Memorandum by Mr. Robert G. McGregor of the Division of Caribbean and Central American Affairs36

Employment of Panamanians in the Canal Zone

. . . . . . . . . . . . . .

Observations and Conclusion.

The State Department has always maintained that the employment policy of the Panama Canal is one for decision by the War Department. The Department of State’s principal interest has been in seeing that our international commitments with Panama are carried out.

As has been said this Department is not in a position to either verify or refute many arguments advanced in the memorandum presented [Page 1441] to the Secretary37 on behalf of Lombardo Toledano.38 The Embassy in Panama reports that Governor Edgerton of the Canal Zone, who was furnished with a copy of the document, is preparing a detailed reply to the accusation contained therein. For its part the Department of State makes the following observations:

The records of the Department reveal an absence of determined interest on the part of the Panamanian Government regarding allegations of discrimination against its nationals employed in the Canal Zone. It should be realized in this connection that if Panamanian citizens in the Zone are to receive wages equal to those paid American citizens that this will have an inflationary effect upon wages to be paid Panamanian labor in the Republic of Panama. One of the most acute problems facing the friendly administration in Panama is price control in the face of an unbridled rise in the cost of living and a slack in employment. Hence, it is submitted that we should be very careful before embarking upon a policy which would have severe repercussions upon the delicately balanced economy of the Republic.
Also the question might arise if Executive Order Number 880239 is to apply to the Canal Zone, as to whether the same principles of equality should not apply in the case of all contracts entered into between agencies or persons acting on behalf of the United States Government and alien labor in foreign countries. This Department believes that such a question is answered by the assertion that contracts for performance in foreign countries invariably require payment of non-United States employees at levels set out in legislation of the country where the work is done.
In view of the extraordinary defense construction contracts of the past few years in the Canal Zone, alien laborers, principally from Jamaica, Costa Rica, El Salvador, and Colombia, have been brought to work in the Zone. If these persons have been subjected to discriminating treatment they might on returning to their respective countries spread propaganda not at all favorable to the United States. Such laborers can have a real appreciation of the issues involved in a question of this kind. Nevertheless these issues do furnish real fuel for agitators and the poorly educated worker.
Lombardo Toledano could hardly have seized upon an issue that contains so many of the elements he uses so handily in pleading the cause of the underprivileged Latin worker (race discrimination; “Yankee Imperialism”; color barriers; wage differentials; exclusive privileges; commissary regulations; etc.) than this one of discriminatory employment practices in the Zone. Historically the Canal Zone [Page 1442] was established at a time when in our national self interest we were most “imperialistically” inclined and doubtless some of the practices inaugurated during that period continue to prevail.
The Embassy in Panama in reporting on this general subject of labor, both in the Republic and in the Zone, has pointed out that all Panamanian labor organizations are weak and impotent. It is not believed that these organizations of themselves could raise this issue to a point where it would cause any preoccupation to either Government for a long time to come. The importance of the problem cannot be overlooked. The interjection of Toledano into this field takes the matter out of the hands of impotent local groups and makes it an issue of more than local importance. It may pit the CTAL (Lombardo’s organization) against the AFL on ground of Lombardo’s choosing. The Metals Trade Union in the Zone and an affiliate of the AFL is a potent organization deeply entrenched and jealous of the prerogatives built up over the years.
This Government cannot overlook the fact that any abrupt change of policy in regard to employment in an area so strategically important as the Canal Zone might have most unfortunate effects during the war. It is one thing to make certain that Canal Zone practice conforms to our commitments to Panama and an altogether different and far more serious matter to proceed hastily to a fundamental reform of this practice. Doubtless this will have to be undertaken sometime in the future but to do it now might easily be prejudicial to our national security and the defense of the Hemisphere.
The President’s Committee on Fair Employment Practice might be asked for a ruling as to whether in its belief Executive Orders Nos. 8802 and 934641 apply to the Canal Zone. If they do, then it would seem apparent that this same Committee is the proper agency to determine whether or not the Canal Zone Authority in its employment practices is adhering to the policy and commitment of this Government regarding equality of treatment between American and Panamanian citizens.

  1. Submitted on March 16, 1944, to Mr. Jonathan Daniels, Administrative Assistant to President Roosevelt.
  2. Memorandum concerning alleged labor discriminatory practices in the Canal Zone; handed to Secretary Hull on February 10, 1944, not printed.
  3. President of the Confederación de Trabajadores de la América Latina (CTAL), Federation of Workers of Latin America.
  4. Order of June 25, 1941, 6 Federal Register 3109.
  5. Order of May 27, 1943, 8 Federal Register 7183.