For the following reasons, it is recommended that suggested revisions of coasting laws not be passed: (1) That the practical and realistic national policy of encouraging and promoting the American merchant marine be continued because of its proven worth. (2) That a reduction in the merchant fleet potential for any future emergency would be inimical to the national security. (3) There is no assurance that the revision of the laws in question would effectuate better service to Alaska. On the contrary, the opposite results would, perhaps, obtain, due to foreign companies' lack of obligation to serve other than the most profitable routes during the most profitable season after they would have effectively eliminated or reduced the service from American companies. (4) The demands of Alaska service can be adequately met by American operators. (5) The American companies should be given every encouragement to enable them to return the service to the compensatory basis which existed prior to the wartime Government operation. That is all, sir. Senator CAPEHART. Thank you, sir. Now, gentlemen, we have other witnesses. I might say at this point in this hearing that I fail to see how the people of Alaska have proven that they have not received good service, and I fail to see how you have proven that they have. They claim they are not getting good service, and you claim they are. And I must say that neither have the proponents of the bill, particularly proved that they are not getting good service, nor, I am quite certain, have you proved that they are. Because there has been no testimony one way or the other, no specific testimony. Mr. ZEUSLER. We have two other witnesses. Senator CAPEHART. Yes. Perhaps you will cover that in your further statements. There has been a lot of conversation in the Congress here about the monopoly implications of this, "the monopoly at Alaska's throat." And Senator Morse placed in the Congressional Record not so very long ago an article by Richard L. Neuberger, which I shall, without objection, place in the record at this point. And the reason I am doing this is that you may want to answer this, because it is a matter of public record. I know nothing about the merits, or demerits of it. But this is an article that talks about the so-called monopoly. And it gives, as one of the reasons, or the reason, why better service is not rendered to Alaska, that it is because of this monopoly. I shall not read the article. It will be inserted in the record. It likewise refers to Mr. Skinner. Is Mr. Skinner present? Senator CAPEHART. It refers to Mr. Skinner's yacht. Mr. ZEUSLER. I fail to see where that has any bearing. Senator CAPEHART. It has some bearing on it, and I should like to place it in the record at this point, and you may read it if you have not already read it. (The article referred to is as follows:) MONOPOLY AT ALASKA'S THROAT-ARTICLE BY RICHARD L. NEUBERGER Mr. MORSE. Mr. President, I ask unanimous consent to have printed in the Record an article which appeared in the latest issue of the Nation, entitled "Monopoly at Alaska's Throat," by Richard L. Neuberger. I offer the article with the recommendation to the Senate Committee on Interstate and Foreign Commerce that that committee proceed without delay to make inquiry into allegations set forth in the article, because if such an inquiry supports the allegations, no time should be lost in taking the necessary steps to correct the situation which Mr. Neuberger points out in his article. There being no objection, the article was ordered to be printed in the Record as follows: MONOPOLY AT ALASKA'S THROAT (By Richard L. Neuberger) SEATTLE, March 2.-Monopolies are now an announced target of the administration. One of the worst should be easy to hit in a fatal spot. This is the Alaskan shipping monopoly, which drains the Territory's pioneer economy by levying the highest ocean freight rates charged by any ships under the American flag. Of all monopolies it is the most vulnerable to administration attack because it operates under the approval and protection of the Federal Maritime Commission. Indeed, the Commission could end it tomorrow-and a majority on the Commission are President Truman's appointees. If the administration wants to do something about monopoly, the tight little monopoly which dominates Alaskan shipping to the detriment of Alaska is the place to begin. Living costs in Alaska are from 38 to 116 percent higher than in the United States, according to the distance from Seattle. Freight rates are behind these sky-high inflationary prices. It costs $26 to ship a ton of fresh vegetables the 1,400 miles from Seattle to the Alaskan port of Cordova; the rate from San Juan to New York City, an equal distance, is $10.80. The benefits from these exorbitant Alaskan rates are confined virtually to one Seattle family. In 1946 Congress authorized a lavish North Pacific shipping subsidy: Government vessels could be rented for $1 a year, with free hull insurance included. The Maritime Commission then decided that Gilbert W. Skinner was to be the principal beneficiary of this Federal largess. Three companies were chosen to receive the subsidy-Alaska Steamship Co., Northland Transportation Co., and Alaska Transportation Co., all based in Seattle. Skinner, Seattle's leading salmon broker, is president of Alaska Steam, and he and his son control two-thirds of Northland Transportation. Alaska Steam and Northland were to operate 21 boats, Alaska Transportation 4. Only Alaska Steam was authorized to call at the main Alaskan ports of Seward and Whittier, where all freight for the vast interior is discharged. Many generations of Americans have dreamed of the development of Alaska. In the last speech he ever delivered standing on his feet Franklin D. Roosevelt, from the bridge of a destroyer, prophesied the opening of a new land of opportunity in the north. Instead, Alaska has been garroted in a collar of high freight rates fitted by this one-family shipping monopoly-a monopoly established with the connivance of the United States Government. Only Alaska Steam can put in at Kodiak Island. Residents of Kodiak pay $27 a ton to get washing machines, radios, and fresh meat transported from Seattle, though Mr. Skinner's friends in the salmon industry can send their product to Seattle for only $12. "High transportation rates are responsible, more than any other one factor," declares George Sundborg, manager of the Alaskan Development Board, "for the economic backwardness of Alaska and for a cost-of-living level so high as to discourage settlement and make colonization impossible." A 33-year-old veteran of Grenfell's Labrador expeditions named Phil Briggs thought he had the answer. He would take cargo out of the British Columbia seaport of Prince Rupert, 700 miles north of Seattle. During the war, when Japanese troops crouched in the Aleutians, the American Army developed Prince Rupert as its chief Alaskan supply base. Briggs would haul an automobile from Prince Rupert to Petersburg for approximately half the toll from Seattle. Clearly this was a threat to Skinner's supremacy in Alaskan waters, and the Maritime Commission sprang to his aid. Although Congress had made the North Pacific subsidy available to any American-flag line, and Briggs was operating under the Stars and Stripes, the Maritime Commission barely acknowledged his letter requesting participation in the subsidy. This meant that Briggs would have to buy his own boats and carry his own hull insurance-and compete against companies getting both items out of the United States Treasury. Small wonder that since the Briggs episode the President's professions of sympathy for small business are greeted somewhat cynically in Alaska. Canadian vessels operating out of Prince Rupert might crack the Skinner monopoly except for one fact. A clause in the Maritime Act denies Alaskans the right to use Canadian ships for freight or passenger service between Prince Rupert and Alaska. Since American ports on the Great Lakes and the Atlantic are free to use Canadian shipping, this is direct discrimination against Alaska, and Senator Butler, of Nebraska, and Delegate Bartlett, of Alaska, have introduced legislation to end it. The Maritime Commission has advised against passage of the ButlerBartlett bill. This advice was done up in the familiar patriotic wrappings: The American merchant marine must not be imperiled. Although Canadian boats seem to constitute a threat to American interests the Maritime Commission says nothing about Gilbert W. Skinner's operation of the yacht Corsair under the flag of Panama as a luxury cruise vessel. The United States Supreme Court has ruled that if Alaska were a state, the law denying its people the use of Canadian ships would be unconstitutional. Only a territory may be thus discriminated against. This may explain why Seattle business interests favor statehood for Hawaii but not for Alaska. Even the State of Washington's leading Democrats, Senator Magnuson and Governor Wallgren, oppose statehood, unwilling to help Alaska wrest itself loose from the clutch of Seattle shipping companies. With the collaboration of the Maritime Commission, Skinner and his associates juggle rates to fit their own convenience. Not long ago Alaska Steam reduced by 75 percent the freight on insulating cork. The Alaska Development Board contends this was done primarily because Skinner and his partners are constructing a cold-storage plant on the Alaskan peninsula. On the same day that it lowered the rate on cork, Alaska Steam hoisted the freight on flour to Fairbanks from $2.33 a hundred-weight to $3.81. Fairbanks housewives, when they buy bread, are subsidizing Skinner's cold-storage plant. During the War Alaskans noted that the many congressional committees which visited the Territory, if they came by sea, almost invariably traveled on Canadian boats because they furnished better service, food, and accommodations than the American boats. Congress and the Maritime Commission have teamed up to deny these amenities to the people of Alaska. "Federal law keeps out Canadian competition,' says Gov. Ernest Gruening. "By restricting the subsidy, the Maritime Commission keeps out United States competition. Alaska is left to the mercy of the Seattle companies, which really means Gilbert W. Skinner and his enterprises." American voters should know how an agency of their Government helps to keep Alaska wilderness. A cannery at Kodiak pays $10 a ton in freight tolls on wire to repair its salmon traps. A homesteader on the same island pays $17 freight on a ton of wire to string a fence. The average Alaskan family must spend approximately $450 a year in ocean freight on its food alone. A group of ex-GI's hopefully founded a cooperative colony at Chilkoot Barracks, Alaska's oldest military post. They were acclaimed in many periodicals as twentieth-century pioneers. They planned to establish a shipping service between Juneau, the Alaskan capital, and Haines, a port leading to the famous Alcan Highway. Today the colony is falling apart. Its 30-year-old founder, Steve Larsson Homer, is night clerk in a dingy hotel in Portland, Oreg. "We had a natural transportation route to the Alaskan interior," he said. "But the lumber companies wouldn't give us a contract to transport their products. They said they were afraid Alaska Steam would learn of it and refuse to serve them. They said they were at the mercy of Alaska Steam.' Alaska Steam fares well with the generous Federal subsidy. During a 4-month period its revenues was $5,400,000 and its operating expenses $3,700,000. As long as the Maritime Commission refuses to honor subsidy requests from American companies based at Portland or Prince Rupert, Seattle steamship corporations can deal with Alaska as cavalierly as they wish. Rates are hiked summarily; boat schedules altered overnight. In 1946 a strike of A. F. of L. checkers shut down the port of Seattle for more than 70 days. Alaskan hospitals ran out of drugs and had no fuel oil on days when it was 50 degrees below zero. Alaskan children had no Christmas toys. The Maritime Commission was quick to hoist antilabor pennants, forgetting that it was responsible for the lack of alternative shipping routes through Portland and Prince Rupert. Many devices are employed to keep Alaska in the grip of one of the tightest existing monopolies. Statehood would give Alaska two Senators acting in Alaska's interests. Recently a prominent Alaskan, heading the Alaska delegation to a Pacific Northwest chamber of commerce conference on Alaskan problems, said the people of the Territory did not really want statehood, in spite of a decisive referendum favoring statehood more than a year ago. The prominent Alaskan turned out to be a resident of a fashionable Seattle suburb. To break the grip of the shipping monopoly on Alaska, only two steps are required: (1) Make Canadian ships available for the Alaskan trade; and (2) extend the Federal subsidy to companies operating out of Portland and Prince Rupert. The Maritime Commission can recommend the first step to Congress. It can undertake the second step itself. It can also give permission to some operator besides Gilbert W. Skinner to serve the ports on the Gulf of Alaska. So long as the Commission supports the shipping oligarchy to which it has delivered over the people of Alaska, it is hard to take at face value the many strictures against monopoly contained in the President's message on the state of the Union. Senator CAPEHART. Now, I do not vouch for the truth of it, but it was placed into the record by a Senator from the State of Oregon, who is very much interested in the whole subject and specifically asked that the Interstate and Foreign Commerce Committee check the matter. Mr. ZEUSLER. Mr. Chairman, as far as the monopoly is concerned, I don't think that one exists. We have competition, in the form of the barge line to the westward. We have competition in the form of fishing vessels in Southeastern Alaska. And we also have it in the Alaska Transportation and the Northland Transportation Co. ships, operating to southeastern Alaska. Furthermore, we are operating under the mandate of the Congress in the form of Public bill No. 12. As far as we can see, from the figures that we have received, that the ships run regularly, and they carry the passengers that present themselves, and they carry the freight that presents itself. We have endeavored in every way to improve our service. We are attempting to reduce rates. We are changing, for instance, as far as fright is concerned, from the measurement basis to the weight basis; which will eventually reduce freight rates to a certain extent. The Alaskans as a whole have complained constantly that we were. running ships half full. We run ships on as regular schedules as we can, especially the passenger vessels. We do not run the freighters on as regular a schedule as we do the passenger vessels, but we do usually carry pretty full cargoes. Senator CAPEHART. Are you going to cover the charge that has been made that you carry salmon much cheaper than you do anything else? There may be good reason for it; I am just giving you an opportunity to place an answer in the record. Mr. ZEUSLER. We will bring that up in the record a little later on, sir. I can just say this much: If it were not for the salmon, Alaska would not exist. Senator CAPEHART. You mean Alaska, or the shipping? Mr. ZEUSLER. Alaska as a whole. Because it is the salmon that pays most of the taxes. It is the salmon that takes the ships up there. It is the salmon that employs many of the workers, now that the mining industry has lapsed. But those figures will be presented, sir. Senator CAPEHART. Yes. Well, I again want to say that the proponents of the legislation have not proven that the service is not good; that you do not give good service. At least, there have been no statistics; it has been mostly in generalities. And by the same token, you have not proven that you do, except in generalities. Mr. ZEUSLER. It all depends, sir, on what you mean by good service. If you carry the freight as it is given you, and if you carry the passengers as they report, and you do not run the extra craft-it seems to me there has been no complaint other than overservice, rather than underservice, on the part of the proponents of the bill. If you read the records of the last rate hearing, you will find that they stressed that very fact many, many times-that we were running ships half loaded, rather than fully loaded. They are the ones that advocated the reduction in passenger service. They are the ones that advocated following a tramp steamer system rather than the regular passenger system. Senator CAPEHART. Do you have statistics on the total tonnage that goes in and out of the Territory of Alaska? Mr. ZEUSLER. We can give you that; yes, sir. Senator CAPEHART. And the tonnage that you carry? Mr. ZEUSLER. We can give you all of that, sir. Senator CAPEHART. And I am wondering if the proponents have any statistics on the tonnage that possibly is delayed for an unusual period of time, and the losses that they have sustained as a result of delays. Mr. ZEUSLER. We can give you all of those figures, sir. (The information referred to, to be supplied by Mr. Zeusler, is as follows:) EDWARD S. JARRETT, Clerk, United States Senate, ALASKA STEAMSHIP CO., Committee on Interstate and Foreign Commerce, Washington, D. C. DEAR MR. JARRETT: Thank you for your wire of April 26th pertaining to Senator Capehart's request for certain statistics. The data was not as readily available as expected, but it is now enclosed herewith. Included are the following reports: 1. Tables of freight tonnages and passengers for the three principal Alaska carriers, showing northbound (Puget Sound to Alaska), interport in Alaska, and southbound (Alaska to Puget Sound) for the three transpired quarters under the Interim Operating Agreement. 2. Details of 1947 Alaska salmon pack by species. 3. Recapitulation of the 1947 Alaska salmon pack by areas and species. 4. Details of Bristol Bay salmon operations for 1947. 5. Some comments on the 1947 Alaska salmon pack. 6. Summary of Alaska taxes for fiscal year ended June 30, 1947. 7. Summary of delays to Alaska Steamship Co. vessels caused by labor trouble during interim operating period. Very truly yours, F. A. ZEUSLER, Executive Assistant to the President. |