Alaska together with the establishment of through routes by the carriers is both desirable and indicated under statehood status. The legislation falls in the category of a long overdue corrective measure in the Alaska transportation picture.

S. 2452

Senate bill 2452, a bill to establish a joint board and to permit the filing of through routes and joint rates for carriers serving Alaska, Hawaii, and the other States.

This bill appears to closely parallel S. 2451, except that the establishment of through routes and joint rates would be permissive rather than mandatory. If there is a choice we prefer the mandatory requirements and have therefore endorsed S. 2451 and have taken no action on S. 2452.

S. 2514

Senate bill 2514, a bill to repeal the act of March 12, 1914 (38 Stat. 305), authorizing the construction and operation of a railroad in Alaska, to incorporate the Alaska Railroad Company, and for other purposes.

In general our membership endorses this bill but recommends that one change or "safeguard" be added. We are told that occupants of leasehold property along the right-of-way of the Alaska Railroad are concerned that they may be required to use the Alaska Railroad exclusively as their means of commercial transportation. We therefore recommend that a suitable clause be added to the bill prohibiting the Alaska Railroad from requiring lessees along the rightof-way to use the railroad exclusively for transportation needs.

Including this one recommended addition the bill has our endorsement.

S. 2669

Senate bill 2669, a bill to extend the period of exemption from inspection under the provisions of section 4426 of the Revised Statutes granted small vessels carrying freight to and from places on the inland waters of southeastern Alaska. The Ketchikan Chamber of Commerce supported the original legislation that set up the exemption involved running to 1960. We now endorse S. 2669 that would extend that exemption until 1964. The legislation has permitted a desirable type of freight transportation service in southeastern Alaska. The service has functioned under certain conditions when common carrier operations became inoperative. It has provided for special handling of perishable foodstuff items shipped from the Puget Sound area that has been desirable in nature. The legislation has also enabled a frequency of service be provided to some of the smaller communities in southeastern Alaska that they did not previously enjoy. We have not been able to conclude that the operation of the freight service permitted by this legislation has seriously impaired the functioning of common water freight carriers serving Alaska some of whom have concentrated their operations almost exclusively to western Alaska and have largely bypassed southeastern Alaska.

S. 2661

Senate bill 2661, a bill to amend title 23, United States Code, to provide for participation of Federal-aid highway funds in the construction of approach roads to ferry facilities on the Federal-aid systems.

We consider this to be "must" legislation and recommend enactment of the bill. The legislation provides that the term "approach to a ferry" may include a ramp of a ferry landing facility used by vehicular traffic approaching the ferry.

One of the problems attendant to establishing a passenger and vehicle ferry system in southeastern Alaska involves the terminals in the communities to be served which are estimated to cost some $3 million. This legislation will permit the use of Federal-aid highway funds in the construction of the terminals which is not possible under present law. The ferry terminals are in effect a part of the road system leading up to the water borne phase of the operation and should properly be eligible for construction assistance under the terms of the Federal-aid highway legislation. Although the problem is somewhat unique to Alaska its application could extend to many other States.

We consider the establishment of a passenger and vehicle ferry system throughout southeastern Alaska, linking the British Columbia road system at Prince Rupert, British Columbia, with the Alaska Highway at Haines, Alaska, is an absolutely necessity as an adjunct to the transportation network in Alaska. This view is shared uniformly, we believe, throughout the State. A recent meeting of the first statewide Alaska road conference held in Juneau and sponsored by the Alaska State Chamber of Commerce unanimously endorsed the immediate establishment of such a ferry system

The peculiar problem we have is one wherein connecting roads simply cannot be built between many of our major communities because of isolated locations 'on islands and also in many instances glacial and mountain terrain prohibit connecting roads being built at reasonable cost. The establishment of a passenger and vehicle ferry system or marine highway, if you choose to call it that, becomes the most economical and feasible method of solving the problem. Many studies have been made endorsing the program, and we refer the committee to a very recent compilation on the subject by Felix J. Toner, registered engineer of Juneau, entitled "Proposed Ferry Service for Southeastern Alaska" prepared for the Alaska Highway and Public Works Department. The committee will be supplied a copy of this document by Richard Downing, commissioner of the highway and public works department, at your Juneau bearing.

Enactment of Senate bill 2661 is necessary to assist in the establishment of the access roads and attendant terminal facilities required for the ferry system. We have communicated with the Honorable Frederick H. Mueller, Secretary of Commerce, under whose review S. 2661 will come, requesting Department of Commerce endorsement of the bill, and a copy of his reply is attached to this statement. We would, however, like to quote at this point the last paragraph of his letter which reads:

"We realize that the establishment of a ferry service in southeastern Alaska is of unique importance to the State and to those persons and organizations in Alaska having an interest in the furtherance of transportation. We appreciate receiving, therefore, your views on this important subject."

In furnishing the background information involved it is our purpose to apprise the committee of the need for enactment of S. 2661. We urgently request your support of the bill and ask that special measures be taken, if necessary, to secure its enactment. This organization as well as other similar ones throughout the State, our affected city governments and the appropriate departments of our State government all stand ready, we are sure, to supply the committee with any additional information it may desire in connection with the subject matter of S. 2661.

S. 1956

S. 1956, a bill to amend the Merchant Marine Act, 1936, for the purpose of providing with respect to the requirements for the operation of subsidy constructed vessels that certain vessels shall be considered as operating in foreign trade.

We endorse this legislation with the provision that it may requirement amendment to overcome_objections by the Secretary of Commerce to the bill as presently drawn. In general the bill is designed, along with S. 2661, to initiate the desired and necessary vehicle and passenger ferry system in southeastern Alaska. Federal-aid highway matching funds are not available, under present law, for use in construction of the desired vessels. This legislation would make possible the subsidy construction of the vessels under the Merchant Marine Act of 1936, together with the loaning of a substantial portion of the funds for their acquisition.

The Secretary of Commerce has expressed opposition to Senate bill 1956 in a letter, dated September 29, 1959, to Hon. Warren G. Magnuson, chairman of the full Committee on Interstate and Foreign Commerce. A copy of that letter is attached to this statement. The objection is based on the wording that only requires a majority of the miles logged by any vessel during a calendar year in round-trip voyages from Alaska to British Columbia, Canada, to qualify the operation as having been one operated exclusively in foreign trade. The objection then goes on to point out that the vessels built with constructiondifferential subsidies would only have to operate a majority of their logged miles during a calendar year between Alaska and British Columbia and would then be free during the rest of the year to engage in domestic trade of any type without repayment of any construction-differential subsidy. Furthermore, that section 905 (a) of the Merchant Marine Act, 1936, defines "foreign trade"

for the purposes of the act as meaning "trade between the United States, its Territories or possession, or the District of Columbia, and a foreign country" and that this bill would depart from that concept by allowing the vessels to log up to half of their mileage in trade between foreign countries.

The objection from the Secretary of Commerce goes on to point out that under S. 1956 domestic operators who have not received subsidy and who have paid full prices for their ships would be faced with competition from ships which have been built with the aid of construction-differential subsidy and for which their owners have paid substantially less than the full shipyard price and states that section 506 of the Merchant Marine Act, 1936, is specifically designed to prevent this type of unfair competition.

Unless the objections of the Secretary of Commerce are overcome with respect to S. 1956 the whole program of establishing the long-cherished passenger and vehicle ferry system in southeastern Alaska is in danger of collapsing. Since receiving the objections from the Secretary of Commerce we have communicated with your office, Senator Bartlett, asking that it approach the Department of Commerce to determine if an amendment to S. 1956 to require exclusive operation of vessels between Alaska and British Columbia rather than the present provision requiring only a majority of the miles operated during a calendar year would be acceptable. Yesterday we received a copy of a letter from your office dated October 14 directed to Hon. Frederick H. Mueller, Secretary of Commerce, inquiring as to whether such an amendment would be acceptable and also expressing to the Secretary the great concern felt in Alaska on the matter and the necessity of somehow accommodating the views of the Department of Commerce without sacrificing the principles of S. 1956. It appears essential to clear the matter with the Department of Commerce prior to the convening of Congress in January, and we urge this committee, together with the full assistance from the Alaska congressional delegation, take the necessary and required steps. In order to assist the committee we have also attached to this statement a copy of the letter of October 14, 1959, from Hon. E. L. Bartlett, to Hon. Frederick H. Mueller, Secretary of Commerce, inquiring as to the acceptability of the proposed amendment to S. 1956.

Mr. BOARDMAN. This concludes our statement with respect to the several bills on which the committee is taking testimony. We want to again thank Senator Bartlett and the committee for the opportunity to appear before you and express our views. If the committee has any questions we would be very happy to try and answer them. Senator BARTLETT. Thank you, Mr. Boardman, for a very complete and informative statement. I have a few questions.

Senator BARTLETT. I should like you to turn to page 2 of your statement, if you will.

There you state a preference on the part of the Ketchikan Chamber of Commerce for the mandatory requirements of S. 2451 as compared to the permissive suggestions made in S. 2452.

I wonder if you would be good enough, Mr. Boardman, to tell the committee why the chamber prefers mandatory instead of permissive legislation?

Mr. BOARDMAN. These two bills were reviewed by our board of directors, and we felt that the filing of the joint rates and the routes was very desirable for the Alaska picture, and a procedure that was long lacking. If it was desirable-which we think it is we would prefer that it be on a mandatory rather than on a permissive basis.

Senator BARTLETT. Then you do not want to take chances on there being no through rates.

Mr. BOARDMAN. Someone once said "a bird in the hand is worth two in the bush."

Chairman BARTLETT. As far as I am aware, Mr. Boardman-and I may be in error on this-we had not heard about the problem presented on page 2 of your statement about the incorporation of the

Alaska Railroad Company, concerning leasehold property. I want to thank you for calling that to our attention, and I am sure that it will be amplified when we reach Anchorage and Fairbanks.

Mr. BOARDMAN. It was relayed to us by a member of our board, who is associated with a local firm that does a lot of business up in that area, so we took it for his face value on it.

Senator BARTLETT. We will certainly look into that feature of the bill.

Now, we are going to hear testimony, this afternoon, we understand, on the subject of charter shipping, the subject covered by S. 2669; but, in the meantime, I wonder if you would care to amplify your statement on this matter in any way? Specifically, it has been claimed-it was claimed while the original legislation was under consideration; it was claimed while the legislation was in force, which is right now, and will be claimed, I suspect, in consideration of this very bill, that this provides unfair competition for the common carrier; that the charter ships do not meet the same safety and manning requirements as those imposed on common carriers; and this is not fair competition, and should not be permitted to continue.

What do you have to say to that?

Mr. BOARDMAN. Senator, I think in speaking for our group, that we would probably feel that it is up to the proponents and prime movers and sponsors of this legislation to-and I am sure that they will, this afternoon, in their period of testimony-develop that point, and attempt to satisfy the committee on it. In a very general way, I might say that there can be unfairness on two sides of the fence; I am sure that some of our smaller communities, places where construction projects are located in isolated spots up here, like satellite tracking stations, and other things that have been built in isolated locations, where we know, from direct records, that this type of service has been very beneficial. I think this group, this afternoon, will cover that phase of the question, I am sure that they will.

Senator BARTLETT. All right, now, one further question with reference to this, and you may care to have them answer it, too, and that will be perfectly all right, if you do. The question is this:

If this charter service is discontinued, do you believe hurt would be done to the city of Ketchikan, itself?

Mr. BOARDMAN. I do, and that, too, is the position of our chamber on the matter.

Senator BARTLETT. Now, Mr. Boardman, as everyone does, sooner or later, in southeastern Alaska, I turn to the subject of ferries. Is it not true that one of the difficulties of this part of Alaska arises on account of the fact that substantially all of it is in a Federal reserve, Tongass National Forest, an area of substantially 16 million acres? Therefore, the roads, within this national forest, which is by far the largest in the United States, are built under Forest Highway Fund appropriations. Is it a correct statement to say that you-you residents of southeastern Alaska will not share in the greatly increased appropriations which will come to the State of Alaska for roadbuilding in the public domain area, and that you would never be able to get enough money for highways here, even if there should be the intention on the part of the Federal Government to build them, because the forest highway appropriations aren't large enough?

Mr. BOARDMAN. I would say it is, Senator, although to slightly modify it, some of the through routes, through our communities, have qualified for Federal aid highway participation. Our through arterial route in town qualifies, but, as you state, it is of such limited mileage in the overall picture, that the statement that you pose, is generally

true.

Senator BARTLETT. Would a road for example, from here to Juneau, if such could be built, which is geographically impossible, qualify for expenditure of other than highway funds, since there is no public domain land except in scattered tracts between here and Juneau?

Mr. BOARDMAN. It probably would not. It is an academic question. It might possibly be defined as a part of the highway system. Senator BARTLETT. Well, that might be about as difficult as getting this bill enacted. [Laughter.]

You said there was some trouble-there would be some trouble in building these roads at, and I quote "reasonable cost"; and do you have any notion, Mr. Boardman, of your own knowledge, from what you have heard, what highway construction runs to a mile at this time in this section of Alaska?

Mr. BOARDMAN. In this area, to build a highway of the grade and standards that you would want, if you could build them to link these communities, it would run, oh, probably on an average mile basis, half a million to $650,000 a mile; I may—I can't speak with complete authority on that; I know that the road construction that we had around here, in recent years, being merely realining and straigthening and blacktopping present road systems, ran up to close to that figure, to the half million dollar a mile figure. If I could depart, at this point, from a theoretical standpoint, there is some 400 nautical miles between Prince Rupert, B.C., and Haines, that we propose to link with this ferry system. If you could build the roads through that terrain, which is impossible, because we are on islands, with intervening mountainous terrain; but if you could, with this type of country, you would have a capital expenditure of probably between $50 and $70 million at the very minimum, to put a stretch of road of 400 miles into this country, plus the problem of maintenance.

This whole ferry system can be capitalized, implemented and put into complete operation for just a fraction of that figure. With these vessels that Mayor Hardcastle described, estimating to cost $3 million apiece, you can do the whole package for something less than $15 millíon. It is the only practical solution that we can come up with to provide the surface transportation link, or marine highway, as we call it, through southeastern Alaska.

Senator BARTLETT. Mr. Boardman, let's say this could be done, and the vessels and the terminal facilities could be placed in operation Have studies been made to reveal whether the operation, from then on, would be self-supporting?

Mr. BOARDMAN. Yes, sir.

Senator BARTLETT. And the answer is?

Mr. BARTON. You say, Mr. Boardman, that the chamber of commerce prefers S. 2451 that would require the filing of through routes and joint rates.

Would you accept S. 2452 as an alternative in case S. 2451 could not be passed? That is the bill that allows the permissive filing of through routes and joint rates.