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Mr. BOURBON. They don't use their own repair yard?
Mr. NEWMAN. No, sir; the management of the Panama Line claims that the costs are too high. I could go into other operations, the marine terminal for example.
Senator DUFF. I am sorry that I have to leave. You may continue, Mr. Bourbon.
Mr. BOURBON. I think it would be helpful if you would discuss those terminals for the record.
Mr. NEWMAN. About 3 years ago, in our survey of the marine terminal operations—that is, the stevedoring and the handling of cargo from one pier to another and from one vessel to another—we found, by a very simple survey, that the Company was not even recovering the cost of the various gangs that worked on the ships. As a result thereof the rates, stevedoring rates, were increased. However, the Company has not kept on top of its operating costs. For the year 1955 there will be in the neighborhood of a half million dollars of costs not recovered.
That, again I want to say, is after our allocations of administrative expenses, of Canal Zone Government costs, interest, and depreciation. We feel in that area, where we are serving strictly the public, rates should be sufficient to cover all costs. It is rare that a battleship or a cargo vessel will come in there except for MSTS. The Navy has its own piers for tankers and those types of vessels.
What should be done—and it goes back to the point of what is in S. 2167, and that is good, sound business management, people that will keep on top of the costs from day to day, and if prices need to be raised to recover costs, they will do so.
Mr. BOURBON. Would you say that these terminals or all of them are necessary adjuncts of the canal operation ?
Mr. NEWMAN. Actually the terminals themselves are used for the Company and for some of the other military where MSTS docks, and commercial vessels who pick up cargo and go down the east or the west coast of South America.
The Panama Line cargo, of course, more than 50 percent of it is commercial, which is put on those docks and transhipped either across the isthmus by truck to Panama City or loaded on other vessels to go to other ports.
The treaty mentions these terminals, and some day these operations may be turned over to the Republic of Panama, if and when they build their own marine terminal piers.
Mr. ECKERT. This would indicate then that it is not an essential part of the transiting activity.
Mr. NEWMAN. Except to bring in the food, clothing, and raw materials that are necessary to operate the canal and run the commissaries.
Mr. BOURBON. There are several terminals at each end?
Mr. NEWMAN. Yes, sir; they are at both ends. The basic operation is on the Atlantic side. There are piers on the Pacific side but the activity is not as great on the Pacific side.
Mr. ECKERT. I think if we may set out our position here, Mr. Bourbon, it is that we believe that many of these activities relate to the transiting and that if they do, they certainly become a part of the operation. As a part of the operation, while we agree and recommend most strongly that the costs be reduced, or the costs be recovered, or
any losses reduced to an absolute minimum, as a result or in the final analysis, the loss or whatever the operation is, must eventually be charged to tolls.
Mr. BOURBON. Do you feel about the terminals and some of the others that where you suggest a reduction of one-third in the operation of the steamship line-let's say one-third, a reduction by getting rid of 1 of the 3 ships-is it possible if not to eliminate some of the other activities like the marine terminals, at least to reduce operations or consolidate operations and thus reduce the deficit?
Mr. ECKERT. I don't know that we could really answer that question. I think probably your industrial bureau, your yard, is a particularly fine example. Is it possible for the canal operation to go on without the use of some facility for drydocking? Could they possibly use a portion of it and thus economically, let's say, reduce the size or the operation and let the commercial ships do the best they could to beat it up to the coast of of America to be repaired, or possibly maintain some small emergency repair station there?
Frankly, I think some special study would have to be made as to whether they could operate without the industrial bureau. If they could, of course, I think it should be done away with. If they can't, then we must operate it. Your question, then, comes down to operating it as economically and efficiently as you can. If it is necessary to the operation of the canal, and if there is a loss as a result, the loss would be charged against the total operation. If, as a practical matter, it could make a profit, O. K., the profit would be used to reduce the cost of operation of the canal.
Mr. BOURBON. If the Dominican Republic completes the $7-million repair yard on which they have made good progress, I imagine some of the ships would find it of interest before they entered the canal to have the repairs done at Ciudad.
Mr. ECKERT. Historically, the docks and yards have been a real problem. For one thing, the priority accorded military vessels. One of the things we ran into there is that no one could ever really know how much a ship was going to cost to get it out of there once you put it in. We do believe great improvement has been made in that area. As Mr. Newman pointed out, it has a good business-type operation today. While it is still accruing losses on its operation, those losses, I am sure, have been reduced.
The basic determination of what facility you actually need to make the operation successful as a transiting operation is one that I don't believe we could answer.
Mr. BOURBON. Thank you very much. I think that these figures and views for the record will be very helpful to the committee. Gentlemen, this, I believe, finally concludes our hearings on the Panama Canal, except that we will be receptive to any further statements which any interested parties care to make.
(Whereupon, at 12:10 p. m., the hearing was concluded.)
(Subsequently statements were received for the record from W. H. Brunner, Cururdu, Canal Zone, dated March 12, 1956; from the Northwest Marine Terminals Association, Seattle, Wash.; and from William S. Tyson, Bowen Building, Washington, D. C., as counsel for the Panama Canal Pilots, as follows:)
CURUNDU, C. Z., March 12, 1956. THE CHAIRMAN, Senate Interstate and Foreign Commerce Committee,
Senate Building, Washington, D. C. DEAR SIR: I understand that hearings are to be held March 16 on S. 2167, a bill introduced by Senator Magnuson, that proposes certain changes to the law concerning the organization and operation of the Panama Canal Company (Public Law 841, 81st Cong.). In view of the fact that hearings are to be held shortly on this bill, I should like to submit for committee consideration the following proposal with regard to those portions of the bill that pertain to the reallocation of certain costs of the Canal Zone Government.
The proposal is :
(a) That the present method of funding for the costs of the Canal Zone Gov. ernment be discontinued, and that such costs be borne by appropriated funds.
(6) That the Panama Canal Company then be required to reimburse the United States for its pro rata share of the costs of the Canal Zone Government. Under existing law, the reverse of the proposal set forth above is practiced. Costs of the Canal Zone Government are, in effect, borne by the Panama Canal Company, which in turn assesses a number of Federal agencies for their pro rata share of these costs. The situation is anomalous in itself in that a corporation underwrites the costs of Government service and then seeks to recover from governmental agencies their share of these costs.
It would appear to be simpler and more logical to collect from one agency than from several. It would also resolve steamship operators' complaints that they are now unfairly required to pay for services rendered by the Canal Zone Government to other Federal agencies. In addition, it would terminate the improper tie-in of Government costs with Company operations. The primary function of Government is to provide service; the primary function of a corporation is to make a profit. When you tie the two together, which is the case at present, you generate a conflict between two diverse interests which does not redound to the benefit of either. Very truly yours,
W. H. BRUNNER.
STATEMENT OF PACIFIC COAST COMMITTEE ON PANAMA CANAL TOLLS This statement is presented on behalf of the Pacific Coast Committee on Panama Canal tolls which first began a study of the Panama Canal toll problem in 1948 and which was reactivated in the fall of 1954.
As a result of studies made by this Pacific Coast Committee in cooperation with other organizations, a reorganization of the Panama Canal took place on July 1, 1951, establishing the Panama Canal Company as a separate Government corporation.
Because of information developed concerning operations under the newly formed corporation, this committee was reactivated in November 1954 to further study the Panama Canal tolls problem and help seek a solution.
The Panama Canal is very important to Pacific coast commerce and with many businesses depending heavily upon cargoes moving through the canal. Prior to World War II, more than one-half of the tonnage moving across piers in West coast ports moved in the intercoastal trade. Today something less than 20 percent of the tonnage moving across these same piers consists of intercoastal traffic. Panama Canal tolls are not the only factor causing this greatly reduced traffic movement, but tolls is a very important factor. Evidence of this importance is illustrated by the following list of chairmen serving the Pacific Coast Committee on Panama Canal tolls in the various port areas. Seattle-Puget Sound
Mr. D. E. Kokjer ,manager, Grace Line, Inc., 408 White Building, Seattle, Wash.
Mr. Edwin A. Stone, executive Secretary, Northwest Marine Terminals Association, pier 24, North Seattle, Wash. Portland-Columbia River
Mr. Thomas P. Guerin, general manager and secretary, Commission of Public Docks, 3070 NW. Front Ave., Portland, Oregon. Stockton-Central Valley area
Mr. Elmo E. Ferrari, port director, P. O. Box 2089, Main Office, Deep Water Terminal, West Washington, Stockton, Calif.
San Francisco Bay area
Mr. Charles P. Howard, Gen. Robert H. Wylie, 95 Market St., Oakland, Calif. Oakland-East Bay area
Mr. Dudley W. Frost, port manager, Port of Oakland, Grove Street Pier, Oakland, Calif. Los Angeles-Long Beach area
Mr. Bernard J. Caughlin, general manager, Los Angles Harbor Department, P. O. Box 151, San Pedro, Calif.
Mr. E. J. Amar, general manager, Port of Long Beach, 1333 El Embarcadero, Long Beach, Calif. San Diego area
Mr. John Bate, port director, Port of San Diego, 1365 Harbor Drive, San Diego, Calif.
For the past 17 months the Pacific Coast Committee on Panama Canal Tolls has furnished educational information to interested organizations in an attempt to engender interest in, and understanding of, the Panama Canal tolls problem. This committee has sent 11 bulletins to a mailing list of over 500 persons and organizations informing them of the need for corrective legislation and keeping them current on congressional activity on this problem. The success of this effort is evidenced by the attached list of 82 organizations representing ports, labor groups, civic groups, service clubs, etc., which have passed resolutions showing the widespread interest in the toll problem and indicating that Panama Canal tolls affect all types of business interests on the Pacific coast. You will note that there are resolutions which did not originate on the Pacific coast, thus indicating the national interest in the need for corrective legislation in dealing with this problem.
The Pacific Coast Committee on Panama Canal Tolls recognizes the vital need for immediate corrective legislation to prevent cargoes moving through the canal from subsidizing nontransiting activities. We have not attempted to make an exhaustive statement concerning the technical aspects of the problem and its solution as we understand that such analysis will be given by other persons before this committee.
Both Mr. Charles P. Howard and Gen. Robert H. Wiley, cochairmen of the Pacific Coast Committee on Panama Canal Tolls, have urged me to inform this Senate committee that as soon as final bills with amendments are available the Pacific Coast Committee will inform all organizations which have adopted resolutions and again urge these organizations to review the legislation and to support it by urging immediate congressional approval of S. 2167 and companion House bills.
ORGANIZATIONS WHICH HAVE, AS OF MARCH 16, 1956, PASSED RESOLUTIONS ON
THE PANAMA CANAL PROBLEM
SEATTLE-PUGET SOUND AREA
Inland Empire Waterways Association.
PORTLAND-COLUMBIA RIVER AREA
City of Astoria, Oreg.
Oregon State Public Port Authorities Association.
SAN FRANCISCO BAY AREA
Alameda Chamber of Commerce.
LOS ANGELES-LONG BEACH AREA
Board of Harbor Commissioners, City of Long Beach.
SAN DIEGO AREA
Central Labor Commission of San Diego County.