we have given no consideration to that whatever because we have felt that this plan of ours had to be financed on the most conservative basis possible and had to be viewed from the most conservative angle. We had to cut it right down to what was the very best and cheapest direct-shipping open-pit material, and we have considered nothing else in our figures. Mr. BLATNIK. The expansibility of the direct-shipment open-pit ores from the Mesabi you estimate at present levels of production will be exhausted within the next five-plus years? Mr. HUMPHREY. Five to ten. I would not say exhausted, Mr. Blatnik, but they will be very materially reduced, because they are the things that, when you get into volume like we are in now, you take your cream when you are pushed. You take your cream in shipping. And that is what we are doing now. We are shipping the cream. We are shipping what is easy to get at. And it is going out very fast. Mr. BLATNIK. The only other source of great expansibility on the whole North American Continent-and it is great, gentlemen, if you have 400 million tons of high-grade open-pit ore that could be moved out as fast as you can scoop it out and transport it out by rail— is up in Labrador? Mr. HUMPHREY. That is correct. No other place on this continent. Mr. BLATNIK. Is that expansibility now available to the steel industry of America, to our economy? Mr. HUMPHREY. Not until the work we are doing is finished and, well, frankly, until you get the seaway. That is the fact. Mr. BLATNIK. That is the bottleneck? Mr. HUMPHREY. That is the bottleneck. Mr. BLATNIK. That is stopping you from shipping it into the lower lake ports? Mr. HUMPHREY. That is what limits what can be shipped. Mr. BLATNIK. The Mesabi Iron Range in 1942 alone shipped 70 million tons; in 1943, 64 million; then 62 million and 58 million. It averaged, I believe, around 59 million tons a year. Mr. HUMPHREY. That is right. Mr. BLATNIK. You estimate that to produce about 10 million tons a year with existing discharge facilities, that that is merely the minimum which you find it necessary just to amortize your investment and justify your investment? Mr. HUMPHREY. That is correct. We would not dare to do it at all if we did not feel that we could move 10 million tons. That is the minimum. Mr. BLATNIK. And the maximum amount that you can ship upstream through the Canadian locks and canal in order to reach the lower lake ports would be 6 to 8 million tons? Mr. HUMPHREY. That is the way we estimate it today. Mr. BLATNIK. And as things now stand, there is no way of increasing that at all but for perhaps the minor addition of one or so million tons, which would not be very significant in 140-million-ton annual production, would it? Mr. HUMPHREY. We cannot find any way to do it. Mr. BLATNIK. Not to be facetious or to sidetrack, but I am rather amused-I should not say "amused" because I am not, but I would be amused if your problem were not so serious, may I say-but it is a sad commentary that you people who have such a good record in mining and who have done such a splendid job over so many years developing these new sources of ore from concentrates and taconites, and who are now going way up in the frozen wastelands of an entirely unknown, uncharted area, should be bottlenecked by this one little stretch of 47 miles of rapids that is such an engineering dream that they can hardly wait to get at it. It is one of the juiciest morsels that has ever been laid before hydro engineers. It reminds me of my experience when I first came to Washington not many years ago. I learned in very short order that there is just no easy way of going from one spot to another within the District of Columbia. In fact, sometimes, as I have mentioned, Mr. Dondero, you have to go over there to get to here. In fact, we use the expression, "There is no point in doing it the easy and sound way because anyone can do that, but it takes an expert to do it the hard and complicated way." I think some of these forces that are responsible for blocking this great resource are somewhat like that. This means so much to us not only by way of our national economy and well-being in this time of very significant expansion in our economy but which also means so much in our own self-interest and our own defense in very critical times which may continue for some time. I cannot help but feel that perhaps we should make it a little harder for you and have you ship that ore all the way down to Mobile and New Orleans and then go up the Mississippi River in a 12- and 9-foot channel up to Minneapolis and then load it on railroad cars and haul it right up to Duluth and Superior. Then you would be able to get right down the Great Lakes to the lower lake ports. That is an example of what I mean by saying you cannot go from here to there, but if you start over there you are liable to make it. Mr. HUMPHREY. I hope that will not occur, because in order to move anything we have to spend a lot of money that would be wasted if we did that. Mr. BLATNIK. I hope so, too. I hope you do not. I am all with you. The mining is no problem? In a relatively easy way, the same way as on the Mesabi Range, you can perhaps double or triple your output of iron ore? Mr. HUMPHREY. That is right. You know just how you do it. Just the same way you do it at Mountain Iron. Mr. BLATNIK. You can dig in the wintertime? Mr. HUMPHREY. Sure. Just exactly the same as you have seen it a hundred times. Mr. BLATNIK. The large lake-type boats, ore boats, that you would use to carry six to eight million tons of ore to Montreal from Seven Islands have a capacity of around 15,000 or 18,000 tons? Mr. HUMPHREY. That is right. Mr. BLATNIK. Twenty-four plus feet-draft? Mr. HUMPHREY. That is right. Mr. BLATNIK. Then you propose to transship that at Montreal to your canal-size boats. What is the capacity of those boats? Mr. HUMPHREY. 2,500 tons. Mr. BLATNIK. 2,500 tons? Mr. HUMPHREY. That is maximum. Mr. BLATNIK. So one lake-sized freighter in normal operation on the Lakes would have to discharge its cargo at some expense and divide that among seven to eight smaller canal-type barges? Mr. HUMPHREY. That is right. Mr. BLATNIK. Those barges could go up all the way through the canal, the locks and the river, right straight to the lower lakes? Mr. HUMPHREY. The near ports in Lake Erie. If they go very far it is expensive. I do not know whether they could run as far as Detroit or not, but Detroit would be the extreme limit to which they could operate. Mr. BLATNIK. Do the docking facilities, loading and unloading facilities which would be required at Montreal exist there now? Mr. HUMPHREY. Oh, no; there is nothing in Montreal today. Mr. BLATNIK. Not a thing? Mr. HUMPHREY. Not at all. Mr. BLATNIK. You stated that some figure would be required to install that. Mr. HUMPHREY. Approximately $20,000,000. Mr. BLATNIK. Would that investment replace facilities now existing on the lower lake ports which you could use if the lake-freight-type of ship of 18,000-ton capacity were allowed to go all the way? Mr. HUMPHREY. They are all available. Mr. BLATNIK. All available? Mr. HUMPHREY. All available. You would not have to spend anything. Mr. BLATNIK. You would not have to spend anything at all in Montreal? Mr. HUMPHREY. That is right. Mr. BLATNIK. If we had the seaway as proposed, the 27-foot depth, you would probably expand additional ore-loading facilities. at Ashtabula or Lorain? Mr. HUMPHREY. That, of course, goes along with steel-plant expansion. Mr. BLATNIK. I am very glad you brought out so clearly a factor which is so important-this one of expansibility or flexibility which has been touched upon several times in the hearing, but I had a feeling perhaps it was not quite driven home as effectively as you did it today. You stated that in the Labrador deposits is the only source of a substantial expansibility which we have left in the North American Continent? Mr. HUMPHREY. That is correct. Mr. BLATNIK. What expansibility, if you have any knowledge of it, can we contemplate in the Steep Rock reserve? Mr. HUMPHREY. There again I am talking about somebody else's business, which I hesitate very much to do. As far as I know, the great bulk of the Steep Rock ore in the future will be underground ore which substantially limits its rapid expansibility. Mr. BLATNIK. We found that out up in the Mesabi Range. Mr. HUMPHREY. In the Mesabi you know that. Mr. BLATNIK. What would be the expansibility, if any, in case of taconite? I am merely asking for the record. Mr. HUMPHREY. Well, taconite is very slow indeed of expansibility. It takes enormous plants to do it, which would be long and expensive in the building. Mr. BLATNIK. Then in event a more serious crisis develops suddenly, with the seaway open you could jump your production by 20, 30, or perhaps 40 million tons a year if the demand required it; could you not? Mr. HUMPHREY. Yes, while you were just getting started at one of the others. Mr. BLATNIK. In taconite, to add 20 million tons capacity, which is not too much, would require, as you said 10 months ago, 200 to 400 million dollar investment and would take 2, 3, or maybe 4 years to get the entire plant structure completed which would process the rock and manufacture concentrate? Mr. HUMPHREY. That is right. Mr. BLATNIK. Requiring perhaps two and three times as much labor, or maybe more, than you would require to get your ore? Mr. HUMPHREY. I think it would require much more than that, Mr. Blatnik. Mr. BLATNIK. Do you think five would be perhaps a closer figure? Mr. HUMPHREY. Probably more than that. Mr. BLATNIK. In addition to your over 30-some years of experience. in a big way in the mining and production of iron ore, you also have had quite some experience in both the coal and the railroad businesses; have you not? Mr. HUMPHREY. That is correct. Mr. BLATNIK. Are you still president, as you stated you were a year ago, of the Pittsburgh Consolidation Coal Co.? Mr. HUMPHREY. Chairman of the board. Mr. BLATNIK. Still chairman of the board? Mr. BLATNIK. And it is your feeling based on intimate experience in the coal business that the seaway as proposed would not hurt the coal business? Mr. HUMPHREY. That is my own personal feeling, and I confine it to that. Mr. BLATNIK. Would your feelings be the same in regard to the railroads? Mr. HUMPHREY. That is my personal feeling with respect to the railroads, Mr. Blatnik, for the reasons I gave. Mr. BLATNIK. Do not answer this unless you wish to, Mr. Humphrey. We do not want to pry into your personal relationships with other business firms-that is, your firm's and yours. But could you give any reason, if you feel free to say, as to why the railroads have opposed the seaway so strongly and so unrelenting and for such a long period of time? Mr. HUMPHREY. I am very glad to state the reason that the railroads have given me. It is that they fear a loss of traffic, and just what that loss of traffic is and how it would come about I cannot tell you because that is their business, not mine. I do not know just what it is. Mr. BLATNIK. Do you have any figures or estimates on what deficits are anticipated for this year and for next year on the ore supply in comparison to the demand for ore supply or the capacity to utilize the ore? Mr. HUMPHREY. Well, our stockpile is now and for the next month will be at the lowest level in the history of the business. They never have been as low as they are right now. We melted more ore in the 12 months from March 1 to March 1 this year than we brought down over the last season of navigation, so that we ate into our stockpiles, and our stockpiles are now at their very lowest level. The best guess, and of course it can only be a guess at this time is this: We brought down last year approximaely 80,000,000 tons-just under that and the best guess now I think is that they will require, that I know of right now, approximately 90,000,000 tons, or perhaps a little more, this year. If the facilities that are being built are finished in that period, they will consume even more than that. As I stated before, we are facing the prospect of the hardest job we have had since I have been in this business-to get enough ore to run these steel plants through till a year from now. Mr. BLATNIK. Just one last question. Reference was made earlier, Mr. Humphrey, to the desirability of this project; that it was such an attractive economic proposition that you felt it would be a sound private venture. Were you advocating that this be developed by private interests or were you merely underscoring the economic feasibility of the project? Mr. HUMPHREY. Well, as I recall it, Mr. Davis asked me what I thought about the possibilities of this being self-liquidating. I have not gone into the returns from the power development sufficiently to know about it. But, in a general way, what I said to Mr. Davis was that I would like to have an opportunity to have a concession on this whole thing, the power and the transportation and the whole thing, to attempt to finance it and do it entirely by private enterprise. Mr. BLATNIK. If it is not possible to be developed by private enterprise because of the Canadian laws and because of the Power Authority Act of 1931 in New York and because of the Federal Government's interest in the international boundary waters, you would favor the construction of this dual-purpose project here by the Government; would you? Mr. HUMPHREY. I would, Mr. Blatnik, and I was not talking about feasibility so much as what I would like a chance at myself. Mr. BLATNIK. Your firm, Mr. Humphrey, would undoubtedly be one of the largest payers of tolls on the navigation end of this, would it not? Mr. HUMPHREY. I would think we would be one of the largest, perhaps the largest. Mr. BLATNIK. And you would pay tolls for quite a good many years; would you not? Mr. HUMPHREY. A long period of time. Mr. BLATNIK. Do you anticipate any difficulty in working out arrangements for a satisfactory rate or a satisfactory toll charge after the construction of the project is under way? Mr. HUMPHREY. Oh, I think, Mr. Blatnik, that that is just a matter of good sound business, and I do not see why there should be any difficulty in working out a good sound business arrangement. There would be a facility there available for use that we are perfectly willing to pay for at a competitive price, and I do not see there would be any more difficulty than there would on any other sound business arrange ment. Mr. BLATNIK. That is all. I hope I have not repeated too much, Mr. Humphrey. I too want to join the others of my colleagues here in thanking you for the excellent presentation you made. 81181-51-pt. 1—33 As you |