Break even point at $200 million in costs with toil rate of $1.30 PC net ton is Mr. KUJAWA. The thrust of my testimony today is that there are no fundamental flaws in the financial structure of the Panama Canal Company. A review of the Company's financial history will show that it has had financial success in sharp contrast with other governmental bodies, such as the U.S. Postal Service, ConRail, and Amtrack, which were initiated with great optimism, but soon came back to the Congress for large sums of Federal subsidies. I share the optimism expressed by members of the committee yesterday, which included admiration for what the Panama Canal has been able to accomplish over the years. Contributing to the financial success of the Company has been its sound accounting policies which properly reflect all costs so that tolls can be set at levels to recover costs, and maintain the Company's financial health. We do not find toll increases of the magnitude made by the Company to be shocking, but rather necessary, and not uncommon in this inflationary period being experienced by economic entities around the world. I think it would be difficult to convince a wage earner who had experienced a 10 percent increase in his cost of living in terms of oil prices, in terms of food prices, and in terms of housing, that a 10 percent wage adjustment to reflect that cost of living, in fact, reflected an increase in wages. He would consider that merely a catchup, that he is the same after the wage increase as he was before. Similarly, the Panama Canal Company needs to catch up, and I think it is a double standard to condemn the Panama Canal for necessary toll increases to reflect cost increases when, in fact, all the Panama Canal Company is doing is financially standing still. If inflation occurs in the future, toll increases will have to be made. Throughout our years of association with the Panama Canal Company, we have observed and admired the ability of the Company to finance its own operations and generate sufficient capital internally to replace and expand Canal facilities as ever-increasing demands are placed upon its ability to render service. The high quality of the Panama Canal service has continued unimpaired since 1950 when it was organized. The Company has never had to seek further financial assistance from Congress, and it has increased toll rates generally only once. The fundamental economic factor contributing to this success has been the traffic growth. Credit for this accomplishment should also be given to Congress and the wisdom and foresight of its legislation governing the financial affairs of the Company, as well as management of the Company, which has adapted to continuous changes in the economic environment in which it operates. The fact that the Company has been able to sustain itself, and, through recycling of its own capital, maintain and improve facilities of the Canal, has benefited many parties. It has benefited the shipping industry, through relatively stable toll rates. It has benefited the employees of the Company, whose substantial wage increases over time have been financed totally through company revenues. It has benefited the economy of the Republic of Panama through the funds that pass through its citizen employees and businesses that are generated initially by Panama Canal revenues. It has benefited consumers worldwide who ultimately bear the cost of the Panama Canal tolls. Finally, the Panama Canal's financial stability has benefited the U.S. Government and its taxpayers who have not been required to subsidize the world trade that enjoys the benefits of Panama Canal service. Changing now to the subject of the tolls formula and cost recog |