The following general cargo lines would have their toll charges reduced as indicated: The following general cargo lines would have their toll charges increased as indicated: The American Hawaiian Line's increase would be somewhat reduced if they continued the present practice of closing the shelter deck on some of their eastbound transits and paying on the increased tonnage amounting to an increase in tolls of about $1,200 per transit. The following passenger lines would have their tolls increased as indicated: Panama Pacific Line Grace Line.... Dollar Lines.. $195, 000 263, 000 17, 000 United Fruit Company.—For this company there would have been a decrease of $4,000. These figures would be greatly reduced by a revision of the Panama Canal rules whereby it is proposed to eliminate from charges public rooms which have no direct earning capacity. A preliminary study indicates that there are approximately 300,000 tons of such space on all United States passenger ships transiting the Canal per year. Summary of tolls collectible under proposed plans based on 1934 transits Reductions under proposed amendments to Panama Canal rules may approximate.... 270,000 15, 325, 047 $12, 831, 146 12, 679, 816 151, 330 90,000 Approximate total of reduction now being considered under this pro- 321, 869 241, 330 Mr. SMITH. As a matter of fact, taking the toll rates that have been proposed by the Secretary of War and taking the proposed changes that will probably be made in the measurement rules, the amounts collected will be less, would have been less for 1933 and 1934, than actually collected, so there is no intention whatever of increasing the aggregate toll collections. The CHAIRMAN. Let me state this. It will give the Senators a birdseye view of what we are driving at. This is a classic instance. The Empress of Britain, a registered British ship, has a tonnage under the Suez Canal rules of 26,000 tons. Under the Panama Canal tolls, the way they are now administered, it has a tonnage of a little over 15,000 tons. When that vessel passes through the Suez Canal it pays tolls amounting to $30,000, a little more. When it passes through the Panama Canal it pays $18,000. Now, we want to rectify that disparity, and it is done through the fact that this ship changed a cloakroom into a cabin where people are supposed to sleep. Senator CLARK. Changed what? The CHAIRMAN. Changed a cloakroom into a cabin and exempted a whole deck, 3,319 tons it lifted out of the assessable tonnage of the vessel. Now, that happens under this dual system. We want to rectify that in some way. Proceed, Mr. Smith. Mr. SMITH. The essential provisions of the bill before the committea (S. 2288) have the approval of the President, the Secretary of War, and the Governor of the Panama Canal. A bill (H. R. 5292) containing the same provisions was favorably reported from the Committee on Interstate and Foreign Commerce and is now pending on the House Calendar. In addition, it may be stated that the enactment of legislation to accomplish the purposes to be served by this bill has been advocated by every Governor of the Panama Canal and by the various Secretaries of War having supervision of Panama Canal matters since the need of the legislation arose in 1915; also that similar bills have passed the House on four different occasions. The purposes of this bill are to do away with the present dual system of measurement for ships using the Panama Canal and to provide a single equitable tolls system therefor. The Panama Canal Act of August 24, 1912, as amended, contains general provisions for the levying of tolls and authorizes the President to establish rules for measurement of vessels and rates of tolls within the limitations set by the act. The act provides that: "Tolls may be based upon gross or net registered tonnage, displacement tonnage, or otherwise"; "may be lower upon vessels in ballast than upon vessels carrying passengers or cargo"; "when based upon net registered tonnage for ships of commerce the tolls shall not exceed $1.25 per net registered ton nor be less than 75 cents per net registered ton"; and if the tolls shall not be based upon net registered tonnage they shall not exceed the equivalent of $1.25 per net registered ton as nearly as the same may be determined, nor be less than the equivalent of 75 cents per net registered ton." 66 66 The CHAIRMAN. At this point, Mr. Smith, would you state what gross tonnage" and what "net tonnage" are? Mr. SMITH. “ Gross tonnage ", generally speaking, is the entire cubical contents of a vessel. The "net tonnage " is the result after deducting from the gross tonnage the space for the propelling machinery, crew space, and other things. You get down to net tonnage under very technical rules. If you want to get into a further detail of gross and net I would prefer that Mr. Sill go further into that. The CHAIRMAN. We do not want that. It is the closed-in space of the vessel, divided by 100 cubic feet, which is the arbitrary definition of a ton. From the gross tonnage you subtract the space you have referred to for the operation and propulsion of the ship. Mr. SMITH. As to how they compare, I have in mind certain ships of the Panama-Pacific Line, I think it is-passenger vessels operating between New York and the Pacific coast. The gross tonnage, as shown by its register prepared by the Department of Commerce, is eighteen thousand-odd tons; the net is something like, at the present time, 9,000 tons. That gives you a little idea of the comparison. Senator FLETCHER. It is generally about one-third the difference between the gross and net tonnage. The CHAIRMAN. That is correct, except in the large passenger vessels, when sometimes the net tonnage is less than half. Mr. SMITH. Pursuant to the authority vested in him, the President, by proclamation dated November 13, 1912, established rates of tolls on commercial ships, as follows: 1. On merchant vessels carrying passengers or cargo, $1.20 per net vesselton-each 100 cubic feet-of actual earning capacity. 2. On vessels in ballast without passengers or cargo, 40 percent less than the rate of tolls for vessels with passengers or cargo. The Panama Canal rules of measurement were promulgated by proclamation of the President dated November 21, 1913. Just briefly, I want to call your attention to the work that was done before these rates were fixed and the measurement rules issued. I have here the report of Dr. Johnson, who made a study of the subject of Panama Canal traffic and tolls. Upon the basis of this the rates were fixed for the tolls through the canal. Senator COPELAND. Show, for the record, what the book is, and the page, so that it can be found. Mr. SMITH. Panama Canal Traffic and Tolls, by Emory R. Johnson, special commissioner on Panama Canal traffic and tolls. Senator COPELAND. Is it a Government publication? Mr. SMITH. It is a Government publication. Senator DUFFY. Does the Suez Canal have any different rates? Mr. SMITH. Of course, there have been some minor changes, but it is substantially the same. The CHAIRMAN. Their tolls have been changed about 16 times in the last 14 or 15 years. Senator CLARK. The Suez or the Panama? The CHAIRMAN. The Suez, varying with conditions of traffic. Senator DUFFY. What I had primarily in mind was the system that Senator Gore pointed out, as to the method of measurement, and so on. Mr. SMITH. Their method of measurement is very much like the Panama Canal rules. They approach that more closely than anyone else the present rules, which have been in effect since before the Panama Canal was opened, in about 1914. Before the measurement rules were issued this report was prepared by Dr. Johnson. It is entitled "Measurement of Vessels for the Panama Canal ", by Emory R. Johnson, special commissioner on Panama Canal traffic and tolls, Washington, D. C., Government Printing Office, 1913. In that he sets out the measurement rules for the Suez Canal and for every other canal that he could get his hands. on, and other information with regard to vessels, and he points out in there the reasons why he did not deem it possible to adopt any of the existing measurement rules at that time. Every country has its own measurement rules for special purposes. Senator COPELAND. Is Dr. Johnson still living, and is he still with the Government? Mr. SMITH. He is still living. He is with the University of Pennsylvania, and has been except for the short period when he was working on these tolls-something like nearly 2 years. Senator COPELAND. The 66 brain trust" did not originate then, with this administration. Senator CLARK. Without going into detail, could you just briefly tell us why it is necessary to get up an entirely new set of rules? NOTE.-Due to misunderstanding this question was not directly answered. There is now no intention to draft an entirely new set of rules. The experience of the last 20 years has demonstrated the desirability of making some changes especially for the purpose of liberalizing provisions which will benefit certain vessels constructed since the rules were formulated. It is proposed to eliminate from net tonnage public rooms, etc., on large passenger-carrying vessels, the tolls on which would be greatly increased if no change was made in existing Panama Canal rules. There is no intention of increasing the Panama Canal tonnage. Mr. SMITH. If you will permit me, I will read what he says on that very subject, on page 7 of this report: None of the national measurement rules, neither those of the United States nor those of foreign countries, is framed with a view to making registered tonnage an accurate expression of the earning capacity of vessels. If any one of these sets of rules were adopted to determine the tonnage upon which Panama Canal charges shall be paid, the charges would not be relatively fair as among different types of ships, tolls would not be imposed as closely as is desirable in acordance with the ability of vessels to pay the charge, and the Government might be deprived of a portion of the revenues which it would be justly entitled to receive for the service of passing ships through the Canal. Still less would it be possible to accept as the tonnage upon which Panama Canal charges shall be paid the tonnage of vessels as stated in their respective national certificates of registry. The measurement rules in force in the several commercial countries differ in important particulars both as regards the spaces included in gross tonnage and as regards the deductions made therefrom in determining the net tonnage upon which shipping charges are imposed. He says: There is, as the report shows, a surprising variation in gross tonnage given the same vessel when measured by different measurement rules, and there is even greater dissimilarity in the net tonnage of vessels as determined by different measurement rules. In some countries the net tonnage of vessels composing the merchant marine averages only 61 percent of the gross tonnage, while in other countries the average is over 70 percent; or, stated differently, some countries, in calculating net tonnage, deduct 39 percent, and other countries less than 30 percent of the space included in gross tonnage. Each country, some more zealously than others, seeks, by means of its laws and regulations concerning gross and net tonnage, to lighten the burdens to be borne by the vessels under its flag as compared with the shipping under other ensigns. In framing rules for the measurement of vessels for national registry commercial countries do not seek to make net tonnage what it should be by Panama rules-the closest practicable approximation of the earning capacity of vessels of different types. Senator FLETCHER. You want to make your own tonnage rules. The CHAIRMAN. I would like to state there, in further response to Senator Clark's question, that the net tonnage, registered ton nage of American vessels, under the United States rules, is arrived at for purposes of port and harbor charges, wharfage and pilotage, and charges of that sort, and under a reciprocal agreement between the different countries they accept the net tonnage arrived at under the rules of the country where the ship is registered. For instance, when the Leviathan goes and docks in Liverpool, or wherever it goes in that region, they accept the net registered tonnage under the United States rules for purposes of imposing charges in the foreign port, wharfage, pilotage, lighter, and other charges. When the Empress of Britain lands here, for instance, we accept her net tonnage under her registration in Great Britain. That has resulted in each country undertaking to reduce the net tonnage for registration purposes, in order to reduce these port and harbor charges. Of course, that is not applicable to ships passing through these canals, where the charges ought to be based on the earning capacity of the ship. Referring again to the Empress of Britain, her tonnage under the Suez rules is 26,000 tons. Under the Panama rules it is 27,000 tons, but she is registered under the laws of Britain at 22,000 tons, and she passes through the Panama Canal, on account of having converted this deck, at about 15,000 or 16,000 tons. That illustrates the point. There has been a sort of competition between countries in reducing their registered tonnages so as to reduce these charges in foreign ports. That is not applicable where charges are to be imposed in these canals for purposes of defraying the expenses of the canal and realizing carrying charges on the cost of the canal. Mr. SMITH. Included in these rules was a provision for the measurement of cargo carried on open decks and for adding the tonnage of such cargo to the net tonnage of the vessel so that charges would be made thereon. Upon a protest of certain shipowners regarding the charges on such deck cargo, the question of the interpretation of the act of Congress regarding toll charges was referred to the Attorney General. The Attorney General held that the term "net registered tonnage" as used in the act must be interpreted to mean the net tonnage of a vessel as measured under the rules prescribed under the statutes of the United States for the registry of vessels. The net tonnage of a vessel as measured for national registry is universally lower than the tonnage as measured in units of 100 cubic feet of actual earning capacity (which is the Canal basis) and it is the practice of nations to keep registered tonnage of their ships down so as to reduce the light dues and port charges based on it. This practice is generally recognized and accepted. As the port charges may be a few cents per net ton, the figure for number of tons on which they are levied is not of great importance; also the rate of port charges would be adjusted upward in consideration of the depressed tonnage. When it comes to the matter of a charge of $1, more or less, per ton for a service such as transit through a canal which saves a ship thousands of miles, the net tonnage becomes of vital concern. Senator COPELAND. If you will excuse be, Senator Glass has asked that I come to the meeting of the Appropriations Committee. Mr. SMITH. Following the receipt of the Attorney General's opinion, the President directed that until Congress could deal more |
