which use the Canal. In the case of our company, the changes had been under consideration for a number of years, but were deferred from time to time because of the continued prospect of legislation similar to the bill now under consideration. As a result of these postponements we have paid a very large sum in excess Canal tolls on a deadweight carrying capacity that was seldom utilized.

Entirely aside from the question of any increase in the aggregate tolls assessed, we urge this committee not to eliminate the United States net registered tonnage as a basis for determining the maximum assessment on cargo ships, as, in our judgment, this unit represents an equitable basis for the assessment of tolls. It is fair to both the shipowner and to the Government. As the allowable draft of the vessel is reduced and her deadweight carrying capacity decreased the burden of tolls is lightened, and, conversely, the tolls increase if the draft and deadweight are greater. Under the Panama Canal rules. of measurement due allowance is not made for these factors. This seems to me to be particularly inequitable as the cost of both construction and maintenance of a Canal increase cumulatively with its depth. The assessment of a lower rate on ships in ballast is a recognition of this principle.

The use of the Panama Canal net ton as the sole basis for assessment of tolls would also have the effect of increasing the tolls paid by the general cargo ships and effecting a corresponding decrease in the tolls paid by oil tankers, even though the aggregate amount collected remains constant. The cargo vessel cannot afford to assume this increased burden and I see no justification for the substantial saving to the tanker.

In addition the net registered tonnage is almost universally accepted as the basis of assessing dues against a ship. Port dues, drydock charges, dockage charges, and pilotage are charged on the basis of the net registered tonnage. To compel the assessment of canal tolls on some other basis forces the shipowner to take both standards of measurement into consideration, and thus unnecessarily complicate his problems.

The committee's attention is also directed to the fact that if the proposed legislation is enacted there will be no statutory requirements for the measurement of vessels, for the purpose of assessing Panama Canal tolls, but that this matter will be left entirely under Executive control. Thus the bill, while ostensibly giving the shipowner the protection of a maximum rate, actually leaves the matter in the hands of the executive department of the Government.

Mr. LEA. What type of ships does your company operate?

Mr. MORRISON. We have two companies-the Hawaiian Steamship Co. and the Williams Steamship Corporation, a subsidiary-with a total of 28 cargo vessels.

Mr. LEA. All general cargo ships?

Mr. MORRISON. All general cargo ships.

Mr. LEA. Do they carry passengers?

Mr. MORRISON. No; we have no passenger ships at all; no passenger capacity.

Mr. LEA. You spoke of the reduction in the rates of Suez Canal tolls. Do you know what those reductions are?

Mr. MORRISON. I notice that in the paper, Mr. Chairman. It was about 25 centimes a ton on laden vessels.

Mr. LEA. How much would that mean in American money?

Mr. MORRISON. I do not know what the gold franc is worth now. I think it is about 32 cents.

Mr. LEA. What is the present rate through the Suez Canal?

Mr. MORRISON. I have seen from the record here that it is slightly higher than the Panama Canal rates.

Mr. LEA. Yes. You spoke of having made some important structural changes in your ships. For what purpose were those changes made?

Mr. MORRISON. The changes were made to reduce the net registered tonnage, for the reasons I have heretofore outlined. They also decreased the deadweight carrying capacity, which capacity was seldom utilized. These changes reducing the net registered tonnage were made under the United States rules of measurement, which are not the same as the Panama Canal rules, because they are substantially on a different basis.

Mr. LEA. How would that reduce the deadweight tonnage?

Mr. MORRISON. In this way: By making these openings in the shelter decks it has reduced the draft by about 2 feet per ship, and that has reduced the net carrying capacity by the amount of about 1,250 long tons per ship.

Mr. LEA. Which requires the operation of the ships on a lighter draft than formerly?

Mr. MORRISON. In the intercoastal trade, I do not know that the statute prohibits putting a ship below the Plimsoll mark but it is a practical disadvantage which the ships have to operate under in competition with other ships.

Mr. LEA. I suppose those structural changes were in the superstructure?

Mr. MORRISON. In the shelter decks; yes.

Mr. LEA. And the idea of the change was to reduce your tolls? Mr. MORRISON. Yes.

Mr. LEA. Through the canal?

Mr. MORRISON. Yes.

Mr. LEA. Was that change very expensive?

Mr. MORRISON. I do not have the exact figures, but I believe it was less than $100,000 for 18 ships.

Mr. LEA. Yes.

Mr. MORRISON. I could furnish those figures for the record if you want them.

Mr. LEA. No; that is not necessary.

Mr. MORRISON. All right.

Mr. LEA. But those changes did reduce your possible cargo? Mr. MORRISON. It reduced the deadweight carrying capacity. Mr. LEA. Yes. That is, the change in the superstructure reduced your deck capacity?

Mr. MORRISON. With these openings, these decks are not water tight, within the meaning of the regulations, therefore that space does not add to the carrying capacity of the ship as it did formerly. Mr. PETTENGILL. Has that effected a change in your rates? Mr. MORRISON. Those changes were made in accordance with the United States rules under the supervision of the classification societies surveyors; at least, they knew when the changes were made.

Mr. LEA. You speak of the rules, you mean the rules of the United States Bureau of Navigation?

Mr. MORRISON. The American Bureau of Registry Shipping and Lloyds are the surveyors that we used.

Mr. PETTENGILL. I would like to ask one or two questions.
Mr. LEA. Mr. Pettengill.

Mr. PETTENGILL. You say that you reduced your carrying capacity?

Mr. MORRISON. Yes.

Mr. PETTENGILL. That was a technical reduction?

Mr. MORRISON. I am not qualified as a technical man, but I presume some of those here could answer the question for you, Mr. Congressman.

Mr. PETTENGILL. In a technical sense, but from a practical standpoint it is not a reduction?

Mr. MORRISON. I would prefer that you ask the engineers about that, Mr. Pettengill. It seems to me, however, that it would not only be a technical but a practical reduction because you could not load below that mark as a result of that change.

Mr. PETTENGILL. I appreciate the fact, Mr. Chairman, that this is a technical subject and that I may get in over my head because I know very little about the merchant marine. I will not ask any more questions right now.

Mr. LEA. We thank you, Mr. Morrison.

Mr. MORRISON. Thank you.

STATEMENT OF EDGAR F. LUCKENBACH, REPRESENTING THE LUCKENBACH STEAMSHIP CO., NEW YORK, N.Y.

Mr. LEA. Please state your name, address, and for whom you appear.

Mr. LUCKENBACH. Edgar F. Luckenbach, of the Luckenbach Steamship Co., 120 Wall Street, New York.

Mr. LEA. You may proceed.

Mr. LUCKENBACH. Mr. Chairman and gentlemen, I am here fighting for my existence. I do not receive a subsidy. I have just completed overhauling my ships to comply with the United States law, at an expense of $155,000.

The N.R.A. has increased my expense about 50 cents per ton on all cargo that I carry. If you adopt the measure suggested by the Canal authorities, it will mean a further increase of about $350,000 or $400,000 per year, which would make it impossible for me to continue in business.

The Shipping Board holds mortgages on my fleet. I cannot pay these mortgages if this measure is adopted.

I think this Canal should be free of any charges whatsoever for American ships engaged in intercoastal trade. It is the only American canal that makes a charge for vessels passing through. The United States Government improves rivers and harbors and they do not make any charge for that. Originally it was intended that American ships should be free of all tolls, and the platform of both political parties were committed to that policy.

There is no American steamship company engaged in intercoastal trade that has made any money for years. And as I said before, if this measure is adopted it will put some of them out of business. Mr. LEA. Is that all your statement?

Mr. LUCKENBACH. That is all.

Mr. PETTENGILL. You say that no steamship engaged in the intercoastal trade has made any money for years?

Mr. LUCKENBACH. Yes.

Mr. PETTENGILL. What was the last year they made some money? Mr. LUCKENBACH. I think we made some money about 6 years ago. Mr. PETTENGILL. About 1927?

Mr. LUCKENBACH. Yes.

Mr. PETTENGILL. 1928 and 1929 you did not?

Mr. LUCKENBACH. In 1928 we made a small amount.

Mr. PETTENGILL. How about 1929 ?

Mr. LUCKENBACH. We did not do so well.

Mr. PETTENGILL. Did you lose money?

Mr. LUCKENBACH. No, we did not; we just about broke even.

Mr. PETTENGILL. And since that time on you have made no money? Mr. LUCKENBACH. We have lost money ever since.

Mr. PETTENGILL. Yes. How many vessels do you operate?

Mr. LUCKENBACH. Twenty-three.

Mr. PETTENGILL. How many of those go through the Canal?

Mr. LUCKENBACH. All of them; all of our trade is intercoastal trade.

Mr. PETTENGILL. I see. Do you know of any shipowners anywhere who have made any money since 1929?

Mr. LUCKENBACH. I do not know about that.

Mr. PETTENGILL. Well, of course, you have had a shrinkage in tonnage, have you not?

Mr. LUCKENBACH. A very large shrinkage.

Mr. PETTENGILL. Did you complete the remodeling of your boats? Mr. LUCKENBACH. I think we have one undergoing repair now. That will be the last one.

Mr. PETTENGILL. How much has that cost you for each boat?

Mr. LUCKENBACH. We have remodeled 15 for $197,007.

Mr. PETTENGILL. That would be about $6,000 per boat?

Mr. LUCKENBACH. How much?

Mr. PETTENGILL. Fifteen into $197,007, about $13,000?

Mr. LUCKENBACK. Yes.

Mr. PETTENGILL. And all of these ships have been repaired to comply with this rule?

Mr. LUCKENBACH. Yes.

Mr. PETTENGILL. And you are getting some benefit from that?.
Mr. LUCKENBACH. Yes; we are saving money.

Mr. PETTENGILL. On account of the tolls?

Mr. LUCKENBACH. Yes.

Mr. PETTENGILL. But you are getting no other benefit from it?
Mr. LUCKENBACH. No. The draft is reduced somewhere between

2 feet and 3 feet per ship.

Mr. PETTENGILL. Yes.

Mr. LUCKENBACH. And our deadweight tonnage is less.

Mr. PETTENGILL. Does that affect the potential carrying capacity of your vessels?

Mr. LUCKENBACH. Well, the classification society thinks so.

Mr. PETTENGILL. You mean the marine insurance; is that what you refer to?

Mr. LUCKENBACH. There is a classification society that gives us a certificate of classification, and that reduces our deadweight; it increases our freeing ports, and that is marked on the side of the ship.

Mr. PETTENGILL. But if you had available freightage again you could load your ship to their former capacity, could you not? Mr. LUCKENBACH. If we could take the risk.

Mr. PETTENGILL. If you could get the marine-insurance risk?
Mr. LUCKENBACH. Yes.

Mr. PETTENGILL. That would increase your marine-insurance premiums.

Mr. LUCKENBACH. I think it would. I do not know of any insurance company that would take a chance, if we were to overload the ship.

Mr. PETTENGILL. That is a point that I wanted to develop. That is all I want.

Mr. WOLVERTON. What is the character of the business conducted by you?

Mr. LUCKENBACH. Freight business.

Mr. WOLVERTON. Is that limited to any one particular kind of cargo, or do you conduct a general cargo business?

Mr. LUCKENBACH. We carry everything we can secure.
Mr. WOLVERTON. Between what ports do you operate?

Mr. LUCKENBACH. We have several ships out of Boston, New York, and Philadelphia for the Pacific coast ports, and we have one out of Mobile, Ala., another out of New Orleans and Houston, for Pacific coast ports.

Mr. WOLVERTON. You stated you have a fleet of 23 vessels?

Mr. LUCKENBACH. Yes.

Mr. WOLVERTON. Were they purchased from the Shipping Board? Mr. LUCKENBACH. Most of them. I am the largest customer the Shipping Board has.

Mr. WOLVERTON. When did you purchase them?

Mr. LUCKENBACH. I think the last one was purchased about 3

or 4 years ago.

Mr. WOLVERTON. When did you purchase your first ship?

Mr. LUCKENBACH. Right after the war.

Mr. WOLVERTON. On what terms?

Mr. LUCKENBACH. You mean the price per ton?

Mr. WOLVERTON. No; I mean the terms of payment. I asked the question because you stated that you would not be able to meet the mortgages held by the Shipping Board?

Mr. LUCKENBACH. Yes.

Mr. WOLVERTON. What are the terms of your mortgages, what rate of interest, and, what other terms of payment?

Mr. LUCKENBACH. The rate of interest is 5 percent, I think.

The terms of payment, I think, were for 15 years.

Mr. WOLVERTON. You are paying 5 percent interest?

Mr. LUCKENBACH. Five percent.