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The Secretary of the Navy explains in his communication and in the notes accompanying the estimates the reasons for the submission of these estimates at this time. Respectfully,

FRANKLIN MACVEAGH,

Secretary.

JANUARY 4, 1913. SIR: I have the honor to transmit herewith supplemental estimates of appropriations, amounting to $240,000, required for the Naval Establishment for the fiscal year ending June 30, 1914, and respectfully request that the same be transmitted to Congress for consideration in connection with the naval appropriation bill.

In pursuance of the requirements of the act of June 22, 1906 (34 Stat., 449), the department reports that the data essential to the preparation of the accompanying estimates was not in hand until subsequent to the submission of the regular estimates to you for transmission to Congress. Respectfully, yours,

G. v. L. MEYER. The SECRETARY OF THE TREASURY.

THE WHITE HOUSE. Approved, January 1913.

Estimates of appropriations required for the service of the fiscal year ending

June 30, 1914, by the Bureau of Ordnance, Navy Department.

NAVY DEPARTMENT.

BUREAU OF ORDNANCE.

Ordnance and ordnance stores

To provide for an increase of approximately 10 per cent in the

schedule of wages for the navy yard, Washington, D. C.,
during the fiscal year ending June 30, 1914, and annually

thereafter (act Aug. 22, 1912, vol. 37, p. 335, sec. 1)---- $100,000.00
Amount appropriated for the current fiscal year ending June
30, 1913---

5, 400,000.00
NOTE.--At the request of the Naval Committee of the
House of Representatives, the department appointed a
board to investigate the question of wages at the navy yard,
Washington, D. C. The board has completed its labors, and
in a voluminous report, a copy of which, accompanied by
certain memoranda, has been transmitted to the chairman
of the Committee on Naval Affairs of the House of Repre-
sentatives, has recommended an increase in wages at the
Washington Navy Yard, based upon the increased cost of
living in Washington as compared with the other cities
from which data was secured, a mounting to approximately
10 per cent and involving an estimated increased expendi-
ture of $240,000 for the fiscal year ending June 30, 1914,
$100,000 of which would be chargeable to the appropriation
" Ordnance and ordnance stores, 1914," and the remainder
($140,000) to the appropriation “ Increase of the Navy,
armor and armament.”

. The adoption of the board's recommendations would in-
volve either a deficiency under the appropriations stated or
a reduction of the force unless additional funds are pro-
vided.

INCREASE OF THE NAVY.

Increase of the Navy, armor and armament

To provide for an increase of approximately 10 per cent in

the schedule of wages for the navy yard, Washington, D. C.,
during the fiscal year ending June 30, 1914, and annually

thereafter (act Aug. 22, 1912, vol. 37, pp. 354, 355, sec. 1)-- $140,000.00 Amount appropriated for the current fiscal year ending June 30, 1913

7, 265, 200.00 NOTE.-At the request of the Naval Committee of the House of Representatives, the department appointed a board to investigate the question of wages at the navy yard, Washington, D. C. The board has completed its labors, and in a voluminous report, a copy of which, accompanied by certain memoranda, has been transmitted to the chairman of the Committee on Naval Affairs of the House of Representatives, has recommended an increase in wages at the Washington Navy Yard, based upon the increased cost of living in Washington as compared with the other cities from which data was secured, amounting to approximately 10 per cent, and involving an estimated increased expenditure of $240,000 for the fiscal year ending June 30, 1914, $100,000 of which would be chargeable to the appropriation Ordnance and ordnance stores, 1914," and the remainder ($140,000) to the appropriation “ Increase of the Navy, armor and armament."

The adoption of the board's recommendations would involve either a deficiency under the appropriations stated or a reduction of the force unless additional funds are

provided. The CHAIRMAN. Mr. Secretary, we thank you. Thereupon, the committee adjourned.

[No. 13.]

THE COMMITTEE ON NAVAL AFFAIRS,

Saturday, January 18, 1913. The committee this day met, Hon. Lemuel P. Padgett (chairman) presiding

STATEMENT OF COL. GEORGE W. GOETHALS, CHAIRMAN AND

ENGINEER IN CHIEF ISTHMIAN CANAL COMMISSION.

The CHAIRMAN. Gentlemen of the committee, we have with us this morning Col. Goethals.

Colonel, we have an item submitted in the estimates, “Marine barracks, Isthmus of Panama: Erection of barracks, quarters, and other buildings for accommodation of marines, $400,000," and we desire to ask you, with reference to that not so much the detail matter as the service of the marines—the situation there and the necessity for the marine barracks.

Col. GOETHALS. The marines are at present located at Camp Elliott, near Bas Obispo, on the west side of the canal. When the water is turned into the cut it places the present camp site on the wrong side of the canal. We are making no provision whatever for troops or inhabitants on the west side of the canal, the railroad being entirely on the east side, so that the necessity is great for moving the marines from their present location to a new one where they will be accessible to railroad communication, if they are to continue on the Isthmus.

The CHAIRMAN. You speak of the west and east sides of the canal. If I understand, the general direction of the canal is from the southeast on the Atlantic to the northwest on the Pacific!

Col. GOETHALS. No, sir; from northwest on the Atlantic to southeast on the Pacific, so that this [indicating] being east and that [indicating] west, the general line of the canal is about in this [indicating] direction.

The CHAIRMAN. The Atlantic is on the east side of the continent?
Col. GOETHALS. On the north side of the Isthmus.
The CHAIRMAN. That is true. It turns in there?

Col. GOETHALS. Yes, sir. If this be the cut [indicating], the railroad runs along the east side of the canal.

The marines, our headquarters, and the present Army barracks are on the west side of the canal. The railroad that now exists on the west side of the canal will be entirely disconnected from the railroad which, as part of the old road, is now on the east side of the canal. The only means of supply, therefore, and the only means of egress and entrance will be from the east side and ferry across the canal by boats, which will be expensive.

The present marine barracks are old French buildings, which are deteriorating rapidly. The men are rather uncomfortable now, and if the Marines are retained they should be moved to the east side of the canal; and arrangements have been made for allotting to them a site for a new post in the vicinity of Ancon, on the east side.

Mr. BUTLER. That has been allotted ?
Col. GOETHALS. Yes, sir; that has been allotted.

The CHAIRMAN. That is a permanent allotment if accepted for permanent quarters?

Col. GOETHALS. Yes, sir.
Mr. Loud. The suspension bridge at Empire comes out?
Col. GOETHALS. Yes, sir.

Mr. ROBERTS. On which side of the canal is the old Panama Railroad?

Col. GOETHALS. It was on the west side of the canal for a part of the distance and on the east side for another part. When the French undertook the construction of the canal they had to move the railroad, which crossed the present line of the canal at about Culebra.

Mr. ROBERTS. When everything is completed, all rails on the west side of the canal will be abandoned ?

Col. GOETHALS. They are abandoned now except the part between Gorgona and Culebra.

Mr. ROBERTS. And that is used for construction purposes?

Col. GOETHALS. For our construction force. We are making preparations to move our headquarters away from Culebra and Empire, and there will be absolutely no connection by railroad with the west side.

The CHAIRMAN. Will the west side of the canal havé inhabitants ?
Col. GOETHALS. None at all; the towns will be depopulated.
Mr. LOUD. Will the large towns be moved?
Col. GOETHALS. Entirely.
Mr. ROBERTS. Why depopulate the west side?

Col. GOETHALS. I have advocated the depopulation of the zone and Congress has adopted that suggestion. The reason for it is that we are there in the heart of another Republic, which has an entirely different system of taxation from ours, their system being rather obnoxious to the American idea of taxation. We have only a leasehold right to the property. We can not induce any American, therefore, to go down there and settle with a hope of transmitting his property to his heirs. We have got to subject them to the obnoxious system of taxation or come in competition very strongly with the Panamans, which is objectionable. The larger the population in the zone the greater will be the cost of civil administration and sanitation; the idea of anybody doing anything that they can get the Government to do is too evident. The result is we can not offer any inducement to Americans to come to the zone and settle, and I do not want anyone else.

Mr. ROBERTS. As I understand, the whole zone will be depopulated, and only the people officially connected with the canal will be there!

Col. GOETHALS. The military and the Navy will occupy it; yes, sir.
The CHAIRMAN. Does that extend to the 10-mile limiti
Col. GOETHALS. Yes, sir.

Mr. ROBERTS. Does that mean that the families of the officers will not be allowed there?

Col. GOETHALS. No, sir. The officers of the Army, Navy, and Marine Corps will have the same facilities there, I assume, as at any military post in the United States. Their families will be provided for.

Mr. ROBERTS. But no civilians ?

Col. GOETHALS. No, sir; except those connected directly with the operation of the canal.

Mr. BUCHANAN. Please tell us briefly what the objectionable feature of the taxation system is?

Col. GOETHALS. They tax everything on the production. As one administration succeeds the other in Panama the treasury is more and more depleted, so that the taxes have to increase, and under our arrangement with Panama, as their taxes increase in the Republic of Panama a similar increase takes place in the Canal Zone; otherwise they would all be crowding the Canal Zone in order to get the benefit of the reduction in taxes.

Mr. ROBERTS. About how many civilians will be utilized in the maintenance and operation of the canal after it is completed ?

Col. GOETHALS. The organization as we have lined it up contemplates about 2,700 men for the canal itself. That includes the machine shops, the dry docks, the lock-operating force, and the dredges, but excluding the organization for the Panama Railroad, and that town will be on the Pacific side. The idea I had in going over the matter with Maj. Butler and in selecting the site for the marines was to place it between our town and Panama; that is the principal reason for its selection, to make a barrier between our population and theirs.

The CHAIRMAN. What will be on the Atlantic side?

Col. GOETHALS. On the Atlantic side will be the force necessary to operate the coal plants and terminals at Cristobal.

The CHAIRMAN. How much will that force be ?

Col. GOETHALS. About 1,000 to 1,200 men, most of them connected with the Panama Railroad. The balance will be over on the Pacific side, with the exception of a few in connection with the locks.

Mr. ROBERTS. The 1,000 will live on the Atlantic side?

Col. GOETHALS. Yes, sir. The towns of Colon and Cristobal, Colon being Panama territory and Cristobal in the Canal Zone, are in juxtaposition, being separated by a street.

Mr. ROBERTS. There has been something said in the committee in the past about a dry dock for the use of the Navy at some point either on the Atlantic or Pacific side of the canal ?

Col. GOETHALS. When we took up the question of the terminals in connection with the canal, we found that we had saved so much on our unit costs that it was possible to build a dry dock in connection with the terminals, and we took the question up with the Navy Department, the idea being that the dry dock was to be for commercial purposes, and the Navy Department asked that any dry dock that was built be placed at the Pacific end of the canal, as the only dry dock they had on the Pacific side was at San Francisco. The plans provide a dry dock that will accommodate a ship that can use the socks, and we submitted the plans to the Navy Department for approval. The dry dock is to be a part of the terminal equipment of the canal, built in accordance with naval ideas.

The CHAIRMAN. And subject to naval use?

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