1

some time ago, and today by motion duly made and seconded, a vote was taken which resulted 28 for said project and 2 against. You, therefore, see what our club thinks about the matter.

In accordance to the order of the club, I was to furnish this information to you that you might present it at the hearing, which I understand is to be held soon. Yours very truly,

LUTHER L. LYCAN, Secretary of Louisa Rotary Club.

THE FIRST NATIONAL BANK OF LOUISA,
Louisa, Ky., May 3, 1946.

R. L. VINSON,

C. T. BRITTON,

Louisa, Ky.

GENTLEMEN: This is to advise you that the Louisa Business Men's Club, an organization of Louisa business and professional men of some 43 members, discussed the canalization of the Big Sandy River at a dinner meeting Monday night, April 29. By motion duly made and seconded a vote was taken which resulted in unanimous vote in favor of this project. You therefore see what this club thinks about this matter.

In accordance with the order of the club I was to furnish this information to you that you might present it at a hearing which I understand is to be held soon. Very truly yours,

JAS. B. HUGHES, Secretary and Treasurer, C. K. VANTILLING, President.

THE MEETING OF MINDS AND MATERIALS TO CREATE NEW OPPORTUNITIES FOR INDUSTRY IN MIDWEST AMERICA

(Published by Big Sandy Valley Association, Inc.)

Industrial opportunities are often the result of a fortunate location--the proximity of raw materials and of low-cost power and a sufficiently large market within low-cost shipping range.

But when all of the manufacturing essentials are not available in any one location, though the market and demand do exist, the enterprising businessmen and financiers frequently accomplish wonders by the boldness and magnitude of their ideas-by their ability to survey the entire country and to envision a meeting of materials and productive facilities under favorable circumstances.

Before materials and manufacture can join, however, there must be a meeting of minds. To stimulate the imagination and thinking of industrial and financial leaders in midwest America is the purpose of this book. It contains a wealth of information, much of which is aimed directly at creating a diversified metallurgical industry in the Mississippi Valley, but which also suggests many possibilities to businessmen in other fields.

In the particular case described herein, in considerable detail, one raw material, coal, would be brought by economical water transport to the localities where the other materials and market exist. With other industries the situation might be exactly reversed and it would pay certain lines of industry to transport raw materials to the Big Sandy either for processing or where coal, natural gas, petroleum, and salt brines abound. There the finished product could be made under excellent conditions and shipped to markets south, east, and overseas. Correspondence is invited from those firms and industries who are interested in the opportunities suggested by this book, so all may work together to make the Big Sandy waterway a reality and an integral, important unit in America's waterways system.

BIG SANDY VALLEY ASSOCIATION, INC.,

Ashland, Ky.

Every businessman, farmer, banker, manufacturer, and public utility executive in that important section of the United States illustrated on the facing page will find information of interest and profit to him in these pages.

The true test of any project is not in the claims of its proponents and opponents, but rather in its application to specific industries. After ascertaining how com

pletely it will supply an urgent need, a detailed study of what benefits a project will bring is essential.

The method used here in studying the benefits of the Big Sandy waterway to a diversified metallurgical industry and other industries may be applied with profit to many other lines of business. For that reason it should prove interesting to people in many different industries.

FIRST THE NEED

The value of a diversified metallurgical industry to the Mississippi Valley is well described in the statement made by Lachlan Macleay, president of the Mississippi Valley Association, before the United States Board of Engineers, September 10, 1945, from which the following is quoted:

"It is in the interests of the national security as well as of a sound economy to develop in the Mississippi Valley a diversified metallurgical industry. This development is dependent upon the abundant and economic supply of three basic raw materials-iron ore; low sulphur, high-grade coking coal; and high-grade limestone. These three constituents are responsible for the industrial growth of the Chicago, Birmingham and Pittsburgh steel centers in this country, the Birmingham and Manchester centers in England, the Ruhr Valley in Germany and the Donetz Basin in Russia.

"The Upper Mississippi Valley has abundant supplies of two of these vital raw materials-iron ore and limestone. It lacks high-grade coking coals and low-cost water transportation to make them available. The coals of West Kentucky, Indiana, and Illinois, which are close to the inland waterways, are all noncoking coals. The only supply of coking coal now readily available is produced in the southern high-volatile and smokeless districts and moving to the valley either by an expensive all-rail haul or via the Great Lakes ports. The coking coals of western Pennsylvania and northern West Virginia are all substantially absorbed by the steel industries in the Pittsburgh districts.

"Until low-cost transportation can be provided to move high-grade coking coals into the Mississippi Valley, its development of a diversified metallurgical industry is handcuffed by high rail rates. The improvement of the channels and harbors of the Great Lakes were undertaken primarily to provide low-cost water transportation of the high-grade iron ores from the Mesabi ranges into the Pittsburgh district. The canalization of the Big Sandy River to provide an inland water link with the Mississippi system will make possible the development of a metallurgical industry in the Upper Mississippi Valley.

"It is logical to expect that with low transportation rates of high-grade coking coal, that many cities in the upper valley will develop metallurgical industries. The Tricities industrial area is a good example. The Tricities are built on large deposits of high-grade limestone. They now consume large quantities of finished steel products manufactured in Chicago and Pittsburgh. With low-cost fuel available and reasonable joint rail-river rates on ore from the Cuyuna field, there is the opportunity for the development of large blast furnaces in this area.

"St. Louis is another logical meeting place for iron ore and the high-grade coking coals of the Big Sandy Valley. Such a union can be expected to stimulate metallurgical industries in this area".

COAL TRANSPORT COSTS TOO HIGH

The need for lower delivered prices on coal was also stressed by A. D. Strong, secretary of the Upper Mississippi Waterway Association, in his testimony before the United States Board of Engineers on November 14, 1945, in these words: "There is a tremendous amount of coal consumption in the area served by the upper Mississippi river. It has been estimated that the annual coal consumption of the Northwest which may be served by the upper Mississippi River is in excess of 16,000,000 tons. The canalization of the Big Sandy River would create a competitive all-water route which would result in a tremendous saving to this large solid fuel coal-consuming area. It is difficult to estimate the untold benefits not only to industries but to communities and farmers in this large agricultural

area.

The facts regarding the demand for a saving on coal costs are also set forth in the following quotation from a letter signed by A. W. Kleinschnitz, secretary of the Upper Mississippl and St. Croix River Improvement Commission of Minnesota, to the United States Board of Engineers:

"The Upper Mississippi and St. Croix River Improvement Commission of Minnesota was created by the Legislature of the State of Minnesota under a joint resolution approved April 8, 1927, for the purpose of developing and promoting river navigation to Minnesota. In addition to Minnesota the surrounding States of Wisconsin, Iowa, North Dakota, and South Dakota also have the benefit, especially Iowa which is located on the banks of the Mississippi, and Wisconsin, located on the banks of the Mississippi and also on the St. Croix River.

"At present our inland waterways system is dependable with maintained channels in the Mississippi as far north as Minneapolis, Minn., and in the St. Croix as far north as Stillwater, Minn., and in the Minnesota River as far as New Ulm, Minn. On these dependable navigable rivers we have any number of municipal and private owned terminals located in the cities of Winona, Red Wing, St. Paul, Minneapolis on the Mississippi, Stillwater on the St. Croix River, and Cargill on the Minnesota River.

"Minnesota and the great Northwest is far removed from the source of solid fuels, especially the better grades of eastern coal. To serve these communities at present it must move via circuitous routes; that is, via rail, Great Lakes ports to Duluth and Superior, then again via rail to points in Minnesota and surrounding territory. Movement via this route is expensive and indirectly responsible for the high cost of eastern solid fuels in this area.

"Considering the all-rail rate on smokeless coal to this district against the river route, the possibilities are that there will be a saving of $2 per ton to the consumer and we believe that this saving to the public would be sufficient to obtain a far greater coal tonnage and value, and we are confident of a great volume of river tonnage increase to this area."

Further_confirmation is also given by Herman Mueller, secretary-general manager, Port Authority of the City of St. Paul, whose statement reads:

"The Port Authority of St. Paul is a municipal commission created and existing under and by virtue of the laws of the State of Minnesota, with jurisdiction over the municipally owned river docks and terminal facilities in St. Paul. By statute, the port authority is specifically charged with the duty to foster the general welfare of the port district, increase the volume of our commerce, and promote the efficient and economical handling thereof.

"These river docks and facilities, financed through municipal bond issues, are for the sole purpose of placing our community and tributary territory in position to secure the benefits of low-cost water transportation. They are adequate to handle a large tonnage of both bulk and package freight. Similar publicly owned facilities are available in Minneapolis and at other points along the upper Mississippi River. We are, therefore, seriously and directly interested in any economically sound proposal to extend the navigation channel of the Mississippi River system of inland waterways.

"The Twin Cities of Minneapolis and St. Paul consume in excess of 2,000,000 tons annually of bituminous coal. This is exclusive of railroad fuel. Because of our climate there is a very large domestic, as well as industrial demand for high-grade fuel. We are far removed from all coal fields and the cost of transportation is a major factor in the delivered price of that essential commodity.

"We have always been recognized as a high-grade coal market and naturally are interested in any reasonable proposal that will reduce the cost of transportation from the sources of all high-grade fuel.

"As is well know, the Twin Cities, despite the handicap of distance and high freight rates, are a large manufacturing community. Our raw materials and finished products must be transported long distances. We are thus place at a serious disadvantage in competition with cities to east and south of Minnesota. That is why we worked so hard over a considerable period of years to secure the 9-foot channel in the upper Mississippi River, which happily became a reality in 1940. Obviously, coal is one of the principal commodities that now reaches the Twin Cities and other upper-Mississippi communities over that improved waterway. "In past years when transportation rates and mine costs for coal were on a much lower plane than today, the handicap of our industries, to which I have already referred, was not so severe as it is today. Under present conditions, and looking into the future, we must take advantage of every possible opportunity to reduce the cost of assembling materials and distributing the products of our factories. An all-water route via the Mississippi and Ohio Rivers to the Big Sandy Valley will give us a strongly competitive route and unquestionably reduce the cost of that high-grade coal delivered in our bins."

BENEFITS ARE WIDELY DISTRIBUTED

These quotations apply primarily to the upper Mississippi Valley. Benefits do not stop there, however. Possible benefits to the lower Mississippi Valley as well are indicated in the following extract from the comprehensive statement of the Department of Public Works of the State of Louisiana entitled "The Case for the Red River Lateral Canal." This project extends from Shreveport, La., for 175 miles southeast to the mouth of the Red River, emptying into the Mississippi River 71 miles north of Baton Rouge, La., and 772 miles south of Cairo, Ill.

In addition to its petroleum and natural-gas industry, the Red River Valley has begun the development of its iron-ore resources which are reported to be substantial. A large initial plant has been constructed near Daingerfield, Tex., consisting of an ore-washing plant, a calcining plant, and coke ovens with a byproduct plant and a blast furnace. The statement of the Department of Public Works, State of Louisiana, makes the following very interesting claims for this plant:

"The coke production capacity at Daingerfield is about 405,000 tons for foundry coke, and about 440,000 tons per year for furnace coke. (One and six-tenths tons of coal are required to make one ton of coke.) Of this production, the Southwest and West, after the war, can probably absorb not over half; the remainder must find markets to the north and east or in Latin America.

"To sell coke east and north of Daingerfield, lower-cost transportation than that presently available must be had. If water transportation is made available, the management estimates that about 200,000 tons of coke would be moved out from Daingerfield plant by barge or other waterway facilities each year.

"The present source of coal is in Oklahoma, but it is conceivable that after the war it might be more economical to secure coking coal from Alabama or West Virginia and move it by water transportation than to continue to import by rail from Oklahoma. If this possibility is realized, the incoming-coal movement over the Red River lateral canal would amount to approximately 550,000 net tons per year.

"It seems probable that a low-cost coking coal will be necessary before there can be much development of the iron industry in this area. Coal could be moved from southern Illinois to Shreveport with a freight cost of approximately $4.50 and from West Virginia or Birmingham with a freight cost of approximately $5.50 per ton."

(The Oklahoma coals referred to above are not byproduct coking coals in type, but more nearly resemble anthracite and are not adapted to coking requirements. According to the Office of Price Administration, the composite cost of production in the Oklahoma district is $1.40 per ton higher than in the Big Sandy district.) The Big Sandy coals are admirably adapted and are logical to the needs of the Red River district. The estimated cost of delivering Big Sandy coal to Shreveport by river, if and when the canalization program is completed, is $3.50 per ton, or $2 per ton less than the above estimated cost of delivering a less desirable coal from Birmingham. If a back-haul movement of calcined ore into Granite City can be worked out as stated, such a movement would reduce the cost both ways for the incoming coal and outgoing ore.

From the above it is fair to assume that the influence of the canalization of the Big Sandy may very well reach down into the deep South and become the vital factor in a large steel-making industry in the Red River Valley, thus still further widening the scope of the Big Sandy Valley project.

CHICAGO VITALLY AND FAVORABLY AFFECTED

Chicago and her industries are vital to the interests of the Mississippi Valley and her welfare is interwoven with the welfare of the entire Valley. Her industries may very well be expected to furnish a return haul movement on up-bound coal which will substantially lessen the over-all cost of water transportation throughout the Valley. The following statement of basic factors flowing from the Big Sandy waterway and their relation to Chicago are pertinent to this study. According to the records of the National Bituminous Coal Commission, average annual rail shipments into the Chicago market areas from the southern coal districts during the 5 years preceding World War II were 8,932,600 tons.

If it were possible to deliver all of this coal to Chicago consumers by river at the estimated savings of 80 cents per ton as set up by the United States Engineer Corps, the total savings from the Big Sandy project to Chicago alone would be $7,146,080 per annum. Owing, however, to the expense of geting from the river

barges to the consumer plants, it is not believed that such a savings can be accomplished. There can be no question of reasonable doubt, however, that an enormous savings will be realized by Chicago consumers.

The benefits to Chicago do not end there however. In a review report submitted to the Chief of Engineers in the latter part of 1944, (1 year before reports had been completed on the Big Sandy project by the Ohio River division engineer) by the division engineer of the Great Lakes Division, United States Engineer Corps, recommending the enlargement of the Calumet Sag channel and extending same to a junction with the Indiana Harbor Canal, thus providing for deep lake draft in the Indiana Harbor and the direct interchange of cargo between river barges and lake carriers, the following statements occur:

There is a growing demand for a barge-to-boat transfer of coal in the vicinity of Chicago. When the Calumet Sag route to connect the Illinois waterway with lake navigation at Calumet and Indiana Harbors is improved, it is expected that there will be a large movement of finished products south and of raw materials north to serve the large industrial region in the vicinity of these harbors.

"With reference to the pending Calumet Sag project, the following communication from D. P. Block, president of the Inland Steel Co. is significant:

666* * * at the present time large tonnages of coal are shipped to the steel plants of the Chicago district, both by rail and by rail and lake from lines in West Virginia and eastern Kentucky. With the development of this waterway, it would be possible to move this coal by barge from points on the Ohio River to the Chicago district at a very great savings in cost. Loading points have already been provided for at Catlettsburg, Ky., and at other points, which will be prepared to handle this movement. Our company alone ships an annual tonnage of about one and one-half million tons from its mine at Wheelwright, Ky. (on the Levisa Fork of the Big Sandy River) and is greatly interested in the potential saving offered by river transportation.

"Both the American Rolling Mills Co. and the Wheeling Steel Corp. have blast furnaces on the Ohio River at Ashland, Ky., and Portsmouth, Ohio. These furnaces consume, roughly, 12 million tons of ore per year, and there is no doubt that they would be interested in the saving resulting from the transportation of this ore by water. This would mean that barges carrying coal from the Ohio River to Indiana Harbor would have a back-haul of ore.'

"All of these possibilities would be opened up by improvement of the Calumet River and Sag Canal at least as far east as the Indiana Harbor Canal."

It is only a question of time until this Calumet Sag Canal project is completed and the estimated down-river movement of iron ore is accomplished. This ore will constitute a bulky back-haul to balance the up-river movement of coal out of the Big Sandy, thus materially reducing the cost of moving coal into Chicago, and at the same time, reducing the cost of the iron-ore movement into the great steel mills of the Ohio Valley.

AGRICULTURE PLAYS BIG PART

Agriculture is the dominant industry of the upper Mississippi Valley, which constitutes the "grain bin of the Nation." Agricultural products, such as grain and hay can be successfully transported in open-top barges equipped with movable hatch covers or tarpaulins and used for delivering coal to the upper Mississippi terminals. These products, moving not only into the industrial districts of the Atlantic seaboard, but to the Atlantic ports for export will find their shortest and most economical route via the up-river terminals on the Big Sandy. As a backhaul commodity, balancing the up-river movement of coal, the transportation cost both ways will be reduced to a minimum to the great advantage of both commodities. An active interest is already being taken in this movement by large grain interests.

A LARGE COAL OPERATOR ENVISIONS THE ENTIRE PROGRAM

A large coal operator, Mr. O. L. Alexander, president of the Pocahontas Coal Operators Association and the Pocahontas Fuel Co., of the Big Sandy Valley, has envisioned this entire program and testified in part in a carefully written letter to the United States Board of Engineers in Williamson, W. Va., on October 22, 1945, as follows:

Certainly I am strongly in favor of the Big Sandy Valley canalization project. It is gratifying that the United States Engineer Corps, after 5 years of exhaustive study and analysis, has found this project is feasible and economically justified.