up. That list has already been heard from and if there are any members of the National Grange group here now that expected to be heard this morning, we will be glad to hear them at this time. STATEMENT OF N. R. DANIELIAN, EXECUTIVE VICE PRESIDENT OF THE GREAT LAKES-ST. LAWRENCE ASSOCIATION Mr. DANIELIAN. Mr. Chairman, my name is N. R. Danielian. I am executive vice president of the Great Lakes St. Lawrence Association. The Grange masters who were here this morning have gone their way and they will not be able to come back this afternoon. They have filed their statements. They appreciate your courtesy in offering this second chance. On behalf of the Great Lakes St. Lawrence Association, as I believe there are no more witnesses, may I request the privilege of submitting a brief later on for the record? We do not wish to present a witness at this time. Senator GREEN. You want to submit a brief? Mr. DANIELIAN. Yes. Senator GREEN. They can submit briefs. Is that what you mean? Mr. DANIELIAN. No; I wish to present a brief later on on behalf of the Great Lakes-St. Lawrence Association. May I have that privilege? Senator GREEN. When will that be submitted? Mr. DANIELIAN. Possibly toward the end of the week. Senator GREEN. It ought to be before this hearing is concluded. It will be too late otherwise. Under the vote of the committee approving the resolution, the time had to be before March 1, that is Friday is the last day which any evidence can be taken. Mr. DANIELIAN. If the record will be open say by Saturday we will be glad to submit it. Senator GREEN. It won't be. Mr. DANIELIAN. It will close Friday? Senator GREEN. Yes. Mr. DANIELIAN. We will try to get something in by Friday. Senator GREEN. If you can, all right, and if you can't it won't be admitted at all. The hearing will stand adjourned until tomorrow morning at half past 10 when the opponents will be heard. Mr. SMITH. Mr. Chairman, my name is Donald Smith. I am executive secretary of the Vermont Cooperative Council. We still have two or three Vermonters who came all the way down from Vermont and have not had an opportunity to be heard. Senator GREEN. They were not announced. They were not on the list of those asking to be heard. Why didn't they apply? Mr. SMITH. I was not in charge of making the arrangements, sir. I do not know. Senator GREEN. Well, you see there has to be a termination Mr. SMITH. I think it was Mr. Clyde Ellis who made the arrange ments. Senator GREEN. I am very sorry. (Whereupon at 4:30 p. m. the committee recessed to reconvene Wednesday, February 27, 1952, at 10:30 a. m.) ST. LAWRENCE SEAWAY AND POWER PROJECT WEDNESDAY, FEBRUARY 27, 1952 UNITED STATES SENATE, COMMITTEE ON FOREIGN RELATIONS, The committee met at 10:30 a. m., pursuant to adjournment, in the caucus room, United States Capitol, Washington, D. C., Senator Tom Connally (chairman) presiding. Present: Senators Connally, George, Green, McMahon, Gillette, Fulbright, Wiley, and Tobey. Present of committee staff: Messrs. Wilcox, Kalijarvi, O'Day, O'Grady, and Holt. The CHAIRMAN. The committee will come to order, please. Mr. Gregory S. Prince, assistant general counsel, Association of American Railroads, is our first witness. Let me say at the beginning that we have had up to now only the witnesses for the proponents, those who want the canal and who want the United States to build it so they can use it, and who want to build a great electrical power plant and turn it over to the State of New York. We now are going to have some witnesses on the other side, the first of whom is Mr. Gregory S. Prince. Mr. Prince. STATEMENT OF GREGORY S. PRINCE, ASSISTANT GENERAL COUNSEL, ASSOCIATION OF AMERICAN RAILROADS Mr. PRINCE. Mr. Chairman, my name is Gregory S. Prince. I am assistant general counsel of the Association of American Railroads, located in Washington, D. C. The CHAIRMAN. Who is the general counsel? Mr. PRINCE. Mr. J. Carter Fort, F-o-r-t. The CHAIRMAN. Go ahead, sir. Mr. PRINCE. I appear here on behalf of the Association of American Railroads, in opposition to Senate Joint Resolution 27, authorizing the construction of the St. Lawrence waterway and power project. This project is being promoted primarily on the ground that it is required in the interest of national defense, and regardless of what else has been said, I am convinced that were it not for that contention this committee would not be giving any consideration to the proposal at this time. We have only to look at the level of our national debt, an $85,000,000,000 budget, a $15,000,000,000 deficit anticipated for the next year, to make it apparent and clear that we cannot afford any unnecessary projects; we must limit ourselves at this time to projects that are essential-required. That is what makes the issue of national defense the crucial one in this case. We recognize that, we expect to meet it, and I shall attempt to deal with that issue first. The claimed necessity of this project from the standpoint of national defense rests on two principal points. The first of these is that the United States-or rather, the Great Lakes steel industry-is dependent upon Labrador iron ore, or if not dependent now, that it will soon be dependent upon the ore from Labrador. The CHAIRMAN. You mean that is their point? Mr. PRINCE. That is their contention and one that I say they must establish before they can prove that there is any semblance of national defense interest in this project. The CHAIRMAN. All right. Mr. PRINCE. I say there is a second point that they must establish: Not only that we will be dependent upon that ore in Labrador, but that in order to make the Labrador ore available the St. Lawrence waterway is needed. Both points, it seems to me, must be established before they have demonstrated the national defense value of this project. I shall attempt to point out that they have failed completely to establish either of these points. HIGH-GRADE IRON ORE RESERVES IN LAKE SUPERIOR REGION I would like to take up first the question of the high-grade iron ore reserve in the Lake Superior region of the United States. The Secretary of the Interior appeared here on Monday and he did not paint quite as dire a picture of the status of our reserves in the Lake Superior region as he did before the House Public Works Committee last year. However, he did indicate quite clearly that in his judgment there was not much of it left. Then he went on to point with particular reference to one classification of the ore which he said was of great importance, the so-called open-pit, direct-shipping ore. He said we have left in reserve less than one-half billion tons. I do not think that he made clear to you the basis of those estimates, which I hope to do. Minnesota tax rolls The Minnesota tax rolls carry the reserves of iron ore. It is important to understand the significance of what is on those rolls, why they are there, and why they do not show all the ore that is in the region. They never have and they never will. The Minnesota tax laws are probably responsibile for that. As soon as ore is proven by drilling and they know the ore is there then it is put on the Minnesota tax rolls and the company begins to pay taxes on it from that minute on; even if they do not mine it for 20 or 30 years, they pay taxes every year on that iron ore. Now naturally the companies have been reluctant to prove up more iron ore than they need for a reasonable program into the future. That just makes sound sense economically and that is what has taken place in the past and why those rolls are not a true picture of the iron ore reserves. In 1920 the Minnesota tax rolls showed reserves of high-grade iron ore in the Mesabi Range as 1,306 million tons. Between 1920 and 1950 we mined 1,141 million tons. That would mean if no ore had been added to those rolls we would have left only 165 million tons of high-grade ore. Instead the rolls for 1950 show 912 million tons still left. The same thing holds true with respect to the open-pit, direct-shipping ore on the relatively small quantity of the Secretary of the Interior placed a great deal of stress. Let me show you what has happened on the Minnesota Tax Commission rolls with respect to that classification of ore. The Secretary pointed out that the Minnesota Tax Commission estimated only 491 million tons of that classification of ore on the tax rolls in 1950. In 1945, the estimate of open-pit direct-shipping reserves for the Mesabi Range was 487 million tons as shown by the Minnesota tax rolls. From 1945 to 1949, 201.9 million tons of that ore was shipped. That would lead you to believe that you have in reserve 285.1 million tons of that kind of ore. But in 1950 what do the Minnesota tax rolls show? They show 491 million tons still on the tax rolls, or 4 million tons more than was shown in 1945, after mining 200 million tons during that 5-year period. I say for that reason those are not proper estimates of reserves and it does not give you the true picture of reserves to bring that out without explaining the significance of those figures. Here is an explanation of why that is so. It seems on the face of it a rather extraordinary fact, but there is a very logical, easily understood reason. Mr. M. D. Harbaugh, vice president of the Lake Superior Iron Ore Association, in an article in the Mining Congress Journal for February 1949, made this statement: Larger, improved equipment for stripping of overburden has so greatly increased the economic limits for stripping that instead of a ratio of 3 to 1 which formerly was about the limit, the ratio in some operations now is 6 to 1, and in a few places considerably higher. The resulting reclassification of underground reserves as potential open-pit tonnage is significant to any consideration of the period of time for which the Mesabi Range may be expected to maintain its place as the principal source of United States ore. In other words, it now appears likely that most of the Mesabi reserves eventually will be mined by open-pit operations. Not merely the part now classified as open-pit, but that most of the reserves of the whole range will in the future be mined by the openpit method, by reason of the improvement in the machinery and equipment by which they strip this overburden. Here are facts that demonstrate that trend in the past year. In the decade 1931-40 the ratio of open-pit to underground ore was only 8 to 1 and in the decade 1941-49 that ratio increased to approximately 28 to 1. I think that bears out the prediction of Mr. Harbaugh. IRON ORE IN THE MESABI RANGE Let us turn, however, from the question of the figures on the tax rolls and specific estimates of tonnage to something a little broader and a little more practical. In the House hearings the Secretary of the Interior pointed out that there were 2.4 billion tons of high-grade iron ore in the Mesabi Range according to their present estimates and 3 billion tons in the whole Lake Superior region. He did not mention those estimates, as far as I can recall, before your committee but they are very important, because he estimates that the requirements for the future from the Mesabi and the Lake Superior region will be on the average 70 million tons from Mesabi, 90 million tons from the whole Lake Superior region, and with these reserves that his own Bureau of Mines and Geological Survey have estimated, there is indicated a supply in that area sufficient for about 30 years. It does not indicate any very critical, urgent situation in which we are about to run out of high-grade ore in Minnesota. FUTURE OF THE MIDWEST STEEL INDUSTRY The Secretary also suggested in his testimony here on Monday the possibility of the great Midwest steel industry having to migrate to the east coast. I would like to point out to you what Mr. Wilfred Sykes, chairman of the executive committee of the Inland Steel Co., had to say with respect to similar suggestions from other sources. There has been some rather wild talk regarding the possible future of the steel industry due to exhaustion of our present sources of raw materials. It has been suggested by an economist that in the future it will be necessary to concentrate the production of steel at the eastern seaboard where foreign ores could be received. This is based on the assumption that our existing sources of ore are being so rapidly depleted that steps must be taken promptly to maintain an adequate supply of steel. Fortunately this is not a true picture. He then explained why it is not and concludes with this sentence: According to the best estimates available we probably have a supply of ore in the Mesabi Range that will last us for the next 30 years or so, after which the annual production will gradually decrease. EXPANSION OF STEEL INDUSTRY There is further evidence that this is likely to be true. This is evidence of a very practical nature, the kind that I think will appeal to you far more than mere figures and estimates that have never proved sound in the past. This is the test of the hard facts of life. The steel industry is going through and has been going through for the past few years the greatest development in its history, and that includes the steel industry located in the Great Lakes area, the area from which the Secretary of the Interior has suggested steel mills will soon be migrating to the east coast. I think it is clear, and that you will recognize, that the leaders of our steel industry would not be undertaking that vast expansion if they feared they would soon have to move, not only the expanded industry, but the rest of it to the east coast. One of our foremost ore experts in this country took exactly the same point of view, the same practical approach to this problem. Mr. Elton Hoyt 2d, senior partner, Pickands, Mathers & Co., clearly expressed that in an address which he made to the general meeting of the American Iron and Steel Institute on May 24, 1951. He said this: It is inconceivable to me that in planning the erection of costly additions to their plants at this time, and without Government subsidy, the executives of the great steel companies and their organizations do not know where the iron ore is coming from to operate their present, as well as their new, facilities. "To me," he said, "no other assurance is required that iron ore reserves are available for an expanding iron and steel industry." |