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. 357, sec. 2, 54 Stat. 389; 48 U. S. Code, secs. 1323a-1323j). In excluding the operation of Panama Canal clubhouses from the operation of proposed sections 51 to 53 the purpose is to permit the continued conduct of those operations substantially as at present. The clubhouses were originally authorized by the Isthmian Canal Commission in 1905 for the purpose of providing recreational, religious, and welfare facilities for the employees. The buildings and structures, were provided from appropriated funds but the operations were financed from^ membership dues and revenues. At the present time clubhouse operations are entirely self-supporting. The clubhouses are patronized mostly by employees and their families; however, their facilities are also available to members of the armed forces. Under a note accessory to the 1936 general treaty with the Republic of Panama the use of clubhouse facilities is limited to residents of the Canal Zone and to officers and employees of the Government and members of the armed forces and their families. Clubhouses are operated in all civilian towns and provide essential services such as restaurants; soda fountains; sale of tobacco; magazines, and toilet articles; moving pictures; bowling alleys; and assembly rooms. Three swimming pools and two bathing beaches are also operated.

Prior to the war appropriations were required to finance expansion of plant; however, the favorable net earnings in the past few years have provided funds for this purpose. An accounting for these funds is made monthly to the General Accounting Office and the transactions are subject to audit verification by representatives of the General Accounting Office, who review the accounts during their annual inspections in the Canal Zone. Except for a small cash working balance, the funds are deposited with the Treasurer of the United States. Although no appropriations are required, the program of clubhouse operations is included in the annual estimates submitted to the Director of the Bureau of the Budget.

The proviso in proposed section 54, like paragraph (b) of proposed section 51, is an outgrowth of the current project for reincorporation of the Panama Railroad Company by act of Congress; and the purpose of the proviso and the relationship of the proviso to the proposed legislation to incorporate the Panama Railroad Company are substantially identical to those hereinbefore outlined with reference to paragraph (b) of section 51.

SECTION 3 OF BILL, ADDING SECTION 85 OF TITLE 2, CANAL ZONE CODE

Section 3 of the bill 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 any employee of the Panama Canal when in the judgment of the Governor such special training would be of benefit to the work of the Panama Canal, and would authorize, during such special training, the payment of the employee's regular compensation and his traveling and subsistence expenses.

Chapter 6 of title 2, Canal Zone Code, deals with employees, and article 1 thereof, wherein proposed section 85 would be placed deals with appointment and compensation of employees in general. While article 1 now consists of but three sections, numbered 81 to 83, respectively, an additional section numbered 84 has heretofore been allotted to a section unrelated to this bill and which is contained in bill H. R. 2817, Eightieth Congress.

Since 1939 Panama Canal appropriations have contained an item reading: "For every expenditure requisite for and incident to the maintenance including the following: * *; not to exceed $2,000 for travel and subsistence expenses of the members of the police and fire forces of the Panama Canal incident to their special training in the United States;

*

* * *99

The quoted item was inserted to authorize attendance by selected employees at any one of several police and fire department training schools in the United States and thus aid the local organization in keeping abreast of advanced scientific methods, a problem rendered difficult by the isolated location of the Isthmus. Proposed section 85 would support the quoted item but would also broaden the authorization to include, in the discretion of the Governor, other classes of special training where needed in order to enable the organization to modernize and improve its methods and procedures in the light of scientific and technical advancements in the United States.

* * *

"

SECTION 4 OF BILL, ADDING SECTION 124 OF TITLE 2, CANAL ZONE CODE

Section 4 of the bill would add to the Canal Zone Code a section 124 of title 2 authorizing the Governor (a) to purchase artificial limbs or other appliances for persons injured in the service of the Isthmian Canal Commission or of the Panama Canal prior to September 7, 1916, the effective date of the United States Employees' Compensation Act, and (b) to make payments in lump sums not exceeding the amounts authorized by the Compensation Act to alien cripples who are now a charge upon the Panama Canal by reason of injuries sustained while employed in the construction of the Panama Canal.

Proposed section 124 would be placed in article 3 (entitled "Compensation for Injuries to Canal and Railroad Employees", and containing three sections relative to the application to Panama Canal and Panama Railroad employees of the United States Employees' Compensation Act) of chapter 6 (entitled "Employees") of title 2, Canal Zone Code.

Proposed section 124 would provide support for two items in Panama Canal appropriations reading as follows:

"For maintenance and operation of the Panama Canal: * payment in lump sums of not exceeding the amounts authorized by the Injury Compensation Act approved September 7, 1916 (5 U. S. C. 793), to alien cripples who are now a charge upon the Panama Canal by reason of injuries sustained while employed in the construction of the Panama Canal; "For sanitation *, the purchase of artificial limbs or other appliances for persons who were injured in the service of the Isthmian Canal Commission or the Panama Canal prior to September 7, 1916,

* *

* *

* **""

The two quoted items have appeared in Canal appropriation language since the years 1918 and 1924, respectively, and their purposes are, of course, apparent. Being limited to cases involving injuries during Canal construction and injuries prior to September 7, 1916, the two items are of diminishing importance. The first of the two items is in fact nearing total obsolescence; however, it is felt that both items should be retained and supported as provided in proposed section 124 until the need for them has wholly passed.

*

*

SECTION 5 OF BILL, ADDING SECTION 906 OF TITLE 6, CANAL ZONE CODE

Section 5 of the bill would add to the Canal Zone Code a section 906 of title 6 which, on the discharge of a prisoner from a penal institution in the Canal Zone, would authorize the furnishing to such prisoner, in the discretion of the Governor, of such suitable clothing as may be authorized by the Governor and an amount of money not exceeding $20.

Proposed section 906 would be placed in title 6, The Code of Criminal Procedure, chapter 27, Penal Institutions, a chapter which now consists of sections 901 to 905 and deals with such institutions and with the detention, treatment, and handling of prisoners.

The proposed section would support the item in Panama Canal appropriations, reading: "For civil government of the Panama Canal and Canal Zone, including gratuities and necessary clothing for indigent discharged prisoners, $

99

The present practice is to pay to each convict discharged from the Canal Zone Penitentiary the sum of $5 and in addition to furnish him with such articles of clothing as are actually required as determined by the deputy warden of the penitentiary (the deputy warden being the officer in immediate charge of the institution whereas the chief of the police and fire division is ex officio warden). This practice stems back to a resolution adopted by the Isthmian Canal Commission on January 3, 1941, authorizing the payment of not less than $5 nor more than $25 to each prisoner discharged from the Canal Zone Penitentiary for the purpose of purchasing clothing and providing for his maintenance until he finds remunerative employment.

The proposed section is based in part upon section 746 of title 18, United States Code, a section applicable to prisoners discharged from prison after conviction under the laws of the United States on indictment. The proposed section would however authorize the extension of these benefits to jail prisoners or certain classes of them, in the Governor's discretion, as the same need exists in those cases particularly inasmuch as jail sentences not infrequently exceed some penitentiary sentences in duration.

CONCLUSION

The bill H. R. 5587, Seventy-ninth Congress, contained a further section (sec. 6) which has been deleted from this proposed bill. Such further section would have amended the act entitled "An act authorizing and providing for the construction of additional facilities on the Canal Zone for the purposes of more adequately providing for the defense of the Panama Canal and for increasing its capacity for the future needs of interoceanic shipping," approved August 11, 1939 (53 Stat. 1409), in such manner as to make citizens of Panama eligible, along with citizens of the United States, for appointment to skilled, et cetera, positions in such construction work. The section is regarded as unnecessary in view of the suspension of construction work under the act aforesaid and in view of the enactment of act December 18, 1945, Public Law 280, Seventy-ninth Congress, to authorize an investigation of means of increasing the capacity and security of the Panama Canal.

I concur in the views and recommendations of the Governor of the Panama Canal.

I have been advised by the Director of the Bureau of the Budget that there is no objection to the submission of this letter and its accompanying draft bill to the Congress for its consideration.

Sincerely yours,

KENNETH C. ROYALL,
Secretary of the Army.

Senator MORSE. The Chair will mark for purposes of identification as exhibit 2 in this record a copy of a bill to amend the Canal Zone Code, and for other purposes, which is a redraft of S. 2003.

(Exhibit No. 2 is as follows:)

A BILL To amend the Canal Zone Code, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That title 2 of the Canal Zone is amended by adding in chapter 1 thereof three new sections numbered 16 to 18, and reading as follows:

"16. ACQUISITION OR CONSTRUCTION OF STRUCTURES, EQUIPMENT, AND IMPROVEMENTS.-The Governor of the Panama Canal is authorized, within the limits of available funds, to purchase or otherwise acquire, construct, repair, replace, alter, or enlarge any building, structure, equipment, or other improvement, when in his judgment such action is necessary for the operation, maintenance, sanitation, or civil government of the Panama Canal or Canal Zone.

"17. CLAIMS FOR LOSSES OF OR DAMAGES TO PROPERTY.-Authority is hereby conferred upon the Governor of the Panama Canal, or his designee for the purpose, to consider, adjust, determine, and settle claims for losses of or damages to property arising from the conduct by the Panama Canal of authorized business operations, or arising from the maintenance, operation, improvement, or enlargement of capacity of the Panama Canal or from the sanitation or civil government of the Canal Zone: Provided, however, That this section shall not apply to claims cognizable either under section 10 of this title, as amended, or under the Federal Tort Claims Act.

"Any award made to any claimant pursuant to this section shall be payable out of any moneys appropriated or made available for the maintenance and opertion, sanitation, and civil government of the Panama Canal and Canal Zone; and the acceptance by the claimant of any such award shall be final and conclusive on the claimant, and shall constitute a complete release by the claimant of such claim against the United States.

"18. DISASTER RELIEF.-In the event of emergency arising because of disaster or calamity by flood, hurricane, earthquake, fire, pestilence, or like cause, not foreseen or otherwise provided for, and occurring in the Canal Zone, or occurring in the Republic of Panama in such circumstances as to constitute an actual or potential hazard to health, safety, security, or property in the Canal Zone, the Governor of the Panama Canal is authorized to expend available funds and to utilize or furnish materials, supplies, equipment, and services for relief, assistance, and protection."

SEC. 2. Chapter 4 of title 2, Canal Zone Code, which chapter is now entitled "Business Operations" and consists of sections 51 and 52 of said title 2, is amended to read as follows:

"CHAPTER 4.-BUSINESS OPERATIONS: SALES AND SERVICES

Sec.

Sec.

"51. Authorization for establishment and "53. Receipts from such operations, sales, operation of various facilities. and services; expenditure and reinvestment; reports. Exception of Canal Zone Postal Service.

"52. Organization and conduct of any such facilities by Panama Canal as 'busi- "54: ness operations.'

"SEC. 51. AUTHORIZATION FOR ESTABLISHMENT AND OPERATION OF VARIOUS FACILITIES. (a) In connection with the operation, maintenance, sanitation, and civil government of the Panama Canal and Canal Zone, the President is authorized to establish, maintain, and operate, through the Panama Railroad Company or otherwise, docks, wharves, piers, drydocks, shops, yards, marine railways, salvage and towing facilities, dredging facilites, construction facilities, fuelhandling facilities, motor-transportation facilities, civil air terminals, power systems, water and sewer systems, warehouses, storehouses, hotels, a printing plant, living quarters and other buildings, and any other necessary facilities and appurtenances, for the purpose of providing, at reasonable prices, fuel, electric power, water, equipment, supplies and materials generally, repairs, labor, transportation, quarters, space in buildings, wharf and like services, hotel and restaurant services, and services generally, including recreational services, and for the purpose of assembling, assorting, storing, repairing, and selling scrap and other byproducts of manufacturing and shop operations, and materials, supplies, and equipment purchased or acquired for the construction, improvement, operation, maintenance, sanitation, or civil government of the Panama Canal or Canal Zone and which are obsolete, unserviceable, or no longer needed. The sales. services, equipment, supplies, and materials hereinbefore referred to may be made or furnished to vessels, to agencies of the Government of the United States, to the Panama Railroad Company, to employees of the Government of the United States or of the Panama Railroad Company, and to any other governments, agencies, persons, corporations, companies, or associations eligible to make or receive such purchases, services, supplies, or materials under the laws prevailing at the time and the policies heretofore or hereafter adopted consistently with such laws.

"(b) In the event the President has heretofore elected, or shall at any time hereafter elect, to maintain and operate through the Panama Railroad Company any of the facilites and appurtenances referred to in this section or section 52 of this title, theretofore maintained and operated by the Panama Canal, the President is authorized to transfer to the Panama Railroad Company all or as much as may be determined to be necessary of the personnel, property, records, related assets, contracts, obligations, and liabilities of or appertaining to the said facility and its appurtenances, and such transfer shall be deemed to have been accepted and assumed by the Panama Railroad Company without the necessity of any act or acts on the part of the said corporation except as otherwise stipulated in provisions of law applicable to the said corporation.

"52. ORGANIZATION AND CONDUCT OF ANY SUCH FACILITIES BY PANAMA CANAL AS 'BUSINESS OPERATION.'-The President may cause any or all of the facilities and appurtenances referred to in paragraph (a) or (b) of section 51 of this title to be organized and conducted by the Panama Canal as 'business operations,' and in such case the aggregate net profit if any accruing from the conduct of such business operations shall annually be covered into the Treasury of the United States.

8122548- 3

"53. RECEIPTS FROM SUCH OPERATIONS, SALES, AND SERVICES; EXPENDITURE AND REINVESTMENT; REPORTS.-The moneys received by the Panama Canal from the operations authorized by sections 51 and 52 of this title, and from pilotage, quarantine, immigration, and like services, from rentals, from damage claims, and from any and all other sales made and services rendered, but not including tolls, taxes, court fees, or fines, may be expended or reinvested under the several heads of appropriation for the Panama Canal, without being covered into the Treasury of the United States except as provided in section 52 of this title; but, except as otherwise provided in this section, such funds shall be subject to the provisions of law relating to public funds of the United States. Monthly reports

of such receipts and expenditures shall be made to the President and annual reports shall be made to the Congress.

54. EXCEPTION OF CANAL ZONE POSTAL SERVICE. The provisions of sections 51 to 53 of this title shall have no application to operations of the Canal Zone Postal Service."

SEC. 3. Title 2 of the Canal Zone Code is amended by adding in article 1 of chapter 6 thereof a new section numbered 85 and reading as follows:

"85. SPECIAL TRAINING OF EMPLOYEES.-The Governor of the Panama Canal is authorized, within the limits of appropriations made therefor, to provide for special training in the United States or elsewhere of any employee of the Panama Canal when in the judgment of the Governor such special training will be of material benefit to the work of the Panama Canal and the special training of such employee would be more advantageous than the hiring of other available personnel having the specialized skill or experience desired. During the period of such special training the employee may be paid his regular compensation and his travel expenses in accordance with the Standardized Government Travel Regulations and the Subsistence Expense Act of 1926, as amended, subject to recovery by the United States of such costs or an equitable portion thereof, as determined by the Governor, in case the employee fails to complete such training or is separated from the service except for reasons beyond his control within one year following the completion of the period of training."

SEC. 4. Title 2 of the Canal Zone Code is amended by adding in article 3 of chapter 6 thereof a new section numbered 124 and reading as follows:

"124. EMPLOYEES INJURED PRIOR TO SEPTEMBER 7, 1916; APPLIANCES; LUMPSUM PAYMENTS.-The Governor of the Panama Canal is authorized to purchase artificial limbs or other appliances for persons who were injured in the service of the Isthmian Canal Commission or of the Panama Canal prior to September 7, 1916, and to make payments in lump sums not exceeding the amounts authorized by the Act of September 7, 1916, as amended (U. S. C., title 5, ch. 15), to alien cripples who are now a charge upon the Panama Canal by reason of injuries sustained while employed in the construction of the Panama Canal.”

SEC. 5. Title 6 of the Canal Zone Code is amended by adding in chapter 27 thereof a new section numbered 906 and reading as follows:

"906. CLOTHING AND MONEY FOR DISCHARGED PRISONERS.-On the discharge of a prisoner from any penal institution in the Canal Zone such prisoner may, in the discretion of the Governor of the Panama Canal, be furnished with such suitable clothing as may be authorized by the Governor, and an amount of money not exceeding $20."

Senator MORSE. It is the chairman's understanding that exhibit 2, the redraft of S. 2003, comes before the committee with the recommendations of the Government officials concerned therewith.

The first witness will be Mr. Burdick.

Will you give your full name and title to the reporter.

STATEMENT OF B. F. BURDICK, CHIEF OF OFFICE, THE PANAMA CANAL, ACCOMPANIED BY R. E. RAMSEY, ASSISTANT CHIEF OF OFFICE, THE PANAMA CANAL, WASHINGTON, D. C.

Mr. BURDICK. My name is Bernard F. Burdick, I am Chief of the Washington office of the Panama Canal.

The general purpose of the proposed legislation is to establish appropriate and adequate authority in substantive law to support operations now conducted by the Panama Canal and the procedures now followed, and the appropriation of funds for such operations and procedures, which are not now wholly covered by substantive legislation.

During the Seventy-ninth Congress Chairman Cannon of the House Appropriations Committee advised the executive department of the Government that the committee was inconvenienced and disturbed by the number of provisions carried in the various appropriation bills