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Mr. DULLUM. No; there is no lumber.

Senator THYE. In other words, this salt is brought in there and distributed, or is it

Mr. DULLUM. No, sir. It is taken from the bay. They have these big salt beds, and through evaporation it is manufactured.

Senator THYE. They take it from there and ship it out!
Mr. DULLUM. Yes, sir.
Senator Tuye. Freight is quite an item in the expense of salt.
Mr. DULLUM. Yes, sir.

Senator Thye. Therefore, they are trying to get this harbor development so they can have less handling of a ton of salt. In other words, they just put it on board rather than to truck it 30 miles down to either Oakland or San Francisco.

Mr. DULLUM. The salt, Senator, until about 4 or 5 years ago, moved from these salt beds to a dock in Oakland—not our facilities, another dock.

CEMENT MANUFACTURE Senator THYE. Besides the salt they have the cement? Mr. DULLUM. That is correct. Senator THYE. They have a cement plant there at Redwood City! Mr. DULLUM. That is correct. That is Kaiser's plant.

Senator Thys. And there, of course, again you would have to truck it down to some other harbor to load that cement out if it was going oceanwise

Mr. DULLUM. You understand, sir, that the vessels loading cement or salt are calling and have called and will continue to call at those facilities.

Senator THYE. Yes; but it is limited.
Senator Cordon. They cannot go out fully loaded.

Senator Thre. It is limited; they either have to load partially and go out or it has to be a smaller vessel only plying up and down the coastline.

I am trying to get the picture clear in my mind why you object, and I am just wondering if we will find the same feeling running out there as we find in some other coastal areas, that what affects my harbor affects your harbor.

Mr. Duulum. We object because we believe that the expenditure of $1 million is not a sound expenditure.

Senator Cordon. Your position is that (1) it would cost more to get the freight in there on the water end. Therefore, it is a waste of money. (2) If that isn't true and they could get the freight in there, then they would be taking business away from the other terminals, and for that reason you should not spend the money. Is that right?

Mr. Dullum. Sir, I think that I might answer your question this way: I suppose that originally when the cost factor of 4 to 1 existed, naturally any consideration

Senator CORDON. You understand there are two projects.
Mr. DuLLUM. Yes, sir; I do.
Senator Cordon. And this is only one of them.
Mr. DULLUM. That is right.

Senator Cordon. And this is for the deepening, and you have got another project altogether different. When you are talking about 4 to 1 you are not talking about this one alone.

BENEFIT-COST RATIO

Mr. DULLUM. I am talking about the study, I believe, made in 1947 or 1949 that has been amended to reflect, as I have stated earlier, a ratio of 1.6 to 1.

Senator CORDON. It is the same project ?

Ir. DULLUM. I believe so, sir.
Senator CORDON. It went from 4 to 1 to 1.6 to 1?

General CHORPENING. It went from 3.8 to 1–3.8 was the original benefit-cost ratio. It was reported to this committee last year as 3.6, and reported in our direct testimony this year as 1.6.

Senator CORDON. What was the occasion for the change made since last year?

General CHORPENING. The original project was on the basis that there were not facilities nor a channel there for deep draft navigation. Recently, however, the Leslie Salt Co. went ahead and dredged a partial channel for themselves and constructed a shipping terminal which permitted their boats to come in—not fully loaded but they could operate. So we realized that we could not take the original credit for shipping that is presently now using the harbor. We had originally taken credit for it as commerce that would move because of the improvement, because it did not exist at that time.

Senator CORDON. How much did you reduce the cost as a result of that?

General CHORPENING. We reduced the cost very slightly because the amount of work that had been done will not appreciably reduce the overall cost of the work, but it did definitely reduce the benefit-cost ratio. The benefits we now estimate to accrue are in the ability to fully load the boats and in shortening the operating time.

Another point in connection with this, practically all of the tonnage upon which the benefits are based originate from or are destined for the area immediately adjacent to Redwood City.

Senator CORDON. You say practically all. What percent? Do you know?

General CHORPENING. It is about 99 percent, sir. Salt, gypsum, and building cement are the three prime dry-cargo commodities, all of which originate right there.

LOCAL PARTICIPATION

Senator CORDON. Did this improvement at the expense of the local people give them the benefit of this 27-foot-deep channel all the way up to their loading and unloading facilities? General CHORPENING. Yes, sir. Senator CORDON. How far was that?

General CHORPENING. The channel built by local interests was 150 feet wide and 1,200 feet long, which flared into a turning basin, which they likewise built, with a maximum width of 600 feet and a length of 1,300 feet, all within the area that was originally included in the Federal project. That is the reason why this benefit-cost ratio has been reduced, because it was not fair to include a benefit for commerce which had started to move due to work that had actually been done by local interests.

Senator ELLENDER. Congressman Miller, what is the position of the Oakland Port Authority? Are they objecting to this?

OBJECTION OF OAKLAND PORT AUTHORITY

Representative MILLER. They are objecting. I have this letter that I will file with the committee from which I have been reading, and it is signed by the manager of the Oakland Port Authority, Mr. Dudley Frost.

May I say, Senator, to one question about these things, this is not a question after all, of a number of competing companies. These ports, including the port of Oakland, are certificated ports. We have set up machinery, both in the National Government and the State government, that regulates them. They are regulated ports. Their tariffs must be regulated, and we maintain there are between 25 and 50 percent surplus port facilities out there now, and we are only going to put more of them on. When we talk of public utilities it is a little bit different. We are not denying Leslie or Kaiser or anyone who wants to handle bulk cargo. If an oil company wants to go down there, certainly they have the right to do it. But I do not think we have a right to use public funds at this time to encourage a situation that is going to result in setting up another utility that will be knocking at the door to compete with those that are there.

And, as I pointed out, if we could divert some of this tonnage that is not direct military tonnage to the private ports it could be handled as cheaply in the private ports because at the Naval Supply Station and the Army Supply Depot in Oakland they use the same type of stevedores, they contract with the same people to handle their cargo as these other people do. But we are passing cargo. We did get a little of it over in the private ports. And if we are going to encourage and maintain private ports that are highly essential in time of war--every one of these ports was taxed during the war in the Pacific, and yet because of the situation in the Orient it was changed, and once that is settled the flow of cargo through San Francisco and west coast ports will come back to its own-in my opinion, we are destroying those auxiliary facilities for shipping, and that is what we have got to maintain.

I know you have to leave now, and there are several paragraphs in this letter I wanted to draw attention to.

Senator CORDON. Do you desire to put the letter in the record?

LETTER TO CHAIRMAN

Representative MILLER. Yes. It is addressed to Senator Knowland, and it is signed by those three people.

FEBRUARY 18, 1954. Regarding the item of $1 million contained in the budget for the deepening and

widening of the channel to Redwood City. Hon. Senator WILLIAM F. KNOWLAND, Chairman, Civil Functions Subcommittee,

Senate Appropriations Committee, Washington, D. C. DEAR SENATOR KNOWLAND: We herewith present certain basic facts for whicta we urge the full consideration of your committee in reaching your decision upon the $1 million appropriation requested for the Redwood City channel project.

1. Redwood City is strictly an industrial port at which, or in the vicinity

of which, several private industries handle their own bulk tonnage. It is not a recognized general cargo port and has no regular general cargo steamer service.

2. Ships with full cargoes of bulk tonnage have navigated through the existing channel and are continuing to do so. Two firms handle practically all the cargo involved, namely, Kaiser Co. and Leslie Salt Co.

3. The United States engineers, in recommending this appropriation could not have shown that such an expenditure would result in any increased commerce in the bay area, but would have to admit that the only result possible would be an attempted diversion of existing general cargo tonnage from long established bay facilities.

4. The final report of the State of California Senate fact-finding committee on San Francisco Bay ports definitely states that the existing ports operated at a deficit during the 20-year period 1931 through 1950, and that the existing San Francisco Bay port facilities have a capacity for from 25 to 50 percent more shipping than now flows through the harbor.

5. The Interstate Commerce Commission, in its decision relative to the application of West Coast Trans-Oceanic Steamship Line to extend intercoastal rates to Redwood City, dated September 9, 1953, stated, “The testimony in opposition to this service, however, casts serious doubt on the question of necessity since it has been shown that the certificated carriers are furnishing adequate service at the nearby San Francisco Bay ports." The Interstate Commerce Commission, as of January 19, 1954, rejected Redwood City's petition for reconsideration. Therefore, if requested steamship services have been found to be unnecessary and unwarranted, then this requested heavy expenditure for said channel development is unnecessary and unwarranted.

6. The claim of the port of Redwood City is that this requested channel improvement supplemented by their port development, if such funds are voted by their people, would create great savings for shippers in that vicinity.

This is not the time or place to go into lengthy detailed evidence submitted at the Interstate Commerce hearings, ICC Docket W1019, Redwood City, but suffice it to state that there are two items of charges from which the claimed for savings are to be derived-wharfage, a charge for use of port or terminal facilities, and drayage.

As to wharfage, Redwood City's present rate is 25 cents per ton as compared with 50 cents per ton charged by all other Pacific coast ports and terminals (exception, San Diego now pending negotiation). The 25-cent rate has been proved noncompensatory in public hearings. The management of Redwood City must be cognizant of this fact. This 25-cent rate is therefore a "bait” or promotion rate and would soon have to be raised, for it is the principal item of revenue.

As to drayage, the rates used by Redwood City to show savings over comparative hauling to its facilities versus east bay ports and terminals are wholly “paper rates” of several years standing and they have not been used, for there has been no volume of business involved. Testimony at abovementioned hearing by reliable draymen states that new drayage rates would be higher and implied there would probably be no difference in such comparative drayage costs.

7. The Interstate Commerce derision in abovementioned docket also stated that consideration must be given to the loss in time and expense of steamers having to move from their regular berths to the southern end of the San Francisco Bay where Redwood City is located and that such extra costs would undoubtedly in the end be borne by the public.

8. Redwood City, at an April 1953 port improvement bond election involving a $1 million issue, failed for the third successive time to vote such bonds. Therefore, the United States Government, when it is attempting by every means possible to eliminate unnecessary expenditures, should not be asked to allocate $1 million to improve a channel that is now navigable

and serves the limited needs. We therefore submit that inasmuch as the people of Redwood City have on three successive occasions defeated the bond election to vote funds for the harbor development that the Interstate Commerce Commission has recently held that there is no necessity to extend intercoastal rates or service to this area, and finally and basically, that the expenditure of funds to dredge a deepwater channel would not produce any additional steamer traffic but would only tend

to divert certain present traffic which is seasonal and is becoming more limited,
that any savings to shippers is extremely questionable, such factual conditions
strongly demand that this request for an appropriation of $1 million should be
rejected.
Respectfully submitted.

PORT OF OAKLAND,
By DUDLEY W. FROST, President.

HOWARD TERMINAL,
By Chas. P. HOWARD, President.

ENCINAL TERMINALS,

By D. L. DULLUM, President. Representative MILLER. I want to thank you gentlemen for your time.

Senator CORDON. It is a rather unusual situation, which was the reason, at least for the Chair's questioning. I wanted to get the basic idea here and the extent to which this was founded upon known facts.

Representative MILLER. Senator, we have not developed this thing; we haven't the facilities to develop it that the Army people have. In their latest report it indicates some other things. In cases they have been known to make mistakes, too.

Senator Cordon. Thank you very much, gentlemen.
Representative Miller. Thank you, Mr. Chairman.

Senator CORDON. The committee is also in receipt of a letter from John A. Bruning, clerk of the board of supervisors, County of San Mateo, Redwood City, Calif., enclosing a resolution adopted by the board requesting approval of Congress for the appropriation for the improvement of the Redwood City Harbor. The letter and resolution will be placed in the record at this point. (The letter and resolution referred to follows:)

Board of SUPERVISORS,

COUNTY OF SAN MATEO,

Redwood City, Calif., February 17, 1954. Hon. WILLIAM F. KNOWLAND,

Senate Office Building, Washington, D. C. DEAR SENATOR KNOWLAND: The Board of Supervisors of the County of San Mateo, at its February 16, 1954, meeting, adopted resolution No. 8045, requesting approval of Congress for appropriation for improvements to the harbor at Red. wood City, Calif., and directed this office to forward a copy to you and express the hope that your further efforts in this matter may result in a successful conclusion, Yours very truly,

JOHN A. BRUNING,

Clerk of the Board. BOARD OF SUPERVISORS, COUNTY OF SAN MATEO, STATE OF CALIFORNIA RESOLUTION NO. 8045-RESOLUTION REQUESTING APPROVAL OF CONGRESS FOR APPRO

PRIATION FOR IMPROVEMENTS TO HARBOR AT REDWOOD CITY, CALIF. Be it resolved by the Board of Supervisors of San Mateo County, California, that,

Whereas an appropriation of $1 million for improvements to the Redwood City Harbor has been included in the Federal budget by the President of the United States, and

Whereas such appropriation was recommended by the Corps of Engineers, United States Army, and

Whereas such recommendation was strongly endorsed by Senator William F. Knowland, Congressman J. Arthur Younger, and Congressman Charles S. Guber, and

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