The Daily Alaska empire Newspaper, January 14, 1937, Page 5

THE DAILY ALASKA EMPIRE, THURSDAY, JAN. 14, 1937. FULL TEXT OF G 'S MESSAGE TO THE THIRTEENTH LEGISLATIVE ASSEMBLY 14, 1937 THE GOVERNOK ALASK/ SUBMITTED JANUARY To the Thirteenth Alaska Legislative Assembly: The Governor is required under the Organic Act to make suggestions to the Legislature recommending legis- lation. This is an attempt to comply with that require- ment. You will have detailed reports from the various Territorial offices and boards containing detailed informa- tion as to the state of the Territory and the information which you may need in your work. I commend those reports to your thorough and thoughtful attention. 1 am sending with this message a copy of the message that it was my privilege to submit to the Legislature two years:-ago which 1 wish you would consider in connection with this one. Conditions in the Territory are incomparably improved over those that existed two years ago. This is due in a large part to the ex inary penditures by the Gov- ernment in Public Works and for relief to those in need. The recovery from depression conditions throughout the country including Alaska is contributing to our improved situation. I called attention of the Legislators two years ago to the expectation of help of the Federal Treasury through Public Works for the succeeding two years. The Federai Government had already intimated very plainly that local revenues should aid in carrying on Public Works and that the Federal Government was planning to retire in a large degree from its direct relief and work relief leaving that to the local Territory, State and Municipal governments. The Federal Government has already prac- tically retired from relief, direct and work, except as i is provided in regular Public Works projects. The time has come when the Territory must find further sources of income in addition to those which we now have or abandon much of the welfare program. Of course, economy must continue to be our watch- word. We cannot afford to overtax industries that we now have. Overtaxation would discourage investment of capital in our natural resources. We must depend upon further development to produce more empioyment ana to add to the Territory’s population. However, the demands on government from the people have become greater on account of the greater activities of the last” administra- tion, National and Territorial. We cannot return to the old attitude of survival of the fittest with the consequent threat to the hindmost. At the present time the fisheries industry is bearing the chief burden of taxation, and casting about for further sources of income the mind naturally turns first of all to the mining industry, the second most important of the Territory’s industries. Mining has prospered during the last two years, due in most part to the increase of the value of gold. The increase of gold value from $20.67 to $35.00 an ounce has made gold mining more profitable than it had been for many years. It would be only fair to have that industry carry part of the increased tax burden clearly indicated as nec ary. The tax on the fisheries industry is a tax on gross production. That on gold mining is a net income: tax. - I believe the time has arrived when this diserimination should cease. Net income taxes open the door for deception. It gives too much scope to the bookkeeper. I believe the ZLegislature should allow liberally for production during development where the money is being reinvested in the mine. However, reinvested money is capital investment. 1 believe we should exempt from taxation on each mine or prospect enough money to permit the prospector to bring his property to profitable opera- tion. The amount of this suggested exemption is one that the Legislature is better prepared to determine than I. The present condition of the Territorial finances is indicated in the following communication from the Terri- torial Treasury: Juneau, Alaska January 8, 1937 Honorable John W. Troy Governor of Territory of Alaska Juneau, Alaska Dear Governor Troy: In reference to your message to the coming Legislature, I am herewith submitting the finan- cial condition of the Territory of Alaska at the close of business December 31, 1936. The net cash balance of the Territorial Treas- ury as of December 31, 1936 was $408,858.71 which shows a material increase over previous biennial reports, notwithstanding the fact that the Territorial Treasury was deprived of approxi- mately $500,000 in pack taxes due to the closed fishing season in the Bristol Bay area during the year 1935. In addition to the net cash balance as of December 31, there are $178,600 in United States bonds drawing 334% interest and $40,000 in Wrangell School bonds drawing 67 interest, mak- ing a total cash and bond balance of $627,458.71. The delinquent taxes due the Territory have been reduced $10,000 from the last previous biennium. The payment of all delinquent taxes due the Territory for the last biennium will be paid at an early date. Very truly yours. (Signed) OSCAR G. OLSON Territorial Treasurer. PUBLIC WORKS 1 call your attention to the benefits which have been derived by municipalities, States and Territories in public works construction through cooperation with the Publie Works Administration by obtaining loans and grants or grants only from the Administration. At the present time the Public Works Administration OVERNOR'S MESSAGE 1 or at a lesser interest rate. 1 believe it would be advisable for the Territory to prepare a set-up to sponsor Public Works projects along the lines that are being practiced by States and municipalities. If such a program is fol- lowed by the Territory it is essential that it be started at the earliest possible time as the PWA available funds from the present appropriation are rapidly being allotted. PLANNING BOARD The last Legislature at my request authorized the creating of a Planning Board such as prevails in many States. 1 did not put this into effect for two or three reascns. One of which, there was no appropriation to bear any cost of organization. Another was that after further experience 1 became convinced that probably the best Planning Board would be the Territorial Board of Administration. The National Resources Board has indi- cated a willingness to assign a competent engineer at Government expense to be utilized by the Territory in pre- paring plans for development. If the Territory should undertake to further a program as outlined in this mes- sage, we should have a Planning Board and we could utilize the services of a Government engineer. Aside from the air field program, ber of major projects in all four Divisions that ought to be under construction soon. The interior country is anxious to get a road connecting from Fairbanks to tap the Goodpaster country and the Forty Mile region. This could also connect up with the International Highway whenever that might be authorized. Such a road would probably start somewhere on the Richardson Highway and extend through the Goodpaster region and on into the Forty Mile and finally connect with the Canadian road from Dawson to the boundary. Another large, meritorious project is development in the Kenai Peninsula country. Another would be a connection between the railroad and the Richardson Highway. Another one would be the con- tinuation of the road leading out of Ruby into the Inter- jor. Another would be the construction of a road up the Taku Valley River to the Canadian boundary. Another would be the construction of the road from the inside passage tide water up the Unuk River to the Janadian boundary. In fact, there are roads needed in all four Divisions. If we get a set-up that would cooperate in public works, the size of the project would be no deter- rent at all. Roads bring people making the country larger and Alaska needs population more than any one thing. A program of this sort would make relief work un- necessary. ¥ 1 believe that the Legislature should prepare one or more memorials setting forth to Congress an extensive program, and the reasons therefor, of development. The Federal Government should contribute to all of our projects. Most of our resources are Federal property. The Federal Government has locked up our timber, coal, laska has a num- oil and other resources to which the people of other 'I‘er-| ritories in their day could obtain title and use for develop- ing industries that brought population and capital. The development of these resources in the other Territories resulted in rapidly increased population and the resources and improvements were available for taxation. Under the circumstances the Federal Government should consider itself Alaska’s largest taxpayer. The development of our resources develops Federal owned property. SOCIAL SECURITY LEGISLATION This Legislature has many important problems con-| fronting it, of which none is more important than the question of amending Alaska’s present social and publice welfare laws so that they will conform with the require- ments of the Federal Social Security Act. In my message to the 1935 Legislature, I stated that! the Federal Government was planning, as soon as condi- tions permitted, to retire in a large degree from caring for, either directly or by work relief, the needy and unem- ployed, leaving this problem to the State or Territorial | governments. This policy has now been definitely established. The present administration has, through the Social Security Act, enacted legislation that in substance states that the responsibility of caring for the aged needy people and indigent children, and planning against the hazards of unemployment is a local one. The Federal Government recognizes that the cost of carrying out such a program will mean an added financial burden to the local governments. Appreciating that the States and Territories would find it difficult to finance such a program, they have provided in the Social Security 'Act a plan for Federal financial aid to those States, and only those States, that pass necessary legislation for their ‘needy and unemployed. Briefly, this plan is to grant money from the ¥ederal Treasury to aid the States to 'care for their needy people and provide against unemploy- ment. The amount of money granted to any State is !dependent upon the amount of money expended by the | State. | There are three phases of the Social Security Act that should be of interest to the residents of Alaska, and I recommend them to you for your consideration: Grants to States for Old-Age Assistance. Grants to States for Aid to Dependent Children. Grants to States for the purpose of as- sisting the States in the Administration of their unemployment Compensation i Laws. i The Territory of Alaska was the first political sub- division of the United States Government to provide aid for its needy aged. This law in an amended form is still in effect in Alaska. The Territory also has a law that provides for the care of indigent children. These laws in their present forms do not meet the requirements of the Social Security Act. The Territory of Alaska is not quali- fied to and will not receive any financial aid from t Federal Government that would assist it in providing aid law, in the Governor. If we amend our laws as outlined above, it will mean an increase in administrative work. 1 therefore, recommend the creation of a Department of Public Welfare that will be charged with administering these laws ‘his can be done without any increase in cost to the Territorial Government, as funds are available under the Social Security Act to pay administrative costs lof administering approved State and Territorial old-age as: > laws. I recognize the fact that, if our present laws are|spread interest in the opportuniti > for|tation of our mineral resources has become manifest. changed, in order that Alaska might become eligil Federal 1, it will be necessary for us to increase our appro tion for aid to the aged needy and indigent Iren. Just how much of an increase will be necessary not prepared to state, as statistical information on tion is not available at this time; yet I am con- that you will be able to estimate our needs and provide revenue sufficient to meet those needs. |to be gained by amending our present old-age as and indigent children laws far outweigh the increa | to the Territory. The Territory of Alaska does not have an unemploy- ment compensation law. Economists almost universally |agree that depressions are inevitable but that the lof depressions can be lessened by providing an unemploy- | ment insurance plan which will, in good times, establish a fund to care for persons who, in depression times, be- | come unemployed and in need of cash subsistence. An unemployment compensation law has both humanitarian and an economic aspect. most inexpensive and effective methods of results of depression. It undertakes to chasing power by carrying over buying power fro of good times to those of declining prosperity. definitely help the individual workman at all times wh he is out of work for an extended period. The Federal Government has in the past four years felt very decidedly the absence of any planning in years passed and consequently has paid, and paid dearly, for relief for some persons who, if an unemployment insurance plan had been provided for them, would not have been required to humble themselves and ask the Government | for cash subsistence or relief work. These persons would have earned benefits under a law which would have helped er careful study, I am convinced that the by wefits [ of M t. | a| It is one of the and protection should be afforded by the Territory, not alleviating the only to those who are now engaged in productive mining, level off pur- but especially to those prospective operators who are m those (actively prosecuting or who contemplate undertaking ex- 1t will plorutory and development work; to prospective investors en|in such enterprises; and to prospectors who are individ- | 1 0 LEGISLATURE has become increasingly evident during the past biennium. The powerful impetus to mining given by the in- creased price of gold has resulted in a notable expansion of mining operations in each of the Divisions of the Terri- tory, which has been attended by greatly improved busi- ness conditions and which has been a large factor in reducing unemployment. Production has increased; dormant enterprises have been awakened to new life; and an intensified and wide- 1fforded in the exploi- Improvement in transportation facilities including those afforded by airplane operators, and the recent intro- duction of new types of mining equipment and improved methods of mining operation have also contributed largely to the prosperity that now obtains in our mining industry. As Mr. B. D. Stewart, our splendidly qualified Director ines, recently said: “The intensified activity that now prevails in produc- tive operations, however, and the improved methods and facilities that are being utilized for the rapid development and quick extraction of the valuable contents of known shock | deposits requires careful consideration of the steps that should be favorable future for the industry. 1 .“Enlurgo(l production from known mineral deposits inevitably means their more rapid exhaustion. “Therefore, all reasonable encouragement, assistance taken to insure a ually engaged in the task of attempting to uncover for us our hidden mineral wealth.” To that end it is recommended that the Legislature provided the Territorial Department of Mines for use dur- ing the ensuing biennium adequate funds to enable that agency to undertake measures of maximum benefit to the mining industry. Such measures would include the fol- lowing: 1. A continuing survey through field examinations 'aid is available under a law enacted by the United States fbyt qutalifiwl engineers of mineral deposits and of current i GO £ & e . jactivities in prospecting development and productive min- Under the Social Security Act a Federal tax is IYE‘_“Ed\ing operations thguughgut the %erritory; agd of rendering on all employers of eight or more employees in the United technical assistance in the field to prospectors and small States. This Federal tax is in effect and payable to the|operators. Federal Government whether or not the Territory passes 2. Dissemination by means of printed reports, cor- an unemployment compensation law. However, if and respondence and personal conferences of up-to,-dnte when a Territorial law is enacted, any employer subject authentic information relating to our mineral resources | to the tax levied under Title 1X of the Social Sgcurlty]including reports on progress in their discovery and devel- Act will receive credit, up to 90 per cent of this Pederal!(,pmem; favorable localities for prospecting, and develop- tax, for any tax paid to the Territory of Alaska under ment and operation as revealed by field examinations; and lan Alaska unemployment compensation law. It can be! gyitable methods to be employed in the search for and | seen that unless a Territorial law is enacted certain em-|development and operation of mining properties under I ployers in Alaska will be subject to these Federal taxes, the conditions that are peculiar to Alaska b‘ut A}usku employers and employees will receive no bene- | 3. Providing a more adequate servi(.:e in the inspec- {fits from them. Under a properly enacted Territorial |tion of mines and in the protection of the lives and health {law employees working for employers subject to the law of miners through study of the hazards attendant upon will earn unemployment benefits that will provide for them mining operations and their possible elimination or control. during an unemployment period. 3 | In order that such measures may be properly and In this connection may I call to your attention the fully carried out it is necessary that additional qualified y of enacting proper legislation to qualify the Ter- | engineers be provided in the Department of Mines. to receive Federal financial aid in establishing a! There has been a growing demand, especially in Such | Southeastern Alaska, for an extension of the important’ public service of identifying mineral specimens and assay- them over the period of unemployment. ritor) ystem of public employment offices in Alaska? is making grants in the amount of 45% of the total cost for the increased number of needy persons. of projects and loans in the amount of 55% of the cost! In the past our present laws have proved to be ade- of the project with a preference given to applications for quate. The depression has, however, created a condition grants only. The Administration gives preference to grant that requires the Territorial Government to render finan- projects only as they favor projects on which the Grantee cial aid to more people than heretofore; and, if these people I ‘willing and able to furnish its portion of the cost are to be properly cared for, it is my opinion that we will thereof in the amount of 557 . need the Federal financial aid that is provided for in the It is my opinion that Alaska could profit considerably Social Security Act. by taking advantage of Federal grants on various Terri-' I desire to stress that under the Social Security Act torial projects. In the past the Territory has appropriated the Federal Government does not set up an administrative funds for its portion of the cost of the Pioneers’ Home body to pay pensions to the needy aged or care for the at Sitka, and such procedure could be followed in the indigent children. The Territory of Alaska still has the future on other projects. If it is your opinion that the responsibility of determining who is eligible for aid under Territorial Treasury cannot spare cash for its portion of the Territorial law and to what extent these people are the cost, it might provide funds for its portion of needy. If our present laws are amended so as to include such cost by applying to Congress for permission to issue the provisions of the Social Security Act, the only func- bonds backed by the Territory, which donds would cover tion the Federal Government will perform is to aid in 559 of the cost of such projects as might be instigated. the financing of the program. The Public Works Administration has been lending money | The Alaska old-age law is administered by the Board on such projects at 47 interest, and it is my opinion that of Trustees of the Alaska Pioneers’ Home. The care of ““Territorial bonds could be sold to the public at the same the indigent children of Alaska is vested, under our present Government, June 6, 1933, that provides for the establish- I ment of a national employment system and for cooperation with the States in the promotion of such a system. I mention this now inasmuch as a system of public employ- ment offices is necessary for the proper administration of any unemployment compensation law. land samples sent from the First Division. ing ore samples for prospectors and others. Such a service is now readily available at the University of Alaska to residents of the interior and northern sections of the Territory. Serious delays are entailed, however, in trans- mitting and in receiving returns on analysis of specimens It is there- For the following reasons I believe such an unemploy-!fore, recommended that a Territorial assay office be ment compensation law should be considered and enacted established and maintained at a central location in South- by this Legislature: 1 declining prosperity. eastern Alaska to be operated under the direction of the It will aid labor as well as industry in times of Department of Mines. It is estimated that an appropriation in the sum of The Territory of Alaska will, without increasing $70,000 or $75,000 for the biennium will be required to the present tax burden of employers subject to the Federal provide the various aids to the mining industry that have tax levied under the Federal Social Security Act, build up been outlined, and it is recommended that that sum be a reserve fund that will be of aid to employees who have appropriated for that purpose. earned benefits in the employment of these employers. 3. That this program can be inaugurated and carried out without any cost to the Territory of Alaska other than the small appropriation necessary to establish a sys- tem of public employment offices. The Social Security Act provides that the Federal Government will reimburse the Territory for all expenses incurred in the proper administration of an approved Alaska unemployment com- pensation law. It is my hope and judgment that the above outlined legislation will be studied and enacted, for I believe sin- cerely, as I feel you do, in the principle expounded by our President in one of his recent messages to Congress: “That among the many objectives of this administration, 1 place ;he security of men, women, and children of the Nation irst.” | It is generally recognized that the work of the pros- pector lies at the foundation of the establisment and growth of a prosperous mining industry. During recent years it has become increasingly difficult to secure from private sources the grubstakes necessary to maintain in the field an adequate force of prospectors in the Territory. Public assistance of some type appears to be necessary in order to correct this serious situation. It is, therefore, recommended that the Legislature give careful study to the advisability of resuming in some form direct assist- ance to prospectors. The suggestion is offered that any funds that may be provided for that purpose might best be administered by the Department of Mines acting with the advice and under the control of a committee of citizens composed of one member of each judicial Division. The following excerpts from a letter written to the z In his first inaugural address, President Roosevelt Governor by George Hellerich, one of our well known said that one of the principal threats to tranquillity in mining engineers and a former member of the Territorial the United States was the fear of fear. the necessity to lay this particular fear. One of the prin- cipal purposes of the National Social Security Act is to lay the fear of fear. Fear is always a menace. Fear of future security is a de*~rrent complex in the acts of everyone, rich or poor. The rich man often seeks to increase his profits not so much because he needs the profits, as he fears that something may cause him to lose his wealth and he may again face poverty. Fear is a brake on activities of the young and those who are not well off. They are fearful always that something may cause them to lose employment. The fear of poverty in old age, or * being forced out of work, burdens the average person and hinders him from making the best use of his talents. I regard the elimination of fear as one of the most desirable features of the National Social Security Act. If one can have the assurance that he will have an income suffi- ciently large to supply his needs, he will be free to do his best and to enjoy freedom. In preparing legislation for cooperation with the Na-' tional Security Act, I suggest that the Legislature provide a Territorial Welfare Board for the administration Social Security and the various Territorial welfare ac- tivities., We have indigent funds, old-age allowances, mother’s pensions, children’s guardians and Pioneers’ Home that ought to be considered in connection with the Social Security legislation, I am prepared to urge that you do not put the Pioneers’ Home in this set-up because it is strictly a Territorial feature that is not contemplated by the National Social Security Act. the Legislature to consider. MINING LEGISLATION - ‘The paramount influence of the mining industry af- fecting the welfare and prosperity of the people of Alaska of | I will leave that for, | | He emphasized Legislature, are worthy of being set down here: “I think that we are in agreement that the Territory should have some sort of an organiza- tion to act as a clearing house where information concerning the mining resources of Alaska can be obtained. In the past this function has been taken care of after a fashion by the Federal Bureau of Mines and the Geological Survey. This source of information has been shut off for the past several years due to lack of appropriations. “I believe it is therefore up to the Legislature to appropriate sufficient funds to take care of an efficient organization. “To my knowledge the present inadequately financed Bureau of Mines has been directly re- sponsible for the present mining activity in the Good News Bay section. It has also done good work in the Ketchikan area, which several Ket- chikan people assure me will result in considerable mining activity in that section. “The functions of a well organized Bureau of Mines are as follows: “1. Point out likely districts for mining development. “2, Assist prospectors and small in technical matters. “3. Compile information dn mining methods in use in various districts. “4, Enforcement of safety regulations. “5. Enforcement of camp sanitary regula- miners 5 tions. “6. Bring to the attention of the public fraudulent mining promotions. SR (Continued on Page Seven)