tonnage low, because it is upon that tonnage that vessels are required to pay the charges that are levied in the ports of the world. Panama Canal charges cannot be levied upon the earning capacity of vessels, nor can the charges be made equitable as between ships of like capacity and as among vessels of different types and countries, if the tolls are based upon net tonnage determined by the rules employed in measuring vessels for national registration. For a satisfactory administration of the Panama Canal it is necessary that the charges for its use shall be levied upon a tonnage determined by rules that apply with like equity to all vessels, by rules that are prescribed by the authority responsible for the adjustment of tolls and revenues, and for administering the Canal in accordance with the general policy adopted by Congress. The extent to which newly constructed vessels can reduce their net tonnage below the tonnage of their earning capacity when the net tonnage is determined by the United States measurement rules, as now interpreted, is shown above. An equally striking illustration of the possible relation of net tonnage as determined by the United States measurement rules to the actual tonnage of space available for the accommodation of passengers and freight is afforded by a vessel under the American flag engaged in the intercoastal trade. When measured by the Panama Canal rules the gross tonnage of the vessel is 13,948 tons, while by the United States rules its gross tonnage is 9,126 tons, or 65.4 percent of the Panama Canal gross. The net tonnage of the vessel according to the Panama Canal rules is 9,217 tons and by the United States rules is 3,830 tons, or 41.5 percent of the Panama Canal net tonnage. Although this vessel's net tonnage, and thus its earning capacity, as determined by the Panama Canal rules, is but 66 percent of its gross tonnage by the same rules-the average ratio of net to gross tonnage for all vessels under those rules being about 70 percent the net tonnage by the United States rules is but 41.5 percent of the relatively low net tonnage according to the Panama Canal rules. The net tonnage upon which the vessel pays tools for transiting the Canal is only 27.4 percent of its gross tonnage as measured by the Panama Canal rules. The possible effect upon net tonnage, as measured by the United States rules, of slight structural changes that have recently been made in this vessel without causing any appreciable reduction in its earning capacity is shown by the fact that this vessel was given a net registered tonnage of 5,814 tons in 1932, whereas in 1933 by the same measurement rules the registered tonnage was made 3,840. ILLUSTRATIONS When a tonnage opening is cut into the uppermost continuous deck, and the accompanying freeing ports and scuppers are installed, the deck-to-hull is lowered to the deck under the former and original uppermost continuous deck. This results in the cargo space on the new deck to the hull being deducted from the net tonnage, if nonwatertight openings of a certain minimum size are cut in the transverse bulkheads, and results also in the deduction of an additional cabin deck. These deductions are because under the United States rules of measurement space used exclusively for passengers and situated above the first deck, which is not a deck to the hull, is exempt from measurement. The additional deck thus permitted to be deducted from the net tonnage can be classified as a cabin deck if it contains on it only one room filled up with a berth and other stateroom furniture so some one person, passenger or crew, can sleep in it. Two illustrations will suffice. On the Santa Rosa a small stateroom installed on the promenade. deck, devoted exclusively to dining and other public rooms, exempts from measurement the entire deck, amounting to 943 net tons, which would otherwise be included. On the Empress of Britain, a British ship, a small cloakroom was converted into a stateroom on an upper deck completely given up to public spaces. This deck under the British rules, as well as under the Suez and Panama Canal rules is included in the net tonnage, but with the installation of this one small stateroom, the entire deck is deducted from the net tonnage under the United States rules. The actual figures as to this ship are interesting. Her net tonnage as measured under the Suez rules is 26,531 tons and for transit through the Suez Canal she pays $30,741 plus any charge for individual passengers. The net tonnage under the Panama Canal rules is 27,500 tons. Her net tonnage under the British registry rules is 22,545 tons. Under United States registry rules in effect at the time of the latest transit of the Empress of Britain through the Panama Canal, her net tonnage measured 15,153 tons and tolls paid at $1.25 per ton were $18,941.25. The United States registry rules set the net tonnage at more than 7,000 tons less than the British registry measurement, and the tolls paid for passage through the Panama Canal were approximately $11,800 less than the amount paid at Suez. Thus it is seen that taking advantage of an American ruling relative to such spaces in relation to staterooms, the owners removed from a small cloak and check room the original equipment and installed a bed, chiffonier, and portable washstand, and called it apartment A. This secured the exemption of space amounting to 3,319 tons from inclusion in the net tonnage as determined under United States registry rules, in addition to the 4,181 tons in other passenger spaces exempted under United States rules but not under the British or the Panama Canal rules. The result is in effect a gift to the steamship company from the United States of approximately $9,000 through this ore feature of exempted passenger cabins alone. As stated the Panama Canal tolls were less than those at Suez by about $11,800. This example is given in detail as it is representative of the principle involved. DUAL SYSTEM UNSATISFACTORY What has been said evidences the unsatisfactory results of the dual system. The head of the Bureau of Navigation, Department of Commerce, stated in his 1916 report to the Secretary of Commerce: Even more desirable as a measure of administration is the bill pending before Congress to enable the Panama Canal authorities to give full effect to their rules for measurement of vessels passing through the Canal. Those rules, substantially the same as the Suez Canal rules, are quite different from those employed by maritime nations generally. In 1920 he said: That On the subject of measurement it may be added that the bill to give effect to the Panama Canal's system of measurement of vessels should be passed. system was prepared after careful study and some expense, but it has never been put into effective operation for the purpose of levying tolls, To the same effect was Mr. David Arnott, chief surveyor, American Bureau of Shipping, who said in an article published in their official bulletin: The present position cannot be considered satisfactory either to Canal authorities or to shipowners, as a dual system of measurement is frankly a nuisance besides being unsound in principle. RELIEF FREQUENTLY URGED President Wilson recognized in a letter of instructions to the Secretary of War, February 15, 1915, the need of an act of Congress dealing with the subject "more completely and satisfactorily." President Wilson said in the letter referred to: I have sufficiently considered the subject matter with you and the Attorney General to determine upon that which I think should be done now. If the Congress shall alter the existing law upon the subject, there will perhaps be opportunity to deal with it more completely and satisfactorily; but until that course is taken the way herein suggested seems to me the best one to meet the existing situation. Since then the various Secretaries of War and Governors of the Panama Canal have asked that the dual system of measurement be abolished and that the Panama Canal measurement rules be restored, with such modifications as experience has demonstrated to be just and equitable. The Canal appropriations bill that followed the issue of President Wilson's instructions to carry out the ruling of the Attorney General contained a proviso making the necessary statutory change, but the proviso was stricken from the bill upon a point of order. During the next Congress and succeeding Congresses bills to the aggregate number of 25 have been introduced for the purpose of giving the President unquestionable authority to determine, within statutory limits, the tonnage and rates of tolls that shall be charged for the use of the Panama Canal. On four occasions the House of Representatives has passed the proposed measure, but it failed to reach final enactment. PRESIDENT ROOSEVELT URGES EARLY ACTION In addition to his message to Congress, dated February 26, 1937, the President wrote to the chairman of your committee as follows: THE WHITE HOUSE, Washington, D. C., February 26, 1937. Hon. SCHUYLER OTIS BLAND, Chairman, House Committee on Merchant Marine and Fisheries. Dear Mr. Chairman: By message of this date I transmitted to the Congress the report of the Committee on Panama Canal Tolls and Vessel Measurement Rules, consisting of Dr. Emory R. Johnson, of the University of Pennsylvania, chairman; Rear Admiral George H. Rock, United States Navy, retired; and former Governor Arthur J. Weaver of Nebraska, appointed under the provisions of the act approved April 13, 1936. The committee has recommended the enactment of legislation which would make the Panama Canal rules of measurement the sole rules for the measurement of vessels at the Panama Canal, and would restore to the President the authority to fix toll rates within limits prescribed by the Congress. The legislation proposed merits the early consideration of your committee, as the rules for the measurement of vessels at the Panama Canal should be such as are adapted for the purpose. The questions involved have been pending for over 20 years, and the enactment of this legislation would permit the President to proceed administratively without undue delay to carry out the recommendations of the committee in regard to the modifications of the measurement rules which should be made and the toll rates which should be fixed. The legislation could well take the form of an amendment to section 412 of title 2 of the Canal Zone Code, approved June 19, 1934, and I now urge that you make an earnest endeavor to secure its enactment at an early date. Sincerely yours, FRANKLIN D. ROOSEVELT. The report could not be printed and available until late in March. Your committee had been advised that interested parties desired to examine it, and as notice to reach all parts of the United States was necessary if full hearings were to be afforded, your committee scheduled the hearings for May 4, 1937, at which time all persons desiring to be heard were given an opportunity to present their views and they did The hearings had been scheduled for the latter part of March, but were postponed because the printed copies of the report could not be obtained in time for consideration before hearings were scheduled. So. Your committee understands that 6 months' notice of change in rates and rules must be given by the President, and as it is recommended that the new rates and measurements shall become effective January 1, 1938, immediate passage of the bill is recommended. WAR DEPARTMENT URGES ACTION The Acting Secretary of War, under date of March 8, 1937, advised the Speaker of the House of Representatives that the enactment of the proposed legislation would be in accord with the program of the President. Under date of May 1, 1937, the Secretary of War again strongly urged the enactment of the proposed legislation as necessary for the proper administration of the Panama Canal, and said that it would provide a satisfactory solution of this problem that will be fair and equitable alike to the Government of the United States and the shipping interests of the country as well as the maritime nations of the world. In this letter the Secretary of War stated that upon the enactment of the proposed bill, he would recommend to the President that he establish the Panama Canal rules of measurement as modified by the committee as the sole rules for the measurement of vessels at the Panama Canal, and that he fix toll rates at 90 cents per Panama Canal net ton, laden, and 72 cents, ballast, for vessels of commerce, and 50 cents per displacement ton for vessels of war as recommended by the Committee on Panama Canal Tolls and Vessel Measurement Rules, appointed by the President. The Secretary of War stated that with normal expected traffic the revenues received at the rates proposed will place the Canal upon a completely self-sustaining basis. Your committee believes this statement to be true, and to be amply sustained by the report of the special committee. The letter of the Acting Secretary of War, dated March 8, 1937, and the letter of the Secretary of War, dated May 1, 1937, follow: The SPEAKER, HOUSE OF REPRESENTATIVES. WAR DEPARTMENT, MY DEAR MR. SPEAKER: The President with his message of February 26 submitted to the Congress the report of the committee appointed under the provisions of the act approved April 13, 1936, for the purpose of making an independent study and investigation of the rules for the measurement of vessels using the Panama Canal and the tolls that should be charged therefor. The act also required that the committee "make such advisory recommendations of changes and modifications of the Rules for the Measurement of Vessels for the Panama Canal and the determination of tolls as it finds necessary or desirable to provide a practical, just, and equitable system of measuring such vessels and levying such tolls." In that message the President approved recommendations of the committee for the enactment of legislation that will amend the existing law so as to provide: (1) That tolls for the use of the Panama Canal shall be based upon vessel tonnage determined by the Panama Canal rules of measurement as prescribed by the President. "(2) That the tolls upon commercial vessels, Army and Navy transports, colliers, supply and hospital ships shall not exceed $1 per Panama Canal net ton and shall not be less than 75 cents per Panama Canal net ton when such vessels are laden. "(3) That a rate of tolls lower than is levied on laden vessels may be prescribed for vessels in ballast without passengers or cargo." The enactment of this legislation will abolish the dual system of measurement whereby vessels are measured and tolls computed under the Panama Canal rules of measurement prescribed by the President, and then the amount collectible is limited by a different and varying tonnage entirely unsuitable for the purpose. It will permit the President to proceed administratively to carry out further recommendations of the committee as to modifications of the rules and the rates to be charged, in order to provide a practical, just, and equitable system of measuring vessels and levying tolls. Existing law upon the subject is contained in section 412 of title 2 of the Canal Zone Code, approved June 19, 1934. There is attached hereto for the consideration of the Congress a draft of a bill which is considered sufficient to make effective the recommendations of the President. The Acting Director of the Bureau of the Budget advises that the enactment of such proposed legislation would be in accord with the program of the President. Sincerely yours, Hon. S. O. BLAND, MALIN CRAIG, Acting Secretary of War. WAR DEPARTMENT, Washington, May 1, 1937. Chairman, Committee on Merchant Marine and Fisheries, DEAR MR. CHAIRMAN: In his message of February 26 the President approved the recommendations of the Committee on Panama Canal Tolls and Vessel Measurement Rules for the enactment of legislation, now before your committee for consideration, which would establish a single system of measurement based on the Panama Canal Rules of Measurement, would prescribe new maximum and minimum limits for toll charges, and would permit the President to proceed administratively to modify the rules and set the rates to be charged within the limits prescribed. You are now informed that upon the enactment of bill, H. R. 5417, I will recommend to the President that he establish the Panama Canal Rules of Measurement as modified by the committee as the sole rule for the measurement of vessels at the Panama Canal, and that he fix toll rates at 90 cents per Panama Canal net ton, laden, and 72 cents, ballast, for vessels of commerce, and 50 cents per displacerent ton for vessels of war, as recommended by the committee. With normal expected traffic, the revenues received at the rates proposed will place the Canal pon a completely self-sustaining basis. I again strongly urge the enactment of this legislation which is so necessary for the proper administration of the Panama Canal. It will provide a satisfactory solution to this problem that will be fair and equitable alike to the Government of the United States and the shipping interests of this country as well as the maritime nations of the world. Sincerely yours, HARRY H. WOODRING, |