Banker v. General

A House Committee headed by Missouri's Representative Shannon has been going up & down the land for months investigating Government-in-business. It paused fortnight ago in Chicago to take another look at Inland Waterways Corp. This $24,000,000 War Department agency headed by Major General Thomas Quinn Ashburn operates a barge line on the Mississippi, Warrior and Illinois Rivers to try to demonstrate to private capital the practicality of waterway transportation. For nine years the railroads have fought the barge line's competition. General Ashburn, no diplomat, has tried to placate while competing with the railroads.

In Chicago the principal witness against the barge line was Frederick J. Lisman, white-haired Manhattan banker, traction promoter, author of the long-shelved Lisman Plan for a Chicago subway system. His glasses trembling indignantly on his thin nose Banker Lisman exclaimed:

"The Inland Waterways Corp. would be subject to indictment for issuing deceptive reports if it were a private concern. It practically amounts to using the mails to obtain money under false pretenses. The barge line fails to figure in its cost such items as attorney's fees, printing, franking, depreciation and the expense of operating the dams and locks it uses. If people knew the facts, they'd demand prosecution. I don't know how much bookkeeping they teach at West Point but they teach obeying orders. If General Ashburn is told to make the lines pay, he shows the lines are paying. His reports are neither a credit to him nor to the Secretary of War who accepts them. The state-merit that the lines pay taxes to the cities to which they operate is an insolent quibble."

From a duck hunt General Ashburn returned to New Orleans last week in fighting trim. He denounced Banker Lisman as an "unqualified liar," called him a "paid railroad lobbyist" declared that Mr. Lisman had had to apologize for similar statements last summer just when he (Ashburn) was about to sue for defamation of character. According to General Ashburn, all testimony in Chicago was part of a "railroad plot" to discredit his barge line. In the barge line's latest (1931) annual balance sheet, General Ashburn reports a net operating income of $298,756 and a deduction from cash revenues of $563,287 for depreciation. What infuriates railmen and bankers like Mr. Lisman are statements by General Ashburn like this one in his 1931 report: "The corporation has no outstanding bonds, consequently pays no interest thereon. Nor does it have any borrowed money on which to pay interest." The reason the corporation has no outstanding bonds is because it received directly from the Treasury $12,000,000 in cash. A private company would have to pay interest on this capital before it could show a profit.

General Ashburn picked a meeting of the Mississippi Valley Association at St. Louis later in the week to make a full-length reply. Excerpts:

"The railroads have descended to individual vilification and perversion of my ideas. . . . They may kill me but they can't kill the idea of water transportation. Men crucified Christ once but his idea lives on. . . . The real trouble with the railroads is the aftermath of frenzied financing and excessive overcapitalization and not bus, truck, airplane, pipeline or waterway competition. Our corporation, unlike the railroads, has passed through no receivership, floated no bond issues, paid no princely salaries. I could spit out the window and retire and my retirement pay for life as a major general would be only $2,250 a year less than I'm getting now. I'll stake my honor, reputation and life that the American people were never misled by any report I ever made.

"Within ten years we can pull out of this business and put our equipment in private hands with the assurance that railroads shall not again strangle waterways transportation to death. . . . The fight against me seems to be made by men who don't know West Point teaches honor, duty, country. If I couldn't laugh at these attacks, I guess I'd commit suicide."

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