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Senator MORSE. It is your testimony before this committee that the procedure which you have been following has not resulted in a parsimonious policy on the part of the Canal Zone officials, and we have not been, to be perfectly frank about it, we have not in your opinion actually been taking advantage of Panama nationals by imposing upon them settlements much less than what they would ordinarily get in an American court in a similar case?

Mr. BURDICK. It has been the intention of the Governor and the other officials, Mr. Chairman, to arrive at a fair and just settlement in these cases, most of which, of course, are property damages.

Senator MORSE. This is limited entirely to claimants for losses of and damages to property?

Mr. BURDICK. Yes, sir.

Senator MORSE. This is my car case, my automobile.

Mr. BURDICK. Yes, sir. The act that gives the Governor the right to settle claims for damages to vessels, that is section 10, title 2, Canal Zone Code, places a limit of $60,000 on the claims which the Governor can pay.

If we make it clear that we do not intend this to apply in such a way as to destroy the remedy on the contracts, we would think we could operate on a fairly small limitation.

Senator MORSE. I just do not see why you should put a limitation on if what you are trying to do is to get yourselves in a position where you can maintain good relations with the people of the Republic, and all you are trying to do is to do justice to them in case of damage to their property, and your settlements are subject after all to the audit and the inspection of the Comptroller's office. You are in quasi Government and private employer capacity down there, too. We just got through passing a bill for the incorporation of the Panama Railroad Corporation, to which Corporation we gave, after all, rather broad powers. You want to be in the position that when it comes to your dealings with the nationals of Panama any private corporation in America is in position to make settlements with private citizens that may have claims against that corporation.

For example, Union Pacific Railroad has an accident running into an automobile. Now most of those accidents of that type, that corporation settles. They do not defend. It is a legitimate case, and you want to be in a position where you can reach a compromise settlement. Mr. BURDICK. Yes, sir.

Senator MORSE. With the national of Panama.

Mr. BURDICK. Yes, sir.

Senator MORSE. In these property cases.

Mr. BURDICK. Yes, sir.

Senator MORSE. Well, I just do not see where you should not be allowed to do it.

Mr. BURDICK. That is our position, Mr. Chairman. It was only an endeavor to meet the General Accounting Office objection so far as we could, but that is exactly our position on this provision relating to settlement of claims, and the Congress has not differed with us in all of these years.

Senator MORSE. Since 1916.

Mr. BURDICK. They have placed it in our appropriation language after year since 1916.


Senator MORSE. There is nothing that will prevent the Congress in the future from taking away from you a power that you are now seeking.

Mr. BURDICK. None whatever.

Senator MORSE. I am satisfied on it. My only concern is so far as the plaintiff is concerned against you fellows. I am more inclined to think that probably he needs more protection against you gentlemen than the Federal Government needs to be protected from any arbitrary decision that the officials of the zone may exercise. I want to be sure that what we are doing here is trying to make permanent a practice which makes it possible for you to maintain better relations with the nationals of another country. I just want to make sure that you are not following too parsimonious a policy in regard to it.

Mr. BURDICK. I think that is a good thought, Mr. Chairman. Senator MORSE. I hope that if you get this power, I would like to have the record show that I do not want you to give the money of the American taxpayers away, but I hope that when as taxpayers they are in fact liable because of conduct of representatives of their Government, you give the nationals of other countries a fair settlement. I do not want you to give them more than they are entitled to, but I think they ought to get a fair settlement and I am a little afraid that if your largest claim has been only $4,500 over the years, you fellows are doing some pretty tight bargaining.

Let us go to the next section. That is the only one in conflict. Now, on this disaster relief, that is section 18.

Mr. BURDICK. Section 1 of the bill would further add to the Canal Zone Code a section 18 of title II authorizing the Governor, in the event of emergency because of disaster, calamity, occurring in the Canal Zone or occurring in the Republic of Panama in such circumstances as to constitute the hazard to health, safety, security, or property in the Canal Zone, to expend available funds and to utilize or furnish material, supplies, equipment, and services for relief and protection. Senator MORSE. Do we have another copy of this bill, this proposed bill?

Mr. BURDICK. Yes, sir.

Senator MORSE. One that is not marked. I want to take that with me to another meeting.

On that particular section, Mr. Burdick, you can file your explanation with the reporter. It is perfectly clear to me, and it is a very good section.

Incidentally, it is the section that we ought to have in general laws applicable to the United States, and it contains the principle that is contained in the bill introduced last week for the setting up of a Nation-wide disaster-relief organization, which we do not have in our laws, and although it differs, the bill introduced last week differs from your proposed section here, in that necessarily yours is limited. to the funds of the Panama Canal Zone, we certainly ought to have a similar over-all national-relief policy, and, of course, the flood in my area in recent days high-lights this whole problem, and I will approve that without any further comment. You can file your statement. Mr. BURDICK. I did not have any comment to make on that other than that a similar provision has been in the annual appropriation since 1916, and it would enable the Governor to act immediately.

The section would provide support for the item in Canal appropriations, reading

For * * * expenses incident to any emergency arising because of calamity by flood, fire, pestilence, or like character not foreseen or otherwise provided for herein; * * *

which item first appeared in Canal appropriation language in 1916 (sundry civil appropriations). The proposed section would enable the Governor to act immediately in the event of any disaster endangering life or disrupting Canal operation.

Senator MORSE. That is a very sound provision.

Mr. BURDICK. Section 2 would amend chapter 4 of title 2, Canal Zone Code, now entitled "Business Operations," and consisting of two sections numbered 51 and 52, in such manner as to expand the designation of the chapter to "Business Operations; Sales and Services" and to include proposed sections numbered 51 to 54.

Present sections 51 and 52 of title 2, which are limited in scope to the provision of materials, supplies and services for vessels, are here quoted for convenient reference.

SECTION 51. PROVIDING MATERIALS, SUPPLIES AND SERVICES FOR VESSELS.The President is authorized to establish, maintain, and operate, through the Panama Railroad Company or otherwise, dry docks, repair shops, yards, docks, wharves, warehouses, storehouses and other necessary facilities and appurtenances for the purpose of providing coal and other materials, labor, repairs, and supplies for vessels of the Government of the United States and, incidentally, for supplying such as reasonable prices to passing vessels, in accordance with appropriations hereby authorized to be made from time to time by Congress as a part of the maintenance and operation of the Panama Canal. (Aug. 24, 1912, ch, 390, sec. 6, 37 Stat. 563 U. S. Code, title 8, sec. 1323.)

52. RECEIPTS FROM SUCH BUSINESS; APPROPRIATION FOR EXPENDITURE AND REINVESTMENT.-Moneys received from the conduct of business referred to in the next preceding section, may be expended and reinvested for such purposes without being covered into the Treasury of the United States; and such moneys are hereby appropriated for such purposes, but all deposits of such funds shall be subject to the provisions of existing law relating to the deposit of other public funds of the United States, and any net profits accruing from such business shall annually be covered into the Treasury of the United States. Monthly reports of such receipts and expenditures shall be made to the President by the persons in charge, and annual reports shall be made to the Congress. (Aug. 24, 1912, ch, 390, sec. 6, 37 Stat. 563 U. S. Code, title 48, sec. 1323.)

Senator MORSE. That is the important point, that net profits go into the Treasury of the United States. Your expenditures are all subject to audit and inspection by the Comptroller General, and therefore, if it should be found that there was any evidence of either waste or fraud or collusive practices, that it could be checked by the Comptroller General's Office.

But the authority that you are really asking for is that you shall be able to operate your facilities on a business-like basis by making use of that income that is necessary in order to pay for the expenditures covered by this section without getting any special authorization therefor.

Mr. BURDICK. That is correct, sir. I might add again, as in the other cases, that this is not any increase in the authority. It is merely a restatement of the existing law, and the existing practices.

Senator MORSE. Since 1916.

Mr. BURDICK. It varies somewhat. There are several different provisions in the appropriaton language, and perhaps you would like for

me to have those provisions inserted in the record, rather than take the time to read it.

Senator MORSE. It is so ordered. (The information is as follows:)

The provisions in the appropriation language as contained in the budget for fiscal year 1948 bearing upon the subject matter of the proposed new chapter are as follows:

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"For every expenditure requisite for and incident to the maintenance and operation, sanitation, and civil government of the Panama Canal and Canal Zone, and construction of additional facilities, including: * printing and binding; purchase (not to exceed thirty-five in the fiscal year 1948), and hire of passenger motor vehicles; *; expenses incurred in assembling, assorting, storing, repairing, and selling material, machinery, and equipment heretofore or hereafter purchased or acquired for the construction of the Panama Canal which are unserviceable or no longer needed, to be reimbursed from the proceeds of such sale;

** *

* *

"Maintenance and operation of the Panama Canal: *; purchase, inspection, delivery, handling, and storing of materials, supplies and equipment for issue to all departments of the Panama Canal, the Panama Railroad, other branches of the United States Government, and for authorized sales; in all, $16,850,000, together with all moneys arising from the conduct of business operations authorized by the Panama Canal Act.

"Total Panama Canal, $24,226,000, to be available until expended.

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"In addition to the foregoing sums there is hereby made available for the fiscal year 1948 for expenditures and reinvestment under the several heads of appropriation aforesaid, without being covered into the Treasury of the United States, and to remain available until expended, all moneys received by the Panama Canal during the fiscal year 1948 from services rendered or materials and supplies furnished to the United States, the Panama Railroad Company, the Canal Zone government, or to their employees, respectively, or to the Panama Government, from hotel and hospital supplies and services; from rentals, wharfage, and like service; from labor, materials, and supplies and other services furnished to vessels other than those passing through the Canal, and to others unable to obtain the same elsewhere; from the sale of scrap and other byproducts of manufacturing and shop operations; from the sale of obsolete and unserviceable materials, supplies, and equipment purchased or acquired for the operation, maintenance, protection, sanitation, and government of the Canal and Canal Zone; and any net profits accruing from such business to the Panama Canal shall annually be covered into the Treasury of the United States.

"There is also made available for the fiscal year 1948 for the operation, maintenance, and extension of waterworks, sewers and pavements in the cities of Panama and Colon, to remain available until expended, the necessary portions of such sums as shall be paid during that fiscal year as water rentals or directly by the Government of Panama for such expenses."

Proposed sections 51 to 54 combine, restate, and clarify the provisions contained in present sections 51 and 52 and those appearing from year to year in Panama Canal appropriation language relating to facilities maintained and auxiliary business activities established and conducted incident to the maintenance and operation, sanitation and civil givernment of the Panama Canal and Canal Zone, and relating to the use and disposition of moneys received from such operations. Since the beginning of operations the basic laws relating to its fiscal and administrative operations have consisted of the Panama Canal Act of August 24, 1912 (now incorporated in the Canal Zone Code) and the various legislative provisions included from year to year in the annual appropriation acts. The intent of these provisions has been well understood and for many years now the operations have been carried on under interpretations which The Panama Canal believes pursue that intent and which have been understood by the various succeeding appropriations committees. The sections do not change the methods which have been

followed for years. Subsection 51 (a) provides (1) an enumeration of the facilities and appurtenances authorized to be established, maintained, and operated; (2) an enumeration of the purposes for which the facilities and appurtenances may be maintained and operated; and (3) a general enumeration of the agencies, entities, and persons

to whom sales, services, supplies, and materials may be made or furnished, under the provisions of the Treaty with the Republic of Panama.

The general purpose of paragraph (a) of proposed section 51 is to provide adequate support in substantive legislation for the continued maintenance and operation of the facilities and appurtenances which are necessary in connection with the Canal enterprise including the government of the Canal Zone.

The third part of paragraph (a), after authorizing the making or furnishing of sales, services, and supplies to vessels and to Government agencies and employees, concludes with an authorization for the making or furnishing of sales, services, and supplies generally to any other entities or persons eligible to make or receive the same "under the laws prevailing at the time and the policies heretofore or hereafter adopted consistently with such laws." The present restriction upon these operations are to be found in the general treaty of friendship and cooperation concluded with the Republic of Panama on March 2. 1936, and in the accessory notes exchanged between the two Governments on that date (Treaty Series No. 945; 53 Stat. 1807). These restrictions include restrictions (a) as to the classes of persons to whom goods may be sold; (b) as to persons entitled to reside or occupy dwellings in the Canal Zone; (c) as to the conduct of private business enterprises in the Canal Zone; (d) as to hotel operations; (e) as to sales to vessels; and (f) as to the use and services of Canal Zone facilities such as hospitals, dispensaries, restaurants, lunchrooms, messes, laundries, and cleaning and pressing establishments.

Subsection 51 (b) authorizes the transfer to and operation by the Panama Railroad Company of any of the facilities referred to in sections 51 and 52. Representatives of the Bureau of the Budget, the General Accounting Office, the Panama Canal, and the Panama Railroad Company are agreed that some of these facilities could be operated more efficiently by the Panama Railroad Company.

Section 52 would authorize the President to set up as "business operations” of the Canal any of the facilities and appurtenances referred to in section 51, in which case the aggregate net profits would be covered annually into the Treasury. This procedure has been followed in the case of facilities and appurtenances susceptible of being operated on a self-sustaining basis.

Section 53 restates and clarifies present section 52 and present appropriation language, in authorizing the expenditure or reinvestment under the several heads of appropriation for the Panama Canal, without coverage into the Treasury (except in the case of net profits of business operations), of the receipts of the operations authorized by proposed sections 51 and 52, and of receipts from sales made and services rendered with the exception of tolls, taxes, court fees, or fines which are deposited in the Treasury of the United States as miscellaneous receipts. Proposed section 53 would require, as in present section 52, monthly reports of such receipts and expenditures to the President, and annual reports to the Congress.

Section 54 provides that sections 51 to 53 shall have no application to operations of the Canal Zone postal service. The operations of the Canal Zone postal service are already provided for in substantive legislation in chapter 14 (secs. 271 to 281) of title 2, Canal Zone Code, as restated by amendment in act June 13, 1940 (ch. 358, sec. 2, 54 Stat. 389; 48 U. S. Code, secs. 1323a-1323j).

Senator MORSE. This is a provision necessary to supplement the bill we approved a couple of weeks ago?

Mr. BURDICK. Yes, sir; and it restates and clarifies the provisions of existing law.

Senator MORSE. The same is true of section 53.

Mr. BURDICK. Section 3 would add to the Canal Zone Code a section 85 of title 2, authorizing the Governor, within the limits of appropriations made therefor, to provide for the special training in the United States or elsewhere of employees of the Panama Canal when in the judgment of the Governor such special training would benefit the work of the Panama Canal. It would authorize, during special training, the payment of the employee's regular compensation and his traveling and subsistence expenses. A provision has been included in Panama Canal appropriations since 1939 authorizing attendance of selected employees at police and fire-department training schools. This aids

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