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Dim on d Explains Kates
(Editor’s note: The following
background-material on the cur
rent rate hearings was authored
by Anthony J. Dimond, Alaska’s
delegate to Congress, and ex
plains his action in the mattef.)
I learned of the increase of
rates through a telegram receiv
from Alaska.
As soon as I was able to get
an outjyie of the facts of the
matter, I .protested the rates and j
insisted strongly that the people
of Alaska were entitled to be
heard. I pointed out that in a
similiar case, that of the Matson
Steamship Company serving
Hawaii, an increase in the steam
hip rates of only ten percent
had been allowed as compared
with the 45 per cent increase in
Alaska. Officials of the Commis
sion said that the action taken
in the case of the Matson Steam
ship Company was a mistake,
and thereafter took proceedings
wnereoy toe Matson rates were
increased 35 per cent, but even
this increase, where the hazard
must be as great as in Alaska,
the rates allowed are 10 per cent
below the Alaska rates.
Finally, a hearing on the sub
ject was held by the Maritime
Commission on January 23.
The only evidence adduced by
the Alaska Steamship Company
was that of its auditor, Mr. Mit
chell. Mr. Mitchell put in evid
ence a statement covering the
period of November 30 to Dec
ember 21, 1941, inclusive, of the
operations of twelve vessels show
ing the gross revenues of each
vessel for the period between
November 30 and December 21.
1941, and the additional items
of expense as to each vessel for
such period actuahv paid or here
after payable due to the war
hor some reason unknown tome,
rt is insisted by the Commission
examiner that the items of ex
pense embraced in crew bonuses
and additional normal operating
expenses from delays due to the
war are military secrets and can
not be revealed to the public ..
with respect to those two items
at least it appears from the test
imony that the companies have
actually sustained the increase
cost ot operations represented.
The Northland Transportation
Company, made a similiar state
ment with respeet to the opera
tions of the NORTH SEA, one
of the vessels in the Northland
Transportation Company.
The testimony of the Alaska
Steamship Company and the
Northland Transportation Com
pany was confined entirely to
what had happened since Dec
ember 7, 1941. When I was af
forded the opportunity to cross
examine Mr. Mitchell, I demand
ed that he furnish a statement
showing the income and operat
ing expenses, the taxes paid, and
the net profits, of the Alaska
Steamship Company for 1941.
Council for all companies im
mediately objected to the pro
duction of any such evidence,
saying that it was not relevant. I
thereupon pointed out that tne
45 per cent increase in rates al
lowed by the Commission, and
now in effect, is a surcharge upon
rates heretofore in effect and
that no one could possibly tell
whether such a surcharge is just
ified unless it is known if the
companies were already making
sufficient profits under normal
charges to cover the extraordin
ary expenses resulting from the
war. The examiner held that my
request was in order and that the
information should be furnished.
However, the council for the com
panies still declined to give the
information desired. It appears
that under the law, an examiner
of the Commission has no right
to compel the production of ev
idence, and so the matter must'
be reported to the Commission
and then the Commission, if
deemed proper,- may require the
companies to produce the evid
ence demanded.
One of the sustantial items of
increased expenses was that of
war risk insurance on the vessels.
In this connection, the values
assigned to the vessels for rnsur
ance is most important. It ap
peared from Mr. Mitchell’s
statement tfiat the total insured
value of the Alaska Steamship
fleet was approximately $7,000,
000, considerably more than the
amount found as the total value
of the assets of the Alaska Steam
ship Company for rate-making
purposes in the rate hearings held
in 1940 and 1941 in which the
Maritime Commission had allow
ed a substantial increase in rates
In that hearing the Commission
held that the fair value of the
assets of the Alaska steamship
Company for rate making pur
poses was $6,650,000 which in
cluded $1,250,000 of working cap
ital, as well as property other
than ships but no specific find
ings was made as to the value of
the vessels for such purpose. In
this connection, it may be of in
terest to note that both the Al
aska Steamship Company and
the Northland Transportation
Company have almost invariably
made substantial profits on their
operations The normal dividend
.rate on stock of the Alaska Steam
ship Company appears to have
been 6 per cent, but we find that
in 1933, the company paid a div
idend of 4 per cent, in 1934 88
per cent, in 1935 56 per cent, in
1936 14 ner cent, in 1937 16 per
cent, and that in 1938 and 1939,
no dividends were paid. In 1940,
the rate was again 6 per cent.
The company has declined to
give any figures for 1941.
With regard to the Northland
Transportation Company, it ap
pears that the company has paid
dividends until the end of 1940
which would average 50 per cent
per year.
At the conclusion I urged that
if it should he lound that the
companies would suffer a deficit
in their operations on account of
extraordinary risks due to the
war, that deficit should be borne
by the Government and not be
imposed solely upon those in Al
aska who are obliged to make
use of the services of the steam-j
(continued on page 8)
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