For example, studies done for the Panama Canal Company, and presented to the Subcommittee in years past, indicate that tolls could be raised only 25 percent before they would begin to divert traffic from the Canal and render a toll increase counterproductive. On the other hand, when times are rough and transits are down we know that most employees will find it difficult to accept a cut in their pay in this day and age, even if it is warranted by some extraordinary circumstances. After all, these Canal employees, who have been loyal and dedicated people, are subject to the same inflation which has plagued all of us in recent years. When tolls can be increased only to a certain extent, and when employee costs cannot be greatly reduced, it is necessary to have higher levels of ship traffic to raise the revenues to make ends meet. As I understand it, the expansion of world trade has given us these levels of revenues in times past, but not in the last few years. Thus, the situation at the present time is a two-edged sword, with financial problems simultaneously cutting away at the Panama Canal shipping traffic and the Canal's employees. Because the financial problems of the Panama Canal have been one of the stated reasons for a recent proposal to freeze and restrict various wage benefits in the Canal Zone, we in the Merchant Marine Committee thought that the members and staff of the House Post Office and Civil Service Committee ought to be present at these hearings, and be given the opportunity to ask relevant questions about the personnel policies of the Canal Zone and the manner in which these policies interact with Canal finances, and with applicable Federal law. We are pleased to have some of the Post Office Committee staff with us, and I hope we have some of their Members come in, if they can get away from some of their other committee work. Our first witness, as the Chairman has mentioned, will be the Governor, and I see we have with him Mr. Steers, the financial vicepresident, Mr. Constant, the Secretary of the Panama Canal Company, and Mr. Frick, the Personnel Director. We have Assistant Secretary Veysey testifying this afternoon, and I think we need to talk to him about these proposals, and I think Mr. Veysey is going to have to answer some questions. I am sorry he could not be here this morning, so that when we started we would be able to get a picture of what the Secretary of Army is trying to do to meet the conditions of the situation we find ourselves in at the present time. With that, Mr. Chairman, I express my hope that we can get to the bottom of the problems in these hearings, and I believe we are almost going to have to form our questioning and judgments according to who is before us, what they explain, how they explain it to us, and what they add to make as clear a picture as possible of what we need to accomplish. I join the Chairman of the Subcommittee to welcome you gentlemen, and I hope that you will be as frank and clear in expressing exactly what is facing you, and what is facing all of us, as the people themselves, who believe in the deep necessity of a well-operated Panama Canal. Finally, I ask unanimous consent, Mr. Chairman, to have treaties and major documents applicable to the Panama Canal inserted in the record at this point. Thank you. [The documents mentioned follow.] BIDLACK-MALLARINO TREATY A GENERAL TREATY OF PEACE, AMITY, NAVIGATION, AND COMMERCE BETWEEN THE UNITED STATES OF AMERICA AND THE REPUBLIC OF NEW GRANADA 1 [Signed at Bogotá, December 12, 1846; ratified by New Granada, July 15, 1847; ratification advised by United States Senate, June 3, 1848; ratified by the President, June 10, 1848; ratifications exchanged at Washington, June 10, 1848; proclaimed in Washington, June 12, 1848; promulgated in Bogotá, August 16, 1948.] ARTICLE XXXV The United States of America and the Republic of New Granada desiring to make as durable as possible, the relations which are to be established between the two parties by virtue of this treaty, have declared solemnly, and do agree to the following points: 1st. For the better understanding of the preceding articles, it is, and has been stipulated, between the high contracting parties, that the citizens, vessels and merchandize of the United States shall enjoy in the ports of New Granada, including those of the part of the granadian territory generally denominated Isthmus of Panamá from its southern-most extremity until the boundary of Costa Rica, all the exemptions, privileges and immunities concerning commerce and navigation, which are now, or may hereafter be enjoyed by Granadian citizens, their vessels and merchandise; and that this equality of favours shall be made to extend to the passengers, correspondence and merchandise of the United States in their transit across the said territory, from one sea to the other. The Government of New Granada guarantees to the Government of the United States, that the right of way or transit across the Isthmus of Panamá, upon any modes of communication that now exist, or that may be, hereafter, constructed, shall be open and free to the Government and citizens of the United States, and for the transportation of any articles of produce, manufactures or merchandize, of lawful commerce, belonging to the citizens of the United States; that no other tolls or charges shall be levied or collected upon the citizens of the United States, or their said merchandise thus passing over any road or canal that may be made by the Government of New Granada, or by the authority of the same, than is under like circumstances levied upon and collected from the granadian citizens: that any lawful produce, manufactures or merchandize belonging to citizens of the United States thus passing from one sea to the other, in either direction, for the purpose of exportation to any other foreign country, shall not be liable to any import duties whatever; or having paid such duties, they shall be entitled to drawback, upon their exportation nor shall the citizens of the United States be liable to any duties, tolls, or charges of any kind to which native citizens are not subjected for thus passing the said Isthmus. And, in order to secure to themselves the tranquil and constant enjoyment of these advantages, and as an especial compensation for the said advantages and for the favours they have acquired by the 4th, 5th, and 6th articles of this Treaty, the United States guarantee positively and efficaciously to New Granada, by the present stipulation, the perfect neutrality of the before mentioned Isthmus, with the view that the free transit from the one to the other sea, may not be interrupted or embarassed in any future time while this Treaty exists; and in consequence, the United States also guarantee, in the same manner, the rights of sovereignty and property which New Granada has and possesses over the said territory. 1 Manuscript, United States Department of State, Archives. Treaty Series, No. 54. Also H. Miller, Treaties and Other International Acts of the United States of America, V. 115-43 (English and Spanish) (US); S. Doc. No. 17 (58th Cong., 1st Sess.) (English); Colombia, Codificación Nacional, XIII, 262-77 (Spanish); Colombia, Colección de tratados públicos de los Estados Unidos de Colombia. I, 38-57 (Spanish and English). L 2d. The present Treaty shall remain in full force and vigor for the term of twenty years, from the day of the exchange of the ratifications; and, from the same day, the treaty that was concluded between the United States and Colombia on the 13th of October 1824, shall cease to have effect, notwithstanding what was disposed in the 1st point of its 31st article. 3rd. Notwithstanding the foregoing, if neither party notifies to the other its intention of reforming any of, or all, the articles of this treaty twelve months before the expiration of the twenty years, stipulated above, the said treaty shall continue binding on both parties, beyond the said twenty years, until twelve months from the time that one of the parties notifies its intention of proceeding to a reform. 4th. If any one or more of the citizens of either party shall infringe any of the articles of this treaty, such citizens shall be held personally responsible for the same, and the harmony and good correspondence between the nations shall not be interrupted thereby; each party engaging in no way to protect the offender, or sanction such violation. 5th. If, unfortunately, any of the articles contained in this treaty should be violated or infringed in any way whatever, it is expressly stipulated that neither of the two contracting parties shall ordain or authorize any acts of reprisal, nor shall declare war against the other on complaints of injuries or damages, until the said partly considering itself offended shall have laid before the other a statement of such injuries or damages, verified by competent proofs, demanding justice and satisfaction, and the same shall have been denied, in violation of the laws and of international right. 6th. Any special or remarkable advantage that one or the other power may enjoy, from the foregoing stipulations, are and ought to be always understood in virtue, and as in compensation of the obligations they have just contracted, and which have been specified in the first number of this article. HAY-PAUNCEFOTE TREATY1 TREATY BETWEEN THE UNITED STATES AND GREAT BRITAIN TO FACILITATE [Signed at Washington, November 18, 1901; ratification advised by the United States Senate, December 16, 1901; ratified by the President, December 26, 1901; ratified by Great Britain, January 20, 1902; ratifications exchanged at Washington, February 21, 1902; proclaimed at Washington, February 22, 1902.] [I. Convention of April 19, 1850. II. Construction of canal. III. Rules of neutralization. IV. Change of sovereignty. V. Ratification.] [ARTICLES] THE UNITED STATES OF AMERICA and HIS MAJESTY EDWARD THE SEVENTH, of the United Kingdom of Great Britain and Ireland, and of the British Dominions beyond the Seas, King, and Emperor of India, being desirous to facilitate the construction of a ship canal to connect the Atlantic and Pacific Oceans, by whatever route may be considered expedient, and to that end to remove any objection which may arise out of the Convention of the 19th April, 1850, commonly called the Clayton-Bulwer Treaty, to the construction of such canal under the auspices of the Government of the United States, without impairing the "general principle" of neutralization established in Article VIII of that Convention have for that purpose appointed as their Plenipotentiaries: The President of the United States, JOHN HAY, Secretary of State of the United States of America; And His Majesty Edward the Seventh, of the United Kingdom of Great Britain and Ireland, and of the British Dominions beyond the Seas, King, and Emperor of India, the Right Honourable LORD PAUNCEFOTE, G.C.B., G.C.M.G., 1 Manuscript. United States Department of State, Archives, Treaty Series No. 401. Also S. Doc. No. 474 (63d Cong., 2d Sess.), pp. 292-94; W. M. Malloy, op. cit., I, 782-84 (US). His Majesty's Ambassador Extraordinary and Plenipotentiary to the United States; Who, having communicated to each other their full powers which were found to be in due and proper form, have agreed upon the following Articles: ARTICLE I The High Contracting Parties agree that the present Treaty shall supersede the afore-mentioned Convention of the 19th April, 1850. ARTICLE II It is agreed that the canal may be constructed under the auspices of the Government of the United States, either directly at its own cost, or by gift or loan of money to individuals or Corporations, or through subscription to or purchase of stock or shares, and that, subject to the provisions of the present Treaty, the said Government shall have and enjoy all the rights incident to such construction, as well as the exclusive right of providing for the regulation and management of the canal. ARTICLE III The United States adopts, as the basis of the neutralization of such ship canal, the following Rules, substantially as embodied in the Convention of Constantinople, signed the 28th of October, 1888, for the free navigation of the Suez Canal, that is to say: 1. The canal shall be free and open to the vessels of commerce and of war of all nations observing these Rules, on terms of entire equality, so that there shall be no discrimination against any such nation, or its citizen or subjects in respect of the conditions or charges of traffic, or otherwise. Such conditions and charges of traffic shall be just and equitable. 2. The canal shall never be blockaded, nor shall any right of war be exercised nor any act of hostility be committed within it. The United States, however, shall be at liberty to maintain such military police along the canal as may be necessary to protect it against lawlessness and disorder. 3. Vessels of war of a belligernt shall not revictual nor take any stores in the canal except so far as may be strictly necessary; and the transit of such vessels through the canal shall be effected with the least possible delay in acordance with the Regulations in force, and with only such intermission as may result from the necessities of the service. Prizes shall be in all respects subject to the same Rules as vessels of war of the belligerents. 4. No belligerent shall embark or disembark troops, munitions of war, or warlike materials in the canal, except in case of accidental hindrance of the transit, and in such case the transit shall be resumed with all possible dispatch. 5. The provisions of this Article shall apply to waters adjacent to the canal, within 3 marine miles of either end. Vessels of war of a belligerent shall not remain in such waters longer than twenty-four hours at any one time, except in case of distress, and in such case shall depart as soon as possible; but a vessel of war of one belligerent shall not depart within twenty-four hours from the departure of a vessel of war of the other belligerent. 6. The plant, establishments, buildings, and all works necessary to the construction, maintenance, and operation of the canal shall be deemed to be part thereof, for the purposes of this Treaty, and in time of war, as in time of peace, shall enjoy complete immunity from attack or injury by belligerents, and from acts calculated to impair their usefulness as part of the canal. ARTICE IV It is agreed that no change of territorial sovereignty or of the international relations of the country or countries traversed by the before-mentioned canal shall affect the general principle of neutralization or the obligation of the High Contracting Parties under the present Treaty. ARTICLE V The present Treaty shall be ratified by the President of the United States, by and with the advice and consent of the Senate thereof, and by His Britannic Majesty; and the ratifications shall be exchanged at Washington or at London at the earliest possible time within six months from the date hereof. IN FAITH WHEREOF the respective Plenipotentiaries have signed this Treaty and thereunto affixed their seals. DONE in duplicate at Washington, the 18th day of November, in the year of Our Lord one thousand nine hundred and one. JOHN HAY. [SEAL] HAY-BUNAU-VARILLA TREATY1 CONVENTION BETWEEN THE UNITED STATES OF AMERICA AND THE FOR THE CONSTRUCTION OF A SHIP CANAL TO CONNECT THE WATERS OF THE [Signed at Washington, November 18, 1903; ratified by Panamá, December 2, 1903; ratification advised by United States Senate, February 23, 1904; ratified by the President, February 25, 1904; ratifications exchanged at Washington, February 26, 1904; proclaimed at Washington, February 26, 1904.] XX. Cancellation of existing treaties. XXI. Anterior debts, concessions, etc. XXII. Renunciation of rights under concessionary contracts. XXIII. Protection of canal. XXIV. Change in government, laws, etc. XXV. Coaling stations. XXVI. Ratification.] ISTHMIAN CANAL CONVENTION The United States of America and the Republic of Panama being desirous to insure the construction of a ship canal across the Isthmus of Panama to connect the Atlantic and Pacific oceans, and the Congress of the United States of America having passed an act approved June 28, 1902, in furtherance of that object, by which the President of the United States is authorized to acquire within a reasonable time the control of the necessary territory of the Republic of Colombia, and the sovereignty of such territory being actually vested in the Republic of Panama, the high contracting parties have resolved for that purpose to conclude a convention and have accordingly appointed as their plenipotentiaries, The President of the United States of America, JOHN HAY, Secretary of State, and 1 Manuscript, United States Department of State, Archives, Treaty Series, No. 431. Also S. Doc. No. 474 (63d Cong., 2d Sess.), pp. 292-94; W. M. Malloy, op. cit., I, 782-84 Malloy, op. cit., II, 1349-57. |