For more than 24 years the insane from Alaska have been cared for in Morningside Hospital near Portland, Oreg. The sanitarium contracts to care for the patients for $52 per month. For many years efforts have been made to eliminate the contract system. The Territorial legislature has memorialized Congress on several occasions, and two years ago the Secretary of the Interior submitted a report on the subject, but as yet no action has been taken by Congress. It is hoped that this matter will receive the attention of Congress this year and that arrangements will be made to provide a Government institution to care for the unfortunates who are committed from Alaska.

The development of the natural resources of the Territory depends very largely on the progress that is made in the construction of roads and trails. This is especially true in the regions which are not easily accessible from navigable waters. The Territory cooperates with the Federal Government in this important work. There are two Federal agencies engaged in road and trail construction; the Alaska Road Commission, War Department, is responsible for the construction of roads and trails outside of the national forests, and the Bureau of Public Roads, Department of Agriculture, is charged with similar work within forest reserves.

The funds appropriated by the Territory for roads and trails are allotted to the several projects by the Territorial Road Board and expended under cooperative agreements with the Federal agencies. Because it is possible to use the Federal organizations in the construction of the projects, the Territory is not required to expend a large amount of its funds for overhead and there is no duplication of organization.

The Alaska Road Commission was constituted in 1905 and is composed of three officers of the United States Army reporting to the War Department through the Chief of Engineers. The headquarters of this organization is in Juneau. Since it began operations the sum of $13,282,007.60 has been expended for all construction and maintenance on roads and trails in the Territory. Of this amount $8,964,412.68 was appropriated by Congress, $3,293,957.15 was derived from the Alaska fund, and $1,023,637.77 was allotted from Territorial appropriations. At the close of June 30, 1928, the Alaska Road Commission reported 10,754 miles of roads and trails under their supervision. These consisted of 1,623 miles of wagon road, 1,375 miles of sled road, 7,044 miles of trails, and 712 miles of flagged trails. During the fiscal year 6714 miles of wagon road, 17111⁄2 miles of trails, 96 miles of sled road, 20 airplane landing fields, and 32 shelter cabins were constructed.

The Bureau of Public Roads, Department of Agriculture, have functioned in Alaska since 1917. From 1917 to 1920 the work was administered on a cooperative basis with the Alaska Road Commission. July 1, 1920, a branch office of the Bureau of Public Roads was established and March 1, 1927, district 11 was created, embracing Alaska and with headquarters in Juneau. Since 1917 Federal funds available for expenditure by the Bureau of Public Roads aggregate $3,565,700 and contributions by the Territory amount to $275,700, making a total of $3,841,400; 173.1 miles of highway have been constructed and 39.5 miles are under construction and will be completed this year. Funds have been allocated for reconnaisance surveys and

preliminary trail construction, which will enable the bureau to extend this work to the more promising mineral districts. This is of great value to the Territory and will be of material assistance in prospecting some of the unknown areas.

The mineral production of Alaska since 1880 aggregates approximately $585,374,000, and of this sum about 62 per cent has been derived from the gold mines. The placer mines have yielded more than the lodes. The production of minerals increased annually until 1916, when $48,386,580 was reported; since that time the output has declined until in 1927, when $14,404,000 was produced. The decline may be accounted for in part by the exhaustion of the known high-grade placer ground and the lower selling price of the mineral products. About three years ago plans were made for the installation of modern dredges in several of the better-known mining districts, and the preliminary work of digging ditches, building dredges, and preparing the ground for mining is about completed. There is every reason to believe that the production of gold from these sources will increase the annual production very materially, and it is likely that the low point has been reached in the mineral output in the Territory.

The mineral production of the Territory for 1927 is valued at $14,404,000, as compared with $17,664,800 in 1926. The production of gold decreased from $6,707,000 in 1926 to $5,927,000 in 1927, while the value of the copper mined decreased from $9,489,000 in 1926 to $7,250,000 in 1927. The gold derived from the lodes increased slightly over that of the preceding year; therefore the decline in the gold production is due to the reduced output from the placer mines.

In all of the placer mining districts adverse weather conditions shortened the working season and in many districts there was a shortage of water for mining operations. The principal placer mining districts are in the vicinity of Fairbanks, fourth judicial division, and Nome on the Seward Peninsula. The Fairbanks Exploration Co. has made extensive plans for dredging in the vicinity of Fairbanks, but they have not yet reached the production stage, although at least three dredges will be ready for operation in the fall of 1928. In Nome the dredging operations were hampered by a shortage of water. About 58 per cent of the placer gold mined in 1927 was recovered by dredges.

Gold-bearing veins are widely distributed throughout Alaska, but the producing mines are situated in three principal districts, namely, southeastern Alaska, Fairbanks, and the Willow Creek region near the Alaska Railroad a short distance north of Anchorage. More than 90 per cent of the total lode gold production comes from southeastern Alaska. The largest mine in this region is the property of the Alaska Juneau Gold Mining Co. near Juneau. The mines on Chichagof Island and those in the vicinity of Hyder continued operations during the year. In the Willow Creek district three mines. produced the greater part of the gold, while in the Fairbanks district six properties were working during a part of the season. Several small gold lode properties were operated in other localities. Among the better developed may be mentioned the Nuka Bay region on the Kenai Peninsula, Crow Creek on Turnagain Arm, Prince William Sound and Nixon Fork on the Kuskokwim.

The copper mines of the Territory produced 645,000 tons of ore, which yielded 55,343,000 pounds of copper valued at $7,250,000.

In 1926, 67,778,000 pounds of copper, valued at $9,489,000, were produced, showing that there was a decrease in tonnage and value of the output in 1927. The principal sources of copper are the mines in the Chitina Valley and on Latouche Island.

Lead and silver are recovered chiefly as by-products in the mining of gold and copper; 627,800 ounces of silver, valued at $356,000, and 2,016,000 pounds of lead, valued at $127,000, were produced from these sources.

Tin is found in veins and the mineralized country rock near Cape York, on the Seward Peninsula, and recovered as a by-product in placer operations in the Hot Springs district in the Yukon Valley. The value of the output is estimated to be about $34,400.

For the first time in many years the production of coal from the mines in the Territory greatly exceeded the importation of this commodity from foreign sources. The total domestic consumption was 166,000 tons, and of this amount 104,300 tons, valued at $548,000, were mined in Alaska. Practically all of the coal mined in the Territory came from three mines, two in the Matanuska Valley and one near Healy on the Alaska Railroad, in the Nenana River Basin. There has been a noticeable improvement in the equipment and operation of the mines, and the result is a better and less costly product.

The Katalla oil field in the Bering River district continued to be the only producing field in Alaska. Here a number of shallow wells produce a small amount of paraffin base oil. This oil is refined locally and the various distillates are disposed of in Cordova and Prince William Sound. Although there are exceptionally good indications of oil in many places in the Territory, but little effort was made to search for new fields during the year. Drilling operations were in progress in two localities. One well in the Yakataga field was drilled to a depth of 2,005 feet before the hole was abandoned. Another well was started in the Matanuska coal field, but operations were suspended during the winter months to be resumed in the summer of 1928.

Southeastern Alaska contains extensive deposits of excellent marble, but for some years the production of this material has been neglected. The deposits are favorably. situated near tidewater on good harbors and afford an excellent opportunity for producing marble at a minimum expense.

For many years efforts have been made to stimulate the mining industry in Alaska. In this work the Federal Government and the Territory have cooperated. The Federal Government, through the Geological Survey, has surveyed and mapped large areas believed to contain valuable mineral deposits. The Alaska Road Commission, War Department, and the Bureau of Public Roads, Department of Agriculture, have assisted in building trails and roads to many of the more promising districts. In 1927 the Territorial legislature appropriated funds to reimburse bona fide prospectors and miners for transportation charges incurred on prospecting trips. Although it is impossible to estimate the actual value of the results of this plan, the reports show that a large number of prospectors have taken advantage of the opportunity to go into the field in search for minerals. These men are required to report the results of their

trips, and when these reports are received it will be possible to determine whether or not the plan is practicable.

The Federal Bureau of Mines maintains a fully equipped minerescue car on the Alaska Railroad and throughout the year a representative of the bureau visits the mining camps in the Territory and gives instructions to miners and subordinate mine officials in mine-safety service and mine-rescue methods. In cooperation with the Alaska Agricultural College and School of Mines, the Bureau of Mines conducts a laboratory in the college where prospectors and miners may have samples assayed at cost and qualitative determinations made free of charge.

The report of the general manager of the Alaska Railroad shows that the deficit, which last year for the first time in the history of the project was less than $1,000,000, was reduced to $840,890. The total revenues derived from the rail and water lines increased, and for the first time the river transportation service shows a profit. Compared with last year, the revenue from all sources increased 8.3 per cent, while the expenses for maintenance and operation increased 3.3 per cent. The operating ratio was reduced from 164.83 per cent last year to 159.32 per cent for the year which closed June 30, 1928. The total deficit for all expenditures, including charges to capital account, decreased 9.4 per cent. The total commercial tonnage was 96,977 tons, an increase of 14,561 tons, or 17.7 per cent more than last year, while the total tonnage, including railroad freight, increased 6.6 per cent. Fifty-one thousand five hundred and eighty-seven revenue passengers were carried as compared with 53,609 last year, a decrease of 3.8 per cent. The transportation revenue from the rail lines amounted to $1,151,723.86, which is 7.4 per cent greater than that of last year. The increase in tonnage was due chiefly to the larger shipments of mining machinery and supplies for mining operations; however, there was an appreciable increase in the volume of many other commodities.

The boat service on the Yukon and Tanana Rivers, operated in conjunction with the rail line from Seward to Nenana, was improved by increasing the equipment and extending the regular service to points on the lower Yukon.

The Territorial legislature in 1927 appropriated $460,000 for the biennium for public roads, bridges, trails, ferries, and landing fields for airplanes. This is about twice the amount usually appropriated, and it is not probable that succeeding allotments will equal this

sum.

Aviation has progressed in the Territory far beyond the expectations of its most optimistic advocates. Under the Territorial laws not to exceed 30 per cent of the Territorial road funds may be expended for the construction of aviation fields, and under this authorization 58 landing fields have been constructed. These facilities make it possible to give airplane transportation to most of the more important places in the interior of Alaska. Many localities heretofore inaccessible are now within easy reach of the larger centers. Prospectors and their outfits are transported to outlying districts without difficulty and in very short time. In one instance 15 prospectors were taken to a new district by one of the local airplanes.

The Territorial legislature provided a subsidy to insure winter airplane mail service to Nome and intermediate points from Nenana. This service was successful and later the Post Office Department authorized air mail service to several other districts.

Territorial subsidies were granted to aid water transportation on the Seward Peninsula. Under this aid routes were maintained from Nome to St. Michael via Solomon, Golovin, Unalakleet, and from Nome to Candle via Teller, Cape Prince of Wales, and Kotzebue. One other route was authorized, but was not operated because of restrictions in the law.

For the first time in the history of the Territory the transportation service in certain localities is ahead of the communication facilities. For example, Teller is only 90 miles from Nome, less than an hour by airplane, but before this community can avail itself of the modern methods of travel it is necessary to send a boat from Teller to Nome about one day's travel if the weather is good. Many other communities are similarly situated. The United States Signal Corps maintains an efficient system and renders excellent service within the limits of their equipment, but there is urgent need of some cheap method of communication between the smaller settlements and the wireless net of the Signal Corps. The officer in charge of the system has given this matter very careful study and understands the needs, but he is without sufficient funds to provide the necessary equipment. Additional funds should be provided for this necessary service. Commercial companies can not undertake it at present and the Radio Commission does not wish to give licenses to new stations in the territory served by the United States Signal Corps.

There are in Alaska four commercial airplane companies operating planes, three in Fairbanks and one in Anchorage. These concerns have nine planes, and new equipment has been ordered. A School for aviators has been opened in Fairbanks. Aviation has advanced to a point where it is very essential that the regulations of the Department of Commerce, which govern the qualifications of aviators and standards of equipment, should be enforced in the Territory. It is significant to note that every dollar invested in aviation. in Alaska has been subscribed in the Territory.

Laws and regulations pertaining to the game and fur-bearing animals are administered by the Alaska Game Commission, with headquarters in Juneau. The commission is composed of five members, one from each judicial division, and the executive officer, who is the representative of the Biological Survey. The members are appointed by the Secretary of Agriculture. All rules and regulations are adopted by the commission and submitted to the Secretary of Agriculture for approval and promulgation. It was to be expected that for a time after the commission began to function there would be minor difficulties to be adjusted, but most of the problems have been successfully solved. The Chief of the Biological Survey spent some time in the Territory, and his visit brought him in closer contact with the situation. In 1926 it was decided to permit the trapping of beaver in certain districts after a long period of closed seasons. Now it appears that so many of these animals were taken that it is necessary to again close the season in district No. 3. The revenues 13850-28- -2