of our stores, all of that kind of expense, we would not spend any more money than the $100,000 that would go into the extra expense for paying extra Panama Canal tolls.

Now, any steamship company dealing with doubling its costs for its vessels would consider that a terrible thing. I am sure that it would pay from one third to one quarter of our entire repair bills. Mr. PETTENGILL. Is it a practice, Mr. Cresap, that your ships for the same cargo, going through both the Suez and the Panama, under toll charges now in force, are less at the Suez than at the Panama? Mr. CRESAP. Less at the Suez?

Mr. PETTENGILL. Yes.

Mr. CRESAP. Oh, no; the tolls imposed by the Suez Canal are very materially greater than the tolls imposed by the Panama Canal. Mr. PETTENGILL. You mean on account of the difference in the currency, or taking that factor out?

Mr. CRESAP. No, no. At all times and for years past.
Mr. PETTENGILL. They have been more?

Mr. CRESAP. They have been more. It has cost to put a cargo vessel through the Suez Canal, it has cost more than to put the same vessel through the Suez Canal as long back as I can remember10 years and at no time, have the Suez Canal charges been less than the Panama Canal charges.

Mr. PETTENGILL. Well, Mr. Chairman, that seems to contradict the statement that was made by the Governor of the Panama Canal Zone, who, as I recollect, stated that the Suez, which is a sea-level canal without locks charges less than the Panama.

Mr. CRESAP. Well, I cannot help what the Governor said.
Mr. SILL. Mr. Chairman, may I say something?

The CHAIRMAN. Yes.

Mr. SILL. It seems I am a sort of a witness for the steamship companies, or they are taking the wind out of our sails, because we came up here to testify that they were reconditioning their vessels in order to reduce their tolls charges, and now they come here and testify that they are doing that that is one of their points, so I am afraid that we are testifying the same thing another way around. I should be testifying for the steamship people, and they should be talking for the Government; but he is right. That is one of our contentions, that the Suez Canal tolls, basing that toll on Suez Canal measurements with the rate at $1.15, the tolls are greater at the Suez Canal. That makes their tolls more, and on passenger ships it is even more true, because at the Suez the passenger cabins are all in the tonnage and the tolls are collected on the total net tonnage of the ship under the Suez Canal rules of measurement.

The Suez Canal rules closely approximate the Panama Canal rules. The Suez Canal rules were designed to stop the steamship people from getting the advantage of having large spaces exempted, as they were under the British rules, the rules designated as the British rules sometimes called board of trade rules, and they adopted the Suez Canal rules for that purpose.

Our rules were designed so that they are an improvement on all these rules. We have the further advantage, because the rules laid down for the Panama Canal tolls were designed after having had the experience in connection with tonnages throughout the world, including the Suez, and as I stated last Tuesday, Mr. Johnson elim

inated the bad features of all of the rules and took the good features of all and made an ideal set of rules.

There is one question that I would like to bring up about the extra cargo you can take when the shelter deck is closed. We have ships at the canal which deliberately close up the shelter decks after having reconditioned them so as to go through on less tolls, because they have found it unprofitable. In other words, the extra amount of freight revenue received more than paid for the extra tolls, so they closed up the openings and made them closed-shelter deck ships.

Mr. LEA. There is another question that I would like to ask.
Mr. CRESAP. Yes, Mr. Chairman.

Mr. LEA. Now, you say that you are an engineer?

Mr. CRESAP. Well, I am something of an engineer.

Mr. LEA. Is it correct to say that the cost of taking a vessel through the Canal is approximately the same, whether loaded or in ballast?

Mr. CRESAP. Oh, I do not think that is correct. The cargo vessel goes through loaded; the present law is that the tolls should be limited to $1.25 net registered tons, and that figure is the maximum amount that that ship will pay.

Mr. LEA. I meant the operating costs.

Mr. CRESAP. Oh, the operating costs.

Mr. LEA. Yes. What it costs the Government to put the ship through the Canal. Is that approximately the same whether the ship is in ballast or laden?

Mr. CRESAP. I have been through the Panama Canal, and I should say it makes practically no difference to the Canal whether the ship goes through in ballast or loaded, or whether the ship is a large ship or a small ship. Of course, if it is a very large ship there is less water lost from the lake, because the ship occupies more space in the locks so that to lock a little ship through the Canal wastes water faster than to lock a large ship through, assuming that the same number of ships are locked through, that the physical operations, outside of a few kilowatts of power for hauling around, which does not amount to more than a few dollars, involves the same number of men all of the way through, so that I do not see that there is any difference, but, of course, I am not a Panama Canal man.

Mr. LEA. Assuming that is approximately correct, then, is not the difference in the charges the Government makes for the ship in ballast and the laden ship based on the theory that the operators of the ship can afford to pay more because they are earning more? Mr. CRESAP. Presumably.

Mr. LEA. Now, that being true, would it not seem that the difference in the charges should be in proportion to the actual earning capacity instead of having just those two lines to work on? Mr. ČRESAP. Mr. Chairman

Mr. LEA. You catch what I mean by that?

Mr. CRESAP. Absolutely. Mr. Chairman, the question of measuring ships for the assessment of tolls is a question that goes back many generations. Arguments have been advanced pro and con as to different systems, and to give you what I consider to be any enlightenment on the question involves too ramified a subject. It

is-you have opened up a door, to which Pandora's Box, would not have any comparison. Do I make myself clear? For 100 yearsMr. LEA. You are clear in putting me in doubt.

Mr. CRESAP. One hundred years ago England had, I think, 15 or 20 different tonnage systems in the different ports of England. Every little port had its own system of tonnage and every one of them thought it was better than the other port, and finally, through these various practices, a system of tonnage measurement has been devised.

Now, the fundamental difference between the Panama system and the net United States registered tonnage system is

Mr. LEA. But, we are making a distinction, evidently, based upon the actual earning capacity of the ship and we do not have any gradations or differences, but adjust them according to those two questions, whether in ballast or whether there is some cargo aboard. Mr. PETTENGILL. Whether they are earning something or not. Mr. LEA. Yes. If they have some load they are charged 100 percent. If they have no load, they are charged 60 percent.

Now, what I am driving at is whether it would be practical for us to have some other line, a little more liberal as a concession to the ship that is not fully loaded.

Mr. CRESAP. You mean gradations between loaded and unloaded ships.

Mr. LEA. Yes; recognizing the principle, in part, that a ship should be charged according to what it is making out of the job. Mr. CRESAP. Yes.

Mr. LEA. And that would mean that a partially-loaded ship should have its tolls reduced to a degree in proportion to its cargo. Mr. CRESAP. I have, of course, not given any thought except just a few minutes here since you read that proposal. I am taking it that your question is based on that amendment, proposed amendment. Mr. LEA. Yes; just working on that theory. That is all, to get information.

Mr. CRESAP. Well, I see one thing that might happen. A ship gets down to the Panama Canal and she is in a rush to get through and get on her way, because she costs a good many hundred dollars a day. Who is going to say what portion of her is empty or filled? Mr. LEA. I presume it would be up to the man that does the measuring.

Mr. CRESAP. The man probably could not get into all the space in the ship to determine that.

Mr. LEA. Of course, the suggested amendment had in mind that should be covered by rules and regulations to fit those conditions. Mr. CRESAP. It would be, as a practical matter, I should sayalthough I cannot speak for the Panama Canal-but as a practical matter, it would be very difficult, have many difficulties attendant upon the execution of the law. It would seem to me there would be room for the most violent of wrangles.

Mr. LEA. Well, that is one thing that we want to consider.

Mr. CRESAP. There is a ship, we will say, hits the Canal at noon, and she wants to get through and get out away from the coast line before night.

Mr. LEA. Of course, you always have the privilege of paying the full amount, if you are in a hurry.

Mr. CRESAP. Well, of course, that is a law that leaves it up to the steamship company in that respect. If a man wanted under the law to lose that amount of money. But, it seems to me I am not saying that it should not be done from the steamship owner's viewpoint, it looks as though it were a very tremendous concession to the steamship owners; but I can see a lot of practical difficulties in administering that at the Panama Canal.

Mr. LEA. Now, as to these costs that have increased due to rise in prices. Those, I presume, affect your competitors equally, generally speaking?

Mr. CRESAP. Except insofar as our foreign trade prices are concerned. That amount of our increases are not reflected in our foreign competitor's balance sheets at all. We are placed at a disadvantage in comparison with his items.

Mr. LEA. You do have certain ships that ply only in intercoastal trade?

Mr. CRESAP. We have a certain proportion of our ships that ply in the intercoastal trade and a certain portion that ply in foreign trade.

Now, it may be that we will keep one ship in the foreign trade and another in the intercoastal trade, but as to keeping the same ship all of the time in the same trade route, while we try to do that for reasons of efficiency, but as a practical matter, it is impossible.

Mr. PETTENGILL. And, this matter of grading the tolls in proportion to income load: You said that the inspector or measurer, as a practical matter, did not inspect all points on the ship, or there might be some points on the ship that he could even get at without long delays, or something of that sort.

Mr. CRESAP. Or moving cargo.

Mr. PETTENGILL. Now, the portion of the ship that is occupied by cargo could not be determined from an examination of the ship's papers?

Mr. CRESAP. No, sir. Freight-that is out of my departmentbut, freight is measured by both measurement and weight and you get involved in all kinds of questions, I am afraid, as to storage.

Mr. PETTENGILL. In other words, you think that it would be impracticable or difficult of administration?

Mr. CRESAP. Offhand, without making a detailed study of it, I see a number of practical difficulties. Whether they are insuperable or not I am not prepared to say.

Mr. LEA. Well, would you not agree that ships should pay equally for their actual carrying capacity? You recognize that principle? Mr. CRESAP. What kind of ships?

Mr. LEA. Ships of a comparable class. Should they not pay the same rate in proportion to their actual cargo capacity, if you are going to put it on a tonnage basis?

Mr. CRESAP. Their actual cargo capacity?

Mr. LEA. That is, if it is based on capacity, then should not all ships be charged according to their full capacity?

Mr. CRESAP. Well, that is the inevitable result. That is almost the universal theory today, apparently.

Mr. LEA. Apparently here the shipowner, by changing his ship, can determine for himself how much toll he is going to pay?

For in

Mr. CRESAP. Only within small limits, Mr. Chairman. stance, I do not think anybody has effected any economies that would begin to compare in the long run with what the extra costs would be to the freight carriers if this bill were enacted.

Mr. LEA. According to the information presented here, there is a great inequality of the burdens placed upon the shipowners of different classes of ships.

Mr. CRESAP. Obviously, because one of the most difficult things in tonnage and classification of ships that can possibly be undertaken is to determine a fair basis for measuring the earning capacity of a peculiar kind of a ship. For instance-and, you take in all rate establishment, where we have different commodities, heavy or bulk commodities get one rate, and fine, costly commodities get another rate. When you get into rates and the subject of measurements, it becomes an exceedingly complicated question.

Mr. LEA. Are there any other witnesses?

Mr. EWERS. There are no other witnesses, on the part of the shipowners' association except that I would like to say, in conclusion, that the association would like to have the witnesses who have appeared here today considered as representative throughout the industry. There are many other companies that would be similarly affected, but who have found it inconvenient to appear on this short notice to attend the hearings; but who would be in a similar position as those who have testified, according to the nature of their trade, foreign or intercoastal, and I would like for the committee also to give consideration, as a matter of principle to the propriety of levying a tax or toll entirely, as a subject to administrative or executive regulation, without any, leaving any legislative maximum at all, because where your rate, even though a maximum rate, be fixed by the statute, if the measure to which that rate is applied is variable the maximum itself means nothing.

In our system of government it has been customary for taxes, impost duties, excises, tolls, generally, to be laid by Congress. The Constitution seems to suggest such a requirement and certainly we do not think it should be departed from, at least, without some definite legislative maximum which would be entirely destroyed if it were left, even though the rate were supposed to be fixed, if the regulations for the measurement were variable by regulations.

We also ask most earnest consideration in this connection, of the foreign problem.

The Canal authorities have from time to time suggested that the majority of the benefits which have accrued from these two systems have inured to the benefit of foreign steamshp companies; but, I think it is very apparent that even if the increase today fell alike. on both American and foreign steamers, the foreigner would benefit to the extent that our currency is momentarily deflated.

We should be most happy to give prompt consideration to some alternative along the lines that have been proposed by the Chairman (Mr. Lea), but at the moment, I am not in a position to make any comment upon that. It will possibly take at least several days for anything to be done in that connection.

Mr. LEA. Very well. As soon as you have some material to present, we will be glad to have you do so.