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Mr. WHITMAN. As general manager of the Alaska Railroad I ain charged with the responsibility of operating the railroad under the jurisdiction of the Department of the Interior. I have held tbis position since April of this year.

I have provided the committee with a written statement which covers the historical background of the Alaska Railroad, as well as detailed financial and statistical data which I hope will be of help to you in evaluating our agency. In it we have pointed out some of the improvement programs which have been initiated or are contemplated. We have also included a complete financial report for the month of June 1955, which covers cumulative operating figures for fiscal year 1955. This financial report shows the proprietary interest of the United States, invested and donated capital, as well as financial details of our operation for the month of June and the previous fiscal year. It was felt that such historical and statistical data in written form would be more easily available for future study by members of this committee, and I will, therefore, take no more of your valuable time than is necessary to give you a brief oral outline of our operation.

The enabling act, a copy of which is furnished in our written statement, authorized the President of the United States to locate, construct, and operate railroads in Alaska and is known as the Alaska Railroad Act. Its purposes may be briefly stated as follows: (1) To provide transportation for national defense, and (2) to perform generally all usual duties of a carrier by a railroad so as best to aid in the overall development of Alaska.

Objectively, we seek to operate the railroad in as businesslike a manner as possible. Definite improvements in this respect can be reported, although I must add that much remains to be done. We are proceeding on the theory that the railroad should be relieved of operations of a kind not ordinarily associated with a rail transportation organization, as well as those which can be performed more economically by private business. As examples of this effort, some months ago we turned the operation of our river boats over to a private concern; we have discontinued a very costly commissary service; and the last of several hotels formerly operated by the railroad has been leased to private operators. Other similar economies are under consideration.

The Alaska Railroad, by stateside standards, is not large. It is 470 miles in length from its southern terminus at Seward, on Ressurrection Bay, to Fairbanks in the Interior of Alaska. In addition, we operate 65 miles of branch lines making a total of 535.6 miles. We have approximately 100 miles of passing tracks.

Basically, all main-line trackage is 115-pound rail and is comparatively new. The 12 miles between Whittier and Portage is laid with some 54 miles of 115-pound rail and the remainder with 90-pound rail. The Jonesville branch is laid with 70-pound rail, the Suntrana branch with 90-pound rail and the Eilson line was constructed of 75-pound rail.

I might add that 115-pound rail is very good rail and pretty much the usual standard stateside railroad.

On our main line, some 287 miles has been reballasted with pit run ballast and 59 miles with crushed gravel. At the start of the current working season we had approximately 155 miles of main-line trackage which, while it had been relaid with 115-pound rail, had not yet been

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itation program.

reballasted. We are currently engaged in this work and at the end of our present season will have completed approximately 40 miles of reballasting. This will leave us with 112 miles yet to be done. If our income permits, we will complete this project at the rate of about 50 miles per year, so that by the end of 1957 we will be able to report that the entire line has been completely rehabilitated. I believe it is fair to say that, with the exception of the 112 miles yet unballasted, our roadbed is in good shape.

A list of our motive power and rolling stock has been included in our written statement. This will indicate that our operation is completely dieselized, with some 7 steam engines retained for emergency use. Our diesel power is in good shape and is being kept up to stateside standards with normal maintenance procedures. Our rolling stock is somewhat below stateside standards, with much of our equipment due for replacement. Last year we purchased 100 multipurpose coal cars and have 50 flatcars on order. The Alaska Railroad should continue to replace its rolling stock, as repairs to the older equipment is causing excessive maintenance costs. However, there is no immediate problem so far as our rolling stock is concerned, provided the railroad's income permits the normal and orderly replacement of such equipment.

With the exception of the territory between Portage and Seward our roadway buildings are in average condition and are adequate. Between Portage and Seward all classifications are in poor condition and considerable rebuilding is contemplated under the current rehabil

Bridges between Portage and Fairbanks are adequate and in good condition, with the exception of some three points north of Portage. These will be replaced within the next five years from railroad earnings. Two steel bridges will be installed between Seward and Portage under the current rehabilitation program.

Among other pertinent facts, you may be interested in knowing that our employment load ranges from about 1,400 persons during the winter months to about 1,800 employees during the short summer working season.

I might add there, that in line with one of the questions you asked the previous witness, our payroll on the Alaska Railroad for last year, fiscal year, was $11,267,000, if you wanted to balance that as to the amount of money we put into the Territory as compared to the tourist travel.

While our written statement gives complete details, briefly our gross revenues for the fiscal vear ending June 30, 1955, amounted to $18,425,440, produced largely from freight transportation. Our total operating expense was $15,808,161, resulting in a net income in fiscal year 1955 of $2,617,279. On a percentage basis, our figures for 1955, as compared to 1954, show a decrease in revenue ton miles of freight amounting to 6.19 percent. Our revenue passenger miles were 14.46 percent lower in 1955 than in 1954. This caused a decrease in total operating revenue of 5.35 percent. However, total operating expenses decreased 16.94 percent. These figures indicate that although operating revenue decreased in 1955, the greater decrease in operating expenses resulted in an increase in both net railway operating income and net income.

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In conclusion, I might say that the future of the Alaska Railroad depends largely upon the development of the Territory, both civilian and military. In addition to competitive factors already in existence, a pipeline has recently been constructed by the military between Haines and Fairbanks. Just how this will 'affect railroad revenues in the future is difficult to forecast at this time. I believe the military is taking into consideration that both lines of supply must be kept in good operating condition, and for this reason our decrease in revenue because of the pipeline may not be as serious as would appear on the surface.

I hope our written report and this brief oral outline will give you a comprehensive picture of our operation, both past and present. As I have served in my present capacity only since April of this year, I have with me Assistant General Manager John E. Manley and Comptroller Leland P. Draney. These gentlemen will assist me in answering any questions you might have at this time concerning subjects with which I am not entirely familiar.

Mr. ABBOTT. Mr. Chairman, unless it has been done, it would be my suggestion that the statement, the full statement prepared by Mr. Whitman, be made a part of the record at this time and that the appendix be made a part of the official committee file. Mr. O'BRIEX. Without objection, it is so ordered.

(The statement referred to follows and the appendix will be found in the files of the committee.)

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ORAL STATEMENT OF REGINALD N. WHITMAN, GENERAL MANAGER OF THE

ALASKA RAILROAD
My name is Reginald N. Whitman, and I reside at 210 North First Street,
Anchorage, Alaska. As General Manager of the Alaska Railroad I am charged
with the responsibility of operating the railroad under the jurisdiction of the
Department of the Interior. I have held this position since April of this year.

I have provided the committee with a written statement which covers the historical background of the Alaska Railroad, as well as detailed financial and statistical data which I hope will be of help to you in evaluating our agency. In it we have pointed out some of the improvement programs which have been initiated or are contemplated. We have also included a complete financial report for the month of June 1955, which covers cumulative operating figures for fiscal year 1955. This financial report shows the proprietary interest of the United States, invested and donated capital, as well as financial details of our operation for the month of June and the previous fiscal year. It was felt that such historical and statistical data in written form would be more easily available for future study by members of this committee, and I will, therefore, take no more of your valuable time than is necessary to give you a brief oral outline of our operation.

The enabling act, a copy of which is furnished in our written statement, authorized the President of the United States to locate, construct, and operate railroads in Alaska and is known as the Alaska Railroad Act. Its purposes may be briefly stated as follows: (1) To provide transportation for national defense, and (2) to perform generally all usual duties of a carrier by a railroad so as best to aid in the overall development of Alaska.

Objectively, we seek to operate the Railroad in as businesslike a manner as possible. Definite improvements in this respect can be reported, although I must add that much remains to be done. We are proceeding on the theory that the Railroad should be relieved of operations of a kind not ordinarily associated with a rail transportation organization, as well as those which can be performed more economically by private business. As examples of this effort, some months ago we turned the operation of our river boats over to a private concern; we have discontinued a very costly commissary service; and the last of several hotels formerly operated by the Railroad has been leased to private operators. Other similar economies are under consideration.

The Alaska Railroad, by stateside standards, is not large. It is 470 miles in length from its southern terminus at Seward, on Resurrection Bay, to Fairbanks

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in the interior of Alaska. In addition, we operate 65 miles of branch lines,
making a total of 535.6 miles. We have approximately 100 miles of passing tracks.

Basically, all main line trackage is 115-pound rail and is comparatively new.
The 12 miles between Whittier and Portage is laid with some 574 miles of 115-
pound rail and the remainder with 90-pound rail. The Jonesville Branch is laid
with 70-pound rail, the Suntrana Branch with 90-pound rail, and the Eielson
line was constructed of 75-pound rail.

On our main line, some 287 miles has been reballasted with pit run ballast and 59 miles with crushed gravel. At the start of the current working season we had approximately 155 miles of main line trackage which, while it had been relaid with 115-pound rail, had not yet been reballasted. We are currently engaged in this work and at the end of our present season will have completed approximately 40 miles of reballasting. This will leave us with 112 miles yet to be done. If our income permits, we will complete this project at the rate of about 50 miles per year, so that by the end of 1957 we will be able to report that the entire line has been completely rehabilitated. I believe it is fair to say that, with the exception of the 112 miles yet unballasted, our roadbed is in good shape.

A list of our motive power and rolling stock has been included in our written statement. This will indicate that our operation is completely dieselized, with some seven steam engines retained for emergency use. Our diesel power is in good shape and is being kept up to stateside standards with normal maintenance procedures. Our rolling stock is somewhat below stateside standards, with much of our equipment due for replacement. Last year we purchased 100 multipurpose coal cars and have 50 flatcars on order. The Alaska Railroad should continue to replace its rolling stock, as repairs to the older equipment are causing excessive maintenance costs. However, there is no immediate problem so far as our rolling stock is concerned, provided the Railroad's income permits the normal and orderly replacement of such equipment.

With the exception of the territory between Portage and Seward our roadway buildings are in average condition and are adequate. Between Portage and Seward all classifications are in poor condition and considerable rebuilding is contemplated under the current rehabilitation program.

Bridges between Portage and Fairbanks are adequate and in good condition,
with the exception of some three points north of Portage. These will be replaced
within the next 5 years from Railroad earnings. Two steel bridges will be in-
stalled between Seward and Portage under the current rehabilitation program.

Among other pertinent facts, you may be interested in knowing that our
employment load ranges from about 1,400 persons during the winter months to
about 1,800 employees during the short summer working season.

While our written statement gives complete details, briefly our gross revenues
for the fiscal year ending June 30, 1955, amounted to $18,425,440, produced
largely from freight transportation. Our total operating expense was $15,808,161,
resulting in a net income in fiscal year 1955 of $2,617,279. On a percentage
basis, our figures for 1955, as compared to 1954, show a decrease in revenue ton-
miles of freight amounting to 6.19 percent. Our revenue passenger-miles were
14.46 percent lower in 1955 than in 1954. This caused a decrease in total operating
revenue of 5.35 percent. However, total operating expenses decreased 16.94 per-
cent. These figures indicate that although operating revenue decreased in 1955,
the greater decrease in operating expenses resulted in an increase in both net
railway operating income and net income.

In conclusion, I might say that the future of the Alaska Railroad depends largely
upon the development of the Territory, both civilian and military. In addition
to competitive factors already in existence, a pipeline has recently been constructed
by the military between Haines and Fairbanks. Just how this will affect Railroad
revenues in the future is difficult to forecast at this time. I believe the military
is taking into consideration that both lines of supply must be kept in good operat-
ing condition, and for this reason our decrease in revenue because of the pipeline
may not be as serious as would appear on the surface.

I hope our written report and this brief oral qutline will give you a comprehensive picture of our operation, both past and present. As I have served in my present capacity only since April of this year, I have with me Assistant General Manager John E. Manley and Comptroller Leland P. Draney. These gentlemen will assist me in answering any questions you might have at this time concerning subjects with which I am not entirely familiar.

Mr. ABBOTT. To any one of you three gentlemen, at page 4 of the prepared statement reference is made to an appendix inclusion which

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sets out the total appropriations for capital expenditures for the Alaska Railroad to June 30, 1955. Is it correct that the direct contributions by the Federal Government to the Alaska Railroad have aggregated nearly $165 million, Mr. Draney? That is the figure?

Mr. DRANEY. Yes, sir.

Mr. ABBOTT. And as of last year you were, in effect, operating on what might be called a revolving fund, almost self-sufficient. Is that an accurate statement?

Mr. WHITMAN. You mean starting last year. Yes.
Mr. ABBOTT. A self-sufficient operation.

The statement which you include here, perhaps in line with the declared policy of "getting the Alaska Railroad out of those things which are not normally railroad operations” has been a policy since when? Do you know?

Mr. WHITMAN. I believe in 1953 or the early part of 1954 a survey team issued a report and recommendation that this be done. Now what year was that, Mr. Manley, do you remember?

Mr. MANLEY. In 1953 they made the survey.

Mr. WHITMAN. And so far as I know, it started at that time and has been working on it ever since.

Mr. ABBOTT. Included in those businesses of which the Railroad divested itself was the river boat operation?

Mr. WHITMAN. Yes, sir.

Mr. ABBOTT. Could one of you gentlemen describe briefly why you favored discontinuing river boat operation?

Mr. WHITMAN. I believe if you take a look, Mr. Abbott-
Mr. ABBOTT. At page 15?

Mr. WHITMAX. We had prepared statement of river-boat operation, item 15.

Our records indicate that for the years that the Alaska Railroad operated the river-boat season it was done at a loss, and it was also the feeling of the committee that was up here that a railroad company is not probably best suited for handling water transportation, river boats in particular, and that an outside concern, commercial concern, might be able to operate it at a profit. And it was on this basis that it was leased.

Mr. BARTLETT. Vr. Whitman, in that connection, is it true that railroads in the States, privately owned, can engage in enterprises other than running a train down the tracks, hotel business, bus business, trucking business?

Mr. WHITMAN. I think I don't know any railroad in the United States offhand, Mr. Bartlett, that has hotels. Now there may be some.

Mr. O'BRIEN. The Delaware & Hudson Railroad, I think at one time had some hotels, but they got rid of them.

Mr. ABBOTT. The Burlington discontinued operation?
Mr. WHITMAN. I could not say.

Mr. BARTLETT. The only point I want to make, what is my understanding has been that railroads in the States, privately owned, do engage in businesses not directly in connection with the railroad itself.

Mr. WHITMAN. I would think that is a fair statement. They do so to some extent.

Some of the land-grant railroads, I believe, had a rather sizable real-estate investment.

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