make available to yourselves the presently available high-grade foreign ores or high-grade ore at the present time available in Labrador? If you were to relocate from Youngstown and Chicago to these coastal areas, it would be a very large investment or large cost, would it not? Mr. FOWLER. Yes. It would be extremely large.

Mr. OAKMAN. What effect do you think the relocation of the steel industry or the migration from the Middle West to the gulf and Atlantic coast ports would have on industrial relations in the Midwest?

Mr. FOWLER. It would have a very severe effect.

Mr. OAKMAN. Disastrous, would it not?

Mr. FOWLER. Yes, sir. It would.

Mr. OAKMAN. Thank you, sir.

Mr. DONDERO. Is that all?

Mr. OAKMAN. Yes.

Mr. DONDERO. I might call the committee's attention to the fact that in section 13 on page 10 the subject of tolls is completely covered and how they shall be arrived at.

Thank you very much, Mr. Fowler, for your statement.

Mr. FOWLER. Thank you, sir.

Mr. DONDERO. Mr. William J. Hull of Youngstown, Ohio, and the Ohio Valley Improvement Association.

Is Mr. Hull present?

STATEMENT OF WILLIAM J. HULL, CHAIRMAN OF THE LEGISLATIVE COMMITTEE OF THE OHIO VALLEY IMPROVEMENT ASSOCIATION, INC.

Mr. HULL. Yes, sir.

Mr. DONDERO. Mr. Hull, would you prefer to file your statement or do you want to make a brief oral statement?

Mr. HULL. I would be glad just to file it, Mr. Chairman.

Mr. DONDERO. That would help the committee a great deal because we have 12 other witnesses.

Mr. HULL. It is perfectly satisfactory to me to dispense with the oral statement altogether.

Mr. DONDERO. Without objection, your statement will be incorporated in the record.

Mr. HULL. My name is William J. Hull. My immediate business connection is with Ashland Oil & Refining Co., of Ashland, Ky., in which I am executive assistant to the chairman of the board.

I am chairman of the legislative committee of the Ohio Valley Improvement Association, Inc. The association is a corporation of the State of Ohio with a record of more than a half century of continuing interest in and activity on behalf of the development of the Ohio River as an inland waterway and the development of the valley territory contiguous to it. The membership of the association represents industry, shippers, river operators, civic groups and related interests who support its work and program. The association is devoted to the improvement of navigation on the river and the conservation, control, purification, development, and use of these water resources. governed by a board of trustees elected by the members, and I am here on the specific authority of the board in support of the St. Lawrence seaway.

It is

The views of our association in support of the St. Lawrence seaway were expressed before this committee by our representatives during its hearings on this subject in 1950 and 1951 (H. Docs. 81-13, pp. 295-307, and 82-2, pp. 526–533) and before the Committee on Foreign Relations of the Senate during its hearings on this subject in 1952 and 1953. Our statement today will be a brief one. We wish only to emphasize to the committee our firm conviction that the industrial and economic future of the Ohio Valley may be seriously impaired unless facilities are constructed to provide low cost water transportation of Quebec-Labrador iron ores into the lower lakes region and the Ohio Valley for use by the steel mills in that great central territory.

There appears to be no question that reserves of high-grade, lowcost ores in the Lake Superior region which provides more than 80 percent of the iron ore for the steel mills in the central territory, are likely to approach exhaustion during the next 25 years. It seems to be agreed also that the steel industry in the United States is becoming more and more dependent upon deposits of low-grade ores around Lake Superior and upon imports from Canada and overseas sources for its future ore supply.

It is true that low-grade ores in the form of taconite are plentiful in the Lake Superior region. They must be treated, however, and a substantial investment in beneficiating plants will be required before they are available on a sufficient scale to replace the high-grade ores now mainly relied upon. Moreover, the weight of expert opinion is that while low-grade ores in the Lake Superior region may eventually offset the decrease in production from high-grade reserves in that area, leaving the output of the region at approximately 90 million tons per annum as at present, additional supplies of ores required to meet increasing consumption can only be achieved through larger imports. It is well known that the ores in the Labrador Quebec area compare favorably in quality and mining costs with the high-grade ores of the Lake Superior region and are believed to be present in volumes sufficient to permit production of 20 million to 40 million tons a year for many years to come. They can be transported by low-cost water means from Seven Islands on the St. Lawrence to the east coast mills, but movement of the volumes likely to be needed to the Middle West would, under present conditions, involve excessive costs. The cheapest route from Labrador to the central territory is by way of the St. Lawrence River to the lower lake ports. But not more than 6 million to 8 million tons of ore a year can now be transported over the 14-foot channel that now parallels the International Rapids. This movement involves transfer from 25,000-ton ships to 2,500-ton canal boats at Montreal and reloading onto lake freighters above the locks. The alternatives to this route are uneconomic. They include shipment of ore by water to Montreal and thence by rail some 700 miles to Pittsburgh, and even farther to other points of consumption, such as Wheeling, Weirton, Youngstown, and Canton. Another means would be an ocean voyage to Philadelphia or Baltimore with a rail haul inland. It appears that at existing freight rates delivery by either of these routes to mills north and west of Pittsburgh would be even more costly than shipment through the bottleneck of the present system of locks.

The proposed seaway which would reduce the cost of the presently available all-water route by more than 25 percent and would permit shipments at the rate of from 24 to 32 million tons of ore a year, provides the only feasible solution for the Middle West's ore-supply problem. Failure to provide a solution will almost certainly result in a sharp relative decline of steel-mill operations in that area as operations are gradually shifted to areas more favorable located in reference to foreign ore sources. The economic cost of such a shift would be enormous in itself, without regard to the almost incalculable cost of the resulting impairment of dependent and related industrial and business activity throughout the Middle West.

The basic economics of the problem are well stated in the article entitled "The Technology of Iron Ore," by B. D. Thomas, of the Battelle Memorial Institute, incorporated in the fourth volume of the Report of the President's Materials Policy Commission, issued in June 1952, at pages 43 and 44:

The central area of the steel industry of the United States produces 80 percent of the pig iron in the country. The ore supply for this geographically isolated area is consequently the most important single factor in the iron-ore industry. The replacement cost of the blast furnaces, coke plants, steel mills, and auxiliary installations associated with this vast steel-producing entity would probably be in excess of $20 billion. The dependent industries and the related human activities which stem in large measure from the steel industry account for a very sizable part of the total wealth and economic power of the country.

Rebuilding this enormous industry to accommodate it to a changing pattern of ore supply would seem to be a far more complex undertaking than to build the concentrating plants and transportation systems involved in assuring a continuing supply of ore to an already existing industry. Capital expenditures for beneficiating Lake Superior taconites, and for the mining development and transportation system for Quebec-Labrador ores, including the St. Lawrence seaway, and for the transportation and development costs of foreign ores, principally Venezuelan, may total $5 billion in the next 25 years. In that time, the steel industry of the United States will consume 4 billion tons of iron ore to produce ingots worth $200 billion. This sum would appear to justify the capital outlay required.

The case of the petroleum industry may serve as a graphic illustration of the dependence of industrial activity in the Ohio Valley and indeed throughout the Middle West, upon a high level of steel production in the central territory. In the area between the Mississippi River and the Allegheny Mountains there are petroleum refineries with a capacity of more than 1,500,000 barrels of crude oil a day. Almost 15 percent or 225,000 barrels a day of the output of these refineries is residual fuel oil for which the principal customers are the steel mills. The oil industry in this territory has already during the past year been confronted with a serious problem of residual-fuel-oil surpluses resulting in part from the steel strike and in part from a slowing down in the rate of growth of the steel industry in the Youngstown-Pittsburgh districts. It will be obvious, of course, in a joint-product industry, such as the oil industry, that surpluses of one product can impair the total operation even though demand for the other products may be unsatisfied. If, because of lack of adequate, economical transportation for its ore supplies to the central territory, the steel industry begins a costly relocation program, expanding its facilities, based on imported ores, on the eastern seaboard and permits operations in the central territory gradually to be reduced, the consequences for the petroleum industry in the Middle West will be particularly severe.