COMMISSION ON ORGANIZATION OF THE EXECUTIVE BRANCH OF THE GOVERNMENT (Water Resources and Power Report) Part 8-Cincinnati, Ohio WEDNESDAY, NOVEMBER 9, 1955 HOUSE OF REPRESENTATIVES SPECIAL SUBCOMMITTEE ON WATER RESOURCES AND POWER OF THE COMMITTEE ON GOVERNMENT OPERATIONS, Cincinnati, Ohio. The special subcommittee met, pursuant to notice, in room 607, Federal Building, Cincinnati, Ohio, at 10 a. m., Hon. Robert E. Jones, Jr. (chairman of the special subcommittee), presiding. Members present: Representatives Jones and Lipscomb. Also present: Representatives Hess, Scherer, and Jenkins; William C. Wise, staff director; and William L. Sturdevant, staff member, and Robert Morris. Mr. JONES. The subcommittee will come to order. This is a special subcommittee of the Committee on Government Operations of the House of Representatives. On my right is a Member of the House from the State of Ohio, Mr. Bill Hess, and on my left is Mr. Glen Lipscomb, a member of the House from the State of California. My name is Bob Jones. Our first witness will be Capt. Robert E. Reed of the Wheeling Steel Corp. of Wheeling, W. Va. Mr. Reed. STATEMENT OF ROBERT E. REED, WHEELING STEEL CORP., WHEELING, W. VA. Mr. REED. My name is Robert E. Reed. I am a resident of Wheeling, W. Va. I attend this hearing today in the interest of Wheeling Steel Corp. The Wheeling Steel Corp. is an old, established firm and has been in operation in the upper Ohio Valley for more than 60 years. We operate blast furnaces at Steubenville, Ohio; Mingo Junction, Ohio, and Benwood, W. Va. We operate fabricating plants at Warwood, W. Va.; Beechbottom, W. Va.; Yorkville, Ohio; Martins Ferry, Ohio; and Wheeling, W. Va. We also operate coal mines on the Allegheny River in Pennsylvania, and we operate a coke plant at East Steubenville, W. Va. We employ about 15,000 people in this district. We produce 2 million tons of coal at our Pennsylvania mines which is all transported by river barge to the coke plant at East Steubenville, W. Va. We produce 2,100,000 tons of ingots per year, which is all used in the fabricating plants that I have just named. We have used river barge service for many years. In fact, I believe the economy of our district is based on the fact that we can have river barge service to the markets that we serve. We serve markets in Louisville, Ky.; Memphis, Tenn.; Minneapolis, Minn.; Kansas City, Mo.; New Orleans, La.; and as far away as Houston, Tex. Now, our margin of profit is not too large on those faraway markets. Yet, we don't have the markets within our own territory. I might say that I believe our economy, or a great part of the economy of our district is based on the fact that we have river-barge shipments for the faraway markets. Now, as long as we are able to retain those markets, by the fact that we have the river-barge shipments, we will continue to prosper within our district. But, if something should take place such as suggestedtolls or user charges-we then would not be able to compete with other firms of the same nature located in different geographical locations in the United States and we then would lose the market. We believe that we support probably 60 percent of the economy within our district. Should we lose those markets, our operation would considerably. We have many thousands of people in our district who have built their homes there years ago. We have many more thousands building new homes today. We are very much alarmed that tolls, or user charges, if they should be applied to the Ohio River locks, that we will lose the markets that I have just told you about, and will create great hardships on all the population within the territory that I have just named where our plants are located. Now, we have been very successful. We would like to continue to be successful, and we believe that the only way we can continue to stay in business is to have the river-barge service without the imposition of tolls or user charges. Mr. JONES. Will you be kind enough to give the committee a general description of the type of operation that Wheeling is in. Do you operate blast furnaces? Mr. REED. We do, sir. Mr. JONES. Where do you secure your ore? Mr. REED. Mostly from Minnesota, but we are now developing the Labrador project. We will get considerable of our ore from Labrador. Our ore in the past has all come from up in Minnesota at the great ranges up there and it has come in and was shipped overland by rail. That has handicapped us to a certain extent. Mr. JONES. Where do you get your limestone? Mr. REED. Sir, I couldn't tell you just where the limestone comes from. We have had an advantage by the fact that we do get our coal by river barge. We have other steel companies located closer to the iron ore and I think it balances itself out in that they get cheaper iron ore and we get cheaper coal. I think that is all I have to say and I have a prepared statement I would like to submit for the record. Mr. JONES. You are opposed to recommendation No. 8 of the Hoover Commission report on water resources and power? Mr. REED. I am. Mr. JONES. Mr. Hess, have you any questions? Mr. HESS. No questions. Mr. JONES. Mr. Lipscomb Mr. LIPSCOMB. Do you have any other conclusions that you would care to mention on other features of the Hoover report? Mr. REED. I have not read other parts of the report and could not comment. Mr. JONES. Without objection, the letter directed to me dated November 8, by Mr. John Neudoerfer, president of the Wheeling Steel Corporation of Wheeling, W. Va., will appear in the record at this point. (The document above referred to follows:) WHEELING STEEL CORP., Wheeling, W. Va., November 8, 1955. HOUSE SUBCOMMITTEE ON GOVERNMENT OPERATIONS, (Attention: Hon. Robert E. Jones.) GENTLEMEN: The Wheeling Steel Corp., with principal offices at Wheeling, W. Va., owns and operates blast furnaces, steelmaking furnaces, rolling mills, byproduct coke ovens, and fabricating plants. Current operations are at approximately 100 percent of capacity, and the present number of employees is approximately 15,000. We operate diesel towboats and a fleet of approximately 100 river barges transporting about 2 million tons of metallurgical coal annually from our mines on the Allegheny River at Harmarville, Pa., to East Steubenville, W. Va., on the Ohio River. This huge tonnage travels a distance of 12 miles on the Allegheny River and 68 miles on the Ohio River. In addition to the movement of this coal, other raw materials, such as fluorspar, fuel oil, and scrap, are delivered to our plants by river transportation. We also ship some finished products by river. Last year these shipments amounted to approximately 180,000 tons, plus a large quantity of benzol, to markets in Louisville, Ky.; Memphis, Tenn.; Kansas City, Mo.; Minneapolis, Minn.; New Orleans, La.; and Houston, Tex. Wheeling Steel Corp. must continue to use barge transportation if we are to serve appropriate market areas, by way of our delivery points on the rivers. As you know, there has been tremendous industrial development along the Ohio River Valley during the past few years, and we can count on additional installations and expansion. A decisive factor in these developments has been low cost water transportation. If tolls or user charges are applied to Ohio River locks, we know that the economy of the entire Ohio River Valley would be put to disadvantage. It might discourage new industry from locating here and it might force well-established industries to seek new locations. Any decision made as to toll or user charges on the rivers is of vital concern to Wheeling Steel Corp. and we hope that we may have an opportunity to talk with you about this. Very truly yours, JOHN L. NEUDOERFER, President. Mr. JONES. Roland Campbell, general counsel, Island Creek Coal Company of West Virginia. STATEMENT OF ROLAND CAMPBELL, GENERAL COUNSEL, ISLAND CREEK COAL COMPANY OF WEST VIRGINIA Mr. CAMPBELL. I do not have a prepared statement. I would like to have the privilege of filing one before the hearings are concluded. Mr. JONES. You may be so good you may not even have to file one. Mr. CAMPBELL. My name is Roland D. Campbell. I live in Huntington, W. Va. I am a lawyer and general counsel for the Island Creek Coal Co. and its subsidiary, Island Creek Fuel & Transportation Co. This company has been engaged in the business of mining coal and shipping coal along the Ohio River and the Great Lakes for something like 50 years. Our position here is to oppose the recommendation of the Hoover Commission that a user charge be applied to those shippers who use the navigable facilities of the inland waterways. The basic argument which seems to be made by the Commission to support that recommendation is that the expenses by the Federal Government for the improvement of the inland waterways offers special benefits to a few localized shippers and is not in the general public interest. Now, the position I wish to take is flatly to contradict that basic argument and to try to show insofar as I can in the operations of our own company, how the benefits of the water transportation are diffused over a great segment of the public. I would like to say first that I am not going to make any legal argument. They will be presented to you better by others, better informed than I am. I would like simply to mention that those who are familiar with the history of our country know that the rivers have been regarded as our great national highways, they are assets given to us by nature, and they have played an extremely important part in the history of our country, and the evidence of that is found in many provisions of our Federal Constitution. First, I would like to talk about the importance of the Ohio River and its tributaries to the State of West Virginia, of which I am a native. I have lived there all my life. I have taken an active part in civic and public affairs. Some years ago I was president of our local chamber of commerce at Huntington, W. Va., so I have some degree of familiarity with the local business in that neighborhood. As you know, the terrain of West Virginia is very rugged. We have lots of hills. Our valleys are few, and many of our counties support a population only because of the presence of the coal industry in those counties. Without the coal industries, many of them would shortly revert to wilderness. West Virginia is one of the few States in the Union which has been losing population since the war. Mr. JONES. They have a good football team up there now. Maybe the people will come back to see them play football. Mr. CAMPBELL. I don't know whether that would attract many permanent residents. It might attract some visitors. We do have quite a problem in our State because of the fact of the drift of population from the State to other centers where industry is growing more rapidly. The tendency within our own State has been for population to drift from the inland counties in the hills and mountains, into the river valleys, and so we have seen quite a substantial growth in the Kanawha Valley, and in the Monongohela Valley, in northern West Virginia, and along the Ohio River. That seems to be the tendency, now. I might add the greatest part of this growth which has come to West Virginia along its valleys has come since the completion of the lock and dam system on the Ohio River and its tributaries, and the great growth of the chemical industry in the Kanawha Valley and of the steel and chemical industries along the Ohio River has come since that time. In other words, it is a growth that has taken place in the last 30 years. Now, without the improvement of the Ohio River which has occurred, at Federal expense, much of that growth would never have occurred, and West Virginia would continue what it was years ago, a very backward, rural State, supporting a very large population, and probably being a drain on the Public Treasury in ways other than the support of the rivers. As it is, there has been, as I said, quite a very good growth in the river valleys and that growth is going on now at an accelerated rate, based very largely on the program which the Corps of Engineers has for the improvement of the lock and dam system on the river and its tributaries, through the erection of the high-level dams, which will replace a much larger number of the smaller dams which are now in use. The benefits of the improvements which have occurred so far, and which will occur in the future, are not confined simply to those particular industries which make use of the river, but large populations within West Virginia are employed profitably and live in surroundings which are pleasant to them, solely because they have the benefits of low-cost water transportation. The same thing is true, not only with respect to West Virginia, but also with respect to eastern Kentucky, where the terrain and other conditions are similar. That is true also of a large part of southern Ohio, where you have rugged country, hill country, relatively few valleys, and the principal local asset will be coal. Now, recently I took a little trip by air up the Ohio Valley and flew over the development that has occurred at Ravenswood, where the Kaiser interests are putting in a large new aluminum plant, and then over Parkersburg, where a number of new plants are on both sides of the river, and then up to the Muskingum River, where the Ohio Power Co. has several very large and growing plants-they are being expanded-and then up through New Philadelphia, and over to Wheeling and up to Steubenville and Liverpool, and then over north into Canton and Akron, and then back to Huntington. And I was impressed by the number of large, new plants which you can see in that area, and they seem to be all based very largely on the existence of the developed waterways. There are many very large new powerplants which are based upon waterborne coal and which serve the large areas-not just along the river bottoms, but many, many miles away. As you know, electric power is now being transmitted at everincreasing voltages so that the distance by which power may be shipped by wire is increased every year, and these powerplants along the river are supplying low-cost power to areas hundreds of miles away from the river. That is a great asset to this whole Ohio Valley area, the whole watershed. Now, the industries which have been built up in the Ohio Valley, as I have mentioned, are the power generation industries, the steel industries, oil products of various kinds, sand and gravel, and chemicals. There is a large trade in manufactured goods using the river. |