General AKIN. Of course, we rent power in Seattle and at each one of these stations we have at Juneau, Anchorage, and Fairbanks. Mr. ENGEL. Are those mostly coal steam plants?

General AKIN. I do not know.

Mr. WEST. Which do you mean- -on the Alcan circuit?

Mr. KERR. I just wanted to know where you acquired your electric power. Is it manufactured, or do you have any power plant or anything of that kind?

General AKIN. We only have an emergency power plant. We rent power from the civilian community wherever possible.

Mr. KERR. From the local owners?

General AKIN. Yes, sir.

Mr. KERR. The Government secures its power from the local manufacturers of power?

General AKIN. Yes.

Mr. KERR. I thought probably we had one plant that was operating. General AKIN. We can look it up and give you the answer on the type of power.

Mr. KERR. I am sure you are correct about it-that it is bought from the local power companies. But I would like you to put in the record the statement that the power used there by the Government is purchased from the local operators and giving the cost of the power. General AKIN. Yes, sir. We will cover that in both ways. (The data requested is as follows:)

Electric power used by the Alaska communication system is acquired when available from public or private utilities who generally use water power for developing electric power. Where public utility power is not available, gasoline or Diesel power plants are used.

Most stations have a standby power plant for emergencies.

The following are the rate schedules at various points in Alaska:

Seward:

Schedule A, domestic: 12 cents per kw.-hr. for first 40 kw.-hr.; 7 cents per kw.-hr. for next 60 kw.-hr.; 5 cents per kw.-hr. for all over 100 kw.-hr. Schedule B, commercial: 10 cents per kw.-hr. for first 100 kw.-hr.; 8 cents per kw.-hr. for next 300 kw.-hr.; 6 cents per kw.-hr. for next 500 kw.-hr.; 5 cents per kw.-hr. for all over 900 kw.-hr.

Schedule C, power and government: 5 cents per kw.-hr. for all power. Fairbanks: All power at 7 cents per kw.-hr.

Anchorage: All power at 6 cents per kw.-hr.

Juneau: Power purchased from Alaska Juneau Gold Mining Co. at rate of 11⁄2 cents per kw.-hr., plus 5 percent of each monthly bill to cover transformer losses. Ketchikan: Power purchased from Alaska Electric Light and Power Co. at 31⁄2 cents per kw.-hr.

SUPPLIES AND MATERIALS

Mr. ENGEL. Still under project 410, in the item for supplies and materials you have gas and oil, $25,000. What do you pay for gasoline up there?

General AKIN. I can get that and supply it for you.

Mr. ENGEL. That is bought through the Quartermaster?

Mr. WEST. Yes, sir.

Mr. ENGEL. And, of course, you get it at cost?

Mr. WEST. Yes, sir.

Mr. ENGEL. That is sufficient.

Then you have down here a large item No. 7, "Operation of cable

barge," $53,000, made up of fuel oil, $8,000; lubricating oil, $3,000;

maintenance, repair, and annual overhaul, $25,000; and subsistence, $17,000; making a total of $53,000.

Did not we have an overhaul job on some cable barge up there last year?

Colonel LAWTON. It was the same item and is in here for the same amount and is about the same figure that the Transportation Corps uses for the same sized boat.

Mr. ENGEL. For coal, $2,500. You get that through the Quartermaster Corps, also?

Mr. WEST. From the engineers.

EQUIPMENT

Mr. ENGEL. Equipment is $72,420, which includes the replacement of nonstandard communication equipment, $8,000, and the replacement of standard communication equipment, $64,420.

Just what items are you replacing there?

General AKIN. That replacement of standard equipment is to replace items carried in stock, for the maintenance of the stock carried in the depot, approximately 11,000 items carried in stock, to give prompt supply and maintenance to the 42 stations of the system.

NEED FOR EXTENSION OF SERVICE TO MEET DEVELOPMENT OF ALASKA

Mr. ENGEL. I noticed in your opening statement you mentioned several things, like the pulp industry and new activities opening in Alaska, for which there are no funds in this budget. How would you propose to meet those with this budget?

Colonel LAWTON. There is no money in this budget for it.

Mr. ENGEL. I am very much interested in the development of Alaska, naturally, and, for instance, the Engineer Corps is dickering right now on a sawmill. It seems they had some considerable money invested in a sawmill during the war, and private interests there were going to expand it, and the war stopped it all of a sudden, and now they are out on a limb and are hoping to get it straightened out.

Alaska has in the new budget some $42,000,000 for construction. I talked to these people in that area, and they were felling trees right close to the ocean, taking them down with cables right to the ocean, felling the whole trees, trimming off the limbs, and taking them down to the sawmill and cutting them up into lumber, and they told me they could put lumber on the barge for $48 a thousand. The plan covers dry kiln; it covers the manufacture of any type of building material that you can make out of spruce, hemlock, and I guess they have several other types of lumber. That is very expensive if it has to be shipped up to Alaska. And they could save all that transportation; that could be eliminated.

And there was some Indian tribe in here, some of the most intelligent Indians I have seen, and they are really on their toes. They had a sawmill up there and were operating the sawmill and naturally trying to sell their lumber in Matanuska Valley, and they were down here on that Matanuska project, trying to get the Army to buy more of their products, fresh vegetables and things of type that it is rather difficult to grow up there, and save some money and still develop Alaska.

It is rather difficult for the Army to do that, because of the fact it may have to go into building a cold storage plant, such as we have up in Michigan, to take care of the stuff, but if we are going to develop Alaska, we are going to have to be able to extend our communication lines into those different areas where the different developments are being had. In other words, we are going to have to put a communication system into that sawmill so that when the engineers want some lumber they can call up and say "All right. Put on so many cubic feet of this and that," without waiting for the slow transportation system overland.

Now, just how are we going to reach those different points so that the development of this communication service will be of the greatest benefit to the Army and industry, and for the development of Alaska? How can we get the money to do that? How can we do that? Have you any suggestions to offer on it? What do other agencies do?

General AKIN. We believe that could be done by providing that we retain a certain percentage of the receipts of the system for those purposes, and by providing that the expenditures be made only upon approval of the Director of the Budget. Now, that would involve a change in the language in the appropriation bill which parallels that of other departments, particularly the Department of Agriculture which operates on that basis. However, I want to inform you that a similar change of language was submitted to the Bureau of the Budget and it was deleted by the Director.

Mr. ENGEL. You would suggest wording similar to that which the Department of Agriculture has?

General AKIN. Yes, sir.

NEED FOR PROVISION FOR MEETING CONTINGENCIES

Mr. ENGEL. Could that be worded in such a way as to take care of contingencies you mentioned in cases of emergencies like the breaking of a cable, and things of that kind?

General AKIN. Yes, sir; that can be done, and done very effectively. Mr. ENGEL. What percentage would you suggest be retained? General AKIN. About 15 percent.

Mr. ENGEL. In other words, you would suggest that we make 15 percent of the gross revenues of the system available for this purpose? General AKIN. That could be used for these purposes subject to the approval of the Bureau of the Budget, yes, sir.

Mr. ENGEL. We can provide that the Director of the Budget make a report, or that you make a report, to the Appropriations Committee on any amounts so allocated.

General AKIN. Yes, sir; that would do it.

Mr. ENGEL. We could do that?

General AKIN. Yes, sir.

Mr. ENGEL. You would have no objection to that?

General AKIN. No, sir; not personally but the Director of the Bureau of the Budget deleted similar language.

Mr. ENGEL. I want this committee to keep track of what is going on. I do not want things to happen like some of the other things that happened during the war.

Thank you, gentlemen.

70546-48- -12

THURSDAY, JANUARY 15, 1948.

CORPS OF ENGINEERS

STATEMENTS OF LT. GEN. R. A. WHEELER, CHIEF OF ENGINEERS BRIG. GEN. R. C. CRAWFORD, DEPUTY CHIEF OF ENGINEERS COL. P. A. FERINGA, ASSISTANT CHIEF OF ENGINEERS FOR CIVIL WORKS; LT. COL. R. L. JEWETT, DEPUTY CHIEF OF CIVI WORKS FOR RIVERS AND HARBORS; C. C. BURGER, CHIEF RIVERS AND HARBORS DIVISION; LT. COL. H. C. GEE, DEPUTY CHIEF OF CIVIL WORKS FOR FLOOD CONTROL; G. L. BEARD CHIEF, FLOOD CONTROL DIVISION; LT. COL. J. H. TYLER EXECUTIVE; J. P. LACROIX, FISCAL OFFICER; MISS J. SMITH FISCAL LIAISON FOR PERSONNEL.

Mr. ENGEL. We have before us this morning the estimates for the Corps of Engineers. Lt. Gen. R. A. Wheeler, Chief of Engineers: Brig. Gen. R. C. Crawford, Deputy Chief of Engineers; Colonel Feringa, and various other officers and civilian employees of the Corps of Engineers are present.

General Wheeler, do you have an opening statement?

GENERAL STATEMENT

General WHEELER. Yes, sir; I would like to make an opening statement, if I may.

Mr. ENGEL. Proceed.

General WHEELER. In preparation of the estimate of funds requested for fiscal year 1949 for river and harbor and flood-control work, I have given much consideration to the need of proceeding with construction of projects once initiated in such a manner as to effect their most economical completion. For major projects it is usually true that a comparatively small allocation of funds is needed for the first year of construction. For the next, 2, 3, or more years, as the case may be, larger amounts must be made available in order that contractors will provide the type of construction machinery, and attain the measure of construction efficiency which will enable construction of the project at minimum cost. The last year of such a large project is usually one in which a smaller allocation of funds is necessary as it is a finishing-up or tapering-off year.

PERCENTAGE ALLOCATION OF FUNDS BY CATEGORIES OF PROJECTS

I was heartened last year by the action of this committee in requesting that I prepare for them a program which would indicate the funds necessary in succeeding years in order to bring our projects to completion. This program which was presented to you in tabular form has been before my staff and has been carefully considered in connection with the estimates that I am presenting herewith. Major consideration has also been given to the remarks of the chairman of this subcommittee, in which he suggested that first, 5 percent of funds. available for construction work should be set aside for small, urgent projects costing under $1,000,000; second, that 15 percent be set aside

for projects from $1,000,000 to $5,000,000; third, that 20 percent be set aside for projects costing from $5,000,000 to $20,000,000; and fourth, that the remaining 60 percent be set aside for large projects costing from $20,000,000 up. Although the chairman gave this policy for flood control and applied it in a monetary sense, I have endeavored to apply it to our entire construction program, and for convenience have reduced his figures to percentages.

A resume of these estimates now before you will indicate the following: Group I (costing under $1,000,000), 52 projects, total $10,865,800, percentage of grand total 2.22 percent; group II ($1,000,000 to $5,000,000), 76 projects, total $57,811,000, percentage I of grand total 11.87 percent; group III ($5,000,000 to $20,000,000), 1 69 projects, total $136,797,400, percentage of grand total 28.08 percent (you will note that the sum of the percentages for these first three groups is 42.17 percent and, therefore, compares favorably with the 40 percent for smaller projects mentioned by the chairman); and, finally group IV (over $20,000,000), 36 projects, total $281,770,800, percentage of grand total 57.83 percent. I have not, due to its different characteristics, included in the above figures the program under the appropriation title "Flood control, Mississippi River and tributaries.""

INCREASE IN COSTS

The question of costs is one that has given me considerable concern. As indicated by the graph before you, costs have increased during the past calendar year. The estimates herewith have been based upon cost figures prepared by us in September of 1947. It is important to realize that the Engineering News-Record construction cost index for September 1947 stood at 417.81, whereas for September 1946 it stood at 360.19, an increase of 16 percent.

Mr. MAHON. From what date do you begin your calculations and arrive at those figures, in the first place? What is the normal, or is there a normal? What is the beginning of the thing?

General WHEELER. The index is based on the average figure of 100 in 1913.

INCREASE IN COSTS OF PROJECTS

I realize that an index of this type is not infallible, that it does not apply with any degree of exactness to any one particular project; however, when blanketed over the whole United States, it does reflect general conditions. Last year I stated that earth-moving costs which are very important in connection with levee and earth dam construction, have not increased unduly. This condition has remained unchanged. The same, to a somewhat lesser extent, applies to dredging costs where, as in earth-moving operations, the increased costs are offset to some degree by increased efficiency of machinery. It is in concrete construction and machinery fabrication and installation that costs have risen sharply. I have also found that in certain parts of the country costs have increased more than in others. Hence, when applying the Engineering News-Record index it should be applied to the total costs of all the projects before you, and in having done so I find that due in large part to the accuracy of the estimates presented to you last year, and to some degree due to the ultra-conservative method we used in presenting to you what we found to be the