The Ambassador in Panama (Davis) to the Secretary of State

No. 713

Subject: Army Memorandum Regarding Employment Practices in Canal Zone

Sir: I have the honor to refer to the Embassy’s airgram No. A–793 of October 29, 19481 reporting the announcement in the local press that a full-scale study of all labor problems in the Canal Zone was being conducted as a result of a letter addressed to the Secretary of Defense by the Secretary of State and to the Embassy’s despatch No. 672 of November 15, 19481 entitled “Army’s Reclassification Act Affecting Non-United States Citizens in the Canal Zone” and to forward attached a copy of a memorandum, with enclosure,2 prepared for and forwarded to the Secretary of the Army by the Commander in Chief, Caribbean Command, subject: “Canal Zone Personnel Problems”, which apparently constitutes a study of present employment and personnel practices in the Canal Zone undertaken as a direct result of the Secretary of State’s letter to the Secretary of Defense.

Respectfully yours,

For the Ambassador:
Edward W. Clark

Second Secretary of Embassy
[Page 688]

Memorandum for the Secretary of the Army


Subject: Canal Zone Personnel Problems

On September 15, 1948 the Secretary of Defense sent you a memorandum including with it a letter to Mm from the Secretary of State of 7 September 1948. The latter dealt with certain Canal Zone employment problems and personnel practices analyzed in a report by Brigadier General F. J. McSherry.
In an enclosure accompanying his letter, the Secretary of State listed three “specific steps” which the letter itself stated “this Government can and should take without undue delay to carry out certain of the recommendations made by General McSherry”. These three “steps” relate to wages, leave and retirement.
The general nature and scope of this group of interrelated problems is well known to you. The action taken on them here within the past year may not be. It is stated in the enclosure herewith, which summarizes a recent analysis made by the Canal Zone Personnel Board. This summary supplements Governor Newcomer’s interim report to you of 21 October 1948.
Every analysis of this group of problems and of their possible solutions is fundamentally affected by two factors which follow:
First, the provisions contained in notes accessory to the 1936 Treaty relative to the principle of equality of opportunity and treatment to be accorded employees of Panamanian and United States citizenship (Treaty Series No. 945, Page 56; 53 Stat. (pt. 3) 1807, 1868), pertain expressly to employees of the Panama Canal and Railroad. Those provisions have no application whatever to any elements of our National Military Establishment.
Second, the Panama Canal Administration is highly localized. Its labor practices have been and are largely conditioned upon its local environment. It does not employ personnel in other foreign overseas areas. On the other hand, that part of our Military Establishment located within the Canal Zone is but a small fraction of the whole. Its personnel practices, in contrast to those of the Panama Canal Administration, have evolved from and function as a result of labor employment rules and regulations in current use by our Armed Services throughout the world. Major changes in those rules and regulations would inevitably produce major reactions in other overseas employment areas of the Military Establishment, as well as call for appreciably larger appropriations here.
The core of this whole problem is the fact that most of the criticism directed at U.S. agencies on this subject is the result of reasoning which begins with two premises—first, that there should be uniformity [Page 689] between corresponding personnel practices of The Panama Canal and Railroad and other U.S. agencies in the Canal Zone, and second, that all U.S. agencies here should provide equal pay for equal work.
Acceptance of either premise has not yet been shown to be in the overall best interests of the United States. In fact, both are at least partly fallacious, by reason of the major dislocations their adoption would provoke in other important United States interests here and in other overseas areas.
For the Panama Canal and the agencies of the U.S. Military Establishment in the Canal Zone to attain uniformity in personnel practices, policies and procedures, it will be necessary either to amend those laws and departmental regulations presently binding upon our Military Estaiblishment here and in all other overseas areas merely to meet a problem which concerns only Panamanians in the Panama area, or to negotiate new treaty provisions with Panama so as to permit changes in those in current use by the Panama Canal and Railroad.
Neither of these alternatives promises any early practicable solution though both deserve and will continue to be subjected to thorough examination in search of any partial remedies which they may offer.
It is hoped that this letter and enclosure may furnish means for eliminating much unjustified criticism and also for replying to criticism which is honest and constructive.
M. B. Ridgway

Lieutenant General, U.S. Army
Commander in Chief
  1. Not printed.
  2. Not printed.
  3. Enclosure to memorandum not printed.