Just a few words about canned goods. The upper Mississippi Valley, especially Iowa, Wisconsin, and Minnesota, have developed a large canning industry, but high transportation charges to the principal markets now are a severe handicap. This industry is another form of agricultural relief, as it encourages diversified farming, and a 9-foot channel in the upper river will do more for the further development of this canned-goods industry than any other

agency.

We must also not overlook the large movement of canned goods from the Pacific Coast States. Because of the Panama Canal route it now costs more to transport canned goods from the Pacific coast to the upper Mississippi Valley than to any other part of the country. A 9-foot channel will provide a cheap all-water route for this movement, and reduce the cost of this important food item.

Linseed oil is another important item. The country's largest flaxseed crushing plants were located in the Twin Cities. However, the high transportation costs on linseed oil and on cake and meal have seriously restricted our markets, and as a consequence large crushers have been built along the Atlantic coast. These eastern mills use foreign flaxseed and thus the farmers of the upper Mississippi Valley are, to a large extent, deprived of the benefits of raising this valuable crop. A 9-foot channel will change this situation entirely. We will again be able to reach the most important markets and our farmers will benefit, not only by the direct returns from raising flax, but also by having available at low cost the cake and meal which is such a valuable feed for livestock.

The welfare of industry in the Mississippi Valley goes hand in hand with the welfare of agriculture, and we can not impress upon you too strongly the distressed condition of both. What the Mississippi Valley needs is a speedy return to the conditions that will attract new industries and rehabilitate and foster the expansion of those already located there.

The substantial rail rate increases beginning in 1914 have destroyed the once more favorable rate relationships of the upper Mississippi Valley with the East, South, and West. There is no prospect of a reduction in rail-transportation charges, in fact, so far as the upper Mississippi Valley is concerned, they are certain to reach higher levels, and thus increase the handicaps under which we are already struggling.

Also, the rail-rate structure is gradually being revised to a mileage basis. This is to our further disadvantage, as the upper Mississippi Valley is farther removed from all seacoasts than any other section of the country.

As I have indicated, further substantial increases in rail rates are on the immediate horizon. Cases pending before the Interstate Commerce Commission threaten such increases. In these proceedings the carriers have proposed heavy advances and the tentative reports, if approved by the commission, will give the railroads a substantial part of what they are demanding. I refer particularly to the general investigations under the Hock-Smith resolution, which was intended to aid agriculture. There is no prospect of such aid as a result of these investigations. On the contrary, agriculture in common with industry in the Middle West will be further burdened with

transportation costs. In some of these cases our largest manufacturers testified that if there is a further increase in transportation costs on their raw materials and finished products they will suffer severely, through the loss of markets now reached with the utmost difficulty. Some of these manufacturers have told me that even under the present rates they could well afford to abandon their plants and move to more favorable locations. Others have already taken this step.

In proof of what I have said about the condition of industry in the upper Mississippi Valley, I take the liberty of quoting from testimony given by two of the largest manufacturers in St. Paul in the Western Class Rate case. (I. C. C. Docket 17,000 p. 2.)

Mr. Washburn is the head of the American Hoisting & Derrick Co., of St. Paul, one of the largest manufacturers of hoisting machinery, was on the stand, and I asked him this question [reading]:

Question. Mr. Washburn, from the standpoint of your business alone, what, in your judgment would be the effect of the proposed increases, taking into consideration also the attempt of the carriers to now cancel some of your most important commodity rates, if these proposed rates were made effective? Answer. I should say it would make it absolutely prohibitive for our business to continue in St. Paul. If our commodity rates were removed and increases made as indicated by the proposed new rates, I do not see how the American Hoist & Derrick Co. could exist in this territory.

Now, I am not saying the American Hoist & Derrick Co. would go out of business but we are located absolutely at the extreme western edge that it would be possible to manufacture, there is no question about that. Now, we have some advantages from the manufacturing standpoint in St. Paul, and we have our plant here which has grown up gradually and has been developed with the growth of this territory but our competition has grown so seriously, it has trebled since the war, that it is a question how long the American Hoist & Derrick Co. could exist under a burden such as might be put into effect by this proposition. That is a question that is giving our officials very grave

concern.

We want the railroads to prosper; we do business with the railroads; we feel that we are entitled to what it costs for their business; but the railroads need our business up here. This country needs our business. If we were to take our factory away from St. Paul, this location would lose about $1,250,000 annual pay roll.

Another large concern at St. Paul is the Bohn Refrigerator Co., Mr. C. C. Bohn, president of that institution testified along a line quite similar to that of the witness above referred to. The following excerpt from the record of his testimony is pertinent [reading]: Question. Mr. Bohn, viewing the situation from the standpoint of your business, what would you say the effect would be on the revenues of the Western Trunk Line railroads if these proposed increases were made effective?

Answer. The only thing I can see is to move. We realize now and have realized ever since the war changed conditions of the refrigerator industry that we are located wrong, and our profits, our gross profits and net profits, have gradually been decreasing.

My judgment is that if there is any further increase in freight, unless we can find something else to offset or counteract it, we will have to try and sell what we have got here and get out and move to the eastern market.

I could go on and read to you a large amount of testimony of similar import given by the largest manufacturers in St. Paul and Minneapolis that was adduced in evidence in that investigation before the Interstate Commerce Commission, but I think that one quotation will give you the picture, and it is representative of the general situation up there.

The present cost of coal is a severe handicap to industrial development in the upper Mississippi Valley. This cost can be substantially reduced by utilizing the river, thus stimulating industrial activities, and this, of course, in turn will increase the amount of coal consumed in that territory.

Distribution of coal can be made from docks on the river just as well as from docks on the Great Lakes. This, however, requires large investments in facilities, and these investments will not be made until the municipalities and private interests have definite assurance that there will be a 9-foot channel.

Coal for the upper Mississippi River territory will come from Illinois, Kentucky, West Virginia, and Pennsylvania. Except from Illinois the movement will be down the Ohio and up the Mississippi. This coal can not be transferred en route, as the cost is prohibitive. The Ohio River is on a 9-foot basis and in order to develop this coal traffic, which will provide one of the major benefits of river transportation, the upper Mississippi must necessarily also be on a 9-foot basis.

And in that connection I would like to have the record refer to page 15 of the report of the special board of engineers, where they discuss the situation in regard to coal, and show what a large amount will move, and at a very large saving to the consumer.

Next to coal, iron and steel are probably the most important raw materials for manufacturing. Even under our present handicaps of high transportation costs there is an enormous movement of iron and steel to the cities on the upper Mississippi River, and interior points.

In order of importance, this movement is from the Chicago district, the Ohio and Pennsylvania mills, and the St. Louis district. Unless the transportation charges on iron and steel can be reduced, the upper Mississippi River territory can not compete with other localities now more favorably situated, because they have economical water transportation.

With the completion of the Illinois waterway. the Chicago steel mills will be able to reach the lower Mississippi Valley on a standardized 9-foot channel, but unless the upper river is also improved to that depth, there will be a very expensive barrier against our territory.

From the Ohio River territory an enormous tonnage of steel is already moving down the Ohio River, and the situation is exactly as I have stated with respect to the Chicago district.

There is a substantial movement of steel to the upper Mississippi territory from the Pittsburgh district, and most of this seeks the lake route, because there is some saving under all-rail rates, even though there are two transfers of the lading en route. From Pittsburgh to the Twin Cities the all-rail rate is 60 cents per 100 pounds, or $12 per ton, and via rail-lake-rail the rate is 512 cents, or $10.30 per ton. You can readily appreciate what a handicap such transportation charges are for our industries in meeting the competition of more favored localities.

From Pittsburgh to the Twin Cities via the Ohio and Mississippi Rivers the haul is 1,820 miles. At the hearing before the Board of Engineers we presented evidence showing that on a 9-foot channel

steel could be moved from Pittsburgh to the Twin Cities at a cost of about $2.70 per ton. This is $7.60 per ton less than it costs us via the cheapest route now available.

From Chicago to the Twin Cities the distance via the Illinois waterway, Grafton, and the Mississippi, is 960 miles, as against a rail haul of 400 miles. But even so we presented evidence that on a 9-foot channel the steel could be moved at a saving of from $2.50 to $3.50 per ton. Via the Hennepin Canal the distance is very much less, and if this canal is improved to a 9-foot basis the saving will ve considerably more.

Even with the present handicap of a channel, less than 6 feet deep, and a transfer from rail to barge, we are moving some steel from Chicago to the Twin Cities at a saving of $1 per ton.

I respectfully repeat that the necessity of fostering manufacturing in the upper Mississippi Valley can not be overstated. Nothing can be of greater benefit to the farmers than large near-by or so-called home markets, that provide a strong and steady demand for the products of the soil and so far as the upper Mississippi Valley is concerned, such markets can now only be further developed by the improvement of the Mississippi waterway system to its fullest carrying capacity.

Senator COPELAND. I would like to ask you a question there. How much did you say was the difference in the coal cost between water transportation and rail transportation?

Mr. MUELLER. I did not give any figures with respect to the coal product. We know that on a 9-foot channel we could move coal into the Twin Cities, which is the head of navigaton on the Mississippi River, from Illinois mines at a saving of at least 75 cents to a dollar a ton.

Senator DENEEN. From which mines?

Mr. MUELLER. I would say southern Illinois.

Senator COPELAND. And then, of course, from the Pennsylvania mines would be considerably more of a saving, would it not?

Mr. MUELLER. The saving would be more per ton because of the high rate.

Mr. BRENT. Senator, the average earnings of the railroads for the last year were about 11 mills. The operation on the lower Mississippi, after paying operating costs, putting away its depreciation, earned about 4 per cent on the Government's investment on the basis of 4 mills. We can handle a boat on 9-foot channels good tow as cheaply as it can be handled on the Great Lakes. There is no question about it.

Senator COPELAND. Thank you.

Mr. MUELLER. The railroads have also felt the effects of this depression in agriculture and industry, and I say advisedly that higher transportation charges will not cure the situation for them. There never was a truer saying than that there is a limit to what the traffic will bear.

Railroad prosperity is dependent entirely upon the prosperity of the territory they serve. Therefore, instead of making the situation more difficult for the railroads, as is often claimed by them, we offering the only possible remedy, which is additional tonnage. Every additional factory chimney and every additional laborer that

are

is employed in the upper Mississippi Valley will obviously provide additional freight for the railroads, even though they will not handle 100 per cent of the increased tonnage.

We have been studying these conditions for many years, and I repeat that we can see but one channel of relief, and that is through the improvement of our navigable waterways.

The present 6-foot project will not give us relief. The special board of engineers so find in their report and they condemn the 6foot project as obsolete.

The Mississippi River forms a part of a reasonably direct route between the entire tributary territory and a very large part of the country, not to mention foreign markets. The river must be used on a large scale, if we are to get relief from our present intolerable situation and for which the Panama Canal is largely responsible. Our earnest appeal to you, therefore, is that this relief be provided as speedily as possible.

The CHAIRMAN. I will have to leave somebody else in charge of the committee because I must go to the Senate floor at 12 o'clock. The gentlemen have informed me they have four more witnesses who wished to be heard. Will Senator Deneen kindly take the chair? And may I say that when we adjourn it will be until 10 o'clock Thursday morning.

(Thereupon, Senator Deneen took the chair.)

STATEMENT OF JOHN A. KERTER, DUBUQUE, IOWA

Mr. KERTER. We of Dubuque took the bit in our mouth, as several other communities, and provided a terminal, one of the most modern terminals upon the upper Mississippi River, and we have expended $389,497 on that terminal, and we are naturally interested in seeing the development go forward in the way of an adequate channel that would make it possible for this terminal to earn a return on our investment.

Some mention has been made as to the possible savings in the transportation of coal. I have on my desk a letter from a man at Charleston, W. Va., who offers to enter into a contract to transfer coal from Charleston to the city of Dubuque at $2.15 per ton, or exactly one-half of the all-rail rate on that same coal. Our public utilities are very much interested in that, because that is the type of coal that they want, I refer to our gas plant and electric-light plant. The electric-light plant is, incidentally, the headquarters of the Interstate Power Co. that furnishes juice for that entire section of the State, and that is the type of coal they want, and if we can get coal in there from the West Virginia fields at $2.15 a ton, there is no limit to the possibilities of our industrial expansion, because that is the basis of industry in that section.

Thank you, gentlemen.

Senator DENEEN. Call the next witness, please.

STATEMENT OF JOHN PETER, MINNEAPOLIS, MINN.

Mr. PETER. Mr. Chairman and gentlemen, I wish to call attention to one fact, and that is that the city of Minneapolis is waiting for Congress to act on this 9-foot channel. We have acquired land in addition to our modern terminal, and we do not know what to do