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Present law provides that the Panama Canal Company shall be represented by the President of the United States or such officer of the United States as may be designated by him. The President has by Executive order designated the Secretary of the Army to administer the affairs of the Canal Zone Government and the Panama Canal Company, S. 2167 would by substantive law transfer this responsibility from the Secretary of the Army to the Secretary of Commerce and the President with the advice and consent of the Senate would appoint the Administrator, Deputy Administrator, and seven-man Advisory Board for the Corporation.

The Canal Zone district of the AFGE does not oppose such transfer if it is spelled out clearly in the law that the Administrator, Deputy Administrator, and each member of the seven-man Advisory Board are selected strictly on the basis of qualifications and with complete disregard to their political affiliation. We feel, however, that unless this is done these men might very well be political appointees to the jobs as a reward for their contribution to a particular party.

Running the Panama Canal is a man-sized job. It not only requires outstanding administrative ability, but the man at the head of this enterprise should be an engineer, although that specilization is not considered essential. The most essential qualification is that he be completely free from political pressure. Il he is not, it is not at all unlikely that he ould be prevailed upon to fill key positions here on the basis of partisan favoritism without regard to the merit system.

We are strongly opposed to any legislation that would make the office of Governor of the Canal Zone or its equivalent a political plum. It has never been such; we want it kept that way.

There are those here who feel—and I believe justifiably so—that the military are in control of too many functions of the canal establishment. For example, in addition to the Governor and Lieutenant Governor, Army Officers are at the head of the following activities of the Canal Zone Government and the Panama Canal Company: (1) Health Bureau, (2) Engineering and Construction Bureau, (3) Gorgas Hospital, (4) Corozal Hospital, (5) most of the specialized professional services of the Health Bureau, and (6) military assistant to the Governor. Navy officers are assigned to the Panama Canal in the following capacities: (1) Marine Bureau Director, (2) Chief of the Industrial Division, (3) captain of the Port of Balboa, and (4) captain of the Port of Cristobal. We see no sound reason why career civilians would not perform as well or better as the head of these functions. On the contrary, we believe it would be in the interest of the service to break with tradition in the appointment of Army or Navy officers to these posts.

S. 2167 would also amend the present law by changing the method of determining certain costs. The new language would require the Republic of Panama to pay for cost of immigration and customs service provided by the Canal Zone Government and for the cost of providing schools for certain of its citizens. The bill would also provide that other agencies of the Government operating on the Canal Zone shall bear their proper share of the cost of maintaining the roads, highways, sewers, and other facilities and services common to a community on the basis of the ratio of military personnel to civilian citizens of the United States and of the Republic of Panama employed by the Panama Canal Company and the Canal Zone Government. These changes meet with our approval and we respectfully recommend that the committee give them favorable consideration.

We have held the opinion from the beginning that the present Board of Directors of not less than 9 nor more than 13 (in practice it has never been fewer than 13) is larger than is necessary. It is also our opinion that some members of the Board have been appointed with very little regard for their qualifications for the post, but more for the purpose of giving them recognition for their contribution to a party or for reasons of business association. Regardless of the existence of any real basis for this opinion, it would be difficult if not impossible to convince employees here that some members of the Board have not proposed changes knowing them to be detrimental to the best interest of the employees. We would favor the proposed change in the governing body if the language were amended to stipulate clearly that these nine governing officers shall be selected for appointment on the basis of proved outstanding qualification for the job and not as a reward for their services or contributions to any political party or individual.

It is noted that S. 2167 provides that “In determining whether or not a facility if self-supporting, the corporation shall allow as cost the items of overhead, maintenance and operation, depreciation, interest on investment, and a proportionate share of the net cost of the Canal Zone Government.” We do not know just how this would be interpreted and applied. We do know, however, that some of the facilities used for purposes other than actual transit of ships include such as commissaries, schools, police and fire protection, sanitation of the Canal Zone, hospitals and dispensaries, housing, maintenance of buildings and grounds, recreational facilities, and the construction and maintenance of streets, sidewalks, and highways. Because of our unique situation, and the fact that we are isolated and set apart from areas in which such services would be provided by city, county, State, and Federal Governments, we feel strongly that the product sold by the Panama Canal (transit of ships) should pay the cost of operating these essential non-revenue-deriving activities. In this view, we are mindful of the fact that the retail price of a stalk of bananas, ton of coal, or kilowatt of electric power is derived by taking into consideration all the costs involved in getting the item to the consumer. We contend the principle is the same in the case of tolls at the Panama Canal. We believe, therefore, that the users of the canal should pay a larger share of the total cost of operating the waterway and all of its auxiliary appurtenances.

There are several other features in S. 2167 not touched upon in this statement. We are not qualified at the moment to comment constructively upon them, but consider them more in the nature of perfecting langauge than of substantial change. Our primary interest lies in endeavoring to prevent any changes in the law that might, by faulty interpretation, require us to contribute as much or more of our salary to the operation of the Panama Canal enterprise than we are now forced to do. We trust the committee will keep in mind our position in its deliberations in regard to the proposed legislation and act in a manner that will bring some relief from the financial burden now being borne by the employees here.

Mr. Chairman and members of the committee, we apreciate greatly the oppor. tunity of presenting our views in connection with the bill now under consideration.

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