Mr. SNYDER. By rail? Mr. WALL. Yes, by rail. Mr. WALL. There is controversy over this, whether the rates are compensatory and what not. But you talk to the people in the industry and they fear that a rate increase, any uncertainty over the use of the canal will convince more of them that the absolute way of getting their coes from the Pacific to Europe or to the east coast would be by landing them in the Pacific Northwest, piggybacking them across the country and vice versa. Now, we do not-we made quite a point that the change in the admeasurement, particularly in regards to the containers on deck and lumber cargoes, that at this particular time we think it would be disastrous that that certainly would add another 20 some percent to the cost of transporting those particular cargoes. And we notice that they have dropped that from their proposal. So at least they are aware that there is only so much you can take out of this industry without affecting your tolls revenues. Mr. SNYDER. I am sure you are aware that the Governor's testimony this morning indicated they recommended additional tolls, and I believe he said they would probably recommend the container cargo charge that the President did not approve, so it looks like they will be looking at that again. Mr. WALL. The government and the NMU have had discussions on this in the past. I guess we will continue to have them in the future. Mr. SNYDER. Let me say for the record that my parochialism of being a landlubber, and one from where we have a considerable amount of rail, does not lead me to want to see the tolls raised to the point that it would not be advantageous to run this canal-I think it has many advantages to use over and above the transit-because of the attractive competition of rail. I want you to understand that. We are somewhat concerned about one of the companies here, Sea-Land Service. Mr. WALL. Yes. Mr. SNYDER. They are one of the big users of the canal? Mr. WALL. Yes; they are. Mr. SNYDER. Do you have any idea how much of their traffic goes the canal? Mr. Wall, I do not mean what percentage of the canal traffic is SeaLand, but what percentage of Sea-Land's business goes through it? Mr. WALL They are not an NMU contracted company. We just used them because of their own position on this, but we can get you the information. Mr. SNYDER. They are going to be here tomorrow. I will just ask them. I will not burden you with that. I hate to let them in on this-were you aware of the fact that Sea-Land Service spends more for entertainment than they do for canal toll? Mr. SNYDER. I guess I will forewarn them, I am going to ask them to tell me about that tomorrow. [Laughter.] Mr. WALL. Well, presumably it is all spent in the development of cargoes for American ships, in that way I would support it. [Laughter.] Mr. SNYDER. Well, if I might again be parochial, I want to assure you that coming from bourbon country, I would like to be sure they are spending an adequate amount of their entertainments on my State's favorite product. [Laughter.] This last statement on page 8, you indicate the carriers have never objected to paying tolls to help support the canal; however, they are now being forced to pay, in effect, through tolls, the original $380 million investment plus the value of the treaty rights and titles, now valued at some $332 million. I do not think, and the Governor can correct me-I do not think they made any payment on the investment other than interest for some little time. Mr. WALL. That I believe is correct. Mr. SNYDER. So they are not paying anything on the principal of the investment and have not for quite some little time. Now, what is the $332 million, Mr. Wall? Mr. SIMPKINS. These are the payments, as I understood the Governor was referring to this morning, they make to Panama. Mr. SNYDER. The Governor is shaking his head negatively. Mr. SIMPKINS. No? Mr. SNYDER. It is in your statement, if you could Mr. SIMPKINS. We understand there are certain treaty rights that are paid for in Panama. Mr. SNYDER. Would you mind if the Governor responded? Governor PARFITT. I think what they are talking about, sir, is the fact we added to the unrecovered investment the value of the excavations which amounted to about $332 million, including title rights, excavations, and that amount is now being included under unrecovered investment depreciated. Mr. SNYDER. Oh, yes. The amount on which you pay interest, Governor, what is that amount? Governor PARFITT. Roughly 300-some. Mr. SNYDER. That is the $380 figure? Governor PARFITT. It is $380-some. Mr. STEERS. Interest paying investment at which we are paying interest June 30, 1975, was $318 million; the figure that was referred to was approximate value of the assets that had not heretofore been depreciated. Their value is reflected in the U.S. Government's interest-bearing investment, has been since that investment was developed back in 1951. Mr. SNYDER. I would like for you to take a look at that paragraph, Thank you for pointing it out to us. Mr. SNYDER. Thank you, Mr. Chairman. AFL CIO MARITIME COMMITTEE, HON. M. GENE SNYDER, Subcommittee on Panama Canal, House Merchant Marine & Fisheries Committee, Washington, D.C. 66 DEAR CONGRESSMAN SNYDER: When we testified on April 6th, concerning the Panama Canal financial problems you asked what was the $332 million referred to in our testimony. You also asked that we supply an answer that would amplify just what you are talking about ." We do so here for your information and also for the Record. This figure, $332,426,681, was taken from the Annual Report of the Panama Canal Company Government-Fiscal Year Ended June 30, 1975-and is as follows: TABLE 5.-Statement of Property, Plant, and Equipment-June 30, 1975, and 1974 The Annual Report further explains this $332 million as follows: "2. Accounting Change During Fiscal Year 1974. The provision for depreci ation in fiscal year 1973 excluded amounts historically not depreciated for titles, treaty rights, and excavation of channels, harbors and basins and other works costing $332 million at June 30, 1973. However, the Company no longer considers it appropriate to assume that these assets have indefinite economic lives. Accordingly, the Company initiated depreciation of these assets over a period of 40 years beginning with fiscal year 1974. This change in policy resulted in an additional annual charge to expense of $8.3 million. Also, effective in fiscal year 1974, the Company changed the service life of the Thatcher Ferry Bridge to coincide with the remaining life of the above described assets. This change increased annual depreciation by approximately $116 thousands." Respectfully, TALMAGE E. SIMPKINS, Mr. METCALFE. Before we adjourn, the Chair will recognize the chairwoman, Mrs. Sullivan, for a unanimous-consent motion. Mrs. SULLIVAN. Mr. Chairman, I ask unanimous consent to have the treaties mentioned in my opening remarks this morning and other pertinent treaties to be made part of the record following my opening statement. Mr. METCALFE. Without objection, it will be so ordered. Mrs. SULLIVAN. Thank you. Mr. METCALFE. Let me again express our thanks to the panel for being here and say to you, Mr. Wall, we have always looked forward to meeting with Mr. Lioeanjie and Mr. Gaskins as well as Mr. Tal Simpkins, in all of the hearings we have had, both here as well as in Panama, and we have always felt as though they have been very objective and analytical in their presentation, and have given us good guidance. I am very happy to see that you are working cooperatively with the gentleman whose achievement I referred to, Governor Parfitt, who is doing, as I said in my opening statement, an oustanding job. I think you make a good team. With that in mind, I want to express our thanks to all of the members of your panel for being with us, and for being so tolerant. I am sure that you could understand that with the Governor on the witness stand and with the Assistant Secretary, Mr. Veysey, that we could not have rushed through the testimony any sooner. We would like to have been adjourned not later than 5 o'clock, but it was important that we finish the hearings, and we appreciate your tolerance and understanding. With that, we express our thanks to you, and the meeting stands recessed until 10 o'clock, tomorrow morning. Thank you very much. [Whereupon, at 5:50 p.m., the subcommittee meeting recessed, to reconvene at 10 a.m., Wednesday, April 7, 1976.] |