We have more than we need here to-day to justify this improvement, if every dollar of it were supported by bonds, so that you can put such competition in and the trucks will carry a part of the business, but the waterways will still have lower figures and have much of the traffic and they can go still lower if necessary. Mr. SEAMAN. The principal point there is the difference in volume of load between the truck and the boat. Trucks carry from 1 to 5 tons, or an average of 1 ton per truck, which perhaps would be fair, but the barges carry from 1,000 to 3,000 tons, and the railroads carry an average of 35 tons to the car, or an average of 600 tons to the train. The car is the unit of rail transportation; the barge is the unit of water transportation. The train can be compared to a fleet of barges. On the Mississippi River we are having large tonnages such as handling iron ore, handling 8 to 10 barges in one tow. The tow of eight barges will be a total of 24,000 tons. Mr. BRENT. Then, also, I want, Senator, to say that the truck is a natural feeder of the waterways; some of the best joint relations being built up are between the waterways and the trucks. The eleventh proposition is simply the savings in the cost, and carrying charges will much more than offset the cost of servicing any and all bonds which may be issued to supplement annual appropriations necessary for rapid work. The notes will simply bring out the fact that we are earning enough now so that out of a total investment of one billion three hundred and eighty-four million were out in the form of bonds, that the interest, amortization, carrying charges in the way of maintenance and operating costs are already being paid; enough to service the entire completed project. Now, the twelfth proposition: In the period during and since the World War Government credit and Government bonds have been employed for many purposes considered as conducive of the general welfare both at home and abroad. Some of these loans will be repaid but many will not. Aside from the payment for services involved in the veterans' compensation, the Government credit has, in all these matters, been used to stabilize or improve the condition of States, foreign nations, and certain groups of citizens interested in banking, railroad, shipping, agriculture. Thus far these grants of credit and issues of bonds bring back to the Commonwealth no tangible permanent values which can be enjoyed by all citizens. The river and harbor improvements are the only permanent improvements (aside from Government buildings) which are the property of the Nation and are open to the free use of all citizens. They need better financing in order to make their great potential value an actual present asset to the whole Commonwealth. It is the accomplishment of this purpose which is the aim of the recommendations of the Mississippi Valley Association embodied in the resolution of its board of directors and unanimously adopted at the last annual meeting of the association, in November, 1931. The resolution reads as follows: Be it resolved, That this board of directors approve and will earnestly advocate the issue by the next Congress of a bond authorization supplementing annual appropriations for the purpose of completing the rivers and harbors improvement projects now or hereafter adopted by Congress. I want to simply say that it will take but a few minutes more. As a nation there has already been an extensive use of credit in the furtherance of many measures of public benefit. The process has been selective to a certain extent, but these measures have generally been adopted as the outcome of some emergency. Finance: Greatest of all is the creation of the Federal reserve system in the interest of stabilizing the values of money and credit. The Congress has subscribed $169,640,000 of public funds to the capital of the Federal reserve banks. It has placed at the disposal of these banks as a reserve $2,041,219,000 of the gold in the Treasury. Against this gold reserve and other assets in the form of bills and securities taken in the process of liquefying credit and money transactions the Federal reserve system has issued and there were in circulation during the year ended December 30, 1930, $1,663,538,000 of Federal reserve notes, a direct obligation of the United States and a direct lien on all the assets of the Federal reserve banks. They are secured, dollar for dollar, by gold or discounted or purchased obligations of banks such as are eligible under the Federal reserve law enacted by Congress. There were $2,101,578,000 of these notes outstanding on June 30, 1931. Because of the tendency of depositors to withdraw their funds, contracting liquid assets, and the marked depreciation of the securities held by member banks, hampering them in their effort to secure additional credit at the Federal reserve banks under existing law, the Congress has recently passed a new law which will measurable relax the present limitations and bring into the Federal reserve treasuries securities heretofore regarded as inacceptable. Railroads: The interstate commerce law of 1887 and all of its amendments prior to the World War constituted a body of congressional enactments aimed to hold in control the undesirable tendencies of a great railroad monopoly built up largely through public grants and contributions and permanently established upon private rights of way. Then after Federal control, in 1920, when the Government desired to divest itself of all further responsibility for railroad operations, Congress found it advisable, in addition to the negotiation to the railroads of heavy loans, to enact section 15-a of the transportation act, 1920, becoming in a large sense guarantor of a fair return in the future upon all money invested in the railroad plant, without securing any effective control of the method or extent of the further issuance of railroad stocks and bonds. This changed the character of the law and has held the scale of charges for public transportation at substantially the World War level, in the face of a marked decline in the value of every other commodity, security, obligation, and thing of value. Of the $230,000,000 loaned to railroads under this act, there were still unpaid on June 30, 1931, substantially $40,000,000. Of this amount there are loans and accrued interest due from railroads in receivership amounting to $27,772,973.43. To secure these loans there are in the Treasury securities of these corporations and their subsidiaries aggregating in face value $40,478,525, the majority of which could not by any reorganization plan to made to yield any considerable fraction of their face value. Twelve years after the passage of this law railroad rates are still 60 per cent above pre-war lever, so high as to be a burden upon depressed business, many railroad stocks are at the lowest level in recent years, dividends have been cut or passed entirely and the earned reserves are so low as to threaten the withdrawal of many railroad bonds as securities available for the investments of savings banks of several States, notably New York. In this emergency Congress has organized the Reconstruction Finance Corporation. It has contributed an outright grant of cash capital of $500,000,000 and authorized the corporation to issue one and one-half billions additional of bonds which are in every particular Federal Government obligations. With the proceeds of this two billions of Government obligations, the corporation is expected to make loans of this amount within a year to financial institutions and railroads and, as security for this money loaned, is to take these depressed and depreciating securities which the public will not buy and which the banks and railroad companies can not otherwise move-take them at the valuation and loan the money at the rate of interest determined by the directors of this Reconstruction Corporation. Agriculture: In order to protect farmers from high interest rates demanded by private lenders and to avoid numerous foreclosures and evictions, Congress put the Federal Government's credit behind farm loans and mortgages. Federal farm loan banks have issued their bonds, which are in every respect Government obligations, for $1,179,000,000. This money has all been raised, it will be seen, by bonds, which are, in essence, loans to the Government by citizens which the Government is obligated to pay back. This money has, in turn, been loaned to farmers, whose lands are mortgaged as security for the loans. These loans on June 30, 1931, amounted to $1,184,000,000. On these loans a moratorium is being actively pressed before Congress, because during the depression there is great difficulty in securing payments of principal or interest and many foreclosures are threatened, the thing the law was planned to obviate. The Government also owns $66,204,473 capital of these banks, which is also involved in these difficulties. In an effort to stabilize the prices of farm products, the Farm Board was formed and Congress authorized the appropriation of a revolving fund of $500,000,000 to be appropriated and spent by the board in this effort. The most of this money has been spent and he board owns a large amount of wheat and cotton on which the Government has had to stand a substantial loss. Public highways: In the period since the end of the World War Congress has appropriated $1,102,000,000 in aid of the development by the States of a system of connected public highways. There is pending before Congress a measure to appropriate $132,000,000 more for this purpose. It is the development of such a connected system of public waterways, reaching all ports and penetrating the interior, which is the major purpose of the river and harbor improvements. When the pending road bill is approved, Congress will have spent, within a period of 15 years, as much on the development of a national road program as has been spent in a hundred years on the entire program of river and harbor developments. Veterans: By act of May 19, 1924, Congress decreed that every veteran of the World War (with some exceptions as to officers) should receive compensation adjusted to his time in service, whether in training or overseas. Senator VANDENBERG. Are you talking about Congress or Santa Claus? Mr. BRENT. These things have been enacted. All claims amounting to $50 or less were paid in cash. All other claimants were given a 20-year endowment life-insurance policy for the agreed amount of the compensation, payable in full at the end of 20 years or to the veteran's estate in case of prior death. On June 30, 1930, there had been 3,630,787 awards issued for an aggregate sum of $3,535,626,000. On February 27, 1931, Congress authorized that loans be made against these policies up to 50 per cent of their face value. Authorized payments to veterans during the fiscal year ended June 30, 1931, including loans as well as death claims, amounted to $766,000,000, liquidating a little more than one-fifth of his total obligation. Foreign governments: The Government loans to foreign governments have been in cash. These loans are almost all now witnessed by the bonds of the several governments. Very little of the indebtedness has been paid, as will be seen from the statement below. Some are not paying much interest. The bonds the Government holds represent only about half of the original loans. The balance has been wiped out and forgiven. Obligations of foreign governments to United States, amount of indebtedness, and payments received on account [Source: Treasury Department (Statistical Abstract of the United States, 1931), p. 219] [All figures in thousands of dollars] This year, in order to allow for some measure of economic recovery in Germany, all payments were voluntarily waived by action of the Congress. Shipping: In order to stimulate the development of a good merchant marine Congress has authorized the appropriation of $250,000,000 as a revolving fund administered by the Shipping Board for loans to American companies to be used in the construction and reconstruction of ships for merchant service. The fund is in active use. All repayments are to the fund. Interest is covered directly back into the Treasury. Finance (Federal reserve notes). Railroads (loans under transportation act). Finance and railroads (reconstruction corporation). Agriculture (Federal form loan banks) Agriculture (Farm Board). Public highways--. Veterans adjusted compensation_ Total---- $1,663, 538, 000 169, 640, 000 40, 000, 000 2, 000, 000, 000 1, 184, 000, 000 500, 000, 000 1,237, 000, 000 2, 769, 626, 000 250, 000, 000 11, 609, 030, 000 21, 422, 834, 000 It is noteworthy that this extensive use of Government credit brings to the citizens as a whole no tangible, permanent public asset owned by the Federal Government. The contrast between this use of credit and the limited use proposed for the prompt completion of river and harbor improvements is so marked as to warrant this comment. The Government's investment in river and harbor improvements is a permanent and productive asset which increases the wealth of the whole Nation. The public debt: At the end of the War between the States, June 30, 1866, the public debt of the Federal Government was $2,755,763,929, or $77.69 per capita, the greatest debt ever before incurred by the United States. At June 30, 1916, the debt had been decreased to $1,225,145,568, only $11.96 per capita. I want to remark that it took 50 years to reduce that war debt by one-half, that is, we took that long to do it. The following year the Nation got into the World War and on June 30, 1919, three years later, due to the borrowing through Liberty and Victory bonds for the payment of war expenses and the enormous loans made to foreign war chests, the public debt was $25,482,034,149, or $240 per capita. Since the close of the war the liquidation of this debt has been vigorously pressed and on June 30, 1931, the total outstanding of $16,801,485,143, or $135.41 per capita. This is a reduction of $8,680,549,276, or one-third of the total war debt in 12 years. Of this the payments of foreign nations amounted to $2,515,013,000. The balance, $6,165,536,276, was raised by taxation, largely through income tax. The thing which is inescapable in all this lending and giving is the lack of any tangible capital asset which has been gained for the commonwealth as an entity. 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 succes |