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HEARING

BEFORE THE

rurg COMMITTEE ON

OFFICE AND CIVIL SERVICE

E ISE OF REPRESENTATIVES

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ra EIGHTY-EIGHTH CONGRESS

FIRST SESSION

ON

H.R. 2030

A BILL TO AMEND THE CIVIL SERVICE RETIREMENT ACT

WITH RESPECT TO ANNUITIES OF PANAMA CANAL

SHIP PILOTS

APRIL 2, 1963

Printed for the use of the Committee on Post Offic

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U.S. GOVERNMENT PRINTING OFFICE

97060 WASHINGTON : 1963
COMMITTEE ON POST OFFICE AND CIVIL SERVICE

TOM MURRAY, Tennessee, Chairman

JAMES H. MORRISON, Louisiana ROBERT J. CORBETT, Pennsylvania

THADDEUS J. DULSKI, New York

DAVID N. HENDERSON, North Carolina

ARNOLD OLSEN, Montana

MORRIS K. UDALL, Arizona

DOMINICK V. DANIELS, New Jersey

LINDLEY BECKWORTH, Texas

HARLEY 0. STAGGERS, West Virginia

ROBERT N. C. NIX, Pennsylvania

EVERETT G. BURKHALTER, California

DON EDWARDS, California

JOE R. POOL, Texas

ALBERT W. WATSON, South Carolina

H. R. GROSS, Iowa

JOEL T. BROYHILL, Virginia

AUGUST E. JOHANSEN, Michigan

GLENN CUNNINGHAM, Nebraska

GEORGE M. WALLHAUSER, New Jersey

ROBERT R. BARRY, New York

KATHARINE ST. GEORGE, New York

EDWARD J. DERWINSKI, Illinois

ROBERT F. ELLSWORTH, Kansas

HOMER E. ABELE, Ohio

SUBCOMMITTEE APPOINTED To CONSIDER H.R. 2030

ARNOLD OLSEN, Montana, Chairman

MORRIS K. UDALL, Arizona

DOMINICK V. DANIELS, New Jersey

LINDLEY BECKWORTH, Texas

II

H. R. GROSS, Iowa

AUGUST E. JOHANSEN, Michigan

ROBERT R. BARRY, New York
CONTENTS

Page

Statement of—

Griner, John F., national president, American Federation of Government Employees 44

Macy, Hon. John W., Jr., Chairman, U.S. Civil Service Commission,

accompanied by Andrew E. Ruddock, Director, Bureau of Retirement and Insurance, U.S. Civil Service Commission 2

McClean, Capt. Richard, president, Canal Zone Ship Pilots Association, accompanied by Capt. W. H. Vantine, Canal Zone Ship Pilots

Association 25

Runnestrand, Paul M., Executive Secretary, Canal Zone Government__ 10
I,
ANNUITIES OF PANAMA CANAL SHIP PILOTS

TUESDAY, APRIL 2, 1963

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE OF THE

COMMITTEE ON POST OFFICE AND CIVIL SERVICE,

Washington, D.0 .

The subcommittee met, pursuant to notice, at 10:10 a.m. in room 215,

House Office Building, Hon. Arnold Olsen of Montana (chairman of

the subcommittee) presiding.

Mr. OLSEN. The subcommittee will come to order.

This subcommittee, composed of Congressmen Udall, Daniels,

Beckworth? Gross, Johansen, Barry, and myself as chairman, has

under consideration H.R. 2030, a bill introduced by our colleague, Mr.

Morrison, to amend the Civil Service Retirement Act with respect to

annuities of Panama Canal ship pilots. Without objection, the bill

will be made a part of the record at this point.

(H.R. 2030 follows:)

[H.R. 2030, 88th Cong., 1st sess.]

A BILL To amend the Civil Service Retirement Act with respect to annuities of Panama Canal ship pilots

Be it enacted by the Senate and House of Representatives of the United States

of America in Congress assembled, That section 6 of the Civil Service Retirement

Act is amended by adding at the end thereof a new subsection as follows:

"(g) Any employee while serving as a ship pilot in the Panama Canal Zone

who attains the age of fifty-five years and completes twenty years of service, not

less than fifteen years of which has been as such a pilot, shall, upon separation

from the service, be paid an annuity computed as provided in section 9."

SEC. 2. Section 9(e) of such Act is amended by inserting after "6(c)" the

following: "or 6(g)".

SEC. 3. This Act shall take effect on the first day of the first month which

begins after the date of its enactment.

Mr. OLSEN. In 1957 a bill similar to H.R. 2030 was approved by

the Senate following a study which was made by former Senators

W. Kerr Scott and William R. Laird concerning conditions of employment confronting approximately 100 ship pilots in the Panama

Canal Zone.

The Senate approved more liberal retirement benefits for Panama

Canal ship pilots in view of the extraordinary conditions under which

these pilots perform their duties.

During the second session of the 87th Congress, a subcommittee of

this committee of which I had the honor to be chairman considered

H.R. 3557 which is identical to H.R. 2030.

After extensive hearings—copies of which are on the members

desks—the subcommittee last year approved the bill and reported it

favorably to the full committee with amendments which provided

1
2 ANNUITIES OF PANAMA CANAL SHIP PILOTS

that the entire 20 years of service must be rendered as a ship pilot in

order to qualify for the 2-percent retirement benefits at 55 years of

age, and that the retirement benefits provided in the bill will be paid

from the civil service retirement and disability fund.

We are pleased this morning to have as witnesses Hon. John Macy,

Chairman of the Civil Service Commission and Mr. Andrew Ruddock,

Chief of the Bureau of Retirement and Insurance, Civil Service Commission. Then I will call nine other witnesses as their names appear

on the list.

Mr. Chairman of the Commission, Mr. Macy, and Mr. Ruddock,

you may proceed.

STATEMENT OF HON. JOHN W. MACY, JR., CHAIRMAN, U.S. CIVIL

SERVICE CO1VIIVIISSI0N, ACCOMPANIED BY ANDREW RUDDOCK,

DIRECTOR, BUREAU OF RETIREMENT AND INSURANCE, U.S. CIVIL

SERVICE COMMISSION

Mr. MACY. Mr. Chairman, and members of the subcommittee.

I appreciate the opportunity to appear before you to give testimony

on H.R. 2030. I would be happy to either read my statement or put

it in the record and summarize it for you, whichever is your preference Mr. Chairman.

MI-. OLSEN. Without objection, your statement will be made a part

of the record at this point, and you may summarize.

(The statement follows:)

PREPARED STATEMENT OF HON. JOHN W. MACY, JR., CHAIRMAN, U.S. CIVIL

SERVICE COMMISSION

Mr. Chairman and members of the subcommittee, I am very glad to have this

opportunity to appear before you and to present the Commission's views on

H.R. 2030. The Commission's report on this bill is contained in a letter dated

March 18, 1963, to the chairman of the full committee. With your permission,

Mr. Chairman, I suggest that report be made a part of the record of this

hearing.

H.R. 2030 would amend the Civil Service Retirement Act to provide benefits

for Panama Canal ship pilots which would be more liberal than those available

to employees generally. The bill would permit retirement on immediate full

annuity for any Panama Canal ship pilot who has reached age 55 and who

has served a total period of 20 years, including at least 15 years as a pilot in

the Panama Canal Zone. The annuity would be computed under the special

formula of 2 percent of average salary for each year of service.

The special benefits proposed for ship pilots are similar to those currently

available only to employees who are engaged in criminal law enforcement work.

The Civil Service Commission has consistently opposed extension of the concept of special benefits to any additional groups. We are firmly of the opinion

that all Government employees should be treated alike for retirement purposes.

Special retirement benefits are not an appropriate form of compensation for

hazards or arduous duties or for duty at inconvenient or unhealthful locations.

Any necessary compensation for such job elements should be reflected in active

duty pay, and to the extent pay is increased, the retirement benefit is also

in&eased because the amount of annuity is related to pay as well as to length

of service.

Our objection in principle to legislative proposals like H.R. 2030 should not

be construed as a failure to understand or an attempt to minimize the importance of the ship pilots in the operations of the Panama Canal. We have

acquired some knowledge of the duties and responsibilities of the pilots. We

are aware of their long and frequently irregular hours of duty; of the hazards

of the work; and of the possible effects on health of working in the tropics,

under constant tension, and exposed to the elements over long periods of time.
ANNUITIES OF PANAMA CANAL SHIP PILOTS 3

While no other group of employees may have the precise combination of

personnel conditions incident to service as a Canal Zone pilot, other groups

do have conditions, which in their opinion, would justify special retirement

provisions.

Stated simply, we do not believe the retirement system is the appropriate

medium for solving the special personnel problems of different occupational

groups. We think a chaotic situation could develop rapidly if the retirement act

were amended to provide one set of rules for ship pilots, another for firefighters,

another for aircraft pilots, and so on through the various occupations which

are found in Government service. Over the years, special retirement provisions

have been proposed for the above groups, as well as for customs inspectors,

postal employees who protect the mail, Treasury collection officers, and employees who occupations subject them to unusual hazards. We have not

favored enactment of any of these propsals.

Although the added benefits in an individual case would involve additional

costs, the Commission's objection to the enactment of H.R. 2030 is not for

this reason. We understand that the total number of pilots never exceeds

100 at any given time. The group is so small that the bill would not noticeably

affect the total cost of the retirement system, which covers over 2 million

employees.

The Civil Service Retirement Act presently contains a number of provisions,

not limited in application to one occupation, which in combination go a long

way toward meeting the special needs of ship pilots. For example, retirement

on disability is permitted after a minimum of 5 years of service. An employee

is considered disabled for retirement purposes if he is physically or mentally

incapable of performing the duties of his own job in a useful and efficient

manner. If he retires on disability, his minimum annuity is the smaller of (a) 40

percent of average salary or (b) annuity based on service projected to age 60.

Mr. Ruddock and I will be glad to answer any questions you may have.

Mr. MACY. Yes, sir. Thank you.

H.R. 2030 is a bill proposing to amend the Civil Service Retirement Act to provide certain special preferential benefits for approximately 130 Panama Canal ship pilots. These preferential benefits

would permit an immediate full annuity for these pilots when they

reach the age of 55, with 20 years of service, if 15 of those years are

as pilots, and to have the annuity computed through use of the special

formula of 2 percent of average salary for each year of service.

The Commission is opposed to this legislation, as it was at the

time Commissioner Lawton testified on the predecessor bill on May

29 last. Our opposition is on the general ground of opposing provisions for preferential treatment of special groups of Federal employees under the Retirement Act.

Mr. OLSEN. Mr. Macy, at that point, would it make any difference

to your Commission if the requirement was 20 years service as a

Panama Canal pilot at 55?

Mr. MAcy. No, sir, the same opposition would apply because it

still would constitute a special and preferential treatment for one occupational group. At the present time there are some 20,000 to 30,000

Federal employees in the executive branch who do have preferential

retirement treatment. Those are the men and women engaged in law

enforcement, criminal statutes, and day-to-day relationship with

prisoners of the Federal Government. The Commission at the time

that exception was recommended also opposed it on the same grounds,

and our position has been that the Retirement Act should not be the

means for providing additional deferred compensation for those

who are engaged in work of particular hazard or difficulty that, instead, such conditions should become part of the compensation system

and those employees given appropriate extra compensation if there
4 ANNUITIES OF PANAMA CANAL SHIP PILOTS

is a demonstration that their work does involve certain hazards or

strains.

Our opposition in no way is an adverse reflection upon the skill or

commitment of the men who perform this vital work of guiding the

ships through the Panama Canal. It is rather a belief that the Retirement Act is not the means for appropriately compensating them for

the work that they perform.

In the testimony last year quite a point was made of the physical

strain and resulting disability in the case of many of these pilots.

In that connection, I would like to point out the Retirement Act

does include disability provisions that make it possible for an employee to retire on disability with as little as 5 years' service, and

that the annuity he receives is the smaller of either 40 percent of

his average salary or an annuity based on service projected to age 60.

It is our belief that these provisions provide an opportunity for

the individual to retire if there is a disability that makes it impossible

for him to perform his particular assignment with efficiency and

effectiveness.

For those reasons, Mr. Chairman, the Commission persists in its

opposition to this legislation as presented in H.R. 2030.

Mr. Ruddock and I will be happy to answer any questions you have

with respect to the Commission's position or on any other features

relating to the retirement situation.

Mr. OLSEN. Could you or Mr. Ruddock detail the costs involved

in retirement in this bill at 15 years at 55, and also costs involved 20

years' service and retirement at age 55?

Mr. MACY. Let me say, Mr. Chairman, that the cost factor in

this legislation is not a basis for our opposition. The increased cost

would be very nominal. I believe Commissioner Lawton testified

last year at your hearing that in the case of the 55-year retirement,

under these provisions, the increased cost would be roughly the equivalent of 2 years' salary.

Is that not correct, Mr. Ruddock?

Mr. RIIDDOCK. Yes, sir.

Mr. MACY. That the salary of a Panama Canal pilot at the present

time, under their pay system, is at the top of the range where 54 of

them are presently located, roughly $17,000. So the cost per man

of this retirement provision would be about $34,000.

Now if it were extended to 20 years, the 20 years' service as a pilot,

I don't believe the costs would be any different.

Mr. RUDDOCK. Distinguishing the two bills, whether you require

all 20 years as a pilot or only 15 years as a pilot, 20 years of service

would produce the same annuity, so the effect of requiring 20 years of

pilot service probably would be to cut down the number of people

eligible to retire just the minute they reach age 55. But it wouldn't

change the cost per individual.

Mr. MACY. I think the testimony last year showed that most of the

pilots had been pilots for their total Federal careers, so that the other

5 years of service didn't ordinarily enter into it.

Mr. OLSEN. While it shows the average age of entering as a pilot

at 36, that the average will be 19 years' service at 55. ButMr. RIIDDOCK. I am not totally familiar with all of these figures,

but I believe the entry age has come down.
ANNUITIES OF PANAMA CANAL SHIP PILOTS 5

Mr. MACY. I believe it has come down during the past year, Mr.

Chairman, because you will recall that last year the testimony offered

showed that there were approximately 100 pilots, and. I believe there

has been an addition of some 30 pilots in the intervening 10 or 11

months, and that they have come in at a lower age level, which has

tended to reduce the average age and also to reduce the average entry

age.

Mr. Chairman, in order to make the record complete, may I refer

also to the official report of the Civil Service Commission dated March

18, 1963, on this bill. You may wish to incorporate that in the record

as well.

Mr. OLSEN. Without objection, it is so ordered that it be entered

in the record at this point.

(The report referred to follows:)

U.S. CIVIL SERVICE COMMISSION,

Washington, D.C., March 18, 1968.

Hon. Tom MURRAY,

Chairman, Committee on Post Office ancl Civil Service, House of Representatives.

DEAR MR. CHAIRMAN: This refers further to your letter of January 30, 1963,

requesting Commission report on H.R. 2030, a bill "To amend the Civil Service

Retirement Act with respect to annuities of Panama Canal ship pilots."

H.R. 2030 would amend the Retirement Act, effective the first of the month

after its enactment, to permit employees serving as ship pilots in the Panama

Canal Zone to retire on immediate full annuity at or after age 55 after a minimum of 20 years' Federal service, at least 15 of which must have been as a

Panama Canal ship pilot. Annuity in each case would be computed under the

special 2-percent formula in section 9(e) of the Retirement Act provided for and

restricted to hazardous duty law enforcement officers retiring under section 6(c)

of the act.

The bill somewhat follows a prior bill (H.R. 4000) introduced in the 85th Congress as a result of a study made by former Senators W. Kerr Scott and William

R. Laird III of the conditions of employment confronting some 90 to 100 ship

pilots in the Panama Canal Zone. Following this study, these Senators on

October 15, 1956, recommended that "any ship pilot in the Panama Canal Zone

who has attained the age of 55 and has completed 15 years of such service be

permitted to retire voluntarily on an immediate annuity equal to 2 percent of his

high 5 years' average salary times his years of such service." H.R. 400 embodied

this recommendation but failed of enactment.

We have carefully studied the facts recited in said report but cannot agree

that the proposed preferential provisions are warranted. By the act of July 16,

1952, Congress created a Committee on Retirement Policy for Federal Personnel

to make a comparative study of all retirement systems for Government employees

and report thereon to the legislative body. Among other things, this act specifically directed the committee_ to make report and recommendation regarding

"the necessity to special benefit provisions for selected employee groups, including oversea personnel and employees in hazardous occupations."

The committee made an exhaustive study of the circumstances surrounding

the employment of selected employee classes and the merits of arguments

presented in support of special retirement benefits. Based upon this study, the

committee on June 29, 1954, submitted the following recommendation to Congress:

"The committee has studied at some length the problems of edal classes of

employees as well as the needs of the Government in those -ities that create

special personnel problems. The committee believes that,cals, 'general rule, all

Government employees should be treated alike for retir nt purposes. It does

not feel that special retirement benefits are an appro to form of compensation for such elements as hazardous or arduous duties service at inconvenient

or unhealthful locations. Any necessary compensati Air such job elements

should be reflected in active duty pay and allowances."

The Commission fully agrees with the foregoing idea . The creation of a new

preferential benefit provision for Panama Canal ship pi ots could only establish

an undesirable precedent and result in various other groups, equally meritorious

as to duties and hazards, urging Congress to accord thehi the same special

privilege.

97060-63----2
6 ANNUITIES OF PANAMA CANAL SHIP PILOTS

No doubt employees engaged in piloting vessels through the Panama Canal

are exposed to hazards not incident to more sedentary types of Federal employment. But the hazards involved in ship piloting are not such as to set these

employees in a special preferential category different from all other employees

of the United States. They are clearly outside the purpose for which Congress

has consistently reserved the special retirement provisions applicable to law

enforcement personnel, namely that of strengthening the Federal criminal law

enforcement instrumentality. Congress has established a precedent as regards

these preferential retirement provisions by originally extending them only to

agents and similar employees of the Federal Bureau of Investigation. Later it

made them applicable to other similar criminal law enforcement officers; but

always the express purpose was to deal with matters strictly in the field of law

enforcement.

The Commission accordingly recommends that adverse action be taken on H.R.

2030.

It should be noted that this proposal does not provide an exception to the

restriction on the use of the retirement fund imposed by the paragraph headed

"Civil Service Retirement and Disability Fund" in section 101 of title I of the

act of August 28,1958, Public Law 85-844,72 Stat. 1064.

The Bureau of the Budget advises that from the standpoint of the administrations' program there is no objection to the submission of this report.

By direction of the Commission:

Sincerely yours,

( S ) JOHN W. MACY, Jr.,

Chairman.

Mr. OLSEN. You say $34,000 per pilot as the cost of either bill?

Mr. MACY. This would be the additional cost per individual. The

difference in cost is between the application of the existing retirement

standards and the more liberalized standard.

Mr. OLSEN. You arrive at that because of some life expectancy or

some life experience that has been the experience with Panama ship

canal pilots?

Mr. RUDDOCK. No, sir. This is making a calculation based on life

expectancies as they have been developed under the whole experience

of the Civil Service Retirement Act.

You may remember last year we indicated that we do not develop

life expectancies with respect to different occupational groups.

Mr. OLSEN. But referring again to last year's hearings, do you

challenge the life experience figures that were developed by the Panama Canal ship pilots at the hearings?

Mr. RUDDOCK. No, sir. As we testified last year, we have no basis

either to affirm or deny the accuracy of those figures. I assume they

are accurate. •

Mr. OLSEN. Do you have any questions, Mr. Gross

Mr. GROSS. Yes.

Mr. Macy, your opposition to this bill is on the basis of the precedent that it would set?

Mr. MACY. That is correct.

Mr. GROSS. Please amplify briefly.

Mr. MACY. It is my belief that if the Congress were to approve

this special treatment for this group, there are many other groups

that would come forward and press for similar consideration.

Mr. GROSS. What would we do with the other employees in the Canal Zone if we were to enact this kind of legislation? They would

be justified in asking for the same legislation; would they not?

Mr. MACY. I am not familiar with all of the occupational groups

and their working conditions there, but it would seem to me that
ANNUITIES OF PANAMA CANAL SHIP PILOTS 7

there would be other groups in the zone that might very well cite this

precedent in claiming similar treatment for themselves.

Mr. GROSS. As well as other groups in other areas that have similar

climates and so on and so forth, similar conditions, in Central America. I would know of no reason why this would not spread out over

a pretty substantial number of employees throughout the Federal Government stationed in Central American and South American countries.

Mr. MACY. I would agree, if this precedent were taken, it would

be very difficult for us to advise you as to where you could draw the

line when other groups make a similar case.

Mr. GROSS. We are getting pretty deeply into the Congo and Africa

where there are similar—and, I assume even worse—working conditions than there are in the Panama Canal as to climate.

Mr. MAGI-. The U.S. employment now is extended around the world

and we have American employees engaged in work in very difficult

climate conditions.

Mr. GROSS. Is there any medical information or knowledge available to the Civil Service Commission with respect to the health conditions in the Panama Canal Zone as it relates to temperature and so

on and so forth? Do you know of any?

Mr. MACY. 'Well, we have information about the general working

conditions there 

Mr. GROSS. Bearing directly upon this issue?

Mr. MACY. We are not aware of any conditions with respect to

these particular jobs that cannot be adequately taken care of in the

compensation scale, and it is our position that if there are special

strains and special hazards involved in a job, this should be reflected

in the rate of pay and should not be reflected in preferential treatment

under the Retirement Act.

I think it is important to recognize that any provision in compensation will ultimately be reflected in the Retirement Act because the

retirement formula is based upon rates of pay and years of service.

Mr. GROSS. That is right.

Mr. MACY. We feel that this is the more appropriate way to deal

with hazard, if it exists, than through a change in the Retirement

Act formula.

Mr. GROSS. I agree with your last statement.

That is all, Mr. Chairman.

Mr. JOHANSEN. Mr. Chairman.

Mr. OLSEN. Mr. Udall? -

Mr. UDALL. I would defer to my friend from Michigan, if he is

ready.

Mr. JOHANSEN. I don't want to get ahead of my good friend from

Arizona but let me see, Mr. Chairman, if I understand this.

At the present time the only preferential arrangements with respect

to retirement and retirement benefits relates to law enforcement officials; is that correct?

Mr. MACY. That is correct.

Mr. JOHANSEN. What about firemen?

Mr. MACY. Firefighters are under the same provisions as the rest

of the Federal employees. There has been, from time to time, a request similar to this one for firefighters as there have been for other

groups. I believe at one time a certain group of postal employees,
8 ANNUITIES OF PANAMA CANAL SHIP PILOTS

who were involved in certain hazardous work, applied for this kind

of special consideration. So that from time to time this has been

viewed by some groups as a way of providing increased compensation on a deferred basis, through retirement, for exposure to hazard

and adverse conditions.

Mr. JOHANSEN. And the position of the Commission and the Chairman is that, if this factor of additional hazard is to be recognized, it

ought to be recognized through regular compensation during the period of employment rather than in a deferred compensation under the

guise of retirement?

Mr. MACY. That is exactly correct, sir. That is our position.

Mr. JOHANSEN. Would it be your feeling that those other groups,

which have attempted to secure this approach, such as the firemen,

would come in here with a pretty strong argument in terms of precedent if this were enacted?

Mr. MACY. That would be my view.

Mr. JOHANSEN. One final question: Are you able to say to what extent in the present compensation scale, which seems to me fairly modest, the fad-ors of hazard or other factors peculiar to this occupation,

are they not already recognized in that wage scale?

Mr. MACY. The representative of the Panama Canal Company can

respond to that in more authoritative fashion, but it is my understanding that the rates of pay have been developed based upon those rates

prevalent in the maritime industry where hazard is reflected in the

compensation.

Mr. OLSEN. Mr. Udall?

Mr. UDALL. In that connection, I don't suppose you will be able to

help me, and I will perhaps reserve it for the following witnesses. The

comparison of New York harbor pilots' compensation one who perhaps might have similar duties, bringing in the Queen Mary and things

of this sort, would the pay of these Panama Canal pilots—becauseI

was interested in the same question that Mr. Johansen raised; that is,

you have repeatedly said, commenting on these bills, that hazardousduty compensation should be reflected in the pay rather than in the

retirement benefits. I am interested to see, as Mr. Johansen, whether

this has actually been done in this case.

Let me go into a couple of other items, if I can, Mr. Macy.

To summarize, you have indicated in your statement, I think, that

there is no particular element of additional cost to the Government if

this bill were passed, as far as you can determine?

Mr. MACY. That is correct. We do not oppose it on the grounds of

costs. Frequently we take that position on liberalization, but the

amounts involved here are not significant.

Mr. UDALL. It is a question of precedent and it might lead us into

something later that would be costly?

Mr. MACY. That is correct.

Mr. UDALL. These pilots have given me, privately, and I am sure

'the other members of the committee, a copy of the statement they

will make here today, or a letter to Chairman Murray, and in there

they indicate that in order to qualify most of them have to put in

about 15 years in maritime work, as first officer or captain of a

merchant vessel; things of this sort. During these years, they make

contributions to the social security fund. They indicate that
ANNUITIES OF PANAMA CANAL SHIP PILOTS 9

it is age 35 before most of them actually can qualify for work in the

Panama Canal Zone. They indicate further that the average pilot,

based on their statistics, for the last 14 years, have retired, or died,

or left the service at an average age of 56 years, with almost 20 years

of service as a pilot.

Let's take a man who has put in 15 years in maritime work, made

contributions to social security—he goes to the Panama Canal, he

works 19 years down there as a Canal pilot, and he dies. Does his

wife get any benefits, either from social security or from the Government retirement system in this particular case?

Mr. MACY. He would have achieved coverage under social security

because he would have worked the necessary number of quarters. So

his widow would be eligible for the regular social security death

benefits. Under civil service he would be—let's see. He would have

haq 19 years' service.

What would his situation be on that, Mr. Ruddock

Mr. RuDDocx. His earned annuity after 19 years' service would be

34.25 percent of his average salary for a 5-year period. His widow

would receive, in a survivor annuity, 50 percent of his earned annuity

and each surviving child, under the age of 18, or between 18 and 21

and in full-time attendance at school, would receive $600 a year.

I beg your pardon. The widow would receive 55 percent of his

earned annuity by virtue of an amendment of last October.

Mr. UDALL. Let me follow this a little further. Let's take one of

their hardship cases: the man who works 15 years to qualify for this

job. Then he only works 10 years before he dies, or perhaps is disabled. He is now 45 years of age. He has worked 15 years in

maritime industry. He has worked 10 years as a pilot, and he is

disabled in service. If he dies, would his wife be entitled to any

benefits under social security or under the Federal retirement system?

Mr. MACY. The social security system would remain the same.

Under civil service disability, he would receive 40 percent of his salary

or the annuity that he would receive at 60, whichever is the smaller.

Mr. JOHANSEN. What about the widow?

Mr. MACY. On the widow, the same thing would apply that Mr.

Ruddock indicated, except the amount would be less because of less

service. And we would compute the service based upon 11/2 percent

the first 5 years, 13/4 percent the second 5 years, and then 2 percent

for the years beyond that in computing the annuity. And then his

widow would receive 55 percent of the resulting annuity.

Mr. JOHANSEN. Effective at what age would the widow be eligible?

Mr. RTJDDOCK. Her annuity would begin the day after his death

and continue for the remainder of her life, unless she remarried.

Mr. UDALL. One further question along the same line. Take a

man with 15 years' service—maritime--10 years in the Canal Zone.

Then he dies. Is there any situation under which his widow would

not get back at least the amount of his contributions to the Federal

retirement system?

Mr. MACY. Let me pass that one to the expert here.

Mr. RITDDOCK. There is no such condition. In fact, that can't happen with any Federal employee, because the act contains a guarantee

that either the employee or his survivors will get back every penny

he paid into the fund.
10 ANNUITIES OF PANAMA CANAL SHIP PILOTS

Mr. GROSS. Plus interest.

Mr. RUDDOCK. If he has more than 5 years' service; there is no

interest after 1956.

Mr. UDALL. Mr. Chairman, these are the questions that I had.

Mr. OLSEN. No more questions?

Mr. JOHANSEN. Let me just see if I can phrase the question this

way—and I think Mr. Udall's questions have probably brought the

answers—but, if I construe the argument in the case that is advanced

in support of this in excessively simple terms, it is that, for some

reason—whether the tensions of the job, the climate, or the combination, or happenstance—as it now stands the men aren't living long

enough to benefit from the pension. Now, that may oversimplify

my understanding of the argument.

I would just like to have you respond to it.

Mr. MACY. This is a difficult point to respond to without really

having all of the data with respect to the group of men tha are

involved. It is possible for them to retire at 55, after 30 years, with

a 5-percent reduction in annuity. This is possible.

Mr. JOHANSEN. After 30 years of what? Not piloting?

Mr. MACY. Thirty years of Federal service.

Now the examples that Mr. Udall cited are all examples where

the service prior to pilot service was non-Federal. Therefore they

accumulated certain equities under the social security system, which

were available to them.

I don't believe I can really be responsive to your point without having more complete data than I have of the vital statistics nature with

respect to this group.

Let me add one further point in answer to your earlier question.

There is a group of Federal employees, a rather substantial group,

that are also subjected to strain and pressure and where the decisions

they make are of great significance in terms of public safety. These

are the air traffic controllers of the Federal Aviation Agency. We

have had a number of approaches, from time to time, from that group

and from the Agency, asking if we would support preferential treatment on retirement on the grounds that the tension involved in the

operation of bringing these aircraft in at high speeds, at congested

airports, is a serious one. Our view has been that even in that instance

it is better to adequately compensate for those jobs and to provide

conditions of proper medical and safety devices and techniques than

to give special treatment under the Retirement Act.

Mr. JOHANSEN. Thank you.

Mr. OLSEN. Thank you very much, Mr. Macy and Mr. Ruddock.

Mr. MACY. Thank you.

Mr. OLSEN. We appreciate your being here with us this morning.

The next witness is Mr. Paul M. Runnestrand, Executive Secretary,

Canal Zone Government. Mr. Runnestrand.

STATEMENT OF PAUL M. RUNNESTRAND, EXECUTivE SECRETARY,

CANAL ZONE GOVERNMENT

Mr. RUNNESTRAND. Thank you, Mr. Chairman.

I am Paul Runnestrand, executive assistant to the President of

the Panama Canal Company and Executive Secretary of the Canal
ANNUITIES OF PANAMA CANAL SHIP PILOTS 11

Zone Government. I am appearing here this morning on behalf of

the Panama Canal Company.

Taking a cue from . the previous witness, perhaps you would care to

insert my prepared statement in the record and I also will summarize

to save your time, sir.

Mr. OLSEN. Without objection, your statement will be entered into

the record in full at this point and you may summarize your statement.

(The statement follows:)

PREPARED STATEMENT OF PAUL M. RUNNESTRAND, EXECUTIVE ASSISTANT TO THE

PRESIDENT, PANAMA CANAL COMPANY

Mr. Chairman, I am Paul M. Runnestrand, executive assistant to the President of the Panama Canal Company and Executive Secretary of the Canal Zone

Government. I am here this morning on behalf of the Panama Canal Company

which is the Government agency that employs the Panama Canal pilots who

are subject to H.R. 2030.

The Panama Canal Company has already submitted a report on this bill by

letter dated March 14, 1963, signed by Mr. W. M. Whitman, Secretary of the

Panama Canal Company and addressed to the Honorable Tom Murray, chairman

of the Committee on Post Office and Civil Service. I suggest that this report

be made a part of the record of this hearing.

For reasons of principle the Panama Canal is not in a position to support

enactment of H.R. 2030. The purpose of the bill is to reduce to age 55 the

age requirement for voluntary retirement of Panama Canal pilots without

reduction in annuity, to reduce from 30 years to 20 years the length of service

required to qualify for voluntary retirement prior to age 60 without reduction

in annuity, and to provide a more favorable formula for computation of the

amount of the annuity. Special provisions now contained in the general retirement law, which would be extended to Panama Canal pilots by H.R. 2030, are

limited to positions involving the investigation, apprehension, and detention

of suspected or convicted criminals. As a matter of policy the extension of

these early retirement provisions to other classes of employees not engaged

in such law enforcement activities does not appear to be justified by the rationale

supporting the original exceptions.

I believe the Civil Service Commission and the report of the Bureau of the

Budget have fully covered the executive branch position on this general policy

which the Panama Canal Company as an executive agency of course supports.

This position of principle does not in any degree mean that the management

of the Panama Canal fails to recognize the special conditions and responsibilities

applicable to Panama Canal pilots. We employ some 130 pilots at the present

time and it is indeed a competent and skilled group performing highly responsible

work that involves special physical conditions and psychological stresses and

strains. The duties of a pilot are undeniably responsible and a high order of

skill and judgment is required. I do not know of any other operating employees

in the Panama Canal who have greater responsibility.

A Panama Canal pilot normally makes three transits a week with an intervening day without duty between any two such transits and with a designated nonwork day in each week. Thus, a typical workweek for a pilot in which Saturday

happened to be designated as a nonwork day might involve transits on Sunday,

Tuesday, and Thursday. In unusual circumstances, such as the occurrence of

especially heavy traffic, it may be necessary for pilots to make transits on 2

successive days.

Ususally the normal workweek of a transit pilot will average to about 40 hours

of duty, including an allowance for travel time. But, of course, there are variations since the length of transit time varies with the nature and size of the

vessel, traffic conditions, and other circumstances. The pilot is in any event paid

on the basis of a 40-hour week and receives overtime for hours in excess of

40. In recent years, with the increase of canal traffic, night transits are becoming

more frequent. A normal transit job for a pilot consists of 11 hours in actual

canal transit duty and 21/3 hours of allowed land travel, or about 13 hours' total

time.

The degree of mental stress which a pilot undergoes varies greatly with

particular transits and depends upon considerations such as variation in ship

Sizes, traffic volume, vessel equipment breakdowns, and weather conditions.
12 ANNUITIES OF PANAMA CANAL SHIP PILOTS

The Panama Canal management is fully cognizant of the physical requirements

and makes every effort to schedule the work so as to minimize the strain or

stress that is inherent in the pilot's work. Thorough physical examinations of

pilots are required annually in order to insure that we have a periodic evaluation of the pilots' continuing fitness to perform pilotage duties. These examinations are required both in the interest of insuring operating efficiency and in

the interest of insuring that no pilot is called upon to perform duties which he

is no longer physically able to perform without unduly taxing his capabilities or

affecting proper performance. These annual physical examinations afford an

appropriate basis for initiation of disability retirements in any case where that

is indicated.

The Panama Canal, and therefore the United States Government, has a substantial investment in the training of a Panama Canal pilot, and it is a fact

that a pilot's skill and ability continue to grow with additional experience. Therefore, even assuming the bill H.R. 2030 were otherwise acceptable in principle

as special retirement legislation, the Panama Canal opposes the feature of the

bill which would permit voluntary retirement at full annuity after only 15 years

of service as a Panama Canal pilot.

Mr. RIINNESTRAND. I might suggest also that the committee may

wish to put in the record at this time our agency official report, which

is a letter addressed to Chairman Murray under date of March 14,

1963.

Mr. OLSEN. At this point, without objection, the letter of Secretary W. M. Whitman, of the Panama Canal Company, to Chairman

Tom Murray, of the Committee on Post Office and Civil Service, will

be made a part of the record.

(The letter follows:)

PANAMA CANAL COMPANY,

Washington, D.C., March 14, 1963.

Hon. TOM MURRAY,

Chairman, Committee on Post Office and Civil Service,

House of Representatives.

DEAR MR. MURRAY: Your request to the Secretary of the Army for a report

on H.R. 2030, a bill to amend the Civil Service Retirement Act with respect

to annuities of Panama Canal ship pilots, has been referred to me for reply

on behalf of the Panama Canal Company.

H.R. 2030 would amend section 6 of the Civil Service Retirement Act (5 U.S.C.

2256) to provide that a Panama Canal pilot who attains the age of 55 years and

completes 20 years of service, not less than 15 years of which shall have been

as ship pilot in the Canal Zone would, upon separation from the service, be paid

an annuity computed as provided in section 9 of the act (5 U.S.C. 2259). This

would reduce from 62 to 55 the age requirement for voluntary retirement without reduction in annuity (or from age 60, with 30 years service) and would

reduce from 30 years to 20 years the length of service required to qualify for

voluntary retirement prior to reaching age 60 without reduction in annuity.

The bill would also amend subsection 9(a) of the Retirement Act to provide

that the annuity of a Panama Canal pilot be computed in the same manner in

which the annuity is computed for an employee "the duties of whose position

are primarily the investigation, apprehension, or detention of persons suspected

or convicted of offenses against the criminal laws of the United States" (subsection 6(c) of the act) ; namely, at the straight rate of 2 percent for each year

of creditable service rather than at the lesser, progressively scaled rates applicable generally under subsection 9(a) of the act. Although the rate at which

the annuity of a Panama Canal pilot would be computed under the proposed

legislation would be the same as it is for the law-enforcement officers covered

by section 6(c) of the act, the age requirement for voluntary retirement at full

annuity would be different (50 years for law-enforcement officers, 55 years for

Panama Canal pilots), and the length of service requirement in the particular

employment would also be different (20 years as a law-enforcement officer, 15

years as a ship pilot plus 5 years of other creditable service).

A Panama Canal pilot normally makes three transits a week with an intervening day without duty between any two such transits, and with a designated nonwork day in each week. Thus, a typical workweek for a pilot, in
ANNUITIES OF PANAMA CANAL SHIP PILOTS 13

which Saturday happened to be designated as a nonwork day, might involve

transits on Sunday, Tuesday, and Thursday. In unusual circumstances, such

as the occurrence of especially heavy traffic, it may be necessary for pilots to

make transits on 2 successive days. During the times that a pilot is assigned

to harbor duty (which does not involve transiting ships through the canal)

he works regular shifts of 8 hours per day. When the pilot is on transit duty

his normal three transits a week usually average out, with the inclusion of an

allowance for travel time, to approximately 40 hours of duty per week, there

being, of course, some variation inasmuch as the length of transit time varies

with the nature and size of the vessel •and other circumstances. Transits at

night were formerly not normally required but in recent years, with the increase of canal traffic, night transits are becoming more frequent. Transit times

for vessels normally are not less than 13 hours, except in rare instances. The

duties of a pilot are undeniably responsible duties, and a high order of skill

and judgment is required. The degree of mental stress which a pilot undergoes varies greatly with particular transits and depends upon considerations

such as variation in ships' size, traffic volume, vessel equipment breakdowns,

and weather conditions.

The Panama Canal Company is fully cognizant of the physical requirements for the important position of Panama Canal pilot and makes every

effort to so schedule the work as to minimize the strain or stress that is

inherent in the employment. Thorough physical examinations of pilots are required annually in order to insure that periodic assessments are made of the

pilot's continuing fitness to perform pilotage duties. These examinations are

required both in the interest of insuring operating efficiency and in the interest of insuring that no pilot is called upon to perform duties which he is no

longer physically able to perform without unduly taxing his capabilities or affecting proper performance. Such annual physical examination of course affords an appropriate basis for the initiation of disability retirements in any

cases where that is indicated.

In view of the substantial investment required in the training of a Panama

•Canal pilot, and in view of the fact that a pilot's skill and ability continue

to grow with additional experience, the Panama Canal Company and the Canal

Zone Government are unable to support the feature of the subject legislation

which would permit voluntary retirement at full annuity after only 15 years

of service as a Panama Canal pilot.

To establish a basis for comparison, the Panama Canal Company sent inquiries to 23 associations of ship pilots in the United States regarding the

features of their retirement plans respecting age and service requirements

for optional retirement. Seven replies were received. It would appear that

the city of Los Angeles Harbor Department has the most favorable optional

retirement plan. It permits optional retirement with 30 years service at any

age or retirement at age 55 with 10 years service. None of the other associations replying to the inquiries permit optional retirement at under 60 years of

age, and most require that the pilot reach age 65 before he may retire. Pilot

associations in the United States are, of course, generally profit-sharing associations and the pension or retirement plans would therefore differ considerably

from the retirement system for Federal employees.

Furthermore, the special provisions now contained in the Civil Service Retirement Act which would be extended to Panama Canal pilots by H.R. 2030 are

limited to positions involving the investigation, apprehension, and detention

of suspected or convicted criminals. As a matter of policy, the extension of

these early retirement provisions to other classes of employees not engaged in

such law enforcement activities does not appear to be justified by the rationale

supporting the original exceptions.

The Panama Canal Company opposes enactment of H.R. 2030.

The Bureau of the Budget advises that there is no objection to the submission of this report to your committee.

Sincerely,

W. M. WHITMAN,

Secreta,ry.

Mr. RUNNESTRAND. Mr. Macy has explained the bill, of course, and

also the reasons for the Commission's opposition to it, so let me say

at the outset that it is the principle explained by Mr. Macy that puts

the Panama Canal Company in position of not supporting this bill.

97060-63--3
14 ANNUITIES OF PANAMA CANAL SHIP PILOTS

We also would oppose the bill on the 15-year requirement of service

as a ship pilot, but the amendment proposed last year to the bill, which

I understand the pilots are agreeable to, of requiring 20 years, would

remove that objection. But our position, as an executive agency, is

one of principle as stated by Mr. Macy and I believe need not be

repeated here by me as it was fully expressed.

As indicated by Mr. Macy, I want to make very clear on behalf of

our agency, that this position of principle or policy does not in any

degree mean that the management of the Panama Canal fails to

recognize the special conditions and responsibilities applicable to

Panama Canal pilots.

We employ some 130 pilots at the present time and it is indeed a

competent and skilled group performing highly responsible work

that involves special physical conditions and psychological stresses

and strains. The duties of a pilot are undeniably responsible and a

high order of skill and judgment is required. I do not know of any

other operating employees in the Panama Canal who have greater

responsibility.

I think the committee, and it is explained in the prepared statement, is familiar with their conditions of work, so I won't repeat them

other than to say they do it on a transit basis so that they do have long

hours of work, two or three times a week, depending on traffic. A

typical workweek, where Saturday happened to be a nonwork day,

might involve transits on Sunday, Tuesday, and Thursday. In times

of heavy traffic, the pilot might have to make transits on 2 successive

days. That is not a normal thing and as we expand the force, that

should not be a normal thing. Actually the normal workweek will

average out to about 40 hours of duty a week, which includes an allowance of 21/3hours travel time for each transit.

In other words, on their _present schedule, they are working some

40 hours a week although the normal transit at any one time might

total about 13 hours, that is, 11 hours of actual transit plus 21/3 hours

of travel time.

Mr. UDALL. Mr. Chairman.

Mr. OLSEN. Yes, Mr. Udall.

Mr. UDALL. On this point, I would assume, sir, you have a long

background in maritime work. How long have you been in the canal?

Mr. RUNNESTRAND. I have been in the canal 22 years, but not, sir, in

maritime work.

Mr. UDALL. What was your background prior to going there?

Mr. RITNNESTRAND. I am a lawyer, sir. I went down there as a

lawyer and I am now in the Governor's office in administrative work.

Mr. UDALL. You are familiar and you have been out on these transits

and have seen them?

Mr. RITNNESTRAND. Yes, sir. ,

Mr. UDALL. Maybe I ought to defer this question to the pilots themselves, but could you give me some idea—you talk about a transit taking

13 or 14 hours. Is some of the pilot's time inactive while waiting for

the lock to fill up with water or for the water to run out of the lock or

are they on the bridge under constant tension throughout this 14-hour

period?

Mr. RITNNESTRAND. Well, the 14-hour period includes travel time,

land travel, going to and from the point of embarkation. I think that
ANNUITIES OF PANAMA CANAL SHIP PILOTS 15

the representatives of the pilots can better explain that, but he is on the

bridge at all times, including the time when the chambers are filling or

emptying of water.

Mr. OLSEN. Only 21/3hours of land time?

Mr. RONNESTRAND. Yes, sir. We are speaking in averages now, so

a normal transit would be around 11 hours. The only time that he

would be able to relax, and I am sure that they can explain this better,

would be if they are tied up for a couple of hours in the lake waiting

for traffic to clear at some bottleneck, but during the lockages their

responsibilities are heavy. They are in charge of the ship during that

time.

Mr. UDALL. This land time, this consists of getting in an automobile

or truck or something and going from the east end to the west end of

the canal?

Mr. RUNNESTRAND. Yes, sir; that is right. The pilot takes the ship

all the way through normally. He lives on the Pacific side and takes

it through to the Atlantic side. The drive back is an hour and a half

or something like that; and there would be transportation at the beginning of the trip from the harbormaster's office out to the mine dock,

where they get in a launch to go out and join the ship. The 21/3 hours

is land travel time, not the launch travel time.

Mr. JOHANSEN. Would the gentleman from Arizona agree that if

the automobile driving conditions are similar to those in the District,

there might be some tension involved in that.

Mr. UDALL. Indeed; and I think they would be fully warranted in

claiming hazardous pay.

Mr. RUNNESTRAND. I think all of us who travel in the Canal Zone

agree, although I do not believe it is as bad as Washington.

The degree of mental stress of a pilot varies greatly with a particular transit and the size of the vessel and weather conditions. There is

no question it is hot and humid, and during daytime transits the sun

is hot. Their testimony last year, and I am sure again this year, will

bring that out.

This, getting back to one of the points you went into with Mr. Macy,

would be true also of some of our other employees, particularly those

on vessel equipment that we have, such as dredges, tugboats, and that

sort of thing.

Mr. UDALL. I was going to raise this point. You said you had been

in the zone 22 years?

Mr. RUNNESTRAND. Yes, sir.

Mr. UDALL. What is the typical weather? Do you have seasons?

Is it hotter in the summer or pretty much the same year round?

Mr. RUNNESTRAND. The temperature and humidity is roughly the

same year round, but our seasons are rainy and dry. We have 4

months' dry season from about Christmastime to the end of April and

8 months' rainy season. Of course, these are tropical rains and the sun

still shines much of the time.

Mr. UDALL. What are the average high and low temperatures in an

ordinary day?

Mr. RUNNESTRAND. The average year round would be around 85.

High temperatures will get into the 90's, no more than 95. The discomfort involved in our temperature there is related to humidity because we have a year-round average humidity of 85 or so. I suppose
16 ANNUITIES OF PANAMA CANAL SHIP PILOTS

at certain times in the year in the very early morning hours, it might

.get down as low as 72, but normally it won't get that low and every day

will be in the middle 80's and many times in the low 90's.

Mr. UDALL. All right. If you picked up this group of very distinguished and able gentlemen up here and moved us to the Canal Zone,

has it been your experience that our life expectancy, if we were doing

the same kind of work we are here, would be sharply and markedly

decreased?

Mr. RUNNESTRAND. No, sir, I couldn't say that. In the old days, in

the construction days, living conditions were considerably different.

If any of you have been to the Canal Zone, you will realize that it is

now an attractive, reasonably healthy place.

Mr. UDALL. What health conditions, what diseases, what difficulties

that I don't have living in Washington might I encounter if I moved

to the Canal Zone?

Mr. RUNNESTRAND. I don't believe there would be any one thing you

could point to except, possibly, the year-round exposure to the sun

which, if you weren't careful, may cause a tendency toward skin cancer

that the pilots associate with it. It applies to anyone who stays out

in the sun. Of course, there are protective things to use for that these

days, to keep the sun out, and, if carefully used, they will prevent that.

Apart from the effect of the sun, our experience doesn't bring to my

mind any disease or affliction other, perhaps, than the general debilitation, or whatever it is that they talk about, which the white man in

the tropics experiences through the years.

Mr. OLSEN. Would the gentleman yield?

Mr. UDALL. Yes.

Mr. OLSEN. The fact is, though, the life experience of these pilots is

less by a great deal than the life experience of other retired Federal

employees isn't that correct?

Mr. RUNNESTRAND. I don't know the answer to that, sir.

Mr. OLSEN. Do you challenge the figures that the Panama Canal

Pilots Association brought here last year?

Mr. RUNNESTRAND. No, sir.

Mr. OLSEN. These were concerning life experience?

Mr. RUNNESTRAND. I do not challenge them. The only thing about

it is I do not know the relative or the comparative figures for some

other group of similar number of employees, either in occupational

category or even taking Federal employees retired from the Canal

Zone generally,. I have never seen developed—and I am not sure it

would be feasible although perhaps it would—other type figures to

compare so, I don't know, for example, whether the incidence of skin

cancer is markedly more than in other occupational categories. It

would presumably be more than someone at a desk.

Mr. UDALL. Skin cancer has been 'Mentioned. Do you find 20, 30,

40 percent of the population down there has skin cancer, or is this

something that afflicts 1 or 2 percent, perhaps?

Mr. RUNNESTRAND. I don't know the percentage, but I think it is

not at all as high as your first figure.

Mr. UDALL. Is the sun when it comes down any hotter than it is in

Arizona, where it gets up to 100 in my home, or does it feel about the

same?
ANNUITIES OF PANAMA CANAL SHIP PILOTS 17

Mr. JOHANSEN. I think, Mr. Chairman, the witness ought to be

warned to be very careful how he responds to that question.

Mr. RIINNESTRAND. I am sure the 110 temperature in Arizona, without the humidity, would be a much more pleasant thing perhaps but,

of course, our temperatures do not get that high.

Mr. UDALL. I spend many hours out in the hot sun during the

months of July, August, and September in even-numbered years, chasing that elusive wildlife known as the undecided voter, and I have had

that 1100 sun beat down on me. I wondered what my exposure

to skin cancer might be?

Mr. BECKWORTH. Mr. Chairman, I am going to have to leave in a

moment. I want to get in about two sentences, if the gentleman will

permit.

Mr. OLSEN. Yes.

Mr. BECKWORTH. Why do you oppose this bill? I did not get here

at the beginning. Is it just a principle proposition only?

Mr. RIINNESTRAND. Yes, sir.

Mr. BECKWORTH. State the principle that you feel would be violated.

Mr. R-crNisrtsTRAND. The principle, as explained by Mr. Macy before

me, is the principle against special retirement legislation to attempt

to compensate individual occupational categories for special hazardous

or health conditions, particularly in view of the precedent it sets for

the many other occupational categories which I understand have, in

the past, petitioned for similar treatment.

Mr. BECKWORTH. Have not a good many precedents, of one kind or

another, in the field of retirement been set?

Mr. RUNNESTRAND. I understand only the one of the law enforcement officers.

Mr. UDALL. Will the gentleman yield?

Mr. BECKWORTH. Yes.

Mr. UDALL. I think Mr. Macy's testimony, and testimony of this

witness, have made two or three quick points. One is there would be

no cost in this legislation. They do not claim that this would break

the retirement funds, or produce any additional cost, because of the

small number involved. Their opposition is one of principle. It

opens the door. If the Panama Canal pilots are entitled to it, then

the people in the control towers in the airports are entitled to it, and

other groups would come in and these might cost something. This,

in a nutshell, is the objection.

Mr. BECKWORTH. I did want to understand. Thank you, Mr.

Chairman.

Mr. GROSS. Are you through?

Mr. UDALL. I am through.

Mr. GROSS. Mr. Chairman.

Mr. OLSEN. Mr. Gross.

Mr. GROSS. What, again, is the average workday?

Mr. RIINNESTRAND. The average transit—maybe I should explain

how these people work. They go on a transit through the Canal 

Mr. GROSS. I understand that. The average• workday or average

transit is how many hours?

Mr. RIINNESTRAND. The average is around 11 hours of actual transit

time.
18 ANNUITIES OF PANAMA CANAL SHIP PILOTS

Mr. GROSS. And there is 2% hours for deadheading back to the

other side?

Mr. RUNNESTRAND. Yes, sir.

Mr. GROSS. They work only one way?

Mr. RUNNESTRAND. Yes, sir.

Mr. GROSS. So that it is about 11 hours, and they are away from

home some 13 hours?

Mr. RUNNESTRAND. Yes, sir.

Mr. GROSS. How long does it take to transit the Canal by automobile? I understand weather conditions have something to do with

this.

Mr. RUNNESTRAND. It is 50 miles—not on superhighways—so, by

automobile, from one end of the Canal to the other, it is roughly 1

hour and 45 minutes, or 2 hours.

Mr. GROSS. To drive by car?

Mr. RUNNESTRAND. Yes

'

sir.

Mr. GROSS. What about the train; it still operates, does it not?

Mr. RUNNESTRAND. Yes. The train is roughly 1 hour and 20 or 25

minutes and they do use the train at times.

Mr. GROSS. So they are amply compensated for land transit

Mr. RUNNESTRAND. Yes, sir; we think so.

Mr. GROSS. In your opinion?

Mr. RUNNESTRAND. Yes, sir.

Mr. GROSS. Are the pilots presently asking for an 8-hour day?

Mr. RUNNESTRAND. Yes, sir; that is under discussion at the present

time. They have 'petitioned the Panama Canal Company for consideration of the application of an amendment—the Thomas amendment,

wage board law last year—which involved overtime for working in

excess of 8 hours. That is under consideration at the present time.

It has been the position of the Agency that the law does not apply to

this group of employees.

Mr. GROSS. If granted, would this represent something approaching a 20-percent increase in compensation?

Mr. RUNNESTRAND. I do not know the percentage, but it would be

an expensive thing; yes, sir.

Mr. GROSS. You pay overtime after how many hours?

Mr. RUNNESTRAND. Forty.

Mr. GROSS. After 40 hours and the canal transits are approximately

an average of three per week; is that correct?

Mr. RUNNESTRAND. Yes, sir.

Mr. GROSS. And the pay schedule ranges from $11,000, approximately, to $17,000 a year; is that correct?

Mr. RUNNESTRAND. Yes, sir. The pilot in training, who is in that

position at the bottom of the ladder for the first 6 months, makes

11,003.20, and, at the end of 7/12years, the pilot receives $17,093.04.

Mr. GROSS. A pilot taking a vessel through the canal is not constqntly out in the sun; is he?

Mr. RUNNESTRAND. No • not constantly, in the sense that he is on

the bridge of the ship, certain portions of which may be covered. I

would prefer the pilot to discuss this in more detail, but you don't

have to be out directly in the sun to get the effects of it down there,

such as the glare on the water.

Mr. GROSS. I understand that. Are the bridges air conditioned?
ANNUITIES OF PANAMA CANAL SHIP PILOTS 19

Mr. RUNNESTRAND. I believe some of the ships may have air conditioning in the center portions, but that would be pretty rare, and not

on the bridge itself.

Mr. GROSS. It is not unreasonably hat in the Canal Zone if you are

able to get a breeze going through a shaded area; isn't that correct?

Mr. RUNNESTRAND. Yes, sir, that is generally true.

Mr. GROSS. You do have the tradewinds down there?

Mr. RUNNESTRAND. Yes, sir, at this time of year, the tradewinds

are delightful. The humidity, however, is very high even in the dry

season, and it is unquestionably hot. Of course, the heat isn't what

gives skin cancer but the direct rays of the sun. However, I am not

an expert on skin cancer.

Mr. GROSS. I only asked the question because you said you had

transited the canal on vessels and I realize that perhaps we ought to

be getting to the pilot witnesses for information on some of the questions that I have asked. I believe that is all at this time, Mr. Chairman. Perhaps we can call these gentlemen back a little later if

we have the time and we can't get the answers from the pilots.

Mr. JOHANSEN. Mr. Chairman, if this change were made to the 40-

hour week, it would be, I assume, without any reduction in annual

pay. Let me ask it a diferent way. Is the present pay on an annual

basis?

Mr. RUNNESTRAND. Yes, sir.

Mr. JOHANSEN. Would there be a change in the annual pay if you

went to a 40-hour workweek?

Mr. RUNNESTRAND. I can't answer that because if we were to go to

an 8-hour day, 5 days a week, it would be such a drastic and complete

change of the schedule and utilization of pilots that the entire system

and compensation would have to be reviewed. It would involve increasing the number of pilots. It probably would involve no longer

taking the ships through with one pilot from one end to the other,

but somewhere in the middle you would have to have launches and

take them off and put on another pilot. The question specifically of

whether in changing over to that form there would be more or the

same annual pay they received would depend on the study. To pay

them overtime in excess of 8 hours a day, if this new law as of last

year were applicable, would be an expensive thing.

As it is now, they average around 40 hours a week. If the transits

that they have in a week, including their travel time, is less than 40

hours, the extra hours are constructed so they don't have any reduction in pay because of working less than 40 hours and there are some

weeks where there are a few hours less than 40. If the work is over

40 hours a week, even though they only have three transits, one might

be extra long or they might be called out for a fourth transit, they

are paid time and one-half for work in excess of 40 hours.

Mr. GROSS. That is about $12.33 an hour for the overtime; is it not?

Mr. RUNNESTRAND. Yes, sir, exactly $12.33 an hour for the top step

pilots.

Mr. JOHANSEN. Just to clarify the thing, the base on which the

overtime is computed is arrived at by dividing the stated annual salary by how many hours?

Mr. RUNNESTRAND. That is 2,080, a 40-hour week. The only further point I might mention is that the agency is fully cognizant of all

of these things we have been talking about and it makes every effort
20 ANNUITIES OF PANAMA CANAL SHIP PILOTS

in scheduling the work of the employees to minimize the strain

and stress that is inherent in their work. Thorough physical examinations are required of pilots annually and this gives us an opportun•

ity for periodic evaluation for continuing fitness and their general

health. It is both in our interests and in their and forms the basis

for disability retirement if that is indicated.

Mr. GROSS. I have a question, if I may, Mr. Chairman.

Mr. OLSEN. Mr. Gross.

Mr. GROSS. The pilots do get medical care?

Mr. RUNNESTRAND. On the same basis as our other employees. We

have a hospital facility, but it is not free medical care.

Mr. GROSS. It is not free. Is it cutrate medical care?

Mr. RUNNESTRAND. Yes, sir. Gorgas Hospital in the Canal Zone

is quite a famous one with very adequate, full medical coverage, and,

of course, the Federal group health insurance plans apply to us down

there as to all Federal employees.

Mr. OLSEN. Could I interrupt. Did you mean to say "cutrate

medical care," or do you know what that term means?

Mr. RUNNERSTRAND. I am afraid I don't, sir.

Mr. OLSEN. I don't mind your term, Mr. Gross, but I would like a

definition of what it is.

Mr. UDALL. The same kind of care Members of Congress receive.

Mr. GROSS. I just wanted to say you might be acquainted with that.

Mr. OLSEN. I am not.

Mr. JOHANSEN. IS it medical care paid for under the same type

of group insurance that other Federal employees have in which case

I would assume it is not cutrate medical care?

Mr. RUNNESTRAND. No, sir, I don't know what the term means.

Ours is excellent full coverage.

Mr. JOHANSEN. You pay at cost the hospital bill and nothing for

the doctors' bills. I mean that is what I would understand cutrate

medical care is.

Mr. GROSS. Let me be a little more explicit. Members of Congress

go out to Bethesda or Walter Reed. They pay for their hospital

room but they get, so I understand—I have never occupied a bed in

either one of those hospitals—free medicine or medicine at no cost, call

it whatever you want. This I would call cutrate medical care. This

is what I was trying to get at.

Mr. UDALL. Would the gentleman agree that deductions are taken

from Members' pay and Federal employees' pay under some plans,

similar to Blue Cross?

Mr. GROSS. Of course, but this is elective. They can participate

in the program or not participate in the program, as they see fit. I

assume that most of them do. I. do, but I know that Members of

Congress go to Bethesda and Walter Reed and get this service.

Mr. OLSEN. I have never been there either, so I wasn't acquainted

with that. Now getting back to the Canal Zone, do you people get

free medicine at all?

Mr. RUNNESTRAND. No, sir. It operates here as a Federal employee

without Bethesda or Walter Reed privileges. The hospital is there

and has a medical tariff under which, if one did not belong to an

insurance plan, the employee would pay for everything. He would

pay at rates prescribed in the medical tariff whether they are full cost

or what, but they are substantial. There is nothing free about them.
ANNUITIES OF PANAMA CANAL SHIP PILOTS 21

At one time they were lower than they are now. They are graduated and based on pay, although now practically all pay the same.

Mr. UDALL. There is a group plan to which pilots and other employees of the Panama Canal Company can subscribe and deductions

are taken from their pay and then if they go to the hospital, the group

financing agency, whether it is Blue Cross or some other group, pays

most but not all of the doctor bill and hospital bill?

Mr. RUNNESTRAND. That is correct.

Mr. UDALL. And some of the medicines?

Mr. RUNNESTRAND. Exactly.

Mr. OLSEN. Does the Panama Canal Company run the hospital?

Mr. RUNNESTRAND. The Canal Zone Government, same thing; yes,

sir. We furnish the hospital for the military there. It is the one

big hospital in the Canal Zone.

- Mr. OLSEN. Do we support that with taxes?

Mr. RUNNESTRAND. No, sir.

Mr. GROSS. We make some appropriation to it.

Mr. RUNNESTRAND. If I may explain: The Canal Zone Government,

which operates the hospital, schools, police, and fire and that sort

of governmental service, goes to Congress for gross appropriations

each year. Let's say it is $20 million. There are certain revenues

from hospital revenues and fines and fees and car licenses, which go

back to the Treasury of the United States leaving a net cost of the

Canal Zone Government of, let's say, $15 million or $12 million. That

is paid to the Treasury of the United States by the Panama Canal

Company from its tolls and other revenue. That is why I say that

the hospital in the end does not come from taxpayer money but it

is entirely out of revenues of the canal enterprise as a whole. We do

go through the budget process on the Government side getting gross

appropriations and then reimbursing the Treasury in cash at the end

of the year from revenues from Panama Canal Company revenues.

This is by statute.

Mr. OLSEN. If there are no other questions, we will excuse Mr.

Runnestrand. I do want to ask one question of Mr. Ruddock before

we go to the next witness.

Mr. Ruddock, do you have a figure disclosing the life experience

of Federal retirees after retirement?

Mr. RUDDOCK. In my memory, sir, I have this in general terms.

The average age at retirement is approximately 62 years, and the

life expectance at that age is approximately 16 years. 

Mr. OLSEN. That life expectancy figure is determined by some

study of actual life experience?

Mr. RUDDOCK. The experience of retirees under the Civil Service

Retirement Act, yes, sir.

Mr. OLSEN. Thank you.

Our next witness is Capt. Richard McClean, president, Canal Zone

Ship Pilots Association, and I understand that you are accompanied

by Capt. W. H. Vantine. Will you please come forward.

I note that the other members received a copy of a letter dated

April 2, 1963, and addressed to Mr. Murray and signed by Richard

A. McClean, together with enclosures. Without objection, this will

be made a part of the record at this point and you may summarize

your case for the committee.

97060-63-4
22 ANNUITIES OF PANAMA CANAL SHIP PILOTS

(The letter follows:)

Hon. Tom MURRAY,

Chairman, Committee on Post (Mee and Civil Service, House of Representatives,

Washington, D.C.

DEAR Mn. CHAIRMAN: Reference is made to the subcommittee hearings scheduled for April 2, 1963, in regard to H.R. 2030, a bill to amend the Civil Service

Retirement Act with respect to annuities of Panama Canal ship pilots.

The history of the original inception of this legislation is voluminous in that

the pilots of the Panama Canal have tried for some years now to have enacted

an amendment to the present Civil Service Retirement Act permitting a more

liberal retirement law for the members of our organization. I should like to

refer the committee to the House committee hearings entitled "Implementing

a Treaty With the Republic of Panama" commencing on page 175. I should

also like to refer the committee to Report No. 824 of the 85th Congress, 1st

session, at which time the U.S Senate reported favorably to S. 821 (the same

type bill as H.R. 2030). I should also like to refer the committee to the subcommittee hearings of the 87th Congress. 2d session, conducted on May 29,

1962, with reference to H.R. 3557 and at which time the subcommittee reported

favorably on same.

This is a most unique situation. The situation is unique in that our bill has

extreme merit and the fact that it does have extreme merit and, we feel, completely justified, a continuing interest persists, not only in the eyes of many

Congressmen and Senators, but in the eyes of our employer the Panama Canal

Company, the shipowners and companies of the United States, and the steamship

operators of the world.

The Civil Service Commission has stated that as an alternative to enactment

of a law of this nature that we should be compensated additionally in active

duty pay and allowances. The Civil Service Commissioner has even recommended such a policy to the Panama Canal Company. The Panama Canal Company on the other hand does not permit nor allow our active duty pay and allowances to get out of "coordination" with other employees of the Panama Canal

Company who are in a supervisory category in spite of the fact that these other

employees do not have the mortality nor disability rate that the pilots

unfortunately have.

The Bureau of the Budget refers to law enforcement agencies having more

liberal retirement benefits, which we don't dispute as being justified, and

generally objects to all bills of like nature as being too costly. Here we can

prove little or no cost to the Government.

A pilot usually has paid substantially into the social security fund prior to

eligibility to participate in the civil service retirement plan. During this same

period, he would have also contributed considerably into private company or

union retirement plans. Upon becoming a pilot and entering Federal service he

loses all that was contributed toward his company retirement plan, as the Government does not participate in these and he does not presume to live long enough

to collect any of his social security benefits. Therefore, except in rare occasions,

a pilot must commence payments toward retirement at the late age of about 36

years. It is physically impossible for him to accumulate the 30 years of service

and he has only a 48 percent chance of living beyond the age of 53 years without

dying or becoming disabled.

Assuming that a pilot lives to the required age of 62, he will have contributed

approximately $29,000 into the civil service retirement fund. This sum does not

include accrued interest at 3 percent per annum which would bring the sum to

roughly $40,000. In figuring a monthly annuity of $800 payable to the retiree,

it would take 50 months (4 years, 2 months) before the pilot could recover his

own investment in the retirement plan. Of a total of 159 career pilots from

1914 to date, only 28 pilots, or 18 percent, retired with full retirement age 62,

whereas 82 percent were separated at reduced annuity.

• In considering the facts, it becomes apparent that the Retirement Act as

presently written does not provide adequate benefits for this specialized group

of Federal employees and that the pilots seldom contemplate ever being able to

reach the required age for retirement in reasonably good health. This denial of

our group of the prospect of a few years of leisure in the "sunset years" should

be adequate proof that the Civil Service Retirement Act does not effectively cover

the pilots, which should be in the intent of any creditable annuity plan.

From the testimony given by the agencies opposing this legislation, it is readily

apparent that the opposition is not to H.R. 2030 particularly, but against any

CANAL ZONE PILOTS ASSOCIATION,

COCO Solo, Canal Zone, April 2, 1968.
ANNUITIES OF PANAMA CANAL SHIP PILOTS 23

and all progressive changes in the Civil Service Retirement Act. This opposition

to change merely for the sake of opposing change would encourage one to think

that the act, when written, was all-encompassing and infallible. An inspection

of the act shows that between its enactment in July 1930 and September 1954,

there were 80 amendments plus several Executive orders, which brought coverage

to certain Congressmen and other special groups. Merely because the pilot

group is so small does not preclude our importance nor the importance of the congressional duty regarding our group. We do not believe that the U.S. Congress

will ever become a party to opposing change merely for convenience of avoiding

responsibility while ignoring glaring evidence that such change is justified.

The Panama Canal Company offers as their objection the "15-year clause." The

pilots circulated a referendum ballot last year in which the pilots of the Panama

Canal Company agreed to an amendment of our retirement bill (H.R. 2030) to

read on line 8; "20 years on the pilots force" and dropping the 15-year stipulation

altogether. This is in keeping with Governor/President W. A. Carter's letter

quoting, "the Panama Canal Company and the Canal Zone Government are unable

to support the feature of the legislation which would permit voluntary retirement at full annuity after only 15 years as a Panama Canal ship pilot; however,

if subject bill were modified to call for a minimum of 20 years as a pilot the canal

agencies would have no objection to enactment of the bill." The pilots of the

Panama Canal would therefor like H.R. 2030 amended to read line 6: "(g) Any

employee while serving as a ship pilot in the Panama Canal Zone who attains the

age of 55 years and completes 20 years of service as a pilot, shall, upon separation

from the service, be paid an annuity computed as provided in section 9." This

amendment will then remove the Panama Canal Company's objections to enactment of H.R. 2030.

Traffic in the Panama Canal is increasing yearly. The Canal Company is

working 24 hours a day. Night work had doubled and the pilots are working

more irregular hours than ever before. The mortality and disability statistics

included in this statement will increase accordingly. Large supertankers and

super ore ships requiring two or more pilots have increased 614 percent between

1955 and 1960—an additional increase of 6.3 percent was noted between 1961

and 1962. The responsibilities of the pilots have increased accordingly. The

tensions experienced in piloting one of these large ships through the canal are

incomprehensible to the laymen. Regular sleeping hours are no longer available

to the pilots. A pilot may be called to work at 4:30 one morning and after a

14-hour transit may very well be called to work the next day at 10 p.m. and be

expected to work all night. Private pilots organizations within the United States

cannot be compared with the canal pilots. Although they make considerable

more money, they do not have the responsibility that we legally assume. In

their case the master is still responsible for his ship where in our case we relieve

the master of a ship (by law) of his responsibility for the navigation and movement of his vessel.

The last pilot to retire at age 62 and the only one since we last testified

before Congress regarding retirement legislation was Capt. R. W. Rubelli.

He left at the end of 1962 with 18 years service as a pilot. Although this bill

would not aid him, he continually urged the Canal Zone Pilots Association to

press for its enactment and always contributed his share of the considerable expense involved. Captain Rubelli, as have many Panama Canal pilots before

him, found this work extremely exhausting after he reached his middle fifties.

Two unfortunate incidents that occurred during the last 2 years of his career

serve to highlight our need for optional early retirement. He suffered a painful back injury from a fall on the deck cargo of a vessel he was boarding at

night and was involved in a ship accident near the end of a transit in which

the Panama Canal Company had to assume liability for damages estimated

to cost $50,000 for permanent repairs. Both of these accidents can be attributed

to these facts: Captain Rubelli had to pilot beyond the years that he was

physically well fit and these accidents might possibly have been avoided had

he been able to retire at an earlier age.

The members of the Canal Zone Pilots Association wish to express their sincere appreciation to the committee for devoting your valuable time to the

consideration of H.R. 2030. Since we are a small politically unimportant group,

this effort on the part of our Nation's elected representatives certainly denotes

a high sense of public responsibility.

By direction of the membership.

RICHARD A. McCLE.AN,

President, Canal Zone Pilots Association.
24 ANNUITIES OF PANAMA CANAL SHIP PILOTS

Enclosure statistics concerning retirement, medical disability, and mortality

rate for Panama Canal pilots.

STATISTICS CONCERNING RETIREMENT, MEDICAL DISABILITY, AND MORTALITY RATE

FOR PANAMA CANAL PILOTS

During the period of time from June 1949 through March 1963 a total of

52 career pilots left the service of the Panama Canal Company. They averaged

56.3 years of age and 19.7 years of service as pilots. This period was selected

because it covers the time when the current buildup of traffic and remarkable

increase in ship size has taken place. Nightwork during this time has increased

manifold and will eventually reach 50 percent. Details follow.

Five men or 10 percent deceased at an average age of 50.8 years with 17 years

of service as pilots.

Pilot Age Service Remarks

Years

Donohue, Leo 43 7 Died in service.

Makibbin, T C 59 25 Died on vacation.

McLaren, D. M 52 23 Died in service.

Redman, M C 44 10 Do.

Wall, William _ 56 20 Do.

Twenty-two men, or 42 percent, were discharged for medical disability at an

average age of 53.5 years with 17.5 years of service as pilots.

Pilot Age Service Remarks

Years

Bach, Harry S 58 23 Medical disability.

Baverstock, Clinton 58 25 Do.

Dear, F. A 55 12 Medical disability (accident).

Dietz, Julius 38 7 Medical disability.

Ferguson, L. A 59 26 Do.

Fort, Roy 61 18 Medical disability (accident).

Kariger, G. F 41 8 Medical disability.

Kolle, G. 0 58 26 Do.

*Jacobs, V. K 51 15 Do.

*Longmore, Harold K. 61 23 Do.

Martin, Glen 44 10 Do.

Meade, George 48 14 Do.

Munden, J. 8 58 26 Do.

Reppa, Frank 58 23 Do.

*Russell, Frank 61 17 Do.

Springthorpe, A. H 46 14 Medical disability (accident).

Smithies, G H 56 18 Medical disability.

Tawes, G. W 58 19 Medical disability (accident).

Tracy, Keith 57 23 Medical disability.

Wallace, Alan 8_ 50 17 Do.

Wentworth, Howard 55 15 Do.

Wilson, C 0 47 Do.

*See note on p. 25.
ANNUITIES OF PANAMA CANAL SHIP PILOTS 25

Fourteen men or 27 percent resigned or went out on voluntary retirement with

reduced annuities at an average age of 58.3 years with 22.9 years of service as

pilots.

Pilot Age Service Remarks

Years

sCalcutt,William 58 23 Voluntary retirement.

Falk, -Henry S 58 31 Do.

Farrell, Webster 59 23 Resigned. No pension until age 62.

Ferri, Henry S 60 20 Voluntary retirement.

Forsstrom, A. B 61 27 Do.

*Grant, Hector 53 19 Resigned.

Hearn, Jack 55 22 Voluntary retirement.

Hudgins, George 57 26 Do.

Kuhrt, Walter 57 22 Do.

Ried, William 60 23 Do.

Rowe, H. V 60 22 Do.

Skeels, Lucien 60 22 Do.

Smith, G. H 61 23 Do.

*Terwilliger, Albert 57 17 Do.

*NoTE.--These six men (1.1.1 percent), died less than 1 year after leaving the canal.

Eleven men, or 21 percent, were able to retire at the age of 62 with an average

of 21.3 years of service as pilots.

Pilot Age Service Remarks

Years

Ducan, Peter W 62 21 Retired.

Harrington, Frank J 62 26 Do.

Flearon, William C 62 17 Do.

Heath, D. S 62 25 Do.

Maloney, Hugh 62 17 Do.

Nilsen, Jens 62 20 Do.

Rennie, Robert G 62 22 Do.

Rubelli, R. W 62 18 Do.

Small, E. B 62 24 Do.

Townshend, Charles S 62 24 Do.

Wyle, R. A 62 20 Do.

Twenty-seven men or 52 percent were either dead or medically disabled at

an average age of 53 years after 17.4 years of service as pilots.

Most of the 14 men who resigned or took voluntary retirement did so at a

considerable financial loss (reduced or delayed annuities) but felt compelled to

do so in order to keep reasonably good health.

Several of the men who were able to last on the job until the age of 62 years

were in poor health and some were out of the canal toward the end on light

duty assisting in the port captains' or harbormasters' offices.

Prepared from master file by

W. H. VANTINE,

2d Vice President, Canal Zone Pilots Association.

STATEMENT OF CAPT. RICHARD McCLEAN, PRESIDENT, CANAL

ZONE SHIP PILOTS ASSOCIATION, ACCOMPANIED BY CAPT. W. H.

VANTINE, CANAL ZONE SHIP PILOTS ASSOCIATION

Captain MCCLEAN. Mr. Chairman, I didn't prepare a written summary regarding this statement. I could briefly go over the traffic - patterns which have increased in the canal. The ships have gotten.
26 ANNUITIES OF PANAMA CANAL SHIP PILOTS

considerably larger. Multiple jobs have increased whereby it takes

two pilots on some ships to get them through since they are so wide.

Mr. OLSEN. Let me interrupt just a minute. Would it be easier and

faster for you to read your statement?

Mr. UDALL. Mr. Chairman, let me say, the statement was given to

me yesterday. I took it home and read it last night. It might well

be the other members of the committee have also read it word for

word and line for line. If this is the case, we could save some time

by getting to questions. I have some and I know the other gentlemen have some also.

Mr. OLSEN. Would you be satisfied?

Mr. JOHANSEN. Yes.

Mr. GROSS. Yes.

Mr. OLSEN. Let us proceed with questions and after the questions,

if you have additional remarks to make, we will come back to your

'direct statement. At this time the Chair recognizes Mr. Udall of

Arizona.

Mr. UDALL. Let me say to both the witnesses, first, that by this procedure, I don't want to restrict your opportunity to make any statement here or answer any of the allegations that have been made by the

previous witnesses. We do have to conclude this in about 35 minutes

and it seemed to me that the time could be better spent answering some

of the questions that we have. But, if at any time you wish to make an

explanation, please indicate that there is additional material or statements you would like to make along these lines because we want to

have both sides of this controversy and decide it fairly.

Captain MCCLEAN. Yes, sir.

Mr. UDALL. It would be interesting to me if you could take about 2

minutes to give me a quick profile of a day on a run. You leave your

home, you drive someplace and you get on a launch and you go out

and get on the ship and then you start through. Run me down on typ-

-ical day when you have a transit?

Captain MCCLEAN. Briefly, let us assume that I am to go to work at

6 o'clock in the morning, in which case the port captain's office will

call me an hour before my boathouse arrival, at which time I'm scheduled to go to work. I get dressed and have coffee and a company car

picks me up at my home at approximately 15 minutes before the assigned hour, takes me to the boathouse. I communicate with our port

captain's office by telephone. He gives me my schedule number, the

ship's name and when I am due at Gatun Locks.

Mr. UDALL. Are you eastbound or westbound?

Captain MCCLEAN. It is southbound, actually. I live on the Atlantic side and I am taking a ship to the Pacific side, so we can refer

to that as southbound.

The average time from boathouse to Gatun Locks runs about 2

-hours, by the time I board a launch, go and board the ship, get the

ship underway, and steam the ship up to Gatun, making the necessary

maneuvers to get the ship down to 2 miles an hour to enter the

locks 

Mr. UDALL. You do not drive this launch on this trip?

Captain MCCLEAN. No, sir.

Mr. UDALL. Can you sleep or rest or go over charts and figures?

-What do you do when you are on the launch?
ANNUITIES OF PANAMA CANAL SHIP PILOTS 27

Captain MCCLEAN. I sit there because the run to the ship's anchorage is approximately 20 minutes and it doesn't give time of course,

for any rest, plus the fact that the launch is noisy;and 

time,

I just'

think about maybe what I did last night or I'm going to do tomorrow.

And so I board the ship and then proceed up to the locks. It takes

another hour roughly 

Mr. UDALL. Just a minute. In the letter there was some indication

of the hazards of boarding. This little launch, I would guess, is 8 or

10 feet out of the water perhaps and the deck of the ship is what, 50

or 75 feet above that?

Captain MCCLEAN. Not that high.

Mr. UDALL. How high?

Captain MCCLEAN. It would average somewhere in the neighborhood, depending on the draft of the ship, roughly 25 feet above the

waterline.

Mr. UDALL. Do you go on a ladder or hoist?

Captain MCCLEAN. We go up a pilot ladder, a stepladder, hung

together with rope lines and it is hung over the side of the ship and as

the launch approaches the side of the ship, I step from the launch to

the ladder and climb up the ladder.

Mr. UDALL. Is this a very dangerous or difficult maneuver?

Captain MCCLEAN. It can be under certain circumstances when the

dry season winds are blowing, for example, it gets rough in the bay

and you have to wait until the launch comes up on the crest of a wave,

step off and let the launch fall out from under you. We have hail

occasions, of course, where the launch has hit the pilot in the legs or

on the feet or on occasions where the ladder will break and the pilot

will fall on the launch or into the water actually. It is rare, but it

has happened.

Mr. UDALL. All right. I am taking too much time, but this is interesting and helpful. Then you are up on the bridge and go to work.

What do you do then?

Captain MCCLEAN. We go to the ship's bridge and issue the orders to

the helmsman, the man who actually steers the ship and the officer

who actually handles the engineroom telegraph, which transmits our

orders to the engineroom so they can carry them out.

Mr. JOHANSEN. Let me interrupt right there. In other words, the

period of the passage through the canal, you are the captain of this

ship?

Captain MCCLEAN. Yes, sir. I relieve the captain of the ship of his

responsibility for navigation and movement of the ship, so that actually, the captain has nothing to say as to how I maneuver his ship.

He can sit down and take it easy. He has nothing to say as to how

his ship is maneuvered.

Mr. UDALL. All right. You get it down to 2 miles an hour and

approach the first lock.

Captain MCCLEAN. We enter the locks with assistance of the locomotives and taw the ship through the locks and it takes about an hour

at Gatun.

Mr. UDALL. The locomotives on either side throw out lines and they

pull you in?

Captain MCCLEAN. Canal seamen. Each ship is manned depending on how big the ship is, with a certain amount of canal seamen.
28 ANNUITIES OF PANAMA CANAL SHIP PILOTS

They throw lines to a couple of men in a boat and they make the lines

fast to a messenger. The messenger is made fast to the wire of the

locomotive and then the lines are heaved on board the ship by use

of mechanical winches.

Mr. UDALL. There is some hazard in banging the ship against the

side of the lock if you are not careful?

Captain MCCLEAN. Especially so for the ship. Accidents, of course,

are extremely expensive when it comes to a ship accident.

Mr. UDALL. You don't recommend banging for either the locks or

the ship?

Captain MCCLEAN. No, sir, we make every effort to avoid that.

Mr. UDALL. All right. The locomotives put it in, they close the

gate and water starts.

Captain MCCLEAN. The water fills the chamber.

Mr. UDALL. How long does it take?

Captain MCCLEAN. Seven minutes for the water to fill up the

chamber.

Mr. UDALL. What are you doing during this 7 minutes?

Captain MCCLEAN. I am standing usually on the center wall side

of the bridge in case I must communicate with the lock master, who

is issuing orders by telephone to control house, in case a wire breaks

or in case the engine fails on the ship, perhaps, and there is any number of things, of course, that can happen, so I am obligated to be in

communication with the locks by voice.

Mr. UDALL. All right. In 7 minutes the upstream gates open. Do

the locomotives pull you out or the ship seamen?

Captain MCCLEAN. We use the ship's engine to start moving, release the breaking locomotives, and I start the ship's engines normally

on half ahead and once I get the ship moving to overcome the moment

of inertia, then I give the towing signal to the locomotives. I stop

the engine and they in turn tow the ship into the next chamber.

Mr. UDALL. All right. These chambers, two or three in a row—

Captain MCCLEAN. Three at Gatun, one at Pedro Miguel, and

two at Miraflores. We go up three steps and down three steps.

Mr. UDALL. In between a big lake?

Captain MCCLEAN. In between Gatun Lake—it is 21 miles from

Gatun to Gamboa.

Mr. UDALL. The process of going down is the reverse of going up?

Captain MCCLEAN. Yes.

Mr. UDALL. Steaming through the lake is under ship's power, no

tugboats?

Captain MCCLEAN. No.

Mr. JOHANSEN. You are still in command on this lake?

Captain MCCLEAN. I am still in command. If we have a waiting

period of 2 hours, I will anchor the ship in Gatun Lake in order to

make my schedule and enter the cut at Gamboa. I judge myself

accordingly because it takes approximately 2 hours to run that stretch

of lake. Then we enter the cut and it takes another hour and 13

minutes to go down to Pedro Miguel locks.

Mr. UDALL. Typically, will you have a waiting period to get into

the locks while the ships are sitting there, waiting for some other ship

to get out?
ANNUITIES OF PANAMA CANAL SHIP PILOTS 29

Captain MCCLEAN. Occasionally we do. It depends on the day's

traffic flow. I may be obligated to tie the ship up to the center wall

of the locks without the assistance of tugs, by maneuvering her engines,

perhaps using the anchor and actually mooring the ship there and

waiting a 'period of 20 minutes or however long it may take. It varies

every day.

Mr. UDALL. All right. You get to the end of the run on the Pacific

side. The captain thanks you and salutes you and then what do you

do?

Captain MCCLEAN. Then you reverse your procedure. You go

down to the deck, hike over the bulwark rail and start down the ladder. The launch pulls up under you and you step off the ladder

on the launch and back to the mine dock on the Pacific side.

Mr. UDALL. How do you get home?

Captain MCCLEAN. Company transportation. Depending on the

hour, we either take a train or an automobile. If it is after the trains

have stopped running, for example, midnight, or 1 or 2 in the morning,

then the Company drives us home in an automobile.

Mr. UDALL. And on the way home, this is free time?

Captain MCCLEAN. Well, it is free time for me theoretically, but the

Company is obligated to pay for that travel time to return me to my

home.

• Mr. UDALL. During that time you can contemplate the size of the

Federal deficit or contemplate your sins or something of this sort?

Captain MCCLEAN. We can, yes, sir. There have been accidents

'

of

course, on the highway. Many pilots have stated the worst part of

the transit is the ride home. The highway is rather hazardous. It

is narrow and very curvy.

Mr. UDALL. Let me take two or three other quick subjects and then

I will let some of my friends here cret into the act, too.

As a flex-son who is exnerienced' in maritime work, what is the most

responsible, most difficult, most hazardous, most stress-filled pilot-type

job in U.S. water, continental, New York, San Francisco wherever it

would be—what is the most responsible, stress-filled piloting job you

can think of in the United States?

Captain MCCLEAN. Offhand I could not say. Perhaps the Houston

Shin Canal.

Mr. UDALL. Is this worse, is there more stress, more tension, more

difficulty, more responsibility at Houston, or doing what you fellows

do? •

Ca tam MCCLEAN. There is no comparison because the master of

the ship has the responsibility for the navigation of movement. And

the pilot in any port of the United States is only there in an advisory

capacity. So should an accident occur or something of that nature,

the pilot is not necessarily responsible.

Mr. UDALL. Would a top pilot at Houston or New York get paid

more than you fellows do?

Captain MCCLEAN. Considerably more; yes, sir. Houston ship

channel pilots made $28,000 last year, for example.

Mr. -UDALL. You have compiled and I commend you for your diligence and very interesting statistics attached to your report. These

cover a 14-year period?

Captain MCCLEAN. Yes, sir.
30 ANNUITIES OF PANAMA CANAL SHIP PILOTS

Mr. UDALL. Are these complete? Do these cover every single pilot?

Captain MCCLEAN. These do not include pilots who have quit.

Mr. UDALL. I understand.

Captain MCCLEAN. We have had men come down for 2 years and

leave. This is referring to career pilots who have stayed over 5

years, years actually.

Mr. UDALL. But you have all career pilots in here. You haven't

selected the ones that had illness or died prematurely. This is a complete picture?

Captain MCCLEAN. This is the complete picture because we haven't

had that many pilots employed in the entire history of the Canal

Company.

Mr. UDALL. Can you summarize for us, as against the figures we'

just had a moment ago, the average Federal employee living 16 years: 

afterretirement, taking this group as an average, how many years

after retirement would they continue to be among the living?

Captain MCCLEAN. We have only had 28 men since the inception.-

of the Panama Canal Company in 1914, who lived to age 62 and retired without going out on medical disability, who retired on full

annuity. That is 28 out of 159 men. The average life expectancy of

those men, and I include a very high year in there as one pilot lived"

to be in his 80's—I don't recall his name—runs between 4 and 6 years.

Mr. UDALL. Old pilots never die or something. Tell me this—this

really bothers me, because I was questioning the preceding witness—

would you agree generally with his statement that if you transported

100 people who are working here in Washington in desk jobs or•

manual jobs to the Canal Zone, would you think their life expectancy

would be dramatically shortened as a general thing?

Captain MCCLEAN. No, sir.

Mr. UDALL. Why is it, then, you have such a sharp and diverse experience with Canal pilots?

Captain MCCLEAN. Generally speaking I would say it is the responsibility that we assume. We are cognizant of our responsibility

the entire period that we are working that day. I am cognizant of

my responsibility when I get called in the morning, and I continually

remain in this state of tension, or with this sense of responsibility; or

at least I'm cognizant of the condition and problems that we are required to face, in transiting a ship, until I actually get off that ship

on the other side, regardless of any delay time in the lake, for example.

Mr. UDALL. Do you believe this accounts for the drastic shortening

of life expectancy?

Captain MCCLEAN. That, and perhaps the irregular hours, irregular

eating habits. We eat, of course, on these ships; and we eat what they

serve us and, in some cases it isn't always too good. This all adds

up. We have men with stomach disorders that I would say are

brought on by this change of food.

Mr. UDALL. Is there any greater occurrence of ulcers among your

group than among ordinary population?

Captain MCCLEAN. I couldn't say, sir.

Mr. UDALL. With regard to the skin cancer question raised earlier,

I think it was indicated you had something in the range of 100 active

pilots. How many of them today, that you know of, have skin cancer

or have had it in the last year!
ANNUITIES OF PANAMA CANAL SHIP PILOTS 31

Captain MCCLEAN. I would hazard a guess that perhaps 10 per--

cent have skin cancer today.

Mr. UDALL. Right now?

Captain MCCLEAN. Right today; and I would say that another 10,

percent, which would be a total of 20 percent, •have had them removed within the past 10 years.

Mr. UDALL. Have any of these deaths you reported been skin

cancer deaths, that you can recall?

Captain MCCLEAN. None, I don't think, could actually be attributed

to skin cancer. However, what actually goes on after skin cancer

starts, I don't know. It may go into other places.

Mr. UDALL. Mr. Chairman, I have taken more time than I should_

have. In fairness, I yield the floor.

Mr. GROSS. Captain, do you have trouble recruiting pilots?

Captain MCCLEAN. The actual recruitment, I would say no. It 18

a highly coveted position for any master mariner, because he does

have an opportunity to live with his family.

Mr. GROSS. Wouldn't you think that is strange, in view of the

figures you have submitted to the committee with respect to mortality?

Captain MCCLEAN. No, sir; because I feel, as Captain Vantine

and the rest of the pilots down there, that we will be in the percentagethat makes, it you see.

Mr. GROSS. I didn't get that last?

Captain MCCLEAN. We feel that we will be in the percentage that

retires in good health.

Mr. GROSS. So, you have no trouble with recruiting. Do you, in

fact, have a waiting list?

Captain MCCLEAN. We always have available applicants. Whether they can qualify for the position or not, that is another thing.

Mr. GROSS. I understand that; but you do have a waiting list, is

that correct?

Captain MCCLEAN. Yes sir.

Mr. GROSS. Now, this 

Yes,

pay—and you admit that this is

probably the most difficult piloting job—I believe that was your

statement?

Captain MCCLEAN. In comparison with our work, yes

'

sir.

Mr. GROSS. In comparison with your work. Is this straight pay

or does this include overtime?

Captain MCCLEAN. This is done on a yearly share basis.

Mr. GROSS. I think I could agree with you, as a layman, that the

Houston ship channel is probably the most difficult I have seen. I

have ridden over the thing, and I have ridden over the Panama

Canal, and I think I could agree with you that it is more difficult.

The Houston pilots do not get any of the fringe benefits that you do,

do they?

Captain MCCLEAN. They have their own company, Congressman

Gross, and what they take from that company is almost a top secret,

even in past hearings on other matters of legislation. The American

Pilots Association is extremely reticent to bring forth certain facts

as to what they do and what they do not receive in their own company.

Mr. GROSS. When you say they get a certain amount of money, do

you have some certain knowledge as to what they get?
:32 ANNUITIES OF PANAMA CANAL SHIP PILOTS

• Captain MCCLEAN. We had a pilot who left the Canal organization

2 years ago, after working there 2 years. His name was Captain

Tuttle, and he told another pilot—who is from the same area—that is

what their share was last year.

Mr. GROSS. Where do you get your recruits for Canal Zone pilots?

Captain McCLEAN. From the maritime industry from all American

steamship companies.

Mr. GROSS. A young man coming out of the Merchant Marine Academy, for instance—would he enter as an apprentice pilot?

Captain MCCLEAN. No, sir.

Mr. GROSS. How much seafaring would he have to have?

Captain MCCLEAN. He must have sailed 7 years on the bridge as an

,officer, of which 1 year must have been as master mariner, and that is

what the Canal Company wants. To achieve this in the industry, it

takes approximately 15 years from entrance as either a cadet or ordinary seaman. That is the trend of the industry before you can be a

captain on a ship.

Mr. GROSS. Your salary schedule ranges from approximately $11,000

to $17,000, is that correct?

Captain MCCLEAN. Yes.

Mr. GROSS. Do you make as much as $1,500 overtime?

Captain MCCLEAN. We average, in a year's time, including holiday

compensation—our average would probably run in the neighborhood

of $1,500 yes, sir.

Mr. GROSS. For all pilots?

Captain MCCLEAN. Well, it depends on the grade of pilot—overtime rate varies.

Mr. GROSS. Some more and some less, but the average would be

$1,500?

Captain MCCLEAN. As an average, I would say yes.

Mr. GROSS. So some are making $18,500 a year?

Captain MCCLEAN. Inclusive of overtime, yes, sir.

Mr. GROSS. You do have housing. As a matter of curiosity, what

rent do you pay? Are rents in the Canal Zone for your living quarters

high?

Captain MCCLEAN. It depends on the availability of certain housing.

I would hazard a guess that the average rent per year runs about

$1,000.

Mr. GROSS. About $1,000?

Captain MCCLEAN. Yes, sir.

• Mr. GROSS. Less than $100 a month?

Captain MCCLEAN. Average rent, yes, sir. They have a little better

quarters, and some aren't so good. This is the average.

Mr. GROSS. Explain plug-in time, will you please.?

Captain MCCLEAN. Plug-in time—we are employed on a contract

basis for a 2-year period, for which the Panama Canal Company

guarantees us an annual salary. If I work, for example, 35 hours

this 'week, the Canal Company has, what we would consider, a gratuity

of the additional 5 hours, in order to stay within the contract of paying

me for 40 hours a week over a year's period. So if I don't work

the 40 hours, they don't take anything away from me. They plug me

in for the additional hours. I am available 6 days a week to the

Panama Canal Company and, if they cannot utilize my services, they
ANNUITIES OF PANAMA CANAL SHIP PILOTS 33

give me that extra time. The average plug-in time, though, doesn't

run too high. On the other hand, we normally stand by from midnight until 0900 each morning without timing credit; in other words,

the Panama Canal Company can call me any time from midnight

until 9 o'clock. We stand by at home for that purpose. That is not

considered standby time, as far as timing is concerned, but I am

obligated to be there at my telephone from midnight until 0900 in

the morning.

Mr. GROSS. I have another question or two, but I think I should

let someone else ask a few questions.

Mr. OLSEN. Mr. Daniels.

Mr. DANIELS. Mr. Chairman, I apologize for coming in late. I

was tied up in another committee prior to coming here. I did not

hear this witness' testimony, but I am familiar with the issue before

the committee so I will forgo asking any questions.

Mr. OLSEN. Thank you, Mr. Daniels.

Mr. Johansen.

Mr. JOHANSEN. Mr. Chairman, just to clarify the record, what is

the normal legal retirement age for these pilots? Is it 62?

Captain MCCLEAN. Yes, sir.

Mr. JOHANSEN. Am I to gather, therefore, from the second page of

these statistics that since June 1949, out of a total of 52 career pilots

who left, the service, only 11 had attained this retirement age of 62?

Captain MCCLEAN. Yes, sir, that is correct.

Mr. JOHANSEN. IS that correct?

Captain MCCLEAN. We have taken all the pilots back through

1949.

Mr. JOHANSEN. And the total is this 52?

Captain MCCLEAN. Since 1949, yes, sir; except the ones who have

been there, say, 2 years and departed or quit.

Mr. JOHANSEN. Who wouldn't be eligible?

Captain MCCLEAN. Who wouldn't be considered as career pilot

or eligible; that is correct.

Mr. JOHANSEN. And you are basing your case on the relatively high

percentage of those who either die in service or retire at an average

age of 53.5 years, due to medical disability?

Captain MCCLEAN. Yes, sir. If I might mention one other point,

at the subcommittee hearings regarding legislation of this nature last

year, we submitted a complete list, which went back through 1914,

so those figures are available, but to keep the list brief, as brief as

possible, we just chose as an arbitrary figure 1949. But a complete

list is on record.

Mr. JOHANSEN. Also to clarify the record, this 42 percent who

were discharged for medical disability, were all of them or certain

ones of them eligible for reduced retirement benefits?

Captain MCCLEAN. They all went out at reduced retirement benefits

on medical disability.

Mr. JOHANSEN. In other words, the disability constituted reduced

or conversely, the reduced benefit was the disability payment?

Captain MCCLEAN. Yes, sir.

Mr. JOHANSEN. I was out of the roam for a moment. I don't know

whether any question was asked about any retirement program for

these Houston Canal employees?
34 ANNUITIES OF PANAMA CANAL SHIP PILOTS

Captain MCCLEAN. Sir, I am not qualified to enlarge on that because I don't know how the outside pilot organizations work their

retirements.

Mr. OLSEN. You ought to tell Mr. Johansen why. I don't think he

heard why.

Captain MCCLEAN. The main reason, of course, is they make considerably more money than we do. Their shares are such that they

can take considerably more money. I am told offhand by a pilot

from the Branch Bar Association which takes the ships over the

New Orleans Bar—a transit of about 16 miles—and then a river

pilot boards the ship and takes the ship up to New Orleans, for

example and then another pilot will dock the ship, that the Branch

Bar pilots average $3,000 a month for 2 weeks' work. They are on

2 weeks and off 2 weeks, so that is $36,000 a year that they took from

their association. Now how they arrange this, I don't know.

Mr. OLSEN. You don't know what other benefits the association

may buy for those members?

Captain MCCLEAN. That is true, I don't know. I assume they have

a medical plan of some sort. I know the master mates and pilots do—

the industry does. They had a welfare plan of which we took advantage when we went to sea, but we can't take advantage of that

plan now, of course.

Mr. UDALL. Mr. Chairman, I wanted to ask Mr. Gross whether that

$3,000 a month would be within the administration's guidelines.

Mr. GROSS. Do you mean to tell me, if I may, Mr. Chairman?

Mr. OLSEN. Certainly.

Mr. GROSS. Do you mean to tell me that they are paid $3,000 for 2

weeks and then off 2 weeks?

Captain MCCLEAN. They normally work 2 weeks at Pilot Town

and then they go home. Most of them live in New Orleans because

Pilot Town is not the best place to live.

Mr. GROSS. If this is true and they are paid $3,000 for 2 weeks,

this means that they get $78,000 a year.

Captain MCCLEAN. Well, sir, that is based on a monthly rate.

Their actual work is 2 weeks on and 2 weeks off, but they are paid

for that month, we will say, $3,000.

Mr. GROSS. Oh, $3,000 a month?

Captain MCCLEAN. Yes, sir but that includes 2 weeks off.

Mr. GROSS. That is still $36,000 a year.

Mr. JOHANSEN. Of course, the record should show, whatever their

situation is, that it is not to be held either for or against the Panama

Canal pilots.

Captain MCCLEAN. It has no bearing on our situation, actually.

Mr. GROSS. Let me see if I get this. You are paid a scale from

$11,000 to $17,000 a year mid the average overtime is from $1,500 a

year. You get meals on board ships. You are away from your home

3 days a week approximately, but you are not a captain of a ship at

sea. What kind of money does the captain of a commercial ship get

Of course, I realize that there are various classifications?

Captain MCCLEAN. There are. An A-3 master today receives

$20,000 and some extra. The actual figure I am not positive of, but

it runs around $240,000-and-something for 9 months' work. He is entitled to 3 months' vacation. They have other benefits, too, of course.
ANNUITIES OF PANAMA CANAL SHIP PILOTS 35

They have a pension and welfare plan and they are going for other

things such as retirement at age 55 and free hospitalization.

Mr. GROSS. You are getting rent at less than $100 a month. I have

the feeling, Captain, that you are pretty well take care of as of now.

I could, of course, be wrong. I have been.

Mr. OLSEN. Any more questions? Mr. Barry.

Mr. BARRY. Thank you, Mr. Chairman.

I noticed in your testimony, Captain, that you indicated because

you were small in number, that the Civil Service Commission may have

turned down your request here. I wondered if you really felt that it

was because you are small. I notice here on page 3 you indicate there

were 80 amendments and several Executive orders that even brought

certain Congressmen and other special groups and you use the word

"certain." I wondered what you meant by that. Why the comparison

here to largess and why to "certain" Congressmen? I don't understand that.

Captain MCCLEAN. There was no reflection to be construed as being derogatory in this regard. We use that as an example that it has

been amended. Our group is small. Perhaps other groups who want

to come in under some sort of hazardous occupation might cost the

Government considerable money in this regard, whereas I was trying

to point out that since our group is small and since the statistics do

bear our conversations out, that it wouldn't cost the administration

anything, rather the Bureau of the Budget.

Mr. BARRY. You do recognize that within Government and within

the Civil Service Commission, there have been charted over a long

period of years certain policies that have not yet realized any breakthrough. And when you get into discussion of the comparison, you

take the legislature and utilize that as a reason. I think you are on

awful thin ice when you do this.

Now, as in these other 80 amendments you refer to, if you took some

of the amendments and showed their applicability to actual cases,

I think your argument and your case might be better founded.

Now I want to ask if retirement is compulsory. Is this a compulsory thing?

Captain MCCLEAN. At age 62, yes, sir.

Mr. BARRY. I don't mean that. Is the retirement plan a compulsory

thing? May a pilot elect or not elect retirement?

Captain MCCLEAN. He may not. It is compulsory, in answer to

your question.

Mr. BARRY. Who compels a pilot to take retirement? What is the

governing body?

Captain MCCLEAN. It is a condition of employment actually with

the Panama Canal Company. Everyone who works with the Panama

Canal Company has to take retirement.

Mr. BARRY. The Panama Canal Company itself?

Captain MCCLEAN. Yes, sir.

Mr. BARRY. Do you know if the Panama Canal Company ever investigated any private insurance companies with regard to a substitution of the governmental policy that is in force here to see whether

or not there is something the Canal Company could buy that would

be tailored more to the needs of the men who are recipients of this

retirement plan or who are participants in this plan?
36 ANNUITIES OF PANAMA CANAL SHIP PILOTS

Captain MCCLEAN. To my knowledge they have not investigated

that possibility.

Mr. BARRY. Would you think this would be something perhaps the

pilots association could ask the Canal Company or indeed do it yourself and try to find some method to attain your goals? I think from

reading the statistical analysis of some of the results of the retirement plan, where you say that a man is probably participating to the

extent of $40,000 and has really under the logic of this amendment,

little opportunity to recover it, I can understand why he would be

somewhat reluctant to participate in the plan and would come in here

to Congress or any place else he could get a return for his participation.

Mr. Gross has been pounding away at total compensation and I am

certainly satisfied, and I am sure that others would be satisfied too,

that perhaps on a total compensatory basis, the pilots feel themselves

reasonably well off or they wouldn't line up to get the jobs in the

first place, but that does not go to the heart of what you are in here for.

You are in here as to "Why do I pay $40,000 and get nothina

b

out, or

very little out?" I wonder if you could suggest to the Canal Company

or to your own association, a look into private plans and then come

in here or the Canal Company—I don't know if they are chartered by

us and I don't know if they are directed by the Congress in that

charter to sustain a program for retirement, but if they are and you

found you could get return for your $40,000 investment, and I don't 

thinkinsurance companies will take advantage of you to the extent

that this apparent plan here is taking advantage of you, we could

relieve the Canal Company of that responsibility. Or if the Canal

Company of its own has a right to implement a plan as a condition

of employment, they, by their own direction and decision, could eliminate the plan and buy it elsewhere or see to it that the association

itself made some suitable arrangements of setting up a fund for that

purpose.

Mr. GROSS. Will the gentleman yield for a question?

Mr. BARRY. Yes.

Mr. GROSS. Do I understand you to say by law you are compelled

to retire at age 62?

Captain MCCLEAN. Yes, sir.

Mr. GROSS. This is true.

Mr. JOHANSEN. Will the gentleman yield for a further question?

It wasn't clear to me just where this $40,000 figure originated. What

is that $40,000?

Captain MCCLEAN. We pay 61/2 percent, and you may correct me

if I'm wrong, but I think it is 61/2 percent of our pay into this retirement fund. The Canal Company matches that and the Bureau of

Budget picks it up for another 7 percent, if I am not mistaken.

Mr. JOHANSEN. SO it is a total of 20 percent?

• Captain MCCLEAN. Yes, sir; so we have taken the arbitrary figure

of $1,000 that the average pilot puts into the retirement fund. At 3-

percent interest, we have compounded this figure up so that the second

year, it would be $1,030, times 3 percent, times 3 percent, over this

period of years. That is where we came up with the figure.

Mr. JOHANSEN. So $40,000 represents 20 years of participation?

Captain MCCLEAN. From age 35 to 62; 27 years.
ANNUITIES OF PANAMA CANAL SHIP PILOTS 37

Mr. JOHANSEN. Twenty-seven years; and that is the pilot's contribution exclusively that is represented by the $40,000?

Captain MCCLEAN. That is right; that is the figure.

Mr. JOHANSEN. I felt I understood the testimony earlier to the

effect that it was assured a person would get out of this plan what he

put into it. Am I confused? Did I misunderstand that testimony?

Captain MCCLEAN. We chose, of course, to show that it is broken

into three portions. This is our portion, this is the Company's portion, and this is the Bureau's portion, and we chose to show or to

describe that our portion, we will say, comes first. That is the money

we are using. That is the money that comes out.

Mr. JOHANSEN. That is $40,000.

Captain MCCLEAN. Then the other two portions are split up. We

chose to show it this way. However, in the actual payments of the

annuities the total fund, whatever that may be—let us assume three

times $40,000 is $120,000. A certain amount is taken each year from

the total and not just our portion, of course.

Mr. JOHANSEN. Well, I am trying to reconcile this talk about the

$40,000 with my understanding of the earlier testimony that the employee or his widow were assured of getting out of it at a minimum of

what they had put in. Now, is that true?

Captain MCCLEAN. It is true. Under the present statistics we

show that we are not living long enough to get our $40,000 back.

Mr. UDALL. Will the gentleman yield?

Mr. JOHANSEN. Who does get it back, and then I will yield? Somebody testified that it was gotten back.

Captain MCCLEAN. It stays in the Treasury of the United States,

I assume, or Bureau of the Budget coffers.

Mr. JOHANSEN. It isn't the employee or his family that gets it

back?

Captain MCCLEAN. Well, you have an option, sir, of taking a high

retirement for yourself as a pilot or you can take a second option—

which is a reduced annuity—so, should you die, then your wife will

receive this annuity until she dies. It doesn't pass on down to children

or anything. It is either yours or your wife's. So, if the pilot dies—

if he has chosen this option--his wife will receive an annuity until

she dies.

Mr. JOHANSEN. Then, I want to ask one other question.

Mr. UDALL. The gentleman has hit on a very important point. Mr.

Ruddock made the statement, in answer to my inquiry at the beginning part of this hearing, that there was no situation under which a

person covered by the Federal retirement system could get back—he

or his survivor could get back—less than the contribution. He is still

here. I would like him to comment on this point and on this apparent

conflict.

Mr. RuDnocK. The Retirement Act assures the employee that he or

his survivors will get back every penny he has put into the retirement

fund. Let's assume he retires and receives an annuity for a time.

Let's assume, at his death, we pay a survivor annuity to a widow and

any children under 18, or to children between 18 or 21, who are attending school. When the last survivor, who is qualified for annuity,

ceases to be qualified, if there is any balance remaining of his own

contributions to the fund, that is payable in a lump sum. It is paid,
38 ANNUITIES OF PANAMA CANAL SHIP PILOTS

first, to a designated beneficiary and, if none, to a surviving spouse;

and, if none, to children; and, if none, to the parents, executor-administrator of the estate, or next of kin, under the laws of the domicile of

the decedent.

Mr. JOHANSEN. But the distinction is that it is actual amounts paid

in and it is not this compounded interest?

Mr. RUDDOCK. No, sir.

Mr. JOHANSEN. Isn't that the distinction?

Mr. RUDDOCK. Perhaps it is.

Mr. JOHANSEN. I mean to say he wouldn't get $40,000, because the

S40,000 is computed on the basis of compounded interest.

Mr. RUDDOCK. The $40,000, I would gather, assumes a nonexistent

interest factor. Under the Retirement Act, once an employee has at

least 5 years of civilian service, then he enjoys, instead of interest, the

protection against disability or death, so that, if he becomes disabled

or dies, he or his survivors will receive an annuity.

Mr. JOHANSEN. Let me ask either of the witnesses, forgetting the

interest factor, how much money out of your salary as a pilot, for this

same period on which you based the $40,000 estimate, what would that

$40,000 be without regard to the interest? How much would he have

put in?

Mr. RUDDOCK. Assuming quickly a salary of approximately $17,000,

61/2 percent with 26 years of service, I think we are talking about

something in the neighborhood of $27,000.

Mr. JOHANSEN. Rather than the $40,000?

Mr. RUDDOCK. Yes. I might point out that the deduction rate has

not always been 61/2 percent. It started at 21/2 percent and has gradually grown. No ship pilot, to my knowledge, as of today, has contributed as much as $27,000 to the retirement fund.

Mr. JOHANSEN. Thank you. Mr. Chairman, I have just one other

observation. I have had my differences of opinion with the Civil

Service Commission but I am not sure that this is a fair statement

as found at the bottom of page.2 :

From the testimony given by the agencies opposing this legislation, it is readily

apparent that the opposition is not to H.R. 2030 particularly, but against any and

all progressive changes in the Civil Service Retirement Act.

I think that is a pretty sweeping accusation. I don't think it is fair.

Captain MCCLEAN. In regard to that statement, I would first like

to add this is a composite letter of three or four pilots' thinking. This

was in reference to the various other types of legislation that want to

come in on this Retirement Act, or for other amendments to the Retirement Act. So we have made the general statement that none of

these will be acceptable to the Civil Service Commission.

Mr. JOHANSEN. Does the statement really mean what it appears to

mean, that the agencies that are testifying against this legislation are

against any and all progressive changes in the Civil Service Retirement Act?

Captain MCCLEAN. To be more specific, we were referring to our

own.

Mr. JOHANSEN. I am glad to have it clarified because, as I say, I

have had my differences with the Commission, but I don't think this is

a fair or accurate indictment.
ANNUITIES OF PANAMA CANAL SHIP PILOTS 39

Mr. UDALL. What you are saying, in effect, is that you want your

plan to be considered on its own merits and not be summarily rejected

because some other groups might or might not be entitled to consideration.

Captain MCCLEAN. That is correct.

Mr. GROSS. One other question, Mr. Chairman, if I may. Am I correct that 54 of the pilots out of the 110 total number 

Captain MCCLEAN. That is 128.

Mr. GROSS. Well, 54 are in the $17,000 bracket?

Captain MCCLEAN. If the statement was made, sir, I can't dispute it.

Mr. GROSS. I don't know that the statement was made. I have been

informed that 54 of the total number of pilots are in the $17,000-a-year

bracket.

Captain MCCLEAN. Yes, sir • we probably have 54 senior pilots.

Mr. JOHANSEN. Possibly the assistant to the Governor can answer

that?

Mr. RUNNESTRAND. That is correct. May I correct one other thing

about the authority of the agency to not apply the Civil Service Retirement Act. By law, it is applicable to our employees—all of them—

on the same basis as to all Federal employees, so neither the employee

or agency has any option. It would require an amendment to the law

to take pilots out of it and to pursue any other independent course.

Mr. OLSEN. The Congress has preempted the field, and they have

directed that you shall be members of the Federal Employees Retirement System?

Mr. RUNNESTRAND. Yes, sir.

Mr. OLSEN. So that is your exclusive retirement system?

Mr. RUNNESTRAND. Yes.

Mr. OLSEN. Just as it is for other Federal employees?

Mr. RUNNESTRAND. Yes.

Mr. JOHANSEN. And participation is mandatory and not optional

for the employees?

Mr. RUNNESTRAND. That is correct. If it would be helpful to the

committee, I would like to suggest, if you think it would be helpful,

for the record, a statement of the pilots' conditions of employment,

which contains the salary ranges and matter of premium pay, holiday

pay, and group insurance.

Mr. OLSEN. Without objection then, this document tendered me—

"Panama Canal Company Pilots' Conditions of Employment"—will

be incorporated in the record at this point. That is dated February

14, 1963.

(The document follows:)

PANAMA CANAL COMPANY PILOTS' CONDITIONS OF EMPLOYMENT

Panama Canal Company pilots are compensated in accordance with the following salary schedules:

Designation

Annual

salary rates

Pilot-in-training (6 months) $11,003.20

Pilot, probationary (1 year) 12,454.70

Pilot 13,906.20

Pilot (over 11/2 years) 14,485.63

Pilot ( over 3 years) 15,354.77

Pilot (over 4% years) 15,934.19

Pilot (over 6 years) 16,513.62

Pilot (over 7% years) 17,093.04

I Years of service refers to service performed as a qualified pilot.
40 ANNUITIES OF PANAMA CANAL SHIP PILOTS

Currently, 54 out of 110 qualified pilots of a force of 131 are at the top

$17,093.04 step.

Pilots in the Canal Zone perform services under the following general

conditions.

(a) Workweek.—A basic workweek of 40 hours, which consists of the first

40 hours of duty performed in an administrative workweek. Pilots average

approximately three trips during this 40-hour workweek.

(b) Premium Pay.—Time-and-one-half pay after 40 hours, including all travel

time in any workweek, or about $12.33 per hour for top-step pilots. In fiscal

year 1962, pilots averaged 6 overtime hours each per pay period.

(c) Holiday Pay.—Double pay for work performed on holidays, not to exceed

8 hours; straight-time pay for any hours in excess of eight. Pilots in the top

step receive about $175 for a canal transit on a holiday, depending on the

length of time in transit.

(d) Standby Pay.—A pilot is authorized full payment for the time he is required to stand by in pilots' room waiting for a transiting vessel.

(e) "Plug-in" Time.—In cases where a pilot does not perform 40 hours of

work and/or travel during an administrative workweek, he is credited with,

and given, full pay for the difference between the combined work and travel

and 40 hours. During the fiscal year 1962, the available pilot force averaged

approximately 7.8 hours of "plug-in" time biweekly.

(1) Retirement.—Pilots have eligibility for retirement, under the U.S. Civil

,Service Retirement Act, which is mandatory in the Canal Zone at age 62 for

U.S. citizens with 15 years or more of isthmian service. A pilot with 30 years

of total U.S. Government service will receive a base annuity of about $9,500

after 5 years at present salary rates. Canal pilots contribute 6/12 percent of

their base pay, which percentage is matched by the Company, toward the civil

service retirement fund.

(g) Leave.--Combined sick and annual leave benefits, amounting to 324 hours

a year with a maximum accumulation of 720 hours. The same leave system is

applicable to all pilots regardless of their years of service. A travel-leave

allowance of 40 hours each year is given, provided an employee remains in a

temperate climate for at least 30 days.

(h) Travel time.—In addition to credit for the actual hours of transit,

Panama Canal pilots receive an arbitrary travel allowance of 21/3 hours for

return across the isthmus for each Canal transit. This travel time is compensable as if it were work time.

(i) Home-leave transportation.—Free home-leave travel every 2 years to the

pilot's place of actual residence in the United States for himself and his family

is allowed. This averages approximately $1,375 per family every 2 years.

(j) Reduced-rate transportation on Company-owned vessel for himself and

family.—Round trip ocean travel on the SS Cristobal, a Company-owned vessel,

to New Orleans is subsidized in the amount of 75 percent, and is available annually if the pilot does not elect to take free home-leave travel. This would cost

the pilot about $100 per round trip per person.

(k) Injury compensation.—Compensation for disability and death, and full

medical care for pilots who suffer injuries in the performance of their duties

under the provisions of the Federal Employees' Compensation Act. This includes an entitlement to 75 percent of any salary or wage loss due to disability

from a stork injury after annual leave has been exhausted.

(1) Official transportation.—A pilot is provided official transportation from

his home to the place where he boards launches en route to transiting ships and

'also official transportation from docks back to his home at the end of the transit.

(m) Taxes.—Federal income tax is withheld. No other excise, sales, or property taxes apply in the Canal Zone.

(n) Meals.—Pilots are furnished meals aboard vessels while working and at

Panama Canal Company expense at the cOnipletion of a transit prior to their

returning home.

(o) Housing.—Government-owned housing is provided pilots on a nonsubsidized .basis, the rent of such depending upon the size and type of quarters

occupied. Assignments to quarters in the Canal Zone are generally made on

the basis of employees' length of service.

(p) Employee group health insurance coverage.—Pilots are eligible for Federal Government group health insurance providing hospital room, miscellaneous

hospital expense, surgical expense, maternity, and major medical expense benefits. The cost of such is shared by the employee and the Panama Canal Company, each paying one-half of the premium. A modified, low-cost conversion

policy is available to retiring employees.
ANNUITIES OF PANAMA CANAL SHIP PILOTS 41

(q) Federal employee group life insurance coverage.—Eligibility for life insurance and accidental death and dismemberment insurance under the Federal

Employees' Group Life Insurance Act. This insurance is term insurance and

builds no cash, loan, or paid-up or extended insurance equities. The cost is

shared by the employee and by the Government as his employer, the employee

paying two-thirds of the cost. The amound of insurance carried by each employee is an amount equal to the current rate of his annual compensation if

such rate is a multiple of $1,000; if not a multiple of $1,000, then to the next

higher $1,000.

Mr. ItCrNNESTRAND. And here is a statement entitled "Canal Zone

Merit System Qualification Standard" which might be helpful.

Mr. OLSEN. Without objection, that qualification standard will be

incorporated in the record at this point.

(The document follows:)

CANAL ZONE MERIT SYSTEM QUALIFICATION STANDARD, SEPTEMBER 1960

Pmyr 1

Duties.—Performs duties involving the piloting of ships in Canal Zone waters,

the terminal ports, and through the Panama Canal.

1. Pilot in training

(a) Applicants must hold a license, issued by the U.S. Coast Guard, as master

of steam or motor vessel, any gross tons, any ocean.

( b ) Applicant must have served as chief mate (or master) on oceangoing

vessels of 1,000 or more gross tons for 1 year while holding master's license.

(c) Applicant must have served as towboat master with the Panama Canal

for at least 3 months.

2. Pilot

(a) Applicant must have served as pilot in training with the Panama Canal

Company for at least 6 months.

( b ) Applicant must have satisfactorily passed a written examination given

by the Canal Zone Government Board of Local Inspectors.

(e) Applicant must have satisfactorily completed the training prescribed by

the Panama Canal Company.

POSITION SPECIFICATION, PANAMA CANAL COMPANY

Duties and responsibilities

Under direction of the port captain and assistant port captain, serves as

canal or harbor pilot for the Panama Canal Company aboard any craft entering or underway in the Canal Zone waters or transiting the Panama Canal, and

performs related work as required.

(NoTE.—The Panama Canal is approximately 45 miles long and is characterized by bends of varying sizes and degrees, tidal and lock currents of varying

intensities, and a navigable channel of different widths, and six concrete lock

chambers, each 1,000 feet long and 110 feet wide. Each complete transit involves

six separate dockings and undockings, and an average transit time of 8 to 10

hours, with large ships passing and meeting while transiting.)

Examples of work performed

Boards any foreign or U.S. ship in Balboa Anchorage or Cristobal Harbor from

a small launch; takes place on bridge and serves as pilot in complete control of

the navigation and movement of ship while in Canal Zone waters, including

ships of all sizes, at all hours.

Gives instructions and is responsible for enforcement of canal regulations and

safety measures; is in charge of vessel underway in Canal Zone; and, from a

navigational aspect, is responsible for safety of passengers, crew, and vessel.

Receives from the marine traffic controllers information by radiotelephone

as to the location and direction of travel of other ships in harbor and in the

canal and interprets a variety of channel markers and signals. Gives orders

1 Employees are designated as "pilot in training" during first 6 months of service and

are automatically promoted to pilot upon satisfactory completion.
42 ANNUITIES OF PANAMA CANAL SHIP PILOTS

to: ship's captain or other officer as to courses, orders to the rudder and

engines; to lockmaster as to speeds at which towing locomotives are to be

operated through the locks, and to towboat masters, when towboats are required.

Minimum qualifications

• Sec. 10.50. Pilot, Panama Canal.—The minimum requirements to qualify an

applicant for license as Panama Canal pilot are as follows:

(a) He must have completed high school or its equivalent;

( b ) He must have been not less than 25 years of age and must not have

reached his 36th birthday at the time of his employment as pilot in training by

the Panama Canal Company. This requirement may be waived by the supervising inspector for an applicant who had not reached his 39th birthday at

the time of his employment as pilot in training; and

(1) Possesses exceptional marine experience, or

(2) Immediately prior to the time of his employment as pilot in training

was an employee of the Panama Canal Company or the Canal Zone Government who was reached for reduction in force or whose rate of pay was

frozen incident to a change in the pay base or in the security designation

of his position;

( c ) He must hold a license, issued by the U.S. Coast Guard, as master of

steam or motor vessels, any gross tons, any ocean;

. (d) He must have served 1 year as chief mate of ocean steam or motor vessels

of 1,000 gross tons or over;

(e) He must have been employed as master, towboats, by the Panama Canal

Company for at least 3 months prior to appointment as pilot in training;

(f) He must have been employeed as pilot in training by the Panama Canal

Company for a period of 6 months;

(g) He must have satisfactorily completed the training prescribed by the

Panama Canal Company; and

(h) He must have passed an examination given by the board of local

inspectors.

Captain MCCLEAN. Mr. Chairman, can I make two more statements.

Mr. OLSEN. Yes, sir.

Captain MCCLEAN. The present pattern, in the entire marine industry, is for officers to retire after 20 years regardless of any age

in other words, 20 years of service at any age. That is the pattern

in the industry.

Mr. JOHANSEN. Let me interrupt right there. Is that 20 years as an

officer or 20 years in the maritime service?

Captain MCCLEAN. The service is broken into unlicensed personnel

and licensed personnel. They all follow the same vein in that respect.

I am referring mainly to Masters, Mates and Pilots Association, with

which we have a charter, and there the trend in the entire industry,

including unlicensed personnel, all encompassing, is 20 years at any

age.

Mr. JOHANSEN. In any type of service?

Captain MCCLEAN. It would be, of course, on ships.

Mr. JOHANSEN. Yes any category of employment on ships.

Captain MCCLEAN. "Yes.

Mr. OLSEN. The category of employment as pilots or 

Captain MCCLEAN. It would be as officers on the ship itself or unlicensed personnel of the ship. That is the trend of the industry.

Mr. OLSEN. But it is officers on a ship?

Captain MCCLEAN. Yes, sir. That would be for a third mate, second mate, chief mate, captain, regardless, the trend is for 20-year retirement at any age. In other words, you could sail 20 years as third

mate and retire, maybe sail as master 15 years and 5 as chief mate,

something like that.

Mr. UDALL. Mr. Chairman, I know these gentlemen have gone to

a good deal of expense to come here and I want to be sure they have
ANNUITIES OF PANAMA CANAL SHIP PILOTS 43

a full opportunity to present their case. Was it the gentleman's

thought to adjourn? We are in violation now. Was it your thought

to ask them to come back or was it the thought we had concluded most

of the testimony?

Mr. OLSEN. I was going to ask the witness if this concluded his

testimony. If not, we will have to recess until we can continue the

hearing.

Captain MCCLEAN. I only have one other statement and it will

just take a second.

Mr. UDALL. And then you would feel you have had an adequate

opportunity. Mr. Chairman, I would suggest he go ahead.

Captain MCCLEAN. I would like to say that over a period of 15

years, H.R. 2030 would affect 54 men, should they choose to retire

at age 55, which would be optional, and in which case, it would not

present any undue hardship on the Panama Canal Company itself

because other pilots could be brought into the service and trained,

should this bill be enacted into law. We would lose 54 over a period

of 15 years, should they so desire to retire at age 55.

Mr. JOHANSEN. Let me be sure I understand this. You mean that

this is the turnover that would result?

Captain MCCLEAN. The possible turnover.

Mr. JOHANSEN. The maximum possible?

Captain MCCLEAN. Maximum turnover possible would be 54 men.

Mr. JOHANSEN. This doesn't mean that these liberalized provisions

would not apply with respect to all subsequent personnel or all subsequent pilots?

Mr. OLSEN. On that point, Mr. Johansen, I think he means that

because of the qualifications for the job, this would be a constant figure

because to get on as a pilot in the canal, you must be 36 years of age,

as an average. You can't hardly be much younger and have the

the experience required, so that with the present number of employees

in the canal, unless they increase the number of employees in the

canal, it would come to about 54 pilots.

Mr. JOHANSEN. Level off as a continuing figure?

Captain MCCLEAN. Yes, sir. The figure, therefore, of course,

wouldn't run that high. I projected this over a 15-year period. It

would average, I would say, somewhere in the neighborhood of four

men per 

year, 

roughly. In other words, the average wouldn't go any

higher than it is today.

Mr. OLSEN. I have one question in the back of my mind. Your

life experience with Panama Ship Canal pilots on retirement at age

62 is 4 years. You said today, 4 to 6 years.

Captain MCCLEAN. Four to six.

Mr. OLSEN. So if there was a change made where there would be

retirement at age 55, you would be attempting to increase the life

experience after retirement from 4 to 6 years to 11 to 13 years?

Captain MCCLEAN. Plus 7 years; yes, sir.

Mr. OLSEN. And that would compare with the overall average of

Federal employees retiring at age 62 having 16 years' experience?

Captain MCCLEAN. Yes, sir.

Mr. OLSEN. That is fine.

We will now hear from Mr. John F. Griner, president, American

Federation of Government Employees.
44 ANNUITIES OF PANAMA CANAL SHIP PILOTS

STATEMENT OF JOHN F. GRINER, NATIONAL PRESIDENT, AMERICAN

FEDERATION OF GOVERNMENT EMPLOYEES

Mr. GRINER. Mr. Chairman and members of the subcommittee, it

is the view of the American Federation of Government Employees

that the bill H.R. 2030, introduced by Representative Morrison, would

add a soundly premised amendment to the Civil Service Retirement

Act.

We believe the bill has merit, and that it would provide modest

recognition of a type of Government service that is well deserving of

inclusion in the category which permits retirement at an age earlier

than that required for voluntary retirement. It should be recognized

that the service of Panama Canal ship pilots is arduous and exhausting and is characterized by a degree of responsibility which creates

extreme tension.

Applicants for the position of pilot must, hold a license issued by

the Coast Guard for master of a steam or motor vessel. They must

have been a deck officer for at least 7 years and held the master's

license for at least 1 year. Applicants must have reached their 25th

birthday but may not be over age 35, which may be extended 5 years

if they have had prior service with the Navy, Coast Guard, or the

Panama Canal Company. Because of the required experience, applicants are usually close to the upper age limit, which means that they

are nearly 35 years old when employed. After 9 months of- orientation

and trial plus an additional 1-year probationary period, the individual

becomes a full-fledged pilot.

Thus the pilot will not come under the Retirement Act in Many

cases until he is 35 or 36 years old. So he cannot possibly accumulate

30 years of service under the act. It is frequently true that the pilot

has paid a considerable amount into the social security fund and in

that same period he would also have contributed a substantial sum

into private company and union retirement plans. When he becomes

•a pilot in the Federal service, he loses the benefit of the company

retirement plan, and it is unlikely that he will live long enough to

collect any social security benefits. The pilot therefore is dependent

upon his retirement annuity. He is holding a position which because

of its strenuous aspects clearly entitled him to early retirement for it

does not permit continued employment much after 55 years of age.

The strain to which these men are subjected is evident in even a

brief review of their daily duties. The Panama Canal Company

runs a 24-hour operation. Night work has doubled and irregular

hours are the rule rather than the exception. Many more large ships

carrying oil and ore have been passing through the Canal since 1955.

These vessels require two or more pilots, and the time spent in guiding

these ships through is filled with tension.

There is one basic difference between the degree of responsibility

placed on pilots in continental United States and in the Canal Zone

which illustrates the burden placed on the latter group. In the

States the master is still responsible for his ship. Canal Zone pilots

by law relieve the master of the responsibility while navigating the

canal.

Statistics compiled by the Canal Zone Pilots Association tell a grim

story of the odds that face these men. We have studied these statistics
ANNUITIES OF PANAMA CANAL SHIP PILOTS 45

which indicate what happened to 52 pilots who left the service of the

Panama Canal Company from 1949 until last month. They averaged

less than 57 years of age and not quite 20 years of service, facts which

substantiate the retirement at age 55 with 20 years of service which

these men are seeking.

Forty-two percent were discharged for medical disability at an average age of 53.5 years, with 17.5 years of service as pilots. Such

facts are convincing proof of occupational hazard and physical hardship.

The Panama Canal Company has approved this bill if it is amended

to require 20 years of service as a pilot. It is understood that the

pilots themselves have agreed to such a change.

The Civil Service Commission has opposed the bill, as it has opposed

numerous retirement bills in the past. One objection was that the

measure disturbed the coordination between the pilots and other employees of the Panama Canal Company. There would be no such

thing as disability retirement if all employees under the act were

coordinated. The Bureau of the Budget raised the question of cost,

though there is to be little or no cost to the Government. Many of

these men would not live long enough to get back in annuities the

money they will pay into the retirement fund.

It is suggested that the following be added to the bill, as a new

section 2, the present section 2 and 3 being renumbered 3 and 4,

respectively:

SEC. 2. Notwithstanding any other provision of law, benefits under the Civil

Service Retirement Act resulting from the enactment of this Act shall be paid

from tjae civil service retirement and disability fund.

The AFGE, Mr. Chairman, urges a favorable report on this bill,

and early enactment by the House. We thank the committee for the

opportunity to submit our views.

Mr. OLSEN. If there are no further questions, the subcommittee

will adjourn.

(Thereupon, Tuesday, April 2, 1963, the subcommittee adjourned.)

a