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(The document referred to is as follows:)
Per 100 pounds
Exhibit 6 contains the calculation of certain weighted average rates. The first is the weighted average all-rail rate in the section of port-toport movements on exhibit No. 5. That resulted in a weighted average all-rail rate of $6.23 per ton.
We have also calculated the weighted average all-water rate via the alternate existing water route. That is $3.56 per ton.
The next calculation is the weighted average all-water rate via the proposed Tennessee-Tombigbee route, and that is $2.84 per ton.
The present differential in favor of existing water route up the Mississippi, over the rail route, on all of this tonnage is $2.67 per ton. That means that this traffic was moving by rail when it could have moved via the Mississippi at $2.67 per ton cheaper on the average. And they say that if you increase your differential by the use of the proposed route by 72 cents, every ton of that traffic will shift from the rails to the new water route. If it did not shift at $2.67, what assurance have
that it will shift at an added differential of 72 cents more, particularly in the light of the experience of the movement of that product on the Mississippi River and these other rivers, the existing waterways? They moved, as I have shown, a total of 3,097 tons in the year 1939 on all of those rivers, representing a distance of 3,699 miles of waterway, and yet they say that every ton is going to shift from the rails to the new water route. I do not think that is a reasonable conclusion to reach. I believe it shows a lack of understanding of the factors which affect the movement of traffic. They have assumed that the difference in rates is everything, and it just cannot be, in the face of this evidence.
I would like to show you the figures on the barge-rail movement, because that is an example which I think is even more striking as to the unreasonableness of including that tonnage as prospective tonnage for this waterway.
The weighted average all-rail rate on the movements included in exhibit 5 under the designation barge-rail is $6.74 per ton. The weighted average barge-rail rate for the proposed route, not the alternate route but by the proposed route, is $5.32. The differential between that and the rail rate, which is not what they took as their saving--the total differential which would be available would be $1.42 a ton. That is on a barge-rail movement. Just above that their own figures show that $2.67 differential was available on a port-to-port movement, and the traffic was still moving by rail, and yet on the barge-rail movement they say that it is all going to shift at $1.42 per ton differential. A barge-rail movement is less advantageous from the standpoint of the barge than a port-to-port movement. It requires extra handling; it is costly and harder on the product; it is much less advantageous than a port-to-port movement. I just cannot
I see any answer to figures based on theories such as these. This is a study we have made with the assistance of traffic officers, and I just cannot believe that the traffic can move in the face of such evidence
Senator OVERTON. Just as a matter of curiosity, it is a rather difficult thing, is it not, to have rate experts agree on what should be the rates and what should be the savings?
Mr. PRINCE. I am quite sure you are correct, sir.
Senator OVERTON. I have not had any experience. You have had experience. I understand in a general way that there is considerable disagreement among experts that appear before the Interstate Commerce Commission with regard to rates.
Mr. PRINCE. All of that is true, Senator. I do not think, however, that that in any way has any effect on what I was speaking of. This is logic. It does not take a rate expert to see that where you have available & water movement which is more advantageous for the commodity with a differential available of $2.67, and it is not used, that on a less advantageous movement the traffic is not going to shift to water at a differential of only $1.42—that is a matter of cold logic, and it is backed up by the experience of what happened on these other waterways.
The total movement of the Mississippi and the other named rivers in 1939 was 3,097 tons, and yet they tell you "we are going to move 107,000 tons on the Tennessee-Tombigbee.” That is 35 times as
. much. It just is not reasonable.
I cannot say why they have erred or what it was that led them into the error. Maybe if I had had to make a traffic survey I would have done just as badly, or maybe worse. But my purpose here is to search their figures and see what is wrong with them, and I just believe that this shows they have erred beyond a shadow of a doubt.
Mr. Chairman, I am approaching the end of my presentation, and I apologize for the length of time I have taken. I have only one more specific thing to refer to.
Senator OVERTON (presiding). We will wait until you finish, then.
Mr. PRINCE. Phosphate rock is the commodity on which they have shown a prospective tonnage of 250,000 tons, north-bound movement I believe, and on that their underlying data show that it was obtained from the hearing held in Mobile. If I am mistaken in that, they can correct me, but that was what their sign indicated that they put in the margin.
They made these data available to us. We have searched the transcript of the record made at Mobile to see what the foundation was for the claim of 250,000 tons movement of phosphate rock. That is a sizable quantity in anybody's language. I thought we would find
I a wealth of information in this hearing which would form the basis for that. But the only thing I have been able to find is comprised within two statements. I am sure if there are more they will bring
them out. One is by Howard J. King, representing the Sheffield Board of Commerce. His statement is this:
The TVA uses large quantities of phosphate rock in the manufacture of fertilizer and phosphoric acid, which can be moved from Florida to Wilson Dam by the intercoastal canal and the proposed waterway.
What do we have there? Somebody says some phosphate rock is used by somebody, which phosphate rock can move by this waterway. That is one statement, and that is the complete statement. The other statement is by C. H. Jackson, secretary of the Florence Chamber of Commerce and a member of the city commission of Florence, Ala.:
In addition to what the two gentlemen who have just spoken have said I would like to remind you that we up there are an agricultural community. The Alabama Governor has said "we are going to come into our own when the fields are green.” We need nitrates from Chile and fats from Florida.
We assume that the word “fats” was a mistake in the transcript and must relate to phosphate rock. I am not sure of that, but we have given them the benefit of that doubt, because we cannot think what they were talking about if it was not phosphate rock. Maybe it was not, but phosphate rock does come from Florida.
And it may be that this project would give us 100,000 tons of these two annually.
That is all that he says. Chilean nitrate and phosphate from Florida. He says “this project would give us 100,000 tons of these two annually.” The two combined. I do not know for what purpose, who it is to be used by, how the quantity is to be divided between the two commodities, and in addition he is a chamber of commerce man.
That is all that we can find in the record to back up the statement that there will be 250,000 tons of north-bound traffic of phosphate rock, with a saving of $313,000.
Senator OVERTON. That transcript you just read says only 100,000 tons as described by one man.
Mr. PRINCE. By one man, yes, and for two products and one of them we are assuming is one of the products in question, phosphate rock.
Senator OVERTON. I thought he said 100,000 tons of phosphate rock.
Mr. PRINCE. No, sir. He said "we need nitrates from Chile and fats from Florida. This project would give us 100,000 tons of these two annually.”
Senator OVERTON. Oh. Well, there is the bell calling us to the floor to vote. I suppose we might just as well recess until tomorrow morning. Mr. PRINCE. I could say farewell in 2 minutes. Senator OVERTON. I know, but we have to vote in 1 minute.
Colonel FARINGA. Mr. Chairman, may I ask: Will you resume the hearing this evening?
Senator OVERTON (presiding). No, sir. We will recess until 10 o'clock tomorrow morning. The clek of the committee will notify the members that we are meeting at 10 o'clock sharp tomorrow morning, and that 10 does not mean 10:30.
(Thereupon at 5:05 p. m. Thursday, June 13, 1946, the committee recessed until 10 o'clock the following morning.)
RIVERS AND HARBORS
FRIDAY, JUNE 14, 1946
UNITED STATES SENATE,
Washington, D. C. The committee met at 10 a. m., pursuant to adjournment on Thursday, June 13, 1946, Senator John H. Overton presiding.
Present: Senators Overton (presiding), McClellan, Brooks, and Robertson.
Also present: Representative Rankin, of Mississippi.
Senator OVERTON (presiding). The committee will come to order. You may proceed with your statement, Mr. Prince.
TENNESSEE-TOMBIGBEE RIVERS, ALA. AND MISS.
STATEMENT OF GREGORY S. PRINCE, ASSISTANT GENERAL SO
LICITOR, ASSOCIATION OF AMERICAN RAILROADS-Resumed
Mr. PRINCE. Mr. Chairman, at the conclusion of the session yesterday I had almost completd my statement, and I have but a few more remarks to make before asking that you hear a witness, a traffic witness, that we have to put on, who will discuss several of the items of traffic in some detail which I have not covered.
We have not had time to make a detailed analysis of all of the commodities which were contained in the underlying data of the Army engineers, such as we have made on several that we have shown you; but we have looked through those data and we know that in many, many other cases the same faulty logic and judgment, as we see it, run throughout their entire traffic survey, resulting in exaggerated tonnage and exaggerated savings.
Perhaps when Colonel Feringa comes on the stand he will say that they have considered the arguments which I have made to you and reached the conclusion that they were not valid; or perhaps they may not have considered them. In the event that he should say that they have considered them and reached a different conclusion, I would like to say now, since this is my last chance, that I cannot believe that their conclusion could be right. If the committee would like to hear my views, after hearing from Colonel Feringa, I will be here and will be glad to discuss whatever the has to say in defense of their methods.
Senator OVERTON: We possibly may hear you if you can make your statement briefly. We want to give you a full opportunity.
Mr. PRINCE. I feel, from what we have shown, that a project indicating a margin of benefits over costs of 1.05 to 1 cannot be justified on the record which is presented to you. I think we have
shown clearly that the ratio of benefits to costs is much less than 1 to 1. The Chief of Engineers has said that they would not reconmend a project in which the ratio fell below 1 to 1.
Senator ÖVERTON. I was not present when you began your testimony.
What railroad do you represent? Mr. PRINCE. I am with the Association of American Railroads, sir.
Senator OVERTON. Did the Associatiou of American Railroads make any independent investigation of this project?
Mr. PRINCE. No, sir; we did not. That is a matter which would take a great time to do and would require quite a substantial force. It is a difficult thing. I do not belittle the size of the task at all. It is an enormous task and a difficult task. You heard one of the witnesses, I think, with reference to the Sacramento River project, say that they took seven men 3 months to make a survey which covered a much smaller volume of tonnage than this. We were not able to do that, and we felt that in the absence of being able to do that we would try to analyze the study made by the engineers. We tried to be as specific and concrete as we could to endeavor to give you something really meaty.
I would like to leave with you one thought about what these so-called transportation savings amount to and what they really are. Whether they are economic benefits to the general public or whether, in fact, they are just a question of shifting transportation costs of one group of shippers to the general public is the question. I do not believe you can escape the conclusion that that, in reality, is what they are doing. They are shifting the burden from the shippers to the general public. There is not a net public benefit when you do that.
Senator OVERTON. That is one of the objections made by the railroads to every waterway project that we have to consider.
Mr. PRINCE. Yes. I wanted to read, if I might, what the Board of Investigation said in House Document No. 159, Seventy-ninth Congress, first session. It is very brief. The heading of this is "Savings
“ to Public Users," and the statement is as follows (reading):
Benefits from improved waterways have normally been computed in terms of transportation savings which are or may be realized by those who use the waterways. Such estimated savings are calculated as the difference between what shippers would pay for transportation by some other means, usually by rail, and the charges or operating costs borne by shippers who use the waterways, which are improved and maintained at public expense. While this procedure is useful in appraising projects under the existing waterway policy, it must, nevertheless, be stressed that the savings referred to are not really economic savings such as would indicate the comparative economy of waterway transportation. They result largely or wholly from a shifting of transportation costs from shippers to taxpayers, who instead bear the hidden costs of navigation improvement and maintenance.
That is the backing for that view that I think is worthy of consideration from a policy standpoint. We are not, as you know, standing alone on those broad policy questions.
We think we have shown in a concrete fashion the reasons why this project cannot be justified.
I appreciate very much your attention and the time that I have been given.
Senator OVERTON. Just one or two questions before you leave.
For the first time, yesterday afternoon, I had to leave the hearings and I was not present during a portion of your testimony. I take it, however, that you have followed the usual pattern of the railway