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TUESDAY, MAY 16, 1939



Washington, D. C.

The committee met, pursuant to call, in the committee room, (Capitol) at 10:30 a. m., Senator Bennett Champ Clark, presiding. Present: Senators Clark (chairman), Hayden, Pepper, Ellender, Downey, Stewart, Bridges, and Lodge.

The committee had under consideration S. 127, providing for the construction, maintenance, and operation of an interoceanic canal over Nicaraguan territory; and S. 2229, providing for the construction of additional facilities and increasing the capacity of the Panama Canal.

(Said S. 127 and S. 2229, respectively, are here printed in full, as follows:)

[S. 127, 76th Cong., 1st sess.]

A BILL Authorizing negotiations and providing for the construction, maintenance. and operation of an interoceanic canal over Nicaraguan territory, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Government of Nicaragua having by treaty with the Government of the United States signed at Washington on August 5, 1914, and duly ratified as required by the laws of both of said Governments and proclaimed June 24, 1916, granted in perpetuity to the Government of the United States, forever free from taxation, or other public charge the exclusive proprietary rights necessary and convenient for the construction, operation, and maintenance of an interoceanic canal, by way of the San Juan River and the great lake of Nicaragua, or by way of any route over Nicaraguan territory, the details of the terms upon which such canal shall be constructed, operated, and maintained to be agreed to by the two Governments whenever the Government of the United States shall notify the Government of Nicaragua of its desire or intention to construct such canal, the President of the United States is hereby authorized, empowered, and directed to notify the Government of Nicaragua of its desire and intention to construct such canal and to agree upon the details of the terms under which such canal shall be constructed, operated, and maintained.

SEC. 2. The Senate of the United States having, in its ratification of the treaty with Nicaragua, as aforesaid, inserted the words: "It is declared by the Senate that in advising and consenting to the ratification of the said convention as amended such advice and consent are given with the understanding, to be expressed as a part of the instrument of ratification, that nothing in said convention is intended to affect any existing right of any of the said named States," namely, Costa Rica, Salvador, and Honduras, the President is authorized and directed to enter into negotiations with said States and determine whether they, or any of them, have any interest in such proposed canal.

SEC. 3. In any agreement made with the Republics of Nicaragua or Costa Rica the President is hereby authorized to guarantee to said Republic or Republics the use of said canal and harbors, upon such terms as may be agreed upon, for 1

all vessels owned by said Republic or Republics, or by citizens thereof, such agreements, however, to be confirmed by the Senate as in ordinary cases.

SEC. 4. As soon as the details of the terms upon which said Nicaraguan canal shall be constructed, operated, and maintained are agreed upon by said Governments and as soon as the surveys heretofore ordered by a joint resolution of the Congress shall have been completed and a report thereof made to the Congress, the President is authorized to proceed with the building of such canal.

In the excavation and construction of such canal the San Juan River and Lake Nicaragua, or such parts of each as may be made available, shall be used.

SEC. 5. The President shall direct the Nicaraguan Canal Commission, hereinafter authorized, to cause to be excavated, constructed, completed, and perpetually maintained a sea-level ship canal connecting the Caribbean Sea with the Pacific Ocean by what is commonly known as the Nicaraguan route from a point on the shore of the Caribbean Sea near Greytown, by way of Lake Nicaragua, to a point near Brito on the Pacific Ocean. Such canal shall be of sufficient capacity to accommodate vessels of the greatest tonnage and draft now in use and such as may be reasonably anticipated, and shall be supplied with all necessary appliances to meet the necessities of vessels passing through the same from ocean to ocean; and he shall also construct such safe and commodious harbors at the termini of such canal as shall be necessary for the safe and convenient use thereof, and shall make such provisions for defense as may be necessary for the safety and protection of such harbors and canal.

SEC. 6. To enable the President to carry out the provisions of this act there is hereby created the Nicaraguan Canal Commission, the same to be composed of five members who shall be nominated and appointed by the President, by and with the advice and consent of the Senate, and who shall serve until the completion of such canal unless sooner removed by the President, and one of whom shall be named as the chairman of said Commission. At least three of them shall be persons learned and skilled in the science of engineering, and at least one of them shall be an officer of the United States Army, and at least one of them shall be an officer of the United States Navy, the said officer being either on the active or the retired list of the Army or Navy. Said commissioners shall each receive as compensation $12,000 per year: Provided, That in the case of Army and Navy officers said compensations shall be in lieu of their pay as officers. In addition to the members of said Nicaraguan Canal Commission, the President is hereby authorized to employ in said service any engineers in civil life, at his discretion, and any other persons necessary for the proper and expeditious prosecution of said work. The compensation of all such engineers and other persons employed under this Act shall be fixed by the Commission, subject to the approval of the President. Said Commission shall in all matters be subject to the direction and control of the President, and shall make to the President annually and at such periods as may be required by order of the President full and complete reports of all their acts and doings, and of all moneys received and expended in the construction of said work and in the performance of their duties in connection therewith, which said reports shall be by the President transmitted to the Congress. The said Commission shall give such information as may at any time be required by Act of Congress or by order of either House of Congress. The President shall cause to be provided and assigned for the use of the Commission such offices as may, with the suitable equipment of the same, be necessary and proper, in his discretion, for the proper discharge of the duties thereof.

SEC. 7. There is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, such sums as may be necessary to make any payments which may be agreed upon by treaty as compensation for the concessions and rights acquired by the United States in connection with such canal and such sums as may be necessary to carry out the other provisions of this Act.

SEC. 8. The Secretary of the Treasury is hereby authorized to borrow on the credit of the United States from time to time, as the proceeds may be required to defray expenditures authorized by this Act (such proceeds when received to be used only for the purpose of meeting such expenditures), the sum of $200,000,000, or so much thereof as may be necessary, and to prepare and issue therefor coupon or registered bonds of the United States in such form as he may prescribe, and in denominations of $20 or some multiple of that sum, redeemable in lawful currency of the United States at the pleasure of the United States after ten years from the date of their issue, and payable thirty years from such date: Provided, That said bonds may be disposed of by the Secretary of the

Treasury at not less than par, under such regulations as he may prescribe, giving to all citizens of the United States an equal opportunity to subscribe therefor, but no commissions shall be allowed or paid thereon; and a sum not exceeding one-tenth of 1 per centum of the amount of the bonds herein authorized is hereby appropriated, out of any money in the Treasury not otherwise appropriated, to pay the expense of preparing, advertising, and issuing the


[S. 2229, 76th Cong., 1st sess.]

A BILL Authorizing and providing for the construction of additional facilities on the Canal Zone for the purposes of more adequately providing for the defense of the Panama Canal and for increasing its capacity for the future needs of interoceanic shipping

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the improvement and enlargement of the capacity of the Panama Canal in the interests of defense and interoceanic commerce is hereby authorized to be prosecuted by the Governor of the Panama Canal under the supervision of the Secretary of War, substantially in accordance with the plans set forth and recommended in the report of the Governor of the Panama Canal, dated February 24, 1939, and published as House Document Numbered 210 and including such appurtenant structures, works, and facilities, and enlargements or improvements of existing channels, structures, works, and facilities as may be deemed necessary at a total cost not to exceed $277,000,000, which is hereby authorized to be appropriated for the purpose: Provided, That the initial appropriation for the fiscal year 1940 shall not exceed $15,000,000. For the purposes aforesaid, the Governor of the Panama Canal is authorized to employ such persons as he may deem necessary and to fix their compensation without regard to any other law affecting such compensation, to authorize the making of any contracts, continuing or otherwise, in advance of actual appropriations, aggregating not more than the total cost authorized herein, as may be deemed necessary for the prosecution of the work herein authorized, to provide for the establishment and operation of such auxiliary plants and facilities in connection with the work as may be necessary or desirable, to utilize any of the facilities or services of the Panama Railroad Company upon such terms and conditions as may be approved by the Secretary of War, and in general to do all things proper and necessary to insure the prompt and efficient completion of the work herein authorized.


The CHAIRMAN. Senator McKellar, if you have any statement to make, the committee will be glad to hear you on both bills.

Senator MCKELLAR. Mr. Chairman, for a number of years I have been introducing a bill to build a canal over the Isthmus of Nicaragua, along the lines of S. 127, which is now before the committee. In the first place, I want to make one change in the bill. On page 6, line 13, I want to strike out the figures $200,000,000 and insert. the figures $722,000,000.

Of course, Mr. Chairman, you are not old enough to remember the celebrated fight between the Panama and Nicaraguan canals, about the beginning of the century.

The CHAIRMAN. You are mistaken about that. I remember hearing Senator Morgan speak all one day about it.

Senator MCKELLAR. He was very much interested in it.

The CHAIRMAN. Very much.

Senator MCKELLAR. I knew Senator Morgan very well. He was a friend of my father, and I recall his great interest in a canal at Nicaragua. But that is water over the dam.

Mr. Chairman, there are three reasons why I think we should have a second canal at Nicaragua, and I should like to outline them briefly to the committee.

In the first place, as you know, under the old Clayton-Bulwer Treaty of 1852, I think, and the Hay-Pauncefote treaty, made during Mr. Theodore Roosevelt's administration, England claimed and asserted an indirect interest in that canal, because of their ownership of certain islands, and she had to be consulted about it. I think there is no doubt that she would be consulted today in respect to any change in the Panama Canal.

The CHAIRMAN. Is it not a fact that the only thing England ever claimed about the Panama Canal was that they were entitled to equal treatment with the United States? Personally, I have felt that contention was sound in many ways. Nevertheless, Congress did to a certain extent recognize it. The same situation would apply to Nicaragua as well as Panama.

Senator MCKELLAR. I don't agree with you about that. When Theodore Roosevelt was constructing the Panama Canal, I recall very distinctly that Great Britain interfered and claimed rights under the Clayton-Bulwer Treaty of 1852, and while Mr. Roosevelt got a modification of those claimed rights, Great Britain insisted that our first policy of not providing for equal tolls to the United States with all other nations was improper, and she demanded and obtained from our Government equal treatment for all nations using the canal. Of course, she still retains an interest in it, and we have a treaty on that subject.

The CHAIRMAN. On that point, did not the contention of the British Government with regard to our obligations under the Hay-Pauncefote Treaty go to the extent of any or all isthmian canals?


The CHAIRMAN. That was the statement made by the Solicitor of the State Department before this committee at the last session of Congress. Senator MCKELLAR. It has been some time since I examined the treaty, but I am quite sure from recollection that Great Britain's sole claim of interest was as to the Panama Canal, and that the ClaytonBulwer Treaty and the Hay-Pauncefote Treaty pertained to the Panama Canal alone. In my judgment, if a new canal were built at Nicaragua, it would be an absolutely all-American canal. I mean by "all-American canal" this: I do not mean that the United States alone would have control of the Canal, because, while we have bought and paid for a strip over which the canal is to be built through Nicaragua, Nicaragua has rights that must and will be respected. In addition to that, as the canal will be almost the same as crossing Costa Rica, we will have to deal with Costa Rica about the matter. We are on the friendliest terms in the world with both Nicaragua and Costa Rica, and I am quite sure there will be no difference of opinion as to those two countries. If Honduras, which is, I believe, the nearest state to the canal, claims rights, or any other Central American country claims rights, we may have to deal with them about that, and it would give. us a good deal of pleasure to deal with them, and I am sure there would be no trouble about giving them their rights.

At this point I desire to insert in this record a portion of the speech of Mr. Somoza, the President of Nicaragua, who was here

recently and addressed the Senate last week. During his address he specifically referred to the building of the Nicaragua Canal. I desire to insert in the record such excerpts from that speech as refer to the building of the canal, and his cooperation and the cooperation of his Government in connection with it.

The CHAIRMAN. That may be done, without objection.

(The matter referred to is here printed in full, as follows:)

Because of her geographic position, and the fortunate configuration of her territory, Nicaragua, in spite of her size, will be called upon to be a complementary factor, indispensable to any plan or combination of forces for the security and defense of this continent. Her territory offers a convenient route for the construction of an interoceanic canal.

The Nicaraguan people consider this fact as their most valuable source of potential prosperity. We earnestly desire that this gift of nature may not be left hidden indefinitely in our native forests, when, by the act of man, it could bring incalculable benefits to ourselves, to you, to the Americans as a whole, and to the commerce of the world. [Applause.]

By a treaty which we are willing to carry through in terms which conform to the interests of both parties, on permanent bases of equity and justice, the United States has long been associated with Nicaragua in the possible realization of this mighty undertaking. We have thus joined our international destiny to yours, confident that this association will always be maintained in an atmosphere of reciprocal amity, of mutual benefits, and of a real comprehension of the needs and character of both Nations. Those who are now engaged, as I am, wholeheartedly in the consolidation of this association of our destinies, firmly believe that when history records its judgment on future events, posterity will not betray our present hopes and convictions. [Prolonged applause.]

Senator HAYDEN. Senator, I want to inquire with respect to the right to be obtained from Nicaragua or Costa Rica, or any other neighboring country, in the construction of the proposed new canal. Would not the proposition be similar to what is contained in the treaty with Panama? I understand, with respect to the Panama treaty, that we have obtained a perpetual lease for a strip of land on each side of the Canal, but that the ultimate sovereignty over the land was never ceded by Panama.

Senator MCKELLAR. That is true.

Senator HAYDEN. There is quite a material difference between that and the acquisition of the territory to become a part of the United States.

The CHAIRMAN. The Panam Canal Zone is a part of the territory of the United States.

Senator HAYDEN. My understanding of the Panama Canal Zone is that we have a lease, an easement, a right-of-way, but that the ultimat sovereignty is still in Panama.

Senator MCKELLAR. That is not my understanding of it.

Senator HAYDEN. For all practical purposes, we control the Canal Zone as completely as though it were a part of the territory of the United States.

The CHAIRMAN. We have a perpetual lease.

Senator HAYDEN. It may be a legal fiction, but my understanding is that Panama never surrendered complete title to the land.

Senator MCKELLAR. That is my understanding. We pay Panama $250,000 a year rent for that leasehold. As I understand it, the Nicaraguan Government agrees to cede to the United States the necessary land, marked out, over which this canal would go, and that would become United States territory. There would be no yearly

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