Mr. WICKERSHAM. I would like to ask one question, Mr. Krebs: What objection or what answer does Mr. Burdick make to the suggestion, if you have discussed it with him?

Mr. KREBS. No, I have not.

Mr. WICKERSHAM. Could I ask Mr. Burdick if he has a ready answer to that suggestion?

Mr. BURDICK. I have no prepared statement, because I had not anticipated a question of that kind would be raised. I would like to make a brief statement on that, however, with the approval of the committee.

Mr. O'TOOLE. Yes.

Mr. BURDICK. First, I would say that the Panama Canal and the Panama Railroad do not have any immediate intention to transfer all of these activities. But if there are certain efficiencies of operation we might find that there are several advantages and that it would be desirable in the interest of efficiency to immediately transfer some of them.

Secondly is the question of this authority already existing in the President, who at the present time has authority to make most of the transfers we are talking about.

Mr. MILLER. Your suggestion is that the President has the authority now?

Mr. BURDICK. He can do so, and in most of these cases.

The third thing relates to the question of profits. The Merchant Marine and Fisheries Committee is now starting on a study to determine recommendations to the Congress for the basis of toll charges. In the past the practice has been to make the Canal self-supporting and in doing that they have determined upon the capitalization of the Canal, that is, the net amount of money that the Government today has in the Canal enterprise to meet the needs commercial traffic, and attempted to set rates which would produce operating expenses, plus the carrying charges, of 3 persent on the amount invested.

Now with respect to the railroad operations and other activities, as Mr. Krebs has pointed ont, those profits do go into the Treasury in the form of dividends, and the railroad has always been self-supporting.

However, the capitalization of that division is not included in this capitalization of the Canal enterprise for toll purposes. Therefore if you take the additional divisions and transfer them to the Canal and get the benefit of the revenues you must also take with it the capitalization, which would increase the capitalization for toll purposes, so that as long as the activities, whether they be the Canal or the railroad, are operating at a profit of 3 percent, it makes very little difference as to whether you include all of these activities in one or the other. But you cannot simply take the revenue without taking over the burden as well.

Mr. MILLER. As I understand you, that if one of these facilities was transferred from the Canal proper to the Railroad Company, while its earnings would be a loss to the Canal, the capitalization, the investment would come off the capital stock?

Mr. BURDICK. There is a provision in the bill, I believe, which increases the capitalization—at least if it is not in the bill, it would be in one of the provisions of the act reincorporating the Panama Railroad Co.-which increases the capitalization to the extent of any of these activities that are taken over; there is a provision for evaluating those activities.

And, as I said a moment ago, your committee is studying this whole question, and regardless of what is done here it is free to recommend what should be included in the capital structure of the whole property.

I see no conflict between the bills at all, and no reason for delayed action on this bill.

Mr. O'TOOLE. Mr. Krebs, did you have any further statement? Mr. KREBS. I would like to say, Mr. Chairman, of course, that we do not agree with Mr. Burdick that the President now has the authority to transfer these facilities to the Panama Railroad Company.

It is true, as Mr. Burdick indicated in his statement, that there is provision in the present section of the law under which the President does have now authority to establish, maintain, and operate, through the Panama Railroad Company, certain facilities similar to those which it is proposed to transfer, but I cannot find any authority in the section which would authorize or permit the President to transfer facilities or property, such as is proposed by this section 2, to the Panama Railroad Company. It is a restatement of this section, a restatement of the present law as he indicates, but it goes beyond restating the law, because it does specifically authorize the President to transfer certain physical facilities to the Panama Railroad Company.

If I may say one thing further, it is true that this committee does have this whole subject under investigation, yet, at the same time Mr. Burdick has pointed out that they do not contemplate any immediate transfer of these facilities. Our position is that the status quo can very well be maintained at the present time pending the completion of this study and investigation of the whole problem by the Committee on Merchant Marine and Fisheries.

Mr. Burdick has indicted no immediate need or necessity for this authority which he has requested, so I do not see why it would not be quite possible to maintain the status quo pending the completion of this study and investigation which is now being conducted.

Mr. O'TOOLE. Is there any further rebuttal, Mr. Burdick?

Mr. BURDICK. No; other than to repeat the fact that we see no reason whatever for delaying this legislation, and that it should be enacted. It will not control your committee or the Congress in any way in establishing the basis for tolls. We say that this authority should be clarified so that if the President and the various agencies of the Government determine that an operation can be performed more economically and more efficiently by one organization than the other it should be transferred, and transferred as soon as that determination is made.

H. R. 2140

Mr. O'TOOLE. We will take up H. R. 2140 next. It was introduced by Mr. Green, of Pennsylvania, who I do not believe is present. (The bill referred to follows:)

[H. R. 2140, 81st Cong., 1st sess.]

A BILL To amend the Act entitled "An Act to provide for the recognition of the services of the civilian officials and employees, citizens of the United States, engaged in and about the construction of the Panama Canal," approved May 29, 1944

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 4 of the Act of May 29, 1944, as amended, entitled "An Act to provide for the recognition of the services of the civilian officials and employees, citizens of the United States, engaged in and about the construction of the Panama Canal", is amended by striking out "who was his wife living with him at least one year of his service on the Isthmus of Panama during said construction", wherever it appears in such section, and inserting in lieu thereof the following: "who was his wife on or before March 31, 1914." Mr. O'TOOLE. Mr. Burdick.

STATEMENT OF B. F. BURDICK, CHIEF OF OFFICE AND GENERAL PURCHASING OFFICER, THE PANAMA CANAL

Mr. BURDICK. Mr. Chairman, I have no prepared statement on this bill.

Public Law 319, Seventy-eighth Congress, approved May 29, 1944, provided for the payment of an annuity to employees of the Isthmian Canal Commission or Panama Railroad Company on the Isthmus of Panama during the period of the construction of the Panama Canal between May 4, 1904, and March 31, 1914. The act provided also for the payment of the annuity to the widow of an employee who would have been entitled to receive the annuity had he been alive on the date when the act took effect, and to the widow of an annuitant dying after he received an annuity payment. In either case, as originally enacted, the act required that the widow must have lived with the employee as his wife during at least one year of his service on the Isthmus of Panama during the construction period.

The pending bill, H. R. 2140, would amend section 4 so as to extend the annuity benefits to a person who was the wife of a deceased employee on or before March 31, 1914, and to eliminate the requirements that she must have been the wife of a deceased employee who was living with him at least one year of his service on the Isthmus of Panama during said construction.

The Panama Canal has consistently favored legislation conferring reasonable special benefits on persons for their Canal construction service.

However, the Canal has no direct interest in such legislation, which concerns the past services of persons nearly all of whom are no longer in the employ of the Government and the extent to which such services should be rewarded by providing annuities for such persons or their widows is, of course, properly a matter for determination by the Congress.

The Panama Canal has no information as to how many persons would be affected by the pending legislation.

I might say, Mr. Chairman, that our report, which was prepared for the signature of the Secretary of the Army, has been cleared by the

Bureau of the Budget for submission to the Committee and will come along probably within the next day or two to your Committee.

That carries the advice that the Director of the Bureau of the Budget has advised that the enactment of the proposed legislation would not be in accord with the program of the President.

Thank you.

Mr. O'TOOLE. Are there any questions?

Thank you.

(The following letters were subsequently furnished for the record:)

Hon. S. O. BLAND,

DEPARTMENT OF THE ARMY, Washington, D. C., April 5, 1949.

Chairman, Committee on Merchant Marine and Fisheries,

House of Representatives, Washington, D. C.

DEAR MR. BLAND: Further reference is made to your request for comment on bill H. R. 2140, to amend the act entitled "An act to provide for the recognition of the services of the civilian officials and employees, citizens of the United States, engaged in and about the construction of the Panama Canal," approved May 29, 1944.

The following is quoted from a statement of the Governor of the Panama Canal with respect to the proposed legislation:

"The act of May 29, 1944 (ch. 214, 58 Stat. 257), as amended by Public Law 619, Seventy-ninth Congress, approved August 7, 1946, grants annuities to persons who were employed by the Isthmian Canal Commission or the Panama Railroad Company on the Isthmus of Panama during the period of construction of the Panama Canal between May 4, 1904, and March 31, 1914, and who were citizens of the United States during such service or became citizens of the United States through naturalization on or before December 7, 1941. Section 4 of that act extends the annuity benefits in certain cases to a surviving widow of such a former employee provided she lived with him at least 1 year of such construction service on the Isthmus.

"The subject bill (H. R. 2140) would amend said section 4 so as to extend the annuity benefits to a person who was the wife of such a deceased employee on or before March 31, 1914, and to eliminate the requirement that she must have been the wife of a deceased employee who was living with him at least 1 year of his service on the Isthmus of Panama during said construction. "The Panama Canal has consistently favored legislation conferring reasonable special benefits on persons for their Canal construction service. However, the Canal has no direct interest in such legislation, which concerns the past services of persons, nearly all of whom are no longer in the employ of the Government, and the extent to which such services should be rewarded by providing annuities for such persons or their widows is of course properly a matter for determination by the Congress. This office has no information as to who or how many persons would be benefited by the subject bill."

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

I am advised by the Director of the Bureau of the Budget that the enactment of the proposed legislation would not be in accord with the program of the President.

DEAR MR. BLAND: Further reference is made to your communication of February 10, 1949, relative to H. R. 2140, a bill to amend the act entitled "An act to provide for the recognition of the services of the civilian officials and employees, citizens of the United States, engaged in and about the construction of the Panama Canal," approved May 29, 1944.

The act of May 29, 1944, authorizes the payment of annuity to any citizens of the United States who served three or more years under the Isthmian Canal Commission or the Panama Railroad Company on the Isthmus of Panama during the construction period, May 4, 1904, to March 31, 1914. If such employee is deceased, provision is also made for payment to the undivorced widow of the amount her husband would receive, if living, provided she was his wife living with him on the Isthmus during the construction period for a period of at least 1 year. In case of death of such employee after receiving annuity payments, the annuity is continued to such undivorced widow.

The proposal would eliminate the requirement that the widow of the employee must have been his wife living with him on the Isthmus for at least 1 year, and substitute therefor the requirement that the widow have been married to the employee prior to March 31, 1914, the termination date of the construction period. There would be no requirement that the widow had lived on the Isthmus at any time.

The act of May 29, 1944, is intended as a measure of reward for the hardships and deprivations suffered by the employees by reason of living conditions existing on the Isthmus during the construction period. Justification for the payment of benefits to widows is found in the fact that these widows shared in these hardships. No such justification can be found in the case of a wife who did not in fact live with her husband-employee under these conditions. In fact, under the terms of the bill, it would not be necessary that the widow have been married to the employee while he was working on the Isthmus, but would include a person entering into marriage with the employee after the termination of his employment on the Isthmus.

The Commission recommends adverse action on this bill.

The Bureau of the Budget advises that there would be no objection to the presentation of this report to your committee.

By direction of the Commission:

Very sincerely yours,

HARRY B. MITCHELL, President.

H. R. 2237

Mr. O'TOOLE. The next bill for consideration is H. R. 2237. (The bill referred to is as follows:)

[H. R. 2237, 81st Cong., 1st sess.]

A BILL For the relief of Mrs. Mary Wadlow

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That in the administration of the Act entitled "An Act to provide for the recognition of the services of civilian officials and employees, citizens of the United States, engaged in and about the construction of the Panama Canal", approved May 29, 1944, Mrs. Mary Wadlow, widow of Benjamin Franklin Wadlow, who was employed as a foreman on the Panama Canal construction project from 1908 to 1912, shall be held and considered to have lived with the said Benjamin Franklin Wadlow as his wife for at least one year of his service on the Isthmus of Panama during the construction of the Panama Canal.

Mr. O'TOOLE. Mr. Burdick.

STATEMENT OF B. F. BURDICK, CHIEF OF OFFICE AND GENERAL PURCHASING OFFICER, THE PANAMA CANAL

Mr. BURDICK. Bill H. R. 2237, for the relief of Mrs. Mary Wadlow, would likewise amend Public Law 319.

Benjamin Franklin Wadlow was employed by the Isthmian Canal Commission effective April 2, 1909, and resigned November 19, 1912. The records of the Panama Canal indicate that Mr. Wadlow was unmarried during his employment on the Isthmus, although recent correspondence with Mrs. Mary Wadlow indicates that he was mar