Hon. GERALD P. NYE, United States Senate, Washington, D. C. WEBBER, GEORGE & OWEN, DEAR SENATOR: Inclosed herewith are petitions containing in all from six to seven hundred names asking for the favorable action of your committee on the Shipstead-Mansfield bill, and it would be appreciated if these petitions are made a part of the record of the hearings. Under separate cover I am sending you two photographs showing tows going up the river a few days ago. It happens that the stage of the river at the time the photographs were taken was approximately at a level that will be maintained by the proposed dams and at the present time under such conditions we are having no seepage, no flood conditions, and no disadvantages of any kind whatsoever. You will notice a very large barge in one of these pictures having a tonnage capacity of either 1,500 or 2,000. This is the type of barge that will make river transportation successful and it can not be used on a 6-foot channel. The smaller barges are those which can be used from time to time on a 6-foot channel if not loaded to full capacity. The apparent opposition to upper-river improvement coming out of Winona is promoted and inspired by persons and concerns who have a purely selfish interest in obstructing the program. Had those concerns which favor the 9-foot channel spent one-third of the time that the aforementioned group has spent in promoting public sentiment on the project, the opposition would have been completely snowed under and now at this late date a well-organized movement is on foot here to bring the exact truth of the situation to he attention of our citizens. Yours truly, WEBBER, GEORGE & OWEN, By J. M. GEORGE. UNITED STATES SENATE, Washington, D. C. NEW YORK CITY, April 6, 1932. DEAR SENATOR NYE: I notice that your committee is to begin hearings on a bill to use half a billion dollars of Federal credit for waterway construction. As an engineer of many years experience and an economist familiar with transportation, I wish to oppose this measure. In Barron's, of February 1, I showed how suicidal such a measure would be at this time. In a monograph published a dozen years ago, copy of which is mailed under separate cover, I showed why inland water transportation is obsolete and money spent on it is worse than wasted. Further, in a book, Pathways Back to Prosperity, just published by Funk & Wagnalls, I have shown the great danger to all classes of further expansion of Federal borrowings at this time. Very truly yours, Hon. GERALD P. NYE, Washington, D. C. CHARLES WHITING BAKER. MINNEAPOLIS, MINN., April 7, 1932. MY DEAR SENATOR: I read in to-day's Minneapolis Tribune that St. Paul is represented in Washington in opposition to the completion of the 9-foot channel in the Mississippi River by a Mr. Schuenemann, and that he had made a statement that he was confident that the Minneapolis Civic and Commerce Association was against the project, and also the Chamber of Commerce. I am sorry to say I think these local concerns, as well as Minneapolis bankers, are against the 9-foot channel. It appeared at a recent hearing before Col. Wildurr Willing at the Minneapolis city hall that representatives of grain gambling concerns and representatives of railroads, were represented by members of the civic and commerce men, they, of course, disclaimed that they represented the association, but there was no one from the civic and commerce boosting for it, and it is a deplorable thing that men who should be in the foremost ranks for this improvement are either lending their support to the railroads in actually fighting the river improvement, or are taking no active part in favor of it. The grain men are all under direct obligation to the railroads and are plainly showing their subserviency to them. They have their line elevators on railroad land and curry favors from the roads and care not if the great mass of people in these cities along the natural waterway transportation line, get a lower freight rate on coal and other necessities or not, in fact these leaches on the communities are always against the best interests of the masses, and I am not a bolshevik, I lived down in Iowa for nearly 40 years where a man's religion was to be a good Republican. I doubt people of this State, and other States along the river, realize the benefits that could accrue to them by the full use of the river for cheap transportation. Recently Berlin, Germany, opened river and canal transportation from the capital of Germany to foreign ports, actually ship to Stockholm, Petrograd, Copenhagen, and England, direct and without transshipment of cargo-and they have only a 4-foot channel-with a 9-foot channel, if the locks provided are long enough and of necessary width Minneapolis and St. Paul can ship grain, ore, machinery, and other commodities to all parts of the world without reloading to larger ships. We are waiting for a deep waterway to Duluth. It may come some day if the railroads will let us build the St. Lawrence Canal, and perhaps, when the railroads have absorbed all of the $2,000,000,000 reconstruction fund, that our Government will become the owner of the railroads and the opposition of General Atterbury et al. to canalization of our rivers, etc., has ceased, then perhaps we will get the 9-foot channel in the Mississippi. In the reconstruction program as it is now carried on, I have no doubt that banks here, at least the chain banks, will receive liberal treatment, and they need it, but it is hard to see how these loans to bankrupt railroads can do much to help the deplorable unemployment condition. It will help the banks if the railroads take up a lot of receivers' bills, etc., and refinance themselves. Recently the Soo Line, which is a Canadian-owned railroad, received a large loan, and they want a great deal more and will get it. I would like to see our city, the head of navigation on the Mossissippi, with shipping going and coming from all parts of the world, but these shortsighted business men who are pulling the railroads' chestnuts out of the fire can not see any immediate profit coming their way. It is true the country is taxed to the limit, but to build a transportation link as necessary as this one, and which will save millions of dollars every year, and no portion of the cost of this improvement will leave our country, and I believe it may be feasible to impose a tonnage toll on all freight in a reasonable amount which will eventually retire the bonds for the entire cost, and even then freight should be much cheaper than rail rates now. For a hundred or more years river transportation was the only means of communication and it served our wonderful country well, too well to allow the river to fall into disuse merely to pay dividends to the railroad owners, and with the improvements proposed in the Shipstead-Mansfield bill we can have direct ocean connections with the seven seas and the saving in freight alone will give the farmer a profit on his wheat and other grain which now goes to the railroads. The Shipstead bill should pass now, unless a better plan is brought out. It may look revolutionary, but an improvement of this kind could well be financed on a 50-year bond basis, 2 per cent to be retired every year from earnings; the bonds could be deposited with the Treasury Department and legal tender money issued in its place, this money to be retired as the bonds were paid off; these bonds would not have to bear to exceed 2 per cent interest to cover all expenses. I believe a law should be passed making it a felony to offer to buy or sell any of the United States obligations at less than par; the writer urged Senator Kenyon of Iowa to offer such a measure in 1917 when we were offering billions of Liberty bonds, which at one time sold down to around 80 per cent of par and allowed a lot of sharks to enrich themselves by buying the bonds from the poor devils who had more patriotism than money. There never will be a time when our United States bonds will not be redeemed at 100 cents on the dollar; then why not stop the speculators from detracting from the value of these obligations? Yours very truly, Hon. GERALD P. NYE, Senate Office Building, Washington, D. C. PROCTOR, MINN., April 11, 1932. DEAR SENATOR: I have received from Congressman Evans a copy of H. R. 5840, a bill relating to the disposal of Federal lands. Yesterday's Duluth Herald carried an editorial in which it referred to this measure as the Evans-Nye bill and stated, in part, as follows: "Governor Pinchot of Pennsylvania vigorously objects to the plan as threatening Federal forest programs, and George D. Pratt, president of the American Forestry Association, is appealing to conservation organizations to campaign against the bill. He says these lands, most of which are in the Western States, comprise virtually all the important resources of the Nation and that the Government should continue to hold them in trust for the people. His special fear seems to be that the bill will wreck our national forests." Inasmuch as we have two national forests in this State in which we take great pride, it is natural that we should be somewhat apprehensive, and I would appreciate it very much if you would give me a brief outline of the purposes of the bill and if it will change the present status of national forests. Thanking you for the favor, I am Yours truly, H. W. DART. Then, if there are no others who desire to be heard, the committee will stand adjourned until further call. Senator SHIPSTEAD. Mr. Macleay, of the Mississippi Valley Association, has asked permission to file a brief in rebuttal. Senator NYE. Certainly; that will be included in the record of to-day's proceedings. They will understand, however, we are wanting to expedite this matter and close it up as soon as possible. (The brief subsequently submitted by Mr. Macleay is as follows:) Senator GERALD P. NYE, MINNEAPOLIS, MINN., April 23, 1932. Chairman Subcommittee of Senate Commerce Committee, Washington, D. C. DEAR SENATOR NYE: With reference to letters of Secretary of the Treasury Ogden L. Mills, of February 19, 1932, and Secretary of War Patrick J. Hurley, of January 7, 1932, raising objections to Senate bill 175, we desire to submit the following in reply thereto : Secretary Mills states that: "The Treasury now has sufficient authority under the Liberty bond acts to borrow on the credit of the United States to meet expenditures for public purposes authorized by law. Under this authority the Secretary of the Treasury may borrow by selling bonds, notes, certificates of indebtedness, or Treasury bills, whichever in his opinion more nearly meets the market conditions at the time of the public offering. The Treasury does not feel, therefore, that it is necessary for the bill to contain authority to borrow funds to finance the purposes specified. As long as the expenditures for public purposes are authorized by law the Treasury has the authority to raise the funds by borrowing if necessary." Secretary Mills here states the general purpose for which loans may be made under the Liberty bond acts. His interpretation of those acts is not generally accepted in the sense that they will take the place of appropriations not made by Congress, but merely to cover Treasury Department deficits. Secretary Mills adds, however, that while he contends he has this authority, he does not intend to use it. The purpose of the Senate bill, S. 175, is not only to authorize but to direct the financing of all river and harbor projects in the manner in which the Panama Canal was financed. Under the Panama Canal bond act, Government bonds were issued for periods of from 30 to 50 years. Senate bill 175 proposes 20-year bonds callable in 10 years. It is suggested that the bill would be a limitation upon the present authority of the Secretary of the Treasury to borrow. To meet such situation, if it actually exists, a provision could be inserted to the effect that this authority is not restrictive but in addition to authority already granted. In support of his statement that the Government may not be able to sell securities bearing 4 per cent per annum, the Secretary cites the Treasury 3 per cent bonds of 1951-1955, which are 20-year bonds to call date, sold on February 8 on a 4.05 per cent basis, and its 15-year 4 per cent bonds sold on a 4.24 per cent basis, adding that this indicates that the Treasury under existing conditions might have difficulty in selling a 20-year 4 per cent bond. Attention is called to the fact that the 44's referred to are now selling approximately on a 3.65 per cent basis, and the 3's on a 3.5 per cent basis. While it may be said that this is due to the activities of the Federal reserve banks, there would seem to be no sound reason why the provision relating to the rate of interest could not be adjusted to accord with provisions in existing law. The use of Government credit during and since the World War has been so exhaustively covered by the brief of the Mississippi Valley Association in this hearing that repetition is not necessary here. We desire, however, to quote one paragraph from that presentation, which reads as follows: "Needed help has been extended to all kinds of groups at home and abroad. Banking as a business has been stabilized and has paid some interest to the Commonwealth, the railroads have had successive boosts and stimulants, the farm and farmers have been protected from usury and extortion, the veterans have received compensation for the dislocation and loss they suffered from the war, other nations have been able to improve rapidly through our largesse. But, although individuals and groups at home and abroad have received and created new value, there is not a dollar of new value created for the Commonwealth as a whole. The great program of public works, creating values available to all citizens, has had to submit to neglect and delay during all this period while the public emergency was being served. It is still being neglected and given but a pittance while these matters of easing finance are adjusted." We submit that it would be a grave mistake to lump together, as the Secretary suggests, reductions in governmental operating expenses, which should be made, with reductions in reproductive capital expenditures, which should not be made, if the individual and national income is to be preserved and stimulated. The President and the Congress have emphasized that our inland waterway improvements are permanent assets of the Nation. The public benefits which will flow from their completion have been clearly shown. These capital expenditures should not be loaded onto the annual Budget, as the Secretary suggests when he knows that the necessary funds to carry out this program by that method can only be secured by additional taxation at a time when Congress is striving to avoid undue increases in the people's tax burden. The businesslike method of financing these capital expenditures embodied in the Shipstead-Mansfield bond bill will accomplish two objectives-first, the reduction of the tax burden, and, second, these reproductive public improvements will speedily be brought into beneficial use, not only as a means of relieving this depression but to serve generations yet unborn. Secretary Hurley, in approving the present piecemeal method of constructing river and harbor improvements under uncertain and inadequate appropriations, states: "A review of the legislative record shows that, as the advance of the country in population and industry has rendered greater the use of our rivers, lakes, and seacoast harbors for commercial transportation, Congress has responded with increased appropriations and broadened authorizations. Provision in this way for improvement has kept pace fairly with the demand and need for it. In recent years, appropriations have been generous, and the existing law provides for carrying on works of improvement by the continuing contract system, which insures the economical and speedy completion of large and important projects." The record is to the contrary. In spite of relatively small increases in the Budget in recent years, appropriations have not kept pace with authorizations and adopted projects have steadily accumulated. In 1923, $73,000,000 would have completed the adopted projects of the Mississippi system within a period of five years. A year later the Porter bill was introduced in Congress with a view of making available $204,000,000 to complete all the adopted river as well as harbor projects, within the same period of time. To-day, nearly $500,000,000 will be needed to accomplish the same purpose; and maintenance requirements will absorb a large and increased portion of all Budget appropriations. Clearly, we are losing ground. Aside from the Ohio River, recently completed, and the Illinois River, the early completion of which is now assured, there is not a project within the Mississippi system that has a remote chance of being completed within five years if present methods of financing and construction must prevail, and this is especially true of that part of the Mississippi system which taps the northwestern and southwestern fields of production. It is clearly evident that Budget appropriations, such as have been made in the past or may reasonably be expected in the future, will not complete the Mississippi system or any major portion of it within the present generation. Therefore, a continuation of the present method of financing these projects spells delay, and delay in the completion of these important reproductive public improvements may seriously retard our economic recovery. We desire to again point out that Senate bill 175 does not propose the issuance and sale in a lump sum of $500,000,000 in bonds, but merely the authority to issue bonds as needed, not to exceed this amount, to supplement such appropriations as can be made, so that this work, now seriously threatened with stoppage, may be carried out under a continuing construction program. Respectfully submitted. MISSISSIPPI VALLEY ASSOCIATION, By LACHLAN MACLEAY, Executive Vice President. By GEO. C. LAMBERT, Chairman. UPPER MISSISSIPPI BARGE LINE Co., (The following communication and accompanying statement were subsequently submitted by Mr. Aishton :) ASSOCIATION OF RAILWAY EXECUTIVES, Washington, D. C., April 15, 1932 MY DEAR SENATOR NYE: In accordance with suggestion this morning, I am inclosing herewith statement showing the taxes paid by the rail carriers for an 11-year period, 1920 to 1930, inclusive. This will give you an idea as to the progressive growth of these taxes, and the amount going to the Federal Government, compared with the amount going for State and local taxes. We highly appreciate your interest in the matter, and if there is any other information you want at any time, don't fail to call on me. Sincerely yours, Hon. GERALD P. NYE, United States Senate, Washington, D. C. R. H. AISHTON, Chairman Executive Committee. Taxes paid by Class I railroads and their nonoperating subsidiaries Waterway improvements from municipal and State funds, raised from taxes, |