about a $10,- 
 000,000 investment. The law, as I have said before, provided that 
 the transportation facilities in commission should be operated pre¬ 
 cisely as if they were a private transportation agency. It also pro¬ 
 vided that no governmental organization should create a deficit. 
 Every transportation agency has its ups and down. Some years 
 the earnings are very good, and others are poor. But a transporta¬ 
 tion corporation is amply competent, under its charter, to finance 
 the poor years, or else it becomes bankrupt. 
 
 If, however, the barge line on the Mississippi (which is the only 
 profitable one, and which supports the Warrior and New Orleans- 
 Mobile section) meets a long season of low water where navigation 
 is wholly or partially suspended (as was the case for three months 
 of every year), then the accumulated surplus rapidly disappears, 
 the revenues fail; and when the available cash assets only equal 
 the outstanding indebtedness, when a continued operation creates a 
 deficit, those in charge of the operations were between the devil and 
 the deep blue sea. 
 
 If Congress were in session, an appeal for funds might, of course, 
 have been made to them to tide over the emergency. Let us assume, 
 however, that through some political upheavel or through trading 
 and bargaining the friends of waterways had become a minority; 
 then the money was not forthcoming, and the operation ceased. 
 What a ridiculous situation would have arisen! Here was a per¬ 
 fectly solvent transportation agency, worth $10,000,000, with avail¬ 
 able collectible cash assets, let us say, $10,000 less than its outstanding 
 indebtedness. Due to temporary business depression it was not mak¬ 
 ing enough to carry the continued losses of a branch line. It had, 
 under the law 7 , to operate that line. It could not create a deficit. If 
 it had had the pov r er to raise money on its own assets, to borrow 7 , it 
 could easily have borrowed from banks and paid the money back 
 gradually, and the public would not have lost its confidence in the 
 line because it could not pay its current obligations. Loss of public 
 confidence results in incalculable harm. 
 
 And the further curious situation would have arisen that if the 
 line had been compelled to discontinue its operations because it w 7 as 
 incurring a deficit, the same rule would have held, and no one could 
 have been employed to keep it in condition, else a deficit would still 
 be created. It would have to be tied up to a bank or sold for a song. 
 
 I have, of course, in this last paragraph employed the reductio ad 
 absurdum method to illustrate my point, w 7 hich is that the lack of 
 powder to finance itself w 7 as a very serious proposition that the prede¬ 
 cessor of this corporation ran up against in a very practical way in 
 its effort to comply w T ith the law 7 which provided that these boats and 
 barges and other transportation facilities should be so utilized as to 
 maintain in full vigor both water and rail transportation. 
 
7 
 
 III 
 
 This country of ours has passed through two stages of trans¬ 
 portation, and is passing now through the third stage. We can 
 roughly segregate them into the days of wagon and water trans¬ 
 portation, the days of rail transportation, and the present days; 
 where transportation demands include the utilization of every avail¬ 
 able means of transportation, rail, water, motor, and air, in order 
 to meet the expanding needs of our interior commerce. 
 
 SOME CURIOUS RESULTS OF MODERN TRANSPORTATION 
 
 When I tell you that a large manufacturing concern of Alabama, 
 which uses a certain kind of ore in its manufactures, and owns its 
 own mines of this ore in the State of Alabama, can yet get this same 
 ore from Sweden, transport it by sea to Mobile, thence by our War¬ 
 rior line to Tuscaloosa, Ala., and deliver it at its plant cheaper than 
 it can produce its own ore at its own mines, and transport it by rail 
 to its manufactory, it will be brought home to you that there is some¬ 
 thing radically wrong in the present situation. 
 
 And when I supplement this by telling you that the Aluminum 
 Ore Co., located at East St. Louis, and owning its own bauxite 
 mines in Arizona, can, by operating its own ships from its own mines 
 in the Guianas of South America, and utilizing the Mississippi 
 service from New Orleans to St. Louis (paying the barge line $3 
 per ton for its transportation), and does do it more cheaply than it 
 can deliver at St. Louis bauxite from its Arizona mines, you will 
 be perhaps convinced that there is vast benefit to be derived from the 
 utilization of waterways; and please note that this particular opera¬ 
 tion affects your household personally in the price of every article of 
 aluminum ware that is used therein. 
 
 As offsetting the disadvantage of the Alabama firm in its competi¬ 
 tion with Swedish products, it is interesting to note that this same 
 aluminum company of East St. Louis turns part of its bauxite, re¬ 
 ceived as above described, into concentrates, ships the same to 
 Sweden by barge line and ocean steamer, and sells it in Sweden 
 cheaper than Sweden can produce the same concentrates; all on 
 account of cheap water transportation! 
 
 WATERWAYS NOT INDEPENDENT 
 
 Water transportation has inherent advantages and inherent disad¬ 
 vantages. I shall try to point these out in detail in the course of 
 these articles. I noticed in a recent letter published by one of our 
 foremost railroad presidents, that he contends that if all available 
 waterways in the United States were utilized, the sum total of 
 freight so transported would not make a big dent in the sum total 
 carried by the railroads. I am not sure, but I think he excepted 
 lake traffic. I presume that the underlying idea in his mind was 
 the fact that railways can operate independently as common car¬ 
 riers, regardless of the waterways, while common carriers by water 
 can not exist independently of railroads, nor do they so seek to do. 
 
8 
 
 REASONS FOR RAILWAY OPPOSITION 
 
 The fact is that since inland-waterway traffic was driven from our 
 navigable streams and canals by the sheer force of the establishment 
 of the steam engine, most railroad men have in the back of their 
 heads the idea that the utilization of our waterways for transporta¬ 
 tion purposes forms a menace to the success of railroads, and, since 
 they have been destroyed, he feels that they should be kept from 
 springing to life, phoenixlike, by every means in his power. 
 
 There is a reason for this, and it is not far to seek. Advocates of 
 waterways, for years after transportation facilities had been driven 
 from them, persisted in their further development, not in the hope 
 of utilizing them as actual carriers, but as a means of clubbing the 
 railroads into submission. 
 
 By the very force of their arguments and clubbing and in self- 
 protection, the railroads did what they are now so vigorously as¬ 
 sailed for doing; that is, introduced the practice of charging less for 
 a long haul than for a shorter. 
 
 The present structure of rail rates throughout the United States 
 has been formed of necessity through various exigencies which arose 
 at sundry times, and whole communities have been built up on the basis 
 of such rates, so that it necessarily follows that any radical readjust¬ 
 ment of rail rates—so frequently suggested to the Interstate Com¬ 
 merce Commission—would result in wholesale hardship. 
 
 HOW PRESENT CONDITIONS AROSE 
 
 These two things—that is, the destruction of water transportation 
 and the building up of the present structure of rail rates—are so 
 correlated that in fairness to all concerned they should be considered 
 together, and in so considering them there should be traced the 
 underlying causes, if possible, as to why the present status exists in 
 regard to transportation; and then to present logical reasons why the 
 present intolerable situation should be modified. 
 
 The transportation problems of the original thirteen Colonies 
 were vastly different from the present-day problems of the United 
 States. Sparsely populated, strung along the seacoast, dependent 
 to a large extent upon supplies from overseas, the necessities of 
 interior transportation were largely confined to communication and 
 marketing of agricultural products in the larger towns. Such trans¬ 
 fer of commodities as took place between the States was done by sail¬ 
 boats. The first crying necessity of interior transportation was met 
 by the building of roads, and it is worthy of note that the cry of to¬ 
 day that is being met by States and the United States is for more and 
 better roads. Allow me to interject here that it is far cheaper to 
 utilize waterways as means of transportation, where available, than 
 it is to construct and utilize good roads, keep them in repair, etc., 
 yet most of the opponents of waterway development as a cheaper 
 means of transportation urge the necessity of good roads. This is 
 illogical and short-sighted, because properly supplemented by water¬ 
 ways and coordinated with them these roads are the capillaries which 
 in turn feed the veins (the lesser rivers), and these finally unite in a 
 great artery of water transportation. That is precisely the course of 
 reasoning followed by our ancestors, and we see them supplementing 
 
9 
 
 such roads as they had by the utilization of rivers and the projection 
 of canals. No one can gainsay that they were right or that they 
 were far-sighted. Just suppose the steam engine had not been in¬ 
 vented, they would have carried through to completion their very 
 correct ideas, and as the demands for transportation grew (as they 
 would have grown, only more slowly than with the railroads) they 
 would have been compelled to utilize rivers and canals, to make them 
 more and more navigable, until to-day we would have in the United 
 States river and canal systems, in all respects, better than the best of 
 Europe. 
 
 Remember that these ancestors of ours came from thickly popu¬ 
 lated countries where, as far as they knew, waterways had always 
 been utilized to their fullest extent, and they could see no logical 
 reason why they should not be so utilized, inasmuch as they offered 
 to them a cheaper means of transporting commodities in bulk than 
 any other way. And it is interesting to note that the many forts 
 which guarded the country as the empire spread its western way 
 were either on the Lakes or rivers or junctions of rivers, and there 
 sprang up those marvelous cities of Chicago, Pittsburgh, Cincinnati, 
 St. Louis, etc. Trading ports first, their natural advantages for the 
 collection of raw materials and the distribution of the same, led in¬ 
 evitably to their selection as manufacturing centers, where the raw 
 material could be cheaply collected and the manufactured product 
 cheaply distributed. 
 
 There is a cycle of transportation leading to saturation, which I 
 shall later discuss, but it is sufficient for the present purposes to 
 observe why all large cities of the United States, with the exception 
 of Indianapolis, are either located on the Lakes or on rivers which 
 at least offer the potentialities of cheap transportation. 
 
 When the railroads first came and entered the transportation field, 
 their activities were limited to the transportation of commodities of 
 suitable bulk and weight, and to passenger service, and did no 
 serious damage to waterways. As the design and power of the 
 engines and cars increased, when the people backing the railroads 
 realized their infinite possibilities, then began a growth that was 
 paralleled by a decrease of water transportation in the interior; 
 because of this fact that is primarily the basis of the need and success 
 of railway transportation. The value of interior waterways, per 
 se, was limited by physical obstacles, so that they could only serve 
 the localities directly on the waterway, whereas the railroad could 
 pass through mountains, bridge abysses, and thunder along any¬ 
 where, everywhere, driving directly to its destination, and bringing 
 peoples of the same country, almost strangers, into intimate contact 
 with each other and publishing to each the vast possibilities of the 
 different sections that only awaited the touch of this modern Midas 
 to change them into gold. 
 
 And as Territory was added to Territory, the necessity of such 
 quick and dependable communication and transportation became 
 vastly enhanced, and the broad steel rails of commerce began to 
 ramify in every direction, and to parallel inland waterways, be¬ 
 cause therein lay, in many instances, the most economical route for 
 construction. Nor was this expansion accomplished easily; each 
 railroad, so far as I am aware, having passed through reorganiza- 
 
10 
 
 tion after reorganization (the public paying the losses in freight 
 and passenger service), and the Government, countries, communities, 
 etc., aiding in every way by land grants, donations, payments for 
 privileges, etc., until to-day it is stated on unquestioned authority 
 that the land grants to the railroads by the United States alone ex¬ 
 ceed the area of the thirteen original Colonies. To-day there is in¬ 
 vested in railroads of the United States, twenty billions of dollars. 
 In interior waterways, less than one billion, and of this less than a 
 billion a very perceptible percentage has gone for flood control and 
 protection, and not for the improvement of navigation. 
 
 RAILROADS CREATED OWN MARKETS 
 
 In spite of all the aid that the railroads had, as they pushed their 
 way through sparsely settled communities, ever westward and north 
 and south, the financial burden upon them demanded that they 
 create communities, towns, and cities to furnish them freight enough 
 to pay their expenses of expansion and pioneering, and as unfettered 
 competition sprang up amongst railroads touching the same points 
 by various routes, began that system of rate making which to-day 
 has become so involved and intricate. A certain railroad would 
 induce a certain manufactory to locate at a certain place on its 
 line by offering rates for transportation for that particular product 
 that would enable it to compete successfully in the same market 
 with an established concern located on some other railroad. This 
 manufactory would so locate, and if successful, expand. With each 
 expansion came more people, with their trinity of demands, necessi¬ 
 ties, comforts, luxuries. So the town or community or city grew 
 and thrived, and furnished more and more traffic to the railroad; 
 but its prosperity, or its success, was built upon special rates which 
 induced the original manufactory to locate there. Now, this rate 
 in itself may seem to have been absolutely without warrant, in that 
 it easily cost more to handle that particular freight than the revenue 
 derived therefrom, but in the ultimate analysis, as seen by the rail¬ 
 road, justified itself. Perhaps Jesuitical, perhaps not, but it can be 
 seen without the aid of a microscope that a multiplication of these 
 instances would lead to outrageous rate cutting, so long as compet¬ 
 ing railroads were free to so cut, and an uplifting now of these 
 particular rates to a compensatory basis might destroy such par¬ 
 ticular communities. 
 
 SEE BULK FREIGHT ON RIVERS 
 
 This utilization of railroads for the benefit of particular com¬ 
 munities, however, had in the meantime to be offset by the carriage 
 of freight of a more profitable nature, and the covetous eyes of the 
 railroads were cast upon the tremendous bulk freight carried by the 
 rivers and canals. They were met with equal covetousness by the 
 river communities, which, one by one, sold their God-given birth¬ 
 right for a mess of pottage. In the meantime, the development of 
 our interior waterways and canals was being pushed along with an 
 eye single to the immediate advantage of individuals or waterway 
 communities. 
 
11 
 
 ATTITUDE OF WATER ADVOCATES 
 
 Thej 7 sought the development of such transportation (if indeed 
 a larger majority of those interested thought at all), not particularly 
 for their utilization as carriers, but as a potential menace to the 
 railroads to make them offer cheap transportation, by which they 
 would profit individually. In other words, the pork barrel sprang 
 into existence, whereb}^ the Nation as a whole was taxed for the 
 benefit of a limited portion of it, and against the interests of the 
 vast majority. They played into the hands of the railroads, and 
 fell easy prey to their sophisms, even as many do to-day. 
 
 APPRECIATION OF RAILROAD ACCOMPLISHMENTS 
 
 It is neither my desire nor my intention to convey the idea in any 
 way that I do not appreciate the necessity of the railroads, that I 
 yield to anyone in my admiration for their effectiveness, of the 
 genius that has opened up a continent and has so materially con¬ 
 tributed to our commercial prosperity, or that I advocate in any 
 way additional restrictive regulations upon them. Rather it is my 
 purpose to show that the railroads are not the only ones to blame for 
 the present conditions, but that a larger part of the public first 
 coaxed the railroads to do certain things, and then forced certain 
 uneconomic conditions upon themselves through their conceptions 
 of what the railroads ought to do, and now turn in a fine frenzy and 
 blame the railroads for creating conditions which could have been 
 avoided if some one, big enough to command sufficient support, 
 could have presented to the public, and had accepted by it, a broad 
 scheme of national transportation, which would have included a 
 coordinated water, rail, and good-road system. 
 
 HOW RIVER TRAFFIC WAS DESTROYED 
 
 How to get this river traffic became the primary object of those 
 railroads with which it w r as in direct competition. It is not a long 
 story, but it is a fateful one, for they did get the traffic, and caused 
 inland water transportation to become practically extinct. They 
 either put on competing lines of boats and carried the traffic at 
 ruinous rates, or bought out the independent operators, or reduced 
 their own rail rates in competition with water traffic, and offered 
 such inducement to ship by rail that they gradually, but surely, 
 gained control of the situation, and all with the willing acquiescence 
 of the interested public, who were so eager for the transitory advan¬ 
 tages they seemed to be getting that they were lulled into a sound 
 §leep from which they only awakened when they saw that their 
 boats had gone, that their rail rates had risen, and that there seemed 
 nothing could be done to save them. 
 
 HOW RAILROADS RECOUPED 
 
 In the meantime, in order to recoup the railroads for the ruinous 
 rates they were furnishing interested cities, a rate structure grew up 
 throughout the interior, whereby those not fortunately located upon 
 
 41711°—25-3 
 
12 
 
 river banks paid the railroad in increased freight rates for the 
 savings the railroads gave those fortunately located. And not only 
 that, but the practice of the long and short haul rates became grad¬ 
 ually fixed, and apparently immutable. This led to the situation, 
 even along navigable streams, where the railroads charged less for 
 a long haul of the same commodity than they did for a short haul. 
 
 The practical situation was this, and in many cases it continues 
 to-day: A railroad would haul, say from St. Louis to Vicksburg, via 
 Meridian, on its own line, for less than it charged to haul the same 
 amount of freight from St. Louis to Meridian. The theory on which 
 the railroads based these rates was that a long haul was cheaper than 
 a shorter one, and there may be some justification in such a theory if 
 terminal handlings were eliminated. 
 
 Having eliminated inland water-borne traffic, the railroads then 
 turned upon one another, and a series of rate wars ensued, weak lines 
 were bankrupted or absorbed, until the situation resulted, in 1883, in 
 the passage of the interstate commerce act, which act has been 
 amended from time to time and still has very objectionable features 
 to many. 
 
 IV 
 
 On January 31, 1921, the Hon. Benjamin G. Humphreys, in a 
 speech delivered before the House of Representatives on “ How the 
 railroads destroyed competition on our inland waterways—long-and- 
 short-haul clause,” arrives at the following conclusion: 
 
 That the long-and-short-haul clause of the interstate commerce 
 act, which had been incorporated in the interstate commerce act for 
 the purpose of correcting the practice of the railroads by which 
 freight rates from St. Louis to river competing points had been 
 reduced beyond a point at ivliich steamboats could survive, but 
 whereby all intermediate points and inland points which had no 
 river transportation were compelled to pay a rate sufficiently high to 
 recoup whatever loss they (the railroads) sustained by reasons of 
 these reductions at river competing points (and which was designed 
 to enable the commission to meet exceptional cases) became the rule, 
 and under it the railroads continued their process of strangulation. 
 He argued that the Senate amendment to section 4 of the transporta¬ 
 tion act, which gave the Interstate Commerce Commission authority 
 in regard to the establishment of certain rates, and specifically ex¬ 
 empting them from the power of fixing such rates “on account of 
 merely potential water competition not actually in existence,” put a 
 club in the hands of the railroads to absolutely kill private water 
 competition. His purpose was to show that the effect of this amend¬ 
 ment was of no benefit to anybody but the railroads, because the 
 railroads are not allowed to fix a charge that is not reasonably com¬ 
 pensatory for the service performed, and asks the result. He 
 answers: 
 
 SPEECH OF CONGRESSMAN HUMPHREYS 
 
 “ River points which formerly enjoyed this differential are denied it, but 
 instead of lowering the rates to intermediate points the railroads have simply 
 raised the rates to river points, and nobody is helped in this process except 
 the railroads. It is suggested, how r ever, that the river is still there and that 
 the shippers along the river can, if they have the enterprise, put steamboats 
 
13 
 
 on the river and thereby get the benefit of cheap river rates.' If they do this, 
 however, as soon as their boats begin to haul freight from St. Louis to New 
 Orleans or from Memphis to New Orleans or from Vicksburg to New Orleans 
 the competition is no longer “ merely potential ” but is actual, and the limita¬ 
 tion of the act which I have just quoted no longer applies. The railroads can 
 then petition the Interstate Commerce Commission for permission to restore 
 the old differential, the only limitation being that the rate must be “ reasonably, 
 compensatory for the services performed.” Now, what is reasonably com¬ 
 pensatory? The Interstate Commerce Commission is not supposed, under any 
 circumstances, to permit a railroad to charge a rate that is higher than a 
 reasonably compensatory rate, and when the commission fixes or approves a 
 rate which the Mobile & Ohio, for instance, can charge for freight from St. 
 Louis through Meridian to Vicksburg they are supposed to have fixed the mini¬ 
 mum rate which is reasonably compensatory. 
 
 If steamboats were put on the Mississippi River and to meet this competi¬ 
 tion the Mobile & Ohio is permitted to lower its rate to Vicksburg, then it 
 should in all conscience be required to make a proportionate reduction to all 
 points along that road between Vicksburg and St. Louis, because it is perfectly 
 patent that if the rate from St. Louis through Meridian to Vicksburg is reason¬ 
 ably compensatory certainly a higher rate from St. Louis to Meridian would 
 be unreasonably compensatory and therefore excessive and unjustifiable. But 
 we know that the Interstate Commerce Commission has permitted this very 
 practice, and permitted the railroads, thereby deliberately and in full view of 
 everybody, to strangle all river competition. Now, what happens? There 
 being no actual competition, the railroad is denied the right to give the river 
 points the lower rate. It is then in order, we are told, for the shippers to put 
 in a line of steamboats. Who will invest his money in a steamboat line when 
 the power is left in the hands of the Interstate Commerce Commission to 
 permit the railroads to renew their piratical practice as soon as the steamboat 
 lines begin to do business? 
 
 I believe in improving our waterways, and I am going to vote for this bill, 
 but I do it in the hope that some day some man will appear here whose words 
 are more persuasive than mine have been and who will be able to convince 
 Congress of the error of its way. If we do not do this, if we permit the law to 
 stand as it is, the time is not far distant when the people of this country will 
 refuse to sanction further public expenditures upon rivers of our country, be¬ 
 cause with this sword of Damocles hanging over his head no business man is 
 going to invest his money in a steamboat line, and there will, therefore, never 
 be any actual river competition ; and until there is such competition no re¬ 
 duction in railroad rates can come from the expenditure of money for the im¬ 
 provement of our rivers, because the law says, “ No such authorization shall 
 be granted on account of merely potential water competition not actually in 
 existence.” 
 
 Now, gentlemen, if we are going to preserve the rivers of the country, you 
 can not do it by merely making appropriations for them. It is all right to 
 improve the channels, but we must make it possible for the boats to float upon 
 the river after the improvement has been made. That can not be done so 
 long as the Interstate Commerce Commission has the power to grant the 
 privilege to the railroads of strangling competition.” 
 
 CYCLES OF TRANSPORTATION 
 
 Sometime before in this series of articles the fact was mentioned 
 that there is a cycle in transportation which leads to what may be 
 termed u saturation.’’ 
 
 This saturation point is reached for any city when the cost of 
 collecting the raw material and distributing the finished product is 
 greater for that particular city than for some other location; and it 
 will inevitably result, as Chicago has reason to know, in the abandon¬ 
 ment of particular manufactories in that city, and the establishment 
 of the same manufactory in some other more suitably located com¬ 
 munity, where the transportation facilities are not saturated; and 
 almost always the new point selected is a city on a navigable stream,. 
 
14 
 
 the Lakes the Gulf, or the seacoast. Let us examine this cycle as 
 it has worked out in Pittsburgh. The location of the steel manufac¬ 
 tories at that particular point was determined, of course, by the fact 
 that ore, coal, and other articles necessary to the manufacture of steel 
 could be assembled there more cheaply than any place else at that 
 time. 
 
 The establishment of the steel industry drew workers, naturally, 
 who wanted the necessities, the comforts, and the luxuries of life. 
 As the industry expanded, more raw material had to be collected, 
 more finished products distributed, more workers and their families 
 came, each of these causes contributing to an ever increasing demand 
 for transportation. This cycle expanded continuously, until to-day 
 the Monongahela River is carrying annually 26,000,000 of tons, and 
 the Pennsylvania Railroad, instead of being hurt, has four times 
 expanded its Monongahela division, which is practically given over 
 to freight handling. What the river took away from the railroads 
 in its handling of bulk commodities, it returned fourfold to the rail¬ 
 roads in the creation of demands for supplies and distribution that 
 could not be handled by the river alone. 
 
 PRESENT RAIL POLICY 
 
 The city now has its own acute problem of near saturation to 
 handle, and it is not alone in that predicament. No wonder it wants 
 the Ohio opened to Cairo and the Mississippi to the Gulf. When it 
 reaches a stage where it costs more and takes longer time to get a car 
 in and out of a city like New York than it does to move it from 
 New York to Philadelphia, the transportation system is pretty 
 well saturated. No one knows this better than the railroads do, and 
 no one knows better than they do that this country has to-day all the 
 main rail arteries it needs, and their tendency is to abandon non¬ 
 paying branches, to concentrate their efforts in bettering their service 
 instead of building new lines; to group together, under a single head, 
 connecting, parallel, or competing routes, enabling them thereby to 
 gradually build up a new and fair system of rates which will render 
 them a reasonable return, and to abolish as quickly as possible dis¬ 
 criminatory rates which they themselves do not desire but which, 
 as we have seen, are part and parcel of their existence. 
 
 These conditions being as they are, why has not inland waterway 
 transportation been rejuvenated? 
 
 How can it be ? 
 
 SAFEGUARDS FOR WATER TRANSPORTATION 
 
 What safeguards have been thrown around inland water transpor¬ 
 tation by law that can be utilized to their fullest extent in an effort 
 to rejuvenate it ? 
 
 They are principally directed toward the end that the inland 
 waterway common carriers shall be protected in their rights to set 
 their own port-to-port rates, and to prevent their absorption and 
 annihilation by the railroads. 
 
 Briefly, they are: (a) In the interstate commerce act it provides 
 that a common water carrier shall have the untrammeled right to 
 make its own port to port rates when it does not absorb certain 
 
15 
 
 charges, but does provide that the Interstate Commerce Commission 
 shall have jurisdiction when such charges are absorbed. 
 
 (b) When interchange with railroads subjects the water carrier 
 to the jurisdiction of the Interstate Commerce Commission, that 
 body has specific powers to regulate joint rates and their divisions, 
 and to compel railroads to make physical connections. 
 
 (c) By the shipping act, 1916, the authority of the Shipping 
 Board over waterway common carriers is limited to a common car¬ 
 rier by water in foreign commerce, or a common carrier by water in 
 interstate commerce on the high seas or the Great Lakes on regular 
 routes from port to port, and inland waterway port-to-port rates are 
 exempted. 
 
 ( d) By the Panama Canal act it is unlawful for any railroad com¬ 
 pany or other common carrier subject to the act to regulate commerce 
 to own, lease, operate, control, or have any interest whatsoever (by 
 stock ownership or otherwise, either directly, indirectly, through any 
 holding company, or by stockholders or directors in common, or in 
 any other manner) in any common carrier by water operated through 
 the Panama Canal or elsewhere with which said railroad or other 
 carrier aforesaid does or may compete for traffic or any vessel carry¬ 
 ing freight or passengers upon said water route or elsewhere with 
 which said railroad or other carrier aforesaid does or may compete 
 for traffic; and in case of the violation of this provision each day 
 in which such violation continues shall be deemed a separate offense. 
 
 ( e ) By section 500 of the transportation act, it is declared to be 
 the policy of Congress to promote, encourage, and develop water 
 transportation, service, and facilities in connection with the com¬ 
 merce of the United States, and to foster and preserve in full vigor 
 both rail and water transportation. 
 
 (/) By Public No. 185, approved June 3, 1924, there was created 
 the Inland Waterways Corporation with certain specific functions 
 to be performed, and this will be discussed in the next article. 
 
 V 
 
 CREATION OF INLAND WATERWAYS CORPORATION 
 
 The passage of House bill 8209 and its enactment into law, June 
 3, 1924, creating the Inland Waterways Corporation owned by the 
 United States, offers the means by which the Government can demon¬ 
 strate, once and for all, the feasibility and economic value of water 
 transportation, and when such demonstration has been satisfactorily 
 completed, it offers satisfactory means by which there can be re¬ 
 established upon our navigable streams and canals private corpora¬ 
 tions, operating common carriers which will be of mutual benefit 
 to the public and themselves. 
 
 ANALYSIS OF NECESSITY OF A CORPORATION 
 
 I know of no better means to emphasize what a great stride has 
 been made toward this desirable end than to analyze the bill, to point 
 out how it will correct existing handicaps of governmental operations 
 by the Secretary of War (which, incidentally, would handicap such 
 operations by any department of the Government), and to show the 
 
16 
 
 reasons for the various provisions of the bill and the objects sought to 
 be attained, which I will do when I have discussed the condition that 
 would have resulted if this bill had not passed. The failure to enact 
 this bill into law would have meant such a serious setback to water 
 transportation as to have retarded the development of our rivers 
 for from 25 to 50 years. The Mississippi-Warrior Barge Line, di¬ 
 rectly under the Secretary of War, is operated as nearly like a private 
 transportation agency as existing laws and regulations will permit. 
 It has had an extremely vicarious existence, but through a persistent 
 continuity of purpose it has been able to forge ahead under the most 
 extremely discouraging circumstances. If this continuity were de¬ 
 stroyed, if new men and new methods were to be tried out, the result 
 was bound to be vastly disturbing. What those in charge of these 
 operations in Washington know is the result of experience. We have 
 passed the stage of theorizing. We know what we can do and what 
 can not be done. We have struggled upward till we can see assured 
 success now that our efforts will be allowed to culminate. 
 
 HISTORY OF THE ORGANIZATION 
 
 Created originally as a war measure to relieve the transportation 
 congestion existing during the war, and operated by the Railroad 
 Administration, when the transportation facilities thus created were 
 turned over to the Secretary of War, and he created the Inland and 
 Coastwise Waterways Service, there was inherited from the Rail¬ 
 road Administration a large number of unexecuted contracts for new 
 boats, a nondescript collection of vessels, operating at a tremendous 
 loss, and rulings of the Railroad Administration in regard to the 
 activities of the barge line, that in my judgment, did incalculable 
 harm. I refer to the regulations and restrictions as to the territory 
 through which the barge line might operate jointly with railroads, 
 the general rules for interchange of commodities with the railroads 
 where joint operations were authorized, and the division of accruing 
 revenue for such joint service. Water transportation was prac¬ 
 tically nonexistent, as has been shown. 
 
 PROBLEMS CONFRONTED 
 
 The problem that the Inland and Coastwise Waterways Service 
 set itself to solve was this: 
 
 How could water transportation be rejuvenated and made profit¬ 
 able by the Government, bearing in mind the fact that all govern¬ 
 mental operation is hedged about by laws and restrictions and de¬ 
 cisions of the comptroller to such an .extent as to make it practically 
 impossible to operate as a private corporation? (The existing re¬ 
 strictions upon the Department of War were equally restrictive on 
 any other department of the Government.) 
 
 What could be done to bring about desired results; that is, the 
 rehabilitation of transportation facilities on navigable rivers and 
 canals, when private operators had been driven out of business? 
 
 FACTIONS AND GENERAL APATHY 
 
 There was an amazing amount of apathy throughout the country 
 as to whether our waterways were utilized or not. Those who were 
 
17 
 
 at all interested in the subject of the development of rivers and 
 transportation thereon, divided in two factions: 
 
 One faction contended that the streams made navigable should 
 be utilized purely for the benefit of port-to-port business, and as a 
 potential menace to the railroads to make them keep down their 
 rates paralleling the rivers. The other faction was bitterly op¬ 
 posed to the development of waterways on the very grounds that the 
 first side advocated it. They claimed that the utilization of our 
 rivers, while resulting in tremendous benefits to the cities along 
 their banks, giving them very low rates in comparison to interior 
 rates, was a detriment to the interior of the country and acted to 
 retard their development; and to place them relatively at a disad¬ 
 vantage to river cities in the same wa;y that the long-and-short- 
 haul clause of the interstate-commerce act worked out with reference 
 to coast and interior cities. 
 
 I well remember, in the early days of the Secretary of War’s 
 administration, what a frigid reception was accorded the sugges¬ 
 tion that if all of the people of the United States were to be taxed 
 to make any particular stream navigable and to put transportation 
 facilities upon it, then the benefits of these transportation facilities 
 should be extended to the interior cities as well as to the cities along 
 the banks of the navigable streams. 
 
 PRESENT GENERALLY ACCEPTED PRINCIPLES 
 
 Now, however, I think I am safe in saying that it is generally 
 accepted by the proponents of waterways that they must rest their 
 case upon three basic principles: 
 
 1. That there is not enough transportation in the United States, 
 rail, highway, and waterway, to meet the increasing demands of the 
 commerce of the country, and that to meet the increasing demands of 
 the next 10 years would cost the railroads a billion dollars a year 
 for 10 years. 
 
 The history of our commerce shows that transportation demands 
 double approximately every 10 years; and if the railroads alone 
 are to meet these demands, the people themselves must furnish, prob¬ 
 ably by direct taxation, such as surcharges, increase in freight, etc., 
 this ten billion dollars. 
 
 2. That water transportation is the cheapest means of transporta¬ 
 tion known. 
 
 3. That the people as a whole, having been taxed to create navi¬ 
 gable waterways, should, as far as practicable, reap the benefit of 
 any low rates inherent in such transportation; that is, the water¬ 
 ways should be so used as to give the greatest possible benefit to the 
 greatest possible number, and the greatest possible amount of the 
 ten billion the railroads would require ought to be saved by the utili¬ 
 zation of water transportation already or nearly available. 
 
 SYNOPTIC .CONCLUSIONS 
 
 After four years’ experience in the operation of governmental 
 facilities on the Mississippi and the Warrior Rivers, the New York 
 Canal, and the intracoastal sections, I have formed very definite 
 
18 
 
 and decided opinions in regard to such operations. Synoptically, 
 they may be stated as follows: 
 
 1. The utilization of' our great streams by common carriers is 
 the only fair means of distributing the benefits of cheap water 
 transportation to the very people who have been taxed to create 
 navigable streams and canals. 
 
 2. The rehabilitation of common carriers upon our navigable 
 interior waterways can only be accomplished by governmental 
 pioneering. 
 
 3. There were various handicaps to the restoration of water trans¬ 
 portation in full vigor, by governmental operation, that delayed, 
 restricted, and hampered the accomplishment of the object sought, 
 and such handicaps were avoidable. 
 
 I think no one will deny the justice of my first premise. 
 
 The second premise is based upon the fact that the creation of 
 the very conditions essential to the revival of the common carrier 
 involve in their creation considerations fraught not only with the 
 possibility but the probability of financial disaster to a private 
 corporation with limited capital—understanding private capital will 
 not consider such a dangerous investment. 
 
 CONDITIONS PRECEDENT TO SUCCESS OF A COMMON CARRIER 
 
 Broadly, the conditions precedent to success to make it possible 
 for private common carrier transportation lines to exist, may be 
 grouped into five subdivisions. There must be: 
 
 1. A suitable navigable waterway. 
 
 EQUIPMENT 
 
 2. Suitably designed equipment for each particular waterway; and 
 that suitable equipment must be determined by experiment. 
 
 That the old water-borne transportation equipment and its meth¬ 
 ods of operation were obsolete is proven by the fact that it had been 
 driven out of existence. The development of a transportation agency 
 to success must be gradual and healthy. There is bound to be, how¬ 
 ever, a long period of constructive effort, of financial outlay without 
 return, before such constructive effort results in a remunerative re¬ 
 turn. The history of all our railroads has been that of ups and 
 downs, and there is too much demand for capital in assured under¬ 
 takings, too great a demand for quick return upon an investment, 
 for capital to pour itself unstintedly, and for an indefinite period, 
 into an undertaking so perilous as the rehabilitation of a form of 
 transportation that competition had utterly destroyed. 
 
 It was fortunate, indeed, for the revival of water-borne commerce 
 that the demands of war brought into being the present magnificent 
 fleets operated by this corporation, and that the law required their 
 operation, because, aside from the other fundamentals of success that 
 experience has brought forward in their proper perspective, while 
 it might have been physically possible to have obtained sufficient 
 funds to inaugurate a service of local importance only, a service 
 whereby the public could be very widely benefited could not possibly 
 have been developed. Financial disaster faced it from the start. 
 
19 
 
 Indeed, the schemes of the original proponents of the revival of 
 water-borne transportation on the Mississippi were so strictly limited 
 in their application that their proposed line was not to be even a 
 common carrier, but a contract carrier, and the freight to be carried 
 was to originate in or be destined to river ports or their immediate 
 vicinity. It would have led to active competition and the destruction 
 of water transportion bv its active and determined competitors and 
 the consequent delay of the revival of such commerce for another 
 half century. But it is an entirely different thing to drive an inde¬ 
 pendent corporation, with limited capital, out of business, and to 
 fight against the expressed policy of Congress that water-borne 
 commerce must be revived (when this policy is supported by con¬ 
 gressional appropriation) in order that the people may be given a 
 chance to find out whether or not the hundreds of millions of dollars 
 spent in making waterways navigable is a success or a colossal 
 blunder. 
 
 No private corporation could have stood up under the determined 
 effort that would have been made to destroy it. The large initial 
 outlay of funds, the years of loss, the lack of intelligent interest in 
 what was being sought for, and the pregnant delays in the matter of 
 adjudicating differences between rail and water carriers could only 
 have been financed by Congress and only have become successful 
 because backed by all its vast powers. 
 
 In speaking of the magnificent fleets in the preceding paragraph, 
 the term must be used comparatively. The six tunnel-type, twin- 
 screw, oil-burning towboats of the Natchez type were and are far 
 superior to any other type ever put on our rivers, but they were 
 theoretically designed and had to be altered practically to meet the 
 conditions of actual service. Originally designed to draw 7 feet, 
 the design was changed to allow a draft of 7 feet 6 inches, and when 
 finally accepted they drew 8 feet 3 inches. As the channel project 
 from St. Louis to Cairo is only 8 feet, and from Cairo to New Or¬ 
 leans only 9 feet, it is not to be wondered at that during low stages 
 navigation is sometimes impracticable. A clearance of 18 inches is, 
 in my judgment, necessary for the development of the highest horse¬ 
 power and the most economical operation. 
 
 The four towboats designed for the upper river were stern wheel¬ 
 ers and are not so flexible as the type used on the lower river. They 
 were also coal burners and had to be converted to oil burners. The 
 barges on the lower river draw 8 feet when loaded to 2,000 tons, 
 and the upper-river barges carry 3,000 tons with about the same 
 draft. 
 
 The lower-river barges are square ends, the upper spoon ends. 
 The lower-river barges (40) were designed primarily for bulk 
 freight and have had to be modified greatly by “ ’ tween-decks ” to 
 carry all kinds of merchandise. The upper-river barges were also 
 designed to carry oil. 
 
 A combination of the types is probably the ideal barge, while the 
 modern towboat would be diessel direct or electric drive, about 200 
 feet long by 40-odd wide, twin or multnple screw, tunnel type, draw¬ 
 ing from 4 feet 6 inches to 5 feet 3 inches, with a brake horsepower 
 of not less than 1,500. 
 
20 
 
 VI 
 
 TERMINALS 
 
 3. There must be suitable terminals and balanced freight both 
 
 ways. 
 
 There was, and still is to an appreciable extent, an argument as 
 to what constitutes a suitable terminal. Suffice to say that suitable 
 terminals depend upon very widely different conditions. In gen¬ 
 eral, they may be classified into three types—the direct lift, the con¬ 
 veyor type, and the floating terminal with incline. 
 
 While in our judgment the most suitable type for the Mississippi 
 is the floating terminal with a railroad incline, such a terminal would 
 be out of place on the Hudson. 
 
 The kind of terminal to be built depends upon the character of 
 the stream, the commodities to be principally handled, whether or 
 not there is to be interchange with the railroads, and various and 
 sundry other local considerations. 
 
 BALANCED FREIGHT 
 
 By a balanced traffic is meant not only freight both ways but 
 freight both ways of both high and low revenue production, and 
 that kind of freight is only going to be procured when there has 
 been built up a dependable, economical, and durable service. The 
 distinction made between dependable and durable is that to consti¬ 
 tute dependability there must be scheduled sailings on which reli¬ 
 ance may be placed and advantage taken of, while by durable is con¬ 
 veyed the idea of permanency. 
 
 With this additional element of necessity to successful operation 
 of water-borne transportation enters another deterrent element to 
 unadventurous capital. It means a continuous and discouraging 
 outlay of funds for an indefinite period until the public can be con¬ 
 vinced that the service offered is economical, dependable, and durable. 
 
 INTERCHANGE WITH OTHER CARRIERS 
 
 4. The next essential condition to success is interchange of freight 
 with the railroads. Without such condition being fulfilled the only 
 freight that can be handled is local production; that is, the produce 
 of the cities situate upon the navigable stream or the intermediate 
 vicinity. Certainly it is unfair discrimination to tax the public at 
 large for the benefit of an inconsiderable portion of the population 
 fortunately located. If the public at large is to be benefited by the 
 revival of water-borne commerce on our interior rivers and canals, 
 then their consignments or assignments of freight must reflect some 
 savings due to the use of such rivers or canals. And to reach any 
 of the public to-dav not on these navigable waters and to let them 
 reap the benefits or cheaper transportation recourse must be had to 
 railways or highways, and the commerce must of necessity be both 
 rail and water-borne. This corporation carries freight into and out 
 of 3fi different States, and does it at 80 per cent of the all-rail rate. 
 
21 
 
 It offers every shipper in the United States a rate whereby he can 
 market or receive his products at a saving of at least 20 cents on 
 every dollar of freight charges. 
 
 OBSTACLES TO PRIVATE OPERATION AS A COMMON CARRIER 
 
 To compel the railroads to enter into interchange relations with 
 them, the water carrier would at once become, willy-nilly, a common 
 carrier, and at the mercy of its rail connections in the matter of the 
 division of revenue accruing from joint hauls. The railroads could 
 and would have said in effect, “ You will take what share of the 
 proceeds we voluntarily give you, or we won’t interchange.” 
 
 As the railroads could not own competing waterway facilities, 
 and as at that time the ostensible object of waterway proponents was 
 to create a potential menace of cheaper transportation, the railroads 
 could very properly take this attitude, and in addition say, which 
 was a fact, “Very well, the rates paralleling the Mississippi River 
 are very much lower than the rates tor the same distance for the same 
 commodities in the interior. If you insist upon taking that haul 
 away from us, we must, to protect our stock and bond holders, insist 
 that we get some tangible return for hauling something to you over 
 our lines and giving it to you, thus taking the long haul away from 
 ourselves. We can only give you these reduced rates when we have 
 the entire haul. Such local preferential rates as you enjoy are, of 
 themselves, unjustifiable.” 
 
 The share of revenue that the water carrier might have been com¬ 
 pelled to accept under this condition could have been so low as to 
 be very unprofitable; and it would not have been a difficult matter to 
 flood the private corporation with undesirable freight that it would 
 have to carry because of its published schedules, to the exclusion of 
 other freight more profitable but not of sufficient importance in 
 itself to justify the maintenance of the line. 
 
 Now this condition, to some extent, befell the governmental opera¬ 
 tions, and led to the enunciation of the final postulate for success; 
 that is— 
 
 EQUITABLE DIVISION OF REVENUE 
 
 5. There must be an equitable division of revenue accruing to both 
 water and rail transportation for a combined haul. 
 
 Fortunately there exists in law a tribunal with effective powers for 
 compelling such a division, the Interstate Commerce Commission. 
 
 The Inland Waterways Corporation ha§ interchange relations 
 with approximately 165 railroads in the United States. These rail¬ 
 roads divide their joint revenue between each other in various ways, 
 depending upon a multitude of conditions. 
 
 An attempt was made in briefs submitted and argued before the 
 Interstate Commerce Commission to enunciate certain principles of 
 general application upon w T hich the commission could base an order 
 to the railroads to give an equitable proportion of the revenue jointly 
 earned by a combined rail and water movement to the water carrier. 
 It required from October, 1920, to April, 1923, to get any decision 
 from the Interstate Commerce Commission, and, considering the 
 
22 
 
 principles involved, the vast amount of data considered, the errors 
 that crept in, the number of defendants cited who had to prepare 
 their answers, this delay is subject to no criticism. 
 
 The last case presented was decided in four months, and was of 
 vast importance to all waterways. 
 
 Let us examine the final condition precedent to success—that is, 
 an equitable division of joint revenue earned by the rail and water 
 carriers for a combined service performed—and see its importance. 
 
 A great import for the Birmingham steel industries through 
 Mobile is manganese ore. It is a commodity especially adapted for 
 water transportation—great bulk and weight. 
 
 The Government built a coal and ore handling plant at Mobile at 
 a cost of approximately one-half million dollars for handling these 
 commodities. The rail rate on this ore from Mobile to Birmingham 
 was about $3.15 per ton. The barge rate was 80 per cent of that. 
 Shortly after the ore operations on the Warrior began the rail lines 
 reduced their rate to $2 per ton. The water rate dropped to equal 
 that, too lean a revenue for even water transportation. It can easily 
 be demonstrated that $2 per ton, or 0.65 mill per ton mile, does not 
 pay for rail carriage, and the ore must be hauled at less than the cost 
 of operations. Why ? To discourage the continuance of the Govern¬ 
 ment barge line and to deter private capital from embarking on a 
 similar enterprise. 
 
 The railroads have twice reduced the rate on bauxite ore from New 
 Orleans to St. Louis since the Aluminum Ore Co. entered into ne¬ 
 gotiations for the transfer of enormous quantities via the barge line. 
 Either their first rate was t,oo high or their present rate is too low 
 and put in to hurt the barge line or discourage private capital from 
 competition. 
 
 INTERSTATE COMMERCE COMMISSION 
 
 These rates must have the approval of the Interstate Commerce 
 Commission or they are illegal. If that branch of Government is 
 unable to curb such opposition to a governmental agency, what 
 chance would private operation have against united railroad oppo¬ 
 sition? (See Congressman Humphreys’ speech, Actual and Poten¬ 
 tial Competition.) 
 
 Now, the Interstate Commerce Commission has the power to com¬ 
 pel equitable divisions between rail and water carriers and between 
 allied rail carriers, but the difficulty of determining what is an 
 equitable division is immense. 
 
 VII 
 
 In April, 1923, the commission answered a brief of the Govern¬ 
 ment practically as follows: 
 
 There are too many conflicting interests to render it possible for this com¬ 
 mission to render a blanket decision as requested. We enunciate certain prin¬ 
 ciples which we desire to be followed in negotiations between water and rail 
 carriers. If, in the negotiations such as we recommend, you reach a breaking 
 point with an individual railroad, such case may be resubmitted and a deci¬ 
 sion rendered. 
 
 This decision, while helpful in the extreme to the Government as 
 giving it authority to negotiate separately with the railroads, would 
 
23 
 
 form a most imposing obstacle to any private organization. It serves 
 notice on the railroads that so long as governmental operations con¬ 
 tinue, so long as Congress appropriates money to prove the practi¬ 
 cability of water transportation, to create the conditions precedent to 
 success, so long must the rail and water routes approach the subject 
 in a proper spirit of cooperation and coordination and not of hostile 
 competition. 
 
 It creates just the reverse situation so far as private operations of 
 waterways is considered. 
 
 By the pursuit of tactics formerly successfully employed, this de¬ 
 cision gives railroads the whip hand over private water enterprise. 
 
 CONDITIONS TO BE FACED 
 
 These are conditions which must be faced. If it is impossible for 
 joint rail and water carriers, cooperating, to give cheaper trans¬ 
 portation than all-rail with a division of earnings affording each a 
 living revenue, then water transportation must fail. So the question 
 of what is a living revenue for each to exist is the vital question to 
 be determined; and so long as railroads would haA^e the upper hand 
 in a fight with a private transportation agency, it Avould seem to be 
 a Avise thing for the Government to do to so organize and use its 
 existing facilities as to determine this question accurately. Once it 
 has been accurately determined that such combined transportation 
 facilities can carry freight more cheaply, and at a reasonable profit 
 to each, once the conditions have been established upon a particular 
 river, then Congress may, if it so desires, direct the sale of such 
 existing facility under such restrictions as are desirable, and the 
 purchase price so received may be used in the creation of similar con¬ 
 ditions upon other rivers; and as each section demonstrates its de¬ 
 sirability for the inA'estment of private capital, such section may be 
 sold. It would only be a matter of time till these successful trans¬ 
 portation agencies Avould ha\ T e established enough of the essential 
 conditions to success, through laAv and Interstate Commerce Com¬ 
 mission decisions, to offer private capital opportunities for original 
 investment, and the Government could then either cease its operations 
 or limit them to particularly difficult operations, Avhere pioneering 
 needs still might exist. 
 
 AVOIDABLE HANDICAPS OF GOVERNMENTAL OPERATION 
 
 Let us examine Avhat the avoidable handicaps of goA r ernmental 
 operation were, and see Iioav necessary the creation of this corpora¬ 
 tion was to the success of the project: 
 
 (a) The lack of certainty on the part of the shipping public as 
 to AA r hether governmental operation might not be suddenly abandoned 
 altogether, or that the transportation facilities might be disposed of 
 to interests hostile to waterways; either of which contingencies has 
 a marked effect on the decision of a shipper avIio desires economical, 
 dependable, and permanent service. 
 
 (b) The fact that all appropriations made by Congress for the old 
 waterways service, under existing laAvs Avere for periods of one fiscal 
 year only, and the money appropriated could be used only in that 
 fiscal year, for the exact purpose specified; and there Avas no assur- 
 
24 
 
 ance that each succeeding Congress would appropriate money. No 
 well-developed plan of expansion or definite policy could be an¬ 
 nounced that would insure the public of a dependable and durable 
 service; and further, in addition to various statutes bearing on the 
 expenditure of such public money, the Comptroller General of the 
 Treasury, not the Secretary of War, the mandatory of Congress, 
 was the final judge as to the legality of such expenditure; and the 
 orders of the Secretary of War might be absolutely vitiated by any 
 of the comptroller’s decisions, regardless of the necessity of such 
 expenditure for the purpose of carrying out the mandate of Con¬ 
 gress. Surely the Secretary of War, the mandatory of Congress, 
 charged with the continued operation of the transportation facili¬ 
 ties turned over to him ought to have the unhampered power to do 
 what he is directed by Congress to do, in his own way, and not ques¬ 
 tioned in the execution of a general policy over the expenditure of 
 the necessary money to accomplish it. 
 
 (c) Its inability to finance itself in periods of depression, thus 
 necessitating an appeal to Congress for funds, opening the flood¬ 
 gates of criticism, with the resultant agitation as to whether or not 
 Congress would, through failure to appropriate, cause the cessation 
 of an operation that is economically sound, the destruction of a 
 solvent transportation agency, the failure of a successful waterway 
 demonstration, because of the law against a Government agency 
 creating a deficit; and under the limits set by such conditions the 
 line was incapable of expansion unless there was a further extension 
 of governmental ownership. 
 
 PURPOSE OF PRESENT LAW 
 
 The stated purpose of the bill is— 
 
 That for the purpose of carrying on the operations of the Government-owned 
 inland, canal, and coastwise waterways system to the point where the system 
 can be transferred to private operations to the best advantage of the Govern¬ 
 ment, of carrying out the mandates of Congress prescribed in section 201 of 
 the transportation act, 1920, as amended, and of carrying out the policy enun¬ 
 ciated by Congress in the first paragraph of section 500 of such act, there is 
 created a corporation to be known as the Inland Waterways Corporation— 
 
 which corporation is to be governed and directed by the Secretary 
 of War. 
 
 BEST INTERESTS OF THE GOVERNMENT 
 
 What are the best interests of the Government, and when can the 
 operations be transferred to private corporations with the best ad¬ 
 vantage of the Government? 
 
 One of the common objections that has been raised to this project 
 for the reestablishment of transportation facilities on waterways by 
 the Government has been formulated in about this manner, and 
 usually as if it were unanswerable: “ Ah, I see ! What you design to 
 do is to let the Government bear all the losses, and as soon as you 
 have developed a paying institution you intend to turn it over to 
 private interests.” 
 
 Now, that is not a fact. Its application to the subject under con¬ 
 sideration; that is, the rehabilitation of transportation facilities on 
 inland waterways, is based on wrong premises, and ignorance of the 
 exact but changing status of the facilities under consideration. 
 
25 
 
 FIGURES VS. PROPAGANDA 
 
 Those facilities which exist to-day came into being as a war 
 measure. They represented in round numbers, on July 1, 1921, 
 $13,000,000, invested at war-time prices. If these facilities had been 
 disposed of on the basis of other similar equipment created for war¬ 
 time purposes, a realization of 5 cents on the dollar would have been 
 more than the average, and the Government could possibly have ob¬ 
 tained $650,000 by a sale, the fleet would have been broken up, and 
 waterway commerce on the Mississippi and Warrior Rivers destroyed. 
 
 During the succeeding fiscal years, including all appropriations 
 made for 1922, 1923, and 1924 (fiscal year 1922 begins July 1, 1921, 
 etc.), there was appropriated by Congress the total sum of $2,084,- 
 650; so that if we add this to the $650,000, which might have been 
 realized by a postwar sale, the total peace investment of the Govern¬ 
 ment in this project is $2,734,650. 
 
 The total appraised value of the physical assets of this corpora¬ 
 tion, as a going concern (exclusive of any value for good will, which 
 usually is valued at 10 per cent), is almost $10,000,000. This valua¬ 
 tion was made by the American Appraisal Co. of Milwaukee. 
 
 In other words, reduced to mere figures, the Government has, 
 by holding on, enhanced the value of its investment $7,625,350. 
 Therefore, the best interests of the Government can be conserved by 
 carrying on the operations until they are so successful as to net a 
 6 per cent return on the present-day valuation, and then disposing 
 of the facilities as a going concern to private capital for a price based 
 on a 6 per cent return on the investment. 
 
 WHY GOVERNMENTAL OPERATION? 
 
 And the Government can well afford to do this, because several 
 objects are gained: 
 
 1. It will salvage seven millions that otherwise would have been 
 written off as a war loss. 
 
 2. The barge line will carry in round numbers, with its present 
 facilities, a million tons a year, at a saving to the public of $1,350,- 
 000. If the fleet were balanced, it could carry 2,000,000 tons a year. 
 
 3. By expanding the facilities to meet the growing needs of trans¬ 
 portation, the corporation will establish itself upon a paying basis, 
 and return revenue to the Treasury instead of taking it out, and its 
 value will be increased b} T just so much more additional capital as 
 may be invested therein. 
 
 4. It will demonstrate beyond question that water transportation 
 is feasible and economical and that when certain conditions are 
 established it offers a profitable investment for capital; and capital 
 will freely invest. 
 
 VIII 
 
 RESULTS OF CORPORATION OPERATIONS 
 
 (Corporation organized June 3, 1924) 
 
 I insert here what the corporation is actually doing on the Missis¬ 
 sippi River, so that my readers may not be led astray by any un¬ 
 authorized figures. There is also inserted a report to the Director 
 of the Budget. 
 
26 
 
 Inland Waterways Corporation — Mississippi-Warrior Service, Mississippi Di¬ 
 vision—Statement of income for the calendar year 1921f and the months of 
 January and February, 1925, and estimate for March, 1925. 
 
 
 Tonnage 
 
 handled 
 
 Total 
 
 revenue 
 
 Total 
 
 expenses, 
 
 including 
 
 depreciation 
 
 Net income 
 
 Deprecia¬ 
 
 tion 
 
 Net income 
 exclusive 
 of depre¬ 
 ciation 
 
 1924 
 
 January__ 
 
 February .. 
 
 March.. 
 
 April____ 
 
 May___ 
 
 June__ . _ 
 
 July...__ 
 
 August..__ 
 
 September_ 
 
 October. ___ 
 
 November_ 
 
 December_ 
 
 Total calendar year 
 1924_ 
 
 1925 
 
 January_ . _ 
 
 February___ 
 
 March 2 _ 
 
 82,179 
 80,229 
 74,117 
 
 81, 528 
 
 69, 916 
 
 82, 565 
 
 70, 387 
 76, 609 
 80, 537 
 57, 604 
 39, 603 
 54, 229 
 
 $261,119. 61 
 251, 422. 29 
 258, 824. 67 
 315, 322. 44 
 288, 653. 34 
 332, 972. 40 
 285,155.13 
 284, 806. 54 
 278, 378. 23 
 199, 097. 04 
 152, 047. 92 
 189, 548. 72 
 
 $256, 597. 06 
 238, 190. 83 
 256, 533. 32 
 305, 751. 50 
 376, 494. 32 
 289,172. 03 
 276, 688. 80 
 275, 716. 53 
 252, 694. 35 
 236, 995. 27 
 238, 051. 60 
 220, 522. 69 
 
 $4, 522.55 
 13, 231. 46 
 2, 291. 35 
 9, 570. 94 
 i 87, 840. 98 
 43, 800. 37 
 8,466. 33 
 9, 090. 01 
 25, 683. 88 
 
 1 37,898. 23 
 
 2 86, 003. 68 
 
 1 30, 973. 97 
 
 $26, 397. 58 
 
 26, 438. 02 
 
 27, 210. 70 
 
 28, 230. 89 
 
 29, 010. 58 
 
 20, 909. 28 
 21,190. 81 
 
 21, 659. 76 
 21, 514. 84 
 21,413. 39 
 20, 940. 76 
 20,866.16 
 
 $30,920.13 
 
 39, 669. 48 
 
 29, 502. 05 
 
 37,801. 83 
 i 58, 830. 40 
 
 64, 709. 65 
 
 29, 657. 14 
 
 30, 749. 77 
 
 47,198. 72 
 
 1 16, 484. 84 
 i 65, 062. 92 
 
 1 10,107. 81 
 
 849, 503 
 
 3, 097, 348. 33 
 
 3, 223, 408. 30 
 
 2 126, 059. 97 
 
 285, 782. 77 
 
 159, 722. 80 
 
 81, 087 
 95, 907 
 88, 000 
 
 249, 457. 91 
 292,362.19 
 270, 000. 00 
 
 233, 538.17 
 231,109. 73 
 235, 000. 00 
 
 15, 919. 74 
 61,252. 46 
 35, 000. 00 
 
 20,811.46 
 20,811.46 
 20,811. 46 
 
 36, 731. 20 
 
 82, 063. 92 
 
 55,811. 46 
 
 1 Loss. 2 March figures estimated. 
 
 There was taken in by the corporation during January, February, 
 and March the sum of $149,577.85 in excess of operating expenses 
 requiring expenditure of funds. 
 
 Of this amount there was set aside—- 
 
 For depreciation___$80, 057.15 
 
 Reserve for future repairs (surplus)_ 21,928.23 
 
 Net profits___ 47,592.47 
 
 Figures for March, 1925, are estimates based on reports from New Orleans office, and 
 are very conservative. Actual results for February exceeded estimated profits by ap¬ 
 proximately $12,500. 
 
 Loss in May, 1924, partly due to adjustment in transferring the accounts to the Inland 
 Waterways Corporation and largely applicable to prior periods. 
 
 Losses in October, November, and December due to low stage of river and floating ice, 
 which seriously delayed deliveries in these months. This happens every year due to 
 the fact that the towboats built by the Railroad Administration draw 8 feet 3 inches 
 and are unable to navigate during low water. This corporation will remedy that by 
 building two of the most modern light-draft towboats, with Diesel engines, and designed 
 to correct all errors in the previous boats. 
 
 April 14, 1925. 
 
 The Director of the Budget, 
 
 Washington, D. C. 
 
 My Dear General Lord : In compliance with your telephonic request to fur¬ 
 nish you a complete statement of what the Inland Waterways Corporation is 
 doing, the following is submitted: 
 
 The current liabilities of the Inland Waterways Corporation at its organiza¬ 
 tion June 1, 1924, exceeded its current assets by $588,114.67. 
 
 The current assets of the corporation as of April 1, 1925, exceed the current 
 liabilities by $235,426.21. 
 
 New money has been added to the business since the incorporation, as fol¬ 
 
 lows : 
 
 Capital stock issued_$1, 500, 000. 00 
 
 Appropriations used_ 103, 276. 14 
 
 Collections on loans and notes receivable_ 28, 610.15 
 
 Operating profit of Mississippi-Warrior service, after deducting 
 accruals for depreciation and future repairs, which required 
 no funds_ 31, 322. 02 
 
 Total new money_____ 1, 663, 208. 31 
 
27 
 
 This was partially expended as follows: 
 
 To cover net liabilities assumed by the corporation 
 
 June 1, 1924_$588,114. 67 
 
 Property and equipment_810, 883. 44 
 
 Expenses of Washington office_ 29, 283. 99 
 
 Total expenditures from new money obtained_ 1, 427, 782.10 
 
 Working capital on hand April 1, 1925_ 235, 426. 21 
 
 Since April 1 we have received a remittance from the New Orleans office of 
 $106,000. That office is allowed $200,000 working funds, which is circulating 
 capital used in conducting the service, and represents current assets in excess 
 of liabilities. By the use of this fund in making prompt payments and getting 
 discounts we saved, since November 1, 1924, the sum of $3,132. 
 
 The Washington office has on deposit— 
 
 United States Treasury_$35, 450 
 
 - Riggs National Bank (checking account, drawing 2 per cent)_ 65,000 
 
 Riggs National Bank (savings account, drawing 3 per cent)_ 106, 000 
 
 206, 450 
 
 We have carried in this period 912,082 tons of miscellaneous cargo, w T ith a 
 total revenue of $2,870,383.86. 
 
 AVe figure a saving to the public of $1.30 per ton on 726,528 (the Mississippi 
 section), which is $944,486.40, and a saving of 30 cents per ton (the Warrior 
 section), on 185,554, which is $55,666.20, or a total of $1,000,152.60. 
 
 Very respectfully, 
 
 T. Q. Ashburn, 
 
 Brigadier General United States Army, 
 
 Chairman and Executive. 
 
 Note. —These figures include not only the Mississippi division, but also the Warrior 
 division and the expenses of the Washington office. 
 
 Lest there be any of my readers who misapprehend these figures, 
 attention is invited to the fact that they first include depreciation, 
 and then deduct it, in order to arirve at a net “ out of pocket ” loss. 
 This is entirely equitable, and you may take either set you desire, 
 but please bear in mind that the “maintenance, repair, and new 
 equipment ” figures (included in the gross expenses) are very much 
 greater than the depreciation, and that the fleet is daily enhancing 
 m value, not depreciating. (See table, p. 25.) 
 
 MANDATES OF THE LAW 
 
 Now, if the problem were only to continue the present operations 
 until such time as the Government could dispose of its holdings at 
 a figure approximating the value of its investment, I think it is 
 reasonably safe to predict that such a consummation could be at¬ 
 tained within a period of five years; but note that this bill contains 
 another mandate; that is, it not only becomes the duty of the Secre¬ 
 tary of War to foster and preserve in full vigor both rail and water 
 transportation but he is required to promote, encourage, and develop 
 water transportation, and there is no limitation as to how he should 
 do it. 
 
 CONDITIONS VARY ON EACH RIVER 
 
 In all my published reports, articles, and speeches, the fact has 
 been emphasized that it is necessary to create certain conditions 
 upon interior waterways before successful common-carrier opera¬ 
 tion can follow; and, also, that when these conditions are created 
 
28 
 
 upon one navigable waterway they are not created upon any other 
 waterways in their entirety. 
 
 Speaking before the Interstate and Foreign Commerce Com¬ 
 mittee of the House of Representatives on this subject, I said: 
 
 These four years of experimentation (on the Mississippi and Warrior) have 
 not been lost. Any cost to the Government has been more than repaid by the 
 freight savings accruing to the public. But because the conditions essential 
 to success have been created upon the lower Mississippi, does not mean that 
 these conditions have been created upon the upper Mississippi, the Ohio, or 
 the Missouri. But what you have done is this: You have determined that 
 there are certain essential conditions to success; you know what these condi¬ 
 tions are, and you know how to go about it to put barge lines on these rivers 
 and to make them a success. 
 
 Now, it is highly improbable that either the Ohio, the Missouri, or 
 the upper Mississippi will be put in a condition to handle such 
 tows as experience has found to be profitable on the lower Mississippi 
 for at least five years. But this Inland Waterways Corporation 
 can, and will, encourage private operations upon the streams men¬ 
 tioned, and all others, by aiding such private operators to create 
 the conditions necessary for success as a common carrier. And 
 common carriers must exist if the public at large is to get the benefit 
 of cheap water transportation. 
 
 THE VALUE OF THE CORPORATION 
 
 In five years much may happen. New types of boats designed for 
 use upon shallow streams may prove feasible and profitable; and 
 every stream emptying into the great national artery of the Missis¬ 
 sippi proper may become a feeder to the great barge line, increasing 
 its value, necessitating increases in its capacity, and extending its 
 benefits to the very door of the producer. And when these benefits 
 have been extended to the producer, the consumer will likewise profit 
 by reduced prices of manufactured products. 
 
 And every day the Inland Waterways Corporation will be ex¬ 
 tending in its scope, through legal interpretations, decisions of the 
 Interstate Commerce Commission, and precedents regarding fair 
 divisions of revenue for joint rail-water traffic, the principle that 
 there must be a living revenue given to each particular carrier in 
 joint rail and water hauls; and the vaster more important principle 
 to the public and private operators, that coordination of effort, co¬ 
 operation between water, rail, and highway facilities not only results 
 in cheaper transportation for the public, but creates demands for 
 transportation that result in greater and continually increasing rev¬ 
 enues to all forms of transportation. Fortunately there can be no 
 more war to the death between rail and water carriers, once the 
 water carrier is reestablished. Many of the conditions that allowed 
 rail interests to destroy water transportation no longer exist, and 
 it will be the business of the Inland Waterways Corporation to de¬ 
 stroy such conditions as still remain. And, backed by the United 
 States, it can do it. 
 
 CHANGE IN SENTIMENT 
 
 Unprejudiced railroad men, especially several very powerful 
 offcials whom I know personally, realize the changed conditions, 
 accept them, and throw the weight of their vast influence toward 
 
29 
 
 cooperation, with powerful effect. He who runs may read a vast 
 change in the sentiment regarding water and rail cooperation within 
 the past two years; but, nevertheless, while war to the death is no 
 longer possible between established rail and water carriers, the con¬ 
 ditions precedent to the successful reestablishment of common car¬ 
 riers upon our inland waterways are still so difficult of creation as 
 to require the backing of the United States Government. 
 
 POWERS OF THE CORPORATION 
 
 The act authorized to be appropriated $5,000,000 to purchase stock 
 in the corporation, all of which is subscribed for by the United 
 States; and which can be obtained in such sums as desired from time 
 to time. In other w r ords, it removes the restriction accompanying 
 an ordinary appropriation, that it must be utilized in the fiscal 
 year for which appropriated, or return to the Treasury of the United 
 States. It thus becomes a continuing fund. 
 
 The corporation, “in addition to the powers specifically granted, 
 shall have such powers as may be necessary or incidental to fulfill 
 the purpose of its creation.” 
 
 The result of this is that the corporation is the judge of how its 
 money shall be spent, and such expenditures are i*ot subject to re¬ 
 strictive laws or technical regulations established by the Comptroller 
 General, who, before the passage of the act, had the absolute power 
 of approval or disapproval of any and all expenditures made by this 
 corporation, even with the approval of the Secretary of War, from 
 appropriated funds. 
 
 The bill thus accomplishes the purpose, as Congressman Denison 
 said in his report, “ of getting away from the limitations of bureau¬ 
 cratic regulations by which the Secretary of War is hedged.” Three 
 million dollars was made immediately available by this present 
 Congress. 
 
 UPPER MISSISSIPPI RIVER 
 
 By the transportation act of 1920, it was only under the contin¬ 
 gency that the so-called “ Goltra Fleet” (designed for operation on 
 the upper Mississippi) should be returned to the United States, that 
 operations could be undertaken on the upper Mississippi. This act 
 provides a mandate that the corporation shall “ as soon as there is 
 an improved channel sufficient to permit the same, initiate the water 
 carriage heretofore authorized by law upon the Mississippi River 
 above St. Louis.” There is nothing indefinite about that. 
 
 CONTINUITY OF OPERATION 
 
 No facilities shall be discontinued until authorized by Congress. 
 The same provision occurs in the transportation act, where the Secre¬ 
 tary of War is required to operate in such a manner as to continue 
 the facilities turned over to his control; but it is a definite reitera¬ 
 tion of the determination of Congress to give this corporation a 
 fair show to make a success by the announcement that its service will 
 be durable and dependable. 
 
30 
 
 NEW LINES 
 
 “If the Secretary of War deems it advisable to develop and op¬ 
 erate new lines, in order to give the public the proper service, he 
 shall report thereon to Congress.” 
 
 IX 
 
 ORGANIZATION 
 
 Now the actrprovides a board of advisors, none of whom shall re¬ 
 ceive any salary or be directly interested in any railroad. The testi¬ 
 mony advanced before the committee showed, to quote their report, 
 “ There are many very able and successful business men throughout 
 the entire Mississippi and Ohio and Warrior valleys whose services 
 could not be purchased at any salary, who are perfectly willing to 
 serve on the advisory board of this corporation in order to give to the 
 Secretary of War the benefit of their experience and their business 
 judgment in connection with the operations of the barge line; and 
 the development of new lines.” This board “ shall consider matters 
 submitted to it by the Secretary of War, and make recommendations 
 thereon, and from time to time advise him and make recommenda¬ 
 tions, in respect to the management and operation of existing facilites 
 or the development and operation of new lines.” So there is very close 
 cooperation between the Secretary of War and the board of advis¬ 
 ors; and I believe that when the board and the Secretary are a unit 
 in their recommendations to Congress, that body must surely accept 
 their combined judgment if they say for example, “The time has 
 come to initiate a barge line, a common carrier, on the Ohio, or on 
 the Missouri,” or whatever it might be. 
 
 The localities and communities represented by this board will feel 
 that their local interests are being protected at the same time that 
 the great national project is being pushed to completion. Of neces¬ 
 sity the board, which meets only on call of the Secretary of War, 
 must have a chairman who is the continuing executive representative 
 of the Secretary of War. The necessity of this is perfectly obvious. 
 There will be no sudden changes of policy or throwing a monkey 
 wrench in the buzz saw of a well-oiled machine. 
 
 A continuing policy is necessary to the success of any business 
 organization, and there must be some executive agent to see that such 
 a policy is carried out. 
 
 In addition to the $5,000,000 authorized to be appropriated, the 
 act also provides for about $1,500,000 additional capital from various 
 sources and gives the corporation the right to borrow money. This 
 latter provision is of immense importance. 
 
 THE POLICY PRESENTED TO CONGRESS 
 
 The Secretary of War wisely presented to Congress a concrete 
 program which they could accept or reject. It had before them all 
 information regarding the following points: 
 
 (a) The inherent difficulties of governmental operation. 
 
31 
 
 (b) The necessity of governmental operation as a pioneer demon¬ 
 strator. 
 
 ( c ) The necessity of Congress providing some means which will 
 allow the Secretary of War, its mandatory, to do the things he would 
 ordinarily do as the head of a great private transportation agency. 
 
 (d) The necessity of providing the Secretary of War with suffi¬ 
 cient capital to overcome the conditions which militate against the 
 success of the governmental demonstration. 
 
 CONGRESSIONAL ACTION 
 
 And I think that Congress in passing this bill did do precisely the 
 things essential to be done in the creation of a corporation controlled 
 by the Secretary of War; by investing him with the necessary powers 
 and funds to demonstrate successfully not only the inherent possibil¬ 
 ities of cheap, profitable, and dependable transportation by water, 
 not only that savings will accrue to the public, not only that our 
 policy of improving our internal waterways is a good policy, but that 
 this demonstration will soon result in the utilization of our navigable 
 streams by private capital operating common-carrier facilities; thus 
 freely offering to all population, rich and poor, the benefits to be 
 derived from cheaper transportation. 
 
 COOPERATION NECESSARY 
 
 In order to hasten the creation of successful common carriers upon 
 our navigable streams, there must be, on the one hand, an abandon¬ 
 ment of the attitude that the development of our waterways for 
 navigation is purely for the purpose of reducing rail rates by actual, 
 or potential, competition. On the other hand there must be an aban¬ 
 donment of the policy of active destruction of water carriers by rail¬ 
 ways, which may take one of many forms, but which seems to have 
 centralized in a battering-ram against the fundamental principle that 
 water transportation is inherently cheaper than any other form. 
 
 MANIPULATED FIGURES 
 
 Because water transportation has not come back over night, be¬ 
 cause the essential condtions for its rehabilitation have not yet been 
 completely developed, regardless of the fact that with the exception 
 of two and a half million dollars (or 2 mills per capita, appropriated 
 in three years), all the money invested by the United States in this 
 demonstration was money spent as a war measure, and as such should 
 be wiped off as any other war expenditure, I have seen it stated that 
 it actually costs the Government $2.68 net, a ton, to carry anything 
 on the Mississippi; and $4.18 a ton net, on the Warrior. As the total 
 amount of money spent on the operations of the Mississippi-Warrior 
 since its inception in 1918 is only a little over $3,000,000 more than it 
 took in—and this includes war operations—and as, during that time, 
 the service has carried a little over four and a half million tons at 
 a conservative freight saving of $6,000,000,1 can not get these figures 
 our opponents claim it costs. Nevertheless, it is good propaganda 
 against us, because few people know the facts, or care to investigate. 
 
 * 
 
32 
 
 THE TRUTH 
 
 t 
 
 And be not misled by figures that are manipulated to show tre¬ 
 mendous losses. Examine the official table printed above. The re- ^ 
 
 suits speak for themselves. Nine months of every year, when the 
 channel is there, the line pays well, and all that is necessary to make 
 it pay 12 months of the year is two light-draft towboats, which this 
 corporation will construct, and additional barges. If the equipment 
 were there this barge line could treble its total yearly carriage and 
 cut its cost per ton accordingly. If it only had one-half its present 
 equipment, and had only carried one-half as much, the figures issued 
 as propaganda against waterway transportation would be doubled. 
 
 We will merely touch upon the Warrior to say that the losses 
 thereon have been reduced from $50,000 a month to $8,000 a month, 
 and we seem in a fair way to put the Warrior system on a paying 
 basis soon. 
 
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