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. 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 generalGeneral 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 Chairman 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:) Hon. STYLES BRIDGES, United States Senate. ASSISTANT SECRETARY OF DEFENSE, 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 stockholder 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, Memorandum for the Secretary of the Army. 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 gov ernment, 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 hospitals, commissaries, cold-storage plants, bakeries, food-inspection units, storehouses for common-use items, motor vehicle maintenance and repair, motor vehicle pools, bulk petroleum storage and handling, laundries, civilian personnel offices, fire stations and equipment, school buses, steamships, marine repair shops, docks and piers, harbor craft (tugs, launches, and barges), construction and equipment of ports, quarry and rock crushing plants, concrete manufacturing plants, construction and maintenance inspection units, printing plants, office machine repair units, and photographic units. I desire that an initial report be made not later than July 1, 1953, and at such times thereafter as is considered appropriate. By copy of this memorandum the Secretary of the Navy and the Secretary of the Air Force are being directed to furnish you with such assistance and information as you determine to be necessary. ROGER M. KYES, Deputy. POLICY STATEMENTS Senator KNOWLAND. I think the policy statements on the part of Congress and its appropriate committees are very clear in this regard, and I am certainly prepared to fully support Senator Bridges and Senator Ellender in regard to this matter. I would be very disappointed if prompt action is not taken to carry out what has been the subject of discussion now for 6 or 7 years. Senator ELLENDER. And it has actually been recommended by those in the field in the Canal Zone. Senator KNOWLAND. This is a case where inertia should be eliminated. General SEYBOLD. Yes, sir. I would like to add in answer to the question which I do not believe I fully answered on the record as to the saving to the Company. The unification of course would reduce our unit costs of operating hospitals, and it might be estimated that that would run around $200,000 a year. Senator ELLENDER. How much? General SEYBOLD. $200,000 a year. Senator ELLENDER. $200,000 on your part and $370,000 by other armed services. That is a half-million dollars, and that is not to be overlooked. Senator KNOWLAND. It represents a lot of income tax from the citizens. Senator ELLENDER. I should say so. General SEYBOLD. Well, of course we must keep in mind that our side is always paid by the company. Senator ELLENDER. I understand that. General SEYBOLD. I do not defend it, Senator, on that basis. Senator ELLENDER. It would just increase your so-called profits to that extent where you could turn more into the Treasury. Senator KNOWLAND. Or amortize the cost of construction. General SEYBOLD. Yes, sir. AMORTIZATION OF CANAL COSTS Senator ELLENDER. Another thing, Mr. Chairman, I would like for our chairman to contact the Bureau of the Budget and find out how long this study is going to go on looking toward legislation that would permit the amortization of the cost of the canal. Senator KNOWLAND. I will say to the Senator from Louisiana that I have already directed the clerk of this committee to address a communication to the Director of the Budget, Mr. Dodge, calling his attention to the long history of this situation and the testimony before this committee and the Armed Services Committee of the House, and I have also requested that a representative of the Bureau of the Budget be here tomorrow as well as the Defense Department so that we can get this thing tied down rather than have it left at loose ends. Senator ELLENDER. Fine. Senator KNOWLAND. Are there any further questions at this time! We are going to continue tomorrow this discussion of the Canal Zone government. The Governor will be here, I understand. Senator ELLENDER. I have more questions, but I will reserve them for tomorrow. Senator KNOWLAND. Do you have any questions, Senator Dworshak? Senator DwORSHAK. I regret, Mr. Chairman, that I missed most of the statement of General Seybold. I do not know whether there are any proposals or recommendations made for any drastic changes in administration for the next fiscal year. I presume I can check and be ready tomorrow? Senator KNOWLAND. He will be here tomorrow. EXPENDITURE FOR BOXCARS I notice in a communication dated January 19, 1954, Senator Bridges, chairman of the full committee, had directed an inquiry to the Secretary of Defense, Mr. Wilson, and while this is applicable. I think, to the Defense Department rather than to the Governor of the Canal Zone government, he mentions that in addition the 1955 justification contemplated a capital expenditure of $530,000 for the replacement of 50 boxcars. I wonder if you could throw any light on the amount of traffic that would justify or warrant the capital investment for 50 additional boxcars. General SEYBOLD. The matter of boxcars, of course, is intimate with the railroad, sir. Our railroad rolling stock is worn out, depleted, and it is at present the facility on which we depend upon for transfer of our supplies from the Atlantic to the Pacific, and it will be more and more in use as we are now beginning to utilize the Army coldstorage warehouse on the Pacific side. The railroad has been a prob lem, as the chairman knows, now for several years. Actually, at the moment, it is paying its way with depreciation and affording some support to the general costs of the company. We can foresee where that may not be so. It is our planning now, and this has not developed, but it is our planning that it appears to be a desirable thing and would be a desirable thing to replace the railroad by a highway entirely within the Canal Zone. We are just up to the position, Mr. Chairman, where we need equipment to bring our materials back and forth. We have to augment that rolling stock under the present way in which we are operating. The cost of a highway, which we feel would be highly beneficial in many other respects, would be a considerable initial cost, but it would once and for all solve many problems that we do have with the Republic of Panama. Senator KNOWLAND. I should think it would be almost essential for the defense of the canal in the event of war, among other things. LAND ROUTE ESSENTIAL General SEYBOLD. I am not too cognizant of the viewpoint of the Armed Forces. The Armed Forces look upon things a little bit differently than the civil government and at to their probable powers in actions of emergencies or subemergencies than we do in the case of civil problems. We feel, and we feel very strongly, that a land route within the Canal Zone is an absolute essential for the operation of the civil government and company. So there we have the problem of the depletion of our railroad rolling stock which is upon us now, and we must maintain this supply route, against the building of a rather costly 22 miles of highway. Senator ELLENDER. Well, general, to what extent could you use the present railroad bed upon which to put a highway? General SEYBOLD. Very much. The preesnt program would include that. Unfortunately, the fill across the deeper part of the lake is only a one-track, you might say, fill. Senator ELLENDER. Yes. General SEYBOLD. It needs greatly to be widened, and that is the expensive part. Senator ELLENDER. But you do not have trestles there; it has all been elevated through deposits of rocks? General SEYBOLD. Yes, it came out of the old Culebra cut. We would only have to build 22 miles because the rest of it is built; that is, to Fort Davis. Senator KNOWLAND. What is the rough estimate of the construction? General SEYBOLD. Somewhere around $7.5 to $8 million. Senator ELLENDER. You mean to complete the road? General SEYBOLD. Yes. Senator ELLENDER. I thought it would be more than that. General SEYBOLD. We would use the old roadbed. Senator ELLENDER. I understand. General SEYBOLD. But it needs quite a bit of additional fill to widen the base. Senator ELLENDER. You could obtain the fill close by, and it would not be a problem? General SEYBOLD. Oh, yes. Senator ELLENDER. And I presume you could use the present tracks to carry it and dump it? General SEYBOLD. Yes. Senator KNOWLAND. The committee will stand in recess until 10 o'clock tomorrow morning. (Whereupon, at 11: 15 a. m., Wednesday, March 10, 1954, the subcommittee recessed to reconvene at 10 a. m., Thursday, March 11, 1954.) |