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few months, even at that time the United States rules did not permit the deduction of superstructures and shelter decks?

Mr. SILL. No, sir; did not permit the exemption of the super

structures.

The CHAIRMAN. When was that exemption made and how?

Mr. SILL. It was put in force at the Canal on the date of the bulletin issued by the Department of Commerce, March 16, 1915. The CHAIRMAN. Did that bulletin exempt shelter decks and superstructures?

Mr. SILL. Yes, sir.

The CHAIRMAN. Was that the result of an act passed by Congress authorizing that to be done?

Mr. SILL. No, sir; it was a revision of the regulations of the Department of Commerce.

The CHAIRMAN. Was that done by the Commissioner of Navigation?

Mr. SILL. Yes, sir.

The CHAIRMAN. You mean that power to change rules to that extent, to include and exclude shelter decks and superstructures, rests within the discretion of the Commissioner of Navigation?

Mr. SILL. I know that he does that. He is charged with the interpretation of the existing laws and his decisions are final.

The CHAIRMAN. Did that bulletin issued in 1915 have the result of reducing the tonnage under the United States rules which these ships were required to pay on when they transit?

Mr. SILL. Yes, sir.

The CHAIRMAN. Go ahead.

Mr. SILL. During the hearing yesterday, Mr. Ewers made the statement that the present bill practically removed all limitation of the tolls that could be charged. He has modified that statement somewhat this morning, but I must point out that the bill carries with it a limit of $1 per net ton Panama Canal Measurement. The Panama Canal measurement requires that the gross tonnage shall include all covered and closed-in spaces on the vessel.

The CHAIRMAN. State that again.

Mr. SILL. The gross tonnage under the Panama Canal rules of measurement includes all covered and closed-in spaces on the vessel, so it would be difficult to increase the gross tonnage to any great extent. That is limited by the size of the vessel itself and there is no chance of making an increase in the gross tonnage.

The CHAIRMAN. Now, tolls are not imposed under either set of rules on the gross tonnage.

Mr. SILL. No. sir.

The CHAIRMAN. Mr. Ewers, as I recall, gave a statement of what the aggregate tolls would be at $1 per gross ton.

Mr. SILL. That is why I asked him to be sure if he meant gross tonnage or net tonnage because the bill specifically provides net tonnage, and net tonnage is defined in the dictionary and every other place as the result

The CHAIRMAN. I wondered about that, because it didn't seem to have relation to anything.

Mr. SILL. As the result obtained after deducting from the gross tonnage the necessary spaces for the working of the vessel, sheltering

of the crew, stowage of boatswain's stores and other spaces which are allowed under the rules.

The CHAIRMAN. And those rules are adopted in all countries and apply in a general way.

Mr. SILL. Yes. The difference of tonnages from one nation to another and the Panama Canal with the national rules of nations is in what is included in the gross tonnage and what is allowed as deduction from the gross tonnage in order to arrive at the net tonnage. So that the dollar limitation in the bill definitely limits the amount of tolls that could be collected by the proclamation of the President in regard to any rates that he may set. He must not go beyond $1. The CHAIRMAN. Per net ton.

Mr. SILL. Per net ton Panama Canal measurement.

Panama Canal rules are well defined. They were devised by Mr. Emory Johnson of the University of Pennsylvania, after careful study over a period of about 2 years and which at that time were made a part of the Presidential proclamation and became the official rules for the measurement of vessels using the Panama Canal.

Every vessel passing through the Panama Canal is given a certificate which shows in detail the spaces that go to make up the gross tonnage and on the next page the deductions which are taken therefrom to make up the net tonnage, including the allowance for propelling power, so that every vessel at the present time that is using the Canal has but to refer to that document to find out what it would be charged at the 90-cent rate to pass through the Canal. The revision of the Panama Canal rules which was contemplated by the Governor and by the Secretary of War and would have been done even though the provision was not in the bill has been taken care of by section 2 so that if the bill were passed it would become mandatory. That study of the rules is to make them apply more equitably to vessels which have been constructed since the Canal was opened and its result will be to reduce the tonnage of vessels and not to increase it. I think that there is no one that can intimate that this study will in any way endanger ships by having their tonnage increased, because the sole purpose is to revise the rules to give to the modern vessels consideration of their development as was intended by Mr. Emory Johnson when he devised the rules.

Senator DUFFY. You don't deny that the passenger ships who appeared yesterday would pay a greatly increased amount to the extent of some million dollars at least.

Mr. SILL. Oh, no. Their tonnage under the Panama Canal rules of measurement won't be increased.

Senator DUFFY. The tolls.

Mr. SILL. The tolls owould be increased, because that particular type of vessel is enjoying now large exemptions of passenger cabins which we consider earning capacity.

The CHAIRMAN. Can you give some concrete cases? I noticed in some report here some 36 or 38 vessels which had made changes in their structure.

Mr. SILL. Under the present system, with the tolls limited by the United States tonnage, the vessels have been able to reduce their United States tonnage appreciably so that they now pay on a very small tonnage as compared with the actual size of the vessel, the actual

cubical contents of the vessel. Therefore, under a system which will eliminate the exemption of these cargo and passenger carrying spaces those vessels will be then rated at a higher tonnage so that the 90cent rate which is proposed in the bill will in effect increase the tolls on the type of vessels that are now enjoying exceptionally low tolls due to the exemption of the spaces.

Senator DUFFY. These tankers that will get the main benefit I suppose are owned by the various oil companies?

Mr. SILL. Yes, sir.

Senator DUFFY. I wonder if they shouldn't have appeared here. Mr. SILL. I don't know why they didn't appear. It did not seem the proper thing for the Panama Canal to go out and round up people and tell them to come in and testify because they would benefit by such legislation. As Mr. Lea pointed out, that is entirely up to the people who are interested.

Senator DUFFY. I just wondered. I haven't been here at all of the hearing.

Mr. SILL. The whole interest of the Canal is to provide a proper method of assessing tolls on a businesslike basis so that Government business can be properly conducted in accordance with the intent of the original act as Congress passed it when the Panama Canal was nearing completion.

Senator DUFFY. It isn't important to me whether Congress originally intended something, but what the experience over the course of years has shown. Is it your idea that the experience over the years has proved the wisdom of the attitude that Congress took at that time and that it was a proper attitude?

Mr. SILL. I think it was entirely proper and I think that has been borne out by our experience. The administration of two sets of rules for the Panama Canal is very difficult, especially as one set of rules is designed to enable ships to get as low a tonnage as possible and the other is stable. One is subject to manipulation by taking advantage of the regulations as interpreted by the Commissioner of Navigation, the other is set forth in rules which do not lend themselves to any such manipulation. We submit that any reduction in toll charges at the Panama Canal should be on the price per ton of the tonnage which is stable rather than a fictitious lowering of the tonnage of the vessel. The ships that Senator Gore referred to were taken during the 1933 calendar year. Thirty-eight vessels were reconditioned to reduce their tonnage under these United States regulations, securing an average reduction of 24 percent, a little over. The CHAIRMAN. Reduction, of course, in the tolls which they paid.

Mr. SILL. Yes. I have a list of them here, if you want it presented in the record. One hesitates to call attention to any particular company or ship; we are just trying to get a fair system that will apply to all vessels alike.

The CHAIRMAN. How many companies are represented by those 38 ships?

Mr. SILL. Five companies.

Senator DUFFY. I think we ought to have it in the record.

The CHAIRMAN. I think so, too. Could you give the top and bottom reduction?

126021-35-10

Mr. SILL. This list, which was made up just as a rough memorandum for my own use and the use of the Governor, shows the former United States net tonnage, new United States net tonnage, reduction in United States tonnage and reduction in toll charges, and percentage of reduction.

The CHAIRMAN. Do you have that ship by ship?

Mr. SILL. Yes.

The CHAIRMAN. Read it.

Mr. SILL. Dorothy Luckenbach, 5,370 tons; after reconditioning, 3,999 tons; reduction of 1,371 tons, or a reduction in tolls of $1,713.75, or 26.1 percent.

The CHAIRMAN. Has that concern appeared here by representative?

Mr. SILL. Yes; that is the Luckenbach Co., and was represented here by Mr. Caldwell.

The CHAIRMAN. So if the old status were restored it would pay more tolls than it does.

Mr. SILL. Yes, sir. I think that in most cases these ships, if the Panama Canal rules were made the basis of a toll charge, at a 90-cent rate would probably pay about what they paid prior to their reconditioning. That is not true in every case, however, because some enjoyed much greater reduction than others.

Senator DUFFY. You say 1,317?

Mr. SILL. One thousand three hundred and seventy-one tons.
Senator DUFFY. I meant the amount of tolls.

Mr. SILL. $1,713.75.

The CHAIRMAN. Saves that on each transit.

Mr. SILL. Yes.

The CHAIRMAN. Go ahead.

Mr. SILL. There are nine of those ships in that company, and they are all more or less alike. Do you want to read each one? The CHAIRMAN. Nine out of thirty-eight?

Mr. SILL. Nine belong to that company. Since that time there have been a couple more of that company that have been reconditioned effecting the same reduction.

The CHAIRMAN. Have you got the figures on those too?

Mr. SILL. No. One of them had a very large reduction because it had an exceptionally high shelter deck. Ordinarily the shelter deck is about 8 feet. Since the Canal has been opened vessels have been built with a shelter deck as high as 14 feet, all of which would be exempted under the rules because there is no restriction as to the height of the shelter deck that can be exempted if it has the proper tonnage opening and freeing ports and scuppers.

The CHAIRMAN. Take up the different companies. We will print the whole business in the record.

Mr. SILL. During the year 1933 the following 38 ships secured a reduction in tonnage under the United States rules of measurement and therefore secured a reduction in tolls charges at the Panama Canal as shown in the following table:

List of vessels that have recently had United States tonnage reduced REDUCTION OF 26.1 PERCENT

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NOTE. These 38 vessels made approximately 400 transits of the Canal with a saving to them or, in other words, a loss of revenue to the Canal of approximately $710,000 per year.

The next is the Californian, of the American-Hawaiian Co.
The CHAIRMAN. Has that concern appeared here?

Mr. SILL. Yes, Mr. Morrison.

Four thousand nine hundred and twenty-seven was the former United States net tonnage; new, 3,653; reduction in United States tonnage of 1,274 tons; reduction of tolls, $1,592.50.

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