The CHAIRMAN. The fish law was passed June 26, 1906. that time your syndicate did own this company. Mr. BIRCH. Well, I was not aware of that. Mr. STEELE. What interest did we own at that time? So at Mr. BIRCH. We owned 46 per cent of the Northwestern Commer cial Company. Mr. STEELE: Who was the president of the Northwestern Commercial Company at that time? Mr. BIRCH. John Rosene. Mr. STEELE. Had the Alaska syndicate any control over that company at that time? Mr. BIRCH. No, sir. Mr. STEELE. Or any charge of its operations? Mr. BIRCH. Not at that time. Mr. STEELE. When did Mr. Rosene resign? Mr. BIRCH. In 1908, according to my recollection. Mr. STEELE. Was it not December, 1907 ? Mr. BIRCH. It may have been December, 1907, or the early part of 1908. Mr. STEELE. Up to that time he had been in charge of the operations of that company? Mr. BIRCH. Yes, sir. Mr. STEELE. That is all. The CHAIRMAN. Have any members of the committee any questions? I will suggest to the committee that it is now five minutes of 12, and there are a number of gentlemen here who are to be given hearings on other subjects. Might it not be well for the committee to have an executive session to discuss the order of procedure? If there are any questions to be asked, of course, we can not ask them between now and 12 o'clock. Senator FRAZIER. There will be some. I wish to ask some. The CHAIRMAN. I was suggesting that perhaps it might be well for us to have an executive session, and then determine the procedure, and let these gentlemen who are here on other business and want to be heard by the committee wait for us. We will let you all know almost immediately-within five minutes. Senator FRAZIER. You will notify Mr. Birch before he goes that we shall want him at a subsequent day? The CHAIRMAN. Oh, yes. Do not go away, Mr. Birch. Mr. STEELE. I will state that I have here the opinion I wrote and the opinion Mr. Stetson wrote. I do not want to bore the committee with them unless you wish to have them put into the record. (The committee thereupon went into executive session, at the expiration of which it was announced that hearings on this subject would be resumed to-morrow, Saturday, February 19, 1910, at 10 o'clock a. m.) FEBRUARY 19, 1910. COMMITTEE ON TERRITORIES, UNITED STATES SENATE, Washington, D. C., Saturday, February 19, 1910. The committee met at 10 o'clock a. m. Present: Senators Beveridge (chairman), Dillingham, Kean, Dick, Piles, Frazier, and Hughes. Mr. JOHN N. STEELE, of New York City, and Mr. STEPHEN BIRCH, of Kennicott, Alaska, appeared. SATEMENT OF MR. STEPHEN BIRCH, OF KENNICOTT, The CHAIRMAN. Had you concluded your examination, Mr. Steele? Mr. STEELE. I should like permission to ask Mr. Birch only two or three further questions to make his testimony perfectly clear. The CHAIRMAN. Certainly; go ahead with as many as you wish. Mr. STEELE. Mr. Birch, although I think I asked you at the hearing yesterday, I should like to ask you again (so that it may be perfectly clear to the committee) to please state whether the Alaska syndicate, or any member thereof, had any interest of any kind, sort, or description in what are known as the coal claims of Mr. Cunningham and his associates prior to the option agreement of July 20, 1907? Mr. BIRCH. No, sir; they had no interest whatever. Mr. STELLE. Had they any connection with them? Mr. BIRCH. They had no connection whatever with them. Mr. STEELE. The option agreement does not obligate the Alaska syndicate, if the option should be exercised, to build a railroad to the coal mines. Please state whether or not it was contemplated and was the intention of the Alaska syndicate at that time to build that road and whether it was understood that it would do so. Mr. BIRCH. The Alaska syndicate were going to build the railroad into the coal fields; but as part consideration in this agreement with Cunningham they were to furnish transportation to Cunningham. Mr. STEELE. You mean by that transportation for the coal to be produced from those mines? Mr. BIRCH. Yes, sir. Mr. STEELE. That branch was to be built from the crossing at the junction at the east bank of the Copper River to the Bering River coal fields? Mr. BIRCH. Yes, sir. Mr. STEELE. And would have cost about how much? Mr. BIRCH. Over $2,000,000. Mr. STEELE. That road was not actually constructed, was it? Mr. BIRCH. No, sir; it never has been. For the reasons, I will refer you Mr. STEELE. Suppose you let me ask that, because I have the paper right before me. Are the reasons why the construction of that branch of the road was not proceeded with correctly set forth in the report of Mr. S. W. Eccles, the president of the Copper River and North 96 western Railway Company, under date of December 14, 1908, and filed with the Commissioner of the General Land Office, together with the report of Mr. Hawkins, the chief engineer of the railway, filed on the same date, and printed in the hearings before the House Cominittee on Territories in the matter of the Alaska Pacific Railway and Terminal Company, House bill 25553, January 12 to 14, 1909? I refer you especially to pages 20 and 21 of Mr. Eccles's report. I do not like to take the time of the committee by having that read, but I will leave it with you. Mr. BIRCH. This sets forth the condition exactly as it existed, and the reasons why the railroad was not built. Mr. STEELE. I should like to have that report of Mr. Eccles put in the record, because it shows exactly what the plan of operation was, and why the construction of that particular branch of the road was not proceeded with. The CHAIRMAN. Put in anything you like. Mr. STEELE. It is only two pages. The CHAIRMAN. Put all of it in if you put any of it in. Mr. STEELE. Yes; I wish to put it all in. The whole of it comprises only two pages. The CHAIRMAN. Very well. (The paper above referred to is marked "A" and is as follows:) COPPER RIVER AND NORTHWESTERN RAILWAY COMPANY, Hon. FRED DENNETT, OFFICE OF THE PRESIDENT, SIR: I had the honor of writing the honorable Secretary of the Interior on the 30th ultimo, stating in a general way what had been accomplished in the construction of the Copper River Railway and the Copper River and Northwestern Railway in Alaska, such letter having been addressed to the Secretary because I had been informed that your report had previously been submitted to him. Mr. E. C. Hawkins, the chief engineer of the two railways, has just arrived in New York, and, complying with your request of August 20, 1908, in response to House resolution of May 12, 1908, I submit herewith his report and accompanying exhibits, which will give you full information as to what has been accomplished in the construction of the railways and of the amount of money expended in connection therewith. For your further information, I beg to submit the following statement regarding the history of these roads and the purposes sought to be accomplished by those who have the entire ownership of them. We understood Alaska to be a Territory, not only containing vast deposits of copper and other minerals, but that its interior afforded highly favorable conditions for agriculture, and was lacking in almost all transportation facilities. Early in 1906 the Copper River and Northwestern Railway Company determined to build from Valdez to the Copper River and up the Copper River into the Tanana district. It was thought that the construction of this road would encourage and develop the vast mineral districts intended to be reached by it, and by providing regular transportation to interior Alaska-now almost inaccessible-would also develop the agricultural resources and tend toward its permanent settlement. In the fall of 1906 preparations were made for sending in supplies and material for the construction of the road, and N. K. Rodgers was appointed chief engineer. Mr. Rodgers went into Alaska on the opening of navigation the following summer, with instructions to make further surveys for the purpose of determining whether the proposed line from Valdez through the Keystone Canyon was the best and most practicable route. Mr. Rodgers made a thorough examination of the country and surveyed routes down the Copper River to Katalla. He reported Katalla as a more desirable terminus than Valdez, and that by selecting Katalla as a terminus the road would avoid the high grades through the Keystone Canyon and provide an easy grade down the Copper River to Katalla, and submitted a report by 24572-10-7 Mr. Clapp, a United States Government engineer, showing that it was practicable by the construction of a breakwater at Katalla to make a safe and commodious harbor. Our attention having been called to the large deposits of bituminous and anthracite coal in the Bering River fields, Mr. A. H. Storrs, an eminent coal expert, was sent there to make an examination and report for the purpose of seeing whether the coal was of such a character and in such quantities as would justify the construction of a railway to that region, for we knew that there was a great scarcity of coal on the Pacific coast and that it was highly desirable that means of transportation should be afforded by which this coal could be placed on the Pacific coast at a reasonable cost, and so avoid the necessity of purchasIng coal from foreign countries and of bringing it at heavy expense from the Atlantic coast and some of the Western States. Mr. Storrs visited the coal fields, made a thorough examination, and reported a practically unlimited quantity of bituminous coal of the highest character, equal, in his opinion, to the coal in the Pocahontas field. The report of Mr. Clapp upon the construction of a breakwater at Katalla was submitted to Colonel Symonds, United States Government engineer, and to Mr. Bensel, New York dock commissioner, who were considered the two most eminent authorities and engineers upon the construction of breakwaters. They made changes in the plan of breakwater, as suggested by Mr. Clapp, and advised that if the reports made to them as to the prevailing condition and strength of the wind and sea were correct the breakwater was feasible and would provide a safe harbor. This breakwater was estimated to cost something over a million dollars. It was then determined that the breakwater should be constructed and that the terminus of the main line of the railway should be at Katalla. The construction of the breakwater was begun and the work proceeded with the intention of making Katalla the terminus of the roads. During the season of 1907, however, it was clearly demonstrated that the force of the wind and the sea at Katalla was such that it was impracticable to build a breakwater at that point. Mr. Rodgers resigned his position as engineer in December, 1907, and Mr. E. C. Hawkins was appointed chief engineer in his stead. As soon as possible Mr. Hawkins went into Alaska and made a personal examination of the conditions there. His reports confirmed the information previously received as to the impracticability of constructing a breakwater at Katalla, and it was then determined that the principal terminus should be located at Cordova, which afforded a perfectly secure and landlocked harbor, with a depth of water at all times sufficient to accomodate the largest steamships. The construction of the Copper River Railway from Cordova, and of the Copper River and Northwestern Railway from Katalla to a junction on the east side of the Copper River, and from Katalla to the Bering River coal fields (the whole of which latter route had been surveyed, several miles constructed, and quite a large part graded), was being proceeded with with all possible dispatch when we were informed that the coal locators in the Bering River fields were having difficulty in securing patents to their locations, and that it was a matter of grave uncertainty when they would secure the same and be in a position to develop their properties and have coal for transportation. After mature consideration it was determined that it would be unwise to expend the large sum of money necessary for the completion of the railway to the Bering River coal field before we could have some reasonable assurance that the coal locators in that field would secure their patents and be in a position to develop their properties, since the completion of the road would not only have required the expenditure of large sums of money, but the road when completed, if idle, would have rapidly deteriorated, and if the development of the coal properties should be delayed for some years the road in all probability would have to be practically rebuilt. As the Secretary of the Interior was advised in my communication of the 30th ultimo, we have provided the money for the construction and completion of this road and are ready to complete it just as soon as we can obtain a reasonable assurance that the coal fields will be worked and developed. As shown by Mr. Hawkins's report, the road from Cordova to the head of the Abercrombie Rapids, a distance of about 54 miles, has been completed, with the exception of the permanent bridges over Copper River. Of the Copper River and Northwestern Railway, owing to the matters hereinbefore set out, only about 6 miles have been actually constructed, although a large amount of grading and excavation on the proposed line to the Bering River coal fields has been done. A number of terminal buildings, such as car shops, warehouses, hospital, office buildings, employees' quarters, etc., have been erected. Changes in our plans were caused, in fact necessitated, by the fuller and more accurate information obtained from time to time. It must be remembered that in building standard-gage roads in Alaska we are practically pioneers, that Alaska is far away, communication with the East slow, construction most expensive and difficult, and sometimes dangerous, and that in Alaska, like in all new countries, experience and thorough knowledge of actual conditions are the only safe guides. As shown in Mr. Hawkins's report, we have spent in this matter the sum of $5,707,466.95. We have not asked any assistance from the Government of the United States, either in money or in grants of land. The money for the whole enterprise has been and is being furnished by those who originally undertook it. It is our intention, as future conditions shall warrant, to extend our line until we have an American railway of standard gage reaching from the Pacific Ocean to the Yukon River. Finally, I beg to say that, while it is thought that in the course of time the enterprise will prove profitable, its undertaking was influenced, to no inconsiderable degree, by a feeling of just pride in those who undertook it that they would be remembered as men who had contributed, by their courage and personal means, to the permanent development and settlement of the important Territory of Alaska, whose great resources must necessarily have remained dormant and its lands unoccupied until adequate transportation facilities were supplied. Respectfully, yours, S. W. ECCLES, President. Mr. STEELE. Mr. Birch, you mentioned in your testimony the Katalla Construction Company. Mr. BIRCH. Yes, sir. Mr. STEELE. You mentioned that as being one of the properties of the Alaska syndicate. Please state what that company is. Mr. BIRCH. The Katalla company is the company that is constructing the Copper River and Northwestern Railway. Mr. STELLE. That is all, Mr. Chairman. The CHAIRMAN. I have just a few questions to ask. In order to clear up the matter in my mind, let me ask this question first. (I suppose it is already in the hearings, but I want to gather it up again.) The Alaska syndicate, you say, consisting of the Messrs. Guggenheim and J. P. Morgan & Co., owns certain properties. The first of these to which you referred, I believe, was a steamship company? Mr. BIRCH. No, sir; the Northwestern Commercial Company. The CHAIRMAN. Very good. It also operates canneries? Mr. BIRCH. Yes, sir. The CHAIRMAN. I see it is stated by Delegate Wickersham, in the hearings held before this committee as follows: The Guggenheims also own all the steamship lines which run up there except one independent, and they are fighting that independent line now by cutting rates and refusing to give them any facilities under the interstate commerce law, etc. I understood you to say yesterday that there are how many other steamship lines? Mr. BIRCH. There is the Canadian Pacific Steamship Company, the Alaska Coast Steamship Company, the Pacific Coast Steamship Company, Shubach & Hamilton, the Humboldt Steamship Company, |