Mr. ANTHONY. If it were being operated by a private corporation, they would not have that number of men on the line.

Col. SEOANE. As I said, this amounts to $296,800 per annum in payment of salaries, $30,000 for quarters, fuel, and light, and $180.000 for transportation, making a total of $506,800. To this should be added the annual appropriation of $140,000 used in technical upkeep and maintenance of the wire system, making a total of $646,800. Against this there would be an income to the Treasury of $180,000 cash turned in as business receipts, leaving a net annual deficit to the Government of $446,800. As the cash income resulting from commercial business is not available for expenditure on the system and must be turned into the Treasury, it remains that the annual appropriation would have to be $646,800 instead of $140,000 as at present. In other words, the Government would be losing the difference between what it now appropriates, $140,000, and what it would have to appropriate, $646,000, or a net additional loss of $560,800, involved in the pay and overhead of additional personnel, it being assumed, of course, that no department of the Government other than the military has personnel available or under pay to assign to the duties of keeping this system in running order.

RATES.

The CHAIRMAN. Is there any reason why, notwithstanding the fact that we are using Signal Corps men to operate this cable system, that the cost should not be made the basis of the rates?

Col. SEOANE. Yes, sir. I should say that that is purely a matter of policy that the Secretary of War and the administration itself handles with regard to Alaska, and the governor of Alaska and many others have something to say about that. Therefore the Signal Corps and the technical people operating the cable do not make a strong stand one way or the other on that.

The CHAIRMAN. From the purely economic standpoint you should recognize this fact, that the Secretary of War, the head of the Signal Service, and the governor of Alaska do not pay this bill, but the people of the United States must pay the bill. We must tax them for it.

Col. SEOANE. Yes, sir; for the development of Alaska.

The CHAIRMAN. There has been no development of Alaska. Everybody knows that.

Mr. BYRNS. How do the rates compare with the rates of commercial cable lines?

Col. SEOANE. They are about 40 per cent lower. If a commercial company had the line they would probably raise the rates 40 per cent. Mr. BYRNS. Why should not the Government raise the rates?

The CHAIRMAN. According to this statement, we are paying more than $400,000 over and above what we receive. Why not collect that in the form of rates, or why not charge the same as the commercial rates?

Col. SEOANE. The rates could be put up, and that is a matter of administrative policy.

The CHAIRMAN. It is a matter for us to decide, and not for people who are not paying any attention to the interests of the taxpayers to decide.

WIRELESS COMMUNICATION WITH ALASKA.

Mr. ANTHONY. Alaska is connected up with the United States by wireless, is it not?

Col. SEOANE. The Navy maintains a wireless system.

Mr. ANTHONY. Is it practicable for the Government to send its official messages by wireless to Alaska to-day?

Col. SEOANE. The Government could send its official messages that way, but the system as a whole could hardly ever be divorced or separated from the great fact that this is now a commercial system and is carrying on a great amount of commercial business.

Mr. ANTHONY. Do you mean by wireless?

Col. SEOANE. No, sir; I mean the cable system.

Mr. ANTHONY. Are there any commercial messages sent by wire

less?

Col. SEOANE. There are some when we have breaks in the cable. Mr. ANTHONY. If this cable should be cut, would the wireless system be able to care for all the traffic of Alaska?

Col. SEOANE. No, sir; it would not.

Mr. ANTHONY. How much could it carry on?

Col. SEOANE. We have gone into that, and I should say that it would hobble along in carrying about half of it.

GOVERNMENT MESSAGES.

Mr. KELLEY. I notice that the Navy's bill was $28 for use of the cable, and I suppose they do all of their business by wireless.

Col. SEOANE. They have not much business in Alaska. They are the least. It is mostly for the Agricultural Department, Department of Justice, and Interior Department.

The CHAIRMAN. Why does the War Department have such an enormous cable bill?

Col. SEOANE. The War Department's bill is not nearly as large as that of the Interior Department. The Interior Department is the big one in this particular. The War Department's charge appears here as $7,000, but that ought to be $3,500, because but half of that represents official War Department business. The rest of it is for the maintenance of the system itself.

Mr. ANTHONY. How long does it take to carry mail by boat from Seattle to Sitka?

The CHAIRMAN. Does anybody ever censor messages on this question of costs, or does anybody determine whether these department communications might go by mail at a cost of 2 cents instead of at this much larger cost by cable?

Col. SEOANE. The officer in charge happens to be myself, and if we see business going through that does not seem to warrant the use of the cables we take the matter up at once. For instance, the Department of Justice was sending certain subpoenaes by cable, and we took it up with them, saying that this use of the cables did not appear to be justified. We have received an answer from them showing that it was absolutely warranted because of the fact that communication with distant places was not possible on account of snow, so that what appeared to be an unreasonable thing in the beginning after investigation appeared to be all right.

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DELIVERY OF CABLE MESSAGES.

The CHAIRMAN. What about the delivery of these cable messages at the end of the line?

Col. SEOANE. We deliver them at the end of the line.

The CHAIRMAN. Is the cost of delivery included in the figures you have given us?

Col. SEOANE. Yes, sir; the cost of delivery is included. A large amount of these messages are really commercial messages to places like Valdez, Cordova, Seward, Ketchikan, etc., where business has come to establish itself. In those towns we have cable messengers employed to deliver the messages, just like the Western Union would do. If you were in any of those towns, you would not know but that the Western Union was running the system.

COMMERCIAL BUSINESS AND RATES,

The CHAIRMAN. Why should not the commercial interests in Alaska pay as high rates for cable service as commercial interests in the United States?

Col. SEOANE. It is affected by the fact that the people up there are undergoing some hardship and they are not so satisfied there. They are leaving Alaska, and it is the only territory that showed a decrease in population in the last census. There are only 25,000 white people there now. Notwithstanding that, however, the cable business has grown and has grown consistently every year, so that the War Department is taking a sort of credit toward establishing at least general contentment among the people along this line.

Mr. BYRNS. Has it grown with respect to commercial business or Government business?

Col. SEOANE. The commercial business is growing. In the beginning it was hardly anything.

Mr. BYRNS. Has it grown recently?

Col. SEOANE. Yes, sir; the commercial business has grown recently.

MAIL FROM SEATTLE TO SITKA,

Mr. ANTHONY. How long does it take mail to go from Seattle to Sitka?

Col. SEOANE. About five days. There are boats that go every two weeks. The boats, of course, take in that whole run of towns and Sitka would be in the run. Sitka is a little off the main route, and I do not think it gets as good service as other places like Ketchikan, Skagway, and Cordova.

The CHAIRMAN. In this table showing the cost of operating the cable, you have not included anything for capital account. If you should compute interest at 4 per cent upon the capital investment. that amount would be added to the loss, would it not?

Col. SEOANE. This cable in the first eight years cost the Government a gross sum of about $6,250,000, and there was a return to the Government of about two and one-third million dollars, so that it cost the Government less than $4,000,000, or about three and twothirds million dollars. That is all that the Government has put into this great system, and it is really a great system. Alaska would certainly be a dead place if it did not have this communication system.

RATES.

The CHAIRMAN. Your idea is that the rest of the people here in the United States ought to be taxed to make up this loss, in order that a few people there may enjoy lower rates than we are enjoying?

Col. SEOANE. Well, it is like the Mexican boundary when there are a great number of troops concentrated down there. With the military operating it, it is just the work of an executive arm of the Government, carried out under that policy.

The CHAIRMAN. But that is not the way the people of the United States look upon the levying of taxes on them.

Col. GRIFFIN. It might be said that there is no commercial telegraph company in Alaska.

The CHAIRMAN. But they ought to pay a rate that would justify us in entering upon the activity, or should pay a rate commensurate with the responsibility assumed.

Col. SEOANE. This is something like the post office policy, where the Government does not increase the postal rates when it carries the mail into difficult or inaccessible mountain regions.

The CHAIRMAN. But they increased the rates during the war.
Col. SEOANE. Yes, sir.

The CHAIRMAN. And you did not.

Col. SEOANE. No, sir; we did not.

Mr. KELLEY. Do you think this will be a profitable venture for a private company?

Col. SEOANE. Not yet, but eventually it will be; and as soon as it becomes a profitable venture for a commercial company, a commercial company will be applying for the privilege of taking over that cable. The Government has always carried out such pioneering business. The Government built the telegraph lines along the Union Pacific Railroad and out into California, and when it became profitable the Government withdrew. That has been the Government's policy.

The CHAIRMAN. Is that all you care to say about it?

COMMUNICATIONS CONGRESS.

Col. GRIFFIN. There is one other factor that we consider of some importance, and that is that the purchase and installation of this cable system was seriously considered by the Communications Congress, at which there were 31 communication systems altogether that received approval. Those systems were listed in the order of their importance in that Communications Congress, and the Alaska cable system was listed as second in importance.

The CHAIRMAN. That was the conference that did not agree on anything?

Col. SEOANE. No, sir; that was a conference that the Secretary of State called from among the heads of the several departments, to make their recommendations to the State Department.

The CHAIRMAN. If you could get a good, live man on one of those conferences, he would dominate it and get anything he wanted. He could have it listed as second or anything else that he chose, and perhaps you had a good man on the conference.

COMPARISON OF COST OF OPERATION UNDER GOVERNMENT AND COMMERCIAL CONTROL.

Col. SEOANE. I would like to read this statement in regard to the cost under commercial control.

If the system were taken under commercial control, there would be a certain recasting of figures, but an analysis is not difficult, and to make the same complete the figures can be summed up as follows:

At present the pay and overhead of the military personnel on the system amounts to $296,000 per annum. The annual appropriation for maintenance and upkeep is $140,000 per annum. General appropriations from the Quartermaster Corps furnishing heat, light, and other services to stations, not covered in the above items, is reckoned at $30,000 per annum. Quartermaster expenditures for the cable ship Burnside total $180,000 per annum. The above amounts

total $646,800. The cash income deposited into the Treasury has been for several years $180,000. This represents only one-half of the business done by the system, the other half being services rendered the various departments of the Government which have an equal worth of $180,000; therefore the system does about $360,000 worth of business per annum.

If a commercial enterprise were to take over the system it would at once increase the rates in keeping with commercial rates elsewhere, and this would add about 40 per cent to the income, making $504,000. A commercial enterprise would furthermore make certain savings, such as eliminating nonpaying telegraph stations in Alaska, and reducing personnel to an absolute minimum, such as having one man at a telegraph office where the Signal Corps maintains a minimum of two. It is very difficult to estimate how much of a cut or saving they could make in this regard. Wages in Alaska are high and it is not easy to procure skilled personnel to remain there. The result is there might be no saving possible at all. But, on the other hand, there is no objection, in order to eliminate argument, to admitting a saving factor as high as 30 per cent. This would amount to $89.000 saving, which should be taken from the total expenditure of $646,800 mentioned above, leaving a possible debit figure of $557,800. A commercial enterprise would have to pay approximately 6 per cent dividends and would have to earn in addition 4 per cent annual surplus, and also provide about 44 per cent for depreciation and 14 per cent for taxes. This would be a figure somewhere between 28 and 30 per cent that would have to be added to the income. Therefore the debit figure of $557,800 is but 70 per cent of what the income should be, which in figures equals $795,000. The best income procurable, as shown above, would amount to about $504,000, from which it is seen that the annual deficit would be $291,000.

Mr. ANTHONY. That is based upon the assumption that the Government would patronize it to the extent that it does now?

Col. SEOANE. Yes, sir.

Mr. KELLEY. Which probably would not happen?

Col. SEOANE. Yes, sir; that is true.

The CHAIRMAN. They would not send 100-word messages where they should send 5-word messages. They would not write the word