Mr. LOVELADY. Well, when I was recruited, sir, 25 years ago, I was told that I would get to ride the Panama Line for $30 one way. Among the other fringe benefits, leave, retirement benefits, low rental rates in quarters, which is something we do not have any more, and you might say very low cost of food in the commissaries that operate on a narrow margin of profit. Those are some of the things that we had as fringe benefits at the time of my employment.

Of course, at this time when a new employee comes in, he is told he has leave, retirement benefits, home-leave travel each 2 years for himself and his family. He has repatriation benefits back to the place of his normal residence in the United States at termination of his service.

Of course, we have now also a group health insurance plan partly paid for by the Government. Those are things that have come into being, Mr. Byrne, in the last 6 or 7 years.

Mr. BYRNE. Why do not the employees take advantage of the ships instead of flying?

Mr. LOVELADY. That is a very difficult question, sir, for me to answer. I think that one of the primary reasons is time. If they ride the line, it takes 6 days to get to New York, 6 days to get back, and that is 12 days charged to their annual leave, and if they take an airplane they can be home in 24 hours and not have so much time charged to their leave.

Mr. BYRNE. Then they get another vacation when they get back? Mr. LOVELADY. I prefer to ride the Panama Line.

Mrs. SULLIVAN. Do they not get some kind of travel time?

Mr. LOVELADY. Not those of us who are employed by the Panama Canal Company. We are not under the Annual Leave Act of 1951. Mrs. SULLIVAN. Who gets that?

Mr. LOVELADY. The Army, Navy, and Air Force employees who are entitled to repatriation at Government expense. Their time does not begin until the day they arrive at home and their leave ends at the time they start to return to their post of duty outside the United States.

Mrs. SULLIVAN. You mean that a Canal Zone worker does not get paid any extra time for travel?

Mr. LOVELADY. Here is one thing I do get, Madam Chairman. If I come to the United States and stay in the United States 30 days, I can get credited with 40 hours' travel time but I have come up here now, for example, and I am going back Saturday. My travel time is all charged to my leave. I will not be entitled to this 40 hours' travel time because I will not have remained in the United States 30 days.

Mrs. SULLIVAN. It is on your regular leave that you are supposed to come to the United States and on your regular leave you get travel time or allowance?

Mr. LOVELADY. I would get the 40 hours' travel time which is 5 days, as you know.

Mrs. SULLIVAN. And if you come by air, that takes 4 or 5 hours, you would still get your 40 hours' travel time?

Mr. LOVELADY. Providing I stay in the United States at least 30 days.

Mrs. SULLIVAN. What if the regulation was rewritten to order that you had to travel by ship because that was for your use?

Mr. LOVELADY. Frankly, Madam Chairman, I would like to see it but I doubt that it could be enforced.

Mrs. SULLIVAN. You cannot have two things and argue for two things and then not use them. You are arguing that the employees want the ship because they want to be able to use it when they want to use it.

Mr. LOVELADY. I believe that the Congress would have to amend the Home Leave Travel Act of 1954 to compel us to do that. Otherwise I do not think that you could legally compel us to ride the Panama Line when the law now says in effect that we can ride any mode of transportation we choose.

Mrs. SULLIVAN. Mr. Mailliard brought up the idea that if the need is not there then are you trying to hold onto a thing when you no longer need it?

Mr. MAILLIARD. I think that is the main question.

Mrs. SULLIVAN. If they are not going to use the facility that is there, and the only way they would use it is to have it forced upon them, then it is either going to be forced upon them or taken away. What do they want?

Mr. LOVELADY. I do not know whether Mr. Mailliard can see that headline or not, "Fight To Save Panama Line Continues. Lovelady Urges Union Members To Ride Ships."

Mrs. SULLIVAN. That is coaxing them. That is not telling them they are going to have to do it or else.

Mr. LOVELADY. I will do everything I can but I cannot take them by the nose and lead them to the ship.

Mr. MAILLIARD. Will the gentleman yield for one point?

I do not think Mr. Lovelady would want us to think that he is advocating that we change the law to compel your people to ride the ships, are you?

Mr. LOVELADY. No, sir.

Mr. MAILLIARD. That would be the most outrageous kind of Government coercion, it seems to me.

Mr. BYRNE. I think the ships are there and they ride them.
How long have you been on the Canal Zone?

Mr. LOVELADY. Almost 26 years.

Mr. BYRNE. Do many stay there to go on pension and do many of the families continue for generation after generation to work there and live there?

Mr. LOVELADY. Mr. Byrne, they have in the past years. However, that is almost a thing of the past now. Because of the implementation of the 1955 treaty between the United States and the Republic of Panama, the second and third generation children that are born there and get out of school find it very difficult to begin to work at paying positions. Since they have no experience of any kind, they have to start in the lower grades and the lower grades now are based on the Panama area rates. Consequently, there is no reason for them to stay there and it is becoming more and more difficult.

I might say this: When a U.S. citizen working for the Government on the Canal Zone terminates his service under the immigration regulations of the Canal Zone, he is required to leave the Canal Zone within a reasonable time. Generally, he is not allowed to stay more than about 60 days. He has either to go into the Republic of Panama

and obtain permission from the Panamanian Government, to do that or he must return to the United States.

Mr. BYRNE. If he quits or goes on pension, he must get out in 60 days?

Mr. LOVELADY. Yes, sir. When I retire, sir, I will have a maximum of 60 days in which to clear out of the Canal Zone.

You know, under the treaties that exist between the United States and the Government of Panama, we cannot acquire real property in the Canal Zone. For example, I cannot acquire a lot and build a home in the zone. I cannot buy a home in the zone.

Mr. BYRNE. Can you not get a license?

Mr. LOVELADY. No, sir.

Mr. BYRNE. What are the rents down there for a family of four? Mr. LOVELADY. Well, sir; I have a three-bedroom concrete block house. It is about 10 years old. It is a nice house for which I pay $38.90 each 2 weeks. That runs about $92 a month. In addition to that, my electric current is metered and I pay $2 a month for the rent of my range. The rent includes, however, the water and the care of the grounds.

Mr. BYRNE. What are these fringe benefits you talk about?

Mr. LOVELADY. Well, sir; Mr. Byrne, I consider that I have some pretty good fringe benefits the group life insurance. I have $11,000 of group life insurance. That costs me 25 cents per thousand per pay period. The Government pays one-third. In other words, I pay two-thirds and the Government pays a third. I consider that an exceptionally fine insurance plan.

Mr. BYRNE. If you left there, could you continue with it?

Mr. LOVELADY. Yes, sir. After a person has 12 years or more of service and leaves the service on a retirement he can continue his insurance. Now, just last July, the Group Health Insurance Act went into effect. The Government pays a part of that. That is definitely a very important and valuable fringe benefit.

Then, of course, we have an exceptionally fine retirement system, the civil service retirement system to which we contribute 61⁄2 percent and the agency matches our contribution. We have what I consider a very fine leave system. The leave system, as I mentioned a moment ago, for the Company Government employees, was prescribed by executive order of the Secretary of the Army. We earn leave at the rate of 121⁄2 hours per pay period for 25 pay periods and 111⁄2 hours for the 26th pay period making a total of 324 hours leave a year.

However, that is annual leave. We do not earn any leave that is earmarked as sick leave. If I happen to be ill and have to take off that is charged to annual leave rather than to something that is called sick leave as in the case of the regular leave system for most of the other Government employees.

Mrs. SULLIVAN. Are there any other questions? Mr. Morse?
Mr. MORSE. I have no questions.

Mrs. SULLIVAN. Mr. Gross?

Mr. GROSS. Yes, I would like to ask a question. You did not mention one thing in the benefits. That is, you have had substantial pay increases, have you not, since that day when you could ride one way for $30 from Panama to New York?

Mr. LOVELADY. Yes, sir; Mr. Gross.

Mr. GROSS. You have had some pay increases, have you not?

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Mr. LOVELADY. Yes, sir; certainly, for which we thank you gentlemen and ladies in the Congress.

Mr. GROSS. I am glad my colleague probed rather deeply into this business of wrapping the cloak of national defense around everything.

I believe in national defense but I am as convinced as he is that the national defense interest could be just as well served, or could be served adequately, if we were not operating these two ships that are in contention. What I am interested in here is whether a comparable service can be provided, a good service can be provided to carry out our obligation to the employees of the Panama Canal Zone? Mr. LOVELADY. Mr. Gross, and Madam Chairman and members. of the committee, of course I was directed to come here by a group of employees of the Panama Canal Zone Company and Panama Canal Zone and have to do the best I can in protecting their interests in the Panama Line as attested to by more than 3,500 signatures to this petition.

The situation has changed certainly in the last several years since the Home Leave Act was enacted in 1954. However, if I come to the States on the Panama Line and want to bring my automobile with me, I can bring it for $90. If I ship my automobile on the Panama Line and come by some other means of transportation, I can ship it for $135.

I believe the cost of shipping an automobile on a private line is somewhere in the neighborhood of $250 or $300. Obviously, then, the employee is concerned with that difference, that saving. It is a natural thing that he is concerned with it.

Mr. GROSS. I do not blame him for that.

Mr. LOVELADY. So we say, sir, if our lines are taken over by private enterprise, are they going to give us any reduced rates?

Mr. GROSS. Do you mean a reduced rate or a comparable rate? Mr. LOVELADY. Let me make it a comparable rate because a reduced rate might be $10 off and certainly that is not a comparable rate.

We would want as nearly comparable rates as they possibly could get. We have a lot of our employees, Mr. Gross, who are in the fairly low grades, grades 4, 5, 6, and 7, with families. They simply cannot afford to pay those exorbitant rates to come to the States and bring an automobile because the Home Leave Travel Act does not include the bringing of an automobile. That is for the account of the individual. Many people want to come up and bring their families and take a trip across the country.

Many people come up like I did 2 years ago, and I am going to have to admit here that I did not ride the Panama Line up.

I flew to Miami and picked up a new car. I ended up in New York and rode the Panama Line back.

That is one of the things that has contributed to this decline in the passenger travel on the line in these last several years, because they can come up at Government expense.

Someone asked here, I believe, this morning, what is the fare on an airplane between Panama and Miami. The round trip rate is $90 on Pan American Airways.

You look like you do not believe that.

Mrs. SULLIVAN. Is that first class?

Mr. LOVELADY. That is tourist class.

Mrs. SULLIVAN. You might ride tourist when you are paying your own way. What do you do when you are riding at the Government expense?

Mr. LOVELADY. They send us tourist class, too, if it is available. Mrs. SULLIVAN. That is all the Government pays for the passengers who would come up?

Mr. LOVELADY. Madam Chairman, I cannot answer that question. Mr. Steers can when he gets on. Mr. Steers is our comptroller.

I believe it is $150. This $90 rate is a rate that is granted that requires travel both ways within 30 days.

Mr. GROSS. And you do not bring any baggage with you or not very much by air?

Mr. LOVELADY. A briefcase is about all you can get by with.
Mr. GROSS. Is it 40 pounds?

Mr. LOVELADY. Forty-four pounds, I think it is.

Mr. GROSS. It is not much. Certainly coming up here for a month's leave or more would cost you right through the nose to bring the clothing and so forth that you would need; would it not?

Mr. LOVELADY. Yes, sir; a very substantial amount.

Mr. GROSS. What I am trying to do is find out what is right to be done in the situation. That is all. I do not know whether this line should be abolished. I am trying to find out. If the Federal Treasury holds out you may be driving up from Panama over the Inter-American highway by automobile some of these times. I doubt that the Treasury can stand it but maybe it will.

Mr. LOVELADY. I have here in my file a 22-page report that was sent to the Director of the Bureau of the Budget by the Secretary of the Army on February 18, 1960. I heard it made reference to this morning so that I am sure the committee has this. I believe that one of the best arguments that can be made for retention of the Panama Line is made in this document. I have not touched upon it, sir. The document was transmitted together with a letter of February 18, 1960, to Hon. Maurice H. Stans, Director of the Bureau of the Budget. The letter is signed by Mr. Brucker, Secretary of the Army. The document itself is headed: "Memorandum for the Secretary of the Army." It is signed by George H. Roderick, Assistant Secretary of the Army for Manpower. It is the document that I am referring to here which has what I think are the cogent reasons why the Panama Line should be continued. I could not add to that, Mr. Gross, one iota because I have not had the access to the information they have. Even if I had access to the statistics, I would not have had time to have developed them in the short time that I had to get ready to come here. Mr. GROSS. I have just one other comment on your statement. You refer to Drew Pearson's column as something in the nature of being top secret. That was one of the worst kept secrets, if it was a secret, that I have ever heard of in Washington.

Mr. LOVELADY. I suspect he may have been referring to this 22-page document that I am talking about as that top secret document. Mrs. SULLIVAN. Is that all, Mr. Gross?

Mr. GROSS. That is all.

Mrs. SULLIVAN. Mr. Lovelady, you will be around in the next couple of days?

Mr. LOVELADY, Yes, Madam Chairman, I will be here until Saturday.