I wanted you to be sure that you understood that this is a copy of a letter that was written to you, and George has not given us his personal permission to read this into the record, but we are taking that since he went out of town, we are taking that permission.

Senator BARTLETT. We understand, and I, for one, know that he is a very good letterwriter.

Mr. STRANDBERG (reading):

Some questions have just been asked me with reference to the bill before the Congress for the incorporation of the Alaska Railroad as a Government corporation. You have sent me a copy of this bill but at the present time, I am unable to lay my hands on it. I have read the bill and remember that its intent is to make the Alaska Railroad conform more with the operating procedures of private railroads. I also remember that the Railroad as a public corporation would not be subject to payment of property taxes but may enter into agreements to pay local governments for services rendered. I acknowledge that this would be helpful in regard to our present futile situation of receiving no moneys at all for services rendered, but today a new question has been asked, which would nullify the tax benefits of the incorporation of the Railroad as a Government corporation if they were permitted to revert to certain practices that are exercised by private railroads.

The Alaska Railroad is distinctly interested in the city of Anchorage port as a competitor. The Alaska Railroad, in its reservation, has several hundred acres of land that are leased to private individuals for warehousing and other business enterprises. The revolting question asked was, "When the Railroad becomes incorporated, will they revert to the practice often used by private railroads of leasing land for warehousing and business activities but placing restrictive clauses in their leases which would prohibit them from using any other form of transportation except the Alaska Railroad?" You can see the implication of such a situation and the Railroad, through its powers afforded by incorporation, could become a detriment to the local shippers and certainly a detriment to the city of Anchorage in its endeavor to bring lower shipping costs to this part of Alaska. There is no positive indication that this is in the minds of the Railroad officials but, in order to prohibit such a seed to be planted and multiply, we would appreciate your introducing an amendment which would prohibit the Railroad from taking such restrictive action in their leasing of Alaska Railroad property to private interests.

It has been pointed out that the original intent when the Railroad first started was that Anchorage would be a port city and that the Railroad would operate the port facility. This was further indicated by their actual building of a small dock in the early years and then prohibiting its usage in order to create railroad traffic by the haul from Seward. We have no way of researching this intent, but I am sure that through your staff you could find, from the hearings and reports on the Alaska Railroad legislation, whether or not such intent is revealed.

It has been suggested, as further security of unfair competition from the Alaska Railroad, that perhaps the bill should be amended to transfer the Railroad's ocean dock to the city of Anchorage for operation by the port commission in conjunction with the new dock that is now under construction. This would separate the two methods of transportation, permitting each entity to specialize in its own particular field.

I want to reemphasize that any benefit the city would receive from payment in lieu of taxes from the Railroad as a Government corporation would be offset many times, if the railroad were given power to exercise unfair competitive practices by placing restrictive clauses in their lease agreement for Railroad property, which would prohibit the leaseholders from making use of the cheapest form of transportation. As you know, the estimates by our feasibility engineers indicate that, after payment of expenses, bond and principal requirements, the Anchorage community will reap a saving of $3 million per year by shipping through the new port facility as compared with shipping from Seward by the Alaska Railroad to Anchorage. The port commission is very concerned with this potentiality and would like you to investigate immediately and keep us advised as to what action we should take to protect our interests.

And it's signed, "Very truly yours, George C. Shannon, City Manager."

Now speaking in behalf of the Port Commission, I wish to state that there is absolutely no indication, as far as we are concerned, that the railroad would do this; and I know that Mr. Anderson, I think that he is here, as is Mr. Manley. I hope that by reading this letter, that I haven't given them some new ideas. We do feel that it's an item that should be looked into, and we should be sure that the city's interests are protected. The Port Commission feels that we would be derelict in our duty if we hadn't called it to your attention. If possible, we'd like to have corrective amendments made to the bill to assure us that this couldn't happen.

Now, to those who don't remember the past-and I know that you do, Senator-it is foolish to say that such things can't happen. We all remember the cases of Heinie Berger's shipping into the rail area, and Colonel Olson's fight with Heinie Berger, prohibiting him from coming in, by switching trains across the tracks, and all other methods; so our interest is a live one. We surely would appreciate any consideration you may be able to give us and if further testimony, or further information may be necessary, we would like to submit it when the hearings are reopened in Washington.

Senator BARTLETT. Well, Mr. Strandberg, you may be assured that this principal point raised by Mr. Shannon will be very carefully considered by the committee, before it acts on this bill, if it does so act. We are grateful that you called our attention to the matter again, by reading Mr. Shannon's letter.

May I ask you if the members of the Port Commission have talked with the management of the Alaska Railroad in connection with the turning over of the ocean dock to the port of Anchorage?

Mr. STRANDBERG. We had discussed it at one time. At the present time, the ocean dock is leased to the Army Transportation Corps of the U.S. Government. Any operation along this line would have to be the subject of the negotiations with them. At one time, we did have an agreement, a tentative agreement to take over the port facilities; but I believe I am correct in stating that the Port Commission at that time turned it down because of certain requirements.

Senator BARTLETT. Do you know how long ago that was?
Mr. STRANDBERG. 1953.

Senator BARTLETT. Have you ever talked with Mr. Anderson about this? Mr. Anderson is in the room.

Mr. STRANDBERG. No, we have not.

Senator BARTLETT. Since Mr. Anderson is present in the hearing room, I know that he will have heard that which you have read concerning the dock, and perhaps in Washington, at a subsequent hearing, the Interior Department witness or witnesses, will want to dwell upon this recommendation offered by Mr. Shannon.

Mr. STRANDBERG. This recommendation is offered by the Port Commission through Mr. Shannon, in the letter; it was the subject of discussion, but I believe that before we enter into any serious consideration by your committee as an amendment we would most assuredly like the opportunity to present additional information and proposals. You must understand that this letter was written to you, as suggested

alternatives of getting around what appeared to be, to us, a possible difficult situation. I couldn't speak for the Port Commission now, as to stating whether we would want to take the dock over; we are offering it here as a possible suggestion. Now, under the present management of the Alaska Railroad, I must state that we have had nothing to indicate that anything like this is in the wind. We are discussing the possibility of an entirely different type of organization which gives us concern.

Senator BARTLETT. Mr. Strandberg, divorcing yourself, if you will, and if you care to, from your membership on the Port Commission, have you had occasion, opportunity, or desire, to read this incorporation bill, or otherwise to inform yourself upon it, to the point where you would want to give a personal opinion on the advisability of enacting this type of legislation. I know, and will inform the staff members, that that opinion would be based upon a lifetime of residence in Alaska, a member of a prominent family here with gold mining and other interests, and with many years of residence in the Rail Belt area. We would be pleased to hear what views you might entertain, as an individual.

Mr. STRANDBERG. Well, aside from the complications which we think might come up regarding the port, I must, in all fairness say that I have always felt that the incorporation of the Alaska Railroad would be would react favorably to Alaska, and to the operation of the railroad, as long as Alaskans have a satisfactory say in its management.

Senator BARTLETT. Do you believe that the setup of the board of directors as now spelled out in the bill is satisfactory, bearing in mind that Mr. Anderson told us that there's no requirement that any Alaskan be appointed?

Mr. STRANDBERG. No. I don't think that that is satisfactory, at all. Senator BARTLETT. You think that there ought to be an Alaskan representation?

Mr. STRANDBERG. I think that there ought to be Alaskan representation.

Senator BARTLETT. Have you read the bill, Mr. Strandberg?

Mr. STRANDBERG. I read it at the time this came up; I read it in detail, but I haven't read it since the Port Commission meeting in August, just prior to the time this letter was written.

Senator BARTLETT. Have you read this section which says that the railroad, in its incorporated status, may issue passes to ministers of religion, traveling secretary of the Railroad Young Men's Christian Association, and certain others but no mention at all is made of passes to be issued by a group of people I always see named on my railroad ticket when I buy one, namely, banana peddlers? And, you are not the proper person to put this question to, but I can't understand why they left out the banana peddlers.

Mr. STRANDBERG. Well, I must confess that I am not in a position to testify on this particular bill. I didn't want to imply that I was endorsing this particular bill. I think that the opposite may be true.

You asked me if I was in favor of the incorporating of the Alaska Railroad, and operating through a corporation. I believe that would be beneficial. I don't know whether this bill is what the people of Alaska would want.

We have voiced some of the objections to it that we can see, and some of the safeguards that we would like to see in it. I believe that a greater participation in the management of the Alaska Railroad by Alaskans would be beneficial.

Senator BARTLETT. I will ask Mr. Barton, rather than you, because there is no reason why you should know, and I don't, whether this bill is an outgrowth of the recommendations of the Hoover Commission? Do you know the answer to that, Mr. Barton?

Mr. BARTON. No, sir, I don't.

Senator BARTLETT. Í have in the back of my mind that it is, but I am not sure of it.

Mr. BARTON. The Alaska Railroad gentlemen present say "Yes". Senator BARTLETT. We will take their word for it.

Thank you, Mr. Strandberg.

Have you any questions?

Mr. BARTON. No questions.

Mr. STRANDBERG. I think that the acting city manager would probably like to express his views on this subject regarding taxation.

Senator BARTLETT. Oh, yes, he will have every opportunity to do so. We will be very glad to hear from you.

Mr. Hostetler?

Will you identify yourself by name, and by position, and by mailing address, please?

STATEMENT OF C. A. HOSTETLER, COMPTROLLER AND ACTING CITY MANAGER OF THE CITY OF ANCHORAGE, ALASKA

Mr. HOSTETLER. Senator, my name is C. A. Hostetler. I am the comptroller of the city of Anchorage, and in the absence of Mr. George C. Shannon, our city manager, I am acting city manager.

I should like to extend Mr. Shannon's regrets upon the fact that he is not able to be here today, but he is enjoying a combined vacation and business trip attending the annual meeting of the International City Managers' Association at St. Louis.

I should like to speak briefly on S. 2514, the railroad incorporation bill, and specifically, upon section 9 of the bill. I should like, with your permission, to quote-it is quite short-it is on page 12, lines

14-24:

Upon the request of the State of Alaska or a political subdivision thereof in which property of the Company may be located, the Company is authorized to enter into an agreement, and to consent to a renewal or alteration thereof with such State or subdivision thereof for the payment by the Company of sums for services and facilities provided to the Company; such sums shall be fixed in such agreement, and shall be based upon the cost of the public or municipal services to be supplied for the benefit of the company but taking into consideration the benefits derived by such State or subdivision from the Company.

I think that all of us in the city administration are happy to see that, at long last, the Interior Department, which apparently has prepared this bill, is recognizing some sort of responsibility on behalf of the railroad to the State, and more of course, to the city, for certain facilities that the city is rendering to the railroad, and has for some time, without any remuneration.

I think, Senator, that you will recall our rather abortive and futile efforts to obtain payment from the railroad for fire services which

have been rendered gratis by the city, since the city took over the railroad fire department some years ago. You will recall, I believe, that the railroad itself, or the management thereof, recognized that the railroad was saving approximately $75 thousand by the operation of their fire department by the city; and that at one time we did have an agreement which provided that the railroad would reimburse us $2,500 a month. This agreement was, in effect, declared null and void, I believe, by the General Accounting Office, and then we never did obtain any payments; and then, again, we had another agreement that provided for the furnishing of certain services at the rate of $1,343 a year. The railroad made a couple of payments on that one, and then I believe it was as of June 30, 1958, they canceled the thing unilaterally on the ground that it was illegal for them to make any payments for the services that were in this agreement.

I think, Senator, that you will also remember that in 1958 you introduced H.R. 4360. This, of course, was when you were our able Delegate in Congress, to permit the railroad to make payments to the city for fire services specifically; and, to my knowledge, that bill never was enacted.

The reason I go into this little past history is that I believe that it would be very desirable if section 9 were broadened to permit retroactive payments to the city, at least for such sums that the railroad, in effect, at one time, was obligated to pay, and then did not pay, because of certain legal difficulties; and I would suggest, sir, that this section 9 be broadened to make, or to permit retroactive payments. You will notice, sir, that it says that such sums shall be fixed and such agreement shall be based upon the cost of the public and municipal services to be supplied, which I assume would be retroactive, or would be prospective only, and not retroactive in its application.

I believe, sir, that the committee might well consider something along that line. It would be to the benefit of the city, and would, in effect, honor the Federal Government's agreements on which—well, I guess I shouldn't use the word "welched"-but that's almost the word for it.

proper

I believe, sir, that you are also familiar with S. 910-and this is a bit of a digression-which is a bill in the Senate to permit local government payments and assessments; and, sir, we, of course, are interested in that, but that is not germane to the particular problem.

I would like to introduce into the record our new city charter, which was enacted by the voters on October 6 with particular reference to chapter IX, page 24, sir—and I will give you this-I should like to read it, and it is very brief:

CHAPTER IX. INTERGOVERNMENTAL RELATIONS

AGREEMENTS FOR TRANSFERRING POWERS

SEC. 9.1. Agreements, including those for cooperative or joint administration of any function or power, may be made by the council with any local government, with the State, or with the United States unless otherwise provided by law. and

COOPERATION WITH OTHER GOVERNMENTS

SEC. 9.2. The city may cooperate with the United States, with the State, or its political subdivisions, or with other States and their political subdivisions on matters of common interest. For this purpose the council may make all necessary appropriations.