BUFFALO AS FLOUR-MILL CENTER The CHAIRMAN. Let me ask you, isn't Buffalo a great place where they ship the wheat in and then mill and then ship it out? Mr. BUTLER. That is right, it is the greatest flour mill center in the world today. The CHAIRMAN. I remember that from testimony before another committee where we had difficulties. They wanted to do that without increasing the rate in anywise. Mr. BUTLER. They are going along there handling plenty of grain up there, the feed mills, flour mills, and these oils that they get from soybeans and different things. It is a big center that handles grain. It is a terminal base there. The St. Lawrence goes in, why, then we are going to slow a lot of the railroad business up. We have got 17 railroads coming in there that the grain comes in on and we ship it to all our seaboards. The CHAIRMAN, What business are you in? Mr. BUTLER. I am in no business. I am just a Congressman. Mr. BUTLER. Prior to that I worked on the water front in the city of Buffalo as general superintendent of one of the mills up there. The CHAIRMAN. That is what I am trying to get at. I am getting your practical experience on this thing. All right, any other questions? Senator MCMAHON. I commend his frankness. Senator WILEY. Did you say 18 or 17 railroads? Mr. BUTLER. Seventeen. Senator WILEY. That run in and out of Buffalo? Senator WILEY. That is all. The CHAIRMAN. It is very important to know whether it is 17 or 18. Congressman Bailey, of West Virginia. STATEMENT OF HON. CLEVELAND M. BAILEY, A REPRESENTATIVE IN CONGRESS FROM THE THIRD CONGRESSIONAL DISTRICT OF THE STATE OF WEST VIRGINIA Mr. BAILEY. Mr. Chairman and gentlemen of the committee, for the purpose of the record, I am Congressman Cleveland M. Bailey of the Third West Virginia District. SEAWAY'S EFFECT ON WEST VIRGINIA I appear in behalf of all the citizens of West Virginia to protest the approval, by your committee, of the pending proposal to provide for the construction of an all-water route to enable oceangoing vessels to enter the Great Lakes. I have, as a Member of Congress, always favored river, harbor, and other waterway projects. If circumstances would permit, I would favor this proposal. I cannot be a party to any action that is certain to destroy the leading industry of my State. Coal is king in West Virginia. We now produce 100,000,000 tons annually more than is produced by any other State. The CHAIRMAN. If coal is king, who is queen in West Virginia? Mr. BAILEY. Probably so. That is a debatable question, Mr. Chair man. Our total production exceeds 168,000,000 tons. This industry is the major source of State and local revenue and yields in excess of $30 million annually in taxes. It must be preserved in order to avert economic disaster. The jobs of 125,000 miners are at stake, to say nothing of the economic effect on our railroads and their 35,000 employees. RECIPROCAL TRADE AGREEMENTS ACT I feel sure that you gentlemen are all fully aware of the fight which I waged some weeks ago on the floor of the House, in writing an escape clause into the legislation to extend the Reciprocal Trade Agreements Act. This was done in order, primarily, to protect this same coal industry. In this reciprocal trade fight, I placed in the record, full proof that the coal industry of my State was being destroyed by the importation of 1,200,000 barrels of cheap fuel oil daily from Saudi Arabia and Venezuela. CHEAP FUEL OIL It is this cheap fuel oil that has driven West Virginia coal out of our eastern markets, particularly in New England, where is it being delivered by tankers. In 1948, West Virginia sold 21,000,000 tons of coal in New England and New York. In 1949 this had dropped to a total of 13,000,000 tons and in 1950 it dropped to slightly more than 10,000,000 tons. Today it is less than 8,000,000 tons. Practically all of this tonnage has been displaced with cheap fuel oil. Four barrels of this residual fuel oil has the same B. t. u. as one ton of West Virginia coal. This fuel oil is sold for $1.6 per barrel, and for $6.40 they can buy an equal amount of heating capacity as in 1 ton of West Virginia coal that for production and transportation costs $10.95 per ton, without any profit to the producer, to lay on the wharf at Boston. The CHAIRMAN. I want to caution you that your time is limited. I want you to bear that in mind. Go right ahead." Mr. BAILEY. Five large American oil companies and one British company, the Anglo-Iranian, have the foreign concessions for this oil. Their profits have been skyrocketing the past few years due to their sale of this oil for $1.60 per barrel that only cost 17 cents initially. In testimony, taken by both the House and Senate Labor Committees, some months ago, it was determined that 1,200,000 barrels of this oil was being imported daily. It was also determined that imports in excess of 350,000 barrels daily would injure both the independent oil companies and the coal industry. I have gone into this matter of oil imports in some detail because it has a direct bearing on the question of constructing the St. Lawrence seaway. In peacetime, West Virginia ships 84 percent of its coal production into the Great Lakes markets. Once you build their seaway, these same tankers that bring this cheap oil to our eastern seaboard, will enter the Great Lakes to refineries in cities like Cleveland, Detroit, and Chicago, and West Virginia coal will be driven from the lake markets just as it has been driven from its eastern markets. COAL DEPOSITS IN NOVA SCOTIA There is still another sound reason why West Virginia and other coal-producing States are opposed to the St. Lawrence seaway. There are proven deposits of coal of approximately 2 billion tons in Nova Scotia at the entrance to this St. Lawrence River. These coal deposits are now being operated. The production for the year 1949 was 6,182,000 tons and for the year 1950 6,428,000 tons. Considerable shipments of this coal, particularly coke, is being imported into the United States. The fact that it is excellent coking coal makes it a dangerous possibility in competition with our West Virginia product in the manufacture of steel. I have not been able to secure the cost on a tonnage basis of producing coal in Nova Scotia, nor is it possible to determine what the water freight rates are on this coal to our lake ports should we build this seaway. I do know, that the average cost per ton to produce coal in the central West Virginia fields is $3.97 and when we add the all-rail freight rates from Beckley, W. Va., to Milwaukee, Wis., which are $5.04 per ton, it would cost $9.01 per ton without any profit to the producer. Assuming that the cost of producing a ton of coal in the Welch mines in England which is $6.43 and a fair estimate of the cost of production in Nova Scotia, there would be a margin of $2.58 per ton to cover freight (all water) on this Nova Scotia coal to Milwaukee, where it would compete with our West Virginia product which faces another boost in freight rates in applications now before the Interstate Commerce Commission. COMPETITION FROM ENGLISH PRODUCED COAL In Great Britain, the Government owns the merchant marine and under the government subsidy she offers in the form of cheap freight rates, to encourage the sale of her products abroad. I am convinced that even English-produced coal could in peacetine compete for our lake markets. One thing is sure, the British ships coming into Canada for grain would stop at Nova Scotia, the entrance to the St. Lawrence, and take on coal for sale in both American and Canadian lake ports. Today, three of the Nation's major rail systems operate in West Virginia. I refer to the Norfolk & Western, the Chesapeake & Ohio, and the Baltimore & Ohio. They all receive the major part of their revenue from coal shipments. They cannot exist without their revenues. Do the proponents of this project have a plan to provide financial rehabilitation to these rail systems when they are made insolvent by this ill-advised action? Do they have jobs to offer the more than 125,000 miners and 30,000 other rail workmen who stand to lose their employment? Do they want to tax the coal and rail in dustries to raise Federal money in the amount of half a billion dollars to build this seaway? ECONOMY IN GOVERNMENT I plead with you, gentlemen of the committee, for a realistic approach to this problem. On every hand, we hear the cry for economy in Government. Then why this proposed project? When we are cutting out for the duration of the emergency every item of expenditure not directly connected with the war effort. I might add, Mr. Chairman, we have cut off appropriations for projects far more important to our defense effort. I refer to the Sutton Reservoir, in West Virginia, where the Administration, through the Budget Office and our Appropriations Committee, have suspended appropriations despite the fact that the major purpose of this project is to remove the flood hazard to the Nation's largest chemical plants so vital to our defense. Charleston, W. Va., is the chief chemical center of the world. Here, our Army engineers say, that one alone of seven large plants could suffer potential flood damages of $20,000,000. The proponents of this seaway project want to take advantage of the war hysteria to gain approval when they could not get it in more normal times for economic values, not war scare, would be the yardstick to measure its value. I am, of course, interested in the iron-ore deposits in Labrador, as a future reserve for use in America. It might be well, before we build this great seaway, to inquire who owns these Labrador ore reserves. QUESTION OF SELF-LIQUIDATION The backers of this project say it will be self-liquidating; that the toll charges collected will carry the load. May I inquire if our good neighbor, Canada, has agreed on these toll rates? Millions of bushels of Canadian wheat now shipped by rail to our eastern seaports for reshipment to Europe, will go outward through this seaway. Have we any assurance that Canada won't demand free clearance for her wheat shipments? I doubt seriously if the tolls collected will cover the ordinary maintenance and operating charges. I shall not take the time of the committee to answer the far-fetched arguments advanced by the proponents of this project. Permit me to say, however, that the idea is somewhat fantastic. It cannot be justified economically. It will do more harm to other sections of our Nation than any good that will come to the limited section of our population that it will serve. I appreciate this opportunity to present West Virginia's side of this question. I sincerely hope your committee will, in its wisdom, report this matter unfavorably. I would like in conclusion, Mr. Chairman, to say that I appreciate the fact that you have given me this limited time. I regret very much that I am not able to present personally all of the picture, but I sincerely hope that the committee will weigh this matter carefully and come up with an unfavorable report. The CHAIRMAN. Senator Myers, you have got some constituents. Bring them around. STATEMENT OF FRANCIS J. MYERS, GENERAL COUNSEL, Mr. MYERS. Mr. Chairman and members of the committee, I am very grateful for the opportunity you have given to us from Philadelphia to present our views on this subject. May I say that I appear here as general counsel for the Chamber of Commerce of Greater Philadelphia. In view of questions that have been heretofore asked, let me say that that position carries no compensation whatsoever, and for my appearance here today I am receiving no compensation whatsoever, either directly or indirectly. Let me further say that I have always opposed the seaway while a member of the Senate, and therefore the views that will be expressed by these witnesses are entirely consistent with the views that I have heretofore expressed as a Member of the Senate. The clerk has told me that he would give these three witnesses 10 minutes in all. They will present their statements and ask that they be incorporated in their entirety in the record, and they will each make a very brief extemporaneous statement. As to our first witness, I would call Mr. Alex Crothers, who is representing the Joint Commission of the Delaware River, which is a corporate entity set up by Pennsylvania and New Jersey set up for the promotion of the Delaware River as a highway of commerce between Philadelphia and Camden and the sea. STATEMENT OF ALEX CROTHERS, EXECUTIVE OF THE PORT PROMOTION DEPARTMENT OF THE DELAWARE RIVER JOINT COMMISSION OF PENNSYLVANIA AND NEW JERSEY Mr. CROTHERS. My name is J. Alex Crothers, and I am the executive of the Port Promotion Department of the Delaware River Joint Commission. We are a Bay State agency and we are charged with the responsibility of the promotion and development of commerce in the area. POSSIBLE DIVERSION OF TRAFFIC It is conservatively estimated that the investment in port facilities by States and municipalities, railroads, and others in port facilities in our port district is in excess of $200 million. The reason, one of the principal reasons, that we are opposed to this project, is because of the possibility of the diversion of traffic from our port area to the proposed waterway. The Secretary of Commerce in his statements before the House Public Works Committee stated that there was no doubt but what a considerable amount of traffic would be diverted from the Atlantic and the Gulf ports to the waterway when constructed, and he had submitted estimates which, when we study them and analyze them very carefully, certainly gives us considerable reason for alarm. For example, his estimates range from 57,000,000 to 84,000,000 tons of commerce annually to move through the waters, and then when we consider that during the year 1950, and this according to the reports of the Bureau of Census, the Department of Commerce, we handled |