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On August 11, 1939, the 76th Congress authorized preliminary exaininations and surveys under section 6 of the Flood Control Act, Public Law 396. Satsequently on December 22, 1944, the 78th Congress by Public Law 534, adopted and authorized a Federal project for flood control on the Hanapepe River 3 recommended by the Chief Engineer in the report submitted by the Secretary of War on March 15, 1944.

The brief "Definite Project Report, Flood Control, Hanapepe River,” outlines the plan for the adequate control of that river by concrete retaining walls and earth levees. It outlines a cost of $283,000 for the entire project of whicb $257,000 is listed at Federal cost. However, revisions to the work estimate indicate $277,000 for that project. Additional information is available at the Office of the Chief Engineer, Department of War.

The report further outlines local cooperation for the project such as acquisition of rights-of-wav, alteration to roads, etc. The county of Kauai has further in 1941 provided $50,000 in bonds fund for this project which shall be matched by another $50,000 by the Territory of Hawaii. However, $100,000 will not suffe

I realize that during the Korean conflict, the interest of national defense was primary. We of Kauai will be the first to sacrifice on that point. However, witb "cease fire” in Korea, the protection of a thriving community from floodwaters needs immediate attention. We on Kauai are confident that the welfare of this community is your concern, and that this appeal for Federal aid for immediate flood-control measure will receive your kind assistance. Respectfully yours,

A. C. BAPTISTE, Jr., Chairman and Executive Officer.

CORPS OF ENGINEERS, UNITED STATES ARMY,
OFFICE OF THE DISTRICT ENGINEER, HONOLULU DISTRICT,

Honolulu, T. H., January 4, 1950. WILLIAM ELLIS,

Chairman, County Board of Supervisors, Kauai. DEAR MR. Ellis: It has just come to my attention that the board of supervisors plans to hold a public hearing in Hanapepe this month to discuss flood-control plans for that community. I further understand that this meeting is to be called as a result of information given you by Mr. A. P. Unger of this office that consideration is being given by the Federal Government to two methods of flood protet tion-first, construction of food walls and, second, moving the town to higher ground. This information is completely erroneous.

The Corps of Engineers and the United States Congress have at no time pro posed that Hanapepe be moved to higher ground. There currently exists no adthority for this office to entertain such a proposal.

For your information the present status of Corps of Engineers' plans for food control at Hanapepe is outlined below. In 1942 the then district engineer, in a report of survey, recommended to the Congress that a flood-control plan of improvement be adopted by the United States for Hanapepe to consist of remoral and replacement of the old trestle-type railroad bridge and the construction of approximately 2,000 feet of concrete flood wall along the left bank of the river from the new highway bridge to the foot of the cliffs north of town. This plan of improvement was adopted and outhorized for construction by the Flod Control Act of 1944, provided that local interests meet the following requirements:

(a) Furnish all rights-of-way for construction of the project.
(0) Remove the (then) existing railroad trestle bridge.
(c) Accomplish necessary street modifications.
(il) Maintain and operate the completed work.

(e) Hold and save the United States free from all claims for damage arising from the construction or operation of the project works.

A copy of this report is inclosed for the information of the board of supervisors. It is requested that it be returned when it has served its purpose.

It should be noted that the presently estimated Federal cost is $235.000 of which $25,000 has been appropriated by Congress for the preparation of a definite project report and final contract plans and specifications. This work will be completed by June 30, 1950, in anticipation of the appropriation of the balance required for construction of the project during the coming fiscal year.

While I shall, of course, be happy to discuss our plans with you whenever you desire, it would be more profitable to us both to postpone this discussion

until early April 1950 at which time our final studies and plans will be sufficiently advanced to give you a complete picture of the Federal project.

I regret exceedingly that the board of supervisors and the people of Hanapepe have been misled and perhaps become unnecessarily concerned by a misstatement of the Federal Government's position. Under the circumstances you may decide that a hearing is unnecessary at this time. Should you determine it desirable to proceed as planned, however, I should appreciate the opportunity of discussing our work with you in advance and of being present at the hearing. I am available to come to Kauai at your convenience. With highest regards. Sincerely yours,

F. H. FALKNER, Colonel, Corps of Engineers, District Engineer.

BILL No. 113–RESOLUTION No. 110

Whereas by Public Law 534, 78th Congress, 2d session, the Congress of the United States adopted and authorized a Federal project for flood control on the Hanapepe River, T. H.; and

Whereas the district engineer, Honolulu district, Corps of Engineers, has de veloped a plan of flood protection which provides for the construction of a flood wall and levee on the left bank of the Hanapepe River at the town of Hanapepe, with automatic drains as may be necessary, and with the road at the upper end of the wall to be raised; and

Whereas the McBryde Sugar Co., Ltd., at the request of the county of Kauai, has recently cooperated in the flood-control project by removing the railroad bridge which crossed the Hanapepe River just downstream of Hanapepe: Therefor; be it

Resolved by the Board of Supervisors of the County of Kauai, T. H., That it concurs in the plan developed by the district engineer, and, when Federal funds are allotted for construction of the improvement, that the county of Kauai provide the following items of local cooperation necessary to the project:

(a) Furnish without cost to the United States the necessary rights-of-way required for construction of the project.

(b) Agree to maintain and operate the project without cost to the United States, and prevent encroachment on, or impairment of the project, in accordance with the regulations to be prescribed by the Secretary of the Army.

(C) Furnish assurances that it will hold and save the United States free from any claims of damage arising from the construction of the project works.

(d) Contribute funds for the cost or perform the work necessary to raise the road at the upstream end of the wall to project grade. Adopted this 16th day of August 1950.

GEORGE K. WATASE,

Supervisor.
DAVID K, LUKE,

Supervisor.
WILLIAM ELLIS,
Chairman and Executive Officer.
FRANCIS M. F. CHING,

Supervisor.
J. W. BERTRAND,

Supervisor. Toshi0 SERIZAWA,

Supervisor.

OFFICE OF THE COUNTY CLERK, COUNTY OF KAUAI, LIHUE, KAUAI, T. H.

CERTIFICATE

I. hereby certify that the foregoing is a full, true, and correct copy of bill No. 113 which was adopted as resolution No. 110 by the board of supervisors of the county of Kauai at a meeting held on August 16, 1950, by the following vote of the board :

For adoption : Bertrand, Ching, Luke, Serizawa, Watase, Ellis ; total 6.
Against adoption : None.
Absent and not voting: None.

J. K. BURGESS, Jr.,

County Clerk, County of Kauai. Dated at Lihue, Kauai, T. H., this 16th day of August A. D. 1950.

TERRITORY OF HAWAII,
DEPARTMENT OF PUBLIC WORKS,

Honolulu, August 29, 1950.
Hanapepe Flood Control
Họn. WILLIAM ELLIS,
Chairman and Executive Officer,

Board of Supervisors, Lihue, Kauai. DEAR MR. ELLIS: Reference is made to your county resolution No. 110 (bill No. 113) in which the county has concurred in the plan developed by the United States district engineer for the flood control of Hanapepe River and has agreed to furnish, without cost to the United States the necessary rights-of-way required for the construction of the project,

In accordance with discussions of your chairman, it is my understanding that your board desires that the $48,524.75, being the appropriation balance available under act 203, S. L. 1941, be reserved for this purpose. We will, therefore, continue to hold this fund available for such use and your request that it be carried over for another biennium will also be given favorable attention. Very truly yours,

R, M, BELT, Superintendent of Public Works.

Bill No. 165, RESOLUTION No. 152 Whereas, by Public Law 534, 78th Congress, 2d session, the Congress of the United States adopted and authorized a Federal project for flood control on the Hanapepe River, Territory of Hawaii; and

Whereas the District Engineer, San Francisco District, Corps of Engineers, has developed a plan for flood protection which provides for the construction of a floodwall and levee on the left bank of the Hanapepe River at the town of Hanapepe, with automatic drains as may be necessary, and with the road at the upper end of the wall to be raised; and

Whereas the McBryde Sugar Co., Ltd., at the request of the county of Kauai, has recently cooperated in the flood-control project by removing the railroad bridge which crossed the Hanapepe River just downstream of Hanapepe: There fore, be it

Resolved by the Board of Supervisors of the County of Kauai, T. A., That it concurs in the plan developed by the district engineer and, when Federal funds are alloted for construction of the improvement, that the county of Kauai provide the following items of local cooperation necessary to the project:

(1) Provide without cost to the United States ail lands, easements, and rightsof-way necessary for construction of the project.

(2) Bear the expense of all highway alterations, and of replacing the former railroad trestle near the river mouth with a satisfactory structure if replacement is required.

(3) Hold and save theUnited States free from damages resulting from construction of the works.

(4) Maintain and operate all works after completion in accordance with regtlations prescribed by the Secretary of the Army. Adopted this 3d day of October 1951.

MATSUKI ARASHIRO,

Supervisor. FRANCIS M. F. CHING,

Supervisor. TAMOTSU OKURA,

Supervisor. HENRY K. AKI, JR.,

Superrisor. A. C. BAPTISTE, JR., Chairman and Executive Officer. GEORGE K. WATASE,

Supervisor TOSHIO SERIZAWA,

Supervisor.

OFFICE OF THE COUNTY CLERK, COUNTY O KAUAI, T. H.,

Lihue, Kauai, T. H. CERTIFICATE

I hereby certify that the foregoing is a full, true, and correct copy of bill No. 165, which was adopted as Resolution No. 152, by the Board of Supervisors of the County of Kauai at a meeting held on October 3, 1951, by the following vote of the said board :

For adoption: Aki, Arashiro, Ching, Okura, Serizawa, Watase, Baptiste; total, 7.

Against adoption : None.
Absent and not voting: None.

J. K. BURGESS, JR.,

County Clerk, County of Kauai. Dated at Lihue, Kauai, T. H., this 3d day of October A. D. 1951.

CORPS OF ENGINEERS, UNITED STATES ARMY,
OFFICE OF THE DISTRICT ENGINEER,

SAN FRANCISCO DISTRICT,

San Francisco, Calif., March 10, 1952. BOARD OF SUPERVISORS, COUNTY OF KAUAI,

Lihue, Kauai, T. H. GENTLEMEN : Receipt is acknowledged of certified copy of bill No. 165, Resolution No. 152, adopted by your board on October 3, 1951, which obligates the county of Kauai to assist in the construction of flood-control works on the Hanapepe River and assure operation and maintenance of the complete project as stated therein.

The resolution is satisfactory to this office and is accepted, as sufficient evidence of the eventual fulfillment of the requirements of local cooperation as will be necessary for the construction of the project.

Federal funds have not as yet been appropriated for construction of the project. It will not, therefore, be necessary to provide the items of local cooperation at this time. You will be so informed, upon availability of the required funds, in ample time to enable orderly construction of the project. Sincerely,

K. M. MOORE, Colonel, Corps of Engineers, District Engineer. PANAMA CANAL COMPANY, CANAL ZONE GOVERNMENT STATEMENTS OF BRIG. GEN. J. S. SEYBOLD, GOVERNOR OF THE

CANAL ZONE AND PRESIDENT OF THE PANAMA CANAL COMPANY; W. M. WHITMAN, ASSISTANT TO GOVERNOR OF THE CANAL ZONE AND SECRETARY, PANAMA CANAL COMPANY; LINDSLEY H. NOBLE, COMPTROLLER, PANAMA CANAL COMPANY; L. B. MAGNUSON, BUDGET ANALYST, PANAMA CANAL COMPANY; AND E. A. BACON, ASSISTANT TO SECRETARY OF ARMY

GENERAL STATEMENT

Senator KNOWLAND. Our next witness is Governor Seybold. You may proceed, Governor Seybold.

General SEYBOLD. Mr. Chairman and members of the committee, I appreciate this opportunity to discuss with you the budget program of the Panama Canal Company and the estimates for the Canal Zone government for fiscal year 1955. Before proceeding to the detailed consideration of the 1955 budget estimates for the Panama Canal Company and Canal Zone government I would like to discuss generally the results of our operations during fiscal year 1953 and the first half of fiscal year 1954. Fiscal year 1953 was the second year of operation under the sweeping reorganization effected by Public Law 841 of the 81st Congress, and the first year of my administration as Governor of the Canal Zone and President of the Panama Canal Company.

Under Public Law 841 we consider that the primary mission of the Panama Canal Company is to operate and maintain the waterway for the morement of ships from one ocean to the other. All other activities of the Company and the Canal Zone government in the Canal Zone are incidental to that mission.

CANAL TRAFFIC

Viewed in that light, fiscal year 1953 was the biggest year in the history of the canal. In that year a record 10,170 ships passed through the canal for which the tolls amounted to a record $37,530,Ox). This high rate of traffic held up through the first half of fiscal year 1954, during which 5,320 ships went through the canal with tolls amounting to $19,451,000.

At the same time that the work load of the Company increased to record highs, the number of employees was reduced in 1953 from 18,239 to 16,392, an overall reduction of 1,847. This contraction continued in the first 6 months of 1954 during which the number of employees was further reduced to 15,420, making a total reduction of 2,819 for the 18 months' period.

This reduction in the number of employees is a part of a continuing program initiated by management to effect economies and improve efficiency wherever possible. Major internal reorganizations have been effected to consolidate activities of related functions, discontinue unprofitable activities that have been found not essential to efficient operation, and eliminate overlapping of functions. The general effect has been to tighten up the organization, reduce costs, and improve the efficiency of the units. It is estimated that this program has resulted in annual savings of nearly a million dollars.

HOUSING SITUATION

In the continued study of the housing problems of the zone the Company has developed the concept of two communities—the Pacific and the Atlantic-rather than a number of localized communities, each with its separate service installations, police, fire, and so forth, which are the present pattern and are literally the heritage of horseand-buggy days. It is expected that in time we can significantly reduce the many service outlets. Recently we have closed the Ancon Clubhouse and three outlying police stations.

The future general program for all supporting activities such as employee services, other supporting services, and auxiliary activities is one of shrinkage and retrenchment. The volume and returns from such activities can be confidently expected to be greatly diminished. As the fixed charges of the Canal Zone Government and interest are generally static, these activities will more and more be unable to bear their current burden of fixed costs. More and more charges then must be carried by the canal as the contributions of other activities are reduced.

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