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MARINE TERMINAL CONFERENCE
International Trade Moor Building , P. O. Box 60046 / Now Orleans, La 70:60
WEDNESDAY, SEPTEMBER 28, 1977
NEW ORLEANS, LOUISIANA
WARDS. REED hairman W. HERBERT ice-Chairman E. POMEROY rcretary-Treaswer C. GUTDRY 'xecutive Secrelary, Legal Advisor
To: THE PRESIDENT OF THE UNITED STATES
THE MEMBERS OF THE CONGRE6S, AND THE SECHETARY OF COMERGE
MR. PRESIDENT, CONGRESSMEN AND MADAME SECRETARY:
THE MEMBERS OF THE MID-GULF SEAPORTS MARINE TERMINAL CONFERENCE
WHOSE FACILITIES HANDLE ANNUALLY OVER
13,600 OCEAN-GOING VESSELS
ENGAGED IN INTERNATIONAL TRADE AND COMMERCE MOST STRONGLY URGE AND
REQUEST THAT THE PANAMA CANAL TREATY NOT BE RATIFIED UNTIL AND UNLESS
PROVISIONS ARE MADE TO LIMIT TOLLS AND CHARGES AT THE PANAMA CANAL
TO THAT LEVEL NEEDED TO DEFRAY OPERATING, MAINTENANCE AND CAPITAL
COSTS OF SAID FACILITY, AND THAT THE MARITIME TRADE AND COMMERCE OF
THE UNITED STATES OF AMERICA NOT BE BURDENED WITH THE COSTS OF INTER
NATIONAL DIPLOMACY, EXPENSES THAT ARE COMPLETELY UNRELATED TO THE
ECONOMIC COST OF PROVIDING CROSS-ISTHMUS PASSAGE OF VESSELS AND
THE COSTS OF PAYMENTS TO THE GOVERNMENT OF THE REPUBLIC
OF PANAMA, IF MET BY INCREASED PANAMA CANAL TOLLS, MAY WELL RESULT
IN DECREASED USE WITH A RESULTANT DECREASE IN TOTAL CANAL REVENUES
AS WELL AS BURDENING SPECIFIC AMERICAN EXPORTS, ESPECIALLY GRAIN
AND MACHINERY MOVING TO THE FAR EASTERN, ASIATIC AND PACIFIC
NATIONS, TO SUCH AN EXTENT AS TO PRICE THEM OUT OF WORLD COMPETITION
SOURCE OF FOREIGN EXCHANGE AND INCOME SO VITAL TO A FAVORABLE
BATON ROUGE / BEAUMONT I GALVESTON I GU'LFPORT I HOUSTON I LAKE CHARLES / MOBILE I NEW ORLEANS I ORANGE SEPTEMBER 28, 1977
THE PRESIDENT OF THE UNITED STATES, THE MEMBERS OF THE COGRESS
MR. PRESIDENT & COIGRESSMEN:
THE GULF PORTS ASSOCIATION, AN ORGANIZATION REPRESENTING THE
PUBLIC DEEPHATER PORTS OF THE STATES OF ALABAMA, FLORIDA, LOUISIANA,
AND TEXAS THROUGH WHOSE FACILITIES OVER ONE-HALF OF ALL GRAIN
EXPORTS FROM THIS UNITED STATES MOVE AND THROUGH WHOSE PONTS SOME 37.8%
OF ALL U.S. CARGOES MOVE IN INTERNATIONAL TRADE AND COMMERCE, SINCERELY AN:77
VIGOROUSLY URGE THAT THE PANAMA CANAL TREATY NOT BE RATIFIED AND BECOME
EFFECTIVE UNLESS AND UNTIL REALISTIC, EFFECTIVE AND CONTROLLABLE SAFEGUARDS
ARE EFFECTED TO ASSURE FAIR, EQUITABLE AND ECONOMICALLY REALISTIC CANAL
TOLLS, RATES DIRECTLY RELATED TO THE OPERATION AND MAINTENANCE OF THE CANAL,
AND NOT INCLUDING THE COST OF INTERNA ITONAL DIPLOMACY.
TO BURDEN THE CARGOS
AND VESSELS TRANSVERSIG THE CANAL WITH THE ADDITIONAL AND VERY SUBSTANTIAL
NON-OPERATIONS COSTS OF PAYMENTS TO THE GOVERNMENT OF THE REPUBLIC OF PAHIUMA
CAN HAVE AN EY. TRE-ELY ADVERSE EFFECT ON NOT ONLY THE CANAL MOVEMENTS, BUT
CAN WELL PRICE CERTAIN U.S. EXPORTS WHICH CAN NOT ECONOMICALLY UTILIZE
OTHER .ROUTINGS OUT OF WORLD COMERCE.
THE EFFECT ON ALL OF THE UNITED STATES
POPIS LOCATED ON THE GULF OF MEXICO COULD BE DRAMATICALLY DETRIMENTAL UNLESS
RATES AND TOLLS ARE MAINTAINED AT A LEVEL COM ENSURATE WITH THE COSTS OF
ROBERT C. EIGRAM, PRESIDENT
Senator ALLEN. Our next witness is Mr. Karl R. Bendetsen. We are delighted to have Mr. Bendetsen appear as a witness. He is one of the mos. knowledgeable persons in the country on the history of the Panama Canal, on the history of the various treaties that we have had with Panama, and on the actual operation of the Panama Canal. Under President Truman he was Under Secretary of the Army and had direct control over the operation of the canal from his post as Chairman of the Board of the Panama Canal Company which of course is responsible for the actual operation of the canal.
Mr. Bendetsen has prepared a remarkable statement here which I think should be required reading for all persons in the country who are interested in this question.
There is so much lack of knowledge about the Panama Canal and the treaties regarding the canal and the manner in which the canal came into existence that if every person in the country who is interested in the Panama Canal could read Mr. Bendetsen's statement, then each would certainly have a good working knowledge of just what the situation is.
Both of these statements today will be part of these hearings in book form. We certainly want to see them made available to as many members of the American public as possible.
We look forward to viewing the testimony of Mr. Bendetsen.
We do have time constraints. I would suggest that if it is satisfactory to you, Mr. Bende-sen, that you give a summary of your overall statement with the understanding, of course, that your full statement will be made a part of the record. This would be on account of the time constraints that we have.
Under the Senate rules our committee can meet only for 2 hours after the Senate goes into session. Inasmuch as it went into session at 9 o'clock this morning the rule would require us to conclude our testimony at 11 o'clock.
So, I would like for you to handle matters as you see fit within those time limitations.
TESTIMONY OF KARL R. BENDETSEN, FORMER UNDER SECRETARY OF THE ARMY AND CHAIRMAN OF THE BOARD OF THE PANAMA CANAL COMPANY
Mr. BENDETSEN. Mr. Chairman and Senator Laxalt, I thank you for the complimentary sentiments you have expressed. It is, of course, satisfactory to me to proceed with the convenience of the committee in mind. I have my extended statement here which if need be I can make available.
Senator ALLEN. That will be put in the record exactly as prepared.
Mr. BENDETSEN. I will depart from the extended statement and I shall undertake to condense my remarks. There may be time, perhaps, for some discussion.
My first introduction to the canal and the Panama Railroad Company was under the act of 1950, September 26, in which the entire structure was changed. The Congress created the Panama Canal Company, a New York corporation, known as the Panama Railroad Company was merged into it.
All the municipal and governmental functions were separated, and the commercial and utility functions, and the power and the responsibility of ratemaking was vested in the Panama Canal Company.
The concept of the 1914 act was changed in that the 1950 act created a Board of Directors under a Chairman. The President of the Company became the general manager of all utility and commercial operations. Ex-officio, the Governor of the Canal Zone is the President of the Panama Canal Company. In his capacity as President he reported to the Chairman. His governmental role, on the one hand, and his role as president of an extensive and complex public utility company are separate and not commingled.
I held the position of Chairman for approximately 5 years although I resigned as Under Secretary of the Army in October 1952. I was asked to remain. This request was repeated by President Eisenhower.
When the undertakings I had accepted in private life and those involving the chairmanship came into conflict in the sense that there was not time to do both, I submitted my resignation. The chairmanship carried with it no compensation.
There has been a great deal of rather outrageous propaganda to the effect that the treaty of 1903 was somehow wrested under pressure, duress and force from the fledgling Panamanian Republic. This is nonsense. No force, duress or pressure was ever applied. The conspirators of the Province of Panama-a Province of Colombia-decided that in their own self-interest when the Colombian Senate declined to ratify the treaty which had been negotiated by Secretary Hay with Ambassador Herran of Colombia that they would secede from Colombia and attempt by all means to get the canal for Panama. These people knew that otherwise the canal would be in Nicaragua because the Spooner Act endowed the President of the United States with the authority and the power to negotiate, either with Colombia for a canal at Panama, or with Nicaragua under certain terms and conditions all of which were well known to the entire world—the world was deeply interested-well known to Latin America. It was not a secret that the Spooner Act made clear that the President was directed to negotiate to secure U.S. territory.
Then President Roosevelt was required to obtain territory, soil of the United States, not a colony but an area solely under U.S. sovereignty and control. This was known to the Colombians, to the conspirators of Panama, and to Nicaragua. The treaty that was then negotiated provided for this.
Senator ALLEN. Excuse me just a moment. We seem to be operating in a different fashion now. In those days the President proceeded only under the authorization and direction of the Congress. Procedures have certainly changed.
As it now is our negotiators have entered into this treaty without any authorization from Congress whatsoever.
We understand from the administration that they do not even plan to submit this treaty disposing of American property to the House of Representatives as required by article IV, section 3 of the U.S. Constitution.
Mr. BENDETSEN. The contrast is exactly as you expressed it, Mr. Chairman. The chasm between the two treaty events is so broad as to be unbridgeable.
The President did negotiate pursuant to a specific act of Congress. As you may know, the sentiment of the United States and in the Congress was in favor of Nicaragua as a site for the canal. Although the total distance from the Caribbean shore to the Pacific shore in Nicaragua is broader by a good many miles than the narrow neck of the isthmus in Panama where the canal lies, the actual land bridge is narrower because the San Juan River and Lake Nicaragua together form a ready made waterway across the major part of that distance. Only a very narrow neck of land would have to be channeled either for a lock canal or a sea level canal.
The geology of Nicaragua is dramatically different from that in Panama. It is much more favorable for excavation. This aspect has not been frequently discussed during the Senate hearings insofar as I know, although the unfavorable Panama geology underlay the French collapse. The geology in Panama is so intractable and so uniquely fractured and so laden with clays so treacherous in character in the 6 months of the rainy season in each year any excavation slides away and the excavation virtually disappears.
In Nicaragua the geology was different and favorable. The Congress knew that. The peoples of the United States knew that. The Panamanian conspirators knew that. They were desperate to obtain the 1903 treaty.
The reason for the Spooner Act giving an alternative with the Panamanian choice being first was because it was believed that the French infrastructure would be useful. But Panama is only one of seven routes across the isthmus which runs from Tehuantepec, Mexico, down through to the border of Colombia. The isthmus is not Panamanian. It is Central America that constitutes the isthmus.
The reason for placing Panama in the Spooner Act at all was that there was some infrastructure there which was thought to be quite useful although the equipment proved to be utterly unsuitable, as it turned out. It was thought the United States would get a head start and all concerned were anxious for that.
So the attempt was first made with Colombia.
The proposed treaty was very suitable. It satisfied the Spooner Act. Communications between Washington and Bogota were difficult. It took 3 weeks to travel from Washington to Bogota. The cable connections were a sometime thing. Washington did not really understand why the Colombian Senate was stalling—because of poor communications.
The real reason why the senate did not ratify in Colombia—and I think this background is important for my next point—was because this was not realized in Washington that the French corporation or the “New Company," which had been created in order to salvage something out of the wreckage of the great de Lesseps failure and was