Memorandum by the Chief of the Division of Central America and Panama Affairs (Newbegin) to the Director of the Office of American Republic Affairs (Daniels)
There is attached for your attention a letter received from Secretary Forrestal6 relative to the proposed establishment by the President of [Page 967] an inter-departmental committee on the Assistant Secretary level to clarify U.S. policy with respect to non-U.S. citizens employed on the Isthmus and to ensure uniformity of legislation and regulations concerning personnel practices in the Canal Zone. There is also attached a copy of Mr. Armour’s letter of September 24, 1947,7 to which Secretary Forrestal’s communication is a reply.
The recommendation for an inter-departmental committee to consider Canal Zone employment policies was made by Brig. Gen. Frank McSherry (ret) in his report of June 1, 1947. General McSherry’s report resulted from a four-months’ study made by him on the Isthmus under arrangements made jointly by the State, War, and Navy Departments. Consideration of such a committee was also given continuing study—and seeming approval—by a working group composed of representatives of the three departments mentioned above, along with officials of the Labor Department, the Civil Service Commission and The Panama Canal.
The Labor Department and the Civil Service Commission responded promptly and favorably to the proposals contained in Mr. Armour’s letter of September 24. During the period of almost two months before the Secretary of Defense replied, Panama Canal Governor Mehaffey made known in a conversation with Mr. Armour his strong opposition to the creation of the committee under the terms suggested. Secretary Forrestal’s letter is in effect a statement of Governor Mehaffey’s views.
In as much as employment practices in the Canal Zone are of fundamental importance in our relations with the Republic of Panama and have an effect on relations with other countries of the area, I believe that careful attention should be paid the letter from the Secretary of Defense, and consideration given as to our further course with respect to the Canal Zone labor problem.
It is my understanding that Mr. Armour did not see Mr. Forrestal’s letter before his departure on leave.