Senator LONG. Have there been suggestions as to how these two ships would be financed? You say they would cost approximately $5 million each. Mr. HULTEN. Yes. Well, at the time, of course, I thought that it would be very logical to presume that the Federal Government would consider this as a part of highway service in Alaska, and I was very happy to see that Senator Bartlett had introduced several bills relating to that very same subject, because it is such a logical extension or substitution for a highway. But between the time that Federal legislation could come about, I had prepared a bill for the State which would have set this up as a revenue bond type of financing whereby the State would have sold the revenue bonds necessary to finance the ships and the amortization and interest would then be included in the fares charged. In other words, it would be a self-liquidating type operation. Senator LONG. There are two possibilities that have been under consideration. Mr. HULTEN. Yes. Senator LONG. Once built who would operate them? Mr. HULTEN. Once they were built they would be operated by the State, but the contract for the service is on the ships; in other words, the manning of the ships would be the same as is done on any of your shipping now; in other words, a contract would be made between the State and the unions concerned, the officers unions and the men's unions of the ships. The cafeterias, cocktail lounges, things of that nature, would be let out to private enterprise to operate on a bid basis. They would bid for the right to operate that facility, and the same with your longshore activities. It would be a contract with your longshore organization such as Castle and Cook terminals, or the other group that is down here would have a contract to do that.'" Senator LONG. Couldn't they be operated by an organized company now operating ships of another type? Mr. HULTON. Well, I maintain that they could. However, I alsothis just happens to be my philosophy-that this is not something that the people should have to wait until a private concern sees its way clear to go into this business, that the profit is sufficient to entice them. We have had the experience of having an interisland transportation system go from the ferry business into the airplane business because they felt that would be a better investment. In other words, in order to guarantee continuing service my belief is it should be operated by the State as a part of the highway system. I don't know if you could get Federal aid if it was a private operation. Senator LONG. I have no further questions, Mr. Chairman. I think it would be of interest if Mr. Hulten observed on any run of the waterways of the world the type of ship that you are using here, I have an impression it was in Denmark that you found what you wanted. Mr. HULTEN. Yes, this particular ship, it is the most modern design of a diesel ship. They are operating in Denmark in the Baltic Sea, and I also have I didn't bring it with me, but articles from the London Mirror, showing this new service going in in the channel, this identical type of ship that we have proposed as the most suitable for operation here. Senator LONG. I made a trip to one of those off Denmark 4 years ago. They are very wonderful, even in rough sea. Mr. HULTEN. Is that right? In other words, the Black Ball Linein the State of Washington has just completed acquiring a ship just about the same as this, and that is a private firm up there, the Black Ball Line, and they are going to operate the ship about the same capacity, carries the same amount of cars and people, as a private op eration. Senator BARTLETT. Mr. Barton? Mr. BARTON. Have you worked out the rate structure that you would apply to the use of the vessel by the public? Mr. HULTEN. I have a tentative rate structure. At the present time it costs $40 to take an automobile one way on a barge from here to the big island, the Island of Hawaii, and $35 one way to the other islands. The tentative schedule that we have worked up would be $4 for an automobile to Hawaii one way, and $6 a person one way. Mr. Barton. $6 for a person, $4 for an automobile? Mr. HULTEN. Yes. Mr. BARTON. That difference puzzles me but go ahead. Mr. HULTEN. The reason is we carry more people than automobiles. The State of Washington in their rate schedule has reversed it a little bit. Their automobiles is a little more than their passengers, but their total of $10 is comparable to the rates charged in Washington. Mr. BARTON. Each person in the car would be $6 and if you wanted to ride on the boat without the automobile that would be $6? Mr. HULTEN. Yes, and it would be less for the closer islands. Mr. BARTON. You think that such charges would take care of all of the costs of operation? Mr. HULTEN. This would take care of the operation of the ship, and the amortization of the bonds. We didn't take freight into the picture at this time at all because we didn't know whether freight would be operated as part of the State operation, or whether we would have a space charter, the space facilities would be chartered out to someone else, and the expenses involved would be their problem. Mr. BARTON. Would you take loaded trucks? Mr. HULTEN. Yes, that is the beauty of this type of operation. The farmers on the outside islands could drive their trucks right on to this and then drive them off and right to market, so there would be no in-between-handling trucks. Mr. BARTON. What would you charge for a large truck from one island to another? Mr. HULTEN. That would have to be on a tonnage basis. We haven't worked out any figures. Mr. BARTON. Thank you. Senator BARTLETT. Mr. Hoff, do you have any questions? Senator BARTLETT. I have been glancing over these reports previously supplied the committee by Representative Suwa. One was made by Joseph B. Ward & Associates, Seattle, in 1956, and this was a study, the foreword discloses for the Oahu Railway & Land Co., and a very hasty reading indicates that Joseph B. Ward & Associates held that the plan presented by Captain Richardson was not economically feasible. Is that your understanding of the Ward report? Mr. HULTEN. Yes. Senator BARTLETT. And that the Ward people thereupon proposed their own plan, which was an island hopping proposal; is that right? Mr. HULTEN. That is right. Senator BARTLETT. And then we have the report dated in March 1957, prepared for the board of harbor commissioners by John Child & Co. What type of operation did that report propose? Mr. HULTEN. I believe it also proposed the possibility of an island by island operation. Senator BARTLETT. How long is it since passenger service by sea has been available in Hawaii between and among the various islands? Mr. HULTEN. I believe it is around 1941, in through there. Senator BARTLETT. Do you believe the State could operate these ferries at a break-even point? Mr. HULTEN. Yes: I do. Senator BARTLETT. And would that include amortization of the bonds? Mr. HULTEN. Including amortization; yes. Senator BARTLETT. I was glancing at these reports while you and Mr. Barton were engaging in colloquy, so perhaps I didn't hear everything you had to say, but do you have a table, a breakdown that is to say of expenditures which would be required and anticipated revenues, amortization, and all other details which would be essential to the furtherance of an operation of this kind? Mr. HULTEN. I have such a schedule, Senator. I don't know whether I brought it with me, but, briefly, the basis on which I made my estimates were the operating costs of the vessel which, as I recall, were around $2,000 or $2,100 a day, plus the amortization of the bond issue, and I think I used a 434-percent interest rate. Senator BARTLETT. What interest rate? Mr. HULTEN. Four and three-quarters. I used two, one a 6-percent rate and one a 434-percent rate. Senator BARTLETT. Would you mind submitting that schedule to be included with your testimony? Mr. HULTEN. Sure, I would be glad to. Senator BARTLETT. When we were in Alaska Mr. Felix Toner, who has studied on behalf of the territorial and I believe the State government of Alaska, this very matter, presented a table during his testimony which was most helpful to the committee, and we will appreciate it if you can do likewise. Mr. HULTEN. I will be very happy to. As I say, I have it all worked up but I didn't bring the table with me. Senator BARTLETT. Just send it to Mr. Barton. Thank you very much for telling us about this service which, of course, has, as we know, a high order of importance in the State. Thank you, sir. Mr. HULTEN. Thank you, sir. Senator BARTLETT. The committee will stand in recess until tomorrow morning at 10 o'clock. (Whereupon at 4:50 p.m., the hearing was adjourned until Wednesday, November 18, 1959, at 10 a.m.) ALASKAN AND HAWAIIAN TRANSPORTATION WEDNESDAY, NOVEMBER 18, 1959 U.S. SENATE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Iolani Palace, Honolulu, Hawaii. Is Mr. Cooke The committee met at 10 a.m., Senator E. L. Bartlett presiding. Senator BARTLETT. The committee will be in order. here? Mr. Brian Cooke is scheduled as the next witness. Mr. Starr, then. Would you please give your full name and mailing address, sir, for the benefit of the Reporter. STATEMENT OF RUSSELL STARR, CASTLE & COOKE, INC., ON BEHALF OF MATSON NAVIGATION CO. Mr. STARR. Thank you, Mr. Chairman. My name is Russell Starr. I am freight traffic manager for Castle & Cooke, Inc., who are freight agents for the Matson Navigation Co. Our offices are located at 130 Merchant Street, Honolulu. I would like first, Mr. Chairman, if I may, to read into the record a statement by Mr. Randolph Sevier, president of the Matson Navigation Co. Senator BARTLETT. You may do so, sir. Mr. STARR. This is Mr. Sevier's statement. It is a pleasure to appear at these hearings on behalf of Matson, to testify on proposed legislation to establish a joint agency to act upon through service and joint rates affecting domestic areas. Matson Navigation Co. endorses in principle the establishment of the proposed agency such as a Board composed of FMB, ICC, and CAB members, to act upon such matters which would include tariffs, establishing through routes, and setting forth joint rates. Matson is no stranger to the problem of having to deal with more than one Federal agency on these matters that presently fall within the jurisdiction of several but which may readily be dealt with by the proposed Joint Board. This problem is put into sharper focus by the fact that no existing agency will accept for filing rates that are applicable jointly between one carrier over which one agency has jurisdiction and another carrier over which the same agency has no jurisdiction. Matson has not completed its study of the different bills drafted to provide for such a proposed Joint Board and will defer to a later time its specific comments on the details of these measures. Meanwhile we will give the question our closest attention. We appreciate the opportunity to appear before you and stand ready at 51709-61-31 475 |