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Senator SPARKMAN. If you would allow me to break in on you. Congressman Bates, who represents a part of this territory, is here with us and is going to have to go to another meeting. I would like to have him say a few words before he goes. I understand he will submit a fuller statement at a later time.

STATEMENT OF HON. JOE B. BATES, A MEMBER OF THE HOUSE OF REPRESENTATIVES FROM THE EIGHTH CONGRESSIONAL DISTRICT OF THE STATE OF KENTUCKY

Senator WITHERS. Will you state your name, Congressman? Mr. BATES. My name is Joe B. Bates, and I represent the Eighth Congressional District of Kentucky.

My interest in this, is the interest of a Kentuckian about Kentucky. It is a Kentucky project and the Kentucky delegation has, by record, shown that they are unanimously for it, and we feel that it would give us an equal opportunity with comparable streams on the south bank of the Ohio, and on the east bank, and that it is very necessary that we do have this improvement.

The technical part has been pretty well given to you, and I don't think there is anything I want to say except to let you know that we are vitally interested in it, and that our economy is going to be vitally in need of it should we have another slack period.

Senator WITHERS. What effect, Mr. Bates, does the market for coal of the Kanawha have on your field, or the river rates?

Mr. BATES. Well, just prior to this emergency that came in 1939. a great number of dealers, coal companies, were in receivership. They couldn't compete with outside coal

Senator WITHERS. Does that include the Kanawha?

Mr. BATES. All competitive coal sections.

Senator WITHERS. What do you think that was due to?

Mr. BATES. They think, and I think rightly, that it was due to the rate differentials in shipping the coal.

Senator WITHERS. Do you mean the river rates and railroad rates? Mr. BATES. Railroad rates.

Senator WITHERS. Railroads?

Mr. BATES. You see, the Kanawha and the Monongahela and other streams do have river transportation that they can fall back on if they can't afford to pay the rates.

Senator WITHERS. I will get you to state whether or not, where you do have the river transportation, that the railroads compete with that by reducing their rates.

Mr. BATES. I wouldn't know about that, but I am pretty reliably informed, I think

Senator WITHERS. You do know that river towns get better freight rates than otherwise?

Mr. BATES. Let me say it this way: The C. & O. operates in the Big Sandy and Kanawha Valleys, and my information, which I think is reliable, is that the freight rate on the Kanawha is much cheaper than it is on the Big Sandy.

Senator WITHERS. That is all.

Senator SPARKMAN. Senator Robertson of Virginia, a member, is here with us and he has come from the Appropriations Committee hearing, and has to go right back to the committee.

With the committee's permission, we will allow Senator Robertson to make his statement before proceeding with the other witnesses. Senator ROBERTSON. Off the record.

(There was discussion off of the record.)

STATEMENT OF THE HONORABLE A. WILLIS ROBERTSON, UNITED STATES SENATOR FROM THE STATE OF VIRGINIA

Senator ROBERTSON. Mr. Chairman, and gentlemen of the committee, the Big Sandy Canal project involves a total of 191 miles of canalization of the Big Sandy River and its Tug and Levisa Forks in the States of West Virginia and Kentucky. The Levisa Fork rises in the State of Virginia and is located in that State for a number of miles. The canal would be alongside the Norfolk & Western Railway on the Tug, the Chesapeake & Ohio on the Levisa, and both railroads on the Big Sandy. It would be solely a navigation project. No flood control or hydroelectric power are involved.

The principal, if not the only, traffic on the canal would be coal. The canal would be, therefore, essentially a one-commodity-transportation agency and the traffic would be one way.

The project is not new to the Congress. It was carefully considered by the Seventy-ninth Congress in 1946. The House Committee on Rivers and Harbors held protracted hearings on the project and it was the subject of full and thorough debate on the House floor. The House, by a record vote of 205 to 144, deleted the project from the omnibus river and harbor bill of 1946, and the Senate Committee on Commerce refused to reinsert it by a vote of 12 to 4. The Public Works Committee of the House also held a hearing on this project. on May 9 of this year, giving both the proponents and opponents full opportunity to present their case. The committee unanimously concluded not to include the project in the current omnibus river and harbor bill, stating:

After careful consideration of all testimony taken, the committee is not convinced that the project should be authorized.

Similarly, this proposed canalization has had a long history with the Army engineers. For more than half a century various projects to make these streams navigable have been considered by the Government.engineers. Indeed, during that period 24 reports have been prepared by them. In 23 instances the Government engineers found that the streams were not worthy of navigation improvements on the scale here involved.

There is widespread opposition to this project. It is opposed by labor; for example, the American Federation of Labor, the 20 railroad brotherhoods, and the United Mine Workers of America. It is opposed by the railroads which serve the territory, particularly the Norfolk & Western and the Chesapeake & Ohio, and I am informed that it is opposed by every substantial coal operator in the Big Sandy Valley. There is also substantial local opposition to the project. Many prominent business and civic leaders from the Big Sandy Valley appeared before the House committee in opposition. The Governors of Virginia and West Virginia filed with the House committee statements in opposition to the project. All members of Congress from Virginia and West Virginia are likewise opposed to it. It should be

remembered that a large portion of this canal would be located in the State of West Virginia and that it would be very close to the State of Virginia. This committee should give serious weight to the expressed opposition of the Governors and Members of Congress from those States.

The most recent report of the Army engineers was made on December 10, 1945, and is completely out of date. The construction costs used in that report are based on 1940 prices. Even on the basis of 1940 prices, the Army engineers found that the cost of the project would be $82,300,000. Competent experts state that the cost of the project on today's prices would be in excess of $161,000,000, or twice what it would have been in 1940. Colonel Moore, speaking for the Board of Engineers in the recent hearing before the House Public Works Committee, stated that his Board could not give the committee any reliable costs or benefit figures on the project without making further study. There is no up-to-date data upon which this committee should authorize the project. Certainly this committee should not authorize the expenditure of $161,000,000 or more until the Board of Engineers has furnished it with figures as to the presentday costs of this project and has advised the committee whether it can be justified economically on the basis of such costs.

Not only are the construction costs set forth in the report out of date but the cost of operating barges and tows on the canal is also outmoded. Those costs were likewise based on 1940 prices. Thus, while the estimate of the Board of Engineers that the crew cost for a tow on the proposed canal would have been $2,775 per month on the basis of 1940 prices, today the cost would be approximately $7,780 per month. In short, today's operating costs are from two to three times those estimated in the report.

Furthermore, the report is out of date in that the traffic surveys which were made by the Army engineers as to potential users of the project are no longer reliable. Those surveys were made more than 6 years ago. Unquestionably, many of the shippers who might have used the canal 6 years ar more ago are no longer in business or their needs have changed.

Another significant factor which has entered the picture since this matter was considered by the Congress in 1946 is that the Norfolk & Western has since then established a river rate from its high- and low-volatile fields in the Ohio River for transshipment of coal. In addition, river loading facilities at Kenova, W. Va., on the Ohio River, are now nearing completion. Now that a river rate has been established and loading facilities will soon be available, no action should be taken by this committee until the Board of Engineers has had an opportunity to reconsider this project in light of this important development. This fact is particularly noteworthy because of the bearing it has on the feeder-value theory, to which I shall refer in a few moments.

Using 1940 prices, the Army engineers found that the cost of constructing the canal would be $82,300,000, the annual carrying charges would be $4,190,000, and that the alleged savings on the canal would be 80 cents a ton. Thus, an economic ratio of costs to benefits of 1 to 1.6 was obtained. But if the project now costs $161,000,000, the annual carrying charges would be $8,199,000, and the economic ration would be 1 to 0.36. In other words, for every dollar that the Government spends, it would get only 36 cents in return.

Also, in using 1940 prices, the Army engineers found that the boatman's charge for hauling a ton of coal on the canal would be 33 cents, but today the cost, as other competent witnesses will testify would be at least 64 cents. Similarly, on the basis of today's prices, the capital or amortization cost would be 99 cents per ton. This 99-cent subsidy is what the taxpayers would pay for each ton of coal transported on the canal, and the 64 cents is approximately what the shippers would pay the barge operators for transporting each ton of coal. In other words, the total cost of transporting a ton of coal on the canal would be the 99-cent subsidy plus the boatman's charge of 64 cents, or a total present-day cost of $1.63 per ton.

But the railroads will haul the same coal from the Big Sandy Valley to the Ohio River for 89 cents per ton. Thus, on the basis of today's prices, coal in the Big Sandy Valley can move by rail to the Ohio River for river shipment for 74 cents a ton less than it would be able to do so on the canal. Under these conditions. there is no way in which the canal could effect any savings, and by the same token, no economic justification for the project can be found.

The proponents of this project were faced with much the same situation even on the basis of 1940 prices. They knew that if the benefits which could possibly accrue from transportation on the canal itself were set up against the 1940 carrying charges and operating costs, the canal would have a yearly operating deficit. Thus, according to the Army engineers' own figures, if the canal cost $82,300,000 on 1940 prices, and if 8,300,000 tons of coal were transported on it at a saving of 29 cents per ton-which is the alleged saving they found on the basis of those prices-the savings would fail to meet the annual carrying charges by approximately $1,783,000. In order to meet this situation the so-called feeder-value theory of benefits was restored

Under that theory the project would be given credit for alleged savings which might accrue on the canal, and also for savings which might accrue on other existing waterways, for example, the Ohio, over which the coal would move to market. By such a computation the canal was credited with all so-called savings on the coal from origin to destination, even though the major portion of those savings were not created or realized on it. Using this theory it was claimed that there would be an average saving of 80 cents per ton, although only 29 cents thereof was effected on the canal itself. The remaining 51-cent saving would accrue, if at all, on the Ohio or other waterways. The opponents of this project have always contended that this feedervalue method of computing savings is unsound. Any savings which might accrue on the Ohio or other waterways are available today. They can be obtained by coal producers in the Big Sandy Valley without building this canal. All the producers have to do is to ship their coal by rail to the Ohio River and there load it on the river. There is no sound basis upon which the feeder-value theory can be applied to this project today, and, without it, it is impossible to find economic justification for the project.

The proponents will speak of alleged savings of $2 and $2.50 a ton, but all of those so-called savings are based on the unsound feedervalue theory, and they are also based on 1940 construction and opersting cost.

It should also be observed that even if the canal effected any savings, those savings would not be passed on to the public. Since this

is to be primarily a one-commodity transportation agency, the general shipping public would not derive any benefit from it.

The proponents also talk a great deal about the Kanawha River Valley, but that valley is not comparable to the Big Sandy. The Kanawha River is a large river. It has water in it. It is comparatively straight. The Big Sandy and its tributaries have very little water in them and they are crooked. The Kanawha flows in a broad valley, the Big Sandy in a very narrow one. There are vast reserves of minable coal in the Kanawha Valley and the quality of that coal is just as good as that in the Big Sandy. Yet despite all of this, the maximum tonnage which ever moved out-bound from the Kanawha into the Ohio in any year since it was deepened to a 9-foot channel was 3,100,000 tons in 1942. The proponents here claim that over 21⁄2 times as much coal will move over these small crooked streams. Actual experience on the Kanawha disproves that claim.

The Big Sandy and its tributaries, as I have suggested, have very little water in them. In fact, there is such a scarcity that they can only be made navigable by resorting to the novel practice of pumping water uphill to float the barges downhill. In order to make this canal navigable, from 7,000,000,000 to 10,000,000,000 gallons of water a day for all or a part of 8 months each year would have to be pumped into locks on this canal. That is enough water to supply 100 gallons a day for every person in the cities of New York, Boston, Cleveland, and San Francisco. This system would be operated by pumping water upstream from lower to higher pools, starting by pumping it out of the Ohio River. It just doesn't make sense to pump water uphill to float barges downhill on such an elaborate scale.

Finally, it should be observed that the people who are supposed to use this canal don't want it. If the canal is to be an economic success, the coal operators will have to use it, but the overwhelming majority of them are opposed to this project. The proponents did not produce a single witness, I am informed, before the House committee that could place a ton of coal on the canal, and I venture to say that they will not produce witnesses here today who will be able to place any substantial amount of traffic on the canal. And yet, they are claiming that the canal will handle some 8,300,000 tons of coal per year. Isn't it significant that every large coal operator in the valley, as well as the United Mine Workers, are opposed to this canal? It is bound to be a failure if it is constructed.

I submit, therefore, that this committee should not authorize a project which involves an expenditure of some $161,000,000 of taxpayers' money where it is clear that the people who are supposed to use it don't want it, where the committee has no up-to-date reliable information upon which to base the authorization of this vast sum of money, where there is such widespread and substantial local opposition to the project and where the project involves so many engineering problems which may make it impracticable. With a national debt of some $250,000,000,000 and at a time when we are making every effort to economize, I hope that this committee will turn down this unsound and uneconomic project, as has been done on every other occasion that the matter has been considered by either the House or the Senate.

Senator HOLLAND. Are there any questions?

Senator WITHERS. What do you think of locking and damming on the Monongahela and the Kanawha Rivers?

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