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"(c) Public vessels of the United States, including warships, naval tenders, colliers, tankers, transports, hospital ships, and other vessels owner or chartered by the United States for transporting troops or supplies may be transited through the Canal free or be required to pay tolls, in the discretion of the President."

Mr. O'TOOLE. Are there any questions?

Mr. FUGATE. Based on the proposal that you suggest there of meeting the situation by providing capitalization on the 50-50 basis, what do you think the tolls would be under H. R. 8677?

Mr. BALL. I think they would wind up at about 80 or 90 cents.

Mr. FUGATE. That is why you want to put a maximum on them of $1? Mr. BALL. I think if tolls went very much over $1, it would be a very severe burden on the intercoastal lines which are having a very difficult time as it is now.

Mr. FUGATE. You have made a very fine statement, Senator.

Mr. O'TOOLE. Mr. Lichtenwalter, Mr. Thompson, and Mr. Barrett, do you have any questions?

Mr. THOMPSON. No, Mr. Chairman.

Mr. O'TOOLE. Thank you, Senator.


Mr. O'TOOLE. Mr. L. Blaine Liljenquist, Washington representative of the Western States Meat Packers Association, desires to present a statement.

Mr. LILJENQUIST. Yes, sir.

Mr. O'TOOLE. Proceed, Mr. Liljenquist.

Mr. LILJENQUIST. Mr. Chairman and gentlemen of the committee, my name is L. Blaine Liljenquist, Washington representative of the Western States Meat Packers Association.

The Western States Meat Packers Association is a trade association of independent meat-packing companies in the 9 Rocky Mountain and Pacific coast States of Montana, Idaho, Utah, New Mexico, Arizona, Nevada, California, Oregon, and Washington. Its president and general manager is Mr. E. F. Forbes, of San Francisco.

We are interested in the bill H. R. 8677 because we believe this proposed legislation, if enacted into law, will result in a reduction in the Panama Canal rates for commercial shipping.

We favor a reduction in the Panama Canal rates for commercial shipping for the following reasons:

Commercial ships passing through the Panama Canal are charged tolls for the entire upkeep of the Canal, its school system, highways, and other costs, while ships owned by the United States pass without charge. The cost for commercial shipping is so excessive that shipping by water between the west and east coasts of the United States is at a minimum. An equitable reduction in the toll charges for commercial ships will increase intercoastal and foreign shipping to and from the west coast to the extent that it will prove very helpful

to western industries and western business.

Increased passenger and freight traffic through the Panama Canal will provide an expanding market for meat and other products produced in the Rocky Mountain and Pacific Coast States.

We have observed that railroad rates tend to be lower wherever there is competition with water transportation. Reduced rates through the Canal will stimulate transport by water. This, in turn, will provide a greater incentive for the overland railroads to practice economies and reduce costs so that east-west railroad rates can be lowered.

Water-borne commerce is essential to the economic welfare of such west coast cities as Los Angeles, San Francisco, Portland, Tacoma, and Seattle, and the decline in commercial traffic through the Panama Canal has been very costly to these cities and to the entire Pacific coast area. The excessive tolls are one of the greatest factors causing a reduction in the volume of cargo handled in west-coast ports.

It is evident that a thriving intercoastal shipping industry in California, Oregon, and Washington is of vital importance in our national economy, as well as in our national defense. As the population of the West continues to soar above the national average, it becomes increasingly important to provide new jobs and new business opportunities. A sick shipping industry has been putting the brakes on job expansion.

The help of this committee is needed to correct this unjust and dangerous situation. We therefore urge that you base the tolls on commercial shipping through the Panama Canal on the true cost of providing transit to commercial vessels, and that you charge the Military Department for all expenses allocable to national defense. Equitable rates for commercial shipping will provide the answer to one of our most important problems on the Pacific coast.

Mr. O'TOOLE. Off the record.

(Discussion off the record.)

Mr. O'TOOLE. Are there any questions?

Thank you very much for your contribution Mr. Liljenquist.
Mr. LILJENQUIST. Thank you, sir.

Mr. O'TOOLE. Mr. Hoyt S. Haddock, executive secretary of the CIO maritime committee

(No response.)


Mr. O'TOOLE. Mr. Herbert Buckley, representing the Intercoastal Lumber Shippers Association, and the West Coast Lumbermen's Association.

Mr. BUCKLEY. Yes, sir.

Mr. O'TOOLE. Proceed, Mr. Buckley.

Mr BUCKLEY. My name is Herbert Buckley, vice chairman of the board of directors of the International Lumber Distributors Association and for the past 14 years chairman of the tronsportation committee of that association. That association is affiliated with the West Coast Lumbermen's Association of Portland, Oreg. The difference between the two being that the Intercoastal Lumber Distributors Association is the distributing end of the business on the Atlantic coast and the West Coast Lumbermen's Association is comprised of some one thousand producing lumber mills on the west coast.

I am here representing both organizations.

Both organizations are vitally interested in the efficient and economical distribution of west-coast lumber in the Eastern States. An adequate merchant marine is of vital importance to this industry as the industry is dependent on the merchant marine for the economical transport of lumber products. A very important factor in the application of reasonable rates to the transportation of this lumber and the level of the rates is of necessity determined by the costs of operation including the charges for transit through the Panama Canal. We definitely do not think that Panama Canal tolls should be based on any cost factors beyond the cost of transit on commercial vessels. All other charges for Government account should not be assessed on the commercial transit.

I would like to file a statement of the West Coast Lumbermen's Association to supplement the views which I have just expressed and to present this committee with the views of more than 1,000 lumbermanufacturing plants on the Pacific coast.

The West Coast Lumbermen's Association of Portland, Oreg., is an organization of manufacturers of Douglas fir and related species of lumber in the western parts of Washington, Oregon, and California. This region and its species represent more than 25 percent of the total national lumber production of the United States, and more than onethird of the total production of softwood lumber of the kind ordinarily used in home construction.

Last year, in 1949, more than a billion board feet of lumber were shipped from Washington and Oregon to the Atlantic coast through the Panama Canal. According to Panama Canal records more than half of all of the cargo moving from the United States Pacific coast to the Atlantic coast in the fiscal year 1949 was lumber.

I have just received a telegram from the West Coast Lumbermen's Association giving further details:

In 1949 there were 1,021,381,000 feet of lumber shipped from Oregon and Washington to the Atlantic coast through the Panama Canal. The equivalent is 1,276,727 tons.

From January 1 to April 30 this year the latest figures available show 346,393,000 board feet or 432,992 tons.

The present rate on intercoastal shipments of lumber from the Pacific coast to the Atlantic is $26.50 per thousand board feet, net measure. Since this rate is equivalent to almost one-third of the mill value of the lumber, or 25 percent of its delivered price laid down on the Atlantic coast, we have a real interest in any matter which would affect this rate. The Panama Canal toll charges represent a significant part of the cost of shipping our lumber. For that reason, we are concerned with H. R. 8677, the bill here under consideration.

It is our understanding that the Panama Canal was built for two purposes:

(1) To assist commerce, and (2) to strengthen our national defense. It would seem reasonable that the relative importance of the Canal for the two purposes be appraised and that commercial traffic be expected to pay no more than its proportionate share of the costs of services and facilities, and its proportionate share of the computed return on the total capital investment.

We do not think the Federal Government should penalize those of us who use the Canal by imposing charges which go beyond reimbursement of the costs of operating the Canal reasonably allocable to freight transit. Nor do we think that the commercial traffic going through the Canal should carry costs of other uses to which the Canal Zone is put, such as national defense. It would seem to us that properly there should be an allocation of the costs of all facilities and services between the national defense and the commercial operation of the Canal. Certainly there is no justification for assessing commerce which transits the Canal with the entire burden of expense arising from those facilities which are provided in large part for the military and other personnel in the Canal Zone.

If your committee will recognize the merit of these principles, we are sure you will arrive at a formula which is equitable and fair to those who use the Canal as well as to the American taxpayers.

I would like to supplement that written statement with an observation. From the standpoint of commerce this country is a large country, the mileages are very great and we feel that very forcibly in the Northwest lumber industry because our mileages are probably greater than those that any other commerce in this country has to bear.

Now, we believe that the United States should be operated as one country. Freight rates can break the commerce of this country into isolated districts or little empires where each production area serves a limited territory, and thus we would eventually arrive at the condition which is largely prevalent in Europe.

We are, therefore, strongly of the view that an increase in the cost of Panama Canal tolls would have the effect of breaking up the commerce into small segments, particularly in the case of an industry such as the west coast lumber industry where the distribution mileage is very great.

Mr. O'TOOLE. Are there any questions?

Mr. THOMPSON. I wanted to ask you, Mr. Buckley, of the freight cost of $26.50 a thousand, how much is represented by the Canal toll? Do you know that offhand?

Mr. BUCKLEY. Why, it would vary, of course, with the size of the ship and the amount of lumber carried, whether the ship has a full cargo or not, but take a Liberty ship, for example, and assuming that it is loaded full with lumber or any other cargo, I should say that the tolls-represent $1 or $1.25 a thousand feet.

Mr. THOMPSON. Thank you.

Mr. O'TOOLE. Are there any questions, Mr. Fugate?

Mr. FUGATE. I have no questions, Mr. Chairman.

Mr. O'TOOLE. Mr. Lichtenwalter, do you have any questions?


Mr. O'TOOLE. Thank you very much, sir.

At this point the Chair will place in the record a report from Assistant Secretary Jack McFall of the Department of State, confirming a telephone call, to which reference was made in the record yesterday, saying that there are no provisions in this proposed resolution affecting treaty arrangements with any other country.

(The report referred to is as follows:)

The Honorable EDWARD J. HART,

Washington, June 26, 1950.

Chairman, Committee on Merchant Marine and Fisheries,

House of Representatives.

MY DEAR MR. HART: I refer to your letter of May 31, 1950, and to the Department's acknowledgement of receipt dated June 5, 1950. In your letter you requested the Department's comments relative to H. R. 8677, a bill to authorize and provide for the maintenance and operation of the Panama Canal by the present corporate adjunct of the Panama Canal, as renamed, and to reconstitute the agency charged with the Civil Government of the Canal Zone and for other purposes.

Paragraph (d) of section 25 of H. R. 8677, amending section 412 of title 2 of the Canal Zone Code, appears to safeguard satisfactorily the treaty commitments of the United States to other interested governments. Accordingly, since there do not appear to be provisions in the bill contrary to the treaty obligations of the United States, the Department perceives no objection to the enactment of H. R. 8677.

The Department has been informed by the Bureau of the Budget that there is no objection to the submission of this report.

Sincerely yours,

Assistant Secretary,
(For the Secretary of State).

Mr. THOMPSON. May I ask Governor Newcomer a question? Mr. O'TOOLE. Yes. Governor Newcomer, have a seat for just a moment, please.

Governor NEWCOMER. Yes, sir.


Mr. O'TOOLE. Mr. Thompson.

Mr. THOMPSON. Governor, I am a little disturbed by some of the rumors that seemed to escape here yesterday, as to whether or not the Department of Defense, or any of its subordinate units, opposes this legislation. That is a very blunt question, and I think I should give you the background from which I ask it. Of course, those of us who have had to do with the Panama Canal and its ramifications understand that the chain of command, so to speak, comes from the Governor of the Panama Canal Zone, yourself, to the Secretary of the Army.

Governor NEWCOMER. Yes, sir.

Mr. THOMPSON. Now, it reaches him directly, and without going through any of his subordinate echelons; that is correct, is it not?

Governor NEWCOMER. That is the theory of our channels of communication, yes, sir.

Mr. THOMPSON. In other words, you do not come through the Chief of Engineers?

Governor NEWCOMER. No, sir.

Mr. THOMPSON. Nor the Chief of Infantry or any other subordinate echelon?

Governor NEWCOMER. No, sir.

Mr. THOMPSON. Your communications go directly to the Secretary?
Governor NEWCOMER. Yes, sir, that is correct.


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