General WOODBURY. If I might add to that, the studies could indicate for the benefit of the Congress what the nature of the financing might be with capital charges considered and without these capital charges considered and this would be something that could be included in the Commission's report.

Mr. RUPPE. Thank you.

Mr. MURPHY. Mr. Ambassador, will the final site selection recommendations take into consideration the nearness to the United States with respect to the fact that our intercoastal shipping will probably benefit from a canal which is close rather than more distant to the United States?

Ambassador ANDERSON. Mr. Congressman, I think that eventually you are going to have to consider geography, nationality, financing, the whole phase of the shipping industry, both from the standpoint of our national interests and the international movement of cargo.

I think this would be one phase of the information that we try to give Congress.

Mr. MURPHY. Counsel has some questions to ask.

Mr. ZINCKE. Colonel Sheffey, with respect to your comment on the prospective congestion of the canal by 1985, if the complete conclusions of the Stanford Research Institute study on tolls are valid and if tolls are increased appreciably, that will vitally affect your statement that the canal will be congested by 1985, will it not?

Mr. SHEFFEY. Very definitely, Mr. Zincke. It is quite clear from these studies that if the tolls are raised enough you will discourage traffic growth, and it's a function of how much you raise them, how much you discourage the growth.

We can't pick the exact point at which the growth ceases but we can predict a general range of tolls at which it would stop growth. Mr. ZINCKE. And it is conceivable that if tolls were increased enough in the range of 150 percent, that a new canal would be totally unnecessary?

Mr. SHEFFEY. I don't know that 150 percent is the figure but at some figure it certainly would be unnecessary. Our hope is to recommend the best canal to accommodate all or nearly all the future shipping of the world at the lowest practicable tolls taking into consideration construction costs, operating costs, and all other costs such as payments to the host country.

Mr. ZINCKE. Now, General Woodbury, you referred to present studies on the present canal route. How much money is being allocated for those studies?

General WOODBURY. On the data collection for the present route we have only about $200,000, sir. We are utilizing the data that the Panama Canal Company has collected over these many years. The bulk of the expenditure on the conversion study is being made by the Jacksonville district in their analysis of the earlier data considering the new construction techniques that might be used to reduce costs below those that had earlier been considered necessary.

(The table of study costs by routes follows:)

Mr. ZINCKE. Could you give an estimate on the total amount that has been spent from the 1947 studies to date on restudying the sea level canal at the present site?

General WOODBURY. May I furnish that for the record, sir?

Mr. ZINCKE. It was stated that this was the fifth study made in 20 years; is that correct?

General WOODBURY. Yes, sir. These studies, of course, were in various degrees of detail.

Mr. ZINCKE. But each of them purported to be a final and conclusive study, did it not?

General WOODBURY. I think not, sir.

Mr. ZINCKE. Were any of them supposed to be the final answer to the sea level canal?

General WOODBURY. I can't testify as to the intent in some of these earlier studies except to say that the 1964 study, for example, merely indicated that this was indeed an opportunity for the United States to explore further the possibility of nuclear construction and its recommendation was that further studies be made.

Similarly, the study of the Merchant Marine and Fisheries Committee back in 1960, I believe, didn't purport to be a final and conclusive study but did indicate that in the long run a sea level canal would undoubtedly be necessary.

Each of these studies, of course, reflected the conditions at the time. the study was made and the level of knowledge that we had and the expertise that we had at that time. All of these have changed considerably in the last 20 years.

Mr. ZINCKE. Well, the physical conditions haven't changed, have they?

General WOODBURY. Excuse me.

Mr. ZINCKE. The physical conditions have not changed?

General WOODBURY. No, but the physical conditions on Routes 17 and 25 were not explored in any earlier study. There has never been any

detailed fieldwork done on either of these routes. Until the 1964 studies, it was not clear as to the nature of the information we would need on those routes in order to determine the feasibility of the use of nuclear techniques for construction there.

These earlier studies did provide a background an lot of information which this Commission has used to define its data collection require

ments.

Mr. ZINCKE. General, I am confining myself to Route 14. Now, how many studies have been made by the Engineers on Route 14, including the 1947 study?

General WOODBURY. I know of no prior studies that have been made by the Engineers on Route 14. There was a special study group authorized in 1947 under the leadership of General Stratton. As you know, this was not done by the Army Corps of Engineers per se, but as a special study effort, I believe, at the time, under the general guidance of the Governor of the Panama Canal. The Governor did update that study in 1960 and it was also the Governor's report in 1964.

The other study that I referred to was one that was sponsored by the Congress and its committees, sir.

Mr. ZINCKE. There was one made about 1957 updating the 1947 report?

General WOODBURY. Yes, sir. I have referred to it as the 1960 study. It was started in 1957, and was done principally by contract.

Mr. ZINCKE. You say the 1947 study was not made by the Engineers? General WOODBURY. It was made by a special study group, sir. The Department of the Army was not charged with making the study. That is, the Office of the Chief of Engineers was not charged with making the study but the Corps of Engineers did loan to the study group several of its people, including General Stratton, to assist in that

effort.

Mr. ZINCKE. And the work, the actual work such as it was, was done by the Engineers, was it not?

General WOODBURY. And the Panama Canal Company or its predecessor. This was before the days of the Panama Canal Company. Mr. ZINCKE. That is all I have, sir.

Mr. MURPHY. Mr. Hathaway.

Mr. HATHAWAY. No questions.

Mr. SCHADEBERG. Could I ask another question, Mr. Chairman?
Mr. MURPHY. Mr. Schadeberg.

Mr. SCHADEBERG. I know this is rather vague but what is the differential in cost to a ship for a ship going around the Cape Horn and getting up to the west coast as compared to going through the canal? Ambassador ANDERSON. I think it would have to be related to the size of the vessel and the cargo.

Mr. SCHADEBERG. I understand that.

Ambassador ANDERSON. I don't think I am qualified at this moment to give you an answer to it. I believe Mr. Sheffey can give you the

answer.

Mr. SHEFFEY. This is one of the things that we are studying in trying to determine an ideal toll structure. The Stanford research study did treat this problem and it appears that at the present rate of 90 cents a ton, a 40,000-ton ship just about breaks even going around the Horn.

It is a function of the daily operating cost of the ship plus amortization of the investment of the ship against time and it is also a function of the speed of the ship.

If it cost the ship $50,000 to go through the canal and its operating cost is $5,000 a day including amortization, and it takes it 10 days to go the other route, you break even right there.

At the moment, some ships go around the Horn simply because under their contracts, the available time permits it where if they have a contract to pick up another load at the other end and don't have a lot of spare time, they prefer to go through the canal and pay the higher cost.

It is a very complicated problem which we are going to analyze in detail. You must bear in mind that the locks of the present canal cannot accommodate ships of greater than 50,000 tons, while a sea level canal could attract ships of 100,000 tons or even larger size if the tolls are low enough. Therefore, the optimum tolls for a new canal might be lower than the optimum tolls for the present canal.

Mr. SCHADEBERG. I am interested in getting that information.

Did you say that the present tolls do not permit the amortization of the cost of the canal?

Mr. SHEFFEY. The law under which the Canal Company operates does not permit it to charge that much. It is required to meet only its operating cost, not its capital cost.

Mr. SCHADEBERG. Not interest.

Ambassador ANDERSON. Yes, interest and operating cost.

Mr. MURPHY. There will be a hearing here on the 18th at which time the Panama Canal Company will make a presentation on the tolls formula and some of the results of increasing the tolls.

Mr. SCHADEBERG. I am trying to relate this to the new canal and what it would cost.

Mr. MURPHY. Mr. Keith.

Mr. KEITH. No questions, Mr. Chairman.

Mr. MURPHY. Mr. Ruppe.

Mr. RUPPE. Do you anticipate that the costs of the new canal would be higher or lower than the present canal?

Ambassador ANDERSON. Direct operating cost, I would think, would be much less without the great operating and maintenance expenses for the locks, power, and water supply systems of the present canal. When you add interest on the amount of debt, it depends whether you do it by conventional or the less expensive nuclear means. How much you have to pay for the money is an important factor and also what the annuity to the host country might be so that you have to know the relationship between these factors before the question could be answered.

Mr. RUPPE. That is all.

Mr. MURPHY. Any other questions?

Mr. KARTH. Mr. Chairman, who made this study for the present canal way back in the early 1900's or the late 1890's? Who made the study to determine that the Panama Canal Zone where we now have the canal was a feasible area?

General WOODBURY. The French set out to build a sea level canal in 1879 but were defeated by a combination of engineering problems, disease, and mismanagement although they had changed their objec

tive to a more easily constructed lock canal in midcourse. When the United States took over in 1903, my recollection is that we didn't have a Canal Commission similar to this one. We did have an International Board appointed consisting of not only U.S. people but shipping interests from Great Britain and France and others, and this Board did recommend the construction of a sea level canal at that time.

This was not a unanimous opinion of that Board. Rather, the U.S. members of the Commission, the majority of them felt that a lock-type canal should be constructed.

Since the United States was putting up the money on this thing and since it appeared at that time that a lock-type canal could be constructed much cheaper and in much less time and could later be converted to sea level if it was ever found to be necessary or desirable to do so, the decision was made by the Congress upon the recommendations of President Roosevelt and the Secretary of War to build a locktype canal.

Mr. KARTH. With the limited technology of those days as compared to the 1960's, how long did we study it before we commenced construction?

General WOODBURY. In those days, sir, the world was quite different than it is in these days.

Mr. KARTH. Yes, sir. Indeed, it was.

General WOODBURY. In those days the French were willing to expend up to 20,000 lives to construct a canal. We would not be willing to do that now.

Mr. KARTH. We licked the mosquito a long time ago. My question is, How long did we study it, at that time, General, before we commenced construction? Do you know?

General WOODBURY. There was an estimate made by a commission known as the Walker Commission in 1901. There was a board of consulting engineers that was appointed by President Roosevelt in 1906, and the design of the canal continued throughout its construction period.

I am under the impression that it moved ahead much like the missile program did in 1960. With your permission, sir, I would like to enter for the record, a summary of past studies and U.S. interests in an interoceanic canal.

(The summary follows:)

CHRONOLOGY OF SIGNIFICANT EVENTS IN THE DEVELOPMENT OF THE UNITED STATES' ISTHMIAN CANAL POLICIES AND STUDIES

1846: By Treaty with New Granada (Colombia) the U.S. guaranteed the neutrality of the Isthmus of Panama and New Granadan sovereignty over it in return for New Granadan guarantees to the U.S. that the right-of-way or transit across the Isthmus upon any mode of transportation, present and future, shall be open and free to the U.S. on the same basis as to citizens of New Granada. 1849: The Panama Railroad Company (a New York corporation) acquired from the Government of New Granada a concession to build a railroad or canal across the Isthmus of Panama, after failure of a French company to act under an 1847 concession to build and operate a railroad.

1849: By joint resolution the U.S. Congress authorized a survey of the American Isthmus for a canal or railroad, and the House of Representatives appointed a committee under Representative John A. Rockwell to conduct an investigation and recommend the extent of government aid for such an enterprise. This committee recommended a canal as the best solution but, pending construction of a canal, recommended construction of a railroad. This same year the House Committee on Naval Affairs recommended an annual grant of $250,000 to the Panama