Mr. GARVEY. I want to say that we can deliver coal from a Pocahontas field by boat into the territory where we ship millions of tons as I just recited, over the Great Lakes, in Minneapolis, for $2.93 a ton cheaper than the cheapest rate that is in effect just now. Mr. RANKIN. Do you mean by that if the waterway is developed? Mr. GARVEY. Yes, sir. I would like to call your attention to a most important item in transportation costs, the all-rail rate on low-volatile coal to Cincinnati is 10 cents higher than the high-volatile rate. In Logansport, Ind., it is 25 cents higher. The all-rail freight rate on a car of coal from the Pocahontas district moving in the same train with a car of coal loaded in the Williamson district delivered in Cincinnati would have a freight charge of 10 cents per ton higher. If the same two cars moved on to Chicago, smokeless coal would have a 20 cents per ton higher freight rate and to many other points at a 25 cents or 30 cents per ton higher freight rate than the car moving from Williamson. It is very hard for a coal operator to understand this inequality. Low-volatile operators have been laboring under this handicap for years, and the railroads have done nothing to correct this situation. I would like to submit at this time for the record a prospectus numbered 1, which was prepared by the Big Sandy Valley Association. Mr. PETERSON of Georgia. Without objection, it will be included in the record. (The document referred to is as follows:) THE BIG SANDY VALLEY ASSOCIATION, INC., PIKEVILLE, KY. IMMEDIATE OBJECTIVE The immediate objective of the Big Sandy Valley Association is to make seaports out of Pikeville and Williamson. This objective can be accomplished by securing the canalization of the Big Sandy River from Catlettsburg to the proposed heads of navigation at mile 126 above Pikeville on the Levisa Fork and mile 92 at Sprigg, about 10 miles above Williamson, on the Tug Fork. This represents a total improved river mileage of substantially 200 miles. Map No. 1 on the preceding page shows the two forks of the Big Sandy, the Levisa Fork and the Tug Fork, and their relation to the Ohio River. The tentative location of a system of 10 locks and dams is shown. The final location and number of dams will not be permanently established until the Big Sandy project has been approved by Congress and money appropriated for the final design. The river mileage from the mouth of the river at Catlettsburg is shown and also the principal towns and operating railways. LOCATION AND EXTENT The Big Sandy Valley occupies the northeastern corner of the State of Kentucky and the southwestern corner of the State of West Virginia. The Tug Fork and the Big Sandy River is the boundary line between these two States. In addition to other valuable raw materials such as oil, gas, salt brines, and fire clay, the valley contains vast deposits of the highest grade of smokeless, byproduct, coking and domestic coals in the United States and probably in the world. These coals are essential to the highly industrialized communities of the Middle West and the Northwest. There were 58,017,413 tons of this type of coal consumed by these communities in 1943. (This figure includes lake shipments.) Coal is stressed throughout this statement for the reason that it offers the greatest promise of river tonnage. Substantial tonnages of other commodities will no doubt develop. The valley is generally wide with low-lying mountains on either side of wide reaches of flat bottom land. The climate is mild. A splendid system of concrete highways has been built. Good schools and churches characterize the cities. The citizenship is predominately American of Anglo-Saxon descent. The people are progressive and aggressive. RIVER TRANSPORTATION River transportation is a comparatively new industry in the United States although it has been effectively used in Europe for centuries. Previous to the canalization of the Ohio River the channels in the Mississippi Valley States were not dependable and year around navigation was impractical. Single unit packet boats had a precarious existence, in spite of which a substantial number were in Not until the opening of the Ohio River and the coming of the modern, high-power tow boats and large steel barges (photographs of which are included), could a dependable, round-the-year service be maintained except when closed by ice. Growth has been phenomenal in spite of the continued depression since 1929 during which year the canalized Ohio River was dedicated. use. 1 Map No. 2 on the preceding page shows the extent of the present improved inland waterways system, and its relation to the various production districts of the coal industry. These production districts, identified by number, are shown in the cross hatched areas. The improved portions of the waterways are indicated by the heavy lining. The Ohio and the Mississippi, extending from Pittsburgh to the Gulf of Mexico, is the trunk line of this system. The important feeders are the upper Mississippi from Cairo to Minneapolis, the Illinois from Alton, Ill., to the Great Lakes at Chicago, the Missouri from St. Louis to Sioux City, Iowa, and the Intracoastal Canal from Corpus Christi, Tex., via New Orleans, to Pensacola, Fla. The Warrior, Tennessee, Cumberland, Great Kanawha, and the Monongahela are among the substantial tributaries. The entire system comprises over 5,000 miles of standardized, improved, dependable waterways. The relative location of the Big Sandy River project is clearly indicated on this map. Once this river is canalized and put on a parity with other rivers in the system, the Big Sandy will become one of the most dependable feeders of the entire system. Certainly if other rivers as indicated, are entitled to these improvements, the Big Sandy is entitled to similar consideration. With her enormous, high-grade coal reserves and splendid industrial possibilities she should and will become an outstanding tonnage producer. Some conception of the magnitude and phenominal growth of river transportation can be had from the accompanying diagram which shows the ton-mile record for the period 1932-42. Owing to war conditions similar data are not available for the past 3 years. Tonnage has increased substantially during these years and a great contribution has been made by the rivers to the war effort. It is submitted that an industry which can show 290 percent increase during 11 years of the most depressed period in the history of the Nation is fundamentally sound and a great asset to the communities served. The Ohio River tonnage increased from 16,692,331 tons in 1933 to 38,280,812 tons in 1942. Likewise the tonnage on the Mississippi increased from 25,037,907 tons in 1935 to 36,242,908 in 1942. The most spectacular increase recorded is that of the Intracoastal Canal from 5,753,919 tons in 1937 to 22,045,000 in 1943. It is interesting to note that 33,835,980 tons were moved on the Monongahelia River alone in 1942. These waterways not only afford cheap transportation service between local terminals but they provide access to the Gulf of Mexico and the Great Lakes. Unbroken cargos of raw sulphur are now moving from Galveston, Tex., into the chemical plants of the great Kanawha Valley. Vast quantities of petroleum products are moving from Baton Rouge into Pittsburgh. It is only a question of time until a return movement of iron ore from the Great Lakes will balance a similar movement of high-grade coal out of the Big Sandy Valley and the neighboring smokeless fields, into Chicago. The Big Sandy Valley cannot afford to neglect an opportunity to become a part of this vast system and it is not intended that it shall do so. Low-cost transportation feeds on itself and its availability may be the determining factor in the future economic life of the Big Sandy Valley. THE BIG SANDY RIVER PROJECT The United States Engineer Corps The United States Engineer Corps constitutes the technical staff of the Government in the study and design of all river and harbor improvements. It has designed the entire system of inland waterways and is responsible for their operation. It has an enviable record over the more than 75 years of its existence and has won the unqualified support of all river-minded people. It has I Not printed. nothing to promote and nothing to sell. It simply obeys orders from the Secretary of War through the Chief of Engineers of the United States. According to Army usage, each unit reports direct to the next higher authority and not to the general public. This is important. The country is divided into operating districts with a district engineer in charge whose duty it is to investigate and report on each individual project originating in his district. His report is transmitted to the Division Engineer who reviews it carefully and transmits it to the River and Harbor Board with his recommendations. The River and Harbor Board in turn reviews the findings of the district engineer and the division engineer and transmits with recommendations to the Chief of Engineers. After undergoing this system of checks and counterchecks, if the verdict is favorable, the project is transmitted to the River and Harbor Committee of Congress, which in turn either rejects or includes it in a recommended river and harbor bill for final action by the Congress. If and when the Congress passes the river and harbor bill the undertaking becomes an "approved project.' Not until appropriations are made can actual work on construction be started. Therefore continual support must be maintained to secure ample appropriations until the work is far enough along to carry through of its own weight. This job is up to our Representatives in Congress and not the United States Engineer Corps although its continued interest is vital all the way through. The present status of our project is that the initial report of the district engineer of Huntington is about to be, if it has not already been, completed and transmitted to the division engineer at Columbus, Ohio. Throughout this entire process it is highly improper for any of the engineering study groups of the Government to give out information to the general public, their sole duty being to report to the next higher authority. This is as it should be and members of this association should recognize this situation and neither embarrass the particular unit with which they are in contact by asking for information to which they are not entitled, nor giving out publicity purporting to come from that unit which might become embarrassing. Such information as is proper can be secured through our Congressmen in Washington. The necessary contacts are being maintained in Washington to insure the prompt transmittal back to the Big Sandy Valley Association as our project progresses through its various stages. We are very fortunate in having able and loyal support from our congressional representatives. The project itself According to our information, the project being studied proposes to canalize the Big Sandy River from its mouth to mile No. 126 on the Levisa Fork and mile No. 92 on the Tug Fork. Mile No. 126 on the Levisa Fork is located about 1 mile below the mouth of Russell Fork well above Pikeville. Mile No. 92 on Tug Fork is opposite Sprigg some 10 miles above Williamson. Our understanding is that the above channels are to be a minimum of 9 feet in depth, and 150 feet wide, with additional widths on sharp curvature to provide ample clearance between upbound and downbound tows. Maximum curvature will be excavated to provide a minimum 700-foot radius. Fortunately the character of the excavation to be accomplished in reducing curvature on sharp bends is principally loose earth which can be moved cheaply. It is believed that a standard tow consisting of the steamboat and four standard 26- by 175-foot barges can operate successfully in these channels. Such a tow would average 4,000 tons or 1,000 tons per barge. It is believed that 10 locks and dams, 2 between Catlettsburg and Louisa and 4 each on the 2 forks, will be required, with locks capable of passing the steamboat and 4 barges at one lockage. Such a facility, while not equivalent to the main trunk facility on the Ohio River, will afford abundant and cheap navigation. Sources in which we have confidence, but whom we are not at liberty to quote, have advised that the economic study of the project made by the Rivers and Harbors Board, was based on a preliminary estimated cost of $60,000,000. Until the final report of the United States Engineer Corps is available however, we cannot know the exact figure which must be justified. ECONOMIC JUSTIFICATION The River and Harbor Committee of the Congress has established an invariable rule for the "economic justification" of all projects adopted and recommended by it to the Congress. This rule provides that the savings to the public must be sufficient to pay the operating expenses and amortize the investment within the fair life of the project. The factors in this formula which the Big Sandy Valley must satisfy are therefore: (a) Savings in river transportation cost. (b) Volume of river tonnage to be reasonably expected thus producing the necessary total savings. (c) Volume of coal reserves available to the river to maintain the necessary tonnage throughout the fair life of the project or 50 years. (d) Probable cost of the project, cost of operation, and savings available for amortization. These factors as applied to coal traffic only will be explored as briefly as may be. (a) River versus rail costs.-Railroad costs are determined by freight rates now in force. The freight rates from the smokeless and high-volatile districts to key river destinations are set up in table A on a succeeding page. River costs: Exhaustive studies have been made of the probable costs of towing coal from the Big Sandy River points to the Ohio. These costs have been tested by consultation with competent builders of river equipment and river operators. They are based on a standard four-barge tow and one lockage for both the steamboat and the barges. The conclusion reached is that the average cost plus a fair profit to the towing company will be as follows: Allen, basing point on Levisa, to Catlettsburg-2.4 mills per ton-mile. On this basis, everything considered, the average river cost of all coal from both forks reaching Kenova will be 22 cents per ton. A rail rate of 55 cents per ton has been established by the Chesapeake & Ohio Railway out of Levisa Fork to Kenova. A similar rate from Tug Fork has not yet been established by the Norfolk & Western Railway but it is to be presumed that such a rate will be established if applied for. To this rate should be added a transfer charge of 7 cents per ton from rails to barge, this being the cost of some of the larger operating companies. The difference between this 55 cent rail rate plus 7 cents transfer charge or 62 cents per ton balances against the 22 cents per ton river cost which represents a saving of 40 cents per ton on the Big Sandy River alone. To this should be added the trunk-line savings on the Ohio, Mississippi and Illinois rivers, in order to produce the total savings creditable to the Big Sandy River projects. The ton-mile cost to basic terminals, based on actual published rates which include a profit, by responsible towing companies, has been analyzed with the following results: Cattletsburg to Cairo, Ill., 1.2 mills per ton-mile. Cairo, Ill. to Alton, Ill., 2.41 mills per ton-mile. Alton, Ill. to Chicago, Ill., 1.8 mills per ton-mile. Alton, Ill. to Minneapolis, Minn., 1.8 mills per ton-mile. Combining these various data with the established rail rates, it is believed that the following table A reflects the cost f. o. b. barge and f. o. b. rails via the rivers and via the rails into the destinations shown. TABLE A.-Relative railway rates and river costs into some of the principal river destinations From the difference in favor of river transportation must be deducted the cost of transportation mines to barge and barge to consumer, since the rail rates quoted are f. o. b. consumer sidings. In some cases excessive rail rates from both the mines to the barge and from the barge to the consumer are in force, in other cases this does not exist. The transfer cost out of the barge into the railway car will not exceed 10 cents per ton at well-equipped terminals. The total savings, based on the expected traffic, creditable to the Big Sandy project will be discussed in the following paragraph. (b) Volume of river tonnage to be reasonably expected. An exhaustive study of the available markets accessible to river-borne coal from the high quality southern districts has been made. Large consumers have been canvassed in such markets as Cincinnati, St. Louis, Chicago, the Tri-cities and the Twin Cities. Based on the consumer interest and the large market already enjoyed by these coals, it is believed that a fair estimate of the present consumer demand for river-borne coal in these markets is over 30,000,000 tons per annum. Inasmuch as this market would have to share with similar coals originating in the Great Kanawha River, it is believed that 10,000,000 tons or more per annum, of which 2,500,000 tons would be smokeless coal, is a fair and reasonable expectancy for the Big Sandy River project. Taking into consideration all of these factors and making wide allowances for unforeseen emergencies, it is believed that a total savings to the ultimate consumers creditable to the Big Sandy River project on the coal movement alone will total $7,500,000 per annum, $4,000,000 of which will be accomplished on the Big Sandy River between the mines and the Ohio River and $3,500,000 between Catlettsburg and the consumers. It is believed that this estimated tonnage will increase substantially. No attempt has been made to include tonnage other than coal although such tonnage will be substantial. (c) Volume of coal reserves.-The life of the project is estimated to be 50 years and in order to maintain shipments of 10,000,000 tons per annum 500,000,000 tons will be required. No attempt has been made by your association to establish the vast coal reserves of the high volatile and smokeless coal fields naturally tributary to the Big Sandy River project. That they are enormous is evidenced by the reserves in Pike County, Ky., alone, estimated by the State geological survey to be 8,000,000,000 tons. A careful study has been made however of the coal areas immediately contiguous to the proposed improvement. Map No. 3 on the following page shows the operating coal companies and others as of 1940 and the area of coal existing within 3 miles and 10 miles of the portion of the river it is intended to improve. The area lying within 3 miles of the river is designated the "3-mile zone" and the area within 10 miles of the river is designated the "10-mile zone". Competent mining engineers and geologists estimated the coal reserves of these zones, as of 1940, to be: Levisa Fork to the mouth of Russell Fork: Tons 449, 462, 000 1, 385, 662, 000 269, 181, 000 963, 550, 000 718, 643, 000 2, 349, 212, 000 A large percentage of coals within the 3-mile and 10-mile zones can be loaded. into river barges direct from the mine cars as cheaply as it can be loaded into railroad cars. At the rate of 7,500,000 tons per year from the High Volatile fields as estimated, there is sufficient coal in the 10-mile zone to maintain shipments for over 300 years or six times the estimated life of the project. During 1940 railroad shipments out of the 10-mile zones totaled 9,357,116 tons. The car allotment capacity of these mines was 12,602,250 tons. Therefore 3,245,134 tons could have been shipped by river without taking any tonnage away from the rails. Similar studies have not been made of large areas beyond the 10-mile zone. |