Mr. WALKER. The C. & O. serves the coal-mining districts of Virginia, West Virginia, and Kentucky, and in the past has transported millions of tons of coal to the eastern seaboard. The year 1949 was the beginning of a tragic era for railroads, railroad employees, the coal-mining industry, and the coal-mining employees, insofar as coal shipped to the eastern seaboard is concerned. Mr. Symes has told you that in 1952, the imported oil that went to the east coast displaced an amount of coal the revenue on which was such that the railroads would have received $100 million. It is impossible to allocate this loss to the individual railroads, but I should like to give you just a few figures on what it meant to a very small segment of the eastern territory. During the year 1949 we lost 3 million tons of coal that had been going to New England alone. Now, that coal moved by rail from Virginia, West Virginia, and Kentucky to Hampton Roads, Va., and it was then transported by water to New England. The loss of that coal was directly attributable to the tidal wave of imported oil that reached the shores of the eastern section of the country. We have not been able to regain any of that tonnage since. In the fact of the matter, it is continuing to be lost. For the first 3 months of this year, our shipments to Hampton Roads that went to New England alone decreased over 26 percent. So it is on the increase, and it will be on the increase, so long as an unrestricted movement of imported oil is allowed to come into this country. Now, as I said, the C. & O. originates more coal than any railroad in the country. Since 1941, we have spent almost a half a billion dollars in improving our roadway and equipment. We own 60,000 coal cars, the value of which, if we had to buy it today, would be over $3 million. In 1947, we began the construction of a coal pier at Hampton Roads. When completed, it cost $9 million. Now, these expenditures were made with the expectation that this coal would continue to move. The C. & O. today is in such condition, physical condition, that it can meet the needs, the transportation needs, in the territory that it serves in time of any emergency, and we hope to keep it that way, but if we are deprived of this coal traffic by the importation of oil, it cannot be expected that we can maintain those expensive facilities and keep our road in condition to meet the transportation needs of this country in case there is a great emergency. In 1949 I told you that we started to lose this tremendous volume of coal to New England alone. Now, in Boston-that is where a lot of this coal goes, to New England-the price of oil in the latter part of 1948 was as high as $3.31 a barrel. On January the 1st 1949, it was reduced to $2.60, and there was a consistent reduction every month or two, until the price of oil got down to $1.68 a barrel, from over $3 to $1.68 a barrel. And remember that that was during a period when prices were generally on the increase. And so long as the imported oil is permitted to be imported into this country without any restric tions, we are not going to be able to haul the coal, and the railroads are not going to be able to transport it. To give you just a small illustration of what this means to our employees and to our railroad, just this small segment that I have picked out here to talk about means the loss of jobs, at 3 million tons, of a thousand employees on the Chesapeake & Ohio Railroad, it means a loss in wages of $41⁄2 million a year and a loss in gross revenue of $12 million a year. Now, I have talked about New England alone, because it is an important point, but what I have said about New England applies to other points on the eastern seaboard. And I may say in conclusion that the Chesapeake & Ohio Railroad does not object to legitimate competition wherever that is found, but we do not think that that is legitimate competition, and unless something is done to stop the unrestricted importation of residual oil into this country, we are going to find that coal is going to be driven from the eastern market. I thank you very much, sir. The CHAIRMAN. We thank you very much for your very fine and clear statement to the committee. Mr. Jenkins would like to inquire. Mr. JENKINS. I would like to ask you one question, Mr. Walker. Mr. WALKER. Yes, sir. Mr. JENKINS. You say your railroad initiates more shipments of coal than any other railroad, and practically all your coal, then, comes from West Virginia and Kentucky, does it not? Mr. WALKER. That is correct, with a little in Virginia. Mr. JENKINS. I think you separate it at Russell, Ky? Mr. WALKER. That is correct, the Russell yard. Mr. JENKINS. That is right across from where I live, and we claim that it is the greatest railroad yard in the world. Are we right? Mr. WALKER. You certainly are, sir. And the greatest railroad in the world, too. Mr. JENKINS. I do not know about that, but it is the greatest railroad yard. The CHAIRMAN. Mr. Knox will inquire. Mr. KNOX. You have made the statement that the C. & O. Railroad Co. had an expenditure of one-half a billion dollars since 1941. Was that on feeder lines, or was that on the overall picture? Mr. WALKER. It was on the overall, on the Chesapeake district. That is the district that hauls the coal. Now, we do have another district, the Pere Marquette District in Michigan. The figures I gave you were on the Chesapeake district alone, the improvement of our property, building lines, and big equipment. Mr. KNOX. Would you care to estimate the amount of money that was spent by the C. & O. feeder auxiliary lines to your main lines in order to move coal? Mr. WALKER. I am afraid that I can't. I do know that we built an extension from the Big Sandy line to Meade, W. Va., that cost us about $78 million, and we have built 4 or 5 others. We have constructed a number of branch lines during that period to reach new coal fields, both in Kentucky and in West Virginia. Mr. KNOX. In other words, there has been a fair share of the halfbillion dollars that has gone for extensions for the one purpose, the removing of coal to that area? Mr. WALKER. No doubt about that; yes, sir. Mr. KNOX. Thank you. The CHAIRMAN. Are there any other questions? Mr. WALKER. Thank you. the eastern markets with the results already explained. We strongly urge, there fore, that Congress take immediate action to correct the situation such as that provided in the bill now under consideration. (The following letters were received for the record:) THE CHESAPEAKE & OHIO RAILWAY Co.. Hon. DANIEL A. REED, COAL TRAFFIC DEPARTMENT, Chairman, Ways and Means Committee, House Office Building, Washington, D. C. DEAR SIR: Hearings are now being held before the House Ways and Means Committee on the Simpson bill (H. R. 4294), covering the proposed extension of the Reciprocal Trade Agreements Act. This bill proposes to establish limitations on the overall quota of crude petroleum and all products derived therefrom to 10 percent, and a 5-percent limitation would be imposed on imports of residual fuel oil. The 5-percent limitation provision affecting foreign residual fuel oil in H. R. 4294 is identical in principle to the proposals contained in 22 or more additional bills previously introduced in the House of Representatives recently. The writer is an advocate of free trade, for he believes it offers the only prac tical and ultimate satisfactory solution to many distribution, as well as other international, problems which may result in wars between nations. It is also appreciated this country cannot be used as an unrestricted dumping ground for commodities produced by cheap labor or for unlimited large surpluses of petroleum products. As a railroad employee and as a voter, I sincerely solicit your support of and vote for the passage of H. R. 4294. A few reasons in favor of this bill are as follows: 1. Complete free trade of petroleum products at this time may cause the deterioration and stagnation of the coal and some segments of the oil industries in these United States. 2. Congress should not ignore legislative safeguards for domestic industries. Today's imports are 154 percent greater than they were in 1946. 3. The displacement of coal by the importation of both crude and residual fue! oil throws a lot of employees in the coal and railroad, as well as in other industries, out of work. 4. In 1952, Federal, State, and local governments lost in tax revenues the equivalent of $1 a ton based on the 31 million tons of coal displaced by the almost 129 million barrels of cheap foreign residual oil brought into this country. 5. The tax loss may be subdivided as follows: Coal industry, at 33.21 per ton Mine workers, on lost wages. Railroad taxes on lost revenue_ Railroad workers, on lost wages_ Transportation tax at 4 cents per ton.. Total__. Less import taxes paid at rate of 54 cents per barrel on 89,971,000 barrels__. $12, 230,000 9, 797,000 10, 357,000 5,571,000 1,240,000 39, 195, 000 4,723,000 Grand total_-- 34,472,000 6. As cheap oil floods the United States, State conservation bodies will be forced by lessened demand for their oil to make further cutbacks. This may result in a prolonged continuation of narrowing profit margin in the domestic oil industry and impede efforts of domestic oil producers to meet defense goals. Narrowing profits and lack of economic incentives, no doubt, may be responsible for the present weakening of essential domestic oil-well drilling programs. 7. The importation of residual fuel oil in 1952 was slightly less than 5 percent of the total domestic demand for petroleum and petroleum products. There fore, this restriction should not work an undue hardship on importers of foreign oil unless they propose to use the east coast as a dumping ground. In a number of press releases recently, the proponents of the unrestricted importation of foreign oil claimed heavy imports of fuel oil have little to do with the present plight of the coal industry. Over 128 million of the 129 million barrels of residual fuel oil imported last year were taken in on the east coast and, in most instances, represented a direct displacement of coal. In addition, over 192 million of 209.5 million barrels of foreign crude oil also moved to the east coast. In December 1952, the yield of residual fuel oil from crude oil on the east coast was 22.7 percent. Therefore, it is reasonable to assume this foreign crude oil produced about 44 million additional barrels of residual fuel oil in 1952. This had the potential displacement of another 10 million tons of coal in the generation of steam and which was not taken into consideration in computing the tax losses of $34,472,000 shown in item No. 5 above. In order that you may appreciate the extent to which the importation of petroleum has increased during the past 5 years, we are showing below the receipts of crude and residual fuel oils for the years 1948 and 1952: Trusting you may see your way clear to support and vote for bill H. R. 4294. Most respectfully, The Honorable DANIEL A. REED, Chairman, Ways and Means Committee, GEORGE G. RITCHIE. NEW YORK CENTRAL SYSTEM, House of Representatives, Washington, D. C. Dear Sir: Having recently returned from a trip to the coal fields in the States of West Virginia, Virginia and Pennsylvania, I am now more fully conscious of the necessity for some legislative action limiting the importation of foreign residual oil along our Atlantic seaboard. The specter of a depression which we of the Republican Party abhor has already reared its ugly head throughout the entire eastern coal field, and if remedial action is not immediately forthcoming, I am fearful that this condition will spread to all branches of industry and agriculture alike. Coal and transportation are two of our basic industries, and while I have long subscribed to the principle that we must import certain commodities if we are to maintain a proper trade balance with friendly nations, I am equally certain that it is not the intention of the Republican administration to permit a small number of large oil companies to monopolize markets through the medium of imported residual oil at dump rates, thereby threatening the economic welfare of a large number of our people who are dependent upon the coal, railroad, and affiliated industries for their livelihood. In light of the facts brought out at the hearing on the Simpson Bill (H. R. 4294), I earnestly hope that you will actively support the enactment of that portion of the bill which contains the 5 percent limitation on foreign residual oil. Thanking you for your good cooperation in the matter, and reaffirming my belief in the principles of the Republican Party, I am Respectfully yours, HARVEY L. WILLARD. The CHAIRMAN. The next witness will be Mr. Brewster B. Jennings, president of the Socony-Vacuum Oil Co., Inc., New York City. Just before you take the stand: The committee has received a statement from Congresswoman Kee of West Virginia, in support of the section of H. R. 4294 which would impose a quota limitation on imports of residual fuel oil. Mrs. Kee is addressing a letter to the members of the committee on this subject. Without objection, I will have Mrs. Kee's statement inserted in the record at this point. 32604-53- --78 (The statement referred to is as follows:) A STATEMENT TO THE HOUSE WAYS AND MEANS COMMITTEE BY CONGRESSMAN ELIZABETH KEE (DEMOCRAT) OF WEST VIRGINIA'S FIFTH DISTRICT Mr. Chairman, I appreciate the opportunity of appearing before this committee and testiying in support of H. R. 4294. In previous testimony the committee has heard detailed accounts of the damage to the economy of all coal-producing States by the seas of residual oil imports that are deluging United States fuels markets, particularly on the east coast. You have also heard witnesses describe the danger to our country's security that comes with unlimited shipments of foreign residual oil as a result of the closing of mines that are so vital to a war-production program. I shall refrain from a general review of the import story and its disastrous impact upon our Nation and its working people, and I think that I can avoid repetition if I confine my remarks to conditions in a local coal area which, in this case, is the district which I have the honor to represent in Congress. Only a short time ago the New England States consumed between 17 and 18 million tons of southern coal annually, but during the last several years foreign residual oil has displaced this coal in increasing amounts, to a point where now nearly two-thirds of our southern coal-much of which comes from mines in the Fifth Congressional District-has been flooded out of these markets. It is hardly necessary to explain the consequences of this impact on the economy of our mining communities, yet anyone not familiar with present conditions in these coal-producing areas would have difficulty visualizing the extent of the distress that foreign residual oil has brought about. West Virginia's coal miners are a proud and hardy people. They are the most representative group of real Americans that you will find anywhere else in our great country. Some are descendants of our Revolutionary heroes, and mary, many others are offspring of settlers who were contributing to America's growth and progress even before West Virginia became an independent commonwealth in 1863. We have natives of the British Isles and the European Continent who have been miners through the ups and downs of the Nation's economic history, and we have young men who have known only America except for that period a decade ago when they served their flag on the other four continents. Our miners, like their fellow West Virginians on the railroads, in other industries, and in places of business in our towns and cities, ask only the right to earn a living. They are complaining now, and justifiably so; they know that their livelihood is being taken away from them through a trade policy that impover ishes many while enriching but a few. Those few are the international oil people who defiantly and disdainfully usurp coal's rightful markets under the false banner of free trade. There can be no free trade where there is fraudulent trading. Our people must be protected against international price fixers, and it is the duty of the Congress to provide this protection. I am aware of the parade of the highest ranking members of the executive branch of our Government who last week descended upon this committee with their sermons-which, incidentally, were not necessarily consistent nor essentially factual to the Congress of the United States. I realize that such opposition makes our work much more difficult. But I respectfully remind the members of this committee that it is the responsibility of the legislative branch of our Government to make these decisions. It may be the duty of those officials of the executive departments to repeat and resound the preferences of the President, but it is the duty of the Congress to make the ultimate decision, in behalf of the people of our land, relative to the problem which now confronts this committee. It is for this reason that I appear here today. I wish to call your attention to the fact that I have been besieged with appeals from the people of my district in behalf of legislation to limit the amount of residual oil imports to 5 percent of domestic demand for the corresponding calendar quarter of the previous year, as provided in H. R. 4294. These appeals do not come only from our mine workers and our coal operators. They are from printers, equipment manufacturers, automobile suppliers, editors, hotel operators, glass and tile distributors, insurance men, lumbermen, sand producers, welders, furniture dealers, grocers, and from scores of other businessmen and workers in my district. |