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Washington, D. C.

The subcommittee met at 10 a. m., Hon. Donald L. O'Toole (subcommittee chairman) presiding, for further consideration of H. R. 8677.

Mr. O'TOOLE. The committee will come to order.

In view of the fact that there have been rumors and hints in the paper that there might be some difficulty in Korea, I have decided to call the witness from the Department of Defense out of regular order, in order that he may get back to the Pentagon Building.

Mr. Felix E. Larkin, General Counsel, Department of Defense.


Mr. LARKIN. Mr. Chairman, I have no prepared statement. I was informed yesterday afternoon that the committee desired a representative from the Office of the Secretary of Defense here, that there were some problems in connection with this bill, H. R. 8677, which were troubling the committee, and that we might clarify them for you, perhaps.

The most expeditious way to get ahead would be for you to ask me the different things you have in mind, and I will attempt to answer. Mr. O'TOOLE. I believe Mr. Thompson has some questions.

Mr. THOMPSON. Mr. Larkin, we are interested, fundamentally, in whether or not you approve of this legislation, speaking for the Department of Defense.

Mr. LARKIN. There is no equivocation or dispute whatever, Mr. Thompson. We approve of the legislation.

Mr. THOMPSON. Do you know when it was first brought forward to the attention of the Department?

Mr. LARKIN. The basic study, upon which this bill is drawn, was under consideration for some time. I just do not know when it originally came to our attention. In January of this year, however, the basic study, which had been transmitted to the Congress by the

President along with a draft of legislation, was sent to the Department of the Army. They were asked for comment.

Mr. THOMPSON. It came from the Bureau of the Budget?

Mr. LARKIN. That is right; yes, sir.

Mr. THOMPSON. They drafted it, I think, and it went to the Army. Mr. LARKIN. That is right.

Mr. THOMPSON. I was wondering when and why it got over to the Defense Department.

Mr. LARKIN. Well, in accordance with the legislative procedures of the Department of Defense, the Department of the Army studied the entire proposal, as they had been requested to, and they, thereafter, solicited the views of the Air Force, the Navy, and the Office of the Secretary of Defense, which is in accordance with the legislative procedures of the Department of Defense.

Mr. THOMPSON. It went over to you, I think you will find, on the first of May.

Mr. LARKIN. It came up to our office from the Army for comment and coordination the 1st or 2d, I think it was, of May, that is right.

Mr. THOMPSON. And it cleared, I think, the 24th or possibly the 25th.

Mr. LARKIN. That is right. On the 23d it was transmitted by Secretary Johnson to the Bureau of the Budget for specific clearance from them.

Mr. THOMPSON. There have been some rather pointed rumors to the effect that the Department of Defense did not approve of the legislation.

Mr. LARKIN. That is not so, Mr. Thompson.

Mr. THOMPSON. I am very glad to have that most positive statement, because certainly, had you not been in favor of it, the surest way to keep it from passing would be to load the bill down with a lot of details which anyone with legislative experience would know would throw almost an insurmountable barrier in the face of any committee trying to put it through at the end of the session.

Mr. LARKIN. The detail, to the extent that it is in it, was not put in by the Department of Defense.

The bill you have before you was sent to us. Naturally it is a complicated bill and a complicated subject. It is the fruit of a lot of careful study. The study took a considerable amount of time.

The very fact-I would like to emphasize this-the very fact that the bill was transmitted to the Congress by Secretary Johnson is evidence in and of itself that the Department of Defense supports and sponsors it. We do not send up bills here which do not have the approval of our Department. I reiterate here again today we support the bill. A part of the process of our own legislative procedures which did consume time, naturally enough, was a study of the bill which had been sent to Army. After consideration by the other two services and their advice, we placed the bill on the official Department of Defense legislative program, and we made it an item on that program. We only do that, of course, with bills that we ourselves either initiate and approve or a bill of this character, which it is felt we would be the most logical agency to sponsor and foster, so that rather than just view it as an individual bill of the Department of the Army, or a bill which did not have the official sanction of our normal legislative

procedures and a position on our legislative program we took the time to go over it, and we affirmatively placed it on that program and it was sent here, and we are still in that position, we sponsor and favor the bill. Mr. THOMPSON. Well, I am very glad to know it. Not all of the subordinate elements of the Department of Defense have been anywhere nearly that positive in their favorable attitude toward the


I am a little bit puzzled. This is the Panama Canal Subcommittee, and we are involved in all of the ramifications of the Canal as it concerns Congress. I am just wondering what the Department of Defense feels is its function in the peacetime management of the Canal. Ever since the beginning of it there have been serious crises of one kind or another in connection with the Canal. It has almost invariably rested on the shoulders of the President of the United States to step in, and by the issuance, generally, of a very emphatic Executive order straighten out these troubles.

I find as late as January 31 of this year that he reaffirmed the position that the Secretary of the Army shall be the representative of the President for such purpose, such purpose being the administration of the Canal. He does not say the Secretary of Defense. Now, is it to be considered that the Secretary of the Army means, in effect via the Secretary of Defense?

Mr. LARKIN. Well, I think it does have policy considerations involved. I would say it is in exactly the same position as the Secretary of the Army finds himself, or is, in relation to the Secretary of Defense and all his other executive and administrative duties.

Under the Security Act, you will recall the Departments of the Army, the Navy, and the Air Force were reduced from executive departments, and were made military departments within the Department of Defense. They were not merged as such, and their individual Secretaries were charged with the responsibilities for the administration as such of the individual Departments, but the Secretary of Defense was further charged with the direction and control and authority over the entire activities of the whole Department of Defense. So that, while they will administer their own Departments, to the extent that there is a policy question of their Department or a policy question common to the whole three, why, the Secretary of Defense, of course, is very clearly the head and is in charge and has control and is responsible for direction.

So that, this function, like administrative functions, will be administered by the Secretary of the Army, but will be subject to the ultimate policy decisions of the Secretary of Defense. I think it is clear that the administration of the Panama Canal is in exectly the same position as all other administrative functions of the Secretary of the Army. Mr. THOMPSON. Then, you regard the management of the Panama Canal as distinctly a function of the Defense Department under peacetime administration?

Mr. LARKIN. Well, I do not know the distinction at this minute of management as such, whether that is just an oversimplification of what goes on down there.

The Governor, obviously, has responsibilities. He operates under the supervision of the Secretary of the Army who, in turn, operates in certain aspects under the control, direction, and authority of the


Secretary of Defense. If you can isolate for me just what you mean by management as such, perhaps I can answer the question a little more directly.

Mr. THOMPSON. Well, of course, we are here now because of the difficulty of sifting out the commercial operations of the Panama Canal, in all of its ramifications, from those which are strictly a matter of national defense. I hope I do not seem to be quibbling over details. Mr. LARKIN. I did not mean to suggest you were. It was for my own enlightenment; I just did not get the aspect of it that you were addressing yourself to.

Mr. THOMPSON. And here we find the problem of trying to figure out whether that Canal is strictly a matter of national defense, or whether it should be regarded as an artery of travel for world commerce, and so forth, for which purpose it was undoubtedly originally conceived, perhaps it was assisted to its beginning and completion by the Spanish-American War, but it originally was an artery of commercial seaborne traffic.

I have only one other observation, and that is that the situation should be clarified as to just who is meant by "The Secretary of the Army." It does not say Department of the Army. It says, "Secretary," and it is interesting to note in all of these studies that there is no subordinate echelon between the Secretary and the Governor. Communications go directly from one to the other, and on the question of tolls, while the Secretary of the Army may forward communications pertaining to tolls, he has no function in his Department in connection with the fixing of tolls.

You certainly clarify your position, and for myself, personally, I appreciate it very much.

Thank you, Mr. Chairman.

Mr. O'TOOLE. Before you go, Mr. Larkin, on behalf of the committee, we would like to have you convey to the Secretary of Defense that we all know that every precaution is being taken in this crisis to guard and strengthen the Panama Canal. At the same time we would like to have you convey to him the further thought that your testimony given this morning has been more concise than we usually expect from representatives of the executive agencies.

Mr. LARKIN. It is very good of you to say so, Mr. Chairman.
Mr. O'TOOLE. Mr. Allen, do you have any questions?

Mr. ALLEN. I may have one question, Mr. Chairman.

I have had a number of people who use the Canal express the opinion that part of the investment of the United States in it should be allocated as a charge for national defense, and that the commercial tolls should be based only on the remaining part of the investment. Was that situation discussed when the bill was considered?

Mr. LARKIN. I am not familiar with the details of such discussions if they took place.

I suppose they must have been part and parcel of that original document that the President transmitted up here, but our considerations of it were more of a nature of analyzing the draft of the bill in relation to those recommendations. Now, I will be happy to search out and find out what considerations were given to them. At this minute, I am sorry I cannot answer that.

Mr. ALLEN. Do you know whether there was any proportion ever discussed, or could you find that out as well?

Mr. LARKIN. I can attempt to. I do not know that there was any. I know that this toll question has been, and rightly so, an integral part of this whole thing, and the question of the imposition of tolls and so forth is part and parcel of it. The division, however, I am not familiar with. Mr. Seidman is here and can probably answer that.

Mr. SEIDMAN. I think the question was referred to the Department of Defense, among other questions relating to the study. Back in November, we did receive some views on that from the Munitions Board, which was named by the Secretary of Defense to prepare the views of the Office of the Secretary.

Mr. ALLEN. Was any proportion discussed?

Mr. SEIDMAN. I think the view of the Munitions Board, speaking for the Office of the Secretary of Defense, was that no part of the capital investment should be written off to national defense. There was no discussion of any proportion.

Mr. O'TOOLE. Thank you, Mr. Larkin.

Mr. LARKIN. Yes, sir.


Mr. O'TOOLE. Mr. Howard Munro of the Central Labor Union and the Metal Trades Council, Panama Canal Zone.

The Chair desires to announce at this time that the House will meet today at 11 o'clock. We have applied for permission to sit during the general debate. I do not know whether it has been granted or not. If it is granted the session of the committee will continue until the last witness is heard. Mr. Munro.

Mr. MUNRO. Mr. Chairman, my name is Howard E. Munro. I am legislative representative of the Canal Zone Central Labor Union and the Metal Trades Council.

The organizations which I represent are the central bodies of 28 unions affiliated with the American Federation of Labor. The membership of these unions are the United States citizens employed by the Federal Government to operate and maintain the Panama Canal and the Panama Railroad Company on the Canal Zone.

Our members are vitally interested in the results of H. R. 8677 should it become a law in its present form. I should like to take a little time to bring to your attention the background of working conditions and compensation paid the United States citizens on the Canal Zone.

During the constructions days of the Canal it was found difficult to man the positions. As a result, Canal Zone officials found it necessary to pay high rates of pay in order to induce workmen to accept positions there. Some wages and salaries paid were more than 100 percent in excess of rates of pay for similar services in the United States.

Anticipating the conclusion of construction work on the Canal, and being desirous of reducing the wages and salaries to be paid those chosen to remain for the purpose of operating and maintaining the Canal, General Goethals, the then Governor, prevailed upon the Con

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