$226,000,000, there were carried over 10,000,000 tons annually of freight traffica greater amount than is left to the river after all the expenditures for the improvements.

The board of investigation and research, which recently issued their report on public aids to domestic transportation, has calculated the annual cost of the Ohio River, without allocation to subsidiaries, for the year 1940, at about $10,251,820. This would mean, as related to the 9,532,298 tons, a cost to the Federal Government alone of at least $1.10 per ton. On this basis, economic justification for the Ohio River project is left without foundation.

There would be equal logic in crediting feeder value to the rail line that hauled coal to Catlettsburg for loading into a barge on the Ohio River. The waterway operators have always claimed that they could not live on port-to-port traffic alone and successfully sought legislation in the Denison Act of 1928 to compel the establishment of through routes and joint rates with the railroads. The Army engineers have not yet suggested, however, a crediting or imputing of feeder value to the rails for their part of the haul but it could be claimed just as logically as here. The traffic that moves by rail to the port would not be available for waterway transportation unless it so moved.

In defining the term "through traffic" the Annual report of the Chief of Engineers on Commercial Statistics of Waterborne Traffic states:

"Since the waterways bearing tonnages neither loaded nor discharged at points thereon are entitled to that traffic, such movements are termed 'through traffic' " (p. xii, 1941).

The waterway bearing the tonnage may be entitled to that traffic but it cannot get it by this method. Under the theory of feeder value used in connection with the Big Sandy project it becomes only ghost traffic, for the savings and benefits, tons and ton-miles are all allocated or credited to the tributary.

If the savings and benefits are to be carried back to the Big Sandy, then in all reason so also should the losses. What about allocated losses? If the Big Sandy is constructed and does carry the traffic prophesied for it, what will be the effect upon other waterway projects constructed and maintained at Government expense which will have to compete with it? In connection with this project, no claim is made that there will be a greater sum total of coal consumed. Ample supplies of coal are available. It is claimed only that coal moving over this river, when improved, will move at so great savings that it will displace other coal in important markets.

As has been shown, coal is now moving down the Monongahela, Allegheny, and Kanawha Rivers on to the Ohio. It seems inevitable, therefore, that if this particular project is as successful as its proponents claim it will be, there must necessarily be a consequent decline in traffic moving on these competing waterways. If this be true, there arises the question of imputed or allocated losses. If allocated savings are to be carried back to the Big Sandy, then it appears logical on any fair principle that losses will also have to be allocated back to it.

The idea of feeder value is therefore, founded upon fallacy. Every project must stand on its own basis. Each has its own costs. Traffic moving over each is used to justify these costs. This traffie cannot be used a second time in an attempt to justify some other project and its costs.

Too often has the same traffic been counted more than once. The advocates of the St. Lawrence waterway have used traffic to justify that project which had already been used to justify improvements on the Missouri, the Mississippi, and the Illinois waterway, the New York barge canal, and even the Ohio River. Advocates of the Florida ship canal have used traffic to justify it that had already been used to justify the St. Lawrence seaway and the Illinois waterway. The Tennessee-Tombigbee project is expected to steal traffic away from the Mississippi River.

Clearly this is threshing old straw over and over again and somewhere there must be a limit to the use of traffic in this manner. That limit is the end of the project itself. Allocated or credited value represented by the phrase "feeder value" is, therefore, a deceptive thing, a will-o'-the-wisp. It is a spurious value, a kind of fool's gold. It should be utterly discarded.

When feeder value is discarded as an unsound method, as I think I have shown is the case, this project returns to the ratio of costs to benefits of 1.0 to 0.58, on the basis of the Board's own figures. Under such an unfavorable ratio, no justification can be found for it.

Mr. LAWSON. At this time I wish to present to the committee Mr. N. R. Lehmann of Roanoke, Va., general coal freight agent of the Norfolk & Western Railway Co.

STATEMENT OF N. R. LEHMANN, GENERAL COAL FREIGHT AGENT, NORFOLK & WESTERN RAILWAY CO., ROANOKE, VA.

Mr. LEHMANN. Mr. Chairman and members of the committee, my name is N. R. Lehmann. I am general coal freight agent of the Norfolk & Western Railway Co. I now present a statement in opposition to the proposed project. While the statement is short, our time is running so low that I will not have an opportunity, I judge, to read it, but I should like to briefly summarize concerning it.

Inasmuch as the promoters of the canal have claimed that its construction is needed for coal development and survival of coal production and employment in the area involved, my statement shows, with supporting facts, the following three things:

1. That the trend of bituminous-coal production in the so-called tributary area has not only kept fully abreast of, but has surpassed that of either the country as a whole-by that I mean the entire United States or the general producing territory east of the Mississippi River.

2. That the number of employees of bituminous-coal operations in the so-called tributary area, which is the entire Big Sandy, both forks, has been relatively greater than that of the country as a whole. 3. That in the so-called tributary area, again the same, the ratio of actual production to potential production capacity has been higher than that of the country as a whole.

As illustrations of only two things shown in my statement, two graphs have been placed before you gentlemen of the committee. My statement contains full information upon which these graphs are based. I now ask you that you note the graph designated as "Exhibit 2." It shows the bituminous-coal trend since 1923. The blue line shows the trend for the United States as a whole. It will be noted that except for the years 1926, 1942, and 1943 it kept below the 1923 balance level. It barely exceeded that level during those 3 years.

The red line shows the trend of the so-called tributary area. It clearly shows that the production trend for this area was far above that of the total United States, as indicated by the blue line. Now, will you please notice my exhibit No. 7.

Mr. DONDERO. Let me ask the witness whether or not you are offering this evidence to refute the claim made before the committee that this particular area has been penalized because it did not have cheap transportation for coal from that area?

Mr. LEHMANN. That is absolutely the point, Mr. Congressman. It is to show that this area, while it suffered during the depression relatively, it did not suffer as much as the entire United States or that portion of the United States east of the Mississippi River, which producing area competes for some or all of the markets that are proposed to be reached by this canalization project.

Mr. ANGELL. What do you give as a reason for the great divergence in the figures from 1925 to 1929?

Mr. LEHMANN. I don't undertake to give any reason. I wish to explain that these figures upon which this graph is based are figures of the Bureau of Mines of the Department of the Interior.

Mr. ANGELL. You show, however, do you not, that during those years production in this particular area under consideration by the committee far exceeded the production of the other areas?

Mr. LEHMANN. They are trends; yes, sir, it does. And I should like to read my entire statement. It supports those figures.

Exhibit No. 7, I believe you have that before you, shows the trend of employment of the bituminous-coal operation. Again these figures are based upon the Bureau of Mines, Department of the Interior. I show all of the figures upon which they are based, and the authority for them in my statement. I should like to explain them in detail, but I do not have time. The blue line shows the trend for the United States as a whole. The red line shows the trend for the so-called tributary area, and again the comparison is in favor of the so-called tributary area. That is the employment that we heard so much about yesterday.

Here it is proper to mention that the production and employment trends of the bituminous-coal operations for important producing areas east of the Mississippi River have been approximately the same as for the entire United States. I so show in my other exhibit, the trend being substantially the same as that of the United States. I have confined my charts to the comparison with the United States on the one hand the the tributary area on the other.

That is all I have to say about these exhibits. My statement shows a similar comparison, including the range of bituminous-coal production to potential production capacity. The facts as presented by my statement should dispel any illusion of the promoters of the canal that the so-called tributary area has not fared as well concerning bituminous-coal production and employment as have other producing areas, or that it is indeed of preferential treatment from the Government.

The statement shows that the unsupported claims of the advocates of the canal cannot be sustained when confronted with actual facts. These indisputable facts should be convincing that the so-called tributary area without the proposed canal has maintained a highly favorable position as compared with either the country as a whole or the general producing area of which the tributary area is a part; also that this favorable position of the tributary area is such as to not warrant any stimulation in the form of Federal subsidies at huge expense to the taxpayers throughout the entire country, including the taxpayers in the competing producing areas, which have fared not nearly so well. That is all.

(Mr. Lehmann submitted the following paper:)

STATEMENT OF N. R. LEHMANN TO THE HOUSE COMMITTEE ON RIVERS AND HARBORS IN OPPOSITION TO PROPOSED CANALIZATION OF BIG SANDY RIVER, AND TUG AND LEVISA FORKS

My name is Nathaniel R. Lehmann. I am general coal freight agent of the Norfolk & Western Railway Co., with office at Roanoke, Va.

I have been continuously employed by the Norfolk & Western Railway since October 1, 1912. Since August 1, 1915, I have been employed in the freight traffic department in various capacities, including services as chief rate clerk and as chief clerk to the general coal freight agent. For period July 1, 1937, through November 30, 1940, I served as assistant general freight agent, since which time I have served in my present capacity, having charge of all matters pertaining to coal and coke rates.

Others are presenting statements concerning other aspects of the proposed canalization, and my statement is confined to showing that:

1. The claims made by the promoters of the canal that its construction is needed for coal development and survival of coal production in the area involved are without foundation.

2. The bituminous-coal production and employment of bituminous-coal operations in the counties in the so-called tributary area of the proposed canal have been maintained, without the canal, on levels comparing favorably with the United States as a whole or with the balance of the general producing territory of which these counties are a part.

The report of the United States Army engineer correctly states that the commercially important coal deposits of the tributary area occur in Pike, Floyd, Johnson, and Martin Counties, Ky., and Mingo County, W. Va. Where my statement refers to "tributary area," it means these five counties. The exhibits referred to are attached to and made a part of this statement.

Exhibits 1, 3, and 4 show tonnage figures for each year over a period of years. Under columns captioned "Percent of base" the first year, 1923, is shown as "Base," denoting 100 percent. The figure in these columns for each subsequent year indicates the percentage that the tonnage for that year is of the tonnage for 1923. In like manner exhibit 6 shows the average number of employees of bituminous coal operations. These exhibits have been thus arranged for the purpose of portraying the trends since the year 1923, which has been considered the first normal year subsequent to World War I.

I shall now more fully describe the exhibits and comment concerning their contents.

Exhibit 1: This exhibit shows bituminous coal production for each year of the 21-year period, 1923 to 1943, inclusive.

Column 1 shows total production in the United States. But perhaps it may be said that this includes production in remote areas not competitive with the tributary area in the markets that the proposed canal, if constructed, is expected to serve. Therefore, column 2 shows production in the eight States east of the Mississippi River which actively compete for some or all of the markets which the proposed canal is designed to serve. It will be noticed that there is no substantial difference in the relative production trend of column 1 as compared with that of column 2. This being so, I shall, for brevity's sake, limit my comments to comparisons of the tributary area with the total United States production. Column 3 shows the production of the tributary area. Now please consider this production as compared with that of the total United States production shown in column 1.

1926 was the peak production year prior to World War II. For 1926 the total United States production was 101.6 percent of the 1923 production, or an increase of only 1.6 percent. In contrast, for the tributary area the 1926 production was 152.4 percent of 1923 production, or an increase of 52.4 percent.

The lowest annual production during the 21-year period shown was for the year 1932. For the tributary area the production dropped only to 76.6 percent of 1923, or a decrease of only 23.4 percent. But the total United States production dropped to 54.9 percent of 1943, or a decrease of 45.1 percent.

That these comparisons for 1926 and 1932 are typical for the entire 20-year period following 1923 is graphically shown by exhibit 2.

Exhibit 21: This exhibit is a graph showing at a glance comparison of percentage figures shown in columns 1 and 3 of exhibit 1, column 1 being the total United States production and column 3 being the production of the tributary area.

It will be readily seen that during the 20-year period following 1923 the production for the country as a whole, while fluctuating, kept below the 1923 level excepting 3 years, 1926, 1942, and 1943. It barely exceeded the 1923 level in 1926, which was the year of the great British coal miners' strike, with United States coal being used to supply some of the normal British coal markets. It did not exceed

the 1923 level by very substantial margins during the war years of 1942 and 1943 when there were unprecedented demands for coal in this and other countries.

In contrast, it will also be readily noted that production of the tributary area for 13 years of this 20-year period exceeded the 1923 production, and by very substantial amounts except in 1936, 1937, and 1940. It steadily increased to the peak prewar year of 1926. It kept well above the 1923 level until 1931. Furthermore the tributary area continued all through the depression period to maintain relatively higher production levels than did the country as a whole. Even during the depression years of 1936 and 1937 it rose above the 1923 level while the production of the country as a whole never rose to as much as 79 percent of its 1923 production.

Exhibit 3: This exhibit shows for each year of the 22-year period 1923 to 1944, inclusive, bituminous coal tonnages shipped by rail from mines in territory comprised almost entirely of what is generally known as the inner and outer crescents to Lake Erie ports for transshipment via lake beyond those ports;

1 Not printed; on file with the committee.

also, separately, the portions of those tonnages that were shipped from mines located in the C. & O. Railway Kentucky district and the N. & W. Railway Thacker-Kenova group. The inner and outer crescents embrace that portion of the Appalachian region extending from Pennsylvania through the western portion of Maryland, West Virginia, and the southwestern portion of Virginia into the eastern portions of Kentucky and Tennessee.

This origin territory is clearly portrayed by exhibit 111, which is a map entitled "C. F. A. Bituminous Coal Rate Groups." Its legend indicates that the territory shown in pink comprises the inner crescent and that the territory shown in blue comprises the outer crescent. The tonnages shown in column 1 of exhibit 3 "From inner and outer crescents" include not only all of the tonnages from these territories as designated in pink and blue on this map but also include tonnages from all other bituminous-coal mines in Pennsylvania and in Tennessee, which are immediately adjacent to but not parts of the crescents as shown in pink and blue on the map. Therefore, these tonnages actually represent all bituminous coal shipped by rail from mines in Pennsylvania, Maryland, West Virginia, Virginia, and Tennessee, and in eastern Kentucky to the destination territory involved. This map (Exhibit 11) shows areas (in pink) designated as "Big Sandy district," "Kentucky district," "Thacker district," and "Kenova district." The tonnages shown in exhibit 3 from C. & O. Kentucky district consist of tonnages from both the "Big Sandy district" and "Kentucky district," as designated on this map, but the preponderance of these tonnages is from the Big Sandy field and Elkhorn field, designated on the map as "Big Sandy District." The tonnages shown in exhibit 3 from N. & W. Railway Thacker-Kenova group consist of tonnages from the "Thacker district" and "Kenova district,' as so designated on the map.

The entire so-called tributary area is located in that portion of the inner crescent described in preceeding paragraph as the C. & O. Railway Kentucky district and the N. & W. Railway Thacker-Kenova group. Virtually all of the C. & O. Kentucky district is comprised of mines located in the so-called tributary area; however, that district and the N. & W. Thacker-Kenova group include territory adjoining, but not actually located in, the tributary area. But the same lakecargo rail rates apply from all mines in the C. & O. Kentucky district and the N. & W. Thacker-Kenova group.

Promoters of the canal have stressed the unfavorable differences in the lakecargo rates from the tributary area over the rates from northern fields located much nearer the lake ports as presenting a problem to the producers in the producers in the tributary area. They cite (p. 15 of a prospectus prepared by the Big Sandy Valley Association, Inc., and presented at the hearing September 10, 1945, before the Board of Engineers) rates from the northern fields located in the crescents, as compared with rates from the southern fields located in the crescents. Merrill's report (Appendix B of United States engineer report) also, at page 31, makes similar rate comparisons. But Merrill's report, at page 45, discounts the importance of these rate comparisons in the light of the respective lake-cargo tonnages from the two sections.

Bearing in mind that the tributary area comprises only a relatively small portion of the entire inner and outer crescents, as referred to in exhibit 3, let us now consider the tonnages stated in this exhibit.

As shown in this exhibit, there have been substantial increases in these lake cargo tonnages from the inner and outer crescents as a whole. Although there have been some fluctuations, these tonnages have, beginning with 24,348,731 tons in 1923, rather steadily increased to 50,481,686 tons in 1944, which is equivalent to 207.3 percent of the 1923 tonnage.

Although the lake cargo tonnages from all of the inner and outer crescent origins, including those in the tributary area, have more than doubled during the 21-year period following 1923, let us now consider what happened from the origins in the C. & O. Kentucky district and the N. & W. Thacker-Kenova group, of which the tributary area comprises by far the major portion. In 1923 the tonnage from this area was only 798,284 tons. It steadily increased, with some set-backs, to 8,562,024 tons in 1944, which is equivalent to 1,072.6 percent of the 1923 tonnage; or, stated differently, the 1944 tonnage was more than 101⁄2 times the 1923 tonnage.

During the 21-year period following 1923, the tonnages from the C. & 0. Kentucky district and N. & W. Thacker-Kenova group amounted to percentage proportions ranging from 8.7 percent, in 1924, to 17 percent in 1944, of the total tonnages from the entire inner and outer crescents. The butuminous coal reserves of the C. & O. Kentucky district and N. & W. Thacker-Kenova group are

1 Not printed; on file with the committee.