ALASKAN SHIPPING

MONDAY, JUNE 7, 1948

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON

INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C.

The subcommittee met at 9:45 a. m., pursuant to call, in the committee room, Capitol, Senator Homer E. Capehart (chairman of the subcommittee) presiding.

Present: Senator Capehart (chairman of the subcommittee).

Senator CAPEHART. We are officially holding hearings on Senate Joint Resolution 218, Senate Joint Resolution 219, and Senate Joint Resolution 222; Senate Joint Resolution 222 being the same as House Joint Resolution 401, introduced by Mr. Bartlett.

The Senate joint resolutions along with House joint resolution 396 will be placed in the record at this point.

(The resolutions are as follows:).

[S. J. Res. 218, 80th Cong., 2d sess.]

JOINT RESOLUTION To continue until December 31, 1949, the authority of the United States Maritime Commission to make provision for certain ocean transportation services to, from, and within Alaska Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the joint resolution of March 7, 1947, entitled "Joint resolution to authorize the United States Maritime Commission to make provision for certain ocean transportation service to and from Alaska until July 1, 1948, and for other purposes' is amended to read as follows: "That it is the intention of the Congress to assist in securing effective, efficient, and reasonably competitive ocean transportation services, by common carriers so far as may be practicable, for Alaska, to encourage the economic development of the Territory and growth of its population, and to increase the Territory's civilian strength and services in support of the national defense.

"SEC. 2. (a) The United States Maritime Commission is authorized to enter into contracts, charters, and other arrangements deemed by it to be appropriate, with American citizens, deemed by the Commission to be qualified, to supply ocean transportation service with American-flag vessels to, from, and within Alaska. Such contracts, charters, or arrangements may include provisions for making available to such operators Government-owned vessels under the control or jurisdiction of the Commission for operation on voyages commencing not later than December 31, 1949. Such provisions may include (1) charter hire at a nominal rate; (2) such marine insurance to be provided by the Commission, as the Commission may determine to be necessary or appropriate as to vessels made available by the Commission and other vessels operated in the Alaska service under contracts, charters, or arrangements with the Commission; (3) requirements that the operators shall operate such vessels to secure the most economical transportation adequate for the Alaska service; and (4) such other requirements, terms, and conditions as the Commission may deem appropriate.

"(b) Each such contract, charter, or arrangement shall provide that, as of the end of each accounting period, the cumulative gross profit, before overhead expenses, from the operation of vessels thereunder, as approved by the Commission, shall be allocated as follows and in the following order:

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"(1) To provide for the operator's proportionate share of the expenses of all operators of maintaining a survey of Alaska ocean transportation services and of the costs and methods of operation of operators in said services, in accordance with a program approved by the Commission;

"(2) To allow compensation to the operator for working capital, use of facilities other than operator-owned vessels, and overhead expenses, on such bases as the Commission may determine; and such bases may be fixed in terms of a percentage or percentages, deemed by the Commission to be reasonable, of vessel operating

revenues;

"(3) To allow the operator a return at the rate of 10 per centum per annum, before Federal income taxes, on the fair value of operator-owned vessels used in the Alaska service;

"(4) Any profit remaining thereafter, at the conclusion of each accounting period, shall be held in a special account. At the end of the second and each succeeding accounting period, if any, such account shall be available for paying any then cumulative deficiency (covering the period from the commencement of operations hereunder) with respect to any amounts which, if earned, would have theretofore been allocated pursuant to the previous paragraphs of this subsection; "(5) At the conclusion of operations under any such contract, charter, or other arrangement, any balance in said special account shall be promptly divided and paid 75 per centum to the Commission and 25 per centum to the operator.

"(c) The Commission may incorporate in each such contract, charter, or arrangement such definitions and formulas for the determinations of vesseloperating revenue, gross profit before overhead expenses, overhead expenses, accounting periods, fair value, and depreciation, as it may deem necessary or appropriate to carry out the other provisions of this subsection and of this joint resolution. The Commission's determination of the value of operator-owned vessels, for the purposes of such contract, charter, or other arrangement, shall be for the purposes of this joint resolution only and shall not be relevant evidence in any regulatory proceeding before the Commission.

"SEC. 3. (a) Every contract, charter, or arrangement made under this joint resolution shall expressly reserve to the Commission, after reasonable notice to the operator and affording him opportunity for hearing if the Commission determines that it is in the public interest so to do, the right to cancel the same upon reasonable notice of such cancellation but not less than ninety days. Such contract, charter, or arrangement shall also reserve to the operator (1) the right to request the Commission to modify or cancel the same for good cause shown, and if the Commission shall determine that the operator's claim is justified, it may make such modification or shall permit such cancellation at such time thereafter as it may consider reasonable but not more than ninety days after such determination, and (2) the unconditional right to cancel any such contract, charter, or other arrangement, effective as of April 1 of any year, provided written notice of such cancellation be given to the Commission on or before January 1 of such year.

"(b) Whenever the President shall proclaim that the security of the national defense makes it advisable, or during any national emergency declared by proclamation of the President, the Commission may terminate any contract, charter, or arrangement hereunder, without cost to the United States, upon such notice to the operator as the President shall determine.

"(c) Nothing contained in this joint resolution shall be construed to limit the right of the Commission to enter into other contracts, charters, or arrangements with new or other operators, if after such notice, investigation, or consultation as the Commission may deem necessary or appropriate in the particular case, but without the necessity of hearings, the Commission shall determine such action to be in the interest of the economy of the Territory of Alaska or of the national defense.

"SEC. 4. All agencies of the Federal Government shall cooperate to the end that, to the maximum extent practicable, traffic by water to, from, and within Alaska, which such agencies control, either directly or as a contracting agency or otherwise, be transported on vessels of the common carriers operating in the Alaska service.

"SEC. 5. The word 'vessels' as used in the joint resolution shall include such passenger vessels, freight vessels, combination freight and passenger vessels, tugs and barges to be employed in combined operation, and other watercraft, as shall, in the discretion of the Commission, be deemed suitable for use in ocean transportation to, from, and within Alaska.

"SEC. 6. The provisions of this joint resolution, as amended, shall not, prior to July 1, 1948, affect the operation of contracts, charters, or other arrangements in accordance with their terms in effect on the date of enactment of this amendatory section, unless superseded before July 1, 1948, by contracts, charters, or arrangements entered into under this joint resolution, as amended.'

[S. J. Res. 219, 80th Cong., 2d sess.]

JOINT RESOLUTION To continue until December 31, 1949, the authority of the United States Maritime Commission to make provision for certain ocean transportation service to, from, and within Alaska Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the joint resolution of March 7, 1947, entitled "Joint resolution to authorize the United States Maritime Commission to make provision for certain ocean transportation service to and from Alaska until July 1, 1948, and for other purpose", is amended to read as follows: "That it is the intention of the Congress to assist in securing effective, efficient, and reasonably competitive ocean transportation services, by common carriers so far as may be practicable, for Alaska, to encourage the economic development of the Territory and growth of its population, and to increase the Territory's civilian strength and services in support of the national defense.

"SEC. 2. (a) The United States Maritime Commission is authorized to enter into contracts, charters, and other arrangements deemed by it to be appropriate, with American citizens, deemed by the Commission to be qualified, to supply ocean transportation service with American-flag vessels to, from, and within Alaska. Such contracts, charters, or arrangements may include provisions for making available to such operators Government-owned vessels under the control or jurisdiction of the Commission for operation on voyages commencing not later than December 31, 1949. Such provisions may include (1) charter hire at a nominal rate; (2) such marine insurance to be provided by the Commission, as the Commission may determine to be necessary or appropriate as to vessels made available by the Commission and other vessels operated in the Alaska service under contracts, charters, or arrangements with the Commission; (3) requirements that the operators shall operate such vessels to secure the most economical transportation adequate for the Alaska service; and (4) such other requirements, terms, and conditions as the Commission may deem appropriate.

(b) Each such contract, charter, or arrangement shall provide that, as of the end of each accounting period, the cumulative gross profit, before overhead expenses, from the operation of vessels thereunder, as approved by the Commission, shall be allocated as follows and in the following order:

"(1) To provide for the operator's proportionate share of the expenses of all operators of maintaining a survey of Alaska ocean transportation services and of the costs and methods of operation of operators in said services, in accordance with a program approved by the Commission;

"(2) To allow compensation to the operator for working capital, use of facilities other than operator-owned vessels, and overhead expenses, on such bases as the Commission may determine; and such bases may be fixed in terms of a percentage or percentages, deemed by the Commission to be reasonable, of vessel-operating

revenues;

"(3) To allow the operator a return at the rate of 10 per centum per annum, before Federal income taxes, on the fair value of operator-owned vessels used in the Alaska service;

"(4) Any profit remaining thereafter, at the conclusion of each accounting period, shall be held in a special account. At the end of the second and each succeeding accounting period, if any, such account shall be available for paying any then cumulative deficiency (covering the period from the commencement of operations hereunder) with respect to any amounts which, if earned, would have theretofore been allocated pursuant to the previous paragraphs of this subsection; "(5) At the conclusion of operations under any such contract, charter, or other arrangement, any balance in said special account shall be promptly divided and paid 75 per centum ot the Commission and 25 per centum to the operator.

"(c) The Commission may incorporate in each such contract, charter, or arrangement such definitions and formulas for the determinations of vesseloperating revenue, gross profit before overhead expenses, overhead expenses, accounting periods, fair value, and depreciation, as it may deem necessary or appropriate to carry out the other provisions of this subsection and of this joint resolution. The Commission's determination of the value of operator-owned

vessels, for the purposes of such contract, charter, or other arrangement, shall be for the purposes of this joint resolution only and shall not be relevant evidence in any regulatory proceeding before the Commission.

"SEC. 3. (a) Every contract, charter, or arrangement made under this joint resolution shall expressly reserve to the Commission, after reasonable notice to the operator and affording him opportunity for hearing if the Commission determines that it is in the public interest so to do, the right to cancel the same upon reasonable notice of such cancellation but not less than ninety days. Such contract, charter, or arrangement shall also reserve to the operator (1) the right to request the Commission to modify or cancel the same for good cause shown, and if the Commission shall determine that the operator's claim is justified, it may make such modification or shall permit such cancellation at such time thereafter as it may consider reasonable but not more than ninety days after such determination, and (2) the unconditional right to cancel any such contract, charter, or other arrangement, effective as of April 1 of any year, provided written notice of such cancellation be given to the Commission on or before January 1 of such year. "(b) Whenever the President shall proclaim that the security of the national defense makes it advisable, or during any national emergency declared by proclamation of the President, the Commission may terminate any contract, charter, or arrangement hereunder, without cost to the United States, upon such notice to the operator as the President shall determine.

"(c) Nothing contained in this joint resolution shall be construed to limit the right of the Commission to enter into other contracts, charters, or arrangements with new or other operators, if after such notice, investigation, or consultation as the Commission may deem necessary or appropriate in the particular acse, but without the necessity of hearings, the Commission shall determine such action to be in the interest of the economy of the Territory of Alaska or of the national defense.

"SEC. 4. All agencies of the Federal Government shall cooperate to the end that, to the maximum extent practicable, traffic by water to, from, and within Alaska, which such agencies control, either directly or as a contracting agency or otherwise, be transported on vessels of the common carriers operating in the Alaska service.

"SEC. 5. The word 'vessel' as used in the joint resolution shall include such passenger vessels, freight vessels, combination freight and passenger vessels, tugs and barges to be employed in combined operation, and other watercraft, as shall, in the discretion of the Commission, be deemed suitable for use in ocean transportation, to, from, and within Alaska.

"SEC. 6. The provisions of this joint resolution, as amended, shall not, prior to July 1, 1948, affect the operation of contracts, charters, or other arrangements in accordance with their terms in effect on the date of enactment of this amendatory section, unless superseded before July 1, 1948, by contracts, charters, or arrangements entered into under this joint resolution, as amended."

[S. J. Res. 222, 80th Cong., 2d sess.]

JOINT RESOLUTION To continue until December 31, 1953, the authority of the United States Maritime Commission to make provision for certain ocean transportation services to, from, and within Alaska Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the joint resolution of March 7, 1947, entitled "Joint resolution to authorize the United States Maritime Commission to make provision for certain ocean transportation service to and from Alaska until July 1, 1948, and for other purposes," is amended to read as follows: "That it is the purpose of the Congress to assist in securing effective, efficient, and reasonably competitive ocean transportation services, by common carriers so far as may be practicable, for Alaska, to encourage the economic development of the Territory and growth of its population, and to increase the Territory's civilian strength and services in support of the national defense.

"SEC. 2. (a) The United States Maritime Commission, after consultation with and approval of the Secretary of the Interior, is authorized to enter into contracts, charters, and other arrangements with American citizens qualified to supply ocean transportation services with American-flag vessels to, from, and within Alaska, at rates to be determined upon reasonable bases provided therein. Such contracts, charters, or arrangements may include provisions for furnishing to such operators Government-owned vessels made available to the Commission for such purpose and vessels under the control or jurisdiction of the Commission,