Mr. MORRISON. Oh, yes; the whole weight-stores and fuel and cargo.

The CHAIRMAN. I don't see that it makes any difference where you put it.

Mr. MORRISON. That is my point. It makes no difference where you put it. These shelter-deck spaces and other exempted spaces are available for the storage of cargo after the openings are cut.

The CHAIRMAN. It looks to me like you are making the point that you put a lot of cargo on your deck and, therefore, you don't have it below, and, therefore, you oughtn't to be charged for it.

Mr. MORRISON. No; I mean that the total weight which that ship may safely carry is substantially reduced because after the openings are cut they don't permit you to sink it down into the water so far as it could have been sunk before; in other words, your load-line is changed.

The CHAIRMAN. But your load is above instead of below.

Mr. MORRISON. No; the theory of it is that those spaces are not watertight and do not add to the buoyancy of the ship and it is not safe to load her to the same point as before the openings were cut.

The CHAIRMAN. That is the theory of it. It looks to me like a sort of fiction that you take advantage of for this very purpose of tolls, but as a matter of fact it doesn't affect the amount of weight that you carry.

Mr. MORRISON. Yes it does, Mr. Chairman.

May I go ahead with a statement of our own case? In our westbound trade, that is from the Atlantic coast to the Pacific coast, on the average we do not carry more than about 30 percent of the ship's deadweight capacity. Therefore, we do not need that deadweight capacity west-bound. Coming back from the coast, we don't use that deadweight all the time, we need it part of the time and part of the time we do not need it.

We feel that we should not be compelled to continue to pay tolls based on a capacity that we seldom use. If we are traveling with only 20 to 30 percent of our weight capacity occupied west-bound and we don't use all of our weight-carrying capacity east-bound, why shouldn't we be permitted to cut down our weight-carrying capacity: and pay a lesser toll? That is exactly what we have done. In certain cases where cargo is offered and the ship is loaded below the new marks the openings have been closed and the tolls have been paid at the higher rates. In other words, we have paid the tolls on the basis of the capacity she then has.

Mr. SILL. What Mr. Morrison says is correct, but his competitors in the same trade do not do that, and they come to the Canal with ships loaded down to the old marks even though their assigned draft has been reduced. Ships in the intercoastal trade are exempt from the load-line law, in the first place. The Panama Canal is exempt from the provisions of the law on all ships, so we do not impose the load-line law at the Panama Canal; therefore to protect the insurance on Mr. Morrison's ships he does not load them below the load line; competitors of his in the same trade do overload them and arrive at the Canal with the same draft they would have if the shelterdeck were closed.

Mr. MORRISON. In the foreign trade, such action would be unlawful and there is a bill now pending before Congress that would make it

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unlawful in the domestic trade to load those ships below the marks, and I believe that bill has been reported out of the House committee. The CHAIRMAN. In what trade are these boats engaged?

Mr. MORRISON. Almost entirely in the intercoastal trade, so possibly it might be legal for us to overload the ships and put them down to their old drafts or even below their old drafts. We don't feel that a prudent owner would do that.

The CHAIRMAN. Mr. Sill says that others do overload. I would want you to comment on that.

Mr. MORRISON. I don't know anything about that. I just wanted to emphasize this point, that there is a genuine reduction in the carrying capacity of these ships when these openings are made. I think perhaps a few illustrations should be given. Our steamship, the Mexican, deadweight carrying capacity before the openings were cut was 13,768 tons. Those are not cubic tons, those are actual weight tons of 2,240 pounds. Her present deadweight capacity is 11,800 tons, and on the average of the whole 18 ships which were converted at that time on which openings were cut, the average reduction in the deadweight-carrying capacity is in excess of 1,300 tons per ship, and that is in her deadweight-carrying capacity.

The CHAIRMAN. That is before cutting the holes?

Mr. MORRISON. Yes.

The CHAIRMAN. And you mean you carry that much less cargo on account of these holes or you would if you reached your load limit? Mr. MORRISON. Yes; if the ship were fully loaded with the openings closed she can carry 1,300-odd tons more than she can fully loaded with the openings open.

The CHAIRMAN. And you do whichever is required.

Mr. MORRISON. We do whichever is required.

There is a change in the draft of a little over 2 feet in those ships. We feel that the United States rules do afford a satisfactory basis for the assessment of the Panama Canal tolls, and they are the result of the maritime experience not only of our own Nation but of all other maritime nations, and their principal purpose and primary object is to afford a fair and equitable basis for the assessment of dues made against ships for the use of all publicly improved and publicly maintained waterways.

In addition to that they are accepted by private parties as a basis, and an equitable basis, otherwise they would not be so used, for the assessment of all kinds of charges entering into the operation of ships, such as drydock charges, wharfage, docking, and even in some ports pilotage.

The CHAIRMAN. Do foreign countries exempt passenger space from tolls?

Mr. MORRISON. As I said, we have no passenger ships and I would rather you directed those questions to some of the men who have passenger ships.

The CHAIRMAN. My point was that various countries had developed these various rules with the same objectives in mind. My understanding is that the Suez Canal rules imposed a toll on passenger space and that the Panama Canal rules did not, except in certain cases. Mr. MORRISON. The Panama Canal rules do, the United States rules do not. The passenger ships enjoy these exemptions in the

Panama Canal by reason of the application of the maximum rate to the United States rules.

The CHAIRMAN. That is what I meant.

Mr. MORRISON. As far as cargo ships such as our company operates are concerned, the United States rules are substantially the same as the rules of the other leading maritime nations.

The CHAIRMAN. You don't run any boats through the Suez Canal? Mr. MORRISON. We have an interest in a company that does operate trans-Pacific freighters, but they are not in the intercoastal trade. We don't run any through the Suez Canal. So far as cargo ships are concerned, there is a substantial unanimity between American rules and the rules of the other maritime nations and the same spaces that are exempted under American rules are exempted under practically all of the registry rules of the maritime nations.

The Suez Canal has been cited as an instance of a large canal, in fact the only other canal comparable in size with the Panama that does not use as a basis for assessement of tolls any of the national registry rules, but bases the assessment of tolls under rules which are similar in many respects to those drawn up by the Panama Canal administration and referred to as the "Panama Canal rules."

It has also been pointed out here today that the reason for that is that Suez is not a publicly owned waterway or canal; Suez is a privately owned waterway, and the principal object is to make just as much money for its stockholders as it can, and naturally these rules and the assessment of tolls thereunder have as their primary object charging all that the traffic will bear.

The CHAIRMAN. Do you know what percentage the British Government owns of the stock?

Mr. MORRISON. I have a record here. It isn't as current as it might be, but out of about 800,000 shares outstanding as of March 31, 1933, the British Government held about 350,000 shares or less than a 50-percent interest.

The CHAIRMAN. Does any other government own any shares?

Mr. MORRISON. This summary does not mention any other government. The British purchased the Egyptian shares in 1875.

The CHAIRMAN. You don't know whether any other government, the French Government or any other, owns any?

Mr. MORRISON. I don't believe they do. I think it would be mentioned here if they did.

I would just like to show the dividend record of recent years for these Suez Canal shares which were originally subscribed at a cost of 250 francs per share, that is, the original subscription was 500 francs per share but it was divided later into 2 shares so the subscription price for the present shares was 250 francs per share.

The CHAIRMAN. That is the old franc, which was 20 cents?

Mr. MORRISON. Or possibly closer to 30 cents on our present 59cent dollar.

The CHAIRMAN. You know what I mean.

Mr. MORRISON. The dividend record: 1929, 350 francs (these are gold francs too, Mr. Chairman); 1930, 545 francs and 67 centimes; 1931, 603 francs; 1932, 510 francs.

The CHAIRMAN. I don't know quite what that means.

Mr. MORRISON. These are annual dividends on the Suez Canal shares.

The CHAIRMAN. That much dividend per share?

Mr. MORRISON. Yes; per year; right. In the years that I have mentioned it was that.

The CHAIRMAN. What percentage would that be on the original investment?

Mr. MORRISON. Over 200 percent in each of those years. 1932, as I said, 510 francs. I don't have the total figure for 1933, but there was approximately an interim dividend of 187 francs and a later dividend of 292 francs, so presumably it was as profitable as the former years.

As of February 25 of this year I find that on the London Stock Exchange these Suez Canal shares were quoted at 230 pounds bid and 250 pounds asked, or substantially more, I should say roughly calculated, than $1,000 a share, so that not only are they paying in dividends very much more than 200 percent of the original investment but they are now selling at over $1,000 a share what originally cost about $50 a share.

There is no criticism, of course, of the Suez Canal. I am just citing that to show that the primary object of the Suez Canal is to charge all that the traffic can bear and to distribute to its owners the largest return on their investment that can properly be distributed. I don't think a system that is designed for that purpose should be used as a criterion of what this Government should charge its ships on a canal like the Panama Canal that is publicly built and publicly

maintained.

The CHAIRMAN. I think if Uncle Sam is going to play Santa Claus maybe there is some point in that.

Mr. MORRISON. The points that I had in mind referring to, Mr. Chairman, have already been discussed. I just want to emphasize again that it seems to me illogical to enact this legislation and then to have an investigation of what would constitute a fair set of rules.

The CHAIRMAN. With a view to the President's revising the rule on the basis of that report?

Mr. MORRISON. It seems to me, as Mr. McCarthy said, so aptly, you have got the cart before the horse.

The CHAIRMAN. You wouldn't have either cart or horse because it would all depend on future legislation and you gentlemen would probably be here resisting the report as you are now if it threatened any sort of change in anybody's tolls. Those whose tolls were to be increased would certainly be here protesting under any plan or any proposal, and if there are any inequalities the plan proposes to iron those out. We will certainly challenge the opposition of those whose tolls. are to be increased. Those who are not to have an increase are just letting it go or taking it for granted.

Mr. MORRISON. This legislation doesn't guarantee any revision. The CHAIRMAN. So you might fare as well as you do now.

Mr, MORRISON. It makes a change mandatory in that the present Panama Canal rules which even our friends from the Canal admit require revision and which they say they are going to revise, it' makes them the sole basis for the assessment of tolls. If any such revision should ever be undertaken, then perhaps we might get some relief, but there is no assurance or guarantee of any such revision, and

it seems to me that the only logical way to proceed is to have the investigation, to have the recommendations as to what changes should be made in the rules before you try to legislate.

Governor Schley told us in New York last November, he feels that the present system is yielding the Government an adequate return. It seems to me that if there are any changes to be made in that system it should not be at the initiation of the Government. It must be on the complaint of those against whom this system is working an injustice. I don't think any such complaint has been registered. Even the tankers who would be benefited substantially under the proposed legislation have not come down here and asked for it. It seems to me, Mr. Chairman, that any system that has worked as long as that and you have no complaint and such inequalities as referred to are not inequalities because they may be applied uniformly to all ships of that type, no drastic action like this is justified unless those upon whom the inequality or who suffer the injustice complain as to that injustice. We certainly urge that you leave the system as is and if you feel that something has to be done, then that the investigation be made before the change in the legislation.

STATEMENT OF A. R. FALLON, UNION SULPHUR CO., NEW YORK

Mr. A. R. FALLON. Have you made any compilation of what the toll would be on the basis of deck loads of American steamers, exempting 20 percent?

Mr. SILL. We have made no study of what the charges would be on deck loads.

Mr. FALLON. It would be a small figure, wouldn't it?

Mr. SILL. The idea of taking 20 percent was to try to include in the exemption all normal deck loads that are going through at the present time. There would be a few over that. It is not in any way an average but it is taken as an arbitrary figure that would not put a charge on deck loads but would still prevent any such construction of vessels as was indicated.

Mr. FALLON. Which would probably affect American tonnage more than the foreign ships.

Mr. SILL. I believe probably there are more American ships carrying large deck loads.

Mr. FALLON. I am thinking in terms of our tolls. We pay now Canal tolls that average out about $1.03 on the basis of the Panama measurement. That figure has been constant. We have not had any alteration to speak of in the per ton toll assessed over the many years that we have used the Canal.

Mr. SILL. Our figures bear that out.

Mr. FALLON. If we were to pay in addition to that something for the deck loads that our ships would carry, and they do exceed 20 percent, then we would be paying more toll. That is the only objection I have to register in connection with this record here today.

Mr. SILL. Our figures show that the Union Sulphur Co. would pay 13 percent less tolls under the proposed rates.

Mr. FALLON. That is susceptible to a great many different methods of computation. I can show you a different result, as I did once.