Memorandum by the Acting Assistant Chief of the Division of Central America and Panama Affairs (Bennett)


Subject: Labor Practices in the Canal Zone

The Panama Canal has announced that the terms “gold roll” and “silver roll” have been eliminated from the new salary and wage schedules of The Panama Canal and The Panama Railroad.1 The last “gold” and “silver” signs in public places have been recently removed in conclusion of a program which has been under way for more than a year since the issuance of the McSherry report.

Action with respect to employment terminology was taken in connection [Page 690] with an overhaul of salary and wage schedules, which embraces several hundred different positions occupied by more than 23,000 employees of The Panama Canal and The Panama Railroad. The resented “gold” and “silver” terms will no longer have any application or significance in connection with positions and payrolls.

The Embassy reports there has been surprisingly little comment on the action in the Panama press. While the press announcement put out by The Panama Canal received wide coverage, much of its significance was unfortunately lost to the public due to the fact that the release was of an exceptionally detailed and technical nature. CPA has been in touch with POS to arrange for appropriate press and radio treatment through our official facilities.

Recently the Air Force in the Canal Zone announced that non-U.S. civilian employees may now aspire to all grades up to and including top positions in competition with U.S. citizens on the basis of merit. Formerly, non-U.S. citizens were stopped about half-way up the ladder. There is a joker here, however, in that the rates paid the two groups will differ for the same positions; salaries of non-U.S. personnel are based on prevailing wage scales, whereas salaries paid U.S. citizens are based on laws passed by Congress. In general the pay of non-U.S. personnel amounts to somewhat more than one-half of the total pay received by U.S. citizens in identical ratings. It will be hard to convince Panamanians that this system offers equal pay for equal work.

As regards the other armed services in the Canal Zone, a recent reclassification program has been the subject of critical comment on the part of Panamanians. In answer to inquiries from the Embassy, General Ridgway has replied that the Civil Service Commission has ruled that the 1936 Treaty commitments concerning equality of employment opportunity and treatment are limited to positions in The Panama Canal and The Panama Railroad Co. and do not apply to the establishments of the armed services on the Isthmus. On the basis of that ruling the armed services have not felt it necessary to distinguish between Panamanians and other non-U.S. citizens in the Canal Zone, and in their reclassification program they have been guided by the policy applicable elsewhere outside the continental United States where there are two standards, one for U.S. citizens and one for aliens. Needless to say, this Civil Service Commission ruling2 strikes at the heart of our recent recommendations to Secretary Forrestal on the McSherry report. While the CSC is technically correct in its ruling that the [Page 691] Treaty commitment applies only to The Panama Canal and The Panama Railroad Co., this sort of double standard is certainly contrary to the spirit of the Treaty. And lumping Panamanians in the same category with all other aliens contravenes the policy in effect since 1908 which has always granted a definite status.

In connection with the reclassification program of The Panama Canal, Governor Newcomer has reported that the minimum wage for alien employees, previously fixed at 16 cents per hour, has been advanced to 26 cents and the maximum rate to $1.40 per hour (these are still substantially below rates for U.S. citizens). Grievance procedures have been instituted, and leave privileges of alien employees have been liberalized within the past year. Plans are under way to improve retirement laws for alien employees of The Canal-Railroad. Thus it appears that some advances have been made in connection with the three points stressed in our letter to Secretary Forrestal, i.e, “gold” and “silver” roll, leave privileges and retirement provisions. The Governor’s memorandum makes it clear, however that, while he may have been prodded somewhat by the State Department’s emphatic support of the McSherry recommendations, he intends to proceed at his own pace in implementing the report. The Zone administration gives every appearance of being a most reluctant reformer.

It is heartening to note the progress which the abolition of the “gold” and “silver” roll represents. This progress is unfortunately counterbalanced, and possibly overbalanced, by other personnel actions taken in the Canal Zone. The road to reform on the Isthmus has many blind turns and disheartening detours.

  1. The announcement was made on November 20, 1948, according to despatch 691, November 22 from Panama, not printed (811F.5041/11–2248).
  2. Marginal note in original: “I think that Gen. Ridgway uses CSC rulings on minimum rights for Panamanians as his own maximum policy. W. T[apley] B[ennett]”