Only The Alaska Line
Resumed Its Service
. . . WAS THAT "CONSPIRACY"?
■ he Antitrust suit brought against
the Alaska Steamship Company
charges that we have “conspired” to
effect a virtual monopoly of the
water transportation business in the
Alaska trade.
Here in brief are the facts behind
an incident every Alaskan will re
member because politics were plac
ed ahead of public interest with the
result that all competing carriers
were forced from the trade leaving
The Alaska Line alone in the field.
THE POST-WAR PROBLEM
During World War II and for the
immediate post-war period, all Ameri
can shipping was requisitioned and
operated for the government under sup
ervision of the U. S. Maritime Commis
sion. During two post-war years under
government operation, losses in the
Alaska trade were enormous. For 1945
the deficit amounted to $2,500,000 and
for 1946 approximately $4,000,000.
Previous to return of vessels to pri
vate owners, joint studies of the Con
gress, the Maritime Commission and
the Alaska Shipping operators showed
In December 1948, follow
ing the termination of the
Interim Plan and at the end
of a long and costly Mari
time Strike, Alaska’s ship
ping industry faced an al
most total collapse. Only the
Alaska Steamship Company
accepted the responsibility
of serving all Alaska and re
sumed its operations. The
record shows that the cause
of that crisis was politics —
not “conspiracy.”
NO PERMANENT
SOLUTION PREPARED v
• — <&■
Despite the complete cooperation of
the Alaska Steamship Company, and
presumably all of the other parties to
the Interim Plan, in submitting full rec
cords and information, by the spring of
1948 it became apparent that no per
manent legislation would be prepar
ed in time to become effective at the ter
mination of the Interim Plan on June
30, 1948.
As a safeguard against complete
chaos in the Alaska Shipping industry,
the Alaska Steamship Company began
a determined effort to have the provi
sions of the Interim Plan extended. We
discovered an amazing and an incred
ible thing — we found that Governor
Ernest Gruening was actively sabotaging
any hope for this urgent extension
through both the Maritime Commission
and the Congress.
After general agreement had been
reached on House Joint Resolution 396,
which would extend the provisions of the
Interim Plan, Governor Gruening in
stigated a substitute bill (H. J. Res. 401)
which would have tied Alaska shipping
that an 88% increase in revenue
would be necessary for the private operators to maintain
service. Of this 88% about 13% represented the cost of marine
insurance, 43% the charter hire on government vessels required
and the remainder was accounted for in increased cost of labor,
fuel, repairs, etc. It was agreed by all, however, that this 88%
increase would be a heavy burden for the Alaskan economy to
shoulder.
It was then determined that by the Maritime Commission’s
furnishing the needed cargo ships to service the trade and assuming
the necessary hull insurance risks, the required 88% revenue
increase could be reduced to an increase of approximately
35%. Accordingly, the carriers in the trade filed their new tariffs
reflecting this increase — which, incidentally, is the last increase
that has been granted despite subsequent events — and the
Maritime Commission made available the necessary vessels at
an annual charter rate of $1.00 per vessel which covered the
remaining amount of needed revenue.
RATE SUBSIDY TO ALASKA
This arrangement was known as the Interim Plan (Public Law
No. 12) and it was fostered with the intent of saving considerable
money for the Alaska people. Simply stated the Interim Plan was
a rate subsidy to the Territory because it eliminated a major
portion of the revenue increase required to continue service. The
carriers received no “cash in hand.” Their decreased operating
expenses resulting from the Interim Plan were reflected directly and
proportionately in the tariff schedules.
The agreement went into effect in May, 1947
and was to continue until June 30, 1948. Parti
cipants in the Interim Plan were the Alaska
Steamship Company, Alaska Transportation Com
pany, Northland Transportation Company and the
Santa Ana Steamship Company.
At the time of the inception of the Interim Plan it was the
objective of the act to provide a period of time in which an accu
rate study could be made of the costs of operation of the shipping
companies under the agreement. This wa$ to provide a yardstick
for the preparation of permanent legislation.
to the apron strings ot tne interior ue
partment, vesting in that agency final authority in determining
what carriers would be permitted to serve Alaska and how.
When it became apparent that this bill had no chance of
passing, the Governor withdrew his opposition to the extension
of the Interim Plan and publicly stated he favored it. When the
extension of the Interim Plan was finally passed, the authority to
place it into effect was discretionary and not mandatory. During this
whole period the Governor continued his argument that Alaska
shipping rates were “out of this world” and that operators were
getting rich without Government aid.
In the end, the Maritime Commission refused to allow
the new bill to take effect and consequently the Interim Plan
benefits to Alaska Water transportation were terminated on June
30, 1948. The result was that all shipping operators were thrown
entirely upon their own resources.
AND THEN WHAT HAPPENED
Almost immediately the Santa Ana Steamship Company re
turned the single vessel it had under charter and declined to con
tinue its service.
As a direct result of the termination of the agreement, aggra
vated by the three months long shipping strike which followed,
both Alaska Transportation Company and Northland Transporta
tion Company found it impossible to continue. Both of them with
drew from the trade in December 1948.
Even the Seattle/Seward barge line which had been heralded
with such fanfare as the “white hope” of the Alaska trade sus
pended sendee permanently — although their collapse was not a
result of the termination of the Interim Plan.
Only the Alaska Steamship Company remained of the five
carriers which had served the trade only six months before.
Was this chaos the result of “conspiracy” and “monopoly” on
the part of the Alaska Steamship Company?
We contend that it was not “unlawful” or “monopolistic”
for the Alaska Steamship Company alone in that shipping crisis
to set about serving all the Territory of Alaska — without increas
ing rates even though we were sustaining an operating deficit.
ALASKA STEAMSHIP COMPANY
Serving All Alaska
i