PANAMA CANAL FINANCES

Press, Volume XCIV, Issue 28150, 13 December 1956, Page 10

PANAMA CANAL FINANCES

“Most Profitable Year In Its History” HIGH VOLUME OF TRAFFIC (From a Reuter Correspondent) z BALBOA (Panama). The Panama Canal Company, with a profit of 4,179,464 dollars, had the most profitable year in its history during the fiscal year ended June 30, 1956. But a drop of one ship a day in the average transits through the canal could transform this profit into a loss. Until July 1, 1951, the canal was run virtually as a United States Government department, on appropriations. Since that date, however, it has been working as a semi-autonomous corporation, required to pay its own way.

Mr W. E. Potter, Governor of the Panama Canal Company, attributes the record profit of the last fiscal year to “the unprecedentedly high volume of traffic in 1956, coupled with only a slight increase in operating costs.” Illustrating the boom in traffic, Mr Potter cited the increase in cargo passing through the canal from 41,500.000 tons in the 1954-55 fiscal year to 46,300.000 tons in 1955-56 fiscal year. “This record total exceeded the previous peak for any year in the canal’s 4£-year history,” he added. But in recording the prosperity of 1956, canal officials are at pains to avoid appearing persuaded that such abundant prosperity is here to stay. As if to emphasise their wary attitude, commercial traffic through the canal so far in the fiscal year which began on July 1, is markedly below the corresponding figure for last year. Imperceptible Effect

A survey by Panama Canal Company officials has revealed that whether the Suez Canal remains open to traffic or not, the situation there will have an imperceptible effect on the traffic and finances of the Panama Canal.

Although its locks are too small for large aircraft carriers and such large trans-Atlantic liners as Britain’s two “Queens’’ and the liner United States, the Panama Canal is in good shape to handle all the business which can be expected for up to 20 years. One point of interest is that the rates charged to ships passing through it have not changed significantly since the canal was opened in 1914. Experience, however, has taught the canal authorities that the shipping business is subject to fluctuations over which they have no control but which can have a make or break effect on the canal’s finances.

“In considering the relationship of fluctuations of revenue to net income, it should be borne in mind that a large portion of canal costs are fixed and do not vary with business volume,” Mr Potter explained. “For this reason, fluctuations of net income are invariably sharper than fluctuations in tolls or other revenues.”