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scale, a scale which is prohibitive for basic resource industries. It is difficult to convince industry that other wage scales can be applied in resource development studies. It is done in Alaska; witness the wage scales established by the mining, petroleum, and logging industries under their own union affiliations.

In answering the second question-"Do you have a labor force?"we generally have to say "No." It is true that rapidly expanding natural resource industries would not find a trained labor force available in the field of base metal mining, or hardwood logging and timber management.

The next question asked is: "Then why can't we bring in our own labor force?" Our answer to this is that there is presently unemployment in the mining industry and in the Lake States hardwood logging industry in the United States. A trained labor force is available there upon showing of need.

Next, Is our business climate attractive? What incentives do we offer to new industries? Can this climate be improved? It is possible under existing State law for investment groups from some foreign countries to form wholly owned domestic corporations qualified to do business in Alaska, including the right to hold mining claims and oil and gas leases, own land, et cetera. This the Japanese did not know. They were also unaware of our Industrial Tax Incentive Act (ch. 129, SLA 1957), and the provisions of our Mining License Tax Act encouraging new mining operations.

The possibilities of joint ventures with U.S. industries is an interesting one. We have already found out that on first approach U.S. companies disclaim any interest in such a venture, while at the same time their representatives are in Japan discussing just such possibilities. This applies to iron ore, copper, crude and residual oils, and others.

You may be sure that the owner and/or operator of a mineral deposit in Alaska, whether it be an individual or a large company, is interested in making the maximum possible profit from its operation. If this can be accomplished by the marketing of its products in the Orient, that is where the product will be sold.

Under present conditions of supply and demand, firm metal prices, and the reserves position of the Nation, it appears to me that if our natural resources are to be developed and marketed in the near future, we must look to the Pacific rim countries as our customer.

Senator BARTLETT. That is an interesting paper, and we will refer especially to that part which you emphasized.

Mr. WILLIAMS. I am not sure whether this is within the scope that you intended to cover. As long as I was requested to come, I thought I would put in some comments on my own of what we think about roads and the development of Alaska. This is within the State, now. This is just within what we are discussing here.

Senator BARTLETT. Go ahead.

Mr. WILLIAMS. This is my own statement, but I speak for the department of natural resources, because we, of course, all think alike on this within the department.

In the exploration and development of our resources to a point where they may be considered for production and shipment either in foreign or interstate commerce, the construction of access roads is most important. The best road expenditures in Alaska that can be

made are those for simple access roads to open new areas in which truck transportation will be the key to development. By simple access roads we mean roads sufficiently well built to stand up for several seasons, not precisely engineered highways for pleasure driving. In many cases, a single-lane road with occasional turnouts would be sufficient. With this type of road construction, we will get the most country opened up, and the most development for the money expended.

Practically all of our highways are being built with Federal aid funds, and so, of course, must be built to Federal specifications. These are pleasant to drive on and are of great help to the tourists and other traveling public. But they are also so expensive to build that relatively few miles can be constructed, and these few miles cannot be justified into new areas unless a main artery is being developed. We suggest that the type of access roads we are in need of may be built with the secondary road appropriation under the Bureau of Public Roads.

We note that this appropriation for Alaska for fiscal 1962 is $14,764,171 as compared to $22,091,082 for primary highways. This is the contents of Senator Bartlett's Washington newsletter, so it must be right.

Senator BARTLETT. Exactly accurate.

Mr. WILLIAMS. We urge that efforts be made to induce the Bureau of Public Roads to reexamine this apportionment to determine if more secondary road money might not be advisable and available for the development of Alaska's resources.

Senator BARTLETT. Mr. Williams, are you telling the committee that there is this $14,764,171 available for secondary roads, but none of that can be used for access roads?

Mr. WILLIAMS. I am assuming that this $14 million for secondary roads can be used for these access roads.

Senator BARTLETT. And you are saying that that is not quite enough to do the job, or not nearly enough?

Mr. WILLIAMS. That is what I am saying.

Senator BARTLETT. You are saying that there should be less for primary highways and more for the access roads?

Mr. WILLIAMS. We are suggesting that this could be the case. Senator BARTLETT. Do you know the attitude of the State depart ment of highways on this?"

Mr. WILLIAMS. No; I do not.

Senator BARTLETT. Maybe you don't care very much, because your interest doesn't have to coincide with theirs. What you want to do is to get access opened up so that there may be more mining; is that right?

Mr. WILLIAMS. And other industrial developments, as well as opening up the country for homesteaders and other people who would like to spread out.

Senator BARTLETT. I am going to restrain myself with the greatest difficulty. I was going to ask you something about the gold mining industry, but I guess I won't because that hasn't anything to do with our hearings. You might just give us a paragraph on what you think the future of gold mining in Alaska is going to be.


Mr. WILLIAMS. Under the present circumstances there is no doubt but that gold mining will be gone in 3 or 4 more years. Practically gone; not completely, but almost.

Senator BARTLETT. What is the value of the production last year? Mr. WILLIAMS. $6 million.

Senator BARTLETT. How much of that was produced by the U.S. Smelting, Refining & Mining Co. at Fairbanks and Nome, and wherever else their operations are located?

Mr. WILLIAMS. This, of course, is a confidential matter. We are not allowed to reveal

Senator BARTLETT. Don't reveal the company's figures, but just tell us how much the other gold producers in the State produced.

Mr. WILLIAMS. The other gold producers, other than those that you have mentioned, produced perhaps one-fourth or one-fifth of the total amount.

Senator BARTLETT. When is U.S. Smelting going to be through at Fairbanks?

Mr. WILLIAMS. They are presently forecasting almost a complete shutdown, I believe, in about 1963.

Senator BARTLETT. How about at Nome?

Mr. WILLIAMS. I believe they are scheduling their shutdown there for 1962.

Senator BARTLETT. What other operations do they have?

Mr. WILLIAMS. They have a dredge at Hog River and another at Chicken.

Senator BARTLETT. How long will they be in operation?

Mr. WILLIAMS. Apparently those will operate for a few years yet 4, 5, or 6.

Senator BARTLETT. Are those two dredges minor producers in terms of the overall and minor employers?

Mr. WILLIAMS. In terms of what the company has produced and employed in the past, yes.

Senator BARTLETT. How high would the price of gold have to be, in your opinion, before gold mining would again be profitable in Alaska?

Mr. WILLIAMS. Probably a hundred dollars.

Senator BARTLETT. I know Congressman Rivers will be especially interested in that, because he has been striving to bring about a change in the situation so that gold mining could be revived here.

On page 5 of Phil Holdsworth's statement you mentioned the Alaska hardwood development at Wasilla. Is that birch?

Mr. WILLIAMS. I presume it is. I am quite sure he is speaking of birch there.

Senator BARTLETT. If it were iron, platinum, or gold, you would know.

Mr. Grinstein?

Mr. GRINSTEIN. Is there any pulp shipped to the lower 48 States from Alaska?

Mr. WILLIAMS. I am under the impression that all the pulp from the Ketchikan mill goes to the lower 48.

Mr. GRINSTEIN. It all goes to the lower 48?

Mr. WILLIAMS. Yes; that is my understanding.

Mr. RIVERS. You are still thinking of the Sitka mill? Or about the one in Ketchikan? The one in Ketchikan sends its products to the lower 48, mostly to the east coast. The one at Sitka sends its total output to Japan.

Senator BARTLETT. And this doesn't mean that some of the pulp shipped from Ketchikan to the other States isn't reshipped to foreign countries from there.

Mr. GRINSTEIN. So Alaska pulp is competitive with pulp that is produced in the lower 48?

Mr. RIVERS. In terms of chemical mills, not in terms of newsprint. Mr. WILLIAMS. I am out of my print here when you discuss pulp. Senator BARTLETT. The answer is "Yes."

Mr. GRINSTEIN. What I am trying to find out is whether the transportation cost had put you in a position where you weren't competitive.

Senator BARTLETT. Mr. Grinstein, you should know that the Ketchikan pulp is taken by barge to Prince Ruppert and shipped by rail from there. Is that right?

Mr. RIVERS. Correction. These barges are American bottoms. They are owned by the American Co., an affiliate, for the purpose of hauling this cargo to Prince Ruppert. And then it goes via Canadian rail. Mr. GRINSTEIN. Foreign bottoms?

Mr. RIVERS. Bottoms on the water. The barges are American bottoms. The rail is Canadian.

Senator BARTLETT. Canadian National has its northwest terminus at Prince Ruppert.

Mr. GRINSTEIN. If I understood your suggestion correctly, it was to establish trade between Japan and Alaska with transshipment from Alaska down to the lower 48. This would help create a backhaul, presumably.


Mr. GRINSTEIN. And lower transportation costs.

Do you know whether this would be consistent or contrary to our existing laws which restrict shipping between two American ports to American bottoms?

Mr. WILLIAMS. If the so-called Jones act is still in effect


Mr. WILLIAMS (continuing). Then it would be contrary to that. Mr. RIVERS. Mr. Chairman, may I interject?

Mr. Grinstein, would you yield to me for a moment?

Mr. GRINSTEIN. Certainly.

Mr. RIVERS. Are you speaking about the merchandise which is landed at an Alaska port, then being carried by American bottoms down to Seattle? What I am getting at is that you would have a foreign vessel hauling between two American ports in that case. You would have the Japanese vessel haul between Japan and Alaska

Mr. GRINSTEIN. If you are shipping on an American bottom, there would be no problem.

Mr. RIVERS. Transshipment would be on American bottoms. That is where our backhaul is important.

Mr. GRINSTEIN. It wasn't clear to me from the statement whether the witness was talking about an American bottom or foreign bottom. I have no further questions.

Senator BARTLETT. Congressman Rivers.
Mr. RIVERS. No questions.
Senator BARTLETT. Mr. McElroy?
Mr. MCELROY. I have nothing, sir.
Senator BARTLETT. Thank you.

Mr. WILLIAMS. I didn't get a chance to answer a comment you made a while ago, about whether I cared, Senator, about the attitude of the State division of highways. I would like the record to show that I certainly do care about what their attitude is. If I had known before 12 o'clock noon today as Mr. Holdsworth left for Anchorage that I was going to be here, I would have certainly checked this matter out with the division of highways before I came here.

Senator BARTLETT. Let the record be very clear, I only made that comment as a jesting remark to indicate a knowledge that your principal interest naturally is in development of mines and minerals, and wasn't intended as a slap at the State department of highways at all. Mr. WILLIAMS. Thank you.

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