to the public the beneficial use thereof within the shortest possible time and at the lowest possible cost; (3) of enabling the Secretary of War to enter into such comprehensive and continuing contracts for the execution of said works of improvement as will establish for each project the probable date of its completion with such a degree of certainty as to justify the immediate investment of capital in terminal and industrial development based upon the prospective use of such improvements; and (4) of immediately employing idle capital, industry, and labor in the construction of said works. SEC. 2. The bonds herein provided for may be disposed of by the Secretary of the Treasury at not less than par, under such regulations as he may prescribe, giving to all citizens of the United States an equal opportunity to subscribe therefor, but no commission shall be allowed or paid thereon. There is hereby appropriated, out of any money in the Treasury not otherwise appropriated, a sum not exceeding one-tenth of 1 per centum of the amount of such bonds to pay the expenses of preparing, advertising, and issuing the same. SEC. 3. Such funds as may be borrowed by the Secretary of the Treasury in pursuance of this act shall be covered into the Treasury as a special fund, and are hereby appropriated for river and harbor projects. The Secretary of War is authorized and directed to allot such funds among the rivers and harbors projects hereinbefore enumerated, in accordance with the plans and within the estimates submitted to and adopted by Congress in each case, as he may deem necessary for their completion. SEC. 4. The Secretary of War and the Chief of Engineers, under the direction of the President, are hereby directed to proceed with the intensive prosecution of such works of improvements mentioned in section 1 hereof as have been or may hereafter be adopted by Congress with a view to their completion within the shortest period of time. For that purpose they will use all the powers and means at their command, and employ simultaneously, by contract or otherwise, all the labor, skill, and material that can be properly and efficiently used in the execution of said works. The Chief of Engineers, upon further surveys and with the approval of the Secretary of War, is hereby authorized to make, within the estimated cost of existing projects, such changes and improvements in the type and location of the permanent structure originally recommended therein as in his judgment will more effectively meet the standards and requirements of modern navigation. SEC. 5. Purchases of material and equipment for use in the construction of such projects shall be restricted to articles of domestic production and manufacture, from the lowest responsible bidder, unless the Secretary of War shall in any case deem the bids or tenders therefor to be extortionate or unreasonable. The rate of wages paid in all such rivers and harbors projects shall be fixed in accordance with the provisions of the Act entitled "An act relating to the rate of wages for laborers and mechanics employed on public buildings of the United States and the District of Columbia by contractors and subcontractors, and for other purposes," approved March 3, 1931. Senator NYE. Before inviting a statement from Senator Shipstead in regard to his own bill, the Chair feels that the record should first contain a copy of the bill S. 175, on which we are to conduct hearings at this time, a letter from the Secretary of War, and a letter from the Secretary of the Treasury upon the same subject. The Chair also wishes to incorporate, to be made a part of the record, letters from the Little Rock Chamber of Commerce, from Mr. Fred Sphelben, director, Mississippi Valley Association, at Greenville, Miss.; Mr. C. W. Bond, secretary-manager of the Burlington Chamber of Commerce, Burlington, Iowa; Mr. Allen Tripp, of Oshkosh, Wis.; telegrams received this morning, one from L. E. Wernecke, Winona, Minn., and another from Mr. Harold Atwood, State representative, Winona, Minn. (The communications and telegrams referred to are as follows:) TREASURY DEPARTMENT, Washington, February 19, 1932. MY DEAR MR. CHAIRMAN: Reference is made to your letters of December 14, 1931, and February 3, 1932, requesting a report on S. 175, which is a bill "To provide for the early completion of river and harbor projects now or hereafter authoized and adopted by Congress, including the connecting channels of the Great Lakes, and to authorize the issuance of bonds therefor." The bill is primarily one for the consideration of the War Department, but the Treasury is vitally interested in the financial provisions of the bill. The first section in the bill authorizes and directs the Secretary of the Treasury to borrow from time to time on the credit of the United States and to issue bonds therefor in order to finance the construction of such projects as have been or will hereafter be adopted by Congress for river and harbor improvements. The amount of the bonds outstanding at any one time is not to exceed the sum of $500,000,000, to be payable in gold coin 20 years from the date of their issuance or callable at the pleasure of the United States at any time after 10 years from such date, and to bear interest payable quarterly in gold coin at the lowest rate obtainable not exceeding 4 per cent per annum. 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 pubuic 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. The bill under consideration provides that funds are to be raised by the sale at not less than par of 20-year bonds bearing interest at a rate not exceeding 4 per cent per annum, a restriction which might place the Treasury in a position of not being able to raise the funds necessary to finance projects already under contract. The fact that the Treasury 3 per cent bonds of 1951-55, which are 20-year bonds to the call date, sold on February 8 on a 4.05 per cent basis, and its 15-year 44 per cent bonds sold on a 4.24 per cent basis, indicates that the Treasury, under existing conditions, might have difficulty in selling a 20-year 4 per cent bond. The Treasury is now facing a tremendous deficit for the fiscal year 1932, and, if taxes are not increased so as to provide a substantial amount of additional revenue for the fiscal year 1933, there will also be a large deficit for that year. It is essential, if we are to maintain unimpaired the credit of the United States Government, that the increase in our public debt be brought to a halt. It would seem, therefore, that this is an inappropriate time to depart from our well-established practice of financing construction projects of this character from current revenue and to embark on a policy of doing so through bond issues. The wise and sound policy for the Government to pursue is to stop borrowing and to raise the revenue necessary to meet all expenditures deemed by the Congress to be essential or desirable. In view of all the circumstances, it is recommended that the bill be not passed. Very truly yours, Hon. HIRAM W. JOHNSON, OGDEN L. MILLS, Secretary of the Treasury. Chairman Committee on Commerce, United States Senate, Washington, D. C. WAR DEPARTMENT, Washington, January 7, 1932. Hon. HIRAM W. JOHNSON, Chairman Committee on Commerce, United States Senate, Washington, D. C. MY DEAR SENATOR JOHNSON: Reference is made to your letter of December 14, 1931, requesting the views of this department on Senate Bill No. 175, present session of Congress: "To provide for the early completion of river and harbor projects now or hereafter authorized and adopted by Congress, including the connecting channels of the Great Lakes, and to authorize the issuance of bonds therefor." At an early day the Government adopted the policy of providing for river and harbor improvements by direct appropriations from the Public Treasury, and this policy has been continued without interruption for more than a century. 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. This department is in hearty sympathy with the underlying motive of the proponents of this bill, acceleration of the development of water highways. It is believed, however, that it would be better to continue to improve these highways by the application of current revenues at the rate the country can afford, than by adding to the present high bonded debt of the Nation as proposed in the bill. The department feels that a special bond issue for the purpose is untimely, and that, under existing conditions, legislation authorizing it would be unwise. It is recommended, therefore, that the bill be not passed. Sincerely yours, PATRICK J. HURLEY, Hon. GERALD P. NYE, Secretary of War. LITTLE ROCK CHAMBER OF COMMERCE, Chairman Subcommittee of Commerce Committee, United States Senate, Washington, D. C. MY DEAR SIR: The Little Rock Chamber of Commerce is a voluntary commercial organization, representing through its membership the entire industrial and professional activities of the Greater Little Rock district, comprising a population of 131,137, according to the last census. We have a very vital interest in the Shipstead-Mansfield bond issue bill, hearings concerning which will be held before the Commerce Committee of the Senate, commencing April 4, and since, for reasons beyond our control, we will be unable to appear in person before this committee, we are taking the liberty of addressing you personally, in order to make known to you the fact that we unequivocally support this bill and are hopefully looking forward to favorable action thereon by the Commerce Committee, with resulting passage by Congress. We respectfully request that this written presentation be made a part of the record in the proceedings before the Commerce Committee and we earnestly hope that we may have your support in this necessary legislation. The undersigned has charge of the traffic bureau of the Little Rock Chamber of Commerce, which department has for its purpose the study, securing, and maintenance of equitable transportation facilities and cost. I have had about 26 years' experience in transportation matters, during 20 of which I was employed in departments of southern and southwestern railroads interested in freight transportation matters, and the remaining 6 years I have been connected with this organization. Since 1911 I have been connected with transportation matters in the Mississippi Valley and have had the opportunity to observe and study conditions affecting its welfare. We are interested in the passage of this bill, which we understand will provide for a bond issue in the amount of $500,000,000, the proceeds of which will be made available for waterways improvement leading to complete navigation upon the Mississippi and its tributaries, subject to the approval of the War Department, for the following reasons: 1. The method of waterway development in the past, contemplating annual appropriations, result in a piecemeal application of these funds and physical development which can not avoid excessive cost for the projects involved. My understanding is that there is a total approximate amount needed to complete projects definitely approved and now being carried out, as follows: These projects may be completed with much greater economy if the funds are made available as needed, rather than through the present method of partial application, some of which may be at inopportune times of the year. 2. There is now under consideration by the War Department the question of navigation upon 470 miles of the Arkansas River, competent traffic studies covering which indicate conclusively that there is a minimum of 12,000,000 tons per annum which would be affected through the consummation of navigation upon the Arkansas, which penetrates the States of Arkansas and Oklahoma, and will result in navigation to and from the Gulf and the Great Lakes at the lowest possible cost to the producers in this vast territory. 3. The completion of the Panama Canal has had a stifling effect upon the Mississippi Valley. It has deprived our manufacturers and wholesalers very largely of their former markets on the Pacific coast and intermountain areas by affording eastern shippers much lower rates to the far West by water to and through the Pacific coast ports than the rail rates between the same western territory and the Mississippi Valley. As a consequence our shippers have been compelled, in a great degree, to abandon this far West trade territory and some of our industries have been compelled to either cease operation or locate plants nearer navigable water. Traffic from the Pacific coast finds its way through the Panama Canal and the eastern ports to destinations several hundreds of miles in the interior, taking from the Mississippi Valley a market which is its market based upon geographical location but which it can not reach due to present high transportation cost. 4. Many millions of dollars have been expended for development of the eastern port water facilities, the rivers and lakes of the East, without protest from this territory as we realize the necessity therefor, but failure to make proper provision for development of navigation in the Mississippi Valley has resulted in the concentration of industry and population along and near the seaboard and unless the suffering industry and agriculture of the Mississippi Valley are given relief through low transportation costs, by reason of navigation upon the waterways of the Missssippi Valley, there can be no development in the Middle West, which is the agricultural backbone of our great country. It is only necessary to refer to the records and orders of the Interstate Commerce Commission to conclusively prove the above statement. Based upon density of traffic, population, cost of operation, freight rates, etc., the commission has concluded and so ordered that the basic scale of transportation charges via rail throughout almost the entire territory served by the Mississippi River and its tributaries, shall be approximately 50 per cent greater than within that territory lying east of the Mississippi River and north of the Ohio and Potomac rivers. With this in mind there can be no other conclusion than that just so long as transportation costs are not reduced within the Mississippi Valley territory there can be no development, but to the contrary there will be a recession of industry owing to its inability to meet the competition from territory enjoying lower transportation cost. 5. As an example of necessity for prompt completion of our waterway projects, I call your attention to just one of many instances. The cotton production in Arkansas during the 1931-32 season amounted to approximately 1,855,000 bales. This cotton finds its market in European countries, the Carolinas, New England, and Canada. A great preponderance may move via water to destinations or at least with a short rail haul in combination with the water hauls. During this season the influence of contiguous water and truck transportation has resulted in a saving of approximately $1.05 per bale and as the adjustment has taken place while there still remained in the State approximately 980,000 bales, there is a resulting saving to the Arkansas producers of $1.290,000. This is only one instance which may be related and shows the importance of prompt development of navigation upon the Arkansas River. In conclusion we desire to stress the fact that under present methods of waterway development the Mississippi Valley may not be in position to have completely available in the next 50 years its God-given arteries of water transportation now or to be later included in the general program and we present that the most economical and expedient method of financing this development is through making available sufficient funds in order that they may be used as needed and applied at times and places most opportune. This can not possibly be done by our present method of piecemeal appropriations and development. We therefore earnestly support the Shipstead-Mansfield bond issue bill and request its passage during this session of the Congress so that there may be no further unnecessary delays or waste of funds in the development of the great waterways of the Mississippi Valley. Respectfully submitted, J. C. MURRAY, Traffic Manager. WINONA, MINN., April 3, 1932 Hon. GERALD C. NYE, Chairman Ways and Means Committee, United States Senate, Washington, D. C.: We Winona County farmers strongly oppose appropriation for use on the 9-foot channel. We feel it would be a waste of funds without conquering erosion, and further taxation would be disastrous. Yours, L. E. WERNECKE. WINONA, MINN., April 3, 1932. Senator GERALD P. NYE, Chairman Ways and Means Committee, United States Senate, Washington, D. C. Winona County against 9-foot channel because it will not benefit shippers. Will destroy thousands of acres farm land. Engineer's report shows no plan for erosion control. Will destroy wild life and fish refuge. Enormous expense not justified by benefit. DEAR SIR: I have been advised by the secretary of the Mississippi Valley Association that there will be a committee hearing with reference to the ShipsteadMansfield bond issue bill, bonds to be issued for the early completion of the inland waterways. As I will be unable to appear before your committee, I am writing you this letter to advise you that I am very much in favor of the bond issue, so that all meritorious projects of the inland waterways can be completed as soon as possible, thereby putting a great many men to work that are now willing to work for a reasonable wage and at almost any occupation. I further believe if this work is pushed and completed at once it can be done for a great deal less money than under the present haphazard manner, which is very expensive. Another reason is that the farm commodities at the present time bring such a low price that the farmers through the central part of the United States have to avail themselves of the very cheapest means of transportation in order to compete in the markets of the world. I have all the sympathy in the world for the railroads, but under the prevailing railroad rates and commodity prices, it is ruinous for a farmer to try to export his wheat or cotton as the freight rate will eat up all he will get for his crop and there will be nothing left for him to live on. We have had a very good demonstration of the above fact in our immediate vicinity during the past cotton season. When cotton was bringing from 15 to 25 cents per pound, the farmer did not object to paying a reasonable rate to the railroads for the hauling of his cotton to the exporting centers such as Galveston, Houston, New Orleans, or Mobile, where he had a profit left after paying the railroad their freight. During the last season cotton, as you well know, sold as low as 5 cents per pound, which is far below the cost of production, and the farmer is compelled to use some other method to get his cotton to the seaports or the eastern mills. The Federal Barge Line made a freight rate in large shipments from Memphis to New Orleans of $1 per bale. This rate interested some of the independent boat owners and they went into the business of hauling cotton from the inland points to New Orleans, and the consequences were that there has been |