business. It looks to me like you would profit by turning this matter over to the Shipping Board.

Mr. SEMMES. Well, Senator, if we can get any relief by that process, I am sure that we would rather have it in that way.

Senator MCNARY. The new bill provides, of course- -it hasn't come out of conference, or out of the subcommittee a board of seven, two to come from the Pacific coast; and I think that a board you might depend upon, a board of the future, to give very tender consideration to the needs of Alaska.

Mr. SEMMES. There is one question, Senator, there that occurs to me, and you are frankly discussing it with me. After reading that committee presentation of the bill it is indicative to me that it is the sense of the committee that these ships shall ultimately be turned back to private ownership.

Now, then, the condition which I want to correct would obtain, unless it is corrected by some process now, Senator. You build up the same condition when you turn the Government's ships back to private ownership, unless we have some remedy such as I have suggested. That is my opinion, of course.

Senator MCNARY. Very well.

Mr. SEMMES. I want to define that. Even if the Government came to Alaska and gave its assistance, this new merchant marine bill Congress is now passing defines that the minute that service is well established, it will be put in private ownership again. That will be done, and so what I am trying to reach is the fundamental that will bring about a condition that will enable Government operation, if that is the will of Congress, or private ownership and operation, if that is the will of Congress, under such protection to the shippers and also to the common carriers that the preferential interests can't go in there and get back again advantage by operating their private tonnage.

I would like to give you, Senators, some light or some idea of the revenues that would be derived from the imposition of this tax, and the cost on the traffic that would be taxed which is not now contributing anything to the common service.

The CHAIRMAN. We will have to adjourn this hearing now.

(Thereupon the committee adjourned to meet at 10 a. m. March 26,

1920.)

ALASKA WATER TRANSPORTATION.

FRIDAY, MARCH 26, 1920.

UNITED STATES SENATE,
COMMITTEE ON COMMERCE,

Washington, D. C.

The committee met at 10 o'clock a. m., pursuant to call, in the committee room, Capitol, Senator Wesley L. Jones, presiding. Present: Senators Jones (chairman), McNary, and Chamberlain. The CHAIRMAN. Mr. Semmes, you may proceed.

STATEMENT OF MR. RICHARD M. SEMMES-Resumed.

Mr. SEMMES. Mr. Chairman, the governor asked me to say that he had to appear before the Committee on Military Affairs this morning on behalf of Alaska wagon roads, and consequently he could not be present. He asks to be excused and wanted me to continue my

statement.

Continuing where I left off yesterday, we respectfully submit that a very few of Alaska's residents-I mean people who live there and pay the present freight and passenger rates can afford to leave their business and make a trip to Washington to present their troubles to a national regulatory board, nor would they have the information necessary to present their cause, however just; nor can the average Alaskan appear successfully in the august presence of an investigator whom he never saw before, surrounded by company attorneys and tariff officials ready to question the propriety or admissibility of his testimony-in common parlance, it gets his goat-and he forgets his troubles in his embarrassment. I wish to embody in this record the statement also that such a complainant is absolutely dependent upon the carrier he is attacking. I can't tell you now of any case where the public carriers have punished any such person in any way, but such a complainant knows his position, and it naturally affects him.

I now call your attention to section 8 of this act which embodies the method of correction we would apply; other sections-2, 3, 4, 5, and 6-being too apparent to require explanation. It is proposed, in essence, to place in the hands of our Alaska territorial shipping board, consisting of our governor, secretary, and treasurer, the revenues derived through assessment of this license fee of $3 per net registered ton, collected upon the first entrance in Alaska, in any calendar year, of any vessel of more than 20 net registered tons, which license tax would have, in the year 1919, amounted as follows:

The CHAIRMAN. What do you mean by "private carriers" and "private ownership"? Is there a public ownership and a public service?

Mr. SEMMES. You see, Senator, 80 per cent of the tonnage going to Alaska does not accept the obligations of the common carrier. and when I speak of private tonnage I mean tonnage that would not accept freight for the public-ships that handle traffic only for the operator of that particular ship.

The CHAIRMAN. That is what I wanted to bring out. That is what I thought you meant. You do not refer to the common carrier. The common carriers are in private ownership, but what you mean by that was to include that which was not carried by common carriers! Mr. SEMMES. Yes, sir. Alaska common carriers are in private ownership, as distinguished from public ownership, but they do a public business, while private ships do not.

The CHAIRMAN. That is what I thought you meant, but I wanted to make it clear.

Mr. SEMMES. I would like to make my point clear by saying that the private ships have a net tonnage of 119,169 tons, but they carried freight to the extent that this tax, if it had been applied in the year 1919, would have averaged about 50 cents on each ton of freight those private ships carried during that year. This fund would be distributed under contract to persons operating common carriers in the service of the people of Alaska, with such persons or companies as the Alaska Territorial Shipping Board might see fit to make contracts. The CHAIRMAN. Would you make those contracts only with common carriers?

Mr. SEMMES. Not necessarily, Senator.

The CHAIRMAN. I thought that is what you said, that you would make contracts with common carriers.

Mr. SEMMES. We would make contracts only with those that would be willing to accept the obligation of serving the community to which they happened to run. If they wanted to exclude the public freight we would not make a contract with them. If, however, a carrier that is now operating private ships to any locality is willing to assume the obligations of serving the entire community, unquestionably we could make a contract with that carrier, if willing to serve that entire community.

The CHAIRMAN. Suppose that some other owner of vessels proposed to render that service at a cheaper rate than the common carrier would render it?

Mr. SEMMES. Naturally the board would make contracts with those who were willing to handle the business satisfactorily at the lowest rates.

Senator CHAMBERLAIN. Let me ask you this: A great many of the large canneries up there own their own vessels, don't they?

Mr. SEMMES. Yes, sir.

Senator CHAMBERLAIN. How large are most of them? What tonnage?

Mr. SEMMES. The largest, Senator, I think, are approximately 2,000 tons, net tons.

Senator CHAMBERLAIN. Then in addition to a vessel of that size, they have more vessels that ply into the bays and estuaries?

Mr. SEMMES. Yes, sir.

Senator CHAMBERLAIN. Now those vessels are registered there? Mr. SEMMES. In some cases.

Senator CHAMBERLAIN. Are any of them permitted to operate without being registered?

Mr. SEMMES. No, Senator. Every vessel of 5 net tons must register.

Senator CHAMBERLAIN. Those vessels owned and operated as they are by canneries do not carry any freight as a rule, except their own pack and supplies for their canneries?

Mr. SEMMES. You mean the large vessels that ply between the outside-that is, from ports in the States?

Senator CHAMBERLAIN. Yes; the vessels that are owned by the canneries. They do not carry anything but the supplies of the owners themselves, do they?

Mr. SEMMES. No, Senator; and that is the part of this matter that I want to bring particularly to the attention of the committee. They take in their own employees and freight, and they bring out their own freight. They do that under a condition which enables them to carry that freight, I am credibly informed, at a rate of about $5 per ton lower than those companies which patronize the common carriers, and this tax would impose upon them a burden of about 50 cents per ton on their traffic, so that they would still have a very considerable advantage over those people who were not fortunate enough or financially able to own their own equipment.

Senator CHAMBERLAIN. The only protest I have gotten against this bill so far comes from a large cannery man up there, who, I think, has some 3,000 tons of shipping.

Mr. SEMMES. It is only natural that he would protest, Senator.

Senator CHAMBERLAIN. What would this impose upon a man, say, with 4,000 net tons of registered shipping?

Mr. SEMMES. A tax of $12,000. We propose to tax these carriers at the rate of $3 per net registered ton.

Senator CHAMBERLAIN. He would have to pay that whether he operated the ship or not?

Mr. SEMMES. If he made runs he would have to pay that.

Senator CHAMBERLAIN. Suppose he made none?

Mr. SEMMES. He would not have to pay it.

Senator CHAMBERLAIN. Now what expense would it entail upon the man with 4,000 tons of shipping?

Mr. SEMMES. It would entail a gross expense, if he made one trip, of $12,000, and if he made a great number of trips it would be the

same.

Senator CHAMBERLAIN. It would not be any more?

Mr. SEMMES. No, sir.

The CHAIRMAN. He gets a license for a year when he makes his first entrance?

Mr. SEMMES. Yes, sir. The vicious part of the whole condition. up there is that when a man has enough freight to move at one time he charters a vessel and sends all of that freight forward at one time, you see, and he gains thereby an advantage over the smaller man who can not afford to collect enough freight at any one time to send it forward on one vessel and make the natural saving. He therefore deprives the common carriers of the revenue which would otherwise enable them to maintain a service the year around. Now after he

has moved his freight at a saving in large quantity-I speak of the larger operator he then falls back for regular service during the rest of the year upon the only common carriers they have up there. Those common carriers must always charge a higher rate than this big shipper has been able to obtain by the operation of either his own equipment or the chartering of vessels

Senator CHAMBERLAIN (interposing). You know the salmon industry has grown by leaps and bounds in Alaska. Could the fishermen and cannery men up there compete with men engaged in the same line of business on the Columbia River, for instance, if they could not get their freight down, their pack down, at a very much lower rate than the common carrier would bring it?

Mr. SEMMES. Unquestionably, for the reason that a great portion of the canned salmon moving from Alaska moves over the common carriers and pays the higher rate, but those big packers who are enabled to maintain their own equipment have an advantage over the small packers, and the big packers, such as Libby, McNeil & Libby and others, are gradually absorbing the entire packing industry through the advantage they have in the shape of a cheaper freight rate through their operation of their own equipment, which does not assume the obligation of serving the community.

Senator CHAMBERLAIN. Under your view, then, whether this bill becomes a law or not, the Shipping Board at least-or some governmental agency ought to tax these people so that the common carrier would get the business?

Mr. SEMMES. Unquestionably some policy should be adopted that would, unless the United States Government is willing to assume a very great loss in the shape of the operation of these common carriers- some system must be devised by which these big interests can not take advantage of the operation of their own private tonnage without contributing anything to the maintenance of the common carriers upon which service the small canner and every small industry has to depend.

The CHAIRMAN. As I understand it, under this bill. a common carrier also will have to pay this tax on his vessels?

Mr. SEMMES. Yes, sir.

The CHAIRMAN. And the real purpose of this bill, as I understand it the main object of it-is to secure a fund that can be used in securing regular and suitable service to what might be called outlying points, off the regular common carrier lines?

Mr. SEMMES. Yes, sir.

The CHAIRMAN. Now that, briefly stated, as I understand it, is the main object and purpose of the bill?

Mr. SEMMES. I. explained yesterday the three direct trade routes. If the vessels serving those direct trade routes did not have to diverge and give service to the smaller places where service is not profitable on account of the delay and the demurrage and everything else entailed, and the danger and the increased insurance rates, the common carriers serving there now could make a profit, and I think even reduce the rates that they are now charging, but they being the only common carriers that the people have out there, they naturally have to serve them. Those people are off of these regular trade routes, and that is where a great portion of their expense comes in. Now this fund would naturally be expended in the judgment of the