The very extent of the variations under the present inaccurate dual-measurement system makes it impractical to accept the rate of tolls collection under this system as a fair limit in establishing the rate to be charged if a single basis of Panama Canal measurement is adopted. The vessels, both United States and foreign, which are profiting by the present rules, do so at the expense of other vessels which are paying a higher rate per ton than they would pay if the uniform basis of equitable tonnage measurement were adopted. In the fiscal year 1934 the charges on British vessels were slightly higher on the average than on American ships, but with that exception the United States vessels have paid higher for the past 5 years than vessels of any other nation but the Japanese. The charges on the Japanese ships are relatively high because they include no large passenger ships using the Canal and their cargo carriers have not heretofore taken advantage of the rules to reduce tonnage by exemption of the shelter deck. They are now beginning to do so, however, and will soon show a substantial reduction. METHOD FAIRER TO ALL The proposed remedial legislation would base charges on the net ton as determined under the Panama Canal measurement rules. The figures quoted above are with respect to the same Panama Canal net tonnage. It will be seen that if the rate per ton established for application on the canal net tonnage should result in increased charges on vessels it would result in greater increases on vessels of all foreign countries, except Japan, than on vessels of the United States. It must be recognized that the change from the system which is obviously unfair as between nations and as between vessels of those nations, to one which is fair and equitable for all must result in some increase to individual ships which are now benefited unduly by the existing system; and that there would be an offsetting decrease in the charges on vessels which are now penalized by the existing system. The solution of this problem lies solely in congressional action. The passage of H. R. 7667, known as the "Panama Canal tolls bill ", introduced in the last session of Congress, would have solved it. This bill passed the House but was not introduced in the Senate in time to permit its passage in the closing days of a record-breaking session. The enactment of such legislation would abolish the present unsatisfactory dual system at the Canal. It would establish the Panama Canal rules as the sole basis for toll charges and would restore to the President the right to set the rate per ton between the limits provided in the bill. It would definitely eliminate charges on deck loads. By postponing the effective date for a year or more from date of passage, as proposed, it would allow ample time for steamship interests to adjust themselves to the new system, and by that time the cost of any reconditioning already made to reduce toll charges would have been covered by the reductions secured. The bill is not designed to increase the present revenue at the Panama Canal but to prevent further and unjustified continuing decreases in revenue. It would provide a method of measurement free from administrative difficulties and not subject to manipulation but which would produce a measure of tonnage that will truly represent the earning capacity of the vessel. It will then be just and fair to the United States Government and the shipping interests not only of the United States but of the world at large. The American Steamship Owners Association vigorously opposed the enactment of such legislation on the grounds that it would increase tolls to some of their members. It is questionable whether such opposition is justified. They have based their figures on the assumption that if the bill should pass, the President would set the rate per ton at the maximum rate provided in the bill. Such an assumption is not justified. The President. in setting the rate per ton between the maximum and minimum limits provided in the bill, would presumably take into consideration all the numerous factors which have a proper bearing on the subject, including possible injustice to shipping, and his own program of recovery, and would undoubtedly give the steamship interests an opportunity to present their views as to the rate that should be established. RATES FOR CANAL MEASUREMENT It is true that the Canal authorities have advocated a $1 rate for laden vessels. This, however, was based on the fact that when the remedial legis lation was first proposed such a rate would have returned to the Government approximately the same amount in the aggregate as was then being collected. Since that time, however, the tolls have been continually lowered, so that at the present time a lesser rate per ton, Panama Canal measurement, would produce the present revenue. The question of increased toll charges under the bill was taken up with the Secretary of War at a hearing granted the shipping interests at which they presented their views. They stated that, at the dollar rate, the additional financial burden would be unbearable and that even at a lesser rate there would still be a considerable increase to some of their members. The result of that hearing was an assurance from the Secretary of War that he would recommend to the President in fixing the tolls rate under the law, in the event the bill should pass, the adoption of a rate on laden vessels of not more than 90 cents. Under the figures for the fiscal year 1933 the tolls collected at this rate would have amounted to $318,204.43 less than were actually collected under the dual system. United States vessels would have paid $230,187.31 less than they actually did pay, and foreign vessels $88,017.12 less. Norwegian vessels would have paid $33,500 more; French, $41,190 more; German, $62,350 more; Dutch $15,140 more; British $150,435 less; and Japanese $113,517 less. Thus, it will be seen that in the year the United States vessels would have benefited more in the aggregate than those of any other nation. With reference to the claim that there would result an excessive increase in certain types of vessels placed in service since the Panama Canal rules were formulated, it may be said that the Panama Canal rules were so designed as to reflect truly the actual earning capacity of the vessel. It was not intended to retard the natural development in ship construction or penalize any provisions designed for the safety or comfort of passengers or crew. It was anticipated, therefore, that modification of the rules could and would be made, while still adhering to the principle of earning capacity, when it should appear from experience that injustice might be done to vessels designed after the rules were formulated. With this in mind, the Secretary of War gave assurance that a study would be made of the Panama Canal rules for the purpose of modifying them so that they would be applied with equity to all types of vessels transiting the canal. Especially does this apply to the large passenger vessels now using the Panama Canal. A preliminary study of this type of vessel indicates that there are certain spaces, such as public rooms, lobbies, music rooms, etc., that could, while still adhering to the principle that the basis of tolls should be on actual earning capacity, be eliminated from the tonnage on the ground that they are nonrevenue producing, as compared with staterooms, etc., which produce revenue. On lines regularly using the Canal such spaces amount to approximately 300,000 tons per year. APPROACH TO AGREEMENT It would appear, then, that the rates would in effect be much lower to all vessels except those few which, by reason of technicalities in the rules, have been able to reduce their tolls charges far beyond the point of fairness. It is difficult to understand why a few who are now unduly benefiting by an unfair system should be allowed to block legislation that will lighten the tolls burden to the whole industry at a time when by their testimony they are sorely in need of such relief. The amounts by which the tolls of these few would be increased, when the tolls on others and the aggregate traffic would be reduced, are an indication of the extent to which they are now benefiting unduly at the expense of fellow members. It would appear, then, that the Steamship Owners Association should lend its offices to assist in the enactment of this legislation for the good of the industry, rather than object to it because a favored few would no longer enjoy special benefits at the expense of the remainder of the traffic. Adjustment of the situation is not only plainly warranted but highly desirable. It has been too long deferred, and it is the hope of the Canal administration that agreement for removing this ancient source of trouble can be reached and the legislation passed in the present session of Congress. EXHIBIT C Hon. THOMAS P. GORE, DYER & KAMMERER, Chairman Senate Committee on Intercoastal and Oceanic Canals, Washington, D. C. DEAR SENATOR GORE: I am counsel for the Merchants and Manufacturers Association of Bush Terminal, and I find that you expect to have a meeting of your committee tomorrow, Thursday, on the subject of the proposed bill affecting Canal tolls of intercoastal shipping. We have previously filed a short brief in opposition to this bill, as our association has a number of members who are intercoastal shippers, and any change in the present Canal tolls which would make any increase thereof, would inevitably result in either a higher charge to their shippers, or a decrease in their business. I would thank you to bring this letter to the attention of your committee at its meeting, in order to indicate the position of our association in regard to the proposed legislation. Very truly yours, PAUL T. KAMMERER, Jr. BRIEF ON BEHALF OF THE MERCHANTS' AND MANUFACTURERS' ASSOCIATION OF BUSH TERMINAL This association consists of individuals, firms, and corporations numbering over 200 members who have offices, freight, terminals, docks, and yards in South Brooklyn, in whose employ there are over 5,000 men, and among which members there are a number who are vitally interested in any legislation affecting freight and shipping. At a recent meeting of the board of directors of the association, a committee was appointed to study all foregoing bills and to make inquiries from the members, and from other organizations which might be affected, as to their attitude toward the proposed legislation. This committee was requested to make their report, which has been done, and the findings of that report are materially the basis of this memorandum. The investigation made by this committee and the suggestions which they have set forth are herewith recorded in this memorandum, which is in opposition to the pending legislation. The proposed law provides in general that on and after January 1, 1936, the toll on merchant vessels carrying cargo through the Panama Canal shall be based on net actual tons of earning capacity as fixed by the Canal authorities; this toll shall be: (a) Not in excess of $1 per net vessel-ton, nor less than 60 cents per net vessel-ton, on laden vessels; and (b) A charge of 40 percent less than named in article 1 shall apply on vessels in ballast without passengers or cargo. Incidentally, there is another provision which permits a toll charge being assessed at the rate of $1.50 per passenger transported through the Canal. As it has been stated that a number of the members of our association are shippers and carriers of freight, special attention was given to an investigation on the matter of increase of costs by virtue of these proposed tolls, and it was conservatively estimated that the increased cost to the carrier would be in the neighborhood of 25 percent, and the additional charge to the shipper would vary between 10 percent to 15 percent. The figures obtained indicated that the actual increased cost in tonnage to four shipping companies with offices in the terminal was approximately $1,059,739. As the evident purpose of the bill is to change the method of measuring the vessels which use the Canal, for the purpose of arriving at the net tonnage, it will be noted that under the Panama Canal Admeasurement Rules, the net tonnage is considerably higher than under the United States Rules of Admeasurement, and, although the weight under the first method would be $1 per net ton as against a rate of $1.25 per net ton under the other method, the resulting cost shows a considerable increase. Assuming that we take as an example an intercoastal cargo ship of 10,000 tons dead-weight capacity, we find the following computation to apply on the basis of the dual admeasurement method: Panama Canal net tonnage, 5,251 tons, at $1-. Increase each transit_. $5, 251 4, 130 1, 121 It must be obvious that any increase in the rates will be passed on to the shippers, who are in no position to bear any additional burdens at this time. This will, of course, materially affect the intercoastal trade and will result in a curtailment of the shipping of eastern merchandise to the west coast, and the shipping from the west coast will probably suffer in the same proportion. There does not appear to be any economic reason for increasing the tolls at this time, as an investigation of the revenue from the use of the Canal indicates that it is now earning more than a fair return on this commercial investment. Remembering that the Canal is also considered a very vital factor in the matter of national defense, and that a large part of the cost of the Canal was written off to this item in 1921, shippers contend that this proposed legislation is simply a method projected by the Canal authorities to seek a return on this cost which was written off at that time. For these reasons our association is opposed to the enactment of the pending legislation. Respectfully submitted. DYER & KAMMERER, Attorneys for the Merchants' and Manufacturers' Association EXHIBIT D SHEPARD & MORSE LUMBER CO., New York. Hon. THOMAS P. GORE, Chairman Senate Committee on Inter-Oceanic Canals, Senate Office Building, Washington, D. C. HONORABLE SIR: Reference is made to Senate bill S. 2288, a bill providing for change of the method of assessing tolls at the Panama Canal. We desire to protest this bill as now proposed on the grounds that the bill is discriminatory against vessels carrying deck loads of lumber. As we read the bill, any ship carrying a deck load in excess of 20 percent of the net tonnage of the vessel shall have tolls levied on the deck load. The only deck load that we know of which customarily exceed this percentage is lumber. We feel that this is a discrimination against lumber to which we object, and we urge that that part of the bill be eliminated before the bill is allowed to become law. The writer regrets exceedingly that other very exacting matters prevent his appearing at the hearing to be held on Thursday, April 4, and, therefore, requests that this letter be read at the hearing and made a part of the records. We will also appreciate it very much if you will be good enough to have a copy of the minutes of the hearing sent to us when printed. |