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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 haye 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 some 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.

Mr. FITZPATRICK. Nevertheless, the physical condition has been improved? Colonel Ohlson. Yes, sir; it has.

SELF-SUSTAINING OF RAILROAD IN THE FUTURE Mr. Rich. In your statement I think you said that the income was $9,766 more than your outgo?

Colonel OHLSON. Yes, sir. Mr. Rich. Above your cost of operation? ('olonel Ohlson. Yes, sir. Mr. Rich. Does that include all the expenses in connection with the operation of the railroad?

Colonel Ohlson. That is the operating expenses. It does not include capital expenditures, such as renewal of bridges and buildings, and any items that come under the classification of capital expenditures.

Mr. Rich. In other words, you took no account whatsoever of items of depreciation charged off?

Colonel Ohlson. No, sir.

Mr. Rich. As to repairs and equipment, and renewals; do you expect to get the money from the Government to make improvements!

Colonel OHLSON. I would say that if a sufficient amount of money is provided for the next 4 years to replace those deteriorated structures, the Alaska Railroad will become on a self-sustaining basis, altogether, including capital expenditures. Mr. Rich. And depreciation also? ('olonel Ohlson. Including depreciation. Mr. Rich. In 4 years? Colonel Ohlson. Yes. Mr. Rich. To what do you attribute the rapid increase in revenue!

Colonel Ohlson. After the rehabilitation work is done, the railroad does not face any heavy capital expenditures for at least 12 or 15 years. Therefore, after that time the revenues will take care of both the operating expenses and similar capital expenditures.

Mr. Rich. I thought you said after 4 years the Government would not need to spend anything, that it would be self-sustaining.

Colonel Ohlsox. Yes; the revenues will take care of all expenses of the railroad of every nature.

Mr. Rich. Both the expense of operation and depreciation? Colonel Ohlsox. Any depreciation and any renewals of the property.

Mr. Rich. You are asking for funds from other sources for the betterment of your railroad now, are you not?

('olonel OHLSON. Yes, we have asked for $200,000. Mr. Rick. Where do you expect to get that money? Colonel OHLsox. From Congress.

Mr. Rich. But you are asking for funds from P. W. A. to make improvements on the railroad, are you not?

(Colonel Ohlson. We have; yes, sir.
Mr. Rich. You expect to put in some new bridges?
('olonel OHLSON. Yes, sir.
Mr. Rich. Where do you erpect to get that money?
('olonel Ohlsox. From whatever source

Mr. FITZPATRICK. What amount did you expend in 1935 and 1936 besides the money appropriated? Were there any other moneys spent!

Colonel Ohlson. No, sir; only the earnings in 1935 and 1936.

Mr. FITZPATRICK. I mean, you did not get any funds from any other depa rtment of the Government?

Colonel Ohlson. No, sir.
Mr. Rich. You made no improvements?
Colonel Ohlson. Yes; we made a certain amount of improvements.

Mr. Rich. Where did you get the money for the improvements that you made?

Colonel Ohlson. The appropriation that we received through Congress. Mr. Rich. The regular appropriation? Colonel Ohlson. Yes, sir.

Mr. BURLEW. The Alaska Railroad has only had one allotment of emergency funds.

Colonel Ohlson. Yes; about 4 years ago. Mr. BURLEW. $100,000 and some-odd. Mr. Rich. You have an item of $200,000 appropriation for the construction of these bridges, have you?

Colonel Ohlson. Yes, sir. It only covers one bridge, however. The renewal of the bridge over the Knik River will cost $200,000.

EXPLANATION OF ITEM OF INCOME FOR FISCAL YEAR 1936

es, and stooonYes; that king at the year 1937

Mr. Rich. Looking at the operating revenue and expense statement on page 18, the estimated revenue for the year 1937 is $1,800,000, and the expense $1,900,000.

Colonel Ohlson. Yes, sir.
Mr. Rich. Or a deficit of $100,000?
Colonel Ohlson. Yes, sir.

Mr. Rich. If you have a deficit of $100,000, that does not agree with the figures you have stated, that you have an income of $9,766.

Colonel Ohlson. On page 18?
Mr. Rich. Yes; page 18, looking at the year 1937.

Cononel Ohlson. Yes; that will be $100,000 for capital expenditures, and $100,000 for operating deficit, this year, 1937, but, of course, we are discussing 1938 now.

Mr. Rich. Would you say you had an income of $9,766? You could not have that for 1938?

Colonel Ohlson. That is the estimated income for 1938. Mr. Rich. You mean you are figuring you are going to receive in 1938 $9,766 more than your expenses?

Colonel Ohlson. These are the figures we are talking about now, for 1938. Are you taking the 1938 or the 1937 figures?

Mr. Rich. You made the statement awhile ago that your income was $9,766 more than your expenses.

Colonel Ohlson. Yes, sir.
Mr. Rich. In this report you read.
Colonel Ohlson. Yes, sir.
Mr. Rich. What year was that for?
Colonel Ohlson. 1936.
Mr. Rich. 1936?
Colonel Ohlson. Yes.

Mr. Rich. According to this statement, it shows your deficit last year was $20,408.17.

Colonel OHLSON. Yes; but there should be deducted $29,121.81 expended during the fiscal year for investigation of mineral and other resources which will show a profit of $9,766.

Mr. Rich. Does the railroad have the power and the privilege of spending that money for the development of resources?

Colonel Ohlson. Yes, sir. Mr. Rich. What powers do you have outside of the operation of the railroad?

Colonel Ohlson. An appropriation made by Congress in 1933, of $250,000. Mr. Rich. Do you have any more of that money left?

Colonel Ohlson. There is, I think, about $18,000 to $20,000 of it left.

Mr. ScrUGHAM. Mr. Rich, this may answer your question. The terms of the act are given on page 501, I think, including the authorizations. Is that correct, Colonel Ohlson?

Colonel OHLSON. Yes, sir.
Mr. SCRIGHAM. That is on page 501 and 502 of the bill.

AMOUNT REC UIRED FOR REHABILITATION OF RAILROAD Mr. Rich. What I am trying to find out from the gentleman's statement is when this road will be self-sustaining. He says if he gets money enough to carry his overhead for 4 years it will, at that time, be self-sustaining, and I am interested now in finding out how much he thinks it is going to take to carry him over a period of 4 years.

Colonel OHLSON. There will be required approximately the amount of $2,150,000, spread over a period of 4 years, to take care of the necessary rehabilitation work.

Mr. Rich. What will that money be spent for, primarily?

Colonel Oulsox. For making line changes in order to eliminate the renewal of wooden snowsheds, ballast roadbeds, patch ballast of certain distances, to construct 12 new section houses which are badly dilapidated and unfit for human habitation, and complete piling, piling trestle approaches, box cars, and refrigerator cars, replace wooden bridges with steel bridges, placing of approximately 40,000 yards of riprap per year, for a period of 3 years, manufacturing concrete culvert pipes, and placing concrete culvert piles. Also the purchase of one locomotive.

The Alaska Railroad has, since it was started, purchased four new freight locomotives to replace old worn-out locomotives that were transferred from the Panama Railroad to the Alaska Railroad which are now fast becoming obsolete and very costly to maintain and repair. They are small engines and we can only haul very small trains with them, and by the utilization of heavier power we can increase ton per train-mile and thereby reduce your operating expenses, and it will be absolutely necessary within the next year or two to purchase another locomotive in order to further reduce operating expenses

Mr. Rick. That means it will require about $300,000 a year for the next 4 years?

Colonel Ohlsox. Yes, sir.
Mr. Rica. You have had this road in operation since 1916?
Colonel Ohlsox. Yes, sir.

Mr. Rich. And the total amount expended amounts to $30,000,000? Colonel OHLSON. About $71,000,000. Mr. Rich. I was looking at your operating costs there and receipts, revenues.

Colonel Ohlson. Yes, sir.

Mr. Rich. Are you going to get in enough receipts from your operations to take care of these expenditures?

Colonel OHLSON. That is, after our replacements. .
Mr. Rich. Yes; after your replacements.

Colonel OHLSON. In my opinion, it can be done. Of course, Congress and the Senate enact laws which often increase the operating expenses of the Federal Government. In the case of the Alaska Railroad there was an act passed by Congress last year, applicable to the Alaska Railroad, the Annual and Sick Leave Act, and that alone will increase the operating expenses of the railroad approximately $93,000. Mr. FITZPATRICK. For 1 year? Colonel Ohlson. Yes, sir; per annum. Mr. Rich. Where do you expect to get this $2,000,000 of special appropriation from the Government? Are you to look forward to that through the appropriation committees, or are you going to try to get it through projects?

Colonel Ohlson. The only means I have is to ask for an appropriation from Congress.

Mr. Rich. There was some place in the report I saw where you are going to ask for $200,000 more for some bridges. I just cannot locate that now.

Colonel OHLSON. It is on page 502 of the bill. Mr. Rick. That is not included in this appropriation bill now, is it? Mr. SCRUGHAM. Yes, sir. Colonel Ohlson. Yes, sir. Mr. BURLEW. Then, in addition to that, we have asked for some emergency funds to build some other structures, which we have not yet received.

Mr. FITZPATRICK. Has the tonnage you have been carrying over this railroad increased much during the last 7 years?

Colonel Ohlson. Sir?

INCREASE IN TONNAGE AND REVENUE OF RAILROAD

Mr. FITZPATRICK. Has the tonnage you have been carrying over this railroad increased a great deal during the last 7 years?

Colonel OHLSON. Yes. Last year it increased. The revenues increased from 1931 in the amount of $688,440 to $906,123 in 1932. In 1934 the revenues were $964,918, and in 1935 they were $1,091,445, and in 1936 they were $1,338,320.

Mr. FITZPATRICK. Was the increase on shipping into Alaska, or shipping out of Alaska?

Colonel OHLSON. The increase was inbound. Mr. FitzPATRICK. Can you give us an idea of what in money value you shipped out of Alaska to this country during the last few years?

Colonel Ohlson. I do not have that statement.

Mr. FITZPATRICK. We have been taking more out of Alaska than we have been putting in there?

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