reason of carriers going by the slack water of this canal rather than fighting the current of the Mississippi.

Senator BILBO. The traffic goes north and south. It has got to go both ways to continue in business. If you carry a load down to Pittsburgh you have got to get back and get another load.

Mr. PRINCE. If you say it will have to be balanced in order to be economical, then I would say this would fall by the engineers' study, where the ratio is very, very preponderating in favor of a movement in one direction. The tonnage north-bound is estimated at 3,500,000 tons. The tonnage south-bound is estimated at 488,000 tons.

Senator BILBO. On account of the current of the Mississippi River there could not be very much north-bound freight on the river. A tow with barges behind it will almost stand still against the Mississippi River current.

Mr. PRINCE. In answer to the statement that they would have to be balanced, they have a margin of over seven times in favor of the northbound movement over the south-bound movement.

I do not want to repeat, but I would like to mention the four points on which I think you would be well advised to obtain the views of the Interstate Commerce Commission if, in conjunction with the engineers, they could be asked to investigate and report to Congress:

(1) The need for the proposed improvement or project. (2) The adequacy of present transportation facilities.

(3) The estimated traffic which would be handled over the new or improved waterway and the sources from which derived.

(4) The loss of revenue to carriers from which traffic would be diverted; and, finally its recommendation as to whether the project should be approved, dependent upon whether the transportation system of the country would be more adequate, more efficient, and cheaper with or without the new project.

Senator BILBO. Do you not think that the Board of Engineers, with their force of experts, are in position to give that information to us as well as the Interstate Commerce Commission?

Mr. PRINCE. I hope to point out before this hearing is over that the Board of Engineers are not as well qualified as the Interstate Commerce Commission is to make a traffic survey. Whether I succeed in that or not will be for you to judge; but we have studied their underlying figures-we had not studied them before the hearing before the House committee-and we are convinced that the people who made that study for the Army engineers are not aware of the factors which affect the movement of traffic. They have assigned to this project traffic solely on the basis of whether it would be cheaper as compared with another rate.

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Anybody who has studied the movement of freight knows that that is not the sole consideration. There are many other considerations which frequently outweigh the question of rates. There may a question of the speed of movement. It may be that the marketing and distribution methods used by the consumers of the products prevent the products being taken in large enough quantities to carry them in barge loads. The facilities may be suitable for handling by railroad but not for handling by barge. The product itself may be harmed by moving it on barges. There are many products that are available to the Mississippi River right now which could move at a differential

under the movement by rail, a substantial differential, but they do not move because it is just not suitable commerce for barge movement. Senator BILBO. What do you have in mind besides perishable foods that would be damaged by water transportation because of the slowness of the movement, which is admittedly slower than by railroad?

Mr. PRINCE. Probably fruits and vegetables would be the principal ones. I do not know how important time is in connection with the movement of any product.

Senator BILBO. I will grant you that fruits and vegetables are perishable and therefore would not be so applicable to water transportation as to rail transportation.

Mr. PRINCE. There are other products that I plan to refer to in the course of my statement.

Senator BILBO. You have other products listed?

Mr. PRINCE. I have other products which are not moving by barge, where there is a much cheaper rate available. They are still moving by rail, although there is a cheaper water rate available. What all the reasons are back of that decision of the shipper, I cannot tell you. I can tell you some of them. I would rather do that a little bit later in my statement, if I may.

Senator BILBO. I beg your pardon. Go ahead.

Mr. PRINCE. Just one more comment with regard to the recommendation of referring this to the Interstate Commerce Commission. That was also the recommendation in a letter from the National Resources Committee in House Document 269.

Senator BILBO. Who was the head of the National Resources Committee at that time?

Mr. PRINCE. I will have to plead ignorance, Senator; I do not know.

Senator BILBO. I would be interested to know.

Mr. PRINCE. The recommendation was made there that it should be investigated by the Interstate Commerce Commission.

It was brought out by Congressman Rankin and Colonel Feringa that some of the points, which the opponents claimed were defects in this project when it was presented to you before, have been eliminated, namely, a specific value for recreation, and for national defense; and the locks have been enlarged. Those matters were taken care of.

There is one other principal defect, or what was thought to be a defect by the Chief of Engineers at that time, which has not been taken care of, and that is the inclusion in this project as a net saving of $1,200,000, as a saving by reason of the diversion of traffic which is now going up the Mississippi, to the new waterway. That saving is not in the transportation rates. That is a saving in operating costs to the operators of the barges by reason of the fact that on this slack water canal they will not have to fight the current. Most of that traffic will be contract and private carrier traffic. That means that private industries will be receiving the benefit to the extent of $1,200,000 as the result of the action of the Government in building this new project.

To say that that is a net saving, when you do not consider as an offset to that saving or as a net public loss the loss of revenue to other carriers from whom the traffic will be taken by reason of the building of this project at Federal expense, seems to be to be unfair. There cannot be a net public gain if you are going to count the gain of a

private concern and save it operating costs in the operation of its barges by the building of this project, and not to weigh in the balance on the other side of the picture what it will cost the common carriers by railroad and other forms of transportation when they lose traffic. That only means that it will throw a greater burden on the traffic which remains. The railroads will have to continue to operate. So, I believe that in your thinking about this you should not consider that $1,200,000 as a net benefit to the public as a whole.

Senator BILBO. You are not gracious enough to assume that the carriers would pass that on to the consumers, are you?

Mr. PRINCE. I would not think that a great deal of that would find its way directly into the pocket of the consumer.

Senator BILBO. Being a railroad man, I can understand that.

Mr. PRINCE. The carriers are trying to serve the whole public as they are called upon, and the loss to them should be weighed in the balance with the saving to private industries in the operation of their barges.

Representative RANKIN. May I ask Mr. Prince a question there? Senator BILBO. Certainly.

Representative RANKIN. You talk about taking this traffic away from one carrier and giving it to another. It would simply be the same carrier switching his barge around through the slack-water route and then, when he gets to the Tennessee River and he would have downstream movement.

Mr. PRINCE. I think the Congressman misunderstood my point. You are precisely right that the saving is not by diversion of traffic from the railroads to a water carrier operating up the Tombigbee. The so-called $1,200,000 is the saving to the same carrier by reason of operating on the slack water. But I say that if that is a net public benefit, if you are going to consider things like that as a net public benefit, then in the diversion of some 2,600,000 tons of traffic from the railroads, which is estimated by the engineers, you should consider the effect on those carriers of that diversion. It is not the same traffic. It is in the other part of their study where they claim a diversion from the railroads of about 2,600,000 tons of traffic.

I will just remind you that General Schley, Chief of Engineers at the time of the submission of House Document No. 269, said that he doubted the wisdom of dependence upon the diversion of any considerable part of the Mississippi River traffic to justify the new project. I think his wisdom in that observation is unchallengeable logically.

Representative RANKIN. At that time you had no 9-foot channel on the Tennessee. You did not have Pickwick Dam, and you did not have Gilbertsville Dam, and therefore you had no outlet on the Mississippi River.

Mr. PRINCE. I submit that this is not the point the Chief of Engineers made. I think the logic in his statement is to be found in thisthat if you take the traffic from the Mississippi, which is part of the justification for expenditures on the Mississippi, and use it for justification of this projeect, if you start to build another one and find that you can save some operating costs for some of this traffic by putting it on another channel that you build, you will be using the traffic a third time. You will take it off the Tombigbee. The fact that they

use the net difference each time, which lessens the amount, does not affect it at all. When you get through you do not have the traffic on the Tombigbee which was the justification for the Tombigbee.

There are only two items of savings which result in the justification of this project. One is the $1,200,000 item which I have just referred to. The other is an item of $5,051,000, which is the saving in transportation costs on the traffic which they predict will use this waterway.

I have implied, by suggesting that a traffic study should be made by the Interstate Commerce Commission, that I do not think the Army engineers can make a study on the prospective amount of traffic by the waterway which can be relied upon as a qualified survey. I think that by this report the Army engineers themselves have shown that the traffic survey which they made and submitted in House Document No. 269 was practically valueless. That was made, I believe, in 1939. I am not certain as to the date.

Was that the date, Colonel?

Colonel FERINGA. I do not remember it by those numbers. I am sorry that I cannot help you out on that.

Mr. PRINCE. Several years later they have produced another report in which they have another traffic study. Two of the three largest items in the previous report are not even included by name in the present report. Those two items represented about 45 percent of the tonnage in their previous report, and they are not of sufficient importance in the present traffic survey even to be included by name. there is any traffic in those items it is found in the category of "All other traffic."

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Three items of traffic in the last report represented 70 percent of the total tonnage estimated for the project. Those items were logs, sand and gravel, and gasoline. Today in the present report, insofar as those three items are seperately listed, they represent 7 percent of the traffic.

I firmly believe that if the same organization making the second survey 7 or 8 years later comes out with that difference in finding on the traffic, both of them cannot be correct. I think they have shown the first one to be incorrect, and I think we will show you today that the second one is not correct. Three items which represented 70 percent before now represent 7 percent.

Senator BILBO. What difference would it make if they produced other items that will make up the necessary tonnage upon which they predicate their figures? You ought to be gratified that they were liberal enough to cut the other down.

Mr. PRINCE. I am gratified to that extent, Senator; but it does not increase my confidence in their traffic surveys. I just cannot have the feeling that their traffic survey was correct before, and I am convinced that it is not correct now.

The two items of logs and sand and gravel, which I spoke of, represented 45 percent of the traffic. The item of logs in their previous report they had 352,000 tons of logs, counting north-bound and south-bound movements, and sand and gravel, a total of 315,000 tons. And those two items are not even named in the present report. That tonnage has disappeared.

To make up for that, they found tremendous increases in the other items. We have a traffic witness who will present those; but I do not want to go into that, because he is going to cover it and show you an exhibit which will point out the difference between those two surveys very graphically.

Representative RANKIN. You are aware of the fact that in that area there is the greatest belt of hardwood timber in America?

Mr. PRINCE. I was speaking of the traffic survey of the engineers, not from personal knowledge of the territory. All of the traffic may come from that region.

Representative RANKIN. But you are aware of the fact that that is the greatest belt of hardwood timber left in America, are you not? Mr. PRINCE. I must say that I can remember from the previous hearings that you told us very graphically how that area had all the reserve supply in the world of many, many raw materials.

Representative RANKIN. That is right.

Mr. PRINCE. I think it is obvious from the face of the report that both the tonnage and the savings attributed to traffic are seriously exaggerated. I am relying now upon their estimates and speaking of the method. I think in one respect it can be shown simply by the method they followed that there is bound to be an exaggeration both of tonnage and of savings.

I would like to deal with that first, because that does not involve a question of how much of each item of tonnage will move. This requires a little bit of detailed consideration of their report, and I hope you will listen as attentively as you can.

From paragraph 145 of the report it will be seen that it is estimated that approximately one-half of the 5,764,000 tons of barge-borne commerce estimated in justification of the proposed improvement, which amounts to 2,882,000 tons, would be diverted from overland routes.

In paragraph 140 of the report we are told that approximately twothirds of the traffic anticipated as reasonably prospective for the proposed improvement could not use existing water routes to greater advantage than rail routes. Two-thirds of the anticipated prospective traffic amounts to 2,666,000 tons which is now moving by rail, although there is a cheaper water route which it could use. That, in itself, seems to me to be incontrovertible proof that there is an exaggeration both of their tonnage and of their savings. If you have 2,666,000 tons of traffic now moving by rail and there is available for it today to the same destinations an existing water route at a cheaper rate, and they are not using it, you know perfectly well that to take all of that traffic and say that now it is going to move by water because we can create an even great differential in the rate by water over the rate by rail is bound to involve an exaggeration. Every ton would not shift because you increase the differential.

The only concession which the Army engineers have made in this respect is that, according to paragraph 140 of the report, they have included as savings only the difference between the water rates via the presently available routes and the probable future water rates via the proposed route.