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Washington, D. C. The subcommittee met, pursuant to call, at 10 a. m., Hon. Clarence Lea (chairman) presiding.

Mr. LEA. The committee will come to order.

We meet this morning to have a partial hearing on H. R. 1399, a bill to provide for the measurement of vessels using the Panama Canal, and for other purposes.

(H. R. 1399 follows:)

[H. R. 1399, 74th Cong. 1st sess.]

A BILL To provide for the measurement of vessels using the Panama Canal, and for

other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the first five sentences of the third paragraph of section 5 of the Act of August 24, 1912 (37 Stat. 560, 569), as amended by the Act of June 15, 1914 (38 Stat. 385), are hereby amended so as to read as follows: "Tolls on merchant vessels, Army and Navy transports, colliers, hospital ships, supply ships, and yachts shall be based on net vessel tons of actual earning capacity, determined in accordance with the *Rules for the Measurement of Vessels for the Panama Canal' prescribed by proclamation of the President, November 21, 1913, and as may be amended from time to time by order of the President, and shall not exceed $1 per net vessel-ton so determined, nor be less than 60 cents per net vessel-ton so determined, on laden vessels, and on vessels in ballast without passengers or cargo shall be less than the rate of tolls for vessels with passengers or cargo : Provided, That no charge shall be made for deck load, which is defined, for the purpose of this Act, as cargo situated in a space which is at all times exposed to the weather and the sea and which space is not included in the net tonnage determined under the said “Rules for the Measurement of Vessels for the Panama Canal.' Toils on other floating craft shall be levied on displacement tonnage at rates to be prescribed by the President. In addition to the tolls based on measurement or displacement tonnage, tolls may be levied on passengers at rates prescribed by the President but not to exceed $1.50 for each passenger. The levy of tolls is subject to the provisions of article XIX of the convention between the United States of America and the Republic of Panama, entered into November 18, 1903, and of article I of the treaty between the United States of America and the Republic of Colombia, proclaimed March 30, 1922.”

SEC. 2. That this Act shall take effect and be enforced on and after January 1, 1936.

During the last session of Congress, we held a hearing at length on a similar bill. So, it is not the purpose of the committee to go over the whole matter again, certainly not from the standpoint of the Government, but inasmuch as some of the shipping companies desire to present their viewpoints, we have decided to give this opportunity.

As a member of the committee I do not see much advantage in thrashing over the matters that were covered in the former hearing, because it is here and available to all members and all interested parties, but, of course, we do not want to interfere with you gentlemen representing the shipping companies in presenting your case in your own way, because it is for you to decide what you want to present.

The bill (H. R. 1399) is practically, if not identically, the same as the bill which passed the House during the last session. That was H. R. 7767.

Subsequent to the hearings in the last session the question as to the amount of tolls was taken up, as all interested parties are aware, and it was determined by the Governor that if this bill should become a law, his recommendation would be that the tolls be fixed at not more than 90 cents a ton, instead of $1 a ton as permitted in the bill. That is the maximum amount permitted by this bill.

I think that everybody interested understood at the time the last bill was presented to the House, that the tolls would actually be 90 cents, instead of $1. The theory of that charge was that the object to be accomplished was not to increase the tolls of the Canal in the aggregate, but rather to provide what was believed to be a more equitable system of apportioning those tolls.

Now, how many of you gentlemen want to be heard, and is there anyone that is particularly anxious to be heard in order that he may get away promptly? We can hear you in your own order, if you have any preference.



Mr. LEA. We might take the names of all the witnesses who want to appear. You may proceed, Mr. Ewers.

Mr. EWERS. My name is Ira L. Ewers, and I am representing the American Steamship Owners' Association.

Mr. LEA. You may proceed in your own way.

Mr. EWERS. Mr. Chairman, I am not going into the merits of this controversy other than to mention them in connection with our present difficulties.

This subject has received considerable attention by both the Canal officials and the industry over a long period of years, and I believe most of you are familiar with the views involved and the difficulties of an equitable solution.

With that in view, the association appointed a committee, some five or six members, to collect the factual data, to prepare recommendations to the association for a solution of the problem. That comm'ttee has requested various data from the offices of the Panama Canal which they believe will enable a more intelligent comprehension of the problem. The shortness of time has not enabled the Canal officials to prepare and submit that information nor, of course, our committee to consider it. We have been informed by the Canal officials that it is hoped that the informat on that we have l'equested might be air-mailed from the Isthmus by January 24, which would be today or tomorrow, and if they are able to prepare it within that time, it should be here relatively shortly, and the association and its committee and the various members of the association would like an opportunity of submitting for the consideration of this subcommittee their reaction to the general situation based upon a study of this factual data.

It will be recalled that the present objection to this legislation has been not only that it would increase tolls in general but that it would redistribute them

Mr. LEA. May I ask when that committee was appointed?

Mr. EWERS. Some time last October, or November, I believe, and they had several meetings with Governor Schley when he was here, which would be last fall some time.

Several propositions were advanced to Governor Schley at that time to which he promised to give consideration but as yet we have received no intimation as to what his attitude would be.

As I was observing, the difficulty is that even though the gross amount of tolls collected from the Canal operations should remain the same, the affect of this legislation would be to redistribute the toll burden amongst the different classes of vessels transiting the Canal. Some classes of vessels as such would benefit. Other classes would have to bear the burden to the extent that others are benefited and the association's committee has been approaching the study of this situation with an idea of determining whether that redistribution of tolls between them would conform to the basic theory of the toll system that vessels should pay tolls pursuant to their earning capacity. We have found several instances which tend to indicate that the proposed legislation would not only produce further inequities in that connection, but we have asked for statistics that would indicate the extent of those inequities.

In the hearings before the committee previously, I believe it has been generally recognized that although perhaps this legislation would correct one loophole in the law, or one inequitable situation, that still further inequities would remain and that some inequities would result from the legislation itself.

At a hearing granted by the Secretary of War, shortly after this hearing last year, the Secretary of War and the Canal officials apparently recognized that the legislation as recommended would produce hardships on the industry as such.

The Secretary of War addressed a letter to Congressman Lea that it was his purpose to recommend, perhaps, that for laden vessels, the tolls should not exceed 90 cents a ton, which would minimize the inequities resulting from this legislation but not entirely dispose of them. We find, however, in the annual report of the Governor of the Panama Canal still further reference to the reasonableness of the efficacy of the $1 rate, and would like to be informed whether there is any disagreement on that score or whether the 90-cent rate will be recommended.

In the annual report of Secretary of Commerce Roper, for the fiscal year ended June 30, 1934, this general situation is commented upon, with respect to the Canal tolls as such. The Secretary also makes reference to international inequities in the admeasurement systems, and recommends still further consideration of a recent proposal for an international basis of admeasurement which would pos

74. In pu: P1926


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