Memorandum by the Governor of the Panama Canal (Mehaffey)91

The McCarran Amendment Question

Below is quoted the McCarran Amendment which since 1940 has been regularly incorporated in appropriation acts for The Panama Canal, Army and Navy covering expenditures on the Isthmus of Panama:

No part of any appropriation contained in this Act shall be used directly or indirectly, except for temporary employment in case of emergency, for the payment of any civilian for services rendered by him on the Canal Zone while occupying a skilled, technical, clerical, [Page 954] administrative, executive, or supervisory position unless such person is a citizen of the United States of America or of the Republic of Panama: Provided, however, (1) That, notwithstanding the provision in the Act approved August 11, 1939 (53 Stat. 1409), limiting employment in the above-mentioned positions to citizens of the United States from and after the date of the approval of said Act, citizens of Panama may be employed in such positions; (2) that at no time shall the number of Panamanian citizens employed in the above-mentioned positions exceed the number of citizens of the United States so employed, if United States citizens are available in continental United States or on the Canal Zone; (3) that nothing in this Act shall prohibit the continued employment of any person who shall have rendered fifteen or more years of faithful and honorable service on the Canal Zone; (4) that in the selection of personnel for skilled, technical, administrative, clerical, supervisory, or executive positions, the controlling factors in filling these positions shall be efficiency, experience, training, and education; (5) that all citizens of Panama and the United States rendering skilled, technical, clerical, administrative, executive, or supervisory service on the Canal Zone under the terms of this Act (a) shall normally be employed not more than forty hours per week, (b) may receive as compensation equal rates of pay based upon rates paid for similar employment in continental United States plus 25 per centum; (6) this entire section shall apply only to persons employed in skilled, technical, clerical, administrative, executive, or supervisory positions on the Canal Zone directly or indirectly by any branch of the United States Government or by any corporation or company whose stock is owned wholly or in part by the United States Government: Provided further, That the President may suspend from time to time in whole or in part compliance with this section in time of war or national emergency if he should deem such course to be in the public interest: Provided further, That the President may, if he finds it necessary because of a shortage of housing, suspend, for the fiscal year 1947, the application of those portions of this section which require the employment of citizens of the Republic of Panama or of the United States in skilled, technical, clerical, administrative, executive, or supervisory positions.

Each year since fiscal year 1941 Congress has seen fit to add the McCarran Amendment in substantially the form quoted above to the War Department Civil Functions Appropriations Bill which includes The Panama Canal funds. It appears probable that the McCarran Amendment will again be put in the appropriation bill for The Panama Canal unless Congress can be persuaded it should be dropped.

Thus far each year the President has deemed it advisable to suspend the McCarran Amendment as provided by the penultimate proviso contained therein.

3900 employees would be discharged

While there is some disagreement as to the interpretation of “skilled, technical, administrative, clerical, executive or supervisory positions” [Page 955] as it might be applied to alien workers, a survey based on interpretations of the Legislative Representative of the American Federation of Labor in his remarks in hearings on this amendment indicates that application of the McCarran Amendment would necessitate the discharge of approximately 3900 employees distributed as follows:

The Panama Canal 2,450
Panama Canal Department 650*
15th Naval District 400*
Caribbean Air Command  400*
Total 3,900

This means the loss of the services of approximately 3900 experienced aliens with varying degree of skill from all agencies. On the basis of estimates submitted to the Governor by supervisory officials of long experience on the Isthmus, it would be necessary to replace these aliens almost man for man by either Panamanians or Americans. In some cases, such as chauffeurs, an average of almost six Americans would be required to replace five natives because of differences in vacations. It is not difficult to picture the chaos that would prevail if these people were dropped from the rolls on July 1, 1947. Based on previous recruiting experience, it would require approximately a year and one-half to get 3000 new employees (the estimated number required for replacement) in the United States for work in the Canal Zone. During the war emergency it was necessary to recruit skilled workers away from Panama as early as February 1940, readily illustrating that the Republic of Panama has no surplus of skilled workers on which we can draw. Aside from the costs in transportation, wages, housing and facilities expansion of bringing great numbers of American workers to the Isthmus of Panama, it is questionable that a large number of skilled American workers could be recruited in the United States at this time.

. . . . . . .

panamanian economy would be upset

The dumping of 3900 unemployed aliens and their families in a country the size of Panama would also create a series of economic problems not easily solved. Hundreds of former contract workers are married to Panamanian women and have received permission to reside indefinitely in the Republic of Panama. Some have repatriation deposits with the Panamanian Government and could be sent home as transportation becomes available but many others have entered illegally and would probably become public charges.

[Page 956]

Although on the surface it appears that the McCarran Amendment is favorable to the Republic of Panama, it is questionable whether the number of positions gained by Panamanian citizens would compensate for the problems created by homeless aliens.

The McCarran Amendment provides that the selection of personnel for positions affected by it is to be based on efficiency, experience, training and education. Panama has only one minor trade school and very limited facilities for training office personnel. Most of the present native Canal Zone workers received their training, as such, by working in the Zone. The Panamanian is unable to compete with Americans when training and education are major factors in selection. At present they are able to compete with personnel nearer their own level of training and education.

potential threat to security

Those persons repatriated would be but a temporary problem. However, more serious problems to all would be:

Those displaced aliens unable to find employment and
Those displaced aliens compelled through economic necessity to take jobs in the Canal Zone as common laborers despite their qualifications as semi-skilled workers or office employees.

Unquestionably, these people who had been displaced from their jobs by an Act of the U. S. Government would provide a most fertile field for Communism. Under present conditions there is no reason to question the loyalty of these people. However, a dissatisfied and destitute group such as this could easily form the nucleus of extensive subversive activities which would threaten the security of the Canal.

trade union position

The American trade unions in the Canal Zone are the only strong advocates of the McCarran Amendment on the Isthmus of Panama. They have consistently opposed the placement of any aliens, Panamanian or otherwise, on the so-called Gold Roll. This is one of the primary reasons the Treaty of 1936 has not been duly observed.

Fear of job security for themselves and for their children, as well as fear of losing their 25% pay differential if too many Panamanians go on the Gold Roll, are admittedly the reasons for the union support of the McCarran Amendment. Even though the McCarran Amendment has been in suspension since its enactment only 60 of 5900 Gold Roll employees are aliens. If after 43 years operation only 1% of the Gold Roll is made up of aliens it seems highly questionable that the American worker need now worry about the encroachment of foreigners.

[Page 957]

the panama canal position

Because of the various factors stated above The Panama Canal is seeking the elimination of the McCarran Amendment except the proviso contained therein relative to the Third Locks Act which should be continued in the form quoted below:

“Notwithstanding the provision in the Act approved August 11, 1939 (53 Stat. 1409), limiting employment in certain positions to citizens of the United States, citizens of Panama may be employed in such positions.”

  1. Transmitted by Governor Mehaffey to the Assistant Chief of the Division of Central America and Panama Affairs (Wise), in his memorandum of April 9, 1947, not printed.
  2. Estimate made by using same percentage as shown affected by Panama Canal survey. [Footnote in the original.]
  3. Estimate made by using same percentage as shown affected by Panama Canal survey. [Footnote in the original.]
  4. Estimate made by using same percentage as shown affected by Panama Canal survey. [Footnote in the original.]