Mr. BARTLETT. These last fees you mentioned, do you know whether they are included as a requirement of law or simply of regulation? Mr. BAKER. The 1 percent and the half of 1 percent, if you are going to take advantage of the special assistance program, the secondary market, they are imposed by law. The 22 percent mortgage fee can be waived by the bank if they wish to work Mr. BARTLETT. Had you finished? Mr. BAKER. No. I have one more statement to make. That is, many of the banks of the Territory have established through their correspondents a limited secondary market. We ourselves are selling mortgages to the Seattle First National Bank, the National Bank of Washington in Tacoma, the People's National Bank in Seattle, and the National Bank of Commerce. Last year we sold someplace between a half and three-quarters of a million dollars at par for their own portfolio. It stands to reason that these Seattle banks are not going to pay us par when the most the Federal Government will pay is 98 percent. So that market is entirely gone. What market we did have has been wiped out through the special assistance program. Mr. BARTLETT. But even if that market were there on a par basis, the portfolio of any particular bank in Seattle or thereabouts would be found to be bulging pretty quickly, too. They wouldn't accept too many Alaskan mortgages. Mr. BAKER. They are accommodating us only because we carry large balances. Mr. BARTLETT. So you tell the committee there is need now for some secondary mortgage arrangement for Alaska housing, and there is likewise need for capital of some sort or another from the States for rather limited capital for expansion purposes which can be made available by Alaska banks? Mr. BAKER. That is right; on a guaranteed basis I think it would be quite sufficient. I don't think it would take a great deal of immediate cash. Mr. O'BRIEN. It has been said one reason for the lack of risk capital here is it is at the whim of Congress. Do you think that is a reasonably accurate statement? Mr. BAKER. No, I disagree with that statement. People in business, if there is a market for their goods or services, don't consider politics too seriously. Mr. O'BRIEN. I am not thinking so much of politics as I am of the stability and continuity of the laws governing the area in which capital is invested. Mr. BAKER. Investment of moneys has been dependent upon Government spending, and if that is what you mean by whim ofMr. O'BRIEN. That would be one thing; yes. Mr. BAKER. That is true. Mr. ABBOTT. Well then, your suggestion that consideration be given to the creation of an agency to guarantee Alaska business loans, complementing that, you further suggest that the lending be handled by banks within the Territory on a deferred participation basis, with the sponsoring bank participating for a reasonable amount. in your view would be the reasonable amount of participation? Mr. BAKER. A minimum of 10 percent. Mr. ABBOTT. A minimum of 10 percent? What Mr. BAKER. Some banks on larger loans might be obliged to participate with some other bank because of their legal limits. Even 10 or 20 percent may exceed their limit. But I would say a minimum of 10 percent. Mr. ABBOTT. And is the deferred participation an essential part of the plans you have in mind? Mr. BAKER. Only to make it more attractive to people in Washington. Mr. ABBOTT. Have you suggested this program to officials in the Department of Commerce or Treasury or in the Department of the Interior? Mr. BAKER. No. I first discussed this previous to the legislation last year and do not have time to prepare a bill, and at the same time I was investigating the possibility of the development of a credit corporation similar to the ones I spoke to you of in the State of Maine, Massachusetts. But those development credit corporations require invested capital, local invested capital, and they are strictly limited in their Mr. ABBOTT. Well, normally you would turn in long-established populous communities to your people who have accumulated wealth and laid it by so that they might find it attractive. In Alaska, I assume you would not find those same people who have substantial amounts of capital. I believe you stated, did you not, that here with the rapid expansion, those people who do have funds which would otherwise be made available to capital is plowed back into their own business? Mr. BAKER. That is right. Mr. ABBOTT. I believe that is all I have except for an off the record suggestion on procedure from this point. (Discussion off the record.) Mr. ABBOTT. Mr. Croul. Mr. CROUL. Our second witness here will be Mr. Bradford Phillips, who wants to testify on some of the problems in connection with the development of our tourist industry in Alaska. STATEMENT OF E. BRADFORD PHILLIPS, VICE PRESIDENT, ARCTIC-ALASKA TRAVEL SERVICE AND DIRECTOR OF THE ANCHORAGE CHAMBER OF COMMERCE, ANCHORAGE, ALASKA Mr. PHILLIPS. My name is E. Bradford Phillips. I am the vice president of the Arctic-Alaska Travel Service and director of the Anchorage Chamber of Commerce. The subject that I am covering, as John has said, is the tourist industry. I would like to make about three observations before I get into the problems, if I may. I would like to say, first of all, that the tourist industry is one of the few basic industries in Alaska. I would like to clarify that a little. For instance, it does not exploit resources in Alaska. Second, it brings new money into the Territory. We are not like the proverbial Chinese, always doing each other's laundry in order to eat. This brings entirely new money into the Territory which was not taken out of the ground here. Third, it doesn't feed off of present industries. It is not a satellite industry of something else that we already have. Fourth, it creates these satellite businesses that I spoke of. Fifth, it has an immediate widespread effect on the economy, very much like adrenalin does to the body. The minute the dollar is dropped into the economy in all areas it immediately starts to circulate, and it is very healthy. It can be felt immediately. I think one of the most important parts of the development of the tourist industry is that it takes relatively small amounts of capital in order to participate. The second observation I would like to make is that it is the third largest industry in the Territory. I base that on the number of dollars brought into Alaska, and actually the observation is based on projected figures from the Stanton report and also our own private financial experience in the industry. The Stanton report, as you probably remember, was made in 1952 and is the only report that I am familiar with on the industry here. The third observation I would like to make is that this year, 1955, a very important transition has been made, and that is we lost our passenger steamship service to the Territory, which, in effect, used to carry a very large percentage-I would suggest over 85 percent of the tourists. And I use the term "knowingly" in quotation marks. Better than 85 percent of them used to come by boat. We lost all of the service for all practical purposes, and we were quite concerned about it. It appeared to us as though it would be like going to the hospital and having your head taken off and try to recover from it in a week. So we were a little pessimistic about what we would do this year. We knew that in the past it would be very difficult to sell tourist transportation to Alaska by air. People preferred the boats if they had to wait several years to come here. We have made that transition this year much to our surprise and delight. Many of the services in the Territory have not suffered at all. Many areas have suffered very much. The organization that I represent I think has a pretty comprehensive picture of the tourist industry in the Territory. We deal with all sections of the Territory. We find that our business has been off, pending final accounting, about 35 percent from last year. We expected at least 50 percent, and we were ready for that. We were very happily surprised. Mr. ABBOTT. What type of organization is that? Mr. PHILLIPS. I represent a tour company, the largest tour company in the Northwest. We handle all of American Express, Thomas Cook, Greyhound tour arrangements in the Territory. We are a ground handler and cover the entire Territory. Mr. ABBOTT. Now I believe you listed tourism as No. 3. What are the major industries dollarwise? Mr. PHILLIPS. I understand that fishing and wood were ahead of tourists in Alaska. I don't know what the figures are, and I can't accurately tell you what the figures are in the tourist industry be cause Mr. ABBOTT. Do you list the military as an industry here? Mr. PHILLIPS. No, sir. Mr. ABBOTт. The reason I asked, as I recall, in a hearing in the Pacific last year, in a total of $700 million in their industry for a 12month period the military accounted for $303 million; I believe sugar and pineapple about $140 million apiece; tourism in Hawaii approximately $50 million. That would be for 1953, I assume. Now do you have any comparable figures here in the Territory? Mr. PHILLIPS. I can estimate on the tourist industry. This year it will probably be around 12 to 13 million dollars. I don't know what the military budget is. Perhaps John could give those figures a little more accurately, but that is an estimate projected on our experience and the report given in 1952. That, of course, covers all phasestransportation, food, lodging, souvenirs and so on. Mr. ABBOTT. Do you list the Alaska Railroad as a major industry in Alaska? Mr. PHILLIPS. The first point I brough up was basic industries in Alaska, and the Alaska Railroad definitely is a major industry. Mr. ABBOTT. In terms of payroll and dollar turnover? Mr. PHILLIPS. Yes. Mr. TAYLOR. I think one point that should be emphasized here is that the tourist dollar is for the most part a new dollar, where many of the other dollars in the Territory are the same dollar used over and over again. Mr. PHILLIPS. The Alaska Visitors' Association has prepared a statement and a study on this very thing. They graphically show how the dollar is spread through the Territory, and they estimtate it turns over about seven times, in effect, as soon as it is deposited in the community. One of the important things is, too, that, for instance, if 10 or 15 million dollars were put into the economy of Alaska in 1 year, it would be spread throughout the Territory and not, for instance, in a 10 or 15 million dollar plant that operates in a single area and benefits employees and those people in the immediate area. The tourist industry is spread from Point Barrow to Ketchikan, including all areas that are accessible at all. Mr. TAYLOR. I may have missed this, but does the Territorial legislature make an appropriation? Mr. PHILLIPS. Yes, the Territorial legislature has made an appropriation matching funds this year or this biennium of $100,000, and the individuals in the Territory have to match that with $50,000, which gives us $150,000 to work with. Mr. ABBOTT. And who programs to work with that? Mr. PHILLIPS. Alaska Visitors' Association does this within the framework of the law. There are certain things that the money can't be spent for, the appropriated money can't be spent for, and that is in the way of salary, transportation, and so on, and so the $50,000 we put in personally goes for to cover that area that is not covered in the Territory appropriation. Mr. ABBOTT. It corresponds roughly to the Hawaii Visitors' Bureau? Mr. PHILLIPS. Yes, primarily, and we have an agency employed to disburse the funds and spend it in the way that the program was set up. Mr. ABBOTT. Well, now, your group, according to some publicitythe subcommittee held a hearing at McKinley-I believe the Alaska Visitors' Association have gone on record strongly urging that the Mount McKinley Hotel be reopened in 1956. Mr. PHILLIPS. That is one of our major points. Mr. PHILLIPS. That is all right. I didn't find out about your hearing until you had gone from McKinley Park, and it was rather curious why we didn't know about it and what the content was, but I am glad that point was brought up. There is one question in the tourist program in the Territory that many people talk about of being of major importance, and that is the Alaskan Highway and feeding people into the Territory. That certainly is the second avenue to funnel people into the Territory. However, I think it will not gain its major importance until paving is done on the highway. It is an adventure, I will grant you, to go over the Alaska Highway, but most of the tourists like to do it one way after they find out what kind of an adventure it is. I think the paving of the Alaska Highway, certainly we will get the volume in the Territory of Alaska necessary to make money. Mr. ABBOTT. Have the people in travel agencies in the Territory itself promoted a fly-in-drive-out or fly-in-sail-out, that is, cooperating with competing means of transportation program? Mr. PHILLIPS. The first active thing that was done was just recently, within the last month, the Alaska Visitors' Association Board meeting at McKinley Park, and it was suggested that it would be wise to investigate the possibility of special back haul freight rates on automobiles on sea transportation in order to be able to sell this very idea you are talking about, because it certainly would sell, because I get people in the office every day during the tourist season wondering what they can do with their car because they do not want to drive back over the highway and would like to fly. Mr. ABBOTT. Matson and United, I believe, have an informal working agreement because of the very pleasant 41⁄2 to 5-day trip out, and then perhaps fly back or vice versa, and that appears to be a major contributing factor to increased utilization to both and mutual advantage of both. Mr. PHILLIPS. That is true also in South America with Pan America and the Grace Line. However, recognize here there is no passenger service. So it means shipping the car itself, a freight problem in getting the car back, or selling it here, and we have a limited market for all the cars that come over the highway. With those observations, I would just like to say briefly: We have daily problems in this industry we are certainly not going to bother you with. We solve them in the main by ourselves. However, there are two problems I would like to mention here, and favorable consideration of these problems would help us immeasurably in the immediate future-that means tomorrow, in the 1956 season-in the development of the tourist industry. Problem No. 1 is McKinley National Park and Hotel. McKinley Park is important because it is the No. 1 attraction to Alaska. That is universally known. It takes very little or no selling people on McKinley, and that is the place they want to go when they come here. So it is obviously the thing to build our tourist program around. I would like to make a couple of comments. No. 1, McKinley National Park Hotel and the National Park itself should be opened. There is no question in our minds that this should happen. No. 2. It is imperative that a decision be made by someone immediately. That means by November 1. |