Memorandum of Conversation, by Mr. W. Tapley Bennett of the Division of Central America and Panama Affairs

Participants: Mr. Briggs, ARA
Mr. David Morse, Assistant Secretary of Labor
Mr. John W. Martyn, Office of the Secretary of War
Admiral Nibecker, Navy Department
Mr. Arthur Flemming, Civil Service Commissioner
Mr. Stanley Burdick, Office of the Panama Canal
Captain Bird, Navy Department
Mr. Ewing, Labor Department
Mr. King, Office of Panama Canal
Mr. Wise, CPA
Mr. Bennett, CPA

Mr. Briggs84 explained that the meeting had been called to enable representatives of the interested Departments and Agencies to hear General McSherry on his recent study of labor problems and policies in the Canal Zone.

General McSherry opened his remarks by stating flatly his opinion that there has been both official and unofficial labor discrimination in the Canal Zone. He believes that the U. S. Government has not lived up to the commitments made in the notes accompanying the 1936 treaty85 promising equality of opportunity and treatment for citizens of Panama in the Canal Zone. He mentioned the Third Locks Act86 which restricts employment under that Act to U.S. citizens as one official violation. He called attention to the Philadelphia Agreement of the ILO87 calling for no discrimination, and charged that U.S. agencies have not lived up to the meaning and spirit of that Agreement despite adherence to it by the U.S. Government.

In General McSherry’s opinion, the heart of the problem is the Gold and Silver rolls. He described the rolls as the vehicle through which discrimination is practiced administratively. Wage rates for the Silver roll range from 44 to 66 cents per hour; only 20 persons in a total of 19,000 Silver employees receive a higher wage. The minimum gold wage is $1.07 per hour. He produced a tabulation showing that the charge of equal work without equal pay has much foundation. For instance, Gold and Silver carpenters do the same work but are paid at [Page 951] an hourly rate of $1.81 and 66 cents respectively. As another example, Gold teachers receive monthly salaries on an average of three times the amounts earned by their Silver counter-parts; General McSherry considers that in the primary grades the Silver teachers are doing a better job under much more trying conditions and with larger numbers of students per teacher. General McSherry made it clear that he did not mean to imply that all Silver employees are equal to all Gold employees and should be paid at the same rate. There are sufficient instances, however, of Silver employees doing the same type of work as Gold as to call for reform in the wage system.

Mr. Morse asked why reforms were not made by local administrators to remedy the more glaring of these inequities. General McSherry replied that for one thing legal difficulties stand in the way and went on to mention the lack of job analyses for Silver positions in the Panama Canal and Panama Railroad. He emphasized that in his opinion the Governor88 has done a great deal for the Silver employees in the Zone. He cited the institution of the 40-hour week with the same take-home pay for Silver employees. The Governor’s interest in and improvement of Silver schools and his desire to raise the wages of some 200 Silver employees under authority given by the Secretary of War (to raise 10% of non-Panamanian aliens) were also reviewed. The construction of new theaters in Silver districts, in numerous instances better than corresponding Gold facilities, was mentioned. It was brought out, however, that there is considerable resistance to reform in the Canal Zone hierarchy beneath the top command (which comes and goes), that U.S. citizens in the Zone are jealous of their rights and privileges, as well as their jobs, and that the tradition of Gold and Silver and what General McSherry termed the Gold roll psychology influences the whole situation. He called attention to differing leave regulations as evidence of further inequities and pointed out that, while the Army and Navy establishments in the Zone apply Civil Service retirement rules for their Panamanian and alien employees, the Canal does not. Mr. Wise asked whether raising Silver rates too much would upset the economy of Panama. General McSherry said he was not worried about Panama. He added that it eventually might change the whole Caribbean wage scale, which he says is very low.

Admiral Nibecker asked whether General McSherry would recommend bringing the Silver employees up to the United States pay level. General McSherry answered that he did not have that in mind, that he would never recommend paying the 25% differential (paid to U.S. employees on the thesis that they have left their homes in the United States to go to the Canal Zone) to native labor. The General [Page 952] stated that he does favor strongly the abolition of Gold and Silver rolls and the preparation of job analyses for all positions with an adequate number of grades within each classification.

Mr. Morse asked what would happen in the Zone if we abolished Gold and Silver, explaining that his question had to do with the psychological effects. General McSherry replied that in his opinion nothing would happen. He spoke of the mixture of nationalities and varying degrees of color in the Panama Air Depot, an Army installation, where there is no Gold and Silver and where normal classification procedures are followed, and described the excellent morale and relations among the personnel there.

Mr. Morse expressed the view that the Gold and Silver question should definitely be put on the committee agenda for future discussion. He warned of the trouble to be expected at the ILO conference at Geneva in June, where we may anticipate the raising of the old question of discrimination. Mr. Wise agreed that the question was bound to come up there and asserted that we should either take positive steps looking toward settlement of the Gold and Silver problem or be prepared to defend the existing situation. Mr. Briggs believed that the latter would be impossible.

Mr. Martyn asked how wages in the Zone compared with those in the Republic of Panama. General McSherry reviewed the practices of a number of U.S. corporations in Panama showing that for comparable jobs, wages and accompanying benefits are perhaps somewhat higher. General McSherry expressed the opinion that the Canal Zone is the economy of Panama and that practices there set the pattern for the Republic. He is opposed to across-the-board increases, such as the 24 cents per hour raise asked by the CIO, but considers that there are many individual injustices. He feels that a man’s fate is at present too much in the hands of his foreman and reiterated his strong belief that there should be job descriptions for all positions.

Mr. Briggs asked whether General McSherry planned to make definite recommendations. The General replied that he was going back soon to spend an additional month in the Canal Zone and was planning to make recommendations at the end of his study. Mr. Briggs offered the view that it seemed to be the feeling of the meeting that the Gold and Silver rolls should be eliminated and job descriptions instituted to shrink the area of inequality.

General McSherry next emphasized the difficulties caused in the Zone by non-uniform legislation and regulations established for the various agencies operating there. In his opinion it would not be too difficult to make a detailed study of all legislation now in effect and to amalgamate it into one general pattern applying to all U.S. agencies [Page 953] on the Isthmus. He favors the establishment on the Isthmus of a general board representing all agencies which would consider labor problems to draw up uniform regulations, especially for alien employees. Problems incapable of solution there should come before the Washington Committee, which would determine major policy.

The McCarran Amendment90 was mentioned and it was brought out that it does raise exceedingly difficult administrative problems in the Zone. The General asked whether U.S. policy is really to uphold the 1936 treaty providing for the equality of employment opportunities or whether we are merely paying lip service to the idea. Whatever our policy, he argued that all U.S. Agencies should follow the same one. He agreed with Admiral Nibecker that Civil Service rules should be followed throughout the Zone in so far as practicable.

Mr. Flemming warned of the possibility of imminent legislative difficulties. He stated his conviction that a majority of the House Civil Service Committee will attempt to nullify the recent Civil Service regulation admitting Panamanians to examinations for Civil Service positions in the Canal and Railroad organizations. He said the matter had been presented to the Attorney General for an opinion.

It was decided that interim meetings to explore further the problems raised at this conference would be desirable. Members present agreed to name representatives to attend a working committee with General McSherry during his current stay in Washington in order to have the benefit of his suggestions.

  1. Director of the Office of American Republic Affairs.
  2. Department of State Treaty Series No. 945.
  3. 53 Stat. (pt. 2) 1409.
  4. The 26th session of the International Labor Conference, Philadelphia, April 20–May 12, 1944; see Foreign Relations, 1944, vol. ii. pp. 1007 ff.
  5. Maj. Gen. Joseph C. Mehaffey.
  6. See infra.