for operation on voyages commencing not later than December 31, 1953: Provided, however, That no one operator or any two or more operators under substantially common control shall be furnished more than 50 per centum of deadweight tonnage of the Government-owned vessels made available under this joint resolution. 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) Before entering into any such contract the Commission shall invite proposals in writing from financially qualified ship operators, regardless of routes in which they have previously operated, to furnish the services contemplated in this section; and in making such contracts the Commission shall take into consideration all such proposals from qualified operators.

"(c) 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 coordinating service and 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 and the Secretary of the Interior.

"(2) To allow compensation to the operator for working capital, use of facilities other than operator-furnished vessels, and overhead expenses, on such bases as the Commission may determine; but not in the aggregate to exceed 15 per centum of the total vessel operating revenue for the period.

"(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-furnished 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.

"(d) The Commission shall 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-furnished 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.

"(e) In determining the reasonableness of rates, the Commission shall disregard its insurance expenses and amounts equivalent to the usual charter hire for Government-owned vessels in a manner and to the extent consistent with carrying out the purposes of this joint resolution.

"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 an 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) Whenever the President shall determine that the service to, from, and within Alaska is inadequate for the purposes set forth in this resolution, he may permit, under such limitations as he shall find to be necessary in the national interest or desirable in a national emergency, service by Canadian vessels to, from, and within Alaska.

"(d) 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, 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."

[H. J. Res. 396, 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 ex

penses, 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 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 vessel-operating 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."

Senator CAPEHART. It has been suggested that we place in the record that portion of the President's message dated May 21, 1948 (S. Doc. 159), on the statehood of Alaska, under the caption "Improving the transportation system," page 2, section 2, running from page 2 through to the middle of page 4.

(Sec. 2 is as follows:)

2. Improving the transportation system: In many respects, Alaska is still a pioneer land, and one of the principal problems, is that of developing a statisfactory transportation system. The Territory is about one-fifth the size of the United States, yet has less highway or railroad mileage than many of our smaller States. It is a country of vast distances, sparsely settled, which together with difficult weather conditions and terrain creates unique transportation problems.

Under these circumstances, the Federal Government has a special responsibility to help in improving the transportation system. Traditionally, the Government has aided the development of transportation in frontier areas. From the standpoint both of military and civilian development, much needs to be done immediately to improve transportation in Alaska.

Nearly all the freight and many of the passengers carried between the States and Alaska move by sea. The only access by land is over the Alaska highway, built during the war, largely through Canadian territory.

Shipping services between Alaska and the States are not now easily provided on an economical and regular basis, nor will they be for some time to come. Weather conditions are difficult, adequate ports are few and scattered, and traffic is very unbalanced at different seasons. As a result, rates have been high and service somewhat unsatisfactory to the Territory. A new development has recently taken place in the establishment of barge transportation, which seems to offer possibilities for competition with the steamship services, although at present barges only operate to a few ports.

The Government has recognized that in vew of the special need for effective sea transportation, assistance should be given to the development of efficient low-cost service, for the best interests of Alaska and the Nation as a whole. Assistance should be provided that will encourage the establishment of new industries in Alaska and consequent migration and settlement. At the same time Government assistance should be directed toward the establishment of a seatransportation system which will become independent of Government subsidy as conditions permit. To this end the Government should audit the efficiency of subsidized operators as well as control the rates.

Present legislation permits nominal-rate charters of surplus Government-owned vessels to private operators. It is apparent that this type of Government aid is sufficient to keep shipping in the Alaska trade and can be administered to achieve. even more desirable rate and service standards than have been provided since the present legislation was approved in March 1947. I recommend, therefore, that the present legislation be extended, in modified form, for 1 year. The modifications should prevent exclusive arrangements with any carriers and should provide financial incentives for efficient operations. The Maritime Commission has presented these recommendations in detail to the Congress. The Commission will also change its present contractual arrangements with the Alaska carriers along similar lines.

At the same time, because of the unique transportation conditions existing in Alaska, I recommend that our maritime laws be amended to remove the present bar to shipping goods in bond between the United States and Alaska via Canadian rail, port, and shipping facilities. This bar does not apply between any of our States, and there is no reason thus to discriminate against Alaska. Furthermore, Canadian ships should be permitted to transport passengers and freight between Alaska ports, in order to provide more adequate service. These recommendations are also in accord with the mutual interest which we will continue to have with our Canadian neighbors in the development of the great Northwest Territory of this continent.

Another factor hampering transportation is that in several Alaska ports, docking and storage facilities are insufficient. Some ports are now being developed

and others are being studied by the Navy, the Corps of Engineers, and the Coast Guard to determine the extent and nature of local improvements needed. A number of private-construction projects are awaiting the completion of these reports.

Land transportation in Alaska is provided principally by the Governmentowned Alaska Railroad and the present inadequate highway network. The 1949 budget now before the Congress includes funds for carrying forward a 5-year program of rehabilitation and improvement for the railroad. Upon reconsidering the urgency of these improvements and the possible rate of construction I now recommend that this program be accelerated, in order to accomplish most of the work within 3 years.

There is also pending before the Congress a long-range program for improving the present highway system and building some important new roads. I shall shortly submit supplemental estimates to accelerate this program, as well as the railroad program.

In addition to these improvements of the highways in Alaska, it is important also to consider the roads through Canada. The Canadian Government has done an excellent job in maintaining the main Alaska highway, and it is being used increasingly by truckers with tourists. The so-called Haines Cut-Off Road is an important link connecting southeastern Alaska at the head of the inland passage with the Alaska highway in the Yukon Territory of Canada. Since this road is of importance to the United States, but is so located as to be of less use to Canada, special arrangements will have to be made, for its improvement and maintenance.

Because of the great distances and sparse settlement of Alaska, air transportation has developed rapidly. Both large-scale air lines and small-scale "bush pilots" operate extensively through the Territory and often provide the only direct link between town and settlements. It is especially important therefore that air transportation be encouraged.

The 1949 budget, now pending before the Congress, includes funds for the improvement of air-navigation facilities in Alaska. In addition, I am glad to note that the Congress has just completed action on legislation for the construction of new airports at Fairbanks and Anchorage, where the present civil airports have become obsolete largely as a result of the establishment of military airports close by.

Senator CAPEHART. What we want to try to do in these hearings is to get all the legislation before us and consider the thoughts and ideas of everyone in order that we may come to some constructive conclusion and recommend to the full committee, then in turn recommend to the Senate legislation that will not get snarled up in some sort of a parliamentary situation.

We will proceed by hearing Delegate Bartlett.

Delegate Bartlett, will you proceed in your own way and make whatever statement you desire?

STATEMENT OF HON. E. L. BARTLETT, A DELEGATE IN THE CONGRESS FROM THE TERRITORY OF ALASKA

Delegate BARTLETT. Mr. Chairman, I am going to keep my testimony just as short as I can on account of the number of witnesses you have before you.

Last year, Mr. Chairman, the Territorial government of Alaska endorsed House Joint Resolution 122 which became Public Law 12 in the belief that the subsidy furnished by that law would be of general and great assistance in the development of Alaska.

While we believe that the people of Alaska have derived some benefits and are deriving some benefits from that law, we are firmly convinced that it has not been utilized in the best possible manner to promote the development of Alaska and thus to aid in the settlement of Alaska and promotion of national defense there, and doing all the