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The preponderance of north-bound traffic, as compared with south-bound traffic transported by the Corporation in its own barges as well as in barges of others, may be seen from the following comparisons:

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Transportation of merchandise and bulk freight in the Corporation's own equipment, expressed in percentages, is shown in the following table:

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Bulk freight transported in the Corporation's own barges during this period consisted principally of essential war supplies, as shown in the following classification:

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In addition to freight transported in the Corporation's own barges, a further contribution in support of the war effort was made by towing war supplies for others, including other carriers. The table shown below indicates the extent of this service:

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Particular attention is directed to the movement of liquid cargoes, which require special equipment, thus necessitating the return handling of empty barges downstream.

Towage of outside equipment, particul rly combat craft, was performed in considerable volume in 1944. The total tonnage of this type of movement in 1944 amounted to 270,273 tons, as compared with 153,898 tons in 1943. The value of the great inland waterway system of this country has probably never been better demonstrated than in the performance of this service during the national emergency. Innumerable seagoing vessels were constructed at inland shipyards. Although this Corporation handled only a fraction of the craft so constructed, its contribution in this respect, since the beginning of the war, when reduced to the number of units, represents the delivery of a formidable navy to deep water. It is indicative of the important role played, not only by this Corporation but by other inland water carriers, in the furtherance of the war effort.

OPERATING CONDITIONS

Operations on the lower Mississippi and Illinois Rivers during January and February were carried on without difficulty. Year-round service into Chicago was made possible by the ice-breaking operations conducted by the United States Coast Guard.

Extremely high water was encountered on the upper Mississippi, Illinois, and Missouri Rivers in the month of April, which resulted in the record stage of 39.14 feet at St. Louis on April 30, the highest stage of the river in a period of 100 years. As a result, freight-handling operations at St. Louis, East St. Louis, and Alton were discontinued from April 25 to May 8. The river stage at St. Louis continued high during May, June, and up to July 14, when the stage of the river fell below 20 feet. These conditions had the effect of curtailing operations and substantially increasing the Corporation's operating costs.

LABOR RELATIONS

Approximately 85 percent of the Corporation's employees are affiliated with national labor organizations. All collective-bargaining agreements, except one with the Order of Railroad Telegraphers, expired May 31, 1944. "Prior to the expiration of these agreements, negotiations were commenced and new agreements on working conditions substantially concluded. The unions' demands for increased wages and other items in dispute necessitated certification to the National War Labor Board. The Board issued directive orders, granting wage increases and other concessions, resulting in increasing operating costs of the Corporation approximately $265,000 for 1944. Generally speaking, negotiations and other relations between management and labor were satisfactory and have been carried on in a cooperative manner.

TRAFFIC

Changes in composition of traffic handled in 1944 as compared with the preceding year have been mentioned in previous sections of this report and are compared in detail in the tonnage statements included in the report of the SecretaryTreasurer. As will be noted, the decline in merchandise traffic, which began with the outbreak of war, continued in 1944 and resulted primarily from curtailed production of consumer goods brought about by the national emergency. Of course, there were other contributing factors, such as wartime need for the use of faster modes of transportation, and the requirement that the Corporation devote its greatest effort to the movement of naval combat craft, liquid bulk petroleum in tank barges, coal, sulfur, grain, and other vital war materials. The performance of this service naturally disrupted the schedules of the Corporation and reduced the dependability of its service on what little merchandise traffic remained available for transportation.

ENGINEERING

The activities of the Engineering Department of the Corporation during the year 1944 were of two kinds. One division of the work pertained to maintenance and engineering involved in operation of equipment owned by the Corporation; the other to maintenance and engineering in connection with the Inland Waterways Corporation as chartering agent for Defense Plant Corporation.

The first-mentioned division involved primarily routine maintenance of both terminal and floating equipment. Much of the existing equipment, because of its age, requires continually increasing maintenance. Some of this equipment has nearly reached the end of its normal economic life, if normal economic considerations are used.

War conditions, however, required a modification of normal policies. Thus every effort has been made to maintain the equipment in operating condition, sometimes contrary to the most economical considerations. As shown in exhibit No. 8, “Statement of operating expenses,” the cost of repairs to line vessels for 1944 was over 25 percent more than for 1943. A good deal of this extra cost resulted from the emergency conditions created by the war. Normally, certain vessel repair work is done in the Corporation's own shops, with major repairs involving drydocking being accomplished by private contractors on a competitive bid basis. The war situation during 1944 forced the almost complete abandonment of the competitive bid policy, and on some occasions caused great difficulty in obtaining drydock and repair service on any basis.

The other division of the work of the engineering department involved the greatest effort of the department. It included considerable engineering, and a great volume of contracting, in connection with the maintenance of Defense Plant Corporation equipment, for which the Inland Waterways Corporation acts as chartering agent, on a reimbursable basis. The Corporation renders the necessary administrative services to Defense Plant Corporation without charge.

CHARTERING AGENT FOR DEFENSE PLANT CORPORATION

In addition to work performed by the engineering department, in connection with maintenance of the Defense Plant Corporation equipment, a separate staff was maintained for the chartering of such equipment and for the purpose of performing the necessary accounting work.

The volume of work in connection with the maintenance, engineering, and chartering of this equipment will be understood when consideration is given to the number of vessels involved. Total units under charter during the year consisted of 21 towboats of 2,000 horsepower, 40 tugboats of 700 horsepower, 214 steel tank barges, 158 wooden tank barges, and 55 steel dry cargo barges, a total of 488 units.

WARRIOR RIVER TERMINAL COMPANY

The traffic of the Corporation's wholly owned subsidiary, the Warrior River Terminal Company, which was exchanged with water carriers, decreased 28 percent for 1944 as compared with the preceding year. However, due to the increased movement of coal transported from mines adjacent to the Company's rights-of-way to the steel mills in the Birmingham district, the total tonnage in 1944 increased 44 percent over 1943. The net income for 1944 increased over the previous year approximately $2,300. The accounts of the Warrior River Terminal Company are consolidated with those of the parent corporation and are included in this report.

POST WAR PLANNING

merce,

By direction of the Secretary of Commerce, a joint study by traffic, engineering; and accounting officials of the Corporation was made during the year to determine the possibility of use of Navy landing craft in commercial inland waterway trade in the postwar period. The study was submitted to the Department of Com

The engineering department is considering the possible need for additional floating equipment for use in the postwar period. A study is now being conducted and plans are being drawn for the purpose of determining the types of barges and towboats which may be most efficiently and economically used and operated over the inalnd waterways.

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ADVISORY BOARD

Two meetings of the advisory board of the Corporation were held in 1944 in the executive offices in St. Louis, Mo. At the July meeting, Col. Malcolm Elliott, of St. Louis, Mo., was reappointed a member of the board for the term expiring July 24, 1949. Other members of the board who served during the year were: Mr. Îyomas J. Mulgrew, Dubuque, Iowa; Mr. Arthur J. Weaver, Falls City, Nebr.; Mr. Thomas N. Beach, Birmingham, Ala.; Mr. Frank E. Bourgeois, New Orleans, La.; Mr. Thomas J. Maloney, Chicago, Ill.; Mr. Chester C. Thompson (chairman-January 1 to August 15, 1944), St. Louis, Mo., and Mr. John S. Powell (acting chairman-August 16 to December 31, 1944), New Orleans, La. Under Secretary of Commerce Wayne C. Taylor attended both meetings.

CONCLUSION

The Corporation has enjoyed very pleasant relations with privately owned carriers on inland and intracoastal waterways. In my opinion, the Corporation has provided a commendable service to the country as a whole and, in some instances, a service beyond the capacity of other carriers to perform. As indicated in the report, its performance of transportation services in connection with vital war equipment and supplies has been most helpful to the agencies of the Government charged with the successful prosecution of the war and to the public in general.

The act creating the Corporation requires it to carry out 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.” As a means of implementing this policy, the Congress has also recognized the need for interchange of water traffic with the railroads through the medium of the establishment of such joint tariffs with rail carriers as shall make generally available the privileges of joint rail and water transportation upon terms reasonably fair to both rail and water carriers.” In this, the Congress has stated the fact that the benefits of lower. cost water transportation are equally the right of all citizens whether or not they may be located adjacent to the river banks.

In this connection, the Interstate Commerce Commission has had under consideration since March, 1935, a proceeding known as I. C. C. Docket 26712, Rail and Barge Rates, upon the outcome of which the future of water transportation, as envisioned by Congress, will depend. This proceeding involves an attempt on the part of rail carriers in general to eliminate the differential from joint rates, and to apply rates equal to or higher than all-rail rates for transportation over barge and rail routes. The outcome of this proceeding is of vital importance to the water transportation industry. A decision of the Commission eliminating differential rates may in a large measure destroy water transportation, which cannot exist on port-to-port traffic only. The final hearing in this case was held about a year ago. The report of the examiner has not yet been released.

In conclusion, I wish to take this means of giving recognition to the faithful, efficient,

and loyal service rendered by the officials and employees of the Corporation. To them my thanks are due and heartily extended. Respectfully submitted,

John S. POWELL, Acting Chairman of the Advisory Board, and Acting President. Senator OVERTON. I think Senator Hart is right about that and I think the explanation is easy to be found. The Government has not properly taken care of this venture.

Senator HART. It has been running for a generation. It went into effect in the early 1920's.

Senator OVERTON. I know, but their towboats are antiquated for the most part. So are their barges. Their facilities are not at all up to date. These towboats are not equipped with Diesel engines, but you find these quasi private carriers or common carriers, they have bang-up equipment in barges and in towboats. They operate at a profit.

What should be done with the Inland Waterways Corporation is for Congress to appropriate sufficient money to get new equipment. There has been a vast improvement in the methods of transportation,

Senator Hart. Well, I think that Corporation is being liquidated. I think it is going out of business now.

Senator OVERTON. There has been no authority of Congress to it as yet. They have to have some authority to do that.

Senator HART. I thought they had it. However, the best comparison is the one of the Mohawk Valley in New York State. There the waterway, the Erie Canal, and the railroads have been paralleling each other for 100 years, anyway.

Excuse me. I have to leave now.
Senator OVERTON. Surely.

Colonel FERINGA. Shall I proceed, Mr. Chairman? I just want to being out the facts on costs.

Senator BROOKS. When you talk about costs, I understood the previous witnesses before you were talking about costs merely after the thing has been established. This other gentlemen objected to the use of the word “cost,” when you take into consideration all the subsidy that the Government gives it and part of the subsidy is the building of the artery. Isn't that true?

Colonel FERINGA. That is the reason, Senator Brooks, I want to bring out from outside sources the operating expenses of traffic moving

on the various transportation arteries regardless of whether or not they are provided by the Government. I also wanted to bring out another statement by the ICC showing that in their opinion at that time a waterway was a public bighway.

There are two items which the previous witness brought out stating the Board was not accurate in its statement.

Senator BROOKS. Well, as I understood from the other witness, his objection was they did not subscribe to the philosophy or the theory that waterway traffic, inland waterway traffic, is low cost, because in the determining of cost you do not consider the subsidy of the Government. Is that correctly what he said as you got it?

Colonel FERINGA. No, sir. I thought he stated that waterway traffic costs were not low.

Senator BROOKS. That is what I understood him to say, but because you didn't take into the cost the cost to the general public of the subsidy provided. If that figure leaves out any subsidy of any kind, it might be much higher, if you included the subsidy of the Government which makes that possible.

Senator OVERTON. Let me see if I understand it. What you are trying to bring out is simply a statement by a representative of the ICC as to the cost of operation?

Colonel FERINGA. That is right.
Senator OVERTON. Not the cost of the investment?
Colonel FERINGA. That is right.

Senator OVERTON. But when the Board of Engineers for Rivers and Harbors passes on one of these projects it takes into consideration the cost of the investment; doesn't it?

Colonel FERINGA. I see your point.
Senator OVERTON. What the Board of Engineers does-
Colonel FFRINGA. You are right.

Senator OVERTON. It says this is going to cost so much. Maintenance is going to be so much.

Colonel FERINGA. You are right, sir.

Senator OVERTON. They are going to take the cost and amortize it over a number of years.

Colonel FERINGA. That is right.
Senator OVERTON. And charge the annual amortization?
Colonel FERINGA. That is right.

Senator OVERTON. And on the other side we are going to take all the benefits?

Colonel FERINGA. That is right.

Senator OVFRTON. Now, the benefits would be to reduce the cost of transportation?

Colonel FERINGA. Yes, sir.

Senator OVERTON. So when the Board of Engineers passes on it, they do not simply take into consideration the cost of transportation and not the investment made by the Government. On the contrary, they weigh the investment made by the Government as against the saving.

Colonel FERINGA. You are completely right. In the final analysis we never recommend a project to Congress unless the benefits in relation to costs, including construction, annual maintenance, and every other item of costs, show that the benefits are greater than the costs.

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