500C.115 Montreal/10–1546

The Governor of the Panama Canal (Mehaffey) to the Ambassador in Panama (Hines)

My Dear Mr. Ambassador: Reference is made to your letter of August 6, 1946, enclosing a copy of a confidential dispatch of July 2619 from the State Department, requesting that statements be prepared and submitted to the Department that might be considered as replies to the allegations made at Mexico City by the Panamanian delegation attending the ILO conference.

The allegations referred to in the State Department’s dispatch are assumed to be those made during the third conference of the American States Members of the International Labor Organization by Mr. Guevara, Workers’ delegate, Panama (Provisional Record, Eleventh Sitting, pp. 3–5), Mr. Sánchez, Government delegate, Panama (Provisional Record, Twelfth Sitting, pp. 8–11), and Mr. Turner, Government delegate, Panama (Provisional Record, Seventeenth Sitting, pp. 4–8). I shall comment on the allegations of these delegates in the order in which they were made.

Allegations of Mr. Guevara, Workers’ delegate, Panama

The allegations of Mr. Guevara concerning conditions in the Canal Zone, which are found in the ninth to the sixteenth paragraphs of his published remarks, contain so many inaccuracies and misstatements that it is difficult to believe that he has ever made any investigation of the subject. Because of the specific nature of his allegations, it is desirable to comment on them at some length.

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The twelfth paragraph of Mr. Guevara’s remarks contains a number of specific allegations which will be discussed in their order.

In his reference to the “gold” and “silver” rolls of The Panama Canal, Mr. Guevara has fallen into an error that is common among citizens of Panama who have made no investigation of the subject, by defining the “gold” roll as including only the privileged workers and technicians from the north, while all Panamanian, Latin American and Caribbean workers are relegated to the “silver” roll. As a matter of fact, the distinction between the “gold” and “silver” workers is one of skill and not of race or nationality. By Executive Order of the President of the United States, all employees of The Panama Canal who receive more than $125 per month or 72 cents per hour are required to be citizens of the United States or of Panama, and the [Page 55] employees in this group are referred to, for convenience, as “gold” employees. Citizens of Panama whose skill entitles them to the higher salaries are employed on the gold roll and receive the same pay and the same privileges as the citizens of the United States on that roll. With the single exception that they are not entitled by law to the same retirement benefits as United States citizens. The remaining employees, who occupy positions requiring less skill or education and receive less than $125 per month or 72 cents per hour, are referred to, for convenience, as “silver” employees, the term “silver” having originated in the early construction days when local labor was paid in silver coin. The “silver” roll is composed of workers of diverse nationalities, including Panamanians, West Indians, Salvadoreans, and other Latin Americans, and, occasionally, citizens of the United States, who receive less pay and more limited leave and retirement privileges than the citizens of Panama and the United States on the “gold” roll.

There is no basis of fact for the allegation that “gold” workers receive for equal work a wage considerably higher than that paid to “silver” workers. The duties of the latter group are those which do not require a high degree of skill and which are carried out under the close supervision of citizens of Panama or the United States on the “gold” roll. The usual basis for this allegation is the fact that in some instances employees on the “silver” and “gold” rolls may have the same designation, but it does not follow that such employees are performing equal work. Thus, a “silver” chauffeur driving a oneton truck under direct supervision cannot be said to be doing work comparable with that done by a “gold” chauffeur who drives a tenton dump truck, or a heavy truck crane, under only general supervision and with a high degree of responsibility for the care and protection of his vehicle. Similarly, a “silver” painter is a semi-skilled artisan who has no responsibility for mixing his paints or for the erection or safety of the scaffolding on which he works, but merely applies paint, under the immediate supervision of a “gold” painter who does no actual painting except when delicate or difficult work is to be done which requires training equivalent to that obtained in an apprenticeship course followed by extended experience as a journeyman painter. The principle of equal pay for equal work is recognized and applied by the Canal administration, and when instances of violation of the principle are called to attention they are corrected promptly.

Separate schools, clubhouses, commissaries, etc., are provided for “silver” employees, but every effort is being made to see that the facilities provided for these employees are reasonably comparable with those provided for “gold” employees. The allegation that [Page 56] “gold” employees drink ice-water out of sanitary individual cups while “silver” employees must drink out of unsanitary communal cups is untrue; common drinking cups are forbidden in the Canal Zone, and sanitary drinking fountains or individual cups are provided for all employees. The allegation that “gold” commissaries are better provided with food supplies than the “silver” commissaries is likewise untrue; exactly the same foodstuffs, including quick-frozen meats, fruits, etc., are available in the “silver” commissaries as in the “gold” commissaries. It is also untrue that Latin American contract workers are forced to live in unhealthy conditions which encourage the spread of contagious diseases. The barracks in which the contract workers are quartered are constructed of wood “as are more than ninety per cent of all houses for both “gold” and “silver” employees”, but they are newly-constructed and provided with excellent sanitary conveniences, and are rigidly and frequently inspected by the Health Department to insure that all sanitary ordinances are being constantly complied with. These barracks compare favorably in all respects with those ordinarily provided for laborers on construction projects in the United States.

In the thirteenth paragraph of his remarks, Mr. Guevara alleges that no adjustment was made in the wages of “silver” workers when their workweek was reduced from forty-eight to forty hours. This is not true. The rates of pay of “silver” employees were adjusted on April 1, 1946, so as to give them the same take-home pay for forty hours of work as they formerly received for forty-eight hours, and an additional increase was granted effective July 1, 1946, making a total average increase in their hourly pay since April 1, 1946, of approximately 35 per cent.

Mr. Guevara’s final allegation, in the fourteenth paragraph of his remarks, is that Latin American workers in the Canal Zone are forbidden to organize trade unions. This is not true. There has never been any prohibition against the organization of “silver” workers in the Canal Zone or any attempt to discourage their organization. An organization of employees of West Indian origin or descent (the Panama Canal West Indian Employees Association) has been in existence in the Canal Zone for many years, and the Canal administration has recognized and freely dealt with this Association on matters related to wage rates, working conditions, etc. Within the past few months a union of “silver” employees affiliated with the CIO has been organized and now claims a membership of over 10,000 employees. It is believed that the organizers of this union will be glad to testify that the Canal authorities have placed no obstacles in the way of their work but on the contrary have facilitated it. The Panama Canal has no information [Page 57] concerning the case of David Gonzalez, alleged by Mr. Guevara to have been discharged for attempting to organize his fellow workers. It is possible that he intended to refer to David Constable, who claimed that he was discharged for this reason but whose claim, I am informed, was found by the CIO to be unfounded after full investigation of the circumstances.

Allegations of Mr. Sánchez, Government delegate, Panama

The eleventh to the twenty-first paragraphs of the remarks of Mr. Sanchez deal with conditions in the Canal Zone. With reference to his statements concerning the fact that the Constitution of Panama does not apply to workers who live in Panama but work in the Canal Zone, it seems necessary only to refer to Article III of the Treaty of 1903, by which the Republic of Panama granted to the United States “all the rights, power and authority within the zone mentioned … which the United States would possess and exercise if it were the sovereign … to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority.” Since it would obviously be impracticable to have two governments exercising jurisdiction simultaneously over the Canal Zone, it may be assumed that Mr. Sánchez was not suggesting such a division of authority, but rather that his comments were intended to indicate that without the protection of the Constitution of Panama, workers in the Canal Zone cannot be assured of the right to organize and to receive equal pay for equal work.

Such an allegation is, of course, completely untenable. All workers in the Canal Zone, with insignificant exceptions, are employed either directly or indirectly by agencies of the United States Government and are adequately protected by United States laws. As has been previously stated, the allegations that in the Canal Zone there is no freedom of association and no recognition of the principle of equal pay for equal work or of the principle of equality of treatment in general are without foundation.

Allegations of Mr. Turner, Government delegate, Panama

In the first paragraph of his remarks, Mr. Turner advances the theory that the United States has only a limited jurisdiction over the Canal Zone, and implies that the Republic of Panama, as titular sovereign, has, or should have, authority over administrative and labor relations in the Canal Zone. In answer to this contention, reference is made again to Article III of the Treaty of 1903, granting to the United States all the rights, power and authority within the Canal Zone which it would have if it were the sovereign, to the entire exclusion of the exercise by the Republic of Panama of any such [Page 58] sovereign rights, power or authority, which article has never been superseded or amended.

In the second paragraph of his remarks, Mr. Turner refers to the existence of the “gold” and “silver” rolls in the Canal Zone, and repeats the allegation that the “gold” roll comprises employees from the United States who enjoy all kinds of privileges, while the “silver” roll comprises employees from Latin American and the Caribbean islands who are subject to discrimination at every turn. The similar allegations made by Mr. Guevara have been discussed above, where it was shown that the distinction between the two rolls is one of skill and not of race or nationality, and that citizens of Panama who possess the necessary skill are employed on the “gold” roll and enjoy exactly the same privileges as citizens of the United States except as to retirement benefits.

In the fourth paragraph of his remarks, Mr. Turner states categorically that in the Canal Zone there is no labor legislation, no legal basis for a trade union movement and no social security laws, and that it is a part of America that is excluded from the realm of social justice. This is a very serious charge against the Government of the United States, but fortunately it is without foundation. As I have previously said, the entire body of workers in the Canal Zone, with insignificant exceptions, are employed directly or indirectly by the Government of the United States, and are protected by United States laws. Certain of these laws, such as the one providing cash relief instead of retirement benefits for non-citizens of the United States who are unfit for further service because of age or disease, are recognized as being not entirely adequate under present-day conditions and studies are being made with a view to determining the changes that should be recommended to Congress for adoption. It can be confidently asserted, however, that the wages and working conditions of employees generally in the Canal Zone, whether they are on the “gold” roll or on the “silver” roll, are equal or superior to those of workers engaged on similar tasks in the Republic of Panama, and greatly superior to those of workers in any other part of the Caribbean area.


To the best of my knowledge, no informed critic of labor policies in the Canal Zone has ever contended that workers in the Republic of Panama are generally better off than “silver” roll employees in the Canal Zone. In fact, it is generally understood and admitted that Canal Zone employment offers many advantages over employment in Panama, as is evidenced by the large number of Panamanian citizens who are employed in the Zone and the continuing volume of applications [Page 59] for such employment. The real basis for the complaints that have arisen in Panama is the difference between the pay of the citizens of Panama and of the United States on the “gold” roll and the pay of the much greater number of employees of various nationalities on the “silver” roll.

The principal sources from which employees are drawn for the Canal Zone are (1) the United States, (2) the Republic of Panama, and (3) other countries and islands of the Caribbean area. By Executive Order the higher-paid positions in the Canal Zone are reserved for citizens of the United States and Panama. It is well known that the Republic of Panama (like the other countries of the Caribbean area) is predominantly an agricultural and commercial country, and that it has no large-scale manufacturing industries in which its citizens could acquire skills that would fit them for employment on the “gold” roll. There is in Panama no such system of apprentice training as exists in the United States, and the few workers who may have acquired a considerable degree of skill from long experience are likely to have only an imperfect command of English and therefore to be of only limited usefulness in the higher positions in the Canal Zone, where English is used entirely. In view of these conditions and the fact that Panama is a small country, with a population of only about 650,000, it is not surprising that the number of citizens of Panama on the “gold” roll is small in comparison with the number of United States citizens on that roll. Before World War II made its discontinuance necessary, the Panama Canal conducted apprentice-training courses from which a number of Panamanian citizens who had a thorough knowledge of English were graduated and are now performing very satisfactory services on the “gold” roll. When it becomes possible to re-establish the apprenticeship system, additional opportunities will be afforded to Panamanians to obtain this training. It should be recognized, however, that the standards established for employment in the Canal Zone are necessarily and properly high and that only highly-skilled Panamanians who are completely at home in the English language can compete on an equal footing with the skilled workers who have been trained in the vast industries of the United States.

Since the great majority of the skilled employees in the Canal Zone must be drawn from the United States, the wage rates for “gold” roll employment are based on prevailing rates in the United States, but are sufficiently above those rates to attract the best type of applicants; and liberal leave and retirement privileges are granted to insure retaining highly-qualified employees. Although many of the reasons for the liberal wages and privileges do not apply to “gold” employees drawn from the Republic of Panama, the latter are nevertheless given [Page 60] the same pay and privileges (except retirement benefits, as previously stated), in recognition of the principle of equal pay for equal work.

For employees on the “silver” roll, who are drawn largely from the Caribbean area, wage rates are based upon but are higher than those prevailing in the Caribbean area. A consistent effort has been made to avoid fixing rates which will be so high as to affect seriously the economies of the countries of the Caribbean area, although this effort has not always been successful, as is evidenced by the statements already mentioned of President Arias of Panama and Mr. Guevara concerning the damage done to the agricultural economy of Panama by high wage rates in the Canal Zone. The Panama Canal administration is constantly endeavoring to better the living conditions of the “silver” employees by improving their schools, clubhouses, hospitals, housing, etc., and will continue these improvements as rapidly as appropriations for the purpose can be obtained.

For the sake of brevity, I have avoided discussing exhaustively the various allegations made by the Panamanian delegates, but if additional information is desired concerning any of the matters touched upon, I shall be very glad to furnish it.

I am [etc.]

J. C. Mehaffey
  1. Neither printed.