that these additional charges will bear most heavily upon those vessels operating in the intercoastal general cargo trade and previously referred to here as best customers, and in competition with the transcontinental railroads. It does not bear heavily upon the tankers operated by the oil companies, neither upon certain especially constructed bulk-cargo carriers owned by important manufacturers.

The thought has been intimated in the hearings before the House committee that some of the steamship companies have been unfair in their attempt to pay the smallest possible dues (see column 2, p. 2174 Congressional Record). When I say that, I refer to the same reference as before as to a few weeks ago here in the House.

I must confess that it is at least unique to intimate impropriety in conforming strictly to the law which has been on the books for approximately 20 years, and while at the same time following established practices of other maritime nations.

The CHAIRMAN. You mean that other countries have been revising and remodeling their ships in order to reduce their tolls and Americans are following the same?

Mr. CALDWELL. Not exactly, Senator. I mean that we have remodeled our boats and our tonnages generally in conformity with maritime practice, and it is true that in this phraseology of the law we are attempting to take advantage of it.

The CHAIRMAN. You say in accordance with maritime practice; you mean these changes would have been made structural changes if it hadn't been for this toll?

Mr. CALDWELL. No; I was not referring to structural changes, I was referring to benefiting by the United States registry, which is as low as possible, the same as all other countries.

If the members of this committee believe that the realinement of these total charges will not seriously affect the interests of the company I represent, I respectfully state that they have the privilege of consulting Shipping Board files showing the financial returns over any period which they may wish.

I suggest for your consideration the perusal of the financial statements submitted by the intercoastal carriers in Shipping Board investigation docket 126. These figures were submitted October 2 and 3 of 1934. Congress has declared it as a policy and I think that no one who recalls shipping conditions, say from 1915 to 1919, can question the wisdom of such policy, to preserve the American merchant marine.

One of the very important conditions of the American merchant marine is the United States intercoastal trade and if a step is taken that will place upon this trade such burdens as will preclude a reasonable financial return, the result is inevitable. The intercoastal trade. is faced not alone with this threat of increased costs but also, and this largely due to the activities of our transcontinental railroad friends, with the repeal of the fourth section of the interstate act, the long-and-short-haul clause, and you are all aware of our other increased labor and other costs.

There is only one thing that I appeal before you, that you permit us to continue to cut our goods by the pattern that was set up for us years ago and to which the trade has adjusted itself.

Senator FLETCHER. Mr. Caldwell, do you take the position, as I understand it, that there is nothing in this law that absolutely makes

A

certain that your tolls will be increased but you think there is a possibility of it?

Mr. CALDWELL. I take the position under this new law that I can't see how they will be otherwise than increased. They will be, yes, sir, with our company approximately $290,000 to $300,000 a year. If you will examine some of those financial statements that we submitted, you will just find where we would land on that basis.

Senator FLETCHER. Mr. Chairman, Mr. Luckenbach says in this letter [reading]:

We wish to state that the present system of measuring vessels for assessing Panama Canal tolls has been in effect ever since the Canal was opened, a period of more than 20 years. The present system is fair and simple of application and should not, after this great length of time, be disturbed.

The American shipping companies, like ours, have paid many millions of dollars into the Treasury for the privilege of using the Canal and it constitutes one of the largest items of costs in our operations. The burden is severe enough and to add further to it by this kind of legislation, in the face of constantly mounting ships' operating outlays, can only spell ruin.

It is a sad commentary on the oft-expressed declaration of the Congress that the American merchant marine must be built up and fostered to the highest degree of efficiency and strength, but legislation of this kind will go far toward nullifying that noble purpose of the Government in respect to the merchant marine.

May we trust that the foregoing will have your earnest consideration and we cannot too strongly urge you to vote against the bill because its defeat will be an assurance to American shipping that the Government is sincere in its desire to help our merchant marine.

The CHAIRMAN. Do you carry passengers?

Mr. CALDWELL. Practically no; we carry a maximum on one, steamer of 16 passengers.

The CHAIRMAN. You have no mail contract?

Mr. CALDWELL. No mail contract or anything of that kind.

The CHAIRMAN. The intercoastal is applicable to American vessels? Mr. CALDWELL. To all lines, to American vessels; yes, sir. (The chairman swore the witness.)

STATEMENT OF D. S. MORRISON, NEW YORK CITY, VICE PRESIDENT, WILLIAMS STEAMSHIP CORPORATION AND ASSISTANT CHAIRMAN, EXECUTIVE COMMITTEE AMERICAN-HAWAIIAN STEAMSHIP CO.

Mr. MORRISON. I am representing here the American-Hawaiian Steamship Co. and its subsidiary, the Williams Steamship Corporation. We are probably the largest customers of the Panama Canal. The CHAIRMAN. Your main concern owns how many ships?

Mr. MORRISON. All together we have 28 cargo ships. We own no passenger ships.

The CHAIRMAN. When you say "all together" do you include the Williams Co. too?

Mr. MORRISON. Yes, the Williams Co. owns 6 and the AmericanHawaiian, 22. They are all engaged in the United States intercoastal trade between the Atlantic and Pacific coast of the United States. In the past 5 years we have averaged over $1,200,000 in tolls. We have been a large payer of Canal tolls since the opening of the Canal. In 1932 and 1933 we paid almost 6 percent of the total tolls paid at the Canal during those years, I think between 51⁄2 and 6 percent. In

1934 there was a dropping off in our tolls due to the Pacific coast strike, and the number of voyages was curtailed.

The CHAIRMAN. What year?

Mr. MORRISON. 1934. We paid a little less than a million dollars last year, in the neighborhood of $990,000.

That shows that we have a very real interest in this legislation and I want very briefly to show what the effect of this bill will be on our company and then on shipping in general.

In our particular case the maximum tolls that could be assessed under the proposed bill would be about $276,000 a year more than the present maximum.

Senator DUFFY. That is on the dollar basis.

Mr. MORRISON. That is on the dollar basis, that is the maximum under the proposed law and I am comparing that with the maximum under the present law.

The CHAIRMAN. Now take the minimum under this pending bill. Mr. MORRISON. I haven't got the figures but I can give you the 90 cent. Under the 90-cent rate there would be an increase of $140,000 a year, or about 13 percent. The percentage increase at the maximum rate would be 25 percent.

The CHAIRMAN. Sixty percent would be a reduction.

Mr. MORRISON. There would be a reduction under the maximum authorized under the present law. Whether there would be a reduction under the minimum or not, I don't know.

It seems to me there has been some confusion today as to just what the effect of this legislation would be in the matter of increasing and reducing tolls. I don't think there has been any very clear-cut statement as to the classes of ships who would have to pay more under this bill than those that would pay less.

The CHAIRMAN. I wish you would state that.

Mr. MORRISON. I have a statement here based on the data supplied by the Panama Canal that gives, I think, a summary of that situation. This is divided into classes of ships. The first class are passenger ships. At the maximum rate of $1 and 60 cents.

The CHAIRMAN. $1.60.

Mr. MORRISON. That is 60 cents in ballast and $1 laden, the United States passenger ships would pay 35 percent more than they are now paying, foreign passenger ships would pay 23 percent more than they are now paying. On all passenger ships there would be an increase of 27 percent.

The CHAIRMAN. That is largely because at present the passenger space is largely exempt from tolls altogether.

Mr. MORRISON. We have no passenger ships, but I understand it is exempted both on foreign as well as United States ships.

The CHAIRMAN. Their passenger space is exempt, a great deal of it, they don't pay anything at all.

Mr. MORRISON. I wouldn't say that.

Senator DUFFY. The significant thing in his figures is that the United States passenger ships would pay 35 percent more and the foreign 23 percent more.

Mr. MORRISON. That is correct.

Senator DUFFY. Do you know why that is true?

Mr. MORRISON. There is that difference between the United States net tonnage and the Panama Canal net tonnages on those two classes that accounts for that difference.

The CHAIRMAN. A good many of the foreign ships have gone farther and faster in making these open spaces or open holes so as to reduce the tolls..

Mr. MORRISON. I can't say what the foreign passenger ships have done, but I think you can rely on this data.

The CHAIRMAN. That may be true, but it does appear that the foreign ships have been even more active than our own in reducing the toll charges by remodeling the ships.

Mr. MORRISON. That is not borne out by these figures because it would seem that the United States ships would be increased very much more in proportion than the foreign ships.

The CHAIRMAN. They haven't made as many changes in their structure.

Senator DUFFY. I don't see how you come to that conclusion, Senator. It would seem to me that if they had done that and then would lose the benefit now by it, they would have a bigger increase than the United States.

The CHAIRMAN. Let's have an explanation of why that would happen.

Mr. MORRISON. The American passenger ships that use the Canal on the whole have larger passenger accommodations, greater passenger accommodations and they are on the whole larger ships, at least so far as passenger accommodations go.

The CHAIRMAN. That is true under either system, so unless there is some other reason that wouldn't account for it.

Mr. MORRISON. On the whole they are very much newer ships, too. The CHAIRMAN. The American?,

Mr. MORRISON. Yes. He thought we had a lot of dilapidated ships from what they said today. I don't see that the age of the ship would make any difference as to the charge that would be imposed.

Senator DUFFY. I can see that if the ships were built and they knew that in recent years since this thing has gone into effect they might well design them so as to try to get the lowest rate that they could.

Mr. PETERSEN. I might say there the Senator is right. The foreign ships are modern vessels, built for the purpose of meeting these conditions, and our ships are not. That is why you find a lower rate for them, they have taken advantage of the structural changes to get a lower rate.

The CHAIRMAN. That was the point I was making a while ago and they said that wasn't the reason. They already existed under prevailing toll charges and that would continue under the new toll charges and that wouldn't explain any variation.

Mr. SILL. I think the explanation is on that chart now. It is because the American ships have more of these exempted passenger cabins than the foreigners have. The American ships have more exempted cabins.

The CHAIRMAN. They would lose that.

Mr. SILL. Yes; and therefore would lose more.

Senator DUFFY. Do you agree, then, that these figures are perhaps correct, that the United States passenger ships would pay a 35 percent increase while the foreigners only pay 23?

Mr. SILL. The figures are furnished by the Canal; I think they must be correct.

Mr. MORRISON. I wanted to bring that out particularly because the inference was made this morning that this proposed bill would increase tolls on foreign ships to a larger extent than it would on United States ships and the figures I have here don't bear that out.

The CHAIRMAN. I could see how that would be true if both lost exemptions and the American ships have larger exemptions than the foreign. Of course, the one that lost the larger exemption would incur the heavier charges.

Mr. MORRISON. The same condition holds true if you apply the 90-cent rate. Under the 90-cent rate the increase on the United States passenger ships would be about 22 percent, on foreign approximately 10 percent, and the average for all passenger ships would be about 15 percent.

The CHAIRMAN. If they lost their privileges, the ones that have the larger privileges would lose the most. What we are trying to get is some sort of equality of rights and equities, and do away with these privileges.

Mr. MORRISON. If the same rules apply equally to all it seems to me there is no substantial inequity. I am bringing this out just to make clear what the result of this bill is going to be if there is no change in the Panama rules, where the increases in tolls will come and where the reduction in tolls will come, and I think the foreign ship and the American ship today enjoy the same rights.

The CHAIRMAN. One gentlemen stated this afternoon that 93 ships had put in a cabin on their upper decks, their top decks, in order to escape these tolls. Now, of course, if this bill passes they would lose that exemption.

Mr. MORRISON. The next class of ship is the shelter-deck freighters which are usually three-deck freighters. As was stated this morning, the more superstructure you have the larger the increase in tolls that would be imposed under this bill. The shelter-deck freighters, United States, would pay 19 percent more at the dollar rate; the foreign shelter-deck freighters would pay 13 percent more at the dollar rate. At the 90-cent rate the United States would pay 7 percent more, the foreign 2 percent more.

The CHAIRMAN. Why is that?

Mr. MORRISON. Apparently the exempted spaces in the United States ships are a larger part of their total space than the foreign. That is the only way I can explain it.

Other dry cargo ships, that is, all other freighters other than those suited to the carrying of liquid cargoes, usually freighters of two or less decks; United States under the dollar rate, increase would be 8 percent; foreign ships under the dollar rate, increase would be 0:2 of 1 percent.

At the 90-cent rate, United States ships would have a reduction of 3 percent, and the foreign ships would have a reduction of 10 percent. Senator DUFFY. A reduction?

Mr. MORRISON. A reduction. That 10 percent, by the way, would amount to about $306,000 per year for foreign ships.

The last class of ships I have here are the oil tankers. The oil tankers would have a reduction of 7 percent at the dollar rate, United States tankers; and the foreign tankers would have a reduction at the dollar rate of 10 percent.