public men who expressed their adverse opinion, on the ground that the Isthmus of Panama alone was to be favored by the opening of the canal by virtue of a treaty with the United States, and that the rest of Colombia would not receive any direct benefits of any sort by that work, as if that way of reasoning, even though it be correct, would justify the irreparable and perpetual damage which would be caused to the Isthmus by the rejection of the treaty in the manner in which it was done, which was equivalent to the closing of the doors to future negotiations. The people of the Isthmus, in view of such notorious causes, have decided to recover their sovereignty and begin to form a part of the society of the free and independent nations, in order to work out its own destiny, to insure its future in a stable manner, and to discharge the duties which it is called on to do by the situation of its territory and its immense richness. To that we, the initiators of the movement effected, aspire and have obtained a unanimous approval. We aspire to the formulation of a true republic, where tolerance will prevail, where the law shall be the invariable guide of those governing and those governed, where effective peace be established, which consists in the frequent and harmonious play of all interests and all activities, and where, finally, civilisation and progress will find perpetual stability. At the commencement of the life of an independent nation we fully appreciate the responsibilities that state means, but we have profound faith in the good sense and patriotism of the Isthmian people, and we posses sufficient energy to open our way by means of labour to a happy future without any worry or danger. At separating from our brothers of Colombia we do it without hatred and without any joy. Just as a son withdraws from his paternal roof, the Isthmian people in adopting the lot it has chosen have done it with grief, but in compliance with the supreme and inevitable duty it owes to itself—that of its own preservation and of working for its own welfare. We therefore begin to form a part among the free nations of the world, considering Colombia as a sister nation, with which we shall be whenever circumstances may require it, and for whose prosperity we have the most fervent and sincere wishes. November 4, 1903. Jose Agustin Arango. Mr. METCALFE. Thank you, Madam Chairman, not only for your fine presentation, but also for your obvious great concern. Thank you also for helping us to set the tone of these hearings, in a proper perspective. For that we are very grateful. I would like to begin these important proceedings by welcoming the distinguished Governor of the Canal Zone, Maj. Gen. Harold R. Parfitt, a man who, I expect, has had some big challenges in his first year as Governor, and who has done remarkably well in those challenges. But first I would like to give recognition to other Members who are present here. If Mr. Snyder, as the minority's senior member, would like to make a statement, I would recognize the distinguished gentleman from Kentucky. Mr. SNYDER. Thank you, Mr. Chairman, and I do have a prepared statement in regard to the hearings, but after listening to the very cogent and telling statement of Mrs. Sullivan, I think that the direction that I might have had my comments pointed toward have been adequately covered in that area. I want to commend you, Mrs. Sullivan, for the statement which you did make, and for the very telling indictment of the State De partment which appeared in your statement. It took great courage to do that, and I commend you for it, and I would like to associate myself with your remarks. With that, Mr. Chairman, I thank you. Mr. METCALFE. Thank you, Mr. Snyder. Now, we recognize the distinguished Governor, the Honorable Harold R. Parfitt, for his statement. STATEMENT OF HON. HAROLD R. PARFITT, GOVERNOR OF THE CANAL ZONE, AND PRESIDENT OF THE PANAMA CANAL COMPANY, ACCOMPANIED BY PHILIP L. STEERS, JR., FINANCIAL VICE PRESIDENT OF THE PANAMA CANAL COMPANY, THOMAS M. CONSTANT, SECRETARY, AND GORDON M. FRICK, PERSONNEL DIRECTOR Governor PARFITT. Mr. Chairman, Madam Chairman and members of the subcommittee, I am Harold R. Parfitt, Governor of the Canal Zone and President of the Panama Canal Company. Accompanying me are Mr. Philip L. Steers, Jr., Financial Vice President of the Panama Canal Company; Mr. Thomas M. Constant, the Company's Secretary; and Mr. Gordon M. Frick, the Company's Personnel Director. Early in February of this year I received a letter from the chairman of this subcommittee and the chairman of the full committee expressing concern about the financial position of the Company. That letter requested a response by the Panama Canal organization to a comprehensive list of questions addressed to: (1) An analysis of the impact and equity of changes to the rules of measurement of vessels proposed by the Company's Board of Directors; (2) An analysis of the financial position and financial problems of the Canal organization; and (3) Alternative financial initiatives. The answers furnished to the committee attempted to provide the maximum detail on those topics. In these hearings I would like to address these matters from a broader perspective, along the lines suggested in your letter of March 30, 1976. That is: First to outline briefly the Company's financial structure, including its statutory financial plan, the various levels of responsibility for its administration, and its accounting policies; second to outline today's financial posture; and third to outline how the Company perceives the present situation and what we believe can be done about it. In order to avoid a lengthy statement, I will, where possible, make reference to detail contained in the answers previously submitted to the subcommitte. Before I continue further, let me say a word for the record concerning the proposals to change the measurement rules of vessels. On March 23, 1976, the President approved all the proposed changes except the one which was addressed to the assessment of tolls on space occupied by deck cargo. The changes became effective at 0001 hours on March 23. With the deletion of the proposed rule on deck cargo, the impact of the rules changes is reduced from that estimated in our previous answers to you. [The amendments to rules for the measurement of vessels which transit the Panama Canal were contained in the Federal Register on March 31, 1976, and are as follows:] [From the Federal Register, March 31, 1976] Title 35-Panama Canal CHAPTER I-CANAL ZONE REGULATION PART 135-RULES FOR MEASUREMENT OF VESSELS Revision On November 21, 1975, the Panama Canal Company published in the Fedderal Register (400 FR 54242) a notice of adoption of changes in the rules for measurement of vessels for the Panama Canal prescribed by 35 CFR Part 135, effective on approval by the President of the United States. The basis for the action changing the rules of measurement is authority vested in the Panama Canal Company and in the President by sections 411 and 412 of Title 2 of the Canal Zone Code (76A Stat. 27). On March 23, 1976, the President approved the changes in the rules, except the proposed new section 135.113 providing for the addition to net cargo, as set forth below. $ 135.82 [Amended] THOMAS M. CONSTANT, Secretary. In § 135.82 the references to § 135.86 are amended to read § 135.85. $ 135.83 [Amended] 2. In the last line of § 135.83 the reference to § 135.86 is amended to read $ 135.85. 3. Section 135.85 is revised to read as follows: $135.85 Certain spaces between inner and outer plating of double bottom Space or spaces between the inner and outer plating of the double bottom of a vessel shall be exempted from measurement, except when used, designated or intended for carrying cargo or fuel; but the tonnage of such spaces within the double bottom as are or may be used for carrying cargo or fuel shall be determined and included in the gross tonnage. The tonnage of double bottom tanks available for cargo or fuel may be obtained by multiplying the liquidcapacity weight by the proper conversion factor to get tons of 100 cubic feet. $ 135.86 [Revoked] 4. Section 135.86 is revoked. $ 135.142 [Amended] 5. In § 135.142 the reference to §§ 135.171-135.182 is amended to read S$ 135.171-135.183. $ 135.175 [Amended] 6. In § 135.175 the last sentence is amended by adding the words "or fuel' between the words "cargo" and "the tonnage.". 7. Following § 135.182 a new § 135.183 is added, reading as follows: § 135.183 Hatchways. The cubical contents of hatchways shall be obtained by multiplying the length and breadth together and the product by the mean depth taken from the top of beam to the underside of the hatch cover. 8. In § 135.211 the reference in the fourth line to § 135.182 is amended to read § 135.183. $135.271 [Amended] 9. In 135.271 the reference in the second line to § 135.286 is amended to read § 135.285. § 135.273 [Amended] 10. In § 135.273 the reference in the last line to § 135.286 is amended to read § 135.285. 11. In § 135.274, paragraph (c) is amended to read as follows: $ 135.274 Spaces for stowage of stores or cargo, not deducted * (c) On supply ships, stores, supplies of all kinds, distilling machinery and distilled water, machines, tools and material for repair work, mines and mining materials, torpedoes, arms, and ammunition. 12. Section 135.281 is revised to read as follows: $ 135.281 Spaces nsed for boatswain's stores, deducted Spaces used exclusively for boatswain's stores, including paint and lamp rooms, shall be deducted. The deduction of spaces under this section shall be reasonable in extent. 13. Section 135.282 is revised to read as follows: § 135.281 Spaces used for boatswain's stores, deducted Spaces used exclusively for engineer's shops shall be deducted. The dededuction of spaces under this section shall be reasonable in extent. 14. In § 135.285 the heading of the section and paragraph (a) are revised to read as follows: § 135.285 Water ballast spaces, deducted (a) Water ballast spaces, other than spaces in the vessel's double bottom, shall be deducted if they are adapted and used only for water ballast, have for entrance only ordinary circular or oval manholes whose greatest diameter does not exceed 30 inches, and are not available for the carriage of cargo, stores, or fuel. Spaces that would otherwise qualify as water ballast except that they are also used for fuel for the vessel's own use shall be regarded as part of the vessel's fuel space as defined in § 135.390. § 135.286 [Revoked] 15. Section 135.286 is revoked. 16. Section 135.287 is revised to read as follows: 135.287 Marking and use of deducted spaces Each of the spaces enumerated in §§ 135.275-135.285, unless otherwise specifically stated, shall be subject to such conditions and requirements as to marking or designation and use or purpose as are contained in the navigation or registry laws of the several countries, but no space shall be deducted unless the use to which it is to be exclusively devoted has been appropriately designated by official marking. In no case, however, shall an arbitrary maximum limit be fixed to the aggregate deduction made under §§ 135.271-135.285. § 135.322 [Amended] 17. In § 135.322 the reference to § 135.286 in the heading and in the second line of the section is amended to read § 135.285. 18. In § 135.324 the reference to §§ 135.381-135.383 is amended to read $$ 135.252-135.354, 135.382. 19. Section 135.327 is revised to read as follows: $ 135.327 Propelling power deductions, how made The deductions made for propelling power provided for in §§ 135.323-135.325 shall be made by adding to the space occupied by the engine room as defined in §§ 135.352-135.354 and 135.382, the spaces available for fuel as defined in §§ 135.390 and 135.391. 20. The undersigned center heading preceding § 135.351 is amended to read as follows: § 135.351 [Revoked] SPACE OCCUPIED BY ENGINE ROOM 21. Section 135.351 is revoked. 22. In § 135.352 the last four sentences are revised to read as follows: § 135.352 What understood by space occupied by engine rooms *** When a portion of the space within the bonndary of the engine or boiler room is occupied by a tank or tanks for the storage of fresh water, lubricating oil, or fuel, including settling tanks, the space considered to be within the engine room shall be reduced by the space taken up by such tanks. Installations not strictly required for the working of the engines or boilers are not to be included in the engine room measurement no matter where situated but given seperate deductions when they qualify under §§ 135.271-135.285 and are listed under the appropriate item on page 2 of the Panama Canal Certificate. 23. In § 135.353 the last sentence is revised to read as follows: § 135.353 Manner of ascertaining cubical content of spaces occupied by engine room *** Add such contents, as well as those of the space occupied by the shaft trunk and by any donkey engine and boiler located within the boundary of the engine room or of the light and air casing above the engine room and used in connection with the main machinery for propelling the ship, to the cubical contents of the space below the crown of the engine room; divide the sum by 100 or by 2.83, according as the measurements are taken in feet or meters, and the result shall be deemed to be the space occupied by the engine room for purposes fo calculating the deduction for propelling power. 24. Section 135.354 is revised to read as follows: § 135.354 Manner of ascertaining cubical content of spaces occupied by engine room; where engines and boilers are in separate compartments. If in any ship in which the space for propelling power is to be measured the engines and boilers are in separate compartments, the contents of each compartment shall be measured separately in like manner, according to the above method; and the sum of the tonnage of the spaces included in the several compartment shall be deemed to be the space occupied by the engine room for purposes of calculating the deduction for propelling power. § 135.381 [Revoked] 25. Section 135.381 and the undesignated center heading preceding that section reading "Propelling Power Deduction for Vessels With Fixed Bunkers, or Having Fuel-Oil Compartments That Cannot Be Used to Stow Cargo or Stores" are revoked. § 135.383 [Revoked] 26. Section 135.383 is revoked. 27. Two new sections numbered §§ 135.390 and 135.391, preceded by an undesignated center heading "Spaces Available for Carriage of Fuel" are added, reading as follows: SPACES AVAILABLE FOR CARRIAGE OF FUEL § 135.390 Spaces available for the carriage of fuel. The spaces available for the carriage of fuel will include the actual volume of tanks or fixed compartments for the storage of lubricating oil or fuel, including settling tanks, which cannot be used to stow cargo or stores and which have been certified by official marking to be spaces for the vessel's own fuel. Dual purpose fuel tanks whose only other use is for the carriage of water ballast will be included in the fuel deduction provided they have been included in the gross tonnage and qualify in all other respects for a deduction. $ 135.391 Manner of ascertaining cubical contents of spaces available for the carriage of fuel. The cubical contents of the above-named spaces available for the carriage of fuel shall be ascertained in accordance with the following provisions: For each fuel tank or compartment, measure the mean length. Ascertain the area of three transverse sections of the ship (as set forth in §§ 135.141 or 135.142135.241 for the calculation of the gross tonnage) to the deck which covers the |