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(The closing two paragraphs of the southeastern conference report are set out under separate headings of "S. 1956" and "S. 2661" in the following pages:)

S. 1956

(Also set out under S. 2661, p. 79)

The above estimate of revenues, expenses, and debt service indicates that the ferry system would be self-sustaining, under the conference plan outlined, by its fourth year of operation. It becomes obvious that the passage of S. 2661 to amend title 23, United States Code, to provide for participation of Federal-aid system and S. 1956 to amend the Merchant Marine Act, 1936, to make the Alaska-British Columbia, Canada, run a foreign trade route within the meaning of this act are essential pieces of legislation to carry out the southeastern conference plan for the establishment of a ferry system for southeastern Alaska. The southeastern conference looks on this proposed ferry system as an extension or part of the Alaska Federal-aid highway system. For this reason the approach roads to the ferry vessels become a logical part of the system and should be eligible for participation of Federal-aid highway funds. The ferry vessels would be operated on a year around basis between Alaska and British Columbia, Canada, except for periods of lay up for maintenance. Therefore, the southeastern conference feels that the passage of these bills is justified and desirable. The conference is aware that the Secretary of Commerce has objected to the passage of S. 1956 because of the fear these vessels will operate elsewhere for part of the year in competition with nonsubsidized vessels engaged in the domestic trade. It is obvious that the intent of the plan which is outlined is quite to the contrary. The fact is that the plan envisions State participation and organization of a nonprofit corporation, which would have as its purpose operation of the ferry vessels only in the Alaska-British Columbia, Canada, trade. It is intended to provide for the transportation of motor vehicles and passengers between the highway terminal points of the Canadian Highway System at Prince Rupert, B.C., and the Alaskan Highway System at Haines-Skagway. We urge the committee to adopt an appropriate amendment to remove the objection of the Secretary of Commerce. It appears that if the language of the bill was changed to require that the vessels be operated exclusively in the Alaska-British Columbia, Canada, trade rather than the existing language "*** for the majority of the miles logged * **" that the basis of the objection of the Secretary of Commerce would no longer be valid. The southeastern conference urges this committee and the Congress to act favorably on S. 2661 and S. 1956 with an appropriate amendment.

SOUTHEASTERN CONFERENCE,
ROBERT E. SHARP, President.

S. 2661

(Also set out as S. 1956, p. 77)

The above estimate of revenues, expenses, and debt service indicates that the ferry system would be self-sustaining, under the conference plan outlined, by its fourth year of operation. It becomes obvious that the passage of S. 2661 to amend title 23, United States Code, to provide for participation of Federal-aid system and S. 1956 to amend the Merchant Marine Act, 1936, to make the Alaska-British Columbia, Canada, run a foreign trade route within the meaning of this act are essential pieces of legislation to carry out the southeastern conference plan for the establishment of a ferry system for southeastern Alaska. The southeastern conference looks on this proposed ferry system as an extension or part of the Alaska Federal-Aid Highway System. For this reason the approach roads to the ferry vessels become a logical part of the system and should be eligible for participation of Federal-aid highway funds. The ferry vessels would be operated on a year-round basis between Alaska and British Columbia, Canada, except for periods of layup for maintenance. Therefore, the southeastern conference feels that the passage of these bills is justified and desirable. The conference is aware that the Secretary of Commerce has objected to the passage of S. 1956 because of the fear these vessels will operate elsewhere for part of the year in competition with nonsubsidized vessels engaged in the domestic trade. It is obvious that the intent of the plan which is out

lined is quite to the contrary. The fact is that the plan envisions State participation and organization of a nonprofit corporation, which would have as its purpose operation of the ferry vessels only in the Alaska-British Columbia, Canada, trade. It is intended to provide for the transportation of motor vehicles and passengers between the highway terminal points of the Canadian Highway System at Prince Rupert, B.C., and the Alaska Highway System at HainesSkagway. We urge the committee to adopt an appropriate amendment to remove the objection of the Secretary of Commerce. It appears that if the language of the bill was changed to require that the vessels be operated exclusively in the Alaska-British Columbia, Canada, trade rather than the existing language **** for the majority of the miles logged ***" that the basis of the objection of the Secretary of Commerce would no longer be valid.

The southeastern conference urges this committee and the Congress to act favorably on S. 2661 and S. 1956 with an appropriate amendment.

SOUTHEASTERN CONFERENCE,
ROBERT E. SHARP, President.

Senator BARTLETT. Mr. Sharp, we welcome you in this other capacity; it is obvious that you approach the committee with an enormous jurisdiction and prestige; and it is also obvious that you are wearing a very large hat to cover all of this territory, and we will be glad to hear from you, by way of a verbal statement, to supplement the one already offered.

Mr. SHARP. My preference, Senator, to do that, is to avoid repetition of two previous witnesses in the detailed statement.

First, the matter of designation of Federal-aid highways through this area, which was raised a moment ago: It is possible to parallel Forest Service highways with Federal-aid highway designations. It has been done, and it can be done; but the practical aspect, I think, is the important one.

My cost information on construction is that you have a variation of $250,000 to $1 million per mile in the local roads constructed, adjacent to the communities that have local roads. If you attempted to do that throughout this 470 mile area, that we are speaking of, or route that we are speaking of, you can see that you could conceivably run into $470 million in costs per single highway along the route between Prince Rupert and Haines, which is the equivalent of 10 years of Federal-aid highway fund apportionments in the State of Alaska; so the impracticability from a construction standpoint, and particularly from a financial standpoint, is a glaring thing, when you stop to think that the State could conceivably consider spending for 10 years all of its Federal-aid highway funds in one section of the State. I think the practicability and financial possibilities of ever constructing a land highway to connect these communities is so far out of the question that we will just have to start looking elsewhere.

It was for this reason that the southeastern conference, after many attempts in finding a solution for the financing of the ferry service, came up with a 13-point plan, which is set forth in the statement.

And a very essential part of that plan is the enactment of S. 1956, and S. 2661 to make Federal aid highway funds available for ferry landing facilities, which are estimated at some $3 million, and to qualify these vessels for construction subsidy under the Merchant Marine Act of 1936.

I would like to go over the cost picture for just a moment; page 3. The estimates for the three vessels that are planned initially, nine terminals, spare parts, materials, and supplies to start operations, is $13,097,000. Add to that $550,000 for your interest during construc

tion, working capital, financing, and legal expenses, gives us a total of $13,647,000.

If the subsidy becomes available at 45 percent of the vessel cost, deduct $4,332,150 and deduct for financing the terminals on the Federal-aid highway plan, $2,970,000, then you have for financing $6,344,850, of which, under the terms of the Merchant Marine Act of 1936, $3,978,638 could be available in the form of a loan. So the initial equity cash investment required to get this program going would be $2,366,212.

It is proposed that the State advance to a nonprofit corporation that would have no other purpose than operating ferry vessels, the equity capital and also sufficient cash to pay the debt service during the first 3 years of operation. Both of these amounts would be repaid; and I will point out the financial feasibility.

Before getting further into revenues and expenditures, the W. C. Gilman Co. of New York made a survey of the potentials of this service, and I have summarized the origin and destination and number of passengers that they might expect would utilize it from the southeast area, a total of 17,300-odd passengers per year, which is broken down with the majority occurring during the summer.

From the central district of the State, a total of 24,583 per year, and a combination, southeast-central, 4,530, giving you a grand total of 46,420 passengers that would be expected to utilize the service, per year.

Those passengers are broken down in this manner: 16,744 as deck passengers; 18,262 as automobile passengers, excluding the driver; 11,414 automobiles, including drivers. That will give you some idea of the breakdown, which, relatively, will reflect that the majority will come from your motorist and the passengers within the automobile, rather than just the passenger service.

The conference has recommended quite a variation in the rate structure that was proposed in the W. C. Gilman Co. study in regard to automobiles including the driver. And the statement sets forth the rates. It might be interesting to review for just a moment, only that pertaining to the automobile and the driver.

Between Skagway-Haines, $4; Haines to Tee Harbor, which is, of course, near Juneau, $18; Juneau to Petersburg, $36; Petersburg to Wrangell, $15; Wrangell-Ketchikan, $29; Ketchikan-Prince Rupert, $29, total of $131 for one-way fare between Haines-Prince Rupert. That amount, in the opinion of many people, is relatively high when you think in terms of attracting large numbers of tourists; but, when you consider it is only 65 percent of what was proposed, without any aid, either for terminals or for vessels, then I think you can readily see that we would be kidding ourselves to think that a lot of people would use service paying over $200 for an automobile and driver to be transported a distance of 470 miles.

From the standpoint of feasibility with Federal-aid funds for the terminals, and subsidy on the vessels, using the years 1962 to 1965, the estimated revenues for the first year-I will use only round figures $925,000; expenditures $1,750,000; the service or funds available for debt service, of course, would reflect a deficit of over $800,000.

That same picture would prevail until 1964, when you would have $214,000 available for debt service; and, in the fourth year of opera

tion, the revenues would exceed the expenditures for operation by $561,000; and also, that amount would exceed the debt service requirement of $482,000 by $79,000.

We feel, after the fourth year of operation, under the plan that is outlined, the system would be financially feasible.

So, we would like to, of course, urge the passage of both of these bills; and in the case of the S. 1956 we realize the Secretary of Commerce's objection is one that should, and probably can be overcome. I am an optimist at heart, and I think that it can be overcome; but from the basis of the letter set forth, in his letter to us here a few days ago, it is not conceivable, in my opinion, that these vessels will do what they fear would occur that they would be operated part-year. Of course, the plan is to operate them for the full year; so we feel that while there is a basis for the objection, that in actually viewing the plan, as proposed, that it will no longer be valid.

I believe, Senator, that I have no more on the statement.

Senator BARTLETT. Thank you, Mr. Sharp, for a most helpful and factual contribution. It is one which I am sure the committee will want to, and will, consider carefully, as it takes up this legislation, next winter.

Mr. Baynton?

Mr. BAYNTON. No questions.

Senator BARTLETT. Mr. Barton?

Mr. BARTON. I want to ask Mr. Sharp if he had estimated the number of vehicles that would use the services; I haven't had time to read his statement.

Mr. SHARP. Yes; it is contained in the breakdown on page 4, 18,260-I beg your pardon : 11,414 vehicles.

Mr. BARTON. Oh, yes; does that include trucks, as well as automobiles?

Mr. SHARP. Yes, although the analysis shows the estimate for trucks to be quite a low figure. The engineers, in projecting the number of automobiles and trucks, were not very optimistic that it would get a great usage by truck, as far as numbers are concerned. Mr. BARTON. Thank you, sir.

Senator BARTLETT. Thank you, Mr. Sharp.

Mr. SHARP. Thank you.

Senator BARTLETT. Thank you, Mr. Sharp, for a most helpful and factual contribution. It is one which I am sure the committee will want to, and will, consider carefully, as it takes up this legislation next winter.

Mr. George Anderson. Would you please be seated, Mr. Anderson, and identify yourself?

STATEMENT OF GEORGE ANDERSON, ILWU LOCAL 62, KETCHIKAN, ALASKA

Mr. ANDERSON. I am George Anderson, with ILWU Local 62; that's the Longshoremen's Union here in Ketchikan.

Senator BARTLETT. And you receive your mail where?

Mr. ANDERSON. 728 Water Street, Ketchikan.

Senator BARTLETT. The committee will be glad to hear any statement on any subject or subjects that you may care to give, Mr. Anderson.

Mr. ANDERSON. I don't know whether this has anything to do with any of the bills that you gentlemen are holding this hearing on, but it is a very important thing to the Longshoremen, and to the workers here in Ketchikan. The local spruce mill here, in exporting lumber to the Far East, has to pay an $8 per thousand differential in surface transportation, from here to Japan or to Korea, which puts it in a very bad competitive position, insofar as getting Army or other orders of lumber. When you are under the surplus labor priority deal, you can't even compete with the stateside companies, because of this large differential in the cost of the transportation.

We feel that you gentlemen should be able to do something about it.

Senator BARTLETT. Explain this a litle bit more fully, Mr. Anderson, if you will, so that we will have a clear idea of what it is you have in mind.

Mr. ANDERSON. The steamship companies charge $8 more per thousand board feet for lumber for surface transportation between here and Japan than they do between Seattle and Japan, although we are closer by a great number of miles. I understand some of it is because of the fact that we are not on a regular port of call or trade route, or something or other like that, that the detention time is longer here. I believe that we can prove by past experience here in Ketchikan, at least, that our dentention time, as far as ships are concerned is no longer than stateside detention time; and we feel that they shouldn't be any differential in this transportation.

Senator BARTLETT. You think that if the charges were equal as between here and Seattle, that there would be a volume of traffic from these ports to Japan, which does not now exist?

Mr. ANDERSON. We feel, and Ketchikan Spruce Mill both feel that there would be 15 to 25 million more board feet of lumber bid upon, which would cause the spruce mill to be employed the year around, and also that the longshoremen would have a lot more work, here, locally.

Senator BARTLETT. What is your information? Does Japan have a serious shortage of lumber, timber products?

Mr. ANDERSON. Well, this is primarily to do with these Army orders, or Government military orders that are required to go by American bottoms.

Senator BARTLETT. To where?

Mr. ANDERSON. To Japan, or Korea, or Wake Island, such places as that.

Senator BARTLETT. Now, do you know, Mr. Anderson, whether this rate is established with benefit of Government intervention of any kind or another, or is it entirely a matter for determination by the private carriers, water carriers?

Mr. ANDERSON. My understanding is that it is a matter of determination by the private water carriers, that they have set it up in some kind of a conference, or other.

Senator BARTLETT. And how long has this been in effect, do you know?

Mr. ANDERSON. My understanding is that it has been in effect since statehood.

Senator BARTLETT. Do you mean that it came into effect only then?

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