Panama Canal and in reports of various Secretaries of War. You will find most of that in this memoranda which Mr. Farley left with the committee.

I think it is admitted that it is not fair to tax the space in a shelter deck, for example, and not to tax the space occupied by a deck load of lumber on a lumber carrier. If the space on the lumber carrier were enclosed within a shelter deck, then that space would be taxed whether used or not; whereas without such a deck, it could carry a deck load of a million and a half feet of lumber, such as may be carried by certain lumber carriers and this load goes scot free under the provisions included in this proposed legislation.

It seems to me that if that situation is to be treated equitably, both the shelter-deck space and the deck space must be treated alike. For instance, port dues levied by the Port of London Authority are assessed upon the tonnage actually carried, both on deck and in the shelter deck. Under those rules the ship is charged for both deck space and shelter-deck space to the extent they are occupied. The same rule applies to both. They are assessed on the basis of their actual measurements.

Furthermore, an exemption or deduction is allowed against both tonnages to the extent that underdeck space may be available for the stowage of that cargo. The exemption of the shelter-deck space, under the registry rules of all maritime nations, clearly shows the analogy between that space and the deck-load situation.

Now, on the question of the ballast ships. I have a little statement that I would like to put into the record, with your permission, Mr. Chairman. Until we get the information that we have requested from the Canal authorities, we are not in a position to submit any comparative data on either of these two questions-that is, either on the deck load or the ballast-but I thought that you would be interested in a statement which I have prepared from the official records of the Shipping Board, which shows the actual tons carried by all of the intercoastal lines, from the Atlantic coast of the United States to the Pacific coast of the United States, for the years 1932, 1933, and the first half of 1934.

For that period of 22 years the intercoastal carriers carried 3,489,000-odd tons of cargo west-bound through the Canal, and as compared with their carrying capacity, on those same ships, of 10,330,000 tons. In other words, we have actually carried about one-third of our capacity west-bound through the Canal; yet, of course, we get no exemption or no deduction on account of empty spaces in the ships.

Mr. LEA. Does your table show the tonnage you carry east-bound? Mr. MORRISON. No; we are substantially full east-bound. The lines are substantially full east-bound. At least, that is the situation in our case, and I think probably it is true in the case of most of the intercoastal lines. This is just the west-bound situation, and this data is taken from the reports filed with the United States Shipping Board, in docket no. 126.

I might just read a portion of these figures.

In 1932 it was 33 percent; 1933, 33 percent; and the first half of 1934, 37 percent. The average for the 22-year period was 34 percent of capacity.

Now, the tankers make the round voyage for the purpose of bringing back a cargo of oil, and the entire cost of the round trip is the cost for transportation. It is a special type of ship, which is not designed to carry general cargo, and we see no justification for what we consider to be rather important and vital discrimination in this departure from the principle of earning capacity.

There is one other tabulation that I would like to put in, for the reason that statements have frequently been made-and I think that some reference was made to this condition in your report last year, Mr. Chairman-that any increased burden that might be imposed under this legislation would fall particularly on the foreign ships and not on the American ships; and I have taken this data from the annual report of the Panama Canal for the fiscal year 1934, and I believe it demonstrates very clearly that the burden of any redistribution of tolls under these bills is going to fall very largely on the American ships and not so much on the foreign ships.

Mr. LEA. Do you have there accessible the statement to which you refer in the report made last year?

Mr. MORRISON. No; I do not have that right here. I might be mistaken about that, but it is my recollection that some statements to that effect were made in the discussion of this bill in either the Senate or the House. I will check that up, if you wish.

Mr. LEA. You might check that up when you revise.
Mr. MORRISON. I will be very glad to check that up.

(The statements referred to by Mr. Morrison were as follows:) On page 10887 of the Congressional Record (73d Cong., 2d sess.): “Mr. DOCKWEILER. So this law, while it may temporarily increase the rates, on the average, on American shipping, yet so soon as the President gets this law, he promises to reduce the general rate to, say, 90 cents or $1 a ton, and the American shipping will be less affected and it will be cheaper for American shipping to go through the Canal when this rate becomes operative." On the same page:

'Mr. LEA of California. It (H. R. 7667) will slightly decrease the amount of tolls that will be collected and the Americans will get two-thirds of what little reduction there is."

On pages 12 and 13 of the hearings on February 8, 1934, before the Subcommittee of the Committee on Interstate and Foreign Commerce of the House of Representatives, on H. R. 7667, Governor Schley, of the Panama Canal, introduced tables indicating that the increase in tools that would be effected under the proposed rates of $1 per Panama Canal net ton on laden vessels, and $0.60 on ballast vessels, would be proportionately heavier on foreign ships than on ships of American registry.

Also, on page 153 of the hearings (Mar. 13, 1934), Mr. Smith again refers to the fact that these rates would increase the tolls on foreign ships by a larger percentage than it would the tolls on American ships.

Take the general cargo and passenger ships that transited the Canal during the fiscal year ended June 1934. The increase that would be made in the tolls of the United States ships would be approximately $1,448,000 or 19 percent. The increase in tolls on similar ships of foreign registry $1,442,000, or 13 percent. In other words, on all general cargo and passenger ships-this is on the basis of the $1 and the 60-cent rates, and the relative percentages would be the same under any other rate.

The increase on all general cargo passenger ships would be $2,280,000, or 15 percent, but the increase would be 19 percent on the American general cargo and passenger ships and only 13 percent on similar ships of foreign registry.

On all tankers and miscellaneous craft there would be a reduction in tolls of $266,000 on American ships, and a reduction in tolls of $176,000 on foreign ships of that class.

The reduction in the case of the United States ships is only 8 percent, but in the case of foreign tankers and miscellaneous craft, the reduction would be 9 percent, so that even in the case of tankers, the American tankers would not get quite so large a redutcion as the foreign tankers.

Taking all ships together; that is, tankers and general cargo and passenger ships-I think these figures are very significant-the increase per transit on United States ships would be about $521.

The increase per transit on ships of foreign registry would be $385. And, the increase per ship on United States ships, that is, per ship per annum, would be $2,869.

And, on ships of foreign registry it would be only $1,291; that is, per ship per annum.

Mr. LEA. That is figuring it at how much per ton?

Mr. MORRISON. That is on the basis of the $1 and the 60-cent rates: one $1 rate for laden ships and 60 cents for ballast. The difference would be in the same proportion on any other rate that you might take, as for instance, the 90-cent rate, or any other rate, under the Panama Canal rules of measurement.

Mr. LEA. Assuming that those rules would not be changed?

Mr. MORRISON. Exactly. That is on that basis. We could not make it on any other basis; that is, on the Panama Canal traffic as shown in the Governor's report.

Mr. LEA. We expect the rate will not be over 90 cents. This bill contemplates that those rules will be revised, based on the experience of the last 20 years.

Mr. MORRISON. Mr. Lea, that is just why I feel it is so important that the revision should take place before the legislation is enacted, so that we can have something from which we can find out how it will effect our business.

Mr. LEA. That will be impossible, because Congress would not attempt to take charge of the detailed revision of the proposed law. Mr. MORRISON. No.

Mr. LEA. The best that we can do is to provide a means by which the adjustment can be made and that must follow after we have given somebody the authority to do that.

Mr. MORRISON. They have the authority to revise the rules now, Mr. Chairman, and a year ago they promised to revise the rules.

Mr. LEA. You may proceed.

Mr. MORRISON. The only other thing that I want to mention is that the year 1934 has been a very disastrous year for most of the intercoastal lines and I am just going to cite our own figures, which have been published as a matter of record. For the 11 months ended November 30, 1934, which are the latest figures we have, our operating loss was about $475,000. We feel that no changes should be made in a system, which the Governor admits is yielding an adequate return to the Government and requires no further revenues from the point of view of Canal administration. The only effect of these changes would be a redistribution of this burden among the shipping lines, and no action is necessary at this time as no shipping

interest is protesting against the present distribution and particularly as the set-up of a permanent separate system of measurements for this purpose will seriously interfere and probably prevent, as Mr. Farley so clearly set forth, the establishment of internationally uniform rules for all purposes.

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

Mr. MORRISON. Thank you.

(The tables above referred to are on file with the committee.)

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

Mr. LEA. Mr. Luckenbach, if you will state your name and address and whom you represent, to the reporter?

Mr. LUCKENBACH. Edgar F. Luckenbach, president Luckenbach Steamship Co., New York.

Mr. LEA. You may proceed in your own way, Mr. Luckenbach. Mr. LUCKENBACH. Our meeting this year is entirely different from the meeting last year. All of our operating expenses have increased; our repairs have gone up at least 25 percent, amounting to about $164,000 a year. Stevodoring, checkering, and other dock labor has increased about $300,000 per year. Licensed and unlicensed ship personnel has increased about $227,000 a year; making a total increase of $687,000.

When we were here last, we did not know what the increase would be, owing to the Government activities, but we are sorry to say we found out.

Last year we had a strike that lasted about 84 days that cost us in the neighborhood of $500,000.

I take it that this bill is to increase Canal tolls, and if the increase, as we figured on the last bill, would be about $300,000 more than we were paying, why, this will either make or break some of us.

I think it is safe to say that none of the intercoastal lines have paid their interest or depreciation charges for several years. Of course you understand that the United States Shipping Board hold mortgages amounting to millions of dollars on this intercoastal fleet. Some have defaulted on their mortgages. Any increase of Canal tolls more than likely will throw the ships back to the Shipping Board and the Government will be in the shipping business once again.

We find suggestions here of discrimination in regard to lumber carriers by eliminating the charges on deck loads. My ships are mostly shelter deck ships, not built for deck loads. It is possible for a man to build a ship that will carry just as much as one of our ships, 8,000,000 feet of lumber, but of that 8,000,000 feet, the new ship would carry 6,000,000 feet on deck and not pay any tolls on it. The result is, anyone that built a ship like that would put us out of the lumber carrying business.

We are not a mail subsidized line. If we were, why, perhaps we would be able to make some dividends, as Uncle Sam might supply the money that we would pay out in Canal tolls.

We have been paying the Canal, ever since it opened, until last year, millions of dollars. Now, we have reconstructed our ships so that our Canal tolls will be less and cost us about $200,000.

If it is the idea of the committee to insist upon increased tolls,. why then I would suggest that the present ships be eliminated and their rules applied to new construction only.

That is all I have to say.

Mr. LEA. Are there any ships which have been reconstructed in recent years?

Mr. LUCKENBACH. I do not know as to others; but we have reconstructed most of our ships.

Mr. LEA. I meant to say new ships.

Mr. LUCKENBACH. There have been no new ships built for the intercoastal trade in some years.

Mr. LEA. What has been the status of this trade during the last year; has it increased or decreased?

Mr. LUCKENBACH. Last year it decreased.

Mr. LEA. Is that true generally of the shipping lines?

Mr. LUCKENBACH. Oh, I think so. There have been large numbers of intercoastal ships laid up for some months.

Mr. LEA. I think it has been announced in the papers that there has been an increased tonnage going through the Canal this last

year.

Mr. LUCKENBACH. I do not know.

Mr. LEA. We will get the figures on that, anyway.

Mr. LUCKENBACH. Yes.

Mr. LEA. Well, we thank you, Mr. Luckenbach.

Mr. LUCKENBACH. Thank you.

STATEMENT OF A. J. McCARTHY, VICE PRESIDENT AMERICAN LINE STEAMSHIP CORPORATION, NEW YORK, N. Y.

Mr. LEA. Mr. McCarthy, if you will state your name, address, and your representation?

Mr. McCARTHY. A. J. McCarthy, vice president American Line Steamships, Inc., 1 Broadway, New York.

Mr. Chairman, I do not have much more to add to what I stated at the last hearing before your committee except that I want to again point out very forcibly what the change in the system of assessing Canal tolls is going to mean to the general cargo and passenger lines. In our own case the tolls would be increased if the dollar rate was fixed under the Panama measurement approximately 50 percent, and proportionately less if the rate was made 90 cents.

At present we are paying over $600,000 a year on tolls on three ships.

The dollar rate would increase those tolls to over $900,000 per

annum.

And, on the basis of 90 cents, that would work out about $815,000 · a year, against what we are paying today of $615,000.

This change in the system places a very great burden upon the general cargo and passenger liners, and carries considerable benefit to the tankers and bulk cargo carriers.

I think it is pretty generally known that the general cargo and passenger lines engaged in the intercoastal trade, using the Panama Canal, that there is not one line that is making their interest and depreciation, as Mr. Luckenbach has just said, whereas I think we