Memorandum of Conversation, by Mr. Murray M. Wise of the Division of Caribbean and Central American Affairs

Participants: General Mehaffey
Mr. Braden—Assistant Secretary of State
Mr. Cochran—CCA
Mr. Wise—CCA

Governor Mehaffey visited the Department today to discuss problems of mutual interest in the Canal Zone. Conversations were begun in Mr. Cochran’s office, continued with Mr. Braden, and terminated with Mr. Wise.

Labor Discrimination. Labor is one of the greatest problems with which the Canal Zone authorities have to deal and the Governor referred in particular to recent allegations from various sources that there were practices of discrimination on the basis of race and color by Canal Zone authorities in the employment and treatment of their employees. He said that pressure to eliminate the grouping of labor into “gold” and “silver” categories had increased. The Governor believed a change in terminology would at first have a helpful psychological effect, which might become adverse when it was realized that the change was purely one of name rather than substance.

He pointed out that differentials in salaries and leave privileges were based on the ability of laborers, not on color or race, and that the terms “gold” and “silver” actually distinguished between skilled and unskilled laborers, respectively. He admitted, however, that in actual practice the majority of skilled laborers are United States citizens and, therefore, formed the “gold” roll, while West Indian, negro and Panamanian laborers are unskilled and form the “silver” roll. The Governor pointed out that in opportunity for employment, in pay and in leave privileges there was no differentiation based on [Page 1154] color or race line, but said there existed a certain amount of segregation of laborers because of differences of habits of personal hygiene and sanitation. He added that this segregation was practical and necessary and could not be avoided.

Mr. Braden told General Mehaffey that he was aware of the full significance of these problems confronting Canal Zone authorities, but deemed it most necessary that the factual study, recommended by the State Department through the Embassy, of labor conditions be given serious attention and completed without delay. Mr. Braden added that he was very anxious to get a memorandum of facts into the hands of the President. He said that, as the Governor knew, the labor question was a very live one these days and that it was necessary to be in a position to meet all kinds of allegations of labor pressure groups. The Governor said that the Embassy, in accordance with the Department’s instructions, had initiated activities leading toward a thorough study of labor conditions in the Canal Zone, but that little progress had been made to date because of Admiral Beardall’s79 illness and subsequent absence from the Zone. The Governor intimated that the study dealt with a most delicate problem and that it was hard to foresee what helpful recommendations could result from the investigation.

The Governor referred to the recommendation which had been proposed by Mr. Charles Taussig of the Anglo-American Caribbean Commission that a study of labor in the Canal Zone should be made by a joint commission of high-ranking officials appointed by the President. He was pleased that the Department and Mr. Taussig had finally agreed to the plan of having the study made by officials of organizations on the Isthmus for he was certain that the activities of an outside joint commission would have had the unfortunate effect of unnecessarily agitating the whole labor problem in Panama.

Governor Mehaffey also referred to the recent activities of the Panamanian delegation at the ILO conference in Mexico City and said that he was most grateful that the United States representatives acting under the guidance of the State and Labor Departments had been influential in seeing that the resolution which was finally adopted did not specifically refer to discrimination in the Canal Zone and did not propose the appointment of a joint commission to investigate discrimination there.

In referring to the treatment accorded United States laborers (“gold” employees) in the Canal Zone as compared to that practiced in the case of laborers from other sources, the Governor said three basic thoughts must always be kept in mind: [Page 1155]

A 25% pay differential is given United States citizens as an inducement to persuade them to depart from the United States to accept work in the Canal Zone and to help defray expenses of periodic returns to the United States on vacations.
Longer leave periods must be given employees from the United States because they are farther from home. Many of the permanent West Indian, Panamanian and other employees are hired locally, live near their homes and, accordingly, need less money and leave for vacation purposes.
An employee of the Panama Canal upon retirement is not permitted to live in the Zone. Retirement for local employees, therefore, does not create the same problem as it does for the United States citizens, hence, an additional reason for differentiation in pay.

The Governor said that the working week for “silver” employees recently had been cut from 48 to 40 hours. Simultaneously, pay was increased approximately 20% in order to avoid any loss in salary for the laborers because of shorter hours. He said this meant no additional take home pay and added that consideration was being given to an increase in the salary of “silver” roll employees which now averages about $60 a month. He thought this might soften some of the charges of discrimination in salaries.

War Department Civil Functions Appropriation Act. The Governor said he had come to the United States twice for hearings on that part of the Civil Functions Appropriation Bill which relates to Canal Zone employment. Canal Zone authorities oppose the McCarran amendment which has appeared in this bill since 1940. Through special proviso and by Executive Order compliance with the McCarran amendment has been suspended during the national emergency and has, therefore, never been in effect. The amendment provides that no negroes or laborers from other countries (citizens of Panama excepted because of treaty agreements) can be employed by the Canal Zone until all United States and Panamanian applicants have been satisfied. This year Labor Representative Hushing80 added a provision to the McCarran amendment which authorizes the President, if he finds it necessary because of a shortage of housing, to suspend for the fiscal year 1947 the application of the McCarran amendment, which requires the employment of citizens of Panama and of the United States in skilled, technical, clerical, administrative, executive or supervisory positions. The Governor explained that the Hushing provision will guarantee the suspension of the McCarran amendment through the fiscal year 1947 even though the national emergency is declared terminated in the meantime. This, of course, is what the Canal Zone authorities want pending a complete elimination of the McCarran amendment which it is hoped can be effected when the [Page 1156] Civil Functions Appropriation Bill is presented for the fiscal year 1948. Canal Zone authorities state that the McCarran amendment forces them to employ United States laborers in positions that can be filled by less skilled workers, thus increasing considerably and unnecessarily employment expenses.

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  1. Rear Adm. John R. Beardall, Commander of the 15th Naval District.
  2. W. C. Hushing, official of the American Federation of Labor.