any reason why iron-ore-mining companies, who have been operating for years in the Lake Superior district, who are now operating, who now hold substantial holdings in that area, would go all over the world spending millions of dollars seeking new sources of iron ore.

They combed all of South America, and after they had about given up they went back for about the third time, I understand, into Venezuela, and finally, after going almost on foot through the jungle or the swamplands into the great interior of that country in which there were no roads or river transport or railroads, they located this deposit there. They went up into Labrador, flying men, matériel, specialists, technicians, and equipment by air, to determine the extent of those bodies there, to begin to develop them. They are in Africa right now.

The point is that those who know this situation best, the mining companies themselves, in spite of the fact they hold large reserves of these low-grade ores in the Lake Superior district, are compelled to spend millions of dollars now to search for new bodies of ore throughout the world, to work and try to develop and to experiment with new processes and new methods and new techniques for utilizing the existing low-grade ores and the vast reserves of taconite. The situation is so critical that they are compelled to go out and grasp and seek for these new sources of ores.

Now, I point to that perhaps in a too general way, but I point to that, gentlemen, as evidence in itself that those who know best, the mining people themselves, are compelled to go abroad and seek these ores which they need.

Now, General, you mentioned that at most we have 14 years of this supply. Is it not true that the mining industry is a long-range proposition? That no mining company or steel company of any size would be carrying on their business in a sound manner if they were not assured at least a 30-year minimum supply of ore for their furnances? I believe they normally try to have at least 50 years' supply ahead before they can carry on their business in any degree with confidence or be able to survive.

General PICK. Mr. Blatnik, I think that the steel companies know perfectly well that our supplies in this country of the high-grade ores are running out. They also know that we have got to have easily accessible high-grade ores. They also know that we have got to go into the world market to get them. They are doing everything that they possibly can, spending enormous sums to develop foreign sources in Liberia and Venezuela. The large companies in the United States are spending terrific sums of money to develop those ores. Actually, in Venezuela, they are developing a channel into the Orinoco River which is comparable to developing a channel similar to the presently existing Mississippi River channel.

Mr. BLATNIK. It is planned that that channel, that large navigation project, shall be constructed by an American firm? Is that right? General PICK. It is to be built by American funds, by the steelcompany funds, in order to get a supply of ore. Now, that indicates to me definitely that that ore from Venezuela is going to the seaboard and adjacent areas rather than to that industrial area which we have in the central part of the United States now. That is why I say it is so important to get as much as you can of this Labrador ore into that Great Lakes area if you do not want it to become a depression area.

Mr. BLATNIK. Not only must we need these additional amounts of iron ore from foreign sources to make up in part, though not entirely make up, the deficit between the supply of ore on hand now and the demand as we see it from now until 1960, but we must also have a sort of reserve or backlog to provide for the expansibility or the flexibility of ore production which is so extremely important should we reach an all-out war?

General PICK. Absolutely.

Mr. BLATNIK. In development of taconite, in development of concentrates, if you look at their production curve, it is a gradual increase from 1,000,000, 2,000,000 to 4,000,000 tons a year on up over a period of years. But, as was contemplated in the last war, the time came when we were producing 25 or 40 million tons of orethese are relative figures-and within 12 months or less than 12 months it had to be increased by over 100 percent; then again by 100 percent, until over a period of about 4 years in those early forties, when we were in World War II, I believe the over-all sudden expansion within 4 years was almost 250 percent in iron-ore production in the Lake Superior district itself.

We do not have that capacity for such expansion at the present time, and if we should get into an all-out war within a year or two or three, we would find ourselves caught with a depleted reserve of high-grade direct-shipment ores from the Lake Superior district and extremely difficult accessibility to foreign sources. Is that correct? General PICK. That is correct, sir.

Mr. BLATNIK. That is all I have at this time, General. I just want to tell you I was extremely impressed by the not only comprehensive presentation you made but the clear and logical arguments which you set forth in behalf of this project which is of such interest to the entire country.

I thank you, Mr. Chairman.

Mr. LARCADE. Do you have any questions, Mr. McGregor?
Mr. MCGREGOR. I have some questions, Mr. Chairman.

General, I have noticed with a great deal of interest your very positive statement relative to the fact that we are getting short of ore. Do the Army engineers make surveys of mineral rights and the availability of various minerals and ores, or do you get that information from other departments?

General PICK. We get that from other departments?

Mr. McGREGOR. Then the statement you have made relative to there being a shortage would probably come from the Department of Commerce or the Department of Interior?

General PICK. It came from the Department of Interior and from the steel companies, sir.

Mr. MCGREGOR. General, do you have any knowledge of Steep Rock deposits? I noticed you referred to it on the map awhile ago during your testimony.

General PICK. I have a limited knowledge of Steep Rock. I understand that there is an ore bed up there that is being prospected now that has some high-grade ore in it. I hope it has as much up there as the Mesabi Range, sir. I understand the Steep Rock ore lies beneath a lake and that the ore occurs in vertical strata rather than in horizontal strata as on the Mesabi and in Labrador.

Mr. McGREGOR. Figures or estimates are given, General, of a thousand million tons of ore.

General PICK. Yes. That would be fine if that proves out to be true, sir. I understand they are prospecting up there.

Mr. MCGREGOR. That is right, and they are prospecting other places. Is that not true?

General PICK. Yes, sir.

Mr. MCGREGOR. You definitely have knowledge of other prospecting?

General PICK. They are prospecting over the entire United States. Mr. MCGREGOR. That is right. Then your statement that we are short of ore would be dependent upon the results of a lot of prospecting?

General PICK. I am basing my statement, sir, on the information which I have gotten from the Department of the Interior, the Bureau of Mines, and upon what the steel companies tell me. They say that there is an enormous amount of low-grade iron ore in the United States but the high-grade stuff is running out, and they have got to have easily accessible high-grade ore.

Mr. McGREGOR. General, do you not agree with me that the stock exchange is somewhat a barometer of our economic condition and it would show whether or not there was a shortage of this material or that material?

General PICK. Oh, I do not know, sir. I do not know anything about the stock exchange. I do not play it.

Mr. MCGREGOR. I do not know much about it either, General, but I do know that the stock exchange is a pretty good barometer. I want to call your attention

General PICK. I know the stock exchange takes a nosedive now and then.

Mr. MCGREGOR. That is right-to the regret of some. But I want to call to your attention that steel stocks are increasingly and continually going up.

General PICK. Do you know one reason? I asked

Mr. McGREGOR. Certainly that is not because we are going to get a steel shortage.

General PICK. I asked the people that question myself, and they said, "We have found the ore."

Mr. McGREGOR. That is right.

General PICK. I said, "Where?"

Mr. McGREGOR. That is what I want to prove to you.
General PICK. They said, "In Venezuela and Liberia."

Mr. MCGREGOR. Well, General, I think we can prove to you that there is not the shortage of ore as claimed by some and I hope you can attend some of the meetings when some of these steel people testify, because then you will get some information other than what some Federal department has given you.

I have noted particularly that you say that this project can be amortized. I take it by that you mean there are to be tolls charged? General PICK. Yes, sir.

Mr. MCGREGOR. And you went into detail. You said it would be amortized over a period of years, and we would get $3 to $1 back. That is unusual for me to understand because we have had testimony here that there has been no agreement between the United States and Canada relative to tolls, and if there is no agreement relative to how much tolls are to be charged, how can you figure that we are going

to get our money back? You would have to know the amount of the tolls, and also how tolls are to be divided, would you not?

General PICK. Canada has agreed to the principle of tolls, sir, and I do not think it would be any difficulty whatsoever in arriving at a system of tolls just as soon as this project is authorized.

Mr. McGREGOR. How much per ton, General, did you consider when you said that this could be amortized over a period of a certain number of years? How much toll charge did you figure there and what authority did you have to use that figure?

General PICK. I took the Commerce Department figures on that, sir, after review by my staff indicated them to be a fair estimate.

Mr. MCGREGOR. Now, the Secretary of Commerce was here, and he advised us there was no definite agreement relative to the amount of tolls to be charged per ton.

General PICK. There is no definite agreement, because they have no authority to make any definite agreement yet, but these tolls on iron ore are, for instance, 50 cents, grain from 25 go 35, coal from 25 to 35, petroleum 25, ballast and shipping 15 cents.

Mr. MCGREGOR. Whose figures are those, General?

General PICK. Those are figures arrived at by the Department of Commerce in making their study.

Mr. McGREGOR. And yet the Department of Commerce admits and the Department of State admits that we have not entered into any agreement with Canada relative to tolls and many other items pertinent to this program. So until final agreement is entered into and determined, those figures, would also change, is that not correct? General PICK. Well, they might, but I do notMr. MCGREGOR. Do you not think they might? General PICK. I think they might be lowered.

Mr. MCGREGOR. They might be raised too, might they not?
General PICK. I doubt it, sir.

Mr. MCGREGOR. And yet, in the face of the questionable amount of tolls to be charged, you say, and you have set forth your figures, this can be amortized on the basis of 30 years, and we will get back $3 to $1? General PICK. I said it would be amortized over a period from 40 to 50 years, sir.

Mr. MCGREGOR. I misunderstood you. But the thing I am trying to get at, General, is on what authority you made those figures and the statement, because the departments where you get those figures admit to us that no agreements have been made on tolls distribution and various other items.

General PICK. No agreement has been made, sir, because there is no authority for an agreement. There has been an untold amount of discussion on this project over the years, and I believe that that will be easy to work out with Canada.

Mr. MCGREGOR. That would have to be taken care of definitely by agreement before we could definitely determine how soon we could amortize this, would it not?

General PICK. I do not think so, sir. I think you can estimate these things just like we estimate any other project which is authorized in the United States as to the benefit-cost, ratio.

Mr. MCGREGOR. And not having knowledge of what the other country wants to do-is that your conception

General PICK. I think we have knowledge what the other country wants to do.

Mr. McGREGOR. But it is not in writing?

General PICK. No, but there is a very genuine understanding, sir. Mr. AUCHINCLOSS. Will you yield?

Mr. MCGREGOR. Yes; I will yield.

Mr. AUCHINCLOSS. I would like to ask one question, General. Have you figured out the approximate cost of transportation of a ton of iron ore from the Labrador area to the furnaces?

General PICK. I do not have it here. I would be glad to furnish it for the record, sir.

Mr. AUCHINCLOSS. Could you?

General PICK. Yes, sir.

Mr. AUCHINCLOSS. Could you make a comparative statement between the cost of laying down the tonnage from Venezuela in the same area?

General PICK. Into the Pittsburgh area for instance? Into which area, sir? Into Pittsburgh area?

Mr. AUCHINCLOSS. Yes, the Pittsburgh area.

General PICK. Or Cleveland or where?

Mr. AUCHINCLOSs. From the Labrador deposit to the Pittsburgh area and from Venezuela to the Pittsburgh area.

General PICK. Yes, sir; I can furnish that for the record, sir.
Mr. AUCHINCLOSS. Thank you.

(The information furnished by the Chief of Engineers based on current estimates by his staff is as shown below. The estimates

include the cost of services required to make delivery of iron ore on dock or in rail cars, as the case may be, at the final destinations indicated. The costs for the water hauls are estimated on the basis of a one-way movement of ore returning empty.)

1. Labrador ore.-Cost of shipping a tons of ore from Seven Islands over a 27-foot seaway, without tolls, to Ashtabula and thence by rail to Pittsburgh: $3.80 per gross ton.

2. Venezuela ore.-Cost of shipping a ton of ore from dockside to Baltimore and thence by rail to Pittsburgh: $4.80 per gross ton.

3. Labrador ore.-Cost of shipping a ton of ore over existing waterway facilities from Seven Islands to Ashtabula and thence by rail to Pittsburgh: $5.65 per gross ton.

4. Corresponding costs indicated in 1, 2, and 3 above to Cleveland.-Labrador ore to Cleveland over 27-foot seaway; the cost is estimated at $2.05 per gross ton. Venezuela ore to Cleveland via Baltimore; the cost is estimated at $5.20 per gross ton. Labrador ore to Cleveland over existing waterway; the cost is estimated at $3.90 per gross ton.

Mr. MCGREGOR. General, I recall a statement that you made the other day and I do not think it was off the record-at the White House. I believe you said that we could start construction work in 90 to 120 days, or something like that..

General Pick. I think I said we could start work in 90 days if we had the money, sir.

Mr. McGREGOR. I notice in your statement, General, where your survey for this project was made 9 years ago. Is that right?

General PICK. That is about right, sir.

Mr. McGREGOR. Would you tell this committee that you could bring up to date your survey so that a contractor could bid on these projects and do it within a period of 90 days on a survey that has been made 9 years ago?

General PICK. On the preliminary works, yes, sir. You see, this project was designed during the last war. We have the design.