Mr. CANNON. It is said, and I believe it is true, that the Advisory Commission of the Council of National Defense has done much valuable work. They have so coordinated the railroads that they will not have difficulties in the matter of transportation. The railroads coordinate in the handling of their rolling stock and the Government shipments have the preference. That was done, comparatively speaking, in the twinkling of an eye. The statement is made, and I believe it is correct, that through the efforts of the Advisory Commission the copper people and the steel people are in line, so that you are not going to have any trouble with them. Just how far this has progressed, I do not know, but I am under the impression that up to this time, through the Advisory Commission of the Council of National Defense, and with the aid of everybody connected therewith, a great work has been accomplished.

Secretary REDFIELD. I think that is undoubtedly true, Mr. Cannon, and they call upon us to render assistance and to help them in that work. We have been called upon to cooperate with them in doing that work. But I can not make a better comparison than the one Mr. Cutler has made. We are not proposing to be auditors, and we are not proposing to do vast detail work of that kind, but the best comparison is that of the small college with a highly trained staff. We have the confidence of the great industries, and they are coming in and talking over these things frankly. They are willing to accept out viewpoint. We have been the means of bringing them and the Government together and making them work in coordination. have seen the same thing operate in the city government of New York, where a considerable number of contracts were made to the very great advantage of the city.

Mr. CANNON. Let me call attention to this case: I have no doubt that the contractor for the Rantoul aviation camp, on the cost-plus basis, is a man of high character, but if you take into consideration the normal labor market before they commenced that work and the labor market after they commenced that work, which was done under stress, it seems to me that the contractor would have great difficulty in getting his plus allowance, because, I apprehend, when the showdown comes the figures are going to be away up yonder. Now, I do not know how you will check that account.

Secretary REDFIELD. I think I can make a suggestion that will make that clear to you: Take, for instance, the National Canners' Association, which includes everybody putting up any form of canned goods. We are able, through the officers of that association and through cooperation with its members, to lay down to them the principles on which they shall base their contract prices to the Government. Now, we are not concerned with the details, but the question that we are concerned with is whether or not the thing is fundamentally right-whether the foundation on which the structure is built is right and proper. We can reach the whole canning industry through them, and, having their confidence, it is a comparatively simple thing to keep in touch with them throughout the year, using a man now and then to guide the whole thing, with the result, as I have already said, that the Government can save thousands of dollars. Mr. Nicholson reports that in the purchase of peas, tomatoes, corn, and string beans we can save over the price that would other

wise be honestly, though ignorantly, made $50,000 per month. We are in a position to make that saving on that one thing. We are not in the position of detectives, but we cooperate with them. Mr. Hurley's statement that one-half of the manufacturers do not know what their goods cost them is true, and every man who has had experience with the large industries of the country, I think, accepts that statement as true. I could cite the case of one great industry in which the three leading concerns did not know and frankly admitted that they did not know.

Mr. CANNON. But they are still in business?

Secretary REDFIELD. They are still in business.

Mr. CANNON. They are still in business under the law of supply and demand?

Secretary REDFIELD. They are still in business under the law of supply and demand, but I was the accountant for one such concern myself once and saw the tendency and withdrew just in time.

Mr. CANNON. There are said to be 110,000,000 people in the United States, and substantially all of them are engaged in producing matter that assumes a shape useful to the human family, and that fact. of course, necessitates an exchange of products. Now, the great majority of the people engaged in production, whether working with or with out machines, are complaining very severely that their wages are not high enough, and, of course, if they are not high enough, your peas. for instance, will not be gathered and you will not put them in the cans. Heretofore all of these things have been regulated without Government control, but now if the Government is to control them all along the line, giving the man more wages for his production or giving him more of the other man's profits for his wages, it becomes a very serious question, and, it seems to me, that it is impracticable from any standpoint, without chaos, to undertake to regulate all along the line unless you can compel all along the line. I have read this report and these recommendations, and, while I am not criticiz ing, it seems to me that unless you can say Come here" and “Go there" all along the line of production, the regulation of prices will be impossible.

Secretary REDFIELD. I have just a single word to say, and that is that the evidence of the need of intelligent guidance in these matters in the business world, but which we do not propose to do except in the way of cooperation, is the fact that three men out of four in business make a failure of it. That is a perfectly well-known fact. Now, in regard to what you have suggested, that would be entirely true but for one fact which Mr. Cutler has referred to, and that is that these men are eager and willing to serve the country and they are anxious to learn. They will gladly take guidance and direction to-day in these things in a way that they would not think of doing in ordinary times. They are most anxious to learn, and nobody is more conscious of the need for it than the small business men. There is no school in which to teach these things to these men, and, as I have said, they are most anxious, eager, and willing to learn. They will take guidance and direction and absorb it voluntarily.

Mr. SHERLEY. There is a contract for emergency work that has been drawn up and that is now being used by the Quartermaster Department. Is that a result of consultation with your board, or did you supervise it?

Mr. NICHOLSON. I am not quite positive about it.
Mr. SHERLEY. This is the contract [indicating].

Mr. CUTLER. Yes, sir; that is one that came from our office.

Mr. NICHOLSON. I am not positive about this particular contract, but I do happen to know that the contracts that are now being used in the Ordnance Department are contracts which were first promulgated by our cost conference.

Mr. SHERLEY. I notice, in reading over the personnel of this conference, that there are representatives of all the departments, and, without undertaking to pass judgment on their technical knowledge, they constituted nine-tenths, or more, of the conference.

Mr. CUTLER. I will explain that. Each one of those contracting officers has a certain division of supplies under his jurisdiction. It is quite essential that each one of them individually should be acquainted with our proceedings. If they had delegated only one man he would have been put to the trouble of teaching all of his subordinates and lerks.

Mr. SHERLEY. I am not complaining of the principle and neither am I trying to apportion the credit that comes as a result of this new work of standardization, but I am simply calling attention to the fact that the personnel indicated here shows that more than nine-tenths of it was composed of men outside of your organization. Mr. CUTLER. Yes, sir; we were strictly the leaders of it.

Now, if I may submit one thing in answer to a question you asked some time ago, which I think you may believe was not properly answered, I would like to do so. You asked Mr. Nicholson several times whether as an individual he could carry out what we are trying to do, and he said: "Yes; on conditions."

Mr. SHERLEY. I do not think my question was in just that form. Mr. CUTLER. I am making it as nearly as possible in that form. Now, I submit this program [handing manuscript], and I say that it would be impossible for any one firm to follow it, because it extends into every line of industry. It covers a full conversant knowledge of manufacturing methods in all industries, with which I might say no other body in the country has to deal except the Department of Commerce.

THURSDAY, AUGUST 16, 1917.

DEVELOPMENT AND USE OF THE INTERNAL WATERWAYS OF THE UNITED

STATES.

(See p. 176.)

STATEMENT OF HON. J. H. SMALL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA.

The CHAIRMAN. Mr. Small, you desire to be heard on the item appearing on page 149 of the bill, as follows:

Development and use of the internal waterways of the United States: For promoting the development and use of the internal waterways of the United States in the transportation of freight; for studying the needs of water transportation as regards terminals, railway connections, and vessels; for investigating the existing relations between the railway system and water transportation and the attitude of shippers toward the use of waterways, including personal services in Washington, District of Columbia, and elsewhere, purchase of reports, and contingencies of all kinds, $37,500.

Mr. SMALL. That in detail sets forth the purposes. When the Secretary of Commerce called my attention to this I had a confer ence with him and with others, and I came to the conclusion that it was a wise expenditure, and I come for the purpose of giving my reasons for it.

The CHAIRMAN. What authority is there for creating in the Department of Commerce a division for promoting the development and use of internal waterways of the United States?

Mr. SMALL. That is a query I had not considered, but, without careful consideration, I should say as it involves the development and promotion of commerce that the department would have jurisdiction.

The CHAIRMAN. I do not know about that. It looks to me as though some of the things are directly under the jurisdiction of the Interstate Commerce Commission.

Mr. SMALL. Possibly with this statement that I have in mind that query will be somewhat cleared.

The CHAIRMAN. Very well.

Mr. SMALL. As a member of the Committee on Rivers and Harbors, and chairman for a little while, I have been impressed with this condition. We have, as a rule, possibly without any reasonable exception, developed a satisfactory commerce at all of the harbors of the country and upon many of the rivers directly tributary to those harbors, but we have not developed a satisfactory commerce upon many of the interior rivers. That condition has caused criticism, and justly so. Yet the River and Harbor Committee have not felt justi fied, nor has Congress apparently felt justified, in abandoning the further improvement of these rivers, which, as rivers, are of great importance. They have commerce contiguous to them which should be carried water borne, the necessity for additional instrumentalities of transportation justify the demand that a larger commerce be car ried on them, and in seeking for the reason why this commerce has not grown as it should have grown, this thought has more than once come to my mind: First, that the facilities for water-borne transportation have not been provided. Among those facilities are water terminals. It has been demonstrated that you can not develop waterborne commerce properly without water terminals. By water ter minals I mean a warehouse connected by a belt line with the railroad or railroads serving the community or city, with appliances for transferring freight quickly and cheaply from the water carrier to the warehouse or to the railway car, and vice versa.

Again, we can not develop water-borne commerce without the establishment of a system of prorating between the railroads and the water carriers, a system which shall approximate nearness to that which exists between the railroads themselves. If one may make a shipment on a through bill of lading with one rate from any point in the country to any other point in the country over a number of railroads, there is no reason why that same system should not apply between railroads and water carriers. That is impossible, however. without the facilities for transferring freight, and that means water terminals. Anybody who has been to any of the Lake ports-for instance, anyone who has visited Ashtabula and seen the terminals that provide quickly for transferring the iron ore from the ship into the car, or the coal from the car into the ship can realize the necessity of adequately equipped water terminals. One type of water carrier

on one river is appropriate that would not be appropriate on another. One type is suited to the Mississippi River and its tributaries and another type to most of the rivers on the Atlantic seaboard. The question is how we are going to get these facilities provided by the various localities and cities, because they are not provided by the United States and ought not to be. They must come by local cooperation. I have reached one conclusion, at least, that we need. some bureau or official who can give Federal supervision to the matter of the promotion of commerce upon these rivers in the interior. So far as the services of engineers are needed in making surveys and providing plans and estimates of cost that will develop these rivers in the best way to promote commerce, we are well equipped; and, in a way, the War Department, through the engineers, reports also upon commerce and gives the information which enables the committee and Congress to determine whether a specific project is worthy of improvement. But improvements have been made of rivers based upon what seemed to be credible information of an intention to do the things that would bring commerce, and yet the commerce has not followed, at least to the extent that was anticipated and which ought to have been established.

Along this line in the Council of National Defense there has recently been appointed a subcommittee on waterway transportation similar to that on railway transportation. Mr. Fairfax Harrison is chairman of the committee on railway transportation, and Gen. Black, the Chief of Engineers, is for the time chairman of the committee on waterway transportation. That is a beginning. This would be a beginning. I think that this expenditure will provide us with information that will be exceedingly valuable.

The CHAIRMAN. Mr. Small, since this estimate was submitted, there has been created the Waterways Commission?

Mr. SMALL. Yes, sir.

The CHAIRMAN. Will not that commission have the comprehensive jurisdiction that would absorb this jurisdiction?

Mr. SMALL. I do not think so. In the first place, that is an investigating commission with authority only to report.

The CHAIRMAN. It covers the cooperation of railways and waterways and promotion of terminal and transfer facilities. Why does that not cover everything? Why should there be a duplication, in your opinion?

Mr. SMALL. It does substantially include this and more. It purports to take up water from the time that it comes down and follows it to the ocean. Upon this commission are conferred powers which have been advocated for some years. Some have faith in it and others are somewhat incredulous regarding the beneficial results.

Here is something that would be important. Take a great river like the Missouri River, about which there has been so much talk and criticism in the years past. Kansas City and St. Louis have together established transportation on that river and it is developing in a very healthy way, and yet I am free to admit it is not as large as it ought to be. Take the upper Mississippi River from the mouth of the Ohio, it has commerce, but not as large as it should be. Take the Cumberland and the Tennessee Rivers, great rivers; take the Ohio River that we are improving, another great river, we will never

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