U.S. ship operators had not planned to use the Seaway in 1958. This was due to the size limitations of the old lock system which restricted shipping to vessels up to 259 feet in length, 44 feet in beam and 14 feet in draft. Because of the uneconomical cost (under U.S. registry) of their operation, few vessels this small are operated by U.S. flag carriers.

This situation should change in April of 1959, however, when the new Seaway opens with facilities large enough to accommodate an estimated 80 percent of the ships now engaged in world trade. To date six U.S. flag carriers have announced definite intentions to inaugurate service via the Seaway in April, and have applications for sailing subsidies pending before the Maritime Board. The six lines are: American Export Lines, American President Lines, Grace Line, Isbrandtsen Co., T. J. McCarthy Co., United States Lines.

In addition to the 4,696 commercial cargo ships which transited the International Section during its first season of operation, 3 U.S. passenger vessels and 590 U.S. and Canadian Government work craft and pleasure craft also made the voyage. A total of 3,812 lockages were required for the grand total of 5,289 vessels.

A total commodity tonnage of 8,023,131 moved on the St. Lawrence River Section of the Seaway, Montreal to Lake Ontario, from July 4 through December 16. A breakdown of the tonnage, by commodities, follows:

Iron and steel, autos, trucks and parts; and other manufactured articles..
Sand, gravel, and stone.

304, 841

198, 776

The cost of operating and maintaining the U.S. portion of the Seaway (exclusive of administrative expenses) from July 1 to December 31, 1958, which covered about 5 months of the normal 8 to 9 months' shipping season, was as follows:

Toll Studies and
Negotiations

After a 3-year study, the Corporation's Tolls Committee completed its study and the discussions with the Tolls Committee of the St. Lawrence Seaway Authority of Canada. The Tolls Committee submitted its report and recommendations to the Administrator of the St. Lawrence Seaway Development Corporation on June 12, 1958. A similar report was submitted by the Canadian Tolls Committee to the President of the St. Lawrence Seaway Authority on the same day. The recommendations submitted by the two committees were in complete agreement.

The Tolls Committee members for the Corporation were:

E. Reece Harrill, Assistant Administrator, St. Lawrence Seaway Development Corporation; Chairman, Tolls Committee.

Charles A. Taff, Professor of Transportation, College of Business and Public Administration, University of Maryland.

Edward A. Bacon, Deputy Assistant Secretary, Office of the Assistant Secretary of the Army, Civil and Military Affairs.

To guide the Corporation in establishing the rates of tolls, the act of May 13, 1954 (33 U.S.C. 981), prescribed several principles to be followed, among which are: (1) the rates shall be calculated to cover, as nearly as practicable, all costs of operating and maintaining the works under the administration of the Corporation, including depreciation, payment of interest on the obligations of the Corporation, and payments in lieu of taxes, and (2) the rates shall provide amounts sufficient to amortize the principal of the debts and the obligations of the Corporation to the U.S. Treasury over a period not to exceed 50 years.

Among the matters considered by the Tolls Committee were the method of assessing tolls, the rules for the measurement of vessels, the distinction between bulk and general cargo, the evidence of cargo actually carried, tolls for partial transit of the Seaway, and the method for payment of tolls. In considering the type of toll system, the Tolls Committee concluded that a composite toll offered the greatest merit. For freight traffic, with some ships transiting fully laden, some partially laden, and some in ballast, the composite toll structure was thought to be the most equitable and the simplest to administer. The composite toll recommended consists of: (1) a minor charge based on the volume measurement of the vessel and designed to meet approximately the operating and maintenance component of the total charges of the Seaway navigation project, and (2) a main charge based on the weight of cargo carried and designed to meet approximately the interest and capital retirement components of the total charges Seaway navigation project.

The committee also concluded that the most practicable measure of a vessel which might be used to compute the minor charge based on ship's size is the vessel's gross registered tonnage. This figure offers a reasonable measure of comparative size of vessels and is readily available from a ship's papers and published ship registers. The Tolls Committee recommended that the unit of weight for the collection of tolls on cargo be a ton of 2,000 pounds.

The rates recommended by the Tolls Committee were:

FOR EACH PASSAGE THROUGH THE ENTIRE SEAWAY— MONTREAL TO LAKE ERIE

A vessel will be assessed 6 cents per gross registered ton of the vessel, and, in addition, 42 cents per ton of bulk cargo and 95 cents per ton of general cargo carried.

FOR EACH PASSAGE-MONTREAL TO OR FROM LAKE

ONTARIO ONLY

A vessel will be assessed 4 cents per gross registered ton of the vessel, and, in addition, 40 cents per ton of bulk cargo and 90 cents per ton of general cargo carried. For partial transit of the new Seaway facilities-between Montreal and Lake Ontario-where there are seven locks, the user will be charged 15 percent of the applicable toll for each lock transited.

FOR EACH PASSAGE THROUGH THE WELLAND CANAL ONLY

A vessel will be assessed 2 cents per gross registered ton of the vessel, and, in addition, 2 cents per ton of bulk cargo and 5 cents per ton of general cargo carried. In the Welland Canal, a partial transit will be assessed 50 percent of the toll irrespective of the number of locks used.

FOR PASSENGERS TRANSITING THE SEAWAY

Commercial vessels carrying passengers will be charged 50 cents per passenger for each lock transited between Montreal and Lake Erie, in addition to the vessel charge.

The suggested tolls according to the Tolls Committee should be sufficient to meet all financial requirements as the anticipated traffic develops. It was the belief of the members of the Tolls Committee that the revenue derived should provide for the annual cost of operation and maintenance of the new Seaway facilities and of the Welland Canal, meet interest charges, and amortize borrowed moneys over a period covering the next 50 years. They estimated that in the first year of operation, the traffic through the new portion of the Seaway would approximate 25 million cargo tons, but would rise gradually to 50 million tons by 1968. The latter figure was used for the 40 years after the early developmental period, since that was considered to be the workable capacity of the facilities

presently existing and under construction between Montreal and Lake Erie. For the Welland Canal, the Canadian Committee estimated the tonnage of cargo at 40 million in 1959, with a gradual annual increase to 60 million tons in 1968.

The traffic estimates of the committee anticipated a developmental period extending to 1968, that is, a period of 10 years during which there might not be sufficient revenue to meet all the annual financial requirements. However, with the proposed tolls and the volume of traffic which is anticipated beginning with the year 1968, they estimated that the annual revenues will be sufficient to compensate for the deficiencies incurred during the developmental period, and that all other financial requirements should be taken care of within the period of 50 years.

A simple method of toll collection was proposed based on the necessity of noninterference with prompt passage by any user. Provision should be made for prior registration of any vessel and satisfactory security being given for the payment of charges, either with the St. Lawrence Seaway Authority or with the St. Lawrence Seaway Development Corporation subsequent to which passage would be permitted. Toll collection and invoicing of accounts as well as the preparation of statistical data was proposed to be assigned to the St. Lawrence Seaway Authority. The St. Lawrence Seaway Development Corporation agreed to participate and share in the annual costs of these services. Charges should be billed to the owner or agent promptly and will be payable after the passage of the ship. For through passage to or from Montreal and Lake Ontario, the invoice will show two amounts to be paid: (1) in Canadian funds to cover the proportion applicable to the St Lawrence Seaway Authority, which has been determined at 1 percent of the total charges; and (2) the balance of the account, or 29 percent in US. funds; representing the proportion applicable to the St. Lawrence Seaway Development Corporation; payable at any designated bank in Canada or in the United States. Tolls collected for use of the Welland Canal will be for the St. Lawrence Seaway Authority account and payable in Canadian dollars. The committee stated that the division of tolls indicated above is based upon current figures of estimated capital and operating costs and should be subject to variation as actual costs are determined.

The Tolls Committee report stated that the projection of traffic volume and financial requirements was made, bearing in mind the legislative requirements on the one hand, and on the other the desirability of establishing tolls which in the early years will be conducive to the development of traffic. The committee further stated that if future events should indicate that traffic conditions or future financial requirements had been either overestimated or underestimated, the committee recognized that necessary adjustments can be made in the toll structure.

Bulk cargo, as defined in the proposed tariff, included such commodities as grain and grain products, loose or in sacks, ores and minerals, liquids in Tips tanks, pulpwood, poles and logs, wood pulp, waste paper, iron and

steel, scrap and pig iron. Domestic package freight of each country will also take the bulk cargo rate. All commodities not included in the definition of bulk cargo were proposed to be classified as general cargo.

In order to provide assistance to the U.S. Tolls Committee, the Corporation held public conferences in Washington, D.C., and Chicago, Ill., on September 9 and 11, 1957, respectively, on the subject of admeasurement of vessels and the method of collecting tolls, and related subjects.

Thereafter, the reports submitted by the Tolls Committee dated June 12, 1958, formed the basis for public hearings on Seaway tolls, which were held by the Corporation and the Canadian Authority in Washington, D.C., and in Ottawa, Canada, on August 6, 1958. The Washington hearings covered about a day and a half and were held pursuant to public notice, thus affording interested parties an opportunity to express their views on the proposed rates and the method of assessing and collecting tolls. At these hearings, some 30 briefs or statements were presented representing the varying viewpoints of shippers, operators, and other interested parties.

After considering the report of the Tolls Committee and the views expressed at the hearings, the Administrator of the St. Lawrence Seaway Development Corporation of the United States and the President of the St. Lawrence Seaway Authority of Canada signed an agreement on the following tariff of tolls for the Seaway.

While this report covers only the activities of the Corporation for the year ended December 31, 1958, the President approved the Agreement on February 25, 1959, which has been made the subject of an exchange of notes between the United States and Canada.

The approved Agreement and Tariff of Tolls are as follows:

MEMORANDUM OF AGREEMENT BETWEEN THE ST. LAWRENCE SEAWAY AUTHORITY AND THE SAINT LAWRENCE SEAWAY DEVELOPMENT CORPORATION RESPECTING THE ST. LAWRENCE SEAWAY Tariff of TOLLS

The St. Lawrence Seaway Authority is hereinafter referred to as the "Authority" and the Saint Lawrence Seaway Development Corporation as the "Corporation”. The St. Lawrence Seaway Authority Act, enacted by the Parliament of Canada, having provided, in part, as follows

"SEC. 17. Where the works have been constructed and are maintained and operated by the Authority to provide in conjunction with works undertaken by an appropriate authority in the United States, the deep waterway mentioned in section 10, tolls may be established pursuant to sections 15 and 16, or by agreement between Canada and the United States and, in the event of such an agreement, shall be charged by the Authority in accordance with directions given by the Governor in Council."

and Public Law 358, 83d Congress, enacted by the Congress of the United States having provided, in part, as follows

"SEC. 12. (a) The Corporation is further authorized and directed to negotiate with The Saint Lawrence Seaway Authority of Canada, or such other agency as may be designated by the Government of Canada, an agreement as to the rules for the measurement of vessels and cargoes and the rates of charges or tolls to be levied for the use of the Saint Lawrence Seaway, and for an equitable division of the revenues of the seaway between the Corporation and the Saint Lawrence Seaway Authority of Canada."