This is a step backward to the former situation whereby activities toward the end of the fiscal year were curtailed until the next fiscal year for appropriation reasons.

TOLLS

We call to the committee's attention that section 412 (b) of title 2 of the Canal Zone Code is the pocket book of the Panama Canal Company. Any amendment made elsewhere will reflect on the language of this section. We point out that any costs not recovered elsewhere nor written into the tolls formula will fall on the United States Treasury.

We have spent considerable time and effort to evaluate the position of the United States citizens working on the Canal Zone and are desirous of establishing permanent working conditions and work force. We will help the committee and its staff in any manner possible to bring about the return of stable conditions on the zone.

We appreciate the opportunity to present our views on this important subject to the committee.

Thank you.

Mr. BOURBON. On page 2 you say "The committee can write a clean bill." Are you referring now to the clean bill that already has been submitted by Mr. Sinclair and Mr. Mayer?

Mr. MUNRO. No, sir. As you will notice in our testimony, there are certain language changes which still must be made in their clean bill. One in particular that I have in mind is the fact that they exclude only the all-cost formula and the applications of Bureau of Labor Statistics to Company/Government employees. Under their language you would have to have 2 sets of prices and 2 sets of cost control because you have other than Company/Government employees on the Canal Zone. So that language would have to be changed to include the few other Federal employees.

Senator DUFF. Your idea of the clean bill is a bill to contain what you bring forth in your statement?

Mr. MUNRO. That is correct.

Mr. BOURBON. I gather from your statement at the top of page 4 that you are not in particular sympathy with the efforts to reduce the tolls? You say a penny saved now may cost the canal dollars and is not economy; a few dollars saved to a small group may cost many dollars later.

Mr. MUNRO. Our position is that the Canal Company/Government should operate as economically as possible considering the over-all picture of the canal to the security and the welfare of all the people in the United States.

Mr. BOURBON. Have you taken any position on the continuance of such activities, for instance, as the Panama Steamship Company, which General Accounting Office has said is rather costly, and whose deficits of course have to be made up through tolls?

Mr. MUNRO. In the particular case of the steamship line, or any other of the activities that are not in the opinion of the General Accounting Office self-supporting, I would like to see figures to indicate the amount of money which would be saved by the deletion of that activity. In other words, at present the steamship line is paying all their out-of-pocket expenses, plus an amount to be credited to general overhead and Canal Zone Government costs, this amount

appears in the financial statement and budget of the Company. If the Panama Line or any other division was stopped, how much would the Canal Zone Government costs be decreased, and how much would the overhead of the Company be decreased by the deletion of the activity? Then we say consider the benefits of the activity how much it would cost to get that service performed elsewhere, and then use a little common sense in weighing the benefit of having the Company carry on certain activities.

Mr. BOURBON. I would gather that the General Accounting Office in its audit would necessarily have to do that before making recommendations, for instance, that they should reduce and do away with one ship in the interests of economy, particularly when it was shown that in 1 year they had a deficit of more than $350,000 on the steamship line itself. That is a lot of money to make up in tolls.

Mr. MUNRO. If it has a $350,000 deficit on the all-cost formula, by reducing the Panama Line to 2 ships or doing away entirely with the steamship line as a Company activity, I ask would the deletion of the activity lower the Company's general overhead expenses and the cost of the Canal Zone Government the equivalent of $350,000 which they claim are not being paid now? That is the point I am trying to bring out.

Mr. BOURBON. It would do it proportionately, wouldn't it? Proportionate to the amount of money that it had contributed to the general overhead administrative costs?

Mr. MUNRO. No. I don't think so.

The way I look at it is that they are paying a part now. If there is no saving you are going to lose that part that they are now paying. So some other activity, which will be tolls, will have to make it up. Mr. BOURBON. I won't press the point.

Senator DUFF. Thank you, Mr. Munro.

The next witness is George D. Riley.

STATEMENT OF GEORGE D. RILEY, LEGISLATIVE REPRESENTATIVE, AMERICAN FEDERATION OF LABOR-CONGRESS OF INDUSTRIAL ORGANIZATIONS

Mr. RILEY. Mr. Chairman, the American Federation of Labor and the Congress of Industrial Organizations is in accord with the position expressed here by Howard E. Munro, who represents the Central Labor Union and Metal Trades Council in the Panama Canal Zone. Zone.

Mr. Munro is recognized as thoroughly informed on the practices in the zone and on the needs of employees who maintain and operate the affairs in the zone on a detailed basis.

The Bureau of Labor Statistics market basket approach will place the consumer price system upon an automatic basis. It, therefore, is necessary that the Canal Zone wage system be based upon United States wages. In this manner, the Washington, D. C., BLS system will be workable.

The recruitment differential for overseas service, together with the market basket provisions should go far toward restoring the full measure of morale which is so much to be desired in that locality.

The AFL-CIO is in full accord with the further proposal by Mr. Munro that those possessing American or Panamanian citizenship

should be the ones solely eligible for employment in civilian jobs, except for temporary work.

Temporary employment is excluded from provisions of Public Law 330 of this Congress in setting forth prohibition against hiring under certain circumstances; excluding temporary employees will, of course, be consonant with Public Law 330.

Likewise, the conditional language which has a way of creeping into so many laws affecting administration of the Canal Zone and which permits suspension of such laws at Executive discretion has long since outlived any usefulness it might have had at any time.

In all other remarks Mr. Munro has made, under the general heading of "Employment Practices," well-considered suggestions which adoption by your committee will find are purposeful and in the good name of improved administration and personnel practices.

The Canal Zone employees have an important stake in the question of cost recovery formula. Mr. Munro's position in favor of exempting services to employees and the supplying of goods from the all-cost formula is basically sound.

Conceivably it is possible to pyramid such costs skyhigh to the end that employees can be thoroughly justified in assuming that the practice is to be in perpetuity, that he and his family will be far better off to pack up and leave the zone to those who are willing to accept this form of abuse or are helpless and must remain to face their fates come what may.

Charging back to the employee just about everything which comes into or which happens in the zone is but to hang the dead albatross around the employee's neck. This is the kind of news which travels fast. The zone isn't going to get and retain the services of the best available personnel under such conditions.

These are some of the reasons we fully endorse Mr. Munro's observations on this point.

The other provisions he has advanced in his remarks are sufficiently clear in purpose as to require no comments. If his views are given proper weight, your committee will be amply compensated for your investment of time in receiving the thinking he has advanced.

Senator DUFF. Thank you, Mr. Riley. The next witness is Thomas G. Walters.

STATEMENT OF THOMAS G. WALTERS, OPERATIONS DIRECTOR, GOVERNMENT EMPLOYEES' COUNCIL, AFL-CIO

Mr. WALTERS. By way of introduction, Mr. Chairman, my name is Thomas G. Walters, operations director of the Government Employees' Council of the AFL-CIO, 100 Indiana Avenue NW., Washington, D. C., phone Ex-3-2820 and 3-2821.

The Government Employees' Council of the AFL-CIO is made up of 22 national and international unions whose membership, in whole or in part, are civil service employees. The total Federal and postal employee membership of the Government Employees' Council is more than 500,000.

Mr. Chairman and members of the committee, as operations director of the Government Employees' Council I have had the opportunity and privilege of discussing and conferring with Mr. Howard E. Munro, legislative representative of the Central Labor Union and

Metal Trades Council of the Panama Canal Zone, who are members of the Government Employees' Council, on the contents of his prepared statement that he today presented to this committee.

From my experience and observation I am happy and delighted to have the opportunity to endorse, on behalf of the Government Employees' Council, the statement as presented by Mr. Howard E. Munro. I make this brief explanation in order to conserve your time and to aid in expediting the hearings, but I would like to reemphasize especially that part of Brother Munro's statement beginnig on page 5 under the heading "Employment Practices."

We support the theory to use the Bureau of Labor Statistics facilities in setting prices on the Canal Zone in keeping with the Washington, D. C. prices, plus the differential, but when we agree to this provision it is with the understanding that we will have only a single wage scale on the canal for everyone and that to be the United States scale.

We strongly endorse Mr. Munro's statement that section 248 (e) of title 2 of the Canal Zone be amended in keeping with Mr. Munro's suggestions as outlined at the bottom of page 5 of his statement that he delivered to this committee today, and I restate his suggested change:

Provided, That no officer, agent, attorney, or employee shall be appointed or hired directly or indirectly except for temporary employment in case of emergency on the Canal Zone to occupy a skilled, technical, clerical, administrative, executive, or supervisory position unless such person is a citizen of the United States or the Republic of Panama.

On March 15, in talking with the officials of the United States Civil Service Commission, I was informed that it was the general practice of the United States to hire only citizens of the United States, and I presume in general that this is the policy of the Republic of Panama. Mr. Chairman and members of the committee, I appreciate the opportunity of appearing before this committee on behalf of the Government Employees' Council, AFL-CIO, and endorsing the statement printed and oral that was presented to this committee today by Howard E. Munro.

Thank you, Mr. Chairman.

Senator DUFF. Thank you, Mr. Walters. Mr. Burrows will be our next witness.

In view of the fact that this is a statement for Mr. Freeman, we will save time by putting it in the record instead of reading it because we have a deadline.

Mr. BURROWs. It will only take about 2 minutes.
Senator DUFF. Go ahead.

STATEMENT OF GORDON M. FREEMAN, INTERNATIONAL PRESIDENT, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AS READ BY ORRIN A. BURROWS, LEGISLATIVE REPRESENTATIVE OF THE INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS

Mr. BURROWs. Mr. Chairman and members of the Senate Committee on Interstate and Foreign Commerce, my name is Orrin A. Burrows, legislative representative of the International Brotherhood of Electrical Workers.

I am presenting this prepared statement in behalf of International President Gordon M. Freeman. The organization is affiliated with the American Federation of Labor and Congress of Industrial Organizations as well as being affiliated with its subordinate departments, with its headquarters being located at 1200 15th Street NW., Washington, D. C.

The organization which I represent is international in scope with over 650,000 members in 48 States, Alaska, Hawaii, Panama Canal' Zone, and in the Dominion of Canada.

These members are employed in the building and construction trades, electric utilities, in the metal trades, various other industries and by the numerous agencies of the United States Government.

Our members employed on the Panama Canal are vitally interested in this legislation as introduced by Senator Magnuson, but we feel S. 2167 does not fully protect our members employed on the Panama Canal Zone.

The IBEW is in full support of the statement which is to be made for the metal trades department of the AFL-CIO as it relates to S. 2167 and the "clean bill" which has been proposed to replace S. 2167.

Many of the provisions contained in S. 2167 we fully support, but we feel some revisions should be made to protect the workers on the Canal Zone. Under the present control over the management of the Panama Canal Zone Government and the Panama Canal Company, much dissatisfaction is evident among the workers, who have been required to assume many charges which they feel should be the obligation of the Government itself.

Under the revised "clean bill," the pro rata costs would be assumed by the several agencies of the Federal Government, including the military, under a stipulated formula. In the event these costs are not paid by the agencies themselves, the amounts could be deducted from the tolls formula.

The workers on the Canal Zone desire civilian control over the operation of the Canal Zone Government and the Panama Canal Company.

The proposed "clean bill" as presented to this committee would accomplish this very thing, just the same as the provisions of S. 2167 but there are a number of provisions in the "clean bill" which, if accepted by this committee in a "package," would satisfy the workers to the extent that they feel "they could live with it."

I have made a number of trips to the Panama Canal since 1947. During the month of November 1952 the Secretary of the Army sent me to the Canal Zone as a member of a rent panel to investigate the housing situation on the Canal Zone. I have had the opportunity to see and discuss with the workers their many problems and I know they have real concern for the way things have been "run" in the past-they want a change for the better and this looks like the opportunity to correct many of the evils that have existed in the way costs have been shifted to the workers, over the years.

I understand that the provisions of the "clean bill" do not conflict with the treaty provisions as negotiated between the State Department and the Republic of Panama. The proposal is to have BLS establish an expenditure pattern as to how employees on the canal spend their money and later have BLS establish a representative "market basket”