Mr. PETERSEN. The collection was enough to pay administration and amortization in the amount of $750,000 a year, I believe it is.

Mr. SMITH. There has not been enough to take care of amortizing the debt.

Mr. PETERSEN. Even so, if you will look at the figures, you will see how the income has increased, that it has been more than enough to take care of the cost of operating the Canal, and you will also see how much they have made, it is $11,000,000 this year, under the present depression.

Mr. WOLVERTON. Captain Petersen, I understand from the statements that you have made here this afternoon, the objection you have relates particularly to the agency of the Government that is going to regulate and control the project.

Mr. PETERSEN. Mr. Congressman, wo do not mean that we would not get fair treatment under the Panama Canal authorities; they have done a splendid piece of operation, and have developed a wonderful institution, and, of course, would still be under the control of the President. But he would have to call on his Cabinet members and their subordinates, because the President cannot know all the details of the operation of these various projects.

Mr. MONAGHAN. Captain Petersen, I just want to say one more thing. I notice you stated the President was not a superman, but I think you will agree with the statements of the greatest leaders of the country that he has taken he country from the morass of desperation and despair and brought it almost from the point of suicide up to self-support, and that if any man in America or in the world today deserves the distinction of being called a superman, that man is the President, Franklin D. Roosevelt.

Mr. PETERSEN. I have no quarrel with your statement at all, Mr. Congressman; we have every respect for the President of the United States, but he would have to rely upon his own assistants.

Mr. MONAGHAN. I just wanted to make that observation.

Mr. PETERSEN. He would have to take the advice, naturally, and act upon the information furnished him by his own Cabinet. I have no quarrel at all with the work and program of the President of the United States.

Mr. MONAGHAN. I appreciate that.

Mr. PETERSEN. Is there anything further, Mr. Chairman?

Mr. LEA. What would happen if they based their toll charges on the hull decks?

Mr. PETERSEN. It will increase the amount of tolls, and I might say again that they do not need to increase them, because they still have plenty of money. I do not think there is any need for increasing tolls.

Mr. LEA. And you think you would be required to pay more tolls if this bill were enacted?

Mr. PETERSEN. I think so.

Mr. LEA. We thank you, Captain.

Mr. PETERSEN. Thank you, Mr. Chairman.

48814-34

STATEMENT OF IRA L. EWERS, ON BEHALF OF THE AMERICAN STEAMSHIP OWNERS' ASSOCIATION, NEW YORK, N.Y.

Mr. LEA. You may proceed, Mr. Ewers, if you please, in your own way. Just give us your full name and for whom you appear for the record.

Mr. EWERS. My name is Ira L. Ewers. I am an attorney, appearing on behalf of the American Steamship Owners' Association, 11 Broadway, New York.

Our association comprises approximately 80 percent of all American flag tonnage operating in foreign trade. We have been acting as code proponents and for that reason have been unable to give this the thought we might have otherwise, and have given to it on previous occasions.

In addition to that, a large number of our men are at this time engaged with the intercoastal rates investigation being conducted by the Shipping Board in New York. For that reason we come to you not as well prepared as otherwise would have been the case.

Mr. WOLVERTON. Is that investigation in response to an application for an increase in rates?

Mr. EWERS. No; that is merely an inquiry to determine what the situation is, and anything the Shipping Board want to know about the facts.

Mr. WOLVERTON. Are the shipowners endeavoring to increase rates?

Mr. EWERS. I do not believe there has been an application made in that connection.

Mr. WOLVERTON. Do you know whether the present inquiry is to determine such a question?

Mr. EWERS. I could not say, but I do not believe it is. I have not personally attended the meetings.

The intercoastal members of the association are very vitally interested in this legislation; and I am unable to give you all of their information, but I happened to be in Washington and was requested to appear here today until such time as they can come before you, in order that the committee may have as much information as possible concerning the viewpoints that have been discussed.

With respect to the position of the association, at this time and in previous hearings we concur in the complaint that has been made by Captain Petersen concerning the present capitalization of the Canal as a commercial venture, and we have collaborated in preparing the statistics which Captain Petersen presented and which we believe will show that the present toll rates will produce adequate returns on a proper commercial value.

When Governor Schley appeared before the committee a week or so ago he stated that in the representative period which he selected, that the tolls actually collected on a Panama Canal tonnage basis for laden ships, amounted to 86 cents per Panama Canal ton.

The bill itself, as proposed by Governor Schley in his testimony, stated that the rate should be $1 on Panama Canal tonnage, for vessels that were laden, which does, of course, amount to an automatic increase in the toll rates of 14 cents per Panama Canal ton. Now, the Canal authorities have urged this legislation for 19 years. In almost every instance, if not every instance, they have

stated that it was not their purpose to increase the gross revenue of the Canal. Whether or not that was their admitted purpose or intention, in every instance the plan which has been proposed by them has amounted to a very substantial increase in the gross revenue of the Panama Canal.

As Captain Petersen has pointed out, when Governor Burgess appeared before the committee a year or so ago, he stated that the Canal was then earning a return of 3% percent on the entire capitalization of $535,000,000, but that he thought the Canal should have a return on the entire expenditures of 5- percent or 6 percent. The present Governor stated that on the basis of $535,000,000 valuation the Canal was earning a rate of 2-point-odd percent; and that he felt the Canai should earn a return of 3 percent, apparently, on the entire valuation. Captain Petersen has covered the question of the valuation and submitted figures and statements which I will not go into again. except to concur in the conclusion which he has drawn.

Mr. LEA. Mr. Ewers, would you rather answer questions as you go along or complete your statement first?

Mr. EWERS. Just as you please, Mr. Chairman.

Mr. LEA. If you would prefer to complete your statement first that is perfectly agreeable.

Mr. EWERS. I have no preference at all, Mr. Chairman.

Mr. LEA. On the question concerning the application of the $1 rate, would you state it would mean an increase of 14 cents per ton on the aggregate amount collected for Canal tolls

Mr. EwERS. Yes.

Mr. LEA. And that you collected the aggregate amount, or could collect the aggregate amount that would be needed, by the 86-cent toll rate

Mr. EWERS. That would produce, according to Governor Schley's calculation, the amount sufficient to operate the Canal.

Mr. LEA. If you compute the rate that is used at this time, and if this bill is enacted, the 86-cent toll would amount to the same as that now collected.

Mr. EWERS. Assume that to be true?

Mr. LEA. Yes.

Mr. EWERS. What is the question?

Mr. LEA. Then would not the logic of it be that the rate should be reduced below $1?

Mr. EWERS. Yes. As a matter of fact, there is the 86-cent rate on Panama Canal tonnage, laden.

I think I will cover that a little more fully later on.

Mr. LEA. Would not that argument more properly be addressed to the President than to the committee?

Mr. EWERS. I am very glad you asked that question. I do not believe Captain Petersen made quite clear the difference between the present proposal, at the present time and the existing plan.

At the present time the United States registered tonnage is defined by statute and we can turn to that language to determine that tonnage. When the Panama Canal Act of 1912 was adopted, the United States needed to adopt some maximum which had statutory definition, which could be construed, and which could be questioned in the courts.

Now, I want to say here that I will not be placed in the position of questioning anyone's administration, the President, the Secretary of War, or the Panama Canal authorities. I feel, however, that it is rather our duty to try to iron out these difficulties here rather than to throw this question upon the already heavily burdened President with the troubles of the Nation confronting him.

We have defined by 46 U.S.C. 77 what constitutes the United States rules of measurement. And as the Attorney General very appropriately remarked in stating that it was the United States net that Congress must have referred to, because he says if they did not refer to that there would have been no statutory minimum or maximum, but something that was variable by regulation.

I think I might digress just for a moment to say this: It was in Governor Burgess' administration-and I hope the Canal officials will correct me if I am in error-while a similar measure was pending in the Senate, and the chairman of the committee, of the subcommitte, instructed us to get together and try to see if we could not agree on a rate that would accomplish, as the Panama Canal official stated, no change in the gross revenue as they were not contending for an increase in rates. I think the stumbling block, at that time was that they assumed this valuation, and difficulty arose as to differences of opinion as to what constituted a reasonable return. we had been approached with a 3-percent return at that time, as Governor Schley seemed to think was a fair return, or even a greater return but on the proper valuation, perhaps a different result might have been obtained.

If

But we have not, in my opinion, been unwilling to make a reasonable compliance with the administration's policy, but as I will detail a moment later, there is a much more difficult problem confronting the industry, for this reason:

The increase in tolls will be almost uniformly amongst certain classes of tonnage.

Fifty of the companies, according to a study which we prepared in 1931 in considering a similar plan, would have their tolls increased, in a 13-month period, $588,474.03.

There were 53 companies, other companies I should say, whose tolls would be reduced in the same period in the amount of $397,775.55. The amount of the second figure is an estimate, at that time, and it may not be entirely accurate. But that represents nearly enough the result to show what would take place from this legislation even though no increase in gross revenue were obtained, there would be a redistribution among those who had to pay the same gross revenue.

In other words, the tankers and bulk carriers, who to my knowledge, have not asked for a reduction, would have their tolls reduced almost $400,000 a year, and the general cargo type steamship and combination cargo-passengers would have their tolls increased $600,000 a year. While the net result, approximately, net increase in the gross revenue to the Canal from that respective study would be less than $200,000, the increase in tolls for the general cargo type steamship would be almost three times that amount. And that is something we must bear in mind even if the same revenue is obtained, namely, that you are going to have a redistribution of the Canal tolls

amongst principally two classes of carriers, the bulk carrier, the tanker, and the general cargo type.

That brings me to the question of equality.

Mr. LEA. Let us see about that just a moment.

Mr. EWERS. Yes.

Mr. LEA. The figures you have just given are based on the theory of collecting the present aggregate tolls but redistributing the charges as proposed in this bill?

Mr. EWERS. Yes; that is correct. The figures which I have given are contained in a very interesting study which was submitted to the committee in 1930. I have only one copy but I will be glad to submit the reference to you.

Mr. WOLVERTON. What is that document?

Mr. EWERS. This is a copy of the hearings on H.R. 10583, in 1930. Mr. WOLVERTON. What is the date?

Mr. EWERS. It started on May 6, 1930, and was continued on May 21 and May 22, of that year.

Mr. WOLVERTON. Thank you.

Mr. LEA. In that connection how would the reduction be brought about?

Mr. EWERS. The reduction would be brought about in this manner: At the present time the method of collecting tolls produces a certain annual charge upon these groups of carriers. As it is proposed these tolls would be collected they will amount, more or less, to what I have indicated.

Mr. LEA. The reduction would be due to lower rates and not to any change in the maximum for what is now charged?

Mr. EWERS. I think it would be a combination of a change in the maximum and a change in the rate.

Mr. LEA. Do you have anything in mind concerning a change in the maximum that would reduce the present charge on ships?

Mr. EWERS. The difficulty with that has been that we are dealing with somewhat dissimilar types of transportation. Perhaps this would help to clear it up. The general cargo steamers are on an equality; and the tankers are also on an equality. They have the right to conform their vessels to the rules, on the same basis. Now originally, from the standpoint of equality, the Canal people contended for tolls on deck loads. Apparently, in this connection, that has been abandoned. This bill is willing to exempt deck loads from toll.

Deck loads, of course, are somewhat expensive to store and ordinarily constitute the lower-price commodities. It is my understanding and while I am not a traffic man-from information that I have gained in my connection with the industry for many years, that this type of tonnage space, constituting the open space, is always at a distinct disadvantage; it does not go on the exact parity with the tonnage stored in the hold.

But I just want to impress upon you, before I pass on, this important fact: That while the gross revenue to the Canal, in the example which I have just stated, will be somewhat less than $200,000 a year from these companies it will be much worse than that upon the individual companies. Because, as I have indicated, it will mean an increase on about half who will have to pay enough more