and other costs, the total investment approaches $6 billion-not to mention the cost in human life. d. Fees currently being paid to Panama are an annuity which was derived from an original railroad agreement with the Republic of New Granada (now Colombia) and have been adjusted to reflect the current $2,095,000 per year. e. This annuity plus other direct benefits from the Canal amounts to some $236,900,000 to Panama per year. f. In 1907 the U.S. Supreme Court reaffirmed the validity of U.S. ownership of the Canal. Wilson vs Shaw, 204, US 24, at 30-35. In view of this evidence, renegotiation of the Canal Zone Treaty is as senseless as it would be to reopen the Louisiana or Alaskan purchases. Furthermore, the Canal is vital to our economy (70% of all Canal traffic originates and terminates in the U.S.) and balance of payments, not to mention its critical part in National and Hemispheric Defense. We must also point out the inconsistencies regarding the current attitude toward dictatorships. Evidently the anti-Communists (Spain, Chile) are to be ostracized, whereas pro-Communist Cuba and Panama are acceptable. Dictator Omar Torrijos of Panama has purportedly signed an arms agreement with Communist Cuba for the purchase of Russian war materials. He has openly asserted his threat-"If the people of Panama decide to invade the Canal Zone, I can either crush them or lead them-and I am not going to crush them". Do we suppose that appeasement will satisfy the Communist appetite for acquisition and coercion? Are we so naive as to believe that we would receive equitable treatment from Dictator Torrijos if we relinquish the Canal Zone? We are still a sovereign Nation, the Canal Zone is sovereign U.S. territory and only the Congress is empowered to dispose of U.S. property according to Article IV, Section 3 (2) of our Constitution. Any agreements designed to dispose of this property without due process of law are therefore illegal and automatically become null and void. We strongly urge your Committee to reject any and all considerations that would result in diminishment or loss of U.S. Canal Zone sovereignity. HON. RALPH METCALFE, THE SEAFARERS INTERNATIONAL UNION, Chairman, Subcommittee on the Panama Canal, DEAR MR. CHAIRMAN: The Seafarers International Union of North America, AFL-CIO, has a deep interest in the recent oversight hearings held by your subcommittee on the financial practices and operations of the Panama Canal Company and the Canal Zone government. We are particularly concerned over the Company's fiscal policies which have necessitated increase in the Panama Canal's toll structure to the detriment of the domestic U.S.-flag intercoastal fleet. In this regard, the Seafarers International Union supports the enactment of H.R. 12641, legislation which provides for the deferment of interest payments by the Canal Company to the U.S. Treasury on the Government's net direct investment in the Canal. Additionally, H.R. 12641 would allow the Company's substantial cash deposits with the Treasury to earn interest. This earned interest could be used by the Company to offset its interest payments due on the Government's net investment. The Seafarers Union is confident that this legislation will help the Panama Canal Company alleviate its present fiscal difficulties without having to impose counter-productive toll increases that have failed to stem its deficits. Following the last two toll increases imposed by the Canal Company there was a decline in the number of vessel transits. A further toll increase cannot but continue this harmful trend, making the burden even greater for the remaining vessels using the Canal. We are certain that it will make it extremely difficult, if not untenable, for our domestic intercoastal fleet to continue viable operations. We also feel that the Canal rate structure is weighted against certain types of vessels, particularly containerships. Compared to other types of vessels, containerships are forced to pay a far higher toll per long ton. Presently containerships are the primary vessel engaged in the U.S.-intercoastal trades. For example, recently adopted measurement rule interpretations now include "the underdeck space not used or useable for carrying cargo and thus not part of the 'actual earning capacity of the vessel' under section 412(a) of Title II of the Canal Zone Code." This section requires that rules reflect the "actual earning capacity". In a typical container vessel only 60 percent of the belowdeck hold space can carry cargo. As a result of the new interpretation, an average bulk carrier pays 71 cents per long ton in tolls, a tanker 64 cents, a general cargo vessel $1.14 and containerships $2.13 per long ton. Any further toll increases will exaccerbate the disparity in the rates charged container vessels and will definitely divert much of the waterborne intercoastal container cargoes to the competing land modes. In short, the aPnama Canal Company by seeking further toll increases is adopting a policy of diminishing returns-substantially diminished returns. The end result of this policy would be a disaster for the Canal and the U.S. intercoastal fleet. Parenthetically, in view of the Panama Canal Company's continuously increasing expenses, we fail to understand why the Company continues to operate the "SS Cristobal". This 40-year-old vessel, transporting approximately 100,000 tons of cargo a year at an estimated cost of $65 per ton, is an unjustified and unnecessary expense to the Panama Canal Company. The operations of the "Cristobal" are extremely inefficient. Since it only serves the port of New Orleans, all its cargoes must be sent to New Orleans from points throughout the United States. This wasteful and expensive procedure further increases the operational costs of the "Cristobal". The Canal Zone is already well served by commercial U.S.-flag shipping, operating from many American ports. These vessels can provide the same service that the "Cristobal" does at lower cost and at greater frequency and thus should be utilized by the Canal Company. The Seafarers Union urges the adoption of these measures so that the Panama Canal Company will have the degree of financial stability needed to insure its continued efficient operation of the Canal to the benefit of world shipping. Sincerely, PAUL HALL, PREPARED STATEMENT OF AMERICAN FEDERATION OF TEACHERS, AFL-CIO Madame Chairman and Members of the Committee: Canal Zone teachers, members of American Federation of Teachers Local 29, have had serious grievances for a number of years, problems that we believe have not been sufficiently aired at Congressional committees such as yours or by other investigative bodies. We appreciate, therefore, this opportunity to mention briefly a few matters of special concern to Canal Zone teachers. One of the major concerns of U.S. teachers regarding the proposed merger of U.S. and Latin-American schools is that it will ultimately open the gates for the Panama Canal Company to place teachers on the Department of Defense pay base. If the merger is implemented, we urge writen assurances by your committee that Canal Zone teachers will remain on the District of Columbia pay base and not convert to the Department of Defense program. A long-standing grievance of Canal Zone teachers is that when our counterparts in the District of Columbia received any benefits other than salary, benefits such as adequate compensation for extra-curricular duties, personal leave, and increased days for sick-leave, Canal Zone teachers did not receive them at the time of implementation in the District of Columbia. For instance, District of Columbia teachers were granted unlimited accumulation of days for sick-leave and were given three (3) days of personal leave per year in 1967. They have, since that date, also received increases for extra-duty pay. But when Canal Zone teachers repeatedly asked for similar benefits, they were not granted at the time of implementation in Washington. Since 1967, Canal Zone teachers requested a "personal leave policy" similar to that in Washington and repeatedly asked for an increase in the total days allowed for sick-leave, our maximum then of sixty (60) days representing assuredly one of the weakest programs throughout the government service, as well as those applied to the private sectors. Many of these benefits, so long a part of the District of Columbia system, have yet to be implemented in the Canal Zone, whereas others were not granted until 1974, and then only as an apparent attempt to make an increased school year seem more palatable to our teachers. One reason for believing that collective bargaining must be applied in some form in the Canal Zone is that we are presently under a policy of consultation, which has been capriciously administered and which, even at best, is considered unworkable by labor organizations throughout the Canal Zone and U.S. In fact, we in the Canal Zone do not even have the right of binding arbitration. That is, Federal mediators have come to the Canal Zone and, in many of those instances in which the mediators found in favor of labor, the decisions were overruled by the Personnel Director, the Lieutenant Governor, or the Governor. We can remember no instance in which teacher input at the consultative process had any real influence in the directive already announced or intended by the superintendent of schools or his superiors. American Federation of Teachers Local 29 should now like to comment on what Canal Zone teachers regard as the major cause for low morale in our school system, namely a decision made by the Schools Division in 1973 to increase the Canal Zone school year from nine (9) months to nine (9) months and tea (10) days. This decision forced the Canal Zone teacher, probably the only U.S. worker so affected, to accept what amounted to pay reduction, not to mention the additional days of work. Certainly another means by which Canal Zone teachers were adversely affected by this high-handed decision was that it prevented Canal Zone teachers, already isolated from the educational opportunities afforded teachers in the U.S., from taking a complete summer school program. Schools Division, in trumpeting the need for the increased school year, pointed repeatedly to the 1971-74 contract between the District of Columbia Board of Education and the District of Columbia teachers and overstated the true situation. That is, residents of the Canal Zone were led to believe that the Zone school year, to be in line with the District of Columbia school year, must be expanded to 186 days for the Canal Zone teachers. How misleading this really was! First, the District of Columbia contract does not state "186 days," but rather than District of Columbia teachers work "no more than 186 days." But the main point we wish to make is that, even before the Canal Zone school year was extended, Canal Zone teachers were working approximately 12% more hours per year than their District of Columbia counterparts. Moreover, District of Columbia teachers received five (5) preparation periods per week, and the Canal Zone teachers received only four (4). The District of Columbia teachers were working from 8:45 AM to 3:15 PM for 182 days for a total of 1,183 hours per year. This meant that the Canal Zone teachers were working 144.5 more hours per year, working from 7:15 AM to 2:45 PM for 177 days for a total of 1,327.5 hours per year. Why then the audacious proposal to extend the Canal Zone school year? Yet this is precisely what the Schools Division did in spite of a recommendation to the contrary by the Governor's Ad Hoc Commitee on Education, no members of which were teachers or school administrators. A majority of Canal Zone residents polled by the Ad Hoc Committee opposed the extension of the Canal Zone school year. Latin American teachers were not even consulted! Since the extension of the school year in the Canal Zone, the Canal Zone teachers are currently working approximately 13% more hours per year than their District of Columbia counterparts. The District of Columbia teachers are still working 1,183 hours per year (8:45 AM to 3:15 PM for 182 days per year), but the Canal Zone teachers are now working 1,334 hours per year (7:30 AM to 2:45 PM for 184 days per year), an excess of 151 hours per year. Until this matter of the school year is resolved equitably it will continue to be a friction point with Canal Zone teachers and will continue to add a divisive note in their relationships with school administrators. We urge a Congressional fact-finding investigation be initiated as soon as possible. As one of the largest affiliates, the American Federation of Teachers Local 29 agrees with the Canal Zone Central Labor Union and Metal Trades Council on the following: (1) the necessity for some form of collective bargaining; (2) implementation of the Governor's Memorandum of Understanding of March 20, 1976, with respect to the wage base proposals and implementation of Executive Order 11491, as amended; or some other form of collective bargaining acceptable to U.S. workers in the Canal Zone; and (3) improved housing for bachelors, a problem long ignored in the Canal Zone; and (4) the retention of the US citizenship requirement for teachers of US children in the Canal Zone. except in the cases of foreign language teachers or teachers of local cultures, as presently required in the US schools in the Canal Zone and all other overseas schools operated by the US Govt. The wage freezes and other proposed austerity measures, as indicated in Business Week of March 29, 1976, seem petty and misguided, in particular the elimination of Coco Solo Hospital, per se, a facility serving some 25,000 American and Panamanian residents, and the only Canal Zone hospital on the Atlantic side of the Isthmus. Budget cuts in the Schools Division of approximately 80% seem inordinate, especially in respect to library materials and classroom supplies. For example, at Balboa High School the library budget has been cut from $10,000 per annum to $2,000 per annum. These measures, both mean and self-defeating, would, as Business Week notes, not even make a dent in the annual deficit the Canal Zone presently faces. Finally, we must add that officials of American Federaltion of Teachers Local 29 share with many other Canal Zone Labor leaders the belief that members of the Department of State and the Department of the Army have for months been initiating programs throughout the Canal Zone which not only subvert the Constitutional powers granted only to Congress, but have as their purpose the gradual implementation of treaty decisions by Executive decree, which again, if the evidence we have seen is correct, violates the Constitution of the United States. We believe that residents in the Canal Zone are, by and large, a very decent people. If the Assistant Secretary of the Army, Victor Veysey, as alleged, referred to us as "gutless sheep", we contend that he and others saw decency and incorrectly interpreted this decency as gutlessness. We therefore urge that members of your committee initiate a Congressional investigation, both intensive and extensive, of the Panama Canal Company and its relationship with the Department of the Army and the Department of State. And on behalf of all our teachers, we do appreciate this opportunity to express our views. Thank you. Respectfully submitted. KENNETH HANNAH, President. ROY HOWELL, Vice-President. CHARLES WALL, Chairman of Building Representatives. RALPH O. SHEPPARD, Vice President [Whereupon, at 4:37 p.m. the subcommittee adjourned, subject to the call of the Chair.] о |