CIVIL FUNCTIONS, DEPARTMENT OF THE ARMY

APPROPRIATIONS, 1955

THURSDAY, MARCH 11, 1954

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS,

Washington, D. C. The subcommittee met at 10 a.m., pursuant to recess, in room F-39, the Capitol, Hon. William F. Knowland (chairman of the subcommittee) presiding.

Present: Senators Knowland, Dworshak, Hayden, Ellender, McClellan, and Robertson.

CIVIL FUNCTIONS

PANAMA CANAL COMPANY

STATEMENTS OF WILLIAM FINNAN, ASSISTANT DIRECTOR, OFFICE OF ORGANIZATION AND MANAGEMENT, AND FRED MCNAMARA, BUREAU OF THE BUDGET

GENERAL STATEMENT

Senator KNOWLAND. The committee will come to order.

We have at this time Mr. Finnan and Mr. McNamara, of the Bureau of the Budget. Gentlemen, we had the Governor of the Canal Zone before us yesterday and several questions were raised by members of the committee relative to the amortization of costs of the canal and also the question of the duplication in facilities in the Canal Zone

area.

I would like to read a brief section from yesterday's record. The comments made were as follows:

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.

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CONSOLIDATION OF HOSPITALS

Taking first the question of the hospital situation, are you familiar with the four hospitals?

Mr. FINNAN. Mr. McNamara is prepared to discuss that, Mr. Chairman.

Senator KNOWLAND. Would you care to discuss that at this time, Mr. McNamara ?

Mr. MCNAMARA. Senator, I am not familiar with what the question in the mind of the Senator is.

Senator KNOWLAND. There have been both discussions and suggestions on the part of the Armed Services Committee and of this committee through its chairman, Senator Bridges, that there could be savings if the hospitals could be consolidated.

Mr. MCNAMARA. The Bureau of the Budget has been trying, sir, since the close of the war to get the Department of Defense to do something to reduce the number of hospitals, both civilian and military, in the Canal Zone. It has not been too successful. The committees of the Congress have been working on the same subject. From our point of view, finally, in connection with the presentation of the 1955 budget, the Department of Defense contemplated the closing of the Fort Clayton Army hospital and the hospitalizing of military patients in the Gorgas Hospital, which, as you know, is the civilian hospital operated by the Canal Government.

The Budget, as presented to the Congress, reflects that decision and the Bureau of the Budget included funds in the appropriation of the Canal Zone to finance the care of 1,205 military patients in the Gorgas Hospital. It was also contemplated, we were told, that the Department of Defense would take some action on the Atlantic side whereby there would only be one hospital. However, we did not get a definite decision on it. We understand that the Navy will in its presentation to the Appropriations Committee affect the care of Canal Zone beneficiaries in the Navy hospital at Coco Solo. It is our view from a planning point of view that there is not a need for the continued operation of four hospitals in the Canal Zone by the Department of Defense.

HOUSE REPORT

Senator KNOWLAND. In the House of Representatives, Report No. 680 of the 83d Congress, last year, June 27, dealing with the Department of Defense appropriation bill, that subcommittee had this to say:

Recent hearings by the subcommittee handling the Canal Zone governmenta! appropriations disclosed duplication of the Federal hospital facilities in the Canal Zone. The Army and the Navy each operated hospitals there in addition to the two operated by the Canal Zone Government. More recent hearings by the Subcommittee on Armed Services confirmed this 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 feasible or the wise thing to do, but as evidence from the 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.

As you have pointed out, the matter has been under study since the close of World War II. The matter has been under consideration

by this committee and its counterpart in the House. It has been under the consideration of the Armed Services Subcommittee in both the House and the Senate. We feel that there comes a time when 7 years of study are sufficient and some action should be taken.

We want to find out precisely what action is going to be taken, and if not, we may have to proceed to make certain that the action is taken.

Mr. MCNAMARA. Senator, we feel that the budget for 1955 does make possible the closing of two hospitals there. Unfortunately, from a budgetary point of view it is difficult to force it, because, as I understand it, we have to place in both the Canal Zone appropriation and in the military appropriation the funds that would be needed to effect the hospitalization of the military patients in Gorgas.

We attempted at first not to provide the money in the Canal appropriation but to put it in the military appropriation for reimbursement to the Canal Zone, but as a technical matter we had to include it in both appropriations; that makes it possible that it would not be carried out. But we do not have a mechanism through the budgetary process to enforce it. Our view is that the Department of Defense has acted in good faith and intends to bring about the closure of one on each side. We have accepted that as a statement of good faith. Senator KNOWLAND. I want to have right at this point so we can keep the matter before us to have the Department of Defense representatives also come forward and let us explore this situation right

now.

Mr. MCNAMARA. Yes, sir.

STATEMENTS OF FRANK B. BERRY, M. D., ASSISTANT SECRETARY OF DEFENSE (HEALTH AND MEDICAL); BRIG. GEN. R. S. MOORE, OFFICE OF THE SECRETARY OF DEFENSE; AND COL. E. I. DAVIS, OFFICE OF THE ASSISTANT SECRETARY OF THE ARMY

DUPLICATION OF HOSPITAL FACILITIES

Senator KNOWLAND. You have heard the general discussion here. We would be glad to have your comments.

Mr. BERRY. I agree, and as a matter of fact, I visited Panama and was out to make a similar report 4 or 5 years ago to the Army to get an opinion, and I agree that our opinion is that one of the hospitals should be left operating on the Atlantic side and one on the Pacific side. The Colon Hospital is in very bad repair, and that leaves Coco Solo on the Atlantic side.

At the present moment the recommendations are in Secretary Floete's office studying the overall duplication of facilities in the Canal Zone, and their opinion as forwarded to us is that they should hold up the closing of Clayton, which is the smaller of the two hospitals on the Pacific side, until their overall study is completed, and then from the Army statement they are perfectly willing to go ahead with the closing of Clayton as soon as the enabling legislation is passed and the appropriation of the Military Department will be available for the reimbursement of the Canal Zone Government for the cost of providing the facilities operated by the Canal Zone Government medical care other than subsistence and dependents of military personnel.

Senator KNOWLAND. While normally I do not approve of the practice of writing legislation in an appropriation bill, nevertheless there are times when both the Congress and the committees have felt that it was reasonable and perfectly proper to do so. It may be that this committee here, its counterpart in the House, in carrying out what we think has been sufficient study for 7 years would add to whatever funds were allowed the following language:

Hereafter appropriations of the Military Department shall be available for the reimbursement of Canal Zone Government for the cost of providing facilities operated by the Canal Zone Government, medical care, other than subsistence of dependents of military personnel.

Mr. BERRY. That has been the hold-up, apparently.

Senator KNOWLAND. Rather than getting caught in a condition of suspended animation between the several departments and the legis lative committees and the Appropriation Committee, this might cut the Gordian knot and permit us to get some action on it.

Mr. BERRY. From the hospital medical standpoint the advantage of Gorgas over Clayton is that it is larger, has more bed capacity. Clayton is somewhat newer, very much newer, than the old part of Gorgas, but a separate building was built in Gorgas about 4 or 5 years ago, so they have a new section there which will hold several hundred patients in and of itself.

Senator KNOWLAND. I am not quite clear as to why the Military Establishment feels that it is necessary to delay in closing one of then. Mr. BERRY. That they went into in Mr. Floete's office, who is in charge of all the duplication of facilities and is trying to work them out. He is brand new at it. His own study of the facilities there in the Canal Zone is going on. I think Mr. McNamara and I have had the same opinion on this, and Dr. Casberg, my predecessor, on the advisability of having only two hospitals in that zone.

Senator KNOWLAND. Well, I hope that the Defense Establishment will complete its study before this committee acts in a reasonably short period of time.

General MOORE. Mr. Chairman, I might state that there is a general feeling in the Office of the Assistant Secretary of Defense, Comptroller, and many other officers in the Army and elsewhere that in the event that authority such as has been made known, read by the Chairman, to continue the treatment of all those now being treated in military hospitals that in less than 45 days this roadblock will be removed and this question definitely solved.

Senator KNOWLAND. That is the most encouraging news that has been presented to this committee in 7 years.

Mr. MCNAMARA. Could I ask the chairman if that includes also the Atlantic side?

Senator KNOWLAND. I would hope that this means if we are going to have one on the Atlantic side that we will have one on the Pacific side.

General MOORE. I think the inclusion of the language read by the chairman would definitely make a satisfactory solution possible, because it would permit the continuation of the treatment of all military persons on both sides of the canal.

Senator KNOWLAND. Of course, we are interested, as you are, in being sure that the facilities are there and that there is no legislative