Mr. WOLVERTON. Mr. McCarthy, in his statement, Mr. Sill, estimated that the cost to his company would be $297,000, or approximately 50 percent more than the present cost and the proposed figures that have been given by Mr. Smith would indicate an average increase of about 8 percent on American ships. Can you account for the difference? Mr. SILL. That is because of the fact that the large passenger ships will be the ones that will have their tonnage increased the most, because all of their passenger space will be included in the Panama Canal tonnage. Mr. WOLVERTON. Would this bill have the effect of increasing the cost as to ships operated by Mr. McCarthy's company? And would they be required to pay the increased amounts estimated by him? Mr. SILL. It would depend upon the price per ton set by the President after this bill was passed as to how much his company would have to pay in excess of what they now pay. Of course, both Mr. McCarthy's figures and Mr. Morrison's figures were based on the tonnage of their reconditioned ships, and that makes quite a difference. Also, Mr. Luckenbach's figures were based on the United States tonnage of the ships after the reconditioning of his ships. Mr. LEA. I take it from the figures that Mr. Smith gave, that if this bill were passed, a toll of about 91 cents would produce the same amount of revenue as is secured now. Is that about right? Mr. SILL. Well, he has those figures. You have the average figures there, Mr. Smith. Mr. SMITH. It would be a little less than that-something like 86 cents, according to Governor Schley. Mr. SILL. On 90 cents, on the basis of 90 cents per ton, Panama Canal measurement, the American ships in the aggregate would not pay any more than they pay now. Mr. EWERS. Governor Schley stated in a representative period which he selected-I do not recall what the period was, but it was his period, whatever it was-that the Panama Canal authorities collected an equivalent of 86 cents per Panama Canal ton during that period on all transits. Mr. SILL. But on American ships, it was 90 cents per ton, and I think he had the figures for the ships in the intercoastal trade and the American ships in the foreign trade, and also the foreign ships. Mr. WOLVERTON. Then I understand, using again Mr. McCarthy's situation as a basis, that if the rate is fixed at approximately 90 cents per ton, that then his company would not have a 50-percent increase? Mr. SILL. Mr. McCarthy would have to pay some more, anyway. Mr. WOLVERTON. That is what I am coming to. Mr. SILL. There are other ships that pay more than 90 cents. Mr. SILL. Yes, sir; that is due to the fact that Mr. McCarthy is enjoying more extensive exemptions than these others are able to enjoy, because of the nature of his ships. Mr. WOLVERTON. That is clear. Mr. McCARTHY. We built them that way. We have a vessel which I think that the United States lacks, and that is a large passenger, a vessel with a large passenger capacity, which I think that this country needs, and I do not think that any further burden ought to be put on them. We ought to be encouraged to build that type of vessel. We can use it for military purposes, in case it is needed. Mr. SILL. I heartily agree with that. Mr. McCarthy's ships are of the finest type of ships that are using the Panama Canal, and I would be very glad if something could be done that would assist them, but under the present law it is impossible. We have the tolls based on one tonnage, and we have a maximum toll collectible based on another tonnage. If the President should issue an order to the effect that 6 months from date he would reduce the tolls 15 percent for the Panama Canal, his ships would not be affected, because with even a 20-percent reduction, the amount would still be greater than the limit set by law under the present United States tonnage of his ships. Mr. EWERS. We are not worried very much about a potential reduction. Mr. SILL. It seems to me if the steamship people would just see that all that we are asking for is an honest yardstick, not one that is broken off at the end, that it would help their ships.. They have gone to a great deal of trouble and expense to recondition their ships. in order to reduce their tolls when it seems to me that the proper method of approach would have been to allow the Panama rules to be the basis for the tolls charged, as originally intended, and then present their case to the Panama Canal authorities and the Secretary of War, and the President, and if they did not receive relief, take it to this committee that it is now before, and I think they would see that they would be able to get, and would be granted that relief. Mr. WOLVERTON. I wish to come back again to Mr. McCarthy's ships and the figures that he gave, which have been confirmed both by you and Mr. Smith, which rather astound me, and which would mean an increased charge so far as his company is concerned, with only three ships operating, of approximately $300,000. Now, does that not seem a penalty that is being placed upon him because of the type of ship that he has, a ship that provides sumptuous quarters? Mr. SILL. Yes, sir; but you must take into consideration that with the three ships that he has, the amount that he is going to increase his tolls is due a great deal to the fact that they make so many transits. He has an average of one ship through the Canal every week, or 52 transits a year. Mr. MCCARTHY. And you like to see them come. Mr. SILL. Absolutely. Mr. WOLVERTON. And there are other expenses, too, you say, Mr. McCarthy? Mr. MCCARTHY. The tolls are not the only expenses that we have in going through the Canal. There are a lot of incidental expenses that are incurred in going through the Canal. Tolls at the Panama Canal are not the only expense. Mr. WOLVERTON. What do you mean by incidental expenses? Mr. MCCARTHY. We have incidental expenses, men you have to put on the ships to run the lines, and towboat expenses, and lots of other incidental expenses that are added to our Canal tolls. So the total expense is not represented by the $625,000 Canal tolls. Mr. WOLVERTON. What does it cost to take a vessel through the Canal of the type of the California, Virginia, or Pennsylvania? Mr. MCCARTHY. $12,200 each way, so that on one round voyage to California we pay approximately $25,000, and that is approximately, will be, 15 percent of our operating expense. Mr. LEA. Now, returning to those figures mentioned by Mr. Smith, if I understod them rightly, they referred to 1933. Mr. SMITH. 1933. Mr. LEA. Tonnage? Mr. SMITH. Yes, sir. Mr. LEA. And the foreign ships would be required to pay about 10 percent more than they do now? Mr. SмTH. Yes. Mr. LEA. And American ships about 8 percent? Mr. SMITH. About 8 percent. Mr. LEA. So that I figure, roughly, about 91 cents on the ton would raise the same amount of money collected in 1933. Mr. SILL. You must understand the type of ship Mr. McCarthy is talking about, his company would have to pay more in proportion that some of the others. Mr. McCARTHY. Mr. Chairman, the total increased revenue now, Mr. Smith states, would be approximately $2,000,000. Now, four or five operating companies would take up pretty near all of that in their increased expenses. Now, it must mean also that a very large number of American ships of the tanker type are going to terribly benefit by this change, and also a lot of foreign ships wil benefit by this change, in the shape of tankers. Mr. SILL. As far as the tankers are concerned, we must say they are going through in ballast one way, and when they are going through in ballast they are entitled to 40 percent. They are not getting that now. Mr. MCCARTHY. They have to make their rates for oil so that they can operate one way in ballast, and we have to pay the bills, and the same is true with a lot of foreign tankers that are going through, and they are enjoying a benefit out of comparison to certain American companies who are operating high type ships. We are paying the bills for the foreigners who are going through. Mr. EWERS. On the statement of Mr. Smith the other day, Mr. Chairman, you recall that to increase the gross income of the Canal $200,000, a certain class of vessels would have their tolls increased $400,000 and other types would have their tolls reduced $200,000 to produce a $200,000 recommended increase in going revenue, and that $200,000, in the case of some companies, I think that the ratio would probably represent a minimum in this connection. Mr. SILL. I think that in dealing with these situations we lose sight of the fact that the same is true now. These vessels that would have to pay more are the ones that have reconditioned their ships. They are necessarily not paying enough now. Between the shipowners themselves there is that inequality that would be ironed out by using the Panama Canal rules of measurement, which are a fair basis for the determination of the size of a ship, instead of a fictitious figure which we now use, the net tonnage under United States rules of registry. If these vessels under a tonnage that is fair as between ships, under a rate which is exactly identical, some ships will pay more and |