extreme and the accommodations inside are just completely out of date with any modern method of building houses. That house was built in 1907, and it is not really a livable place, and the employees expect, and rightfully, I think, that the Government should make adequate provision for their living in this climate that they must contend with.

Mr. KERR. By doing that we get a higher grade of employees and get a more intelligence class of people down there.

General NEWCOMER. Yes, sir; and it is that class of employees that we are continually looking for, those who make the Panama Canal their lifework, who come there and are willing to stay permanently. Otherwise the cost of recruitment and repatriation is very high. It amounts to about $1,800 a family.

Mr. KERR. As they come in contact with our people and the preparations made for them to increase their intelligence through good schools necessarily they want better living accommodations. General NEWCOMER. Yes, sir.

Mr. KERR. Are there any further questions?

Mr. RABAUT. In the first place, the ships of many countries go through the Panama Canal, do they not?

General NEWCOMER. Yes, sir; of all countries.

Mr. RABAUT. We are always holding ourselves out to the world as a Government interested in the welfare of its people.

Now, this is a Government project pure and simple of the most intimate character?

General NEWCOMER. Yes, sir.

Mr. RABAUT. And I think that there should be substantial houses there. I think that the program has been thought out pretty well. I feel that you have set a good example to other nations going there, and it is most intimate, and it is important in any time of trouble that we are in or that our country gets into from time to time that these people should be well housed. When I was down there some few years ago I was certainly struck with the type of housing that was down there. For the most part it has outlived its usefulness.

I am not anxious to spend a lot of money, but I notice you are going at this over a period of time. I want to make certain of this pointyou do not intend to use this money to do a part of some buildings and then wait for some more appropriations to complete them. You are going to build complete units with the money that will be available to you from time to time; is that right?

General NEWCOMER. That is correct.

FUNDS SUPPLIED BY PANAMA RAILROAD COMPANY

Mr. RABAUT. How much of this did you say was going to be supplied by the Panama Railroad Company?

General NEWCOMER. About $16,000,000, based upon our present estimates.

Mr. RABAUT. $16,000,000?

General NEWCOMER. Yes, sir.

Mr. RABAUT. That is on the remodeling of 867 units?

General NEWCOMER. Some of it will be used in the construction of entirely new houses, too.

Mr. RABAUT. For new homes, too?

General NEWCOMER, Yes. sir.

Mr. RABAUT. And altogether there are going to be 6,110 units?
General NEWCOMER. Yes, sir.

Mr. RABAUT. Is the 867 units added to the 6,110 units, or is it part of that number?

General NEWCOMER. That is to be added to it, making a total of 6,977 units.

Mr. RABAUT. And the original cost was estimated above the figure which you now submit, the $70,882,000 estimate?

General NEWCOMER. That figure is still good.

Mr. RABAUT. The original estimate was higher?

General NEWCOMER. No, sir; it was just the distribution throughout the years of this sum.

Mr. RABAUT. This figure is still good at $70,882,000?
General NEWCOMER. Yes, sir.

Mr. RABAUT. And, with the contribution of the Panama Railroad Company deducted from that, that leaves the United States share $54,242,000 over how long a period?

General NEWCOMER. Over a period of 10 years.

Mr. RABAUT. Over a period of 10 years?

General NEWCOMER. Yes.

Mr. RABAUT. And you are asking for $4,000,000 to start?

General NEWCOMER. Yes, sir; which is a little bit below average.

TYPES OF HOUSES TO BE BUILT

Mr. RABAUT. What type of houses normally will you build-single homes, two-home units, four-family units, or multiple-family units? General NEWCOMER. Two-family houses and single houses. Mr. RABAUT. Two-family houses and single houses?

General NEWCOMER. Yes, sir. We have some sketches here with us showing what we propose to build. We would like to show them to you if you do not mind.

Mr. RABAUT. All right; hold them up here; let us see them.

General NEWCOMER. That is a map of the Canal Zone showing where we propose to build.

Mr. RABAUT. What is that, a two-family house?

General NEWCOMER. That is a two-family house; this is a twobedroom house, a two-family house.

DISCUSSION OF ADEQUACY OF RENTALS

Mr. RABAUT. Is that the type of house you are talking about renting for $38 a month?

General NEWCOMER. Yes.

Mr. RABAUT. I feel that really for what you are giving them that that rent is too low.

General NEWCOMER. From $36 to $38.

Mr. TABER. What do those people earn?

General NEWCOMER. The people who live in there will probably earn around between $4,000 and $5,000 a year.

Mr. RABAUT. That is about $100 a week; that is awful low rent. Mr. TABER. That is low rent for that property.

General NEWCOMER. Well, the rent is based on this provision which prescribes what it shall cover.

Mr. RABAUT. But you have some leeway as the Governor.
General NEWCOMER. We cannot raise the rent-

Mr. RABAUT. I think the rent should be upped a little bit if we are going to build nice homes like that for those people, and I do not think anybody getting such a home will do any complaining about paying a reasonable rent. They cannot get anything comparable to that in the Canal Zone for that amount of money, or anything like it. I am strong for your program, but I am here representing the Government too; I have to look out for the Government.

General NEWCOMER. Yes, sir; but it is a question of whether the Government wants to make a profit on these buildings.

Mr. RABAUT. You will not get by on that with the elements, the wind, and everything that happens down there. You will not get by with the leeway that you have in there. You can get all of these experts, and they will quote you scripture for their own purposes, but when you get to keeping them up for 40 years with the little money that you have for that purpose, to keep them painted, repaired, and look after the prevention of termites and all of the rest of it, that will not be sufficient.

Mr. KERR. And the insurance.

you?

Mr. RABAUT. You do not insure them, do General NEWCOMER. No, sir; we do not insure them; we cannot. Mr. RABAUT. But you certainly have to keep them repaired and keep them reroofed and keep close to them and look after their upkeep. General NEWCOMER. As I say, we charge rent that will cover these costs, and that is adjusted from time to time as the cost varies.

Mr. RABAUT. I think you had better take a look at the figures on the rent, Governor. I am strong for the project, and that is the biggest part of your hump, to get the project going.

General NEWCOMER. Yes, sir.

Mr. RABAUT. And I want to tell you something else. I have to protect the Federal Government's interest too, and we have to look out that we do not come out on the short end of this over a period of 40 years. You figure this out and you will find that you have not much leeway here to keep them up. What does a person in the States pay, if they are making $4,000 or $5,000 a year, and that is practically $100 a week, for a house like that? Do you see anybody getting a $36 place like that up here?

General NEWCOMER. You cannot do it in the States.

Mr. RABAUT. No; you cannot do it, and the Government cannot do it down there for that amount either and keep them up. They do run down, and you will not have the money to keep them up with this rental.

General NEWCOMER. The object is to provide suitable livable places for these employees

Mr. RABAUT. You are proud of it; yes, sir; and you are proud there of that picture, and it is a nice job and a good job, but we want to know that a good job has been done as far as finances are concerned and their relationship to the Government. Now, that is a singlefamily house there; how much is that going to rent for? I do not know whether my colleagues think I am right about it or wrong.

Mr. TABER. There is not any question about your being right about it.

General NEWCOMER. I have here $41 to $43 on that house.

Mr. TABER. That is very decidedly moderate, is it not?

Mr. RABAUT. What is set up in front there; is that a light there at the top in front?

General NEWCOMER. No, sir; that is a louver for ventilation. Mr. RABAUT. Do you have fans in the attics?

General NEWCOMER. No, sir; we do not have fans in the attics. The living part has a ceiling over it, and we have to plan on the natural ventilation, getting cool air in there.

Mr. RABAUT. Do you do anything there to insulate the upper part of the houses against heat?

General NEWCOMER. No, sir. We have gone recently into the use of aluminum roofing. They reflect the heat, and the people who are living in about half a dozen of those houses that we have built say that they are about 10° cooler than those with the old corrugatediron roofs, and there is probably something in that, but that has just been a recent development due to the availability of aluminum for that purpose.

Mr. SCRIVNER. The use of aluminum paint would tend to have some of that same effect, would it not?

General NEWCOMER. Yes; but that requires repainting at intervals. Mr. RABAUT. What is that one; that is larger, is it not?

General NEWCOMER. Yes, sir; that has two bedrooms in it.

Mr. RABAUT. How much is that to rent for?

General NEWCOMER. From $41 to $44.

Mr. TABER. Just like the last one.

Mr. RABAUT. How much in wages would a man earn who would get that type of house?

General NEWCOMER. I would say about $5,000, probably.

Mr. RABAUT. That is very reasonable now.

General NEWCOMER. Of course, I want to say that when we assign the quarters we make them available to those who have had the longest service. It is done entirely on a seniority basis, so their income may be anything, really.

Mr. RABAUT. What about utilities? Do you pay for the utilities, or does the tenant pay for them?

General NEWCOMER. He pays for water and electricity.

Mr. RABAUT. He pays for water and electricity?

General NEWCOMER. Yes; and the care of the grounds.

Mr. RABAUT. Does he pay for the care of the grounds?

General NEWCOMER. Yes, sir; unless he elects to do it himself. We require that the grounds be maintained.

Mr. RABAUT. I did not know that they paid for that extra.
General NEWCOMER. Yes, sir.

Mr. RABAUT. I would still suggest that you look over the relationship here between income and what they are getting, and about the Government receiving sufficient money to properly keep up the places. General NEWCOMER. That, of course, is what we try to provide. Mr. RABAUT. You will find that you cannot cut that too close. You must have some leeway.

General NEWCOMER. I think there is a lot in what you say.

Mr. RABAUT. I know from experience.

Mr. TABER. Referring to the fellow you said got $5,000 a year, would that be his base pay, or would that include the 25 percent additional he receives?

General NEWCOMER. That would be his total take-home pay.

Mr. KERR. Mr. Scrivner wants to ask you a few questions, General. Mr. SCRIVNER. General, I would not want to let go unchallenged at least the tail end of your statement about returning any more than operating costs. I think that is quite a question of dispute which the committee has gone into at various times. It has been more than 2 years since I have had anything to do with the Panama Canal appropriations, but I recall then that there was quite a discussion about whether it was paying the operating costs or not, let alone returning income to the Treasury. So, I still question whether that is a fact or not. I am not going to debate that now, but there was an order issued, I think, asking that the rates be raised in order to more nearly pay the operating costs. What happened to that order?

General NEWCOMER. That order by the President has been suspended a number of times to give an opportunity to look into this question of tolls, and the present suspension runs until April 1, 1951.

FOREIGN SHIPS TRANSITING CANAL

Mr. SCRIVNER. I think it was pointed out then that 52 percent of the ships going through the Canal are foreign ships?

General NEWCOMER. Now 60 percent.

Mr. SCRIVNER. That 60 percent of the ships going through the Canal are foreign ships, and there were many of us who felt, while we might be willing to subsidize our own vessels, it did not seem right to be subsidizing foreign vessels.

General NEWCOMER. Yes, sir.

Mr. SCRIVNER. I would like to come back to your statement as to the rentals. On page 3 of your statement you say that this project will be amortized during the life of the buildings that will be constructed. Where is the money coming from that is going to build these buildings?

General NEWCOMER. It is coming largely from appropriations.
Mr. SCRIVNER. All right, now, where do we get the money?
General NEWCOMER. It comes from the Federal Treasury.

Mr. SCRIVNER. From taxes and the sale of bonds?

General NEWCOMER. Yes, sir.

Mr. SCRIVNER. Because we are running on deficit financing, and we have to sell bonds in order to obtain money in order to finance these projects.

General NEWCOMER. Yes, sir.

Mr. SCRIVNER. If that is true, I think it might be well to consider that possibly this project is being financed on borrowed money, so that may be under sound financing the amortization should, at least, carry the cost of the issuance of the bonds.

General NEWCOMER. Yes, sir; that point undoubtedly can be raised. Mr. SCRIVNER. Then, in adidtion to that, these bonds which we are now selling provide that if you will spend $75 now you will get $100 back 10 years from now.

General NEWCOMER. Yes, sir.