competition to domestic carriers who are operating coastwise. Those people have to pay full price for their vessels and here you would be taking a vessel that you would, let's say, only have paid 55 percent for, and go out and compete with them.

That is the basis for his objection to the bill as stated in his letter. We feel that there is a relatively simple way to clarify the thing, and without getting into any details of wording, why, we would propose that it merely states that if such vessel, if it is eligible for financing under that amendment, if that vessel is used in any other run, then, it would require immediate repayment of any construction subsidy.

To me, that would be an extremely simple way to solve the whole problem, because with such an amendment the vessel would have to operate in this run; it couldn't go any place else, otherwise it would lose the entire construction subsidy, and be forced to repay it; and I believe that that would answer the objection that the Secretary proposes; and I think that it is a relatively simple way to handle the whole thing. Thus, this construction subsidy is a very, very vital matter, to get a rate structure that we can really attract trade with, because one of the industries that could bring us immediate economic benefits, without any great investment of capital on the part of anyone, would be to build up our tourism just as quickly and as fast as we can; and this ferry system can do it for us. It can do it not just for southeastern; it can do it for all of Alaska, and that is our reason why we are so vitally interested in S. 1956, and would like to see favorable action on it.

I think that that would conclude what I have to say on S. 1956, and if there are any questions concerning our feelings on that, or questions about the ferry system, I would be very happy to answer them. Senator BARTLETT. Mr. Toner, I am wondering if you have had opportunity to read the statement prepared for this committee by Mr. Sharp, at Ketchikan?

Mr. TONER. No, I have not had opportunity to read it. I haven't received it as yet, to be honest with you.

Senator BARTLETT. Then I will not question you further on that. He presented a very excellent statement, and he presented many figures relating to anticipated revenues, numbers of passengers, and so forth. I wanted to determine whether you were in agreement with it, but since you haven't read it, you would not be able to comment.

Mr. TONER. I would put it this way, that if Mr. Sharp did that, it is undoubtedly from the Gilman report. If this committee would like copies of that report, we have them and we can provide them, but I think that may have been done. The figures undoubtedly were from there, and presented to the committee, and I would be in agreement with what Mr. Sharp said.

Senator BARTLETT. He revised the figures contained in the Government report in the light of further knowledge and present-day circumstances. It might be well, if you would care to do so, to present a copy of that report or two, or three, perhaps; for the use of the committee.

Mr. TONER. Yes, we will be glad to do that.

Senator BARTLETT. You may proceed, then, Mr. Toner, unless the members of the staff have questions.

Mr. BARTON. Mr. Toner, the amendment that you mentioned to S. 1956 wouldn't interfere in any way, I take it, with the limited domestic service that you mentioned might be rendered by these. vessels?

Mr. TONER. Are you speaking now of the amendment that I proposed to the amendment?

Mr. BARTON. That's right. The repayment of the subsidy in case the vessel was used in other than foreign trade?

Mr. TONER. No, it would not, because S. 1956 puts this particular service which we desire completely under foreign trade. Now, themy proposal would be also, to add to that, to guarantee that the minute that that vessel, or any vessel in this service that has received a construction subsidy, the minute it was used in any other service, then the full construction subsidy would be repayable, right then and there. I think that that would answer the objection that the Secretary makes, that we might go out and compete unfairly with some other company or some other vessel in a domestic run some place.

Mr. BARTON. Thank you, sir.

Senator BARTLETT. Mr. Baynton?

Mr. BAYNTON. Mr. Chairman, to make sure that that is clear, as I understand you now, Mr. Toner, your amendment is intended to limit this vessel from British Columbia say, or from Seattle, to the Alaska route it would normally travel?

Mr. TONER. My amendment, S. 1956, would be worded so that the vessel could not be used any place other than in that run. Mr. BAYNTON. Without

Mr. TONER. Without repayment of the construction subsidy.
Senator BARTLETT. Immediate repayment, I believe you said.
Mr. TONER. Immediate repayment, yes.

Senator BARTLETT. Do you know, of your personal knowledge, if there is opposition to this ferry service, from any of those carriers? Mr. TONER. Of my own knowledge, no; I do not know of any opposition of my own knowledge.

Senator BARTLETT. You may proceed, Mr. Toner.

Mr. TONER. The next bill that has been introduced is S. 2661, in which the Federal Highway-aid Act would be amended to permit Federal highway-aid funds to be used for the construction of access roads between the upland and these ferry vessels; at present, under the highway-aid programs, or the Highway-aid Act, the construction between the authorized route, or Federal route, or State route, and the vessel itself, the construction of any roads, the construction of any landing facilities, the construction of a ramp to approach such a landing facility, none of those things were eligible under the present Federal Highway Aid Act.

Again, we are in a problem of financing something and trying to get to a decent rate structure; and, because of our particular situation, we actually refer to this ferry system as our marine highway. It is impossible I will repeat here it is just impossible to tie us together by roads. We have come up with another solution; we want to use a boat for a road. We don't ask the Federal highway-aid funds to be expended on building a vessel. We do say, however, that as much of the road as can be built as a road, should be built with highway-aid funds; and that is why S. 2661 has been introduced. Under that bill,

we would be able to construct the necesary access roads and facilities to take a vehicle or a person and transfer them from the land to a boat-and that is all that we ask for under this S. 2661. And we are vitally interested in the passage of that legislation because it takes another considerably large sum of money to build these facilities. I believe, roughly, we're speaking in terms of around $3 million, to build the necessary access facilities, if we must pay for them on the basis of 100 percent money; and if we go the other way, we are talking in terms of around possibly four or five hundred thousand dollars if we go Federal aid funds.

And since we as I stated earlier-since we consider this a highway, we want to use as much in the way of highway funds as we canas we possibly can for the necessary transitional structures between the upland and the vessel; and we would urge the committee to report favorably on this; and we certainly would love to see positive action in the Senate in an affirmative manner.

I think that that would cover my statement on S. 2661, and if there are any questions on that, I would be very happy to answer those, too. Senator BARTLETT. Is it true, Mr. Toner, that most of southeastern Alaska is in a Federal reservation?

Mr. TONER. I couldn't give you the exact figures, but I think probably about 98 percent of it is. I think it is reasonably close to that. Senator BARTLETT. And is it also true that the public domain areas of Alaska, which lie almost altogether away from southeastern Alaska, will benefit very considerably, starting next year, by reason of the fact that Alaska will be included in the Federal-aid highway programs, with the possible exception of the interstate highway program? Mr. TONER. Yes, that is true.

Senator BARTLETT. Is it also true that unless an arrangement can be made, or arrangements, as you have suggested, for help in establishing a ferry service, that southeastern Alaska will be very largely denied the benefit of this accelerated highway program which will go only, or principally, to other parts of Alaska?

Mr. TONER. That is true, and again, even if we had unlimited funds, if we had the entire Federal budget available to us, I doubt that we could turn around and build a road between our islands.

What we need is something that can use the waterways. That is why we are here testifying for these two bills. We have to get aid, and there is no possible source of aid other than Maritime Administration for the vessels, the Federal Highway-Aid Act for facilities to enable us to get from the land to the vessels; and as I say, I wouldn't even want to hazard the remotest guess as to what it is going to cost us to build a road from here to Petersburg; or, let's get down to Ketchikan, which is twice as far. It would be a nice project.

Senator BARTLETT. Money being so tight, and interest rates so high, and the state of the Federal Treasury being what it is, do you think that it would be practical to build a subway to connect these various communities in southeastern Alaska? [Laughter.]

Mr. TONER. I will qualify my answer; it depends on who you are— the contractor or the Government. [Laughter.]

Senator BARTLETT. Mr. Barton?

Mr. BARTON. Mr. Toner has a very good statement. I have no questions.

Senator BARTLETT. He always makes a good statement.
Mr. TONER. Thank you, Senator.

Senator BARTLETT. Thank you, Mr. Toner.

And now, we will turn very deftly and adroitly and rapidly to S. 2669, on which the first witness will be Senator Elton Engstrom. Senator Engstrom, we welcome you.

STATEMENT OF HON. ELTON E. ENGSTROM, STATE SENATOR FOR ALASKA

Senator ENGSTROM. Thank you, Senator Bartlett.

Senator Bartlett, Representative Rivers. My name is Senator Elton E. Engstrom. My box number is 723, Juneau, Alaska. I have been in the fish-buying business here in Alaska for the past 30 years. At the present time we have operations in Pelican, Sitka, and here in Juneau.

Our production yearly runs some 72 million pounds, which we ship all over the United States. About 6 million pounds average of this tonnage, is frozen and stored in the three plants-Sitka, Pelican, and Juneau. I am talking of our own production. In each of these other ports there are other buyers who handle probably not quite as much as we do, but maybe half again as much.

It is quite a job to get our fish to the railheads. We do a lot of business through Prince Rupert, primarily because of the cost factor, and it is a little bit faster service to Chicago, where the bulk of our fish goes. We have used the charter association boats for a great many years and find that it is aboslutely imperative that we have this type of operation in our business.

We shipped this past month, or will have shipped this month, over a million pounds of fish. These shipments go out in carload lots of from 2 to 4 carloads, on order. Each car is somewhere around 40,000 to 45,000 pounds.

The present charter boats, if they were coming in as they are now, couldn't handle our tonnage. We have had the Robert Eugene up in Alaska for over a month and a half, running steady to Prince Rupert, taking fish, not only from us, but from other ports in the district down here.

We have had her into Pelican on the 9th of the month for fourcar load; we have had her into Sitka on the 19th for four cars; and we will have her into Pelican on Saturday for two cars, and then she will go over to Sitka on Monday morning and pick up two cars more to complete four cars. Now, she will get out of Seattle, but she has done a valiant job for us in moving this quantity of fish that we have to move on order. I don't know how, without this service, we could remain in business. I know, with the big carrier that is operating, it would be impossible, if that was the only means of our transporting fish.

We have a minimum of four to five cars going into Rupert-if they can put them in their vans now and which they have on deck, and a few things like that-but we don't always have two cars, or four cars, or five cars.

Our business during the beginning of the season, which is in May, and runs up until September-we are very busy bringing fish in. At

that time, we have to do a lot of overtime work to get out a couple of cars to fill orders to keep fish moving, to our customers. It is imperative that we keep that fish rolling, especially in a market like we now have where Seattle can outsell us by 2 or 3 cents a pound below our costs in Alaska.

Senator Bartlett, I have repeated much that I said 2 years ago, but the situation today is no different than it was then. I wish to repeat that this service is essential to our continuing operating on the scale that we are operating today.

Senator BARTLETT. Does most or all of your fish go by rail from Rupert?

Senator ENGSTROM. Practically all of our fish go via Prince Rupert. We ship some loose to Seattle and Los Angeles.

Senator BARTLETT. Why can't Alaska Steam take care of you? Senator ENGSTROM. I don't know how they could take care of us, Senator, with the tonnage that we are shipping, from the three ports where we have fish. If there was any way where Alaska Steam could take care of us and take care of Petersburg, Wrangell, and Ketchikan, and the whole business, I would be the first one to say that it was possible. I know my own business, and I know that it is impossible for them to take care of us, under the present setup and their present ships.

Senator BARTLETT. How many tons of fish in one carload?

Senator ENGSTROM. 45,000 pounds, Bob.

Senator BARTLETT. How many pounds of fish does the Alaska Steam require for loading before it will put into a port?

Senator ENGSTROM. I understand that from the last time that we have discussed this, it was a five-car minimum to go into Prince Rupert.

Senator BARTLETT. Do you have to move your fish fast for competitive reasons?

Senator ENGSTROM. Absolutely, Senator. We have to have fish on the market, on demand of our customers.

Senator BARTLETT. Do you do any shipping, at all, by Alaska Steam?

Senator ENGSTROM. I do very little. I ship mildcure salmon via Alaska Steam.

Senator BARTLETT. How do their rates, Alaska Steam's rates compare with the charter service?

Senator ENGSTROM. Senator, I have no idea on that, because that is all handled at the other end. We are merely commissioned buyers; we buy on a commission basis, and handle for principals in the States. Senator BARTLETT. Which one of these charter boats service comes up here and is used by you?

Senator ENGSTROM. We use the Ketchikan Merchants' Charter Association here in Juneau, and it has the Vitanic, the Sydney, and sometimes the Coral Sea and the Iceland have been in here.

Senator BARTLETT. Do those ships bring goods from Alaska northbound-from Seattle, rather?

Senator ENGSTROM. From Seattle, yes; they do, sir.

Senator BARTLETT. And take fish south?

Senator ENGSTROM. That's right, sir.

Senator BARTLETT. Thank you, Élton. Any questions, Mr. Rivers?