mines. That is true of the Norfolk & Western; they mine a great deal of their own coal. The coals are coming into broad use to blend with lower grade coal to produce mixes for byproduct coke ovens. The railways have charged excessive freight rates, causing inequitable differentials, and in doing so they have profited at the expense of the producer. [Reading:] This district is dependent on the Norfolk & Western Railway for an outlet to the markets. This railway and the Chesapeake & Ohio Railway urge that their transportation service is adequate and abundant and should not be supplemented by river transportation. That such service is neither adequate nor abundant is testified to by the fact that producing coal companies in the district have been compelled to invest large sums of money to provide ocean carriage into New England and lake carriage into the Northwest. Otherwise, because of noncompetitive freight rates, these very large markets would not be available to our district. Very much to the advantage and profit of the Norfolk & Western and Chesapeake & Ohio Railways, and with the approval of the Interstate Commerce Commission, a system of freight rate differentials into both the Great Lakes markets and the markets of the Middle West and the Northwest have been built up. These differentials vary from 67 cents per ton to the lakes from the Freeport district in western Pennsylvania to $1.89 per ton into Chicago from the northern Illinois district in Illinois. The tendency of these differentials is upward rather than downward. The cost of producing coal in the southern districts, due to conditions beyond the control of the producer in the establishment of wage scales, has been inequitably increased in relation to the cost of production in competitive coal-producing districts, and for this reason a production cost differential in favor of the competitive districts must now be added to the freight-rate differentials. For these reasons the entire industry in the southern district is confronted with a severe emergency from which there is no escape unless we can meet competition by cheaper transportation costs. If these differentials are not overcome, large segments of markets will be lost by the southern district. This constitutes a serious emergency, which will bring about a chaotic condition affecting the Pocahontas and the southern districts as soon as prewar normals are resumed. The Chesapeake & Ohio Railway has already established water rates on smokeless coal from the New River district to the head of navigation on the Great Kanawha and to various points from mines on the Kanawha River and to Catlettsburg and Clyffeside on the Ohio River for byproduct and steam coal from the Levisa Fork, thus affording a river outlet for both the New River smokeless, Kanawha, and Levisa Fork coals. No similar rates have been named by the Norfolk & Western. River transportation has already been provided coal producers in the competitive districts, namely, western Pennsylvania, eastern Ohio, northern West Virginia, the Kanawha, New River, Logan, western Kentucky, southern Indiana, southern Illinois, and northern Illinois districts, and records show that the Pocahontas field has lost business in certain markets to the producers in some of these districts shipping by water. The Big Sandy River project has been carefully studied and designed by the most highly trained and experienced group of river-transportation experts in the United States, namely, the United States Engineer Corps. There are about 5,000 miles of river channels now included in the inland-waterways system of the United States, all of which were designed by this group and all of which are in successful operation. It is estimated by the United States Engineer Corps that there is a riverside market for 35,000,000 tons of coal of the character produced in the Pocahontas and southern districts, and that with its canalization completed, the mines served should secure a large percentage of this 35,000,000-ton market. And, further, the addition of approximately 3,000,000 tons which could be shipped from the Pocahontas district at a saving of 89 cents per ton, or $2,670,000,000, will add materially to the savings estimated by the United States engineers. Mr. DONDERO. Is there any other type of bituminous coal that is as smokeless as Pocahontas? Mr. GARVEY. A comparable coal would be the anthracite coal mines in eastern Pennsylvania. Mr. DONDERO. I am eliminating that, because that is hard coal as we know it in the Northern States. Mr. GARVEY. There is a little bit out in Arkansas, a little small spot of it there that is very low in volatile but generally speaking there is no other deposit that has lower volatile coal than we have. Mr. DONDERO. The reason I asked that is this: At least in my section of the world, Pocahontas coal is used almost exclusively for residential purposes and we cannot buy it because it is not to be had, regardless of the price. Mr. GARVEY. I am very familiar with your situation, Mr. Dondero. We ship millions of tons into the Detroit market. Mr. DONDERO. I am trying to find out if you have any competition in your field by another type of coal that is at all comparable with the type that you sell to us. Mr. GARVEY. I do not think so. I do not believe there is any coal that can compare with ours, but freight rates and other things keep our price up in our market. Oil and gas are our greatest competition there now, gas in particular, which was referred to a few minutes ago. Mr. DONDERO. It is a different type of fuel that is in competition. with you rather than a rate of coal that is in competition with you? I mean by that, some other kind of coal. Mr. GARVEY. That is right. The mine is on the Norfolk & Western Railroad, and they ship to Detroit on the same rate that we do, and that coal is very similar and it is very high-grade domestic coal. That is what you want it for. Mr. RANKIN. How far is that on an air line from the city of Washington, here? Mr. GARVEY. I think it is in the neighborhood of 300 miles. That is the New River, and we are 50 to 100 miles further south. There are mining operations continually from the New River field continually through the Pocahontas. Mr. RANKIN. You could generate power from that coal at about 2% mills per kilowatt-hour? Mr. GARVEY. I am not familiar with the exact cost of generating power. I make Mr. RANKIN. I am familiar with it. I have examined every witness coming before this committee and I have gone through this fact many years. I notice in one of these papers here criticizing the operations of the Tennessee Valley Authority that you can generate that power with coal in this field and lay it down in Washington or Baltimore or any other city within this distance at a cheaper wholesale rate than we are paying in the entire Tennessee Valley area. that statement because the enemies of hydroelectric power try to pit the coal producers against the advocates of water power, of which I am one. I want to call attention to the fact that you can generate power for 1,000,000 kilowatt hours for every dollar you pay for coal at the mouth of the furnace. That is the best coal in the UnitedStates, 14,000 B. t. u.'s to the pound, and that is just about the limit. You can generate the power for 2% mills a kilowatt hour. You can transmit it for 0.4 of a mill a kilowatt hour for every 100 miles. Three hundred miles would be 10 mills. Add to that your 2% mills, and you will see you will get it below 4 mills a kilowatt hour, laid down 300 miles from the mine. The average we pay for wholesale power in the Tennessee Valley today is 4.44 mills per kilowatt hour. You can take the coal produced in your area and in other coal fields, and generate power and distribute it at a Tennessee Valley Authority rate all over the country. Mr. DONDERO. Do they use your power-your coal for the generation of power or is there a cheaper grade of coal which is used for power? Mr. GARVEY. They do use our coal for the generation of power. Right here in the city of Washington, I think there is more of our coal consumed for that purpose than any other grade of coal. We shipped 50 cars here the other day. You gentlemen are asking where the coal is today and why we haven't been doing this today or doing that today. We have been under the supervision of Solid Fuels. Solid Fuels has told us where to ship coal for the last 3 or 4 years. They approved every contract we made and we made a rule that we must ship to dealers and others that we had been shipping to in the past. For instance, in 1943, they shipped the same amount of coal, or a percentage of it, that they did to that same dealer and consumer in 1942. It prevented you from using any other method of transportation or opening up any other market. Things have been at a standstill in that respect for the last 3 or 4 years. Mr. DONDERO. Could you do a better job if you took the chains off? Mr. GARVEY. No; I would say Solid Fuels did a pretty fair job. Mr. DONDERO. Do you mean during the war? Mr. GARVEY. Yes, sir. We will likely be under their supervision for several months yet. As long as this emergency exists, and I think Solid Fuels has been doing a good job and will do a good job, but we are shooting now at normal times. Mr. RANKIN. You could generate the power and ship it over here much more cheaply than you could ship coal over here and then have the power generated. Mr. GARVEY. There is power being generated on the Kanawha River today, and I know the connections have been made to have it shipped to Detroit. Mr. RANKIN. Will it be transmitted by wire? Mr. GARVEY. Yes; and it is going to Detroit, I think, today. [Reading:] The great system of inland waterways in the United States was undertaken by the Congress to offset the tendency of industry to migrate out of the interior States into the coastal areas adjacent to the two oceans and the Great Lakes because of low cost of water transportation. Decentralization of industry and national defense from the atomic bomb are added reasons today to encourage and promote diversified industries in the midcontinent area. In order to retain our markets and participate in the expansion of industry in the midcontinent area, we must have lower transportation rates. Tying the Big Sandy Valley coal fields, including the Pocahontas field, into the great midcontinent areas by means of canalizing the Big Sandy River and its main tributaries accomplishes this purpose and will provide the low-cost transportation essential to the Valley States; and Whereas it is essential that southern coal areas be tied into the great inland waterways system; its vast coal reserves insure a long life to the Big Sandy project; the United States Engineer Corps has estimated 24 billion tons of mineable coal within 10 miles of the river without attempting an estimate of the coal reserves in other areas accessible to the river, such as the Pocahontas and Tug River districts, or even in the immediately adjoining counties: Now, therefore, be it Resolved (1) Because the Big Sandy Valley is a logical link in the inland waterways system; and (2) Because the project is economically sound; and (3) Because the Pocahontas district has no other feasible river outlet; and (4) Because of the inequitable and unfair freight rates and relatively high cost of production making reduced costs to the consumers essential to avoid loss of markets and resulting unemployment and labor disputes; and (5) Because of the necessity to furnish jobs in the coal fields under prewar conditions; and (6) Finally, because the project has the unqualified support of the United States Engineer Corps in which the members of this association have great confidence: The Pocahontas Operators Association hereby approves and recommends the Big Sandy Valley canalization project and urges its early completion; and be it further Resolved, That copies of this resolution be sent to the United States Board of Engineers, our Representatives in Congress, and the Governors of West Virginia, Virginia, and Kentucky. Certified to by Attest: Bluefield, W. Va., October 29, 1945. O. L. ALEXANDER, President. W. E. E. KOEPLER, Secretary. Certain operators on the C. & O. Railway in the Kanawha and Logan fields have, at this time, rates to the river. Some few operators can dump their coal directly into barges while other operators have varying rates, none of which exceeds 55 cents per ton to the river for interstate shipment. Certain New River operators mining smokeless coal on the C. & O. Railway have a rate of 55 cents to Mount Carbon located on the Kanawha River. Also there are rates of 55 to 65 cents per net ton from operations in the Big Sandy District to the Ohio River. These rates are excessive and will be corrected if the Big Sandy is improved as recommended by the United States Board of Engineers. Neither the smokeless operators mining coal in the Pocahontas-Tug River districts nor the high-volatile operators on the N. & W. Railway have any rate for river shipment, while both low and volatile shippers on the C. & O. have established rates for river shipment. The Pocahontas and Tug River operators mined in 1944, 32,211,318 tons. A large percentage of this tonnage was shipped to eastern tidewater where it was carried by boat to points on the New Jersey, New York, and New England coast. The boats, barges, and docks are largely owned by operators producing coal in the smokeless fields. The operators found it necessary to make these large investments running into millions of dollars in boats, docks, and facilities in order to move their product. Likewise smokeless shippers as well as highvolatile shippers ship large tonnages of coal by lake to the Northwest, where it was necessary also to make large investments in docks and facilities, railway freight rates being prohibitive. The railroads, the N. & W. and C. & O., who are opposing the expenditure of Government money in this instance to canalize the Big Sandy, argue that Government money should not be spent in this instance because their railroads furnish sufficient and adequate transportation facilities for the handling of the coal mined in the territories affected. I bring this point to your attention for the purpose of showing that these railroads furnish only part of the transportation facilities to points where extremely large percentages of the coal mined in the districts affected moves. The operators themselves, as well as others interested in transportation facilities only, other than railroads, have invested millions of dollars in facilities to assist in the movement of coal from the pit mouth to the ultimate destination. My company operates seven boats out on the Atlantic to carry coal from Hampton Roads to New England points. It has cost us several million dollars to help those railroads move that coal. Mr. RANKIN. What were those points? Mr. GARVEY. Hampton Roads to New England points. Mr. RANKIN. How do you get it to Hampton Roads? Mr. GARVEY. It comes over on the Norfolk & Western Railroad from my company. Mr. RANKIN. What does it cost you per ton-mile to haul it by water? Mr. GARVEY. We are moving it up there by water from Hampton Roads to Boston for 85 cents a ton. Mr. RANKIN. How many miles is that? Mr. GARVEY. I do not know. Mr. RANKIN. I believe it is several hundred miles. Mr. GARVEY. Yes, sir; it is. The rates by rail are prohibitive. We could not ship it by rail at all. Mr. RANKIN. How much does it cost by rail to ship it to Hampton Roads; do you know? Mr. GARVEY. It is $2.63 a long ton. Mr. RANKIN. Do you mean $2.63 for 1 ton? Mr. GARVEY. It is $2.63 a long ton from the mines to Hampton Roads. Mr. RANKIN. How far is that? Mr. GARVEY. About 400 miles. I would like to read a statement showing tonnages originating on the C. & O. and N. & W., separately, for the calendar year 1944. [Reading.] In the calendar year 1944 the Chesapeake & Ohio Railway originated on its own line 65,527,326 net tons of revenue bituminous coal. Of this tonnage 18,339,161 tons terminated on the Chesapeake & Ohio Just think, that is only 27.9 percent of the coal that originates on the line, that terminates on their line. It all goes to boats, barges, and other railways. and 47,188,165 tons were delivered to connecting carriers. In that year the Chesapeake & Ohio received from connecting carriers 12,789,044 tons of bituminous coal of which 1,243,030 terminated on the Chesapeake & Ohio and 11,546,014 tons were turned over to connecting carriers. Total revenue bituminous coal handled by the Chesapeake and Ohio in that year was 78,316,370 tons. Norfolk & Western Railway in 1944 originated on its own line 49,241,622 net tons of revenue coal and of this tonnage 9,499,139 tons terminated on the Norfolk & Western and 39,742,483 tons were delivered to connecting carriers. That is only 19.3 percent of the coal that originates there, terminating on their own line. I put this in the record to show you gentlemen that when we are told that they furnished the facilities, all that are necessary for conveying this coal, it is not a true statement, because |