GENERAL STATEMENT BY THE GENERAL MANAGER OF THE ALASKA RAILROAD Mr. SCRUGHAM. Colonel Ohlson, will you give us a general statement and any comments that you wish to make, particularly on the physical condition of the road, or any suggestions as to freight and passenger rates, tourist travel, and so forth? Colonel OHLSON. I am pleased to be able to report, gentlemen of the committee, that the Alaska Railroad during the year 1936 got out of the red and into the black to the extent of $9,766 above its expenses. That, of course, represents the difference between operating revenues and operating expenses. It does not include capital invest ments. A limited amount of improvement and rehabilitation work was done. This work consists of ditching, bank widening, grade raising, ballasting, filling in of wooden trestles, replacing wooden culverts with concrete pipe, placing rock to protect roadbed against erosion from rivers and streams and making line changes to eliminate snow sheds. AID RENDERED IN INVESTIGATION AND DEVELOPMENT OF MINERAL RESOURCES The Alaska Railroad continued the activity of aiding the mining industry by maintaining an office and a geologist, who, in cooperation with the Alaskan branch of the Geological Survey, rendered assistance and furnished information to prospectors, mine operators, and prospective investors. In connection with this aid, a number of investigations of prospects, mines, and mineralized areas were made, and the information obtained was made available to the public. Practically all of the mining camps served by the railroad and river-boat lines were very active during the fiscal year ending June 30, 1936. These camps included the Moose Pass-Hope gold placer and lode; Girdwood gold placer and lode; Willow Creek gold lode; Nilchina gold placer; Yetna gold placer; Valdez Creek gold placer and lode; Broadpass gold lode; Kantisha gold, silver, lead placer, and lode; Bonnifield gold placer; Hot Springs gold placer; Circle_gold placer; Fairbanks gold placer and lode; Livengood gold placer; Ruby gold placer; Innoko-Iditarod gold placer; and many small districts. The increase in mining activity is due largely to the increased price of gold and the operation of old low-grade properties by improved methods and modern equipment rather than to new discoveries. Some of the outstanding developments of the year were the installation of a gold dredge in the Moose Pass-Hope district; the successful installation and operation of a gold-gravel washing plant in the Yentna district which will stimulate the further use of similar types of equipment where special operating conditions exist; the continued development of a low-grade gold-lode property in the Broadside district which gives promise of developing into a mine with large operations and which will produce considerable revenue to the railroad; a continued development of new gold-dredging ground in the Fairbanks district; and the installation of a new gold dredge in the Circle district. AGRICULTURAL DEVELOPMENT IN MATANUSKA VALLEY In the fall of 1934 President Roosevelt indicated a desire to alleviate the suffering of some of the settlers in the drought-stricken Northwestern areas and directed the F. E. R. A. to arrange to move some of these settlers to the Matanuska Valley. Two hundred settlers and their families were selected from Michigan Wisconsin, and northern Minnesota. Fifty-eight of these families have since returned to the States for various reasons. However, those who came to Alaska with the intention of improving their condition will unquestionably succeed. NEED OF MODERN FACILITIES TO PROVIDE FOR FUTURE BUSINESS It is expected that freight revenue in 1937 will exceed this year's totals. Tourist traffic is expected to increase; but with the present hotel facilities in the rail belt, including Mount McKinley National Park, being far from adequate in comfortably providing for the present travel, the expansion of the tourist traffic presents a serious problem, and it is of vital importance that modern facilities are provided for the future. DATA ON REVENUE AND EXPENDITURES Revenue from all sources, including nonoperating income, was $1,867,395.32, an increase of $390,827.56, or 26.468 percent. Total expenses for rail and water line were $1,888,934.30, an increase of $331,371.12, or 21.275 percent. The total deficit for rail and river-line operation and including miscellaneous operations was $17,443.89, a decrease of $56,230.77, or 76.323 percent. From this should be deducted the amount of $27,121.81 expended during the fiscal year for investigation of minera. and other resources, which would show a profit of $9,677.92. From the attached chart showing a comparative statement of revenues and expenditures of the Alaska Railroad, by fiscal years, it will be noted that the deficit has been reduced each year except during the year 1930, when the revenues decreased and the expenses increased, due to serious wash-outs and heavy maintenance cost; but in the operating-ratio statistics is reflected real efficiency in railroad operation, and in the tabulation shown below there will be noted a reduction in the operating ratio except during 1929 and 1930, on account of having heavy maintenance cost and wash-outs. In 1926 it was 199.9; in 1927, 164.9; in 1928, 159.32; in 1929, 179.28; in 1930, 209.34; in 1931, 154.31; in 1932, 132.09; in 1933, 122.73; in 1934, 117.26; in 1935, 103.61; and in 1936, 100.70. The Alaska Railroad will face a deficit for the year 1937, owing to a decrease in revenue caused by the Pacific coast maritime strike and increased expenses on account of the Annual and Sick Leave Act applying to the Alaska Railroad. This strike tied up commercial shipping to Alaska between 5 and 6 weeks last fall, which resulted in serious food shortage and other supplies; and due to urgent appeals from the Governor and the various chambers of commerce of Alaska to the President and the Secretary of the Interior, the President, on November 17, 1936, issued Executive Order No. 7498, authorizing and directing the Alaska Railroad to provide necessary transportation service to and from the Territory during the interruption of shipping or for such period as deemed necessary by the Secretary of the Interior, and that passengers and freight rates charged by the commercial carriers be maintained by the railroad. This service resulted in an operating loss of approximately $153,400, which included about $49,000 for repairs and improvements on Office of Indian Affairs motorships North Star and Boxer, which repairs would have to be made at a later date when required for their service if it had not been done by the railroad. Other contributing factors to the operating loss was the lack of tonnage on the return voyages, as during the winter months there is practically no shipping from Alaska to the States. Also, because it was not agreeable to the maritime union to man, load, or unload ships belonging to owners then in controversy with the unions, it was neces sary to charter two ships from packing and fishing companies, which were not entirely suitable for economical commercial operation, owing to the absence of cold-storage space and passenger accommodations in one and limited cold-storage space and passenger accommodations in the other. To cover this deficiency an appropriation in the amount of $153,400 has recently been requested through the usual channels. A considerable number of wooden bridges have been replaced with steel bridges, and a great number of the approaches and trestles have also been filled with earth. There remain, however, some of the original structures that are now badly deteriorated through decay and dry rot which must be replaced at an early date. In fact, one bridge 800 feet long over Knik River must be rebuilt this year and another bridge 640 feet long over Matanuska River as soon as funds are available, because of their unsafe condition; and trains are now required to move over these bridges at restricted speed. It is not the thought or plan that the Alaska Railroad should be brought up to the high physical standards of class I railroads in the States, but it is the thought that the property should be placed in condition for safe, efficient, and economical operation; and a $200,000 appropriation is, therefore, urgently needed. Further, I want to state, as has been discussed here before, that Alaska is a wonderful country with tremendous possibilities and resources. The need is to get these resources started to produce, and any appropriation that is made for that purpose will be money well spent. ALASKA'S GREATEST NEED IS INCREASED POPULATION Alaska's greatest need, of course, is an increase in the permanent population. There are a great number of transient people coming up there in the spring with the swallows, working in the mines, for the road commission, and for the railroad during the summer months, returning with their earnings to the States in the fall. The youngsters of the settlers in the Matanuska Valley will eventually replace a certain number of that laboring class, and those people will remain in Alaska, and it will be helpful. Alaskans should, of course, also help themselves to a certain extent. For instance, the coal that is imported from British Columbia and Utah into southeastern Alaska-there is no reason why the Alaskan people should not utilize their own resources in that respect, and something should be done about that. NEED OF ESTABLISHING AN INDUSTRY TO SUPPLY WORK FOR NATIVES Furthermore, the fishing companies come up to Alaska and fish in the summertime, and they bring practically all their personnel with them to carry on their operations. Now, it occurs to me that some one should organize a company in Alaska with a view to getting work for the natives of Alaska. It should be a dependable organization, because when the fishing companies come up there they must be assured that they will have the necessary labor to carry on their operations. I have been told by several large operators, packing companies, and fishing companies, that if they were assured of a sufficient number of laborers they would never bother about taking any of those people into Alaska, or any workingmen into Alaska. ADDITIONAL HOTEL FACILITIES NEEDED With reference to hotel facilities, in the rail belt last year there was an increase in the tourist travel to Alaska. It could have been greater if there had been more hotel facilities. Every effort has been made attempting to induce private capital to construct hotels at Seward, Anchorage, and Fairbanks. The Seward situation is in somé instances acute, and it has been necessary to hold boats at Seward in order to afford accommodations for the tourists. At Anchorage some relief has been afforded, because there have been additions to one of the hotels built that will accommodate about 60 more people. At Fairbanks the situation is still very bad. I do not see any hope for any improvement there this year. Possibly next year someone will put up a hotel there. TRAVEL AND TOURIST ADVERTISING However, the Federal Government must initiate steps to insure more travel to Alaska, which we all know produces considerable revenue, because tourists leave a certain amount of money wherever they stop. Mr. SCRUGHAM. Is it the function of the Alaska Railroad to handle the tourist traffic and propagandize tourist traffic, or is that the function of Dr. Gruening's bureau? Colonel OHLSON. Both agencies. Of course, the Alaska Railroad comes under Dr. Gruening, but we have from year to year joined other transportation companies in the States, who have participated in joint advertising campaigns, and we spent from $6,000 to $8,000 a year for that purpose. PHYSICAL CONDITION OF RAILROAD Mr. FITZPATRICK. What is the physical condition of the railroad today compared with 2 or 3 years ago? Colonel OHLSON. The railroad today is in better condition than it was 2 or 3 years ago. Of course, due to limited funds, there was a certain amount of improvement work that could have been done if we had had the funds with which to do it. during the interruption. necessary by the Secret: freight rates charged by ti railroad. This service resulted in a which included about $49,00 of Indian Affairs motorships have to be made at a later d had not been done by the railro Other contributing factors t tonnage on the return voyages, practically no shipping from Al. was not agreeable to the maritim belonging to owners then in contr sary to charter two ships from på were not entirely suitable for econ to the absence of cold-storage spa in one and limited cold-storage spa in the other. To cover this deficiency an appro has recently been requested through A considerable number of wooden steel bridges, and a great number of also been filled with earth. There original structures that are now bu and dry rot which must be replaced bridge 800 feet long over Knik Rive: another bridge 640 feet long over Ma are available, because of their unsafe required to move over these bridges at It is not the thought or plan that brought up to the high physical stand. States, but it is the thought that the condition for safe, efficient, and econom appropriation is, therefore, urgently nee Further, I want to state, as has bee Alaska is a wonderful country with: resources. The need is to get these re and any appropriation that is made for well spent. ALASKA'S GREATEST NEED IS INCR Alaska's greatest need, of course, is a population. There are a great number o there in the spring with the swallows, w road commission, and for the railroad returning with their earnings to the Stat The youngsters of the settlers in the tually replace a certain number of th people will remain in Alaska, and it will of course, also help themselves to a cer For instance, the coal that is import Utah into southeastern Alaska-there people should not utilize their own r something should be done about that. |