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would have been collected under proposed rates over period of the last
MEASUREMENT OF VESSELS USING THE PANAMA CANAL
THURSDAY, APRIL 4, 1935
UNITED STATES SENATE,
SUBCOMMITTEE ON MERCHANT MARINE
Washington, D.O. The committee met, pursuant to call of the chairman, at 10:20 a. m. in the committee room of the Capitol, Senator Thomas P. Gore, chairman, presiding.
Present: Senators Gore (presiding), Clark, Duffy, and Barbour. Senators Trammell and Long accounted for a quorum. At the invitation of Senator Gore, the Senate Commerce Committee was represented by its Subcommittee on Merchant Marine, Senator Copeland, chairman of the Committee on Commerce, and Senator Duncan U. Fletcher, member of the committee, being present.
The CHAIRMAN. The meeting will come to order.
(The committee had under consideration S. 2288, which is here printed in full as follows:)
(S. 2288, 74th Cong., 1st sess.) A BILL To provide for the measurement of vessels using the Panama Canal, and for other purposes
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 412 of title 2 of the Canal Zone Code, approved June 19, 1934, is hereby amended to read as follows:
"Tolls on merchant vessels, Army and Navy transports, colliers, hospital ships, supply ships, and yachts shall be based on net vessel-tons of one hundred cubic feet each of actual earning capacity, determined in accordance with the *Rules for the Measurement of Vessels for the Panama Canal' prescribed by proclamation of the President, November 21, 1913, and as may be amended from time to time by order of the President, and shall not exceed $i per net vessel-ton so determined, nor be less than 60 cents per net vessel-ton so determined, on laden vessels, and on vessels in ballast without passengers or cargo shall be less than the rate of tolls for vessels with passengers or cargo: Provided, That tolls shall not be levied on a deck load, which is defined, for the purposes of this Act, as cargo situated in a space which is at all times exposed to the weather and the sea and which space is not included in the net tonnage determined under the said 'Rules for the Measurement of Vessels for the Panama Canal', except on tonnage of such deck loads which is in excess of 20 per centum of the net tonnage of a vessel so determined.
“Tolls on other floating craft shall be levied on displacement tonnage at rates to be prescribed by the President. In addition to the tolls based on measurement or displacement tonnage, tolls may be levied on passengers at rates prescribed by the President but not to exceed $1.50 for each passenger. The levy of tolls is subject to the provisions of article XIX of the convention between the United States of America and the Republic of Panama, entered into November 18, 1903, and of article I of the treaty between the United States of America and the Republic of Colombia, proclaimed March 30, 1922."
SEC. 2. The President is authorized to appoint a special committee of three members, to serve for not more than six months, for the purpose of making a study and investigation of the rules for the measurement of vessels using the Panama Canal and the tolls that should be charged therefor and holding hearings thereon at which interested parties shall have full opportunity to present their views. Such committee shall report to the President upon said matters prior to January 1, 1936, and shall make such advisory recommendations of changes and modifications of the “Rules for the Measurement of Vessels for the Panama Canal” as they find necessary or desirable to provide a practical, just, and equitable system of measuring such vessels and levying such tolls. Members of such committee shall be paid compensation at the rate of $825 per month, except that a member who is an officer or employee of the United States shall receive no compensation in addition to his compensation as such officer or employee. Such committee is authorized to appoint such employees as may be necessary for the execution of its functions under this Act.
SEC. 3. This Act shall take effect on the date of its enactment, except that section 1 shall take effect on September 1, 1936.
We have assembled for the purpose of having hearings on S. 2288, which is identical with H. R. 5292, and I will insert at the beginning of the hearing a copy of the Senate bill.
Senator COPELAND. Has it been reported out in the House?
The CHAIRMAN. Identical, I think, with the Senate bill. The Senators present know and others know that there are two systems of ascertaining tonnage on vessels passing through the Panama Canal, one known as the “United States rule” and the other as the Panama Canal rule."
They differ materially and often are in conflict. It is a dual system which is not satisfactory either to shipping concerns or to the Government or to the Panama Canal authorities. The object of this hearing is to arrive at some sort of legislation that will get rid of that confusion and place the toll charges on the basis of the earning capacity of the ships, so that everybody will have a common standard that will be applied to all vessels alike.
At present the tonnage of a ship may vary owing to the structural arrangement or rearrangement of the vessel. And I might say it militates as often in favor of foreign vessels as against American vessels, American registry. Sometimes the same vessel pays more tolls on one trip than on another, and sometimes vessels transiting the Canal pay the same when they pass through in ballast as when they pass through loaded to their guards. We want to get rid of that in some way. That is the purpose of this whole legislation. The object of this hearing is to derive all the light we can to guide us in this legislation.
I think, to begin with, we will have Mr. Smith, who is a proponent of this legislation, you might say, present the objects of the present legislation and give us an analysis of it, so that all other parties who are to appear will know exactly what we are driving at and get a bird's-eye view of the thing.
(The chairman swore the witness.)
The CHAIRMAN. I think, gentlemen, if it suits everybody, you had better let Mr. Smith make his statement in a continued and unin
terrupted way, then subject himself to questions at the hands of those who wish.
In connection with what I have already said I want to insert a definition of the four different kinds of tonnage, displacement tonnage and dead-weight tonnage, which are related to each other, and the gross tonnage and net tonnage, which are related to each other.
STATEMENT OF H. A. A. SMITH, ASSISTANT CONTROLLER AND
LEGAL ADVISER OF THE WASHINGTON OFFICE OF THE PANAMA CANAL
Mr. Smith. Mr. A. L. Flint, Chief of the Washington office, is also present, but he doesn't expect to testify, and Mr. Fred de V. Sill, chief admeasurer of the Panama Canal at Balboa, Canal Zone, is also present to answer any questions and present any testimony which may be desired.
It is my purpose merely to present a rather brief general statement outlining the purpose of this bill and the reasons why, from the standpoint of the Canal authorities, it should be enacted into law.
Senator FLETCHER. May I ask if the general effect of the bill will be to increase tolls?
Mr. SMITH. The general effect will not be to change the aggregate amount of tolls at all. It merely changes the method of collection between different types of vessels to some extent.
The CHAIRMAN. Suppose we make it perfectly clear at this point that the object of this legislation is not to increase the aggregate amount of tolls collected from vessels passing through the Canal. The general object is to require that the aggregate amount of tolls paid shall pay the carrying charges, about 3 percent, on the capitalization of the Canal. The purpose of this legislation is to establish a uniform system that will not discriminate between vessels of like earning capacity.
Senator COPELAND. I assume, Mr. Chairman, at the proper time there will be inserted in the record a schedule showing exactly how it does change the revenue relating to certain lines and ships that use the Canal ?
The CHAIRMAN. Yes, sir.
Table showing effect of the 90-cent-laden and 54-cent-in-ballast rates on all American steamship lines using the canal
Reduction in Tanker group: Standard Shipping Co
$135, 000 Standard Oil Co. of California
85, 000 Sun Oil Co..
78,000 Union Oil Co. of California..
42, 000 Miscellaneous Tanker Lines.
238, 000 The vessels in this group generally transit one way in ballast and one way loaded When loaded they pay on the United States net tonnage, but when in ballast they now pay on 72 cents times the Panama Canal net tonnage so do not receive the 40 percent reduction in tolls from the laden rate as set forth in the Presidential proclamation. Any reduction in the ballast rate will be directly reflected in the tolls paid by these vessels when transiting in ballast, hence the apparent large reduction in toll charges.