The estimates include $45,000 for detailed architectural and engineering plans and specifications for improvements which are needed and should be ready to start in the post-war era.

THE PANAMA CANAL

The bill proposes an appropriation of $8,108,000, which is a reduction of $1,071,600 below the amount appropriated for fiscal year 1945, and a reduction of $90,000 from the Budget estimate. The reduction from the Budget estimate is made in the item for "Construction of additional facilities, Panama Canal." Other items are approved as proposed by the Budget.

Prior to the war period the Panama Canal was predominantly a commercial enterprise showing receipts from tolls for a number of years in excess of $23,000,000 per annum. In recent years its commercial utilization has declined until receipts from tolls approximate only $5,000,000 per annum, but its importance as a military and naval asset has greatly increased. The facilities have been utilized to a much greater extent than in previous years and it would appear that the time is rapidly approaching when there will be need for improvements and replacements that have been neglected or held in abeyance until a more propitious time.

Funds in the amount of $424,000 are provided for post-war plans and specifications in order that they may be completed and ready for the inauguration of work when manpower and materials are available. With regard to the Panama Canal the committee desires to call attention to the report of the General Accounting Office Committee to the Comptroller General of the United States, submitted July 19, 1944, a copy of which was filed with the chairman of the Committee on Appropriations, as follows:

INTERMINGLING OF CASH BY THE COLLECTOR and the Paymaster

(150) With respect to the counting of cash in the hands of the collector and the paymaster, principal accountable officers of the Panama Canal, this committee was faced with the same conditions that have confronted former committees. The committee did not count the cash in the custody of these officers but accepted certificates of the Comptroller, the Panama Canal, for the amount of cash to the credit of the agencies whose accounts were examined. As has been reported by previous committees no verification of Panama Canal and Canal Zone funds actually in the hands of the collector and the paymaster at any given date can be effected, because such funds are intermingled with Panama Railroad Company funds (48 Ú. S. C. 1327), and the committee was not authorized to examine the accounts of the railroad or its business auxiliaries. While a segregation is made in the accounting department of the thousands of transactions affecting the Canal, the railroad, and the Canal Zone government, thereby enabling the collector and the paymaster to maintain book controls with respect to their accountability to these agencies, nevertheless there is no physical separation of the cash belonging to such agencies in those offices. Therefore, the counting of cash in either office by representatives of the General Accounting Office (or by the private firm of accountants who audit the accounts of the Panama Railroad Company) to determine that cash is on hand in sufficient amounts to equal the stated accountability of only one or less than all of the agencies involved would be futile.

(151) In connection with this recurring question of “cash intermingling" there is submitted for the attention and consideration of those concerned a prior committee's suggestion that: "* * * a complete audit should include verification and reconciliation with submitted or approved accounts of all cash in the offices of the collector, the paymaster, and other fiscal officers, pertaining to the Panama Canal, the Panama Railroad, and the Canal Zone government, as well as spceial

deposit or trust funds, which verification could readily be accomplished if concurrent audits of accounts of all such agencies of the Government were made in the Canal Zone, preferably on a fiscal-year basis."

(152) With respect to Canal Zone funds it is to be noted that accounts, records, and other data relative thereto have been made available to committees for verification and audit, but no accounting for such funds is rendered to the General Accounting Office. These funds, consisting of postal money order and savings funds, and clubhouse funds derived from operations of restraurants, motionpicture theaters, cigar and newsstands, bowling alleys, swimming pools, etc., are received and disbursed by the collector, who accounts therefor to the Comptroller, the Panama Canal. While it appears that these funds are quasi-public or trust funds of the classes comprehended by the provisions of section 19 and/or 20 of the Permanent Appropriation Repeal Act, 1934 (48 Stat. 1232-1233), and properly subject for accounting to the General Accounting Office, it is believed that the verification thereof by General Accounting Office committees, while on the Isthmus, is sufficient in scope and detail to meet the audit requirements of the General Accounting Office, and that no further accounting to said office for such funds need be furnished by the Canal Zone Government.

(153) Insofar as the Panama Railroad Company is concerned the Acting Comptroller General in his annual report for the fiscal year 1937 held that in view of Executive Order No. 2135, dated February 4, 1915, there is no present legal authority for requiring the railroad company to render an accounting to the General Accounting Office. The accounts of the Panama Railroad Company are approved and audited by the Comptroller, the Panama Canal, and subjected annually under contractual arrangement to an additional restricted examination by a firm of public accountants. On the basis of actual costs as reflected in the records it is believed that the annual audits of the accounts of the Panama Railroad Company and its business auxiliaries could be made by enlarged General Accounting Office committees concurrently with the verification of the accounts of the other agencies on the Isthmus at no greater, and in all probability, at much less cost to the Government than under the present arrangements with the firm of public accountants, and with the additional advantages which, obviously, would accrue from complete and simultaneous audits of all activities on the Zone.

The committee is of the opinion that the recommendations of the General Accounting Office Committee to the Comptroller General have merit and respectfully suggests that the proper legislative committee of the House of Representatives give the matter early attention. The committee notes with approval that in accordance with the favorable financial showing of the Hotel Tivoli, mentioned in last year's hearing, the Panama Canal has renegotiated the rental agreement with the Panama Railroad Company and is now receiving rental of $36,000 per annum as contrasted with the nominal rental of only $12 per annum received during the period of years when the hotel was operating at a deficit. Operations for the 8 months ending February 29, 1944, produced a net revenue of $100,422.67, or an average monthly profit of approximately $12,500.

H. Repts., 79-1, vol. 1-34