end, the Atlantic end of the canal, to take care of ship repairs for ships that are damaged in transit that come in to us unable to proceed. The ships do not like to use our facilities because when they have a repair away from their home port they must pay their entire crew during the repair period so that we usually get the small nasty jobs just to get the ship on to sea.

The Engineering and Construction Division is in charge of all of the construction work and is headed by a lieutenant colonel of Engineers. He does the dredging, handles the navigation aids for the canal and its approaches. He runs the water system and purifies the water. He runs the power system. He runs the telephone system. He maintains all the structures and he designs everything which is built.

The major portion of our construction work, of course, is done by contract and those contracts are advertised usually 2 months so that contractors in the United States have plenty of time to bid.

We do have a number of contractors who operate in Panama and in the Canal Zone who do a great deal of our work because, of course, they are much more familiar with the type of work that we have and the climate, the terrain, the soil conditions, and so forth.

Mrs. SULLIVAN. At that point, Governor, is there always some improvement and construction going on there to keep the canal right up to top efficiency plus these improvements that have been going on for the past several years?

Governor CARTER. Yes, we are engaged in a major program at the present time which totals about $46 million to widen the Gaillard Cut from 300 to 500 feet to make it possible to transit ships more quickly to take care of our increasing workload and then we have other programs.

There is an $81⁄2 million program to replace the locomotives that pull the ships through the locks.

A Japanese firm, the Mitsubishi Corp., has that contract.

The CHAIRMAN. You mean a Japanese firm has a contract to replace the equipment in the Canal Zone?

Governor CARTER. Yes, sir. The contract was awarded last spring and actually one of the first signatures that I had to make was to sign the contract. They were sufficiently under the U.S. bidders so that we are required to award it to the Japanese firm.

We have other programs that are going on but there is quite a major construction program in the Canal Zone.

As I say, 95 percent of it is done by contract.

To go on with our organization, the Transportation and Terminal Bureau handles all of the port operations. It takes care of all the ships that come into Panama to unload and unloads the ships or loads them. It runs the Panama Railroad.

Incidentally, the railroad is operating quite well now. running the railroad at just about a break-even point. This committee should be quite interested in that.

We are

It also runs a trucking service but that is for minor operations. We do not run any major van service back and forth across the isthmus. It handles marine bunkering. We bunker ships that come into the zone. We handle the products but the product itself is owned by Gulf Oil, Shell Oil, and other oil companies who either own their own tanks in our farms or rent them from us.

Then the final large bureau is the Supply and Community Services Bureau. This handles all of the operations for the people. It runs

all the retail stores in the zone.

It runs the grocery stores, the drugstores, the clothing stores, shoestores, and that sort of thing. It rents all the houses and maintains them. It assigns the houses. This becomes a very difficult problem sometimes. It takes care of the grounds. It removes the garbage and it is the logistical supply agency for the entire Panama Canal Company.

We have the Procurement Division in New York City, for example, where we have about 36 people in our Procurement Division working for the Director of the Supply and Community Services Bureau.

I believe I left out the strength of the Transportation and Terminals Bureau. That one has about 2,200 people; 254 of them are U.S. citizens and 1,900 are non-U.S. citizens.

In the Supply and Community Services Bureau we have 206 U.S. citizens and about 2,000 non-U.S. citizens, a total of about 2,200 people.

Then we have our New York Operations where the Panama Line headquarters currently are. I have just put the Panama Line into the Water Transportation Division of the Transportation and Terminals Bureau for better and more efficient handling. I think we will be able to improve our operations quite a little by that move. Now they are under Mr. Everson in the Transportation and Terminals Bureau who handles those ships in Panama and is very familiar with that type of operation.

We also have in New York a small accounting staff that takes care of the accounting for the Panama Line and the Procurement Division. That is the way we are organized.

Of course, I do have a Personnel Division and I did not introduce Mr. Phil Steers, who is the comptroller of the Panama Canal Company or Mr. Merrill Whitman, who is the secretary of the Panama Canal Company. Both of these men are well known to this committee.

We have, of course, an administrative branch, an executive planning staff, and a few odds and ends.

The total employment in the Canal Zone for the Panama Canal Company-Canal Zone Government is roughly 14,000 people, of which about 10,000 are Panamanians.

I believe that gives you a quick rundown of the method of operation. Would you like me to go further into it?

Mrs. SULLIVAN. When you talk about the number of employees in the various departments—we had a discussion yesterday, as you remember, about solicitation of freight and passengers.

Governor CARTER. We have that information, Madam Chairman. Mrs. SULLIVAN. Could you tell me what you spend and how many people are employed in the solicitation of business?

Governor CARTER. To put the figures in the same light that Mr. McNeil did, we have two street solicitors for freight and we have part-time solicitors that cost us a total of $15,300 a year. For busi

ness promotion in the United States for freight we spend $9,000 at year and in the Republic of Haiti about $5,000, and we pay an agent who is our agent in Panama, Fedanque Bros., about $8,000. That is on a percentage basis of whatever business he promotes.

We also have a $15,000 bill for advertising in the United States, $1,300 in Haiti, and in Panama a total of $16,300, and the $15,300

for street solicitors runs the U.S. total for people and promotion to $39,300, and in Haiti to $14,300, a total of $53,600.

Now, to relate them to Mr. McNeil's figures, I believe I recall that he said 11⁄2 percent. Ours in the United States is 1.24 percent. He did not include, if I recall his testimony, anything outside of the United States. However, we had a figure for Panama and Haiti as 0.45 percent or a total of 1.7 percent for freight.

For passengers, we have an advertising bill only and we have no solicitors on the streets at all. That runs $23,900 a year, a total of 2.9 cents per passenger revenue dollar.

Does that answer your question? His, I believe, was 5-pointsomething.

Mrs. SULLIVAN. Yes, and could you submit that?

Governor CARTER. Yes, we will submit this for the record. (The information follows:)

Business promotion, etc.

PANAMA LINE

For freight solicitation in the United States approximately 0.012 cent per commercial freight revenue dollar.

For freight solicitation (all areas) approximately 0.017 cent per commercial freight revenue dollar.

For passenger solicitation approximately 0.029 cent per commercial passenger revenue dollar.

Details

The CHAIRMAN. Do these figures include the services rendered by the Panama Canal Company to the Panama Line?

Governor CARTER. I do not quite understand the question, Mr. Bonner.

The CHAIRMAN. Often we have in MSTS, when they come in and present their figures, a situation where they do not include the services that the Department of Defense renders to MSTS that are not included in Military Sea Transport costs.

Governor CARTER. Since the Panama Canal a corporation, everything must be included. include corporate overhead.

Company is set up as
These figures do not

Mr. STEERS. This is the direct cost of business promotion. There are no indirect costs applicable to this.

Governor CARTER. This is the direct cost of business promotion. The CHAIRMAN. You mean that all the services that are rendered by the Panama Canal Company to the Panama Line are included in these costs, your office services, for example?

Mr. STEERS. My office does not render any services to business promotion.

The CHAIRMAN. I am talking about the operation of the Panama Line.

Mr. STEERS. In reporting the operation of the Panama Line, we do not include the general overhead of the corporation.

The CHAIRMAN. Thank you.

Mr. MAILLIARD. Madam Chairman.

Mrs. SULLIVAN. Mr. Mailliard.

Mr. MAILLIARD. When you compute your passenger solicitation expense, am I correct in assuming that you have included only commercial passengers, not the Government passengers?

Governor CARTER. That is correct, yes, although we have a little problem in soliciting our own passengers, too, but that is more or less in an administrative way.

Mr. MAILLIARD. But with respect to these figures you gave when you broke them down on a percentage basis, you are assessing the costs against commercial passengers only?

Governor CARTER. That is right. For example, I did not take one freight solicitor off of the two that I have and charge him to myself for the Panama Canal Company. These are all we have and they all work in the commercial business. The percentages are related to commercial business.

Does that answer your question, Mr. Mailliard?

Mrs. SULLIVAN. Would we throw you off your line of thought, Governor, if right at this point we interrupt you?

Yesterday, when the Grace Line and the United Fruit and the American Merchant Marine Institute witnesses testified, they brought up the fact numerous times that the Panama Line was not being patronized by the workers of the Canal Zone.

I have had argued with me a number of times that you cannot insist that people use certain facilities.

My thought is that when you are paying for it you can stress that this line should be there for their use. I recognize, too, that the zone workers have not been using their own facilities as they should. Yet they want and expect their travel time, if they come by air on home leave even though it takes much less time by air, and probably costs you more to let them come by air. Maybe it would need legislation. Maybe it would need regulation.

What is your opinion of whether or not you can tighten up the mode of travel of the workers when they come back and forth on home leave?

Governor CARTER. To answer your question specifically, Madam Chairman, my legal counsel advises that as long as the Panama Line is a commercial carrier strictly, as it is, we cannot order our people to travel on the line. We can, administratively, try to set it up so that it is more convenient for them but they do have a free choice as to what means of travel they utilize.

There is a difference in cost of travel. If they elect a more expensive mode of travel than I can give them by the Panama Line, they will have to pay the difference. We can, of course, make some administrative, not regulations exactly, but procedures which encourage the use of the line and actually their use of the line since this controversy began last year has been, I believe, increasing. We have

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the figures of exactly how many traveled in every possible way. If you would like those for the record, I can give them to you.

Mrs. SULLIVAN. We do want them for the record and we also want it for the record for all modes of travel.

Governor CARTER. Yes.

(The information follows:)

Panama Canal Company-Home leave travel, 1956–60, by carrier

Approximately 70 percent pass through Miami, 5 percent through Houston, 10 percent through New Orleans, and 15 percent through Los Angeles.

2 Approximately 75 west coast ports and 25 percent gulf ports.

Mrs. SULLIVAN. And what the Government pays the worker for that travel.

Now, if they pay something in addition, I really was not aware of that.

Governor CARTER. I can give you that now. We pay the cost of the travel. We do not give them the money. We buy the tickets. Mrs. SULLIVAN. I realize that. If they come by air and come up here for a good length of time and have luggage which would necessarily be over the allotted amount, do they pay the additional cost of their baggage?

Governor CARTER. We allow them first-class baggage on a tourist ticket. First-class baggage on an airplane overseas is 66 pounds and tourist is 44. We allow them first-class baggage but no more.

Of course, they are allowed much more than that on a ship but that is all we allow them on an airplane.

Mrs. SULLIVAN. If the commercial passenger and cargo traffic were taken away from the ship line, then the regulation would not hold. In other words, it is not commercial so that they could be made to travel on it.

Governor CARTER. We could specifically order people on the line in that case, I am advised by my legal counsel.

Mrs. SULLIVAN. If that would happen, would that take up the loss of the commercial cargo and the commercial passengers?

Governor CARTER. No, I am afraid it would not, because we could not possibly direct people to take their leaves at a particular time of the year and, as everyone else has trouble in the summertime, so do we because this is when our people's children are out of school and that is when they want to take their leave so that our ships are already sold out practically for the months of June, July, and August. It is during the wintertime when we do not want the people away and they do not want to be away that this commercial business does us so much good because, of course, that is the tourist season for people from the United States to try to get out of the snow in Washington to get down to Panama where it is nice and warm.