Hearings, Reports and Prints of the House Committee on Merchant Marine and Fisheries

The subcommittee met at 10 a.m., pursuant to notice, in room 219, Old House Office Building, Hon. Leonor K. (Mrs. John B.) Sullivan (chairman of the subcommittee) presiding.

Present: Representatives Bonner (chairman), Sullivan (chairman of the subcommittee), Garmatz, Johnson, Byrne, Mailliard, Gross, Glenn, Tupper and Morse.

Staff members present: Bernard J. Zincke, counsel, and William B. Winfield, chief clerk.

Mrs. SULLIVAN. The Subcommittee on Panama Canal will come to order.

I would like to open the hearing with an explanation of why we are here and what it is we are trying to determine.

This subcommittee has jurisdiction within the Committee on Merchant Marine and Fisheries for all matters involving the Panama Canal. The Panama Line is operated by the Panama Canal Company not as a sideline, not as a means of making money for the Government in competition with private shipping lines, but primarily as an important adjunct to the operation of the canal itself.

That, in any event, is the purpose of having the steamship line in operation, and in these hearings we want to examine into the manner in which the purpose has or has not been served. If the Panama Line is not, in fact, an indispensable adjunct in the operation and maintenance of the Panama Canal, then it would be appropriate to follow through on the suggestions made by the previous administration to abandon the line completely.

But it seems to many of us on this subcommittee and on the parent committee that the decisions made by the previous administration in regard to the future of the Panama Line were based more on a philosophy of getting Government out of competition with private enterprise-regardless of any other factors-than on the relative importance of the line to the canal's maintenance and operation. That is something we want to be able to weigh in these hearings.

BACKGROUND ISSUES IN HEARINGS

The background to our hearings is as follows:

Sometime in, I believe, 1958, the Bureau of the Budget under Mr. Eisenhower entered into a contract with an engineering firm to prepare a report on the advisability and feasibility of abandoning

the Panama Line completely. This report, the so-called Drake report, calling for an end to the line, was made to the Bureau of the Budget about a year later-I believe around August of 1959. Copies of it went to the Panama Canal Company and to the Secretary of the Army as stockholder of the Panama Canal Company. We in this committee heard about the existence of this report only as a rumor at first; eventually we learned for a fact that such a report had been made, but despite requests for copies of it, we never saw the report until a year or more after it was made-that is, some time after the adjournment of Congress last summer.

But before we adjourned last summer, word reached us that on the basis of recommendations made in the Drake report, the Panama Line was to be abandoned, and the Panama Canal Company was instructed to make arrangements with private shipping lines to provide the cargo and passenger service essential to the canal's operation which had been handled for so many years by the Panama Line. As I said, we heard about this just before the Congress was recessing in July for the political conventions.

EMERGENCY HEARING LAST JULY

In haste, we set up a Saturday morning hearing in the very last moments of the session prior to the recess; we had difficulty getting witnesses who could speak authoritatively for the administration on this matter; we could get neither yes nor no answers to most questions, and the whole matter was one of doubt and uncertainty and confusion as to the Government's position or intentions.

Consequently, the Committee on Merchant Marine met quickly and approved House Resolution 623 and House Report 2206 (see p. 4) of the last Congress, which I introduced, declaring the Panama Line to be an indispensable adjunct of the operation and maintenance of the Panama Canal, noting that there was a threat of its discontinuance by administrative order, and declaring it to be the sense of the House of Representatives that the operation of the steamship line be continued by the Panama Canal Company until the completion of a full study and report on this matter by the Merchant Marine and Fisheries Committee during the first session of the 87th Congress. The committee's action served, we felt, as due notice to the executive department of the seriousness with which any abandonment of the line would be viewed by the responsible committee of the House holding legislative jurisdiction over this activity, at least until the committee could get all of the facts.

Some time later, we received copies of the Drake report, and also of comprehensive rebuttal reports made by the Secretary of the Army, the Panama Canal Company's Board of Directors, and by the Ebasco Corp., an engineering firm engaged by the Panama Canal Company to analyze the same data on which some of the conclusions of the Drake report were said to be based. (See appendix.)

These documents make up a thick and argumentative file on this matter. Obviously, the experts disagree bitterly on all of the main points; that is, on whether the line is or is not important or necessary to the operation of the canal, whether it is economic or not, whether it should be abandoned or not.

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Hearings, Reports and Prints of the House Committee on Merchant Marine and ...