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Senator ELLENDER. What about the Panamanians who live within the Canal Zone ?

General SEYBOLD. They go to schools furnished by the Canal Zone.

Senator ELLENDER. That is an added advantage that the Panamanians who live in the zone obtain, is it not?

COMPARABLE SCHOOL SYSTEMS

General SEYBOLD. I would hardly say, Senator, that it is an added advantage. It is a different variety of school, and if I may digress for a moment, we have had more than requests, it has been a criticism of the Government that we are teaching Panamanians to be Americans and we are now establishing in our schools a comparable school system for the Panamanian group as the schooling in Panama. It was just recently when I had one of my monthly meetings with the alien group that the criticism was again leveled that the problem in moving to the Republic was the fact that the children were unable to take their place in the Panamanian schools due to the fact that the systems were different. They felt that it was entirely wrong, this group I again refer to, that we should place their children in an American system.

We are trying to correct that as quickly as we can because I am heartily in favor of getting these children of the alien group into the Panamanian social area rather than the American.

Senator ELLENDER. Are you working to the end of having all local employees live in Panama rather than the zone? General SEYBOLD. As many as possible; yes, sir.

Senator ELLENDER. I realize that it would be rather difficult to have them all live on the outside.

General SEYBOLD. Yes, sir.

Senator ELLENDER. But as to those who live on the outside, why would it not be feasible to let them get medical attention and other fringe benefits from some other source; that is, probably by paying them a little better salary so that they can spend their money with the Panamanians? As I recall, one of the criticisms that were lodged by some of the business people in Panama were to the effect that these people who worked at the Panama Canal bought their groceries and things like that in the Panama Canal Company stores, and so forth.

Well, it strikes me that we ought to explore the posisbility of employing Panamanians, with the understanding that they receive a little better salary. If that were done, they could obtain from other Panamanians medical facilities, their groceries, and things of that kind. I believe it might result in better relationships and at the same time I have a hunch that it might cost the Government les

CONTROL OF EPIDEMICS

Senator KNOWLAND. If the chairman might interject at this point, I will concede the point raised by the Senator from Louisiana. It does seem to me, however, that you are faced with this problem that if perchance the employees for economic or other reasons did not either take out what we might call health insurance or have the facilities, and if they caught some disease and brought it over into the Canal Zone we would probably in the long run have a very real problem, because these people come back and forth across the line.

So I think there is some interest on the part of the responsible authorities of the Canal Zone government to either, if not furnish the medical attention themselves, to be sure that comparable attention is furnished to these people, because disease knows no boundary, and once a person comes into the zone with a contagious disease you might have a serious epidemic start.

General SEYBOLD. I think our views on that are a combination of both, with possibly the hospital and medical care being set aside against the economic life of the employee, which follows in our thinking along with the Senator from Louisiana. Also, there is a fact in the hospitals that the load could not be taken right away. These things require a timetable, I think.

Senator ELLENDER. That is why I asked whether you were working toward that end.

General SEYBOLD. Yes, sir.

Senator ELLENDER. I am sure that it would be possible to get the cooperation of the Panamanian authorities there to keep the cities where these people reside in a clean condition.

Senator KNOWLAND. But certain things, such as innoculations that we might require, unless they require the same thing we might run into difficulty.

MORE BUSINESS FOR PANAMANIANS

Senator ELLENDER. You could make them get certificates, the same as they make us do when we visit certain areas, I think that is a problem easily solved. But the idea is to have these people who work in the zone do as much of their business as possible with the Panamanians. That is one of the more difficult problems.

General SEYBOLD. I heartily concur. I think that we should import that labor into the zone. Whatever adjustments are required to meet their needs, why that can be worked out like any labor-relations problem generally is.

Senator ELLENDER. It would do two things in my humble judgment: It would reduce our costs, and at the same time be more satisfactory to the Panamanian Government, since it would mean more money flowing through their economic stream. These people would deal with the local merchants and purchase from them; they would use their doctors and dentists rather than those services being furnished free.

Senator KNOWLAND. Of course, that is not unlike the problem that American communities have where there are large installations around of helping patronize the local merchants and so on rather than purely through Government agencies.

General SEYBOLD. Yes.

Senator KNOWLAND. On the school situation, of course, I guess you are faced with a practical problem. It is like people living in two different school districts, normally education facilities would be furnished, and people, whether they were Panamanian or Americans living in the Canal Zone or living in the Republic of Panama, they would want their children to go to school, and you have to have facilities provided.

General SEYBOLD. It is the basis of the systems that we feel has been one of the problems. The alien finally is of course a citizen of Panama, and he sooner or later takes his position in the Republic as a citizen. But the school system that has been erected for these people heretofore has been aimed at the American, so he is not able to really meet competition when he goes back into Panama because he cannot talk the language well enough, and he has not their social ideas.

Senator ELLENDER. There are a lot of objections on the part of the Panamanians to that.

General SEYBOLD. Yes, sir.

Senator ELLENDER. That is why I say your greatest employment I assume is not far from Panama City—that is not far from Panama proper. Then the same is true when you get on the Atlantic side. Your facilities are not far from the Panamanian Republic so that it would be an easy matter, in those two localities at least, to hire most of your people from Panama, the Republic of Panama, and pay them a little better wage than those working and living in the zone. The higher rate of pay should result in their obtaining medical and schooling and other facilities from the Panamanian Government. I think it would be more satisfactory.

General SEYBOLD. I entirely concur with your theory in general, sir. The only thing is that there would be extreme difficulty in having a two-wage-rate system. I think that the better thing to do is to just move the entire bulk of it rather than to have wage differentials which of course are always extremely bad.

Senator KNOWLAND. You may proceed.

PROPOSED EDUCATIONAL PROGRAM

General SEYBOLD. It is also proposed to change the aspect of the educational program for the noncitizen resident on the zone and accentuate his educational orientation to his native country of Panama instead of the United States. Heretofore the educational system has been practically a counterpart of that in the United States and has resulted in poorly fitting these people to their own country. The reduction of the number of aliens in the zone will also minimize many zone problems, will assist the Republic in its economic growth, and ultimately relieve the company of a large volume of effort in supporting activities.

This concludes my formal statement. For details of the 1955 budget I refer to the justifications now in the hands of the committee, and I will be glad to answer any further questions the committee may have.

Senator ELLENDER. Mr. Chairman, may I ask a question or two! Senator KNOWLAND. Yes.

DUPLICATION OF FACILITIES

Senator ELLENDER. When our committee was in the Canal Zone a few weeks ago as I recall there were nine of the recommendations of the many submitted that were put into effect. It was my understanding that the consolidation of the hospitals was being given attention. Has anything further been done in that respect ?

General SEYBOLD. At the moment the matter of consolidation of the hospitals is in the hands of the Secretary of Defense. There has been at the moment no consolidation of the hospitals. The matter has been

under constant study and meetings of the various groups and various recommendations, both from the

commanding general of the Armed Forces and parts—that is, the Navy and Air Force and Army and also the Panama Canal.

Senator ELLENDER. Assuming that the projected consolidation comes into being, would that in any manner save much money insofar as the Panama Canal Company is concerned?

General SEYBOLD. That is rather difficult to answer. We believe in general overall consolidation of the hospitals there.

Senator ELLENDER. I know.

CANAL ZONE HOSPITAL FACILITIES

Senator KNOWLAND. May I interrupt at this point, Senator, to read out of the Department of Defense appropriation bill of 1954, on page 8. The House committee had this to say:

Recent hearings by the committee handling Canal Zone government appropriations disclosed duplication of Federal hospital facilities in the Canal Zone. The Army and Navy each operate a hospital there in addition to two operated by the Canal Zone government. More recent hearings by the Subcommittee on Armed Services confirms the duplication. It is evident that 2 of the 4 hospitals with proper cross-servicing will meet current needs. Defense officials at first flatly disagreed that this was the feasible or wise thing to do but, as evidenced by a letter from the Department on page 481 of the printed hearings on Navy appropriations, the Department now fully agrees that two hospitals will suffice. This matter has been under consideration in the Department since 1947. A further study of the situation is contained in a report by the General Accounting Office dated June 30, 1952. It is a reflection on those involved that this arrangement was not reached long ago.

I might say that I fully concur with the Senator from Louisiana that there comes a time when studying should stop and action should commence. It seems to me in view of the recommendations of this committee and the House Committee on Armed Services that it is high time the responsible authorities proceed to action rather than merely to discuss it very much longer.

Senator ELLENDER. As I recall, recommendations did come from the Army and the Navy from the forces in the zone, but later on the Navy withdrew its support?

General SEYBOLD. That is correct.
Senator ELLENDER. And it has caused some more delay.
General SEYBOLD. That is correct.

SAVINGS ANTICIPATED

Senator ELLENDER. But I am in hopes that it will be done now, and if I have anything to do with it we are going to take out of the armed services bill the $370,000 amount that the commanding general

General SEYBOLD. General McBride.

Senator ELLENDER. General McBride. He said that if the consolidation that he advocated takes place we will save $370,000.

DUPLICATION OF FACILITIES

Senator KNOWLAND. I might also state, and I think the committee will be interested in the fact that on April 13, 1953, Senator Styles Bridges, chairman of the full Appropriations Committee, wrote the following letter to the Honorable W. J. McNeil, Assistant Secretary of Defense, as follows:

DEAR MR. SECRETARY: The Subcommittee on Army Civil Functions heard testimony from representatives of the General Accounting Office and from officials of the Panama Canal Company-Canal Zone government, regarding duplication of facilities in the Canal Zone. For example, Mr. Bendetsen, former Assistant Secretary of the Army and Chairinan of the Board of Directors of the Panama Canal Company, submitted a report to the Secretary of the Army on January 16, 1952. That report contained the following conclusion:

“The problem of unnecessary duplication applies across the board in the Army, Navy, and Air Force on the one hand and the Company-government on the other. It is concluded that the Defense Management Committee should undertake a project looking toward the elimination of duplication in collaboration with the Company-government."

The committee desires that you take the necessary steps to eliminate all unnecessary duplication, that you advise the committee of your plans for accomplishing this objective, and that you keep the committee currently advised of the progress being made. It is further requested that you inform the committee as to any action taken with respect to Mr. Bendetsen's report of January 16, 1952.

For your information and convenient reference, there is attached a copy of the testimony presented to the committee together with a copy of the special report of the General Accounting Officer on the Health Bureau of the Canal Zone government.

We will have the reply printed in the record. (The information referred to follows:)

ASSISTANT SECRETARY OF DEFENSE,

Washington 25, D. C., June 8, 1953. Hon. STYLES BRIDGES,

United States Senate. DEAR SENATOR BRIDGES : Reference is made to your letter of April 13, 1953, concerning the duplication of facilities in the Canal Zone.

A review of the data available at Washington level indicates that satisfactory progress is not being made in the elimination of unnecessary duplication of facilities in the Canal Zone. I have requested further information from the field and when it is received you will be notified.

As a result of my review the Secretary of Defense has directed the Secretary of the Army to make an overall survey of all activities of the armed services in the Canal Zone and to present recommendations for elimination of unnecessary duplication. He has also recommended that the Secretary of the Army, as stock. holder of the Panama Canal and as representative of the President in the supervision of the Canal Zone government, include those agencies in the survey. A copy of the directive is enclosed for your information. Sincerely,

W. J. MCNEIL

THE SECRETARY OF DEFENSE,

Washington, June 8, 1953. Memorandum for the Secretary of the Army. Subject: Duplication of Activities in the Canal Zone.

It is requested that you conduct for the Secretary of Defense a survey of duplication of activities as between the Army, Navy, and Air Force in the Canal Zone. As the respresentative of the President in the supervision of the Canal Zone goternment, and as stockholder of the Panama Canal Company, you may also wish to include the facilities of those agencies in the survey with the objective of accomplishing the elimination of all unnecessary duplication both within the armed services and as between the armed services and the canal agencies. Insofar as you find unnecessary duplication the elimination of which is beyond your authority as Secretary of the Army or as supervisor of the canal enterprise, it is requested that the situation be reported to me with your recommendation as to the action which should be taken.

As a minimum, your survey is to include but not be limited to a review of hos pitals, commissaries, cold-storage plants, bakeries, food-inspection units, store houses for common-use items, motor vehicle maintenance and repair, motor

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