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Senator Walsh. You are speaking about the Seward Peninsula. Upon what is that speculation based ?
Mr. BALLAINE. Those are the official reports of the Geological Survey, from their own investigations. The quartz districts in Alaska are very extensive. Dr. Brooks, the head of the Geological Survey for Alaskan work, told me within the last few weeks that in this range of mountains here [indicating), the Endicott Range, there is probably going to be one of the richest and most permanent mining districts in Ålaska. He says that the mineral indications there are surprising:
Senator NELSON. That is up on the headwaters of the Koyukuk?
Mr. BALLAINE. Yes; about Union City and Seaforth and Beaver City and Rapid City. There is some good coal in that district also; it is probably not so good as the Matanuska or the Bering River coal, but it is fairly high grade.
One more point: We are asked a great many times why the Government should be called upon to build railroads in Alaska. The reply is sometimes given that it is impossible, absolutely impossible, to raise money to build railroads in that country unless the railroad builders have the privilege of acquiring coal lands in fee, to be used as a part of the assets of the railroad on which to base a bond issue, or to show a tonnage for assured earnings. But even that would provide for railroad transportation only to the Bering River and the Matanuska coal fields.
In this connection I am going to give some information for the benefit of the committee. It is information that has never been made public heretofore.
After the Canadian owners of the reorganized Alaska Central had taken over the property, I entered into negotiations with J. P. Morgan & Co. to ascertain whether they would back me in a project to build a narrow-gauge railroad, taking over the railroad from Seward, changing it into a narrow gauge, and extending it as a narrow gauge on into the Tanana Valley. I had my negotiations directly with G. W. Perkins. I offered to put up as a basis of security all of my property in Alaska, and all of the stock and bonds in the contemplated company, with a bond issue limited to $20,000 per mile, they to have a voting trusteeship of all the stock until after the railroad should be completed to the Tanana River, when the bonds might be marketable and I could pay them back. Mr. Perkins agreed to enter into negotiations with the Canadian owners to take over the Alaska Northern with bonds in the proposed new company. Whether he ever did so or not I am not qualified to say. But it was agreed by Mr. Perkins, in the course of our negotiations, that Morgan & Co. should send out an expert to ascertain the amount of resources along the route from Seward to the Tanana River.
In the summer of 1909 they sent A. N. Grey, the traffic and tonnage expert for Morgan & Co., to make that investigation. In July of that year Mr. Perkins himself went up to Alaska. I met him by appointment at Seward. He was at Seward for several days on the first trip. He then went to the westward, and on his return a week later he was in Seward several days longer. Mr. Grey's investigation and Mr. Perkins's investigations, according to Mr. Perkins's statement to me, resulted in their finding resources along the route from Seward through the Susitna Valley to Tanana River better and more varied than they had expected. Mr. Perkins told me in Seward, and later in Seattle, that he would favor the financing the road on the plans that I had proposed, in the event that he could get the consent of the Guggenheim Bros. to do so, and could make satisfactory arrangements with the Canadian owners for a conversion of their securities into securities of the proposed new company. He explained to me that the Alaskan Syndicate at that time was owned by Morgan & Co., and by the Guggenheim Bros., and that they had an agreement by which the firm of J. P. Morgan & Co. should not engage in any other Alaskan railroad enterprise or mining enterprise without the consent of the Guggenheim Bros. He agreed with me that he should recommend favorably their taking up this plan, not alone on account of its merits, but because the firm of J. P. Morgan & Co. and their friends held one-third of the stock in the Sovereign Bank of Canada, which at that time was going through liquidation.
The Sovereign Bank had failed in consequence of the failure of Frost & Osborne. It held nearly all of the bonds of the Alaskan Central Railroad and nearly all of the stock. It was Mr. Perkins's opinion, as he expressed it to me, that through that arrangement they might be enabled to come out whole in their investments in the Sovereign Bank.
By appointment I met Mr. Perkins in New York about the 20th day of November, 1909, when I expected to close negotiations. He informed me then that the Canadian owners were having difficulty in getting their bondholders to agree to the proposed exchange.
Later in the winter, or possibly in the spring, Mr. Perkins told me that the Guggenheim Bros. had refused to give their consent to the plan for Morgan & Co. to take over the financing of this project as a narrow-gauge railroad from Seward through the Susitna Valley to the Tanana on the ground that they regarded the Tanana Valley as their field. Mr. Perkins told me at the same time that Morgan & Co. were not prepared to encourage any railroad building in Alaska until the Government issued patents to coal claims then pending.
I asked Mr. Perkins: "Do I understand from this that if I or any other individual, or any company, should go to some other bank or banker to raise money for building a railroad from Seward through the Susitna Valley to the Tanana I should meet with the opposition of the owners of the Alaskan Syndicate ?"
He replied: “We could not allow a railroad to be built through the Susitna Valley into the Tanana. There will be no more railroad building in Alaska until the coal fields are opened."
The ACTING CHAIRMAN. They might stop us if we tried.
Mr. BELLAINE. I made this same statement within 30 days after that interview with Mr. Perkins to the Senate Committee on Territories, when Senator Beveridge was chairman. Senator Beveridge, Senator Kean of New Jersey, and Senator Dick of Ohio were present. I asked permission to have my statement taken down officially, so that it might be an official statement, because legislation was then proposed for the guaranty of interest on the bonds of 1,000 miles of railroad which the Alaskan Syndicate was favoring. The committee refused to allow my statement to be taken by a stenographer and published in the official records. Senator Beveridge called Mr. Perkins by phone in New York, I am informed, and told him the substance of my statement. I understand that Mr. Perkins denied to
Senator Beveridge that he had ever had any negotiations of any kind with me, or even had known me.
If Mr. Perkins now will come out with a public denial of the statements I make here as to my negotiations with him I am prepared to substantiate what I say. I will go further. If Mr. Perkins will give his permission, I will make public a telegram which passed from Mr. Perkins to a broker in New York asking him to call up a member of President Taft's Cabinet and have a certain conversation with him. If it comes to that point, I think we shall be able to contribute some very lurid literature to the discussion of the Alaskan problem.
Senator Walsh. In view of the testimony to which we have just listened I move that the chairman of the committee be directed to address a communication to Mr. Perkins saying that the committee would be pleased to have his testimony on this point, and asking him if he would attend.
Mr. BALLAINE. I wish the committee would do that. The ACTING CHAIRMAN. With no objection, that will be done. Mr. WICKERSHAM. I do not think that has anything to do with the bills before the Senate. I rather object to getting into these outside matters if we can avoid it.
Senator WALSH. I will tell you why I made that motion. The line that is suggested into the T'anana Valley up the Susitna passes through a rich coal field, the character of which has been exhibited by the photographs before us. It then reaches the Tanana Valley, the rich agricultural valley of which the witness spoke so clearly to
Immediately beyond is a mining region of fabulous wealth, as indicated by the gold production in the past, and with great prospects for the future. Evidently it is a country of wonderful resources. It will occur to the inquiring mind at the very outset as to why it is, if this is the case, the Government of the United States should be asked to build a railroad through there and why private capital does not at once take up this enterprise and develop the country in the expectation of getting rich return. Apparently no more inviting field for railroad development exists upon this continent from what we have learned this morning than this same region. Apparently the testimony here affords some reason.
Mr. BALLAINE. That is precisely why I made the explanation that I have made. There is more to follow if necessary.
Senator WALSH. I should deplore getting into a controversy about this, but it looks as if we were now possibly learning why the Government ought to build this railroad.
The ACTING CHAIRMAN. If that is the desire of the committee, I will request the chairman
Senator NELSON. I concur in the motion of the Senator. I should like to have both the representatives of the Morgan house and the Guggenheims here and find out whether they ever intend to build from Chitina across to the Tanana. That goes to the question of whether the Government ought to build it. If they are ready to build it, let them build it.
Senator Walsh. I apprehend, Mr. Chairman, that the very general sentiment is that if private capital can go in and construct these lines the Government ought not, in the present state of public feelings, undertake it.
Mr. WICKERSHAM. It does not make the least bit of difference, Mr. Senator, to the people of Alaska, whom I represent, who builds that railroad. We want it built. If we can get it built by private capital, we are perfectly delighted.
Mr. BALLAINE. If the Government builds any of these railroads on a 3 per cent bond issue, very naturally the cost of transportation is going to be less than if built by private capital on an inflated bond issue.
The bonds will be discounted about 20 per cent to start with, and they will be 5 per cent bonds instead of 3. The owners of all railroads aim to make their stock pay dividends
Senator WALSH. But that argument would apply to railroad building anywhere, would it not?
Mr. BALLAINE. That is very true.
Senator Walsh. That is making an argument in favor of Government control and construction.
Mr. BALLAINE. In building railroads in a new country, as in Montana, Idaho, and our other Western States, their bonds had to be sold at a much lower figure on the public market than the bonds on railroads in a thickly settled community are sold. You can not sell a bond for a new railroad into a new part of Montana to-day unless it is marketed by one of the large railroad companies, for more than 75, and that is true of all of our new railroads in Oregon and Washington. In a thickly populated country a railroad bond may sell close to par, but in a new country like Alaska you would do mighty well to-day if you could get 60° for your bonds anywhere in the world—in Holland or England, or anywhere in the United States-even if you did not encounter the prohibitive opposition of the Alaska syndicate.
Referring again to the agricultural and stock-growing possibilities in Alaska, I wish to insert in the record an official statement furnished me at my request by Dr. Walter H. Evans, Chief of Insular Statistics of the Agricultural Department, showing comparisons with countries in Europe in the same latitude and under almost identical climatic conditions as Alaska. His statement is dated February 28, 1913, and is as follows:
As a result of the investigations at Sitka, Rampart, and Fairbanks, supplemented by hundreds of letters from settlers, it can be safely asserted that in almost any part of Alaska south of the Arctic Circle hardy vegetables of good quality can be produced, so far as the climate is concerned. A list of these vegetables would embrace radishes, turnips, kale, mustard, lettuce, carrots, parsnips, parsley, peas, cress, cabbage, cauliflower, Brussels sprouts, kohl-rabi, onions, spinach, endive, leeks, beets, potatoes, and rhubarb, and among the herbs, caraway, catnip, mint, and thyme. In specially favored localities and in favorable seasons asparagus, beans, celery, cucumbers, squash, and salsify have been grown by taking advantage of warm sheltered spots with exposures toward the sun, Under ordinary conditions corn, melons, tomatoes, eggplant, and pumpkins have proved failures.
In the interior valleys grain can be successfully grown and there has not been a year since 1900 when the majority of the varieties of oats, barley, and rye have not ripened at the Rampart Station (lat. 65° 30' N.). Wheat, both fall and spring sown, has ripened some years. Similar results have been secured at Fairbanks, in the Tanana Valley, but the work has not been in progress for as many years. In 1909 out of 60 varieties of grain of all kinds, 55 ripened their entire crop as follows: Spring wheat 1, winter wheat 1, winter rye 7, spring rye 1, spring emmer 1, spring barley 29, and spring oats 15.
AGRICULTURE IN NORTHERN EUROPE.
In order to further establish the possibility of agriculture in Alaska, a comparison has been made of the countries of Norway, Sweden, Finland, and the Russian Provinces of Archangel, Vologda, and Olonetz. All these countries lie between latitudes 58° and 70° north, and for the most part they are north of 60°, the approximate latitude of the northern reach of the Gulf of Alaska. In Europe within the above limits are embraced over 985,000 square miles, or about 599,450,000 acres. Alaska, with its 570,390 square miles, or 365,049,000 acres, extends from latitude 54° 30' in southeastern Alaska to more than 71° at Point Barrow. A study of the topography, climate, native plants, etc., shows that the conditions are not very dissimilar in the two regions, whatever advantage there is in climate being probably slightly in favor of the European countries. In these countries of Europe more than 11,000,000 people are living, while the census of 1910 reports 64,356 as the population of Alaska. Recent statistics show in the three countries and three Provinces in Europe which lie mostly north of 60° that 8,373,000 acres of land were producing cereals of all kinds, the total yield being: Wheat, 6,683,840 bushels; rye, 36,509,640 bushels; barley, 26,963,545 bushels; oats, 109,036,780 bushels. In addition potatoes to the amount of 100,321,100 bushels and 7,871,119 tons of hay were reported. Live stock are returned for these countries as follows: Horses, 1,516,251; cattle, 6,110,476; sheep, 4,033,578; hogs, 1,484,124; goats, 368,021; and reindeer, 564,732.
The area reported under cultivation varies from less than 0.01 per cent in Archangel and 0.5 per cent in Norway to 4.1 per cent in Sweden. In Finland, Vologda, and Olonetz only about 1 per cent of the total area is in cultivation, as the term is commonly used. In nearly every country there are natural meadows of large extent used as pasture and for haymaking, so that the total under agricultural use is probably about double the figures quoted above. On a basis of 1 per cent of the total area available for crops and 2 per cent for crops, pasture, and haying there should be over 3,650,000 acres capable of cultivation, or 7,300,000 acres available for possible agricultural development in Alaska. In 1894 the Director of the United States Geological Survey, in a letter to the House Committee on Agriculture, estimated the area of tillable land in southeastern Alaska in the Cook Inlet country, the Alaskan Peninsula, and adjacent islands at from 3,000 to 5,000 square miles, or 2,000,000 to 3,000,000 acres. In 1900, after traveling repeatedly throughout Alaska and comparing estimates from various sources, Prof. C. C. Georgeson estimated the tillable and pasture land of Alaska at 100,000 square miles, or 64,000,000 acres. In 1910 Mr. J. W. Neal, who is in charge of the agricultural experiment station near Fairbanks, made a reconnoissance survey of the Tanana Valley, and he estimated the agricultural and grazing lands of that valley and the small valleys leading from it as about 15,000 square miles, or 9,700,000 acres, or more than the total area reported under crops in the specified countries of Europe.
With the same development of agriculture in Alaska as in Europe, to supplement its mining, fisheries, and other industries, Alaska should support a population almost equal to that of Europe north of 60° latitude and a commerce of equal or greater importance.
Comparative area of some European countries.
Acres 76,226,000 101, 563,000 $2,025,000
58 30 to 70 30
402,000 4,113, 900 1,578,300
62 0 to 70 0
208, 680, 320
0.075 1.7 1.1