ST. LAWRENCE SEAWAY THURSDAY, JUNE 18, 1953 HOUSE OF REPRESENTATIVES, The committee met, pursuant to adjournment, at 10:05 a. m., in room 1302, New House Office Building, Hon. George A. Dondero (chairman) presiding. Mr. DONDERO. The committee will come to order. The Chair wishes to state, without taking it out of the time of the opponents, that the House will be in session at 11 o'clock today and therefore we will only have 1 hour. We hope everybody will be rather brief and to the point. The Chair has a list of short statements to include in the record: One by Congressman Rabaut, of Michigan; One by Mr. Perry, the traffic manager of the Houston Port and Traffic Bureau of Houston, Tex.; presented to the committee by the Honorable Albert Thomas, of Texas; Mr. John T. Corbett, national legislative representative, Brotherhood of Locomotive Engineers; Mr. W. D. Johnson, vice president and national legislative representative, Order of Railway Conductors of America; William F. Giesen, general manager and counsel of the Martime Association of the Port of New York; Mr. Leverett Lyon, chief executive officer, Chicago Association of Commerce and Industry; A telegram from Mr. J. Alex Crothers, director of the port development department, Delaware River Port Authority, Camden, N. J. Without objection, they will be included in the record. The Chair has a letter from Bernard L. Robinson, major general, Deputy Chief of Engineers, that I desire to put in the record. Without objection, it will be included in the record. (The statements referred to are as follows:) STATEMENT OF HON. LOUIS C. RABAUT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN Thank you, Mr. Chairman and members of the committee, for this opportunity to submit my views on the legislation you are now considering to provide for the participation of the United States in the construction of the St. Lawrence seaway. Please note the way I phrased that sentence. There is no longer before this committee, or the Congress, or our country the question of whether the St. Lawrence seaway should be built. Our great neighbor to the north, with its tremendous potential for economic greatness, has already resolved that much-debated question. Our latest assurance to that effect has come from the Canadian Minister of Transport, the Honorable Lionel Chevrier, in a speech delivered here in Washington on April 30, 1953. He said, "Canada is ready, willing, and anxious to proceed with the seaway at her own expense without cost to the American taxpayer. Canada has passed legislation, both provincially and federally, and could start the project tomorrow." We can only guess, Mr. Chairman, how long this kind forbearance on the part of our Canadian neighbors will last, once the Federal Power Commission has licensed some entity in the United States to proceed with the construction of hydroelectric power facilities for that phase of the project. So we have only to decide whether we are to participate in this great work, whether, together with Canada, we are to proceed in the development of a key link in this commercial chain which binds our nations together; whether we will join in the effective control of a vital economic resource in which we have equally as great a stake as Canada. I am gong to be perfectly frank with this committee and tell you that my chief concern in the question of whether or not we join in construction of the seaway is the future of the automobile industry in America. First, I would have you understand this. I have sat on committees of this Congress for many years considering expenditures for the multi-million-dollar projects we have undertaken for flood control, river and harbor development, and related power and immigration purposes. I know that the weakest kind of plea that can be made for such a project is that its need is measured by a particular local purpose-which is of no significant national benefit. I do not want to be classified with the "selfish local interests" that have historically been the chief source of opposition to the seaway. I think such a classification is especially inappropriate when one pleads in behalf of the American automobile industry. Just think for a moment that the automotive industry is the greatest single purchaser of manufactured and raw materials in this country today. It is the greatest purchaser of steel; it buys more rubber and more glass than any other industry in America. It consumes whole catalogs of every kind of fabric and material; it even takes the wax from the honeybee. A former Secretary of Commerce once said to me that if we could find another product that would so capture the imagination of the American people, and then establish it as a necessary part of our way of life, we would not have a thing to worry about in this country for another 100 years. No one can really measure how the prosperity of our country has been geared to the progress of the automobile industry. What would the real-estate values of the Nation be without the fine highways which the automobile made necessary? The automobile made the petroleum industry. Without the automobile we would certainly have no need for the thousands upon thousands of gasoline-service stations, the repair garages, and the parking lots dotted across the Nation. Who can really say what America owes to the automobile industry? Automobile manufacturing needs, above all else-steel. The industry is now a part of an economic and efficient pattern of production which is bounded by the rapidly depleting ores of the Mesabi Range, the rich new deposits of Labrador, and the vast steel-manufacturing complex of the Midwest heartland of America. The transmisson belt for this economic marvel is the Great Lakes and its connecting channels. It is impossible to predict the extent of the upheaval of the American economy should the normal pattern of production and distribution of the automobile industry be disrupted. The many other important aspects of the St. Lawrence seaway, including its contribution to our national security, have, I am sure, been properly covered by the other witnesses who have appeared before your committee. I have endeavored to place before you just one example of how the seaway, through its relation to the automobile industry, affects the lives and property of millions of Americans. We owe it to ourselves, in other words, to insure that we are in on the ground floor when the seaway is built, and that, in the tradition of the cooperative and friendly relations we have always enjoyed with Canada, we join in its management and control. I urge your favorable consideration of legislation to this end. STATEMENT OF G. B. PERRY, TRAFFIC MANAGER, HOUSTON PORT AND TRAFFIC BUREAU, INC., HOUSTON, TEX. My name is G. B. Perry. I am employed by the Houston Port and Traffic Bureau, Inc., a nonprofit corporation formed of public and private enterprise having direct interest in the development of the port of Houston. In addition, I have been requested to represent at this hearing the following-named organizations and political bodies: Harris County-Houston Ship Channel Navigation District, a political subdivision of the State of Texas Houston Maritime Association, an organization composed of steamship operators and agencies Houston World Trade Association, an organization composed of firms and individuals directly interested in development of foreign commerce Houston Cotton Exchange and Board of Trade, a trade association composed of cotton buyers and handlers Texas Ocean Freight Forwarders Association, an organization composed of freight forwarders conducting business at ports on the Texas gulf coast Houston Chamber of Commerce, a nonprofit corporation formed of 6,500 Houston firms and individuals for promotion and protection, civic, and economic welfare of the city East Texas Chamber of Commerce, a regional organization composed of 4,000 east Texas communities, firms, and individuals devoted to furtherance of area interests including economic and political West Texas Chamber of Commerce, a regional organization with aggregate membership of 6,000 west Texas communities, firms, and individuals, of which 141 memberships are held by community chambers of commerce, devoted to furtherance of area interests including economic and political Each of the organizations here represented are unalterably opposed to the expenditure of public funds in any form or manner for the purpose of opening of a waterway on the St. Lawrence River. This opposition has continued through the years and suitable resolutions have been adopted by the membership regardless of design of the legislation. The people of Texas are confounded by this constant pressure to force participation of the American taxpayer in a project which has been time and time again condemned as impractical and visionary. The essence of the present legislation here before the committee, House Joint Resolution 104, is creation of a corporation to perform the construction initially contemplated. In formation of this Corporation, the outlay of $5 million in capital stock, with retirement over a 50-year period to a minimum of $1 million, has been emphasized in publicity releases but little has been said of obligation guaranties extending to $100 million. We hold this characterization of original expenditures as a public investment in a self-liquidating corporation to be a simple disguise intended to satisfy the general demand for economy in government. What is the structure and authorities of this Corporation? Activities of the Corporation would be at the exclusive direction of a threeman Board of Directors. No department of the Government would be possessed with supervisory powers although debts and obligations assumed by those directors would be unconditionally guaranteed by the Government. Contrast this with the construction of the Inland Waterways Corporation which is under direction of the Secretary of Commerce, and whose obligations are held by congressional order to a maximum of 25 percent of the value of its assets. Even though the Corporation is being formed for the purpose of directing construction of a project intended to make a sea route available to areas adiacent to the Great Lakes, a three-man Board of Directors prevents full participation by the States affected, much less a national representation. This is purely a regional project and it appears reasonable that at least the States having material interest should have a voice in the activities of the Corporation. These States would be foolish indeed if they do not insist upon this right. The bill sets no standards of competency by which the Corporation may be assured of direction by men qualified by education and experience. The appointments are to be purely political in nature and obviously it will become the hunting ground of displaced or self-seeking persons under the patronage system. The annual salary to be paid Board members exceeds that of congressional pay by $5,000 and that of the President of the Inland Waterways Corporation by $6,200. This is a rather remarkable sum of money to be paid a man whose qualifications actually need be no more than a suitable connection with the Chief Executive. Every conceivable power is vested in this three-man Board of Directors, including the responsibilities of negotiation with a foreign government. Contrary to sound principles in Government, the proposed Corporation is to be authorized to set compensation of its employees and define duties. The conditions fostered in such an atmosphere-patronage, political activity, nepotismare commonly known and abhorred by the American people. Corporate powers to buy and sell property, including acquisition by condemnation processes, is a simple usurpation of rights accorded a government not a corporation as such. The lack of restrictions on the acts of this proposed corporation provides unlimited opportunities for abuse of the public interest. We do not believe that legislation should be passed which would result in initiation of this construction. In the event, however, this committee concludes a bill should be reported out, the best possible measure should be selected. With due respect for the author of House Joint Resolution 104 and with recognition of his ability and integrity, let it be known that the organizations here represented-comprised of more than 50,000 citizens of the State of Texas-are convinced that the bill requires modification and here submit the following basic recommendations: 1. The committee should cause the membership of the Board of Directors to be increased substantially and should provide for representation by the affected States. 2. The salary to be paid Board members should be reduced to a proper level. 3. Congress should retain control of the activities of the proposed corporation. Agreements and pacts between the countries involved should receive the approval of Congress. The measure and application of tolls should not be left to the discretion of the Corporation. 4. A merit system should be provided for in the bill to rid the proposed Corporation of political activities by, and on the part of, its employees. 5. Standards of competency should be provided for members of the Board of Directors of the proposed Corporation. 6. The claimed self-liquidating abilities of the project should be strengthened by elimination of the proposed obligation guaranty with the stipulation that necessary funds will be provided through appropriations. The people of Texas wholeheartedly supported our present administration in the belief that a return to sound governmental practices was necessary to the very continuance of our way of life. It is understandable they should find justification in the position of opposing legislation which would invest the rights and opportunities in a small group of political appointees to commit this Nation to aggregate debts of $100 million in the performance of a vain and useless activity. To all who would but pause and consider, the obvious purpose of the present legislation is the initiation of construction on the St. Lawrence with the intention of requesting additional funds to deepen the channel to 33 or 35 feet with attendant work on interlake canals and locks all the way to Duluth, coupled with harbor improvements and navigational aids. The American Government, once committed, would be considered bound to complete the undertaking. Costs of construction have been a constant source of disagreement since the very initiation of St. Lawrence legislation, and are at this time, but the costs involved in completion of the work covered by this bill fade into comparative insignificance when consideration is given to the probable total outlay. Reliable sources estimate the ultimate cost of a 35-foot channel to Duluth at $2 billiona near two-thirds of the total Federal expenditures for river and harbor development from 1791 through 1949 ($3,589,442,823, Board of Engineers for Rivers and Harbors). This estimate takes into account only the expense incident to channel and lock construction and does not consider necessary harbor improvements. According to the Annual Report of the Chief of Engineers, United States Army, for the year 1950, controlling depth of the Milwaukee Harbor is 21 feet; Buffalo, 21 feet; Chicago, 20 feet; Duluth, 20 feet. Levy of such an added burden upon the American taxpayer is terrifying to contemplate-especially when this increase in the Federal debt has as its sole objective the provision of water service to but a segment of the Nation. User tolls are an unworkable method of recovering the money spent, for application of a commensurate toll would defeat the purpose of the project by eliminating the proposed savings in transportation costs. There is no good reason to cloak this expenditure, either as presently proposed or at its ultimate objective, in the guise of an investment or to define appropriated money as capital stock or obligation guaranties of a mythical corporation. The money will be spent for development of the Great Lakes ports and but a fraction, if any, will be recovered. The effect of this enormous expenditure cannot be measured by the increase in tax load alone for the existing ocean ports will be confronted with the problem of survival. Ports are simply gateways in world commerce. Disregarding all side factors, a port develops in response to the offerings of cargo. It is but a utility. Growth and economic developments of the inland regions utilizing a particular port pattern the volume and type of cargo which will flow through that |