CONTENTS Statements of- Bailey, Frazer A., president, National Federation of American Ship- Page Ball, Joseph H., vice president, Association of American Shipowners. Burdick, Bernard F., chief of office of the Panama Canal. Larkin, Felix, General Counsel, Department of Defense. - Prince, Gregory S., assistant general counsel, Association of American III MAINTENANCE AND OPERATION OF THE PANAMA CANAL FRIDAY, SEPTEMBER 1, 1950 UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON ARMED SERVICES, Washington, D. C. The subcommittee met, pursuant to call, at 1:40 p. m., in room 212, Senate Office Building, Senator Harry Flood Byrd (comprising a subcommittee of one) presiding. Present: Senator Byrd. Also present: Justice M. Chambers of the committee staff. Senator BYRD. The meeting will come to order. This is a subcommittee appointed to consider H. R. 8677, a copy of which is placed in the record at this time. (H. R. 8677 is as follows:) [H. R. 8677, 81st Cong., 2d sess.] AN ACT To authorize and provide for the maintenance and operation of the Panama Canal by the present corporate adjunct of the Panama Canal, as renamed; to reconstitute the agency charged with the civil government of the Canal Zone, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 5 of title 2 of the Canal Zone Code, approved June 19, 1934 (48 Stat. 1122), is amended to read as follows: "5. ESTABLISHMENT, ADMINISTRATION, AND FUNCTIONS OF CANAL ZONE GOVERNMENT.—The independent agency of the United States heretofore known as the Panama Canal shall hereafter "(1) be known as the Canal Zone Government; "(2) be administered, under the supervision of the President or such officer of the United States as may be designated by him, by a Governor of the Canal Zone; and 66 "(3) be charged, except as otherwise provided by law, with the performance of the various duties connected with the civil government, including health, sanitation, and protection, of the Canal Zone. "CROSS-REFERENCE "Appointment of other necessary persons, see section 81 of this title, as amended." SEC. 2. Except as otherwise provided in, or where inconsistent with, the provisions of this Act, the terms "the Panama Canal", "the Canal", and "the Canal authorities," wherever appearing in the statutes of the United States and having reference, prospectively, to the agency heretofore known by those names, are amended to read "the Canal Zone Government." SEC. 3. Except as otherwise provided in this Act, the title "the Governor of the Panama Canal", wherever appearing in the statutes of the United States is amended to read "the Governor of the Canal Zone." SEC. 4. Except as otherwise provided in, or where inconsistent with, the provisions of this Act, the term "the Panama Railroad Company”, wherever appearing in the statutes of the United States and having reference, prospectively, to the corporation heretofore known by that name, is amended to read "the Panama Canal Company." SEC. 5. The headline and introductory clause of section 7 of title 2 of the Canal Zone Code are amended to read as follows: "7. CONTROL AND JURISDICTION OF GOVERNOR OVER CANAL ZONE.-The Governor of the Canal Zone shall: * * *"" SEC. 6. Section 82 of title 2 of the Canal Zone Code is amended to read as follows: "82. COMPENSATION OF PERSONS IN MILITARY, NAVAL, OR PUBLIC HEALTH SERVICE.- -(a) If any of the persons appointed or employed as provided in section 6, or section 81, as amended, of this title are in the military, naval, or Public Health Service of the United States, the amount of the official salary paid to any such person shall be deducted from the amount of salary or compensation provided by or which shall be fixed under the terms of those sections, but this section shall not be construed as requiring the deduction from the amount of such salary or compensation of— "(1) the retired pay or allowance of any retired warrant officer or enlisted man of the Army, Navy, Air Force, Marine Corps, or Coast Guard; or "(2) the training pay, retainer pay, or allowances of any warrant officer or enlisted man of the Reserve forces of the Army, Navy, Air Force, Marine Corps, or Coast Guard. "(b) The Canal Zone Government shall annually pay to each of the aforesaid services an amount sufficient to reimburse the said service for the official salary paid to any person in such service for the period of appointment or employment by the Canal Zone Government." SEC. 7. The headline and first sentence of section 245 of title 2 of the Canal Zone Code, as added by the Act of June 29, 1948 (ch. 706, 62 Stat. 1075), are amended to read as follows: "245. CREATION, PURPOSES, OFFICERS, AND RESIDENCE OF PANAMA CANAL COMPANY. For the purposes of maintaining and operating the Panama Canal and of conducting business operations incident to such maintenance and operation and incident to the civil government of the Canal Zone, there is hereby created, as an agency and instrumentality of the United States, a body corporate to be known as the Panama Canal Company, hereinafter referred to as the 'corporation'. * * * "" SEC. 8. Paragraph (c) of section 246 of title 2, Canal Zone Code, as added by the Act of June 29, 1948, is amended to read as follows: "(c) In order to reimburse the Treasury, as nearly as possible, for the interest cost of the funds or other assets directly invested in the corporation, the corporation shall pay interest to the Treasury on the net direct investment of the Governmen in the corporation as defined in paragraphs (a) and (b) of this section, and shown by the receipt described therein, at a rate or rates determined by the Secretary of the Treasury as required to reimburse the Treasury for its cost. Payments of such interest charges shall be made annually to the extent earned, and if not earned shall be made from subsequent earnings unless the Congress shall otherwise direct." SEC. 9. Section 246 of title 2, Canal Zone Code, as added by the Act of June 29, 1948, is amended by adding at the end thereof a new paragraph lettered (e) and reading as follows: "(e) The corporation is further obligated to pay into the Treasury as miscellaneous receipts amounts sufficient to reimburse the Treasury, as nearly as possible, (1) for the annuity payments under article XIV of the convention of November 18, 1903, between the United States of America and the Republic of Panama, as modified by article VII of the treaty of March 2, 1936, between the said Governments, and (2) for the net costs of operation of the agency known as the Canal Zone Government. The net costs of operation of the Canal Zone Government, which are deemed to form an integral part of the costs of operation of the Panama Canal enterprise as a whole, shall not include interest but shall include depreciation and the reimbursement of other Government agencies for expenditures made on behalf of the Canal Zone Government. The payments into the Treasury, referred to in this paragraph, shall be made annually to the extent earned, and if not earned shall be made from subsequent earnings unless the Congress shall otherwise direct." SEC. 10. Subparagraph (e) of section 248 of title 2, Canal Zone Code, as added by the Act of June 29, 1948, is amended by adding at the end thereof a sentence reading as follows: "The provisions of section 82 of this title, as amended, shall apply to the corporation and to its officers and employees." SEC. 11. Section 249 of title 2 of the Canal Zone Code, as added by the Act of June 29, 1948, is amended by relettering subparagraphs (a) to (f) thereof as subparagraphs (b) to (g), respectively, and by inserting after the introductory clause of said section a new subparagraph reading as follows: "(a) May maintain and operate the Panama Canal." SEC. 12. Article 3 of chapter 12 of title 2, Canal Zone Code, as added by the Act of June 29, 1948, is amended by renumbering sections 255 and 256 of said title 2 as sections 257 and 258, respectively, and by adding, in said article 3, two new sections numbered 255 and 256 and reading as follows: "255. APPROPRIATIONS TO COVER LOSSES.-Appropriations are hereby authorized for payment to the corporation of such amounts as may be shown in the annual budget program of the corporation as necessary to cover losses sustained in the conduct of its activities. Amounts appropriated to the corporation under authority of this section shall not be added to the amount of the receipt referred to in paragraphs (a) and (b) of section 246 of this title, and shall not require payment of interest under paragraph (c) of said section 246: Provided, however, That repayments by the corporation to the Treasury shall in no case be treated as dividends under sections 246 (d) and 253 of this title until all amounts appropriated to the corporation under authority of this section shall have been repaid to the Treasury." "256. AUTHORIZATION FOR TRANSFER OF PANAMA CANAL TO CORPORATION.-The President is hereby authorized to transfer to the corporation the Panama Canal, together with the facilities and appurtenances related thereto, and any or all of the facilities and appurtenances heretofore maintained and operated by the Panama Canal under authority of section 51 of title 2 of the Canal Zone Code, as amended by section 2 of the Act of August 12, 1949 (ch. 422, 63 Stat. 601), and all or so much as he may determine to be necessary of the personnel, property, records, related assets, contracts, obligations, and liabilities of or appertaining to the said Canal and the aforesaid facilities or appurtenances, and such transfer shall be deemed to have been accepted and assumed by the corporation without the necessity of any act or acts on the part of the corporation except as otherwise stipulated in the provisions of section 246 of this title." SEC. 13. Section 411 of title 2 of the Canal Zone Code is amended to read as follows: "411. AUTHORITY TO PRESCRIBE MEASUREMENT RULES AND TOLLS.-The Panama Canal Company is authorized to prescribe and from time to time change (1) the rules for the measurement of vessels for the Panama Canal, and (2), subject to the provisions of the section next following, the tolls that shall be levied for the use of the Panama Canal: Provided, however, That the rules of measurement, and the rates of tolls, prevailing on the effective date of this amended section shall continue in effect until changed as provided in this section: Provided further, That the said corporation shall give six months' notice, by publication in the Federal Register, of any and all proposed changes in basic rules of measurement and of any and all proposed changes in rates of tolls, during which period a public hearing shall be conducted: And provided further, That changes in basic rules of measurement and changes in rates of tolls shall be subject to, and shall take effect upon, the approval of the President of the United States, whose action in such matter shall be final and conclusive." SEC. 14. Section 412 of title 2 of the Canal Zone Code, as amended by the Act of August 24, 1937 (ch. 752, 50 Stat. 750), is amended to read as follows: "412. BASES OF TOLLS.-(a) Tolls on merchant vessels, army and navy transports, colliers, tankers, hospital ships, supply ships, and yachts shall be based on net vessel-tons of one hundred cubic meet each of actual earning capacity determined in accordance with the rules for the measurement of vessels for the Panama Canal, and tolls on other floating craft shall be based on displacement tonnage. The rate of tolls on vessels in ballast without passengers or cargo may be less than the rate of tolls for vessel with passengers or cargo. "(b) Tolls shall be prescribed at a rate or rates calculated to cover, as nearly as practicable, all costs of maintaining and operating the Panama Canal, together with the facilities and appurtenances related thereto, including interest and depreciation, and an appropriate share of the net costs of operation of the agency known as the Canal Zone Government. In the determination of such appropriate share, substantial weight shall be given to the ratio of the estimated gross revenues from tolls to the estimated total gross revenues of the said corporation exclusive of the cost of commodities resold, and exclusive of revenues arising from transactions within the said corporation or from transactions with the Canal Zone Government. The rate of tolls on laden vessels shall not exceed $1 per net vessel-ton. "(c) Vessels operated by the United States, including warships, naval tenders, colliers, tankers, transports, hospital ships, and other vessels owned or chartered by the United States for transporting troops or supplies, may in the discretion |
