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fresh milk on them-I mean all of it we ship from out of State; we get about half of our milk locally.

Senator BARTLETT. Mr. Rivers?

Congressman RIVERS. No questions.

Mr. BARTON. Mr. Erwin, do you have any comparisons on the cost of shipping by Alaska Steam and the charter association?

Mr. ERWIN. It is not any cheaper to ship on the charter association than it is on Alaska Steams; I am sure that it costs as much, if not more, to ship on it than it does the other. It costs us a lot-we have had to engage in financing and things of that sort that are quite expensive to us; we don't know how expensive they are going to be; they might materialize and be quite expensive.

Mr. BARTON. In other words, you consider the convenience and flexibility worth it?

Mr. ERWIN. That is correct.

Senator BARTLETT. Are you a member of the Ketchikan Association?

Mr. ERWIN. I am a member, and an officer of the corporation. Senator BARTLETT. The corporation was started last month? Mr. ERWIN. The corporation was started last month, and I am one of the officers.

Senator BARTLETT. Thank you, Mr. Erwin.

Mr. Irving Hoage.

STATEMENT OF IRVING HOAGE, EXECUTIVE VICE PRESIDENT, KETCHIKAN MERCHANTS COOPERATIVE ASSOCIATION, SEATTLE, WASH.

Mr. HOAGE. My name is Irving Hoage (spelling) H-o-a-g-e. My address is 11012 27th Avenue NE., Seattle, Wash.

Senator Bartlett, Representative Rivers, members of the committee: I would request permission to file a written statement, at a later date, and also request permission to file individual statements from other members of the Ketchikan Merchants' Cooperative Association at a later date, because they have not arrived in Juneau at this time.

Senator BARTLETT. Granted, with the understanding that those statements will be in Mr. Barton's hands within a month. Mr. Hoage, permit me to ask you, in what capacity are you appearing here?

Mr. HOAGE. I am appearing as executive vice president of the newly formed Ketchikan Merchants Cooperative Association, Inc. I formerly was the agent of Ketchikan Merchants' Charter Association. If you will permit me to read the letter from the captain of the port, pier 39, Seattle, Wash., of the U.S. Coast Guard, file A17-9, date October 12, 1959.

Mr. I. A. HOAGE,

Manager, Ketchikan Merchants Charters Association,
Seattle, Wash.

DEAR MR. HOAGE: I am pleased to report that an inspection of your facility on October 5, 1959, by inspectors from this office showed that there were no apparent violations of Federal laws related to the safety of vessels and waterfront facilities. It is gratifying to note the safety consciousness that exists on your facility. You are to be complimented for your fine work along the lines of establishing safe practices.

We are looking forward to the next inspection of your facility.

A copy of this report is being forwarded to the Seattle Fire Department. Sincerely yours,

E. A. COFFIN, Jr.,
Captain, USCG, Captain of the Port, Seattle, Wash.

Senator BARTLETT. Will you permit a question, right there?
Mr. HOAGE. Yes, sir.

Senator BARTLETT. Does this relate to your terminal facilities only, or to your terminal facilities and your ship?

Mr. HOAGE. I believe that this pertains to the terminal facilities only, that they did say vessels, but I don't believe that there was a vessel there at that time.

I have copies of this letter if it would be received into the record. Senator BARTLETT. One will do it.

Mr. HOAGE. I will furnish a written statement later, and I appreciate the opportunity.

(Written statement of Mr. Hoage and possibly others to be furnished by Mr. Hoage within a month to Mr. Barton, for the record.) Senator BARTLETT. Do you have any further statement?

Mr. HOAGE. Nothing further at this time.

Senator BARTLETT. May I ask you a question or two?

Mr. HOAGE Yes, sir.

Senator BARTLETT. Is my memory correct in recalling that when this legislation was originally passed, the Congress was informed that it would provide ample time for those engaged in this charter operation to comply with all the regulations of the Coast Guard?

Mr. HOAGE. It was thought that certain regulations could be compiled with; however, upon submission of certain vessels to the Coast Guard, to determine what would be required, in order to comply with the regulations, it was proven to the satisfaction of interested parties that it would be uneconomical to alter the vessels to comply with regulations.

I refer specifically to a letter from our Washington attorney to the Honorable Edward A. Garmatz, chairman of Subcommittee on Coast Guard, Coast and Geodetic Survey and Navigation, Committee on Merchant Marine and Fisheries, room 210, House Office Building, Washington, D.C., under date of April 10, 1958, for some three pages

of

Senator BARTLETT. Would you please summarize, without reading that entire letter?

Mr. HOAGE. Well, if you will permit me, I will pick out the pertinent paragraph; I believe I have the one here, on page 2 of the letter, and I quote:

In order to give the committee some idea of the cost of performing the modifications required by the Coast Guard, the owner of the Ruth Ann, Southeast Alaska Marine Transport Co., obtained an estimate from the most respected marine surveyor in Seattle, the firm of McGinitie & McDonald, which firm has been employed by almost every American-flag steamship company operating from the west coast. It is the opinion of this independent marine engineering firm that the cost of modification on the Ruth Ann would be $27,623 and that such cost would appear to make the operation of this vessel prohibitive in her present trade. This report is attached hereto as exhibit B.

If the increase in crew space required for Coast Guard inspection is obtained by extension of the deckhouse, with construction of a new wheelhouse atop the 51709-61-8

present deck structure being operationally undesirable, the cargo capacity of the Ruth Ann would be decreased by 10 percent. Unfortunately, the space which would be eliminated would be the cold storage or cool room cargo space in which is transported the higher revenue cargo. The loss of this space alone would probably result in the forced discontinuance of the operation of these small boats, which is presently marginal.

I also attach as exhibit C a letter dated April 2, 1958, from the Commandant, U.S. Coast Guard, to the undersigned, indicating the problems which must be overcome to place the other vessels operated by KMCA under inspection. The Commandant's letter indicates that the Vitanic could not meet inspection requirements without rebuilding the entire vessel. It is also clear that the items set forth on the Iceland and the Coral Sea are preliminary and that additional items may be required after drydock examination. On the basis of our experience obtained in comparing the Coast Guard's preliminary statement with respect to the Ruth Ann, as set forth in the Coast Guard's letter of August 8, 1957, with the actual requirements imposed by the Coast Guard after formal submission of the Ruth Ann for inspection, we must conclude that the modification shown as required for the Iceland and the Coral Sea is substantially understated. We understand that the original field reports which were submitted to the Coast Guard in Washington contained items in addition to those herein set forth but were eliminated with the thought that possibly this work would not have to be done.

I believe that is sufficient.

Senator BARTLETT. Mr. Hoage, would you care to submit that letter for the record?

Mr. HOAGE. Yes; I could submit it for the record. I can obtain additional copies.

Senator BARTLETT. Now, I would like to ask you this: How large is the crew of the Ruth Ann now?

Mr. HOAGE. The crew on our boats are four in number.

Senator BARTLETT. If all provisions of law applying to other vessels were complied with, how many men would you have to have? Mr. HOAGE. Eleven.

Senator BARTLETT. What is the more important cost factor, the physical changes made in the vessel, or the additional crew charges? Mr. HOAGE. Not so much the additional crew charges, but the loss of cargo carrying capacity by the increased quarters space required. Senator BARTLETT. Do you know if there are any other exemptions of this character, for any other vessels in the U.S. coastwise trade?

Mr. HOAGE. Not in the coastwise trade, but under charter provisions where a single person chartering a vessel can charter and operate vessels up to 200 gross tons with a crew of four.

Senator BARTLETT. Well, let me get this straight: let's say this charter service were discontinued tomorrow. Then Marshall Erwin, for example, if he had enough business in his store, could charter a vessel for his own exclusive use, without meeting any of the Coast Guard requirements.

Mr. HOAGE. That's right, sir.

Senator BARTLETT. It has been said, repeatedly, in the past, Mr. Hoage, and doubtless will be said again, that this provides most unfair competition to Alaska Steam; that Alaska Steam does have to meet all the regulations that apply under general law to ships, and that it is an economic disadvantage in the kind of competition offered by these charter vessels. Do you desire to make any comment relating to that.

Mr. HOAGE. I believe that the record will speak, as it has been presented in Ketchikan, and in Juneau, as to the individual shipper needs for continuing a service such as this.

Senator BARTLETT. Well, that's true, but still there's

Mr. HOAGE. From Ketchikan, in defiance of the charge of unfair competition, it certainly, to my way of thinking, if I am regulated in the type of business that I am going to be conducting by the laws of the United States, of the Government of the United States, that will throttle me to the point where I cannot serve the general public, I think that I would get out of it.

Senator BARTLETT. Well, let me present another factor to you: we know that this original bill didn't go through Congress with a chorus of hurrahs and hoorays that were able to pass this bill, but on the other hand, very considerable opposition was voiced to it; and this opposition, I should say, came more from those who feared a relaxation in safety requirements, than from any other group. They said, "Why, if we enacted general laws to preserve the safety of vessels to protect life, why should we make on a continuing basis, or for any period at all, for that matter, this complete exemption? There can be no need in economic service that will match the need for safety, insofar as the Government is able to achieve it." Now, that is going to have to be overcome again; and since there was no direct statement on that in Ketchikan, and since I do not recall a direct statement on it here today, I would be very pleased to have you discuss that particular subject because I think it is of vital importance in the forthcoming consideration of continued exemption.

Mr. HOAGE. Well, the safety of vessels is concerned in the operation, I believe the charter vessels that I have been connected with have an excellent safety record, in the fact they have completed more than 500 round voyages between Seattle and southeastern Alaska with only one loss of vessel, and no loss of life or injury to the crew. Senator BARTLETT. Over what period?

Mr. HOAGE. Over the period of-I have been associated for 6 years, and the operation has been going a total of 7, I believe.

Senator BARTLETT. Do you say to the committee that these vessels are operated safely regardless of whatever the law might state on a particular point?

Mr. HOAGE. I believe they are safely operated, yes. The record of their performance would speak for that.

Senator BARTLETT. Thank you, Mr. Hoage.

Congressman Rivers?

Congressman RIVERS. No questions.

Senator BARTLETT. Mr. Barton?

Mr. BARTON. I would like to know how these voyages are arranged and financed; what you do, and what the members do, and so on? Mr. HOAGE. Well in the past, the membership has appointed an agent to charter a vessel in their behalf.

Mr. BARTON. You?

Mr. HOAGE. That has been me, and under the new setup of the incorporation, continues much the same manner.

The members contribute proportionately to the charter hire of the vessel, and the longshore costs of loading and discharging, crewing, supplying of food, and any supplies and any repairs incidental to a voyage.

Presently, the board of directors determine an apportionment of cost to be used as a yardstick on a particular voyage and then an

assessment or a rebate will be determined at the end of an operating period.

Mr. BARTON. Have there been any charges that you are operating as a common carrier service?

Mr. HOAGE. There have been charges, yes.

Mr. BARTON. What was the upshot of these charges?

Mr. HOAGE. I would prefer Mr. Ireland, who will speak following me, to discuss those in more detail.

Mr. BARTON. Thank you.

Senator BARTLETT. Why was the corporation formed?

Mr. HOAGE. To join together the merchants in a unit as encouraged under the State law favoring cooperative associations, to conduct the affairs and thereby limit their individual personal liability. Senator BARTLETT. The laws of which State?

Mr. HOAGE. The State of Alaska.

Senator BARTLETT. Is stock issued?

Mr. HOAGE. No stock is issued.

Senator BARTLETT. Thank you, Mr. Hoage.
Mr. Ireland.

STATEMENT OF DONALD W. IRELAND, ESQ., OF SEATTLE, WASH.

Mr. IRELAND. Senator Bartlett, Senators, members of the committee, my name is Donald W. Ireland, I am an attorney, and my office is at 1111 Northern Life Tower, Seattle, Wash. For the record, I believe that the committee has asked for a copy of the Senate joint memorial to Congress, and I would like to make this a part of the record at the present time.

Senator BARTLETT. Thank you. It will be received for the record. (Joint memorial follows:)

SENATE JOINT MEMORIAL No. 22

IN THE LEGISLATURE OF THE STATE OF ALASKA

FIRST LEGISLATURE FIRST SESSION

IN THE SENATE

(By Senators Bradshaw, Smith, Stewart, Peratrovich, and Nolan) To the Honorable Dwight D. Eisenhower, President of the United States; the Honorable Richard Nixon, President of the Senate; the Honorable Sam Rayburn, Speaker of the House of Representatives; the Honorable E. L. Bartlett and the Honorable Ernest Gruening, Senators from Alaska; and the Honorable Ralph J. Rivers, Representative from Alaska:

Your memorialist, the Legislature of the State of Alaska in first legislature, first session assembled respectfully submits that:

Whereas Public Law 85-739 as passed in August 1958, allows certain small vessels to transport merchandise to and from places within the inland waters of southeastern Alaska and Prince Rupert, British Columbia;

Whereas the vessels authorized by this law are operated by cooperatives and transport the merchandise of members on a nonprofit basis; and

Whereas the large, scheduled vessels serving southeastern Alaska cannot economically and expeditiously provide service between small fishing villages and the larger commercial and processing centers of southeastern Alaska; and Whereas considering the numerous and diverse waterways of southeastern Alaska and the dependence of the area on the fishing industry it can be seen that the operation of such small vessels is essential to the total economy of that part of the State; and

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