THE CHAIRMAN, CURUNDU, C. Z., March 12, 1956.. Senate Interstate and Foreign Commerce Committee, Senate Building, Washington, D. C. DEAR SIR: I understand that hearings are to be held March 16 on S. 2167, a bill introduced by Senator Magnuson, that proposes certain changes to the law concerning the organization and operation of the Panama Canal Company (Public Law 841, 81st Cong.). In view of the fact that hearings are to be held shortly on this bill, I should like to submit for committee consideration the following proposal with regard to those portions of the bill that pertain to the reallocation of certain costs of the Canal Zone Government. The proposal is: (a) That the present method of funding for the costs of the Canal Zone Government be discontinued, and that such costs be borne by appropriated funds. (b) That the Panama Canal Company then be required to reimburse the United States for its pro rata share of the costs of the Canal Zone Government. Under existing law, the reverse of the proposal set forth above is practiced. Costs of the Canal Zone Government are, in effect, borne by the Panama Canal Company, which in turn assesses a number of Federal agencies for their pro rata share of these costs. The situation is anomalous in itself in that a corporation underwrites the costs of Government service and then seeks to recover from governmental agencies their share of these costs. It would appear to be simpler and more logical to collect from one agency than from several. It would also resolve steamship operators' complaints that they are now unfairly required to pay for services rendered by the Canal Zone Government to other Federal agencies. In addition, it would terminate the improper tie-in of Government costs with Company operations. The primary function of Government is to provide service; the primary function of a corporation is to make a profit. When you tie the two together, which is the case at present, you generate a conflict between two diverse interests which does not redound to the benefit of either. Very truly yours, W. H. BRUNNER. STATEMENT OF PACIFIC COAST COMMITTEE ON PANAMA CANAL TOLLS This statement is presented on behalf of the Pacific Coast Committee on Panama Canal tolls which first began a study of the Panama Canal toll problem in 1948 and which was reactivated in the fall of 1954. As a result of studies made by this Pacific Coast Committee in cooperation with other organizations, a reorganization of the Panama Canal took place on July 1, 1951, establishing the Panama Canal Company as a separate Government corporation. Because of information developed concerning operations under the newly formed corporation, this committee was reactivated in November 1954 to further study the Panama Canal tolls problem and help seek a solution. The Panama Canal is very important to Pacific coast commerce and with many businesses depending heavily upon cargoes moving through the canal. Prior to World War II, more than one-half of the tonnage moving across piers in West coast ports moved in the intercoastal trade. Today something less than 20 percent of the tonnage moving across these same piers consists of intercoastal traffic. Panama Canal tolls are not the only factor causing this greatly reduced traffic movement, but tolls is a very important factor. Evidence of this importance is illustrated by the following list of chairmen serving the Pacific Coast Committee on Panama Canal tolls in the various port areas. Seattle-Puget Sound Mr. D. E. Kokjer,manager, Grace Line, Inc., 408 White Building, Seattle, Wash. Mr. Edwin A. Stone, executive Secretary, Northwest Marine Terminals Association, pier 24, North Seattle, Wash. Portland-Columbia River Mr. Thomas P. Guerin, general manager and secretary, Commission of Pub lic Docks, 3070 NW. Front Ave., Portland, Oregon. Stockton-Central Valley area Mr. Elmo E. Ferrari, port director, P. O. Box 2089, Main Office, Deep Water Terminal, West Washington, Stockton, Calif. San Francisco Bay area Mr. Charles P. Howard, Gen. Robert H. Wylie, 95 Market St., Oakland, Calif. Oakland-East Bay area Mr. Dudley W. Frost, port manager, Port of Oakland, Grove Street Pier, Oakland, Calif. Los Angeles-Long Beach area Mr. Bernard J. Caughlin, general manager, Los Angles Harbor Department, P. O. Box 151, San Pedro, Calif. Mr. E. J. Amar, general manager, Port of Long Beach, 1333 El Embarcadero, Long Beach, Calif. San Diego area Mr. John Bate, port director, Port of San Diego, 1365 Harbor Drive, San Diego, Calif. For the past 17 months the Pacific Coast Committee on Panama Canal Tolls has furnished educational information to interested organizations in an attempt to engender interest in, and understanding of, the Panama Canal tolls problem. This committee has sent 11 bulletins to a mailing list of over 500 persons and organizations informing them of the need for corrective legislation and keeping them current on congressional activity on this problem. The success of this effort is evidenced by the attached list of 82 organizations representing ports, labor groups, civic groups, service clubs, etc., which have passed resolutions showing the widespread interest in the toll problem and indicating that Panama Canal tolls affect all types of business interests on the Pacific coast. You will note that there are resolutions which did not originate on the Pacific coast, thus indicating the national interest in the need for corrective legislation in dealing with this problem. The Pacific Coast Committee on Panama Canal Tolls recognizes the vital need for immediate corrective legislation to prevent cargoes moving through the canal from subsidizing nontransiting activities. We have not attempted to make an exhaustive statement concerning the technical aspects of the problem and its solution as we understand that such analysis will be given by other persons before this committee. Both Mr. Charles P. Howard and Gen. Robert H. Wiley, cochairmen of the Pacific Coast Committee on Panama Canal Tolls, have urged me to inform this Senate committee that as soon as final bills with amendments are available the Pacific Coast Committee will inform all organizations which have adopted resolutions and again urge these organizations to review the legislation and to support it by urging immediate congressional approval of S. 2167 and companion House bills. ORGANIZATIONS WHICH HAVE, AS OF MARCH 16, 1956, PASSED RESOLUTIONS ON THE PANAMA CANAL PROBLEM SEATTLE-PUGET SOUND AREA Inland Empire Waterways Association. Mayor's Maritime Advisory Committee, City of Seattle. Pacific Northwest Trade Association. Port Commission of the Port of Olympia, Wash. Port Commission of the Port of Seattle. Propeller Club, Port of Seattle. Spokane Chamber of Commerce. City of Astoria, Oreg. PORTLAND-COLUMBIA RIVER AREA City of Seaside, Oreg. Commission of Public Docks, Portland. East Side Commercial Club, Portland. International Association of Machinists, Lodge 26, Astoria, Oreg. Oregon State Public Port Authorities Association. Pacific Wool Growers, Portland. Port of Astoria, Oreg. Port of Portland, Oreg. Port of The Dalles, Oreg. Portland Wool Trade Association, Oreg. Port of Suislaw, Florence, Oreg. Port of Coos Bay, Oreg. SAN FRANCISCO BAY AREA Alameda Chamber of Commerce. Board of State Harbor Commissioners, Port of San Francisco. Board of Supervisors, City and County of San Francisco. City of Antioch, Calif. City Council of Alameda, Calif. City of Pleasanton, Calif. Grand Lake Taxpayers Association. Interservice Club Council, Oakland, Calif. Lions Club, Oakland. Marine Exchange, Inc., San Francisco, Calif. Marine Fireman's Union, San Francisco, Calif. Mayor's Committee on Shipping, Shipbuilding, and Ship Repair, San Francisco. Oakland Chamber of Commerce. Oakland Board of Port Commissioners. Oakland City Council. Port of Redwood City. Pacific American Tankship Association. Richmond City Council. San Francisco Bay Area Council, Inc. San Francisco Chamber of Commerce. San Francisco Junior Chamber of Commerce. Stockton Chamber of Commerce. Stockton Port Commission. Women's Civic Club of Oakland, Calif. Women's Legislative League of Oakland and East Bay. LOS ANGELES-LONG BEACH AREA Board of Harbor Commissioners, City of Long Beach. Long Beach Retailers Associated. Los Angeles Steamship Association. Paramount Chamber of Commerce. Printing Industries, Inc., of Southern California. Southern California Traffic Managers Conference. Woodland Hills Chamber of Commerce. SAN DIEGO AREA Central Labor Commission of San Diego County. Chula Vista Chamber of Commerce. Harbor Commission of the City of San Diego. Junior Chamber of Commerce, San Diego. National City Chamber of Commerce. Port of San Diego. Propeller Club, Port of San Diego. San Diego Chamber of Commerce. State Board of Pilot Commissioners, San Diego. OTHER PACIFIC COAST ORGANIZATIONS California Association of Port Authorities. California Legislature, 1955. California State Junior Chamber of Commerce. Northern California Ports & Terminals Bureau, Inc. Pacific Coast Association of Port Authorities. Rice Growers Association of California, Sacramento, Calif. OTHER ORGANIZATIONS American Association of Port Authorities. Intercoastal Lumber Distributors Association, Inc., New York. Hon. WARREN G. MANGUSON, WASHINGTON 5, D. C., March 22, 1956. United States Senate, Washington, D. C. MY DEAR SENATOR MAGNUSON: Pursuant to my conversation with you on Tuesday after the hearings on S. 2167, I am writing you this letter on the problem of the compensation of Panama Canal pilots under the present version of S. 2167. As I informed you at that time these pilots, who are members of Local No. 30 of the International Organization of Masters, Mates, and Pilots, have been held by the United States District Court in Panama to be required under present law to receive compensation in accordance with the rates and practices in the maritime industry. The provisions of law under which their compensation should be fixed are sections 205 of the Federal Employees Pay Act of 1945 (59 Stat. 295, as amended, 5 U. S. C. 913) and section 202 (8) of the Classification Act of 1949 (63 Sta. 954, as amended, 5 U. S. C. 1082 (8)). Under the provisions of section 6 (b) (5) of the proposed "clean bill" to substitute for S. 2167 the corporation would have full power to "fix their compensation" as it sees fit. It is this provision in S. 2167 which the pilots would like qualified so as to preserve the compensation requirements presently granted to them by the Congress. They have had much difficulty in getting the Company to meet these legal requirements and have had to file suits in court in order to get relief. For this reason it is doubly important to these people that S. 2167 contain provisions similar to the present law mentioned above. I suggest that a proviso be added after the word "employees" on line 10 of page 7 of the proposed "clean bill" to the following effect. Provided, however, That pilots of vessels transiting the Panama Canal shall have their compensation fixed by wage boards and shall be paid wage board overtime and the rates and practices in the maritime industry of the United States. The pilots are of the opinion that this suggested proviso would preserve for them the compensation which they have struggled so long and with such difficulty to obtain. When I discussed the matter with you on Tuesday I understood that you agreed that a change in the compensation of the pilots was not an objective of the bill and that you would go along with language which would preserve for them their present rights. I am sure that all of the pilots will greatly appreciate your cooperation in this matter as they have full confidence in you. With best wishes, Sincerely yours, WILLIAM S. TYSON, Counsel for Panama Canal Pilots. (The following additional correspondence, statements, etc., also were received for inclusion in the record: Letter from the Governor of the Canal Zone, dated May 18, 1956, in response to certain questions addressed to him by Senator Magnuson, and including further comments on the committee print; letter from Senator Magnuson to the Director of the Budget, dated March 28, 1956, and reply of the Director, Mr. Percival Brundage, dated April 9, 1956; letter from Robert E. Mayer, president, Pacific American Steamship Association, dated March 30, 1956; letter from Committee on Panama Canal Tolls, dated April 3, 1956; letter from the American Merchant Marine Institute, Inc., dated April 9, 1956; letters from Henry P. Chandler, dated April 27, 1956, and May 28, 1956; and letter, under date of April 13, 1956, from James A. Campbell, national president, American Federation of Government Employees, enclosing a statement for the record of R. M. Lovelady, national vice president of the federation. The letters, etc., are as follows:) Hon. WARREN G. MAGNUSON, United States Senate, Washington, D. C. CANAL ZONE GOVERNMENT, OFFICE OF THE GOVERNOR, Balbou Heights, C. Z., May 18, 1956. MY DEAR SENATOR MAGNUSON: On behalf of the Panama Canal Company and the Canal Zone Government there are submitted herewith for insertion in the record of your hearings on the bill S. 2167, to make certain changes in the administration of the Panama Canal Company, and for other purposes: (a) Data responsive to the points raised in your letter of April 5, 1956. The question or comment in your letter is quoted preceding the corresponding answer in each case, in the order presented in your letter. (b) Comment on the clean bill enclosed with your letter. The enclosed material requires no additional explanation. I should like to emphasize, however, that as a whole I do not consider the "clean bill" any improvement over S. 2167 except for the one correction that would continue the present dual office of Governor and operating head of the Company. Our comments in opposition to S. 2167, already in your record, still apply generally to the clean bill. In particular it is my definite opinion that the attempted statement of a consumer pricing provision in section 6, on page 6, of the clean bill, besides being unnecessary, is unsound in conception and drafting, would be controversial, troublesome and, in fact, unworkable in practice, and would create more problems than it would solve. It is requested that this letter be inserted in the record with the enclosed material. Sincerely yours, J. S. SEYBOLD, Governor of the Canal Zone, President, Panama Canal Company. RESPONSE ON BEHALF OF PANAMA CANAL COMPANY AND THE CANAL ZONE GOVERNMENT TO QUESTIONS SUBMITTED IN LETTER OF APRIL 5, 1956, FROM SENATOR WARREN G. MAGNUSON TO J. S. SEYBOLD, GOVERNOR ON THE CANAL ZONE AND PRESIDENT, PANAMA CANAL COMPANY, SUPPLEMENTING TESTIMONY AT HEARING ON S. 2167 (Questions are quoted verbatim from and in the order presented in Senator Magnuson's letter of April 5, 1956, and are followed by the corresponding answers in each case.) Question: "In your testimony you state the primary mission of the canal enterprise is to operate and maintain the waterway for the dual purpose of serving both national defense and transoceanic commerce. Elsewhere you review the chain of management command from the stockholder to the Board of Directors, to the Governor, to the division heads, all of whom serve at the pleasure of the stockholder, who is the Secretary of the Army. "(a) With this organizational structure in mind would you state your views as to which of the two purposes of the canal enterprise is of primary importance? "(b) Would you please review for the committee the manner in which any commercial control of the canal by nonmilitary personnel is reflected in canal management?" Answer: The primary mission of the Panama Canal enterprise is to operate and maintain the waterway for the transiting of ships from one ocean to the other and this primary mission has the dual purpose of serving both national defense and interoceanic commerce. |