811F.411/3–2354
The Ambassador in Panama (Chapin) to the Secretary of State
official–informal
Dear Foster: In reply to your letter of March 171 regarding the racial discrimination in the Canal Zone, I hasten, as you suggest, to give you the following “fill-in.”
I am afraid there is little doubt that there has been, since the beginning of the construction of the Canal, discrimination in the Canal Zone against non-U.S. citizens. The Panama Canal Company, the Canal Zone Government and the Armed Forces divide their civilian employees into two general categories: U.S.-rate and local-rate workers. It is to be noted that the U.S.-rate group contains not only highly qualified technical personnel and office workers but also skilled artisans and even manual workers, whereas the local-rate group, although containing some minor clerical personnel, is largely composed of manual workers, both skilled and unskilled. These two groups were originally established, for payroll purposes, as the “Gold” and “Silver” rate groups, but the present terminology was put into effect as the result of the McSherry Report, referred to later, dated 1947. The grouping has, however, acquired secondary meanings of segregation and racial discrimination since, with very, very few exceptions, all U.S.-rate workers are white U.S. citizens. On the other hand, local-rate workers are predominantly black West Indians or their descendants. U.S. raters receive higher pay for corresponding jobs, i.e., a U.S.-rate truck driver will receive almost double the wages paid to a Panamanian or West Indian truck driver. In addition, the U.S.-rater enjoys a 25% differential applied to his salary.
The division into payroll categories has in practice segregated the local-rate (West Indian or Panamanian) worker from the U.S.-rate (white) worker and to some extent has limited his opportunities for advancement. Local-rate workers live in special communities and use separate schools, recreational facilities, commissaries and motion picture theatres, etc. In Gorgas Hospital, for example, washrooms are plainly marked “U.S. Rate” or “Local Rate” as the case may be. Since Panamanians, regardless of color, are with a few very notable exceptions employed in the local-rate group, there is some confusion in Panamanian discussions of discrimination as to whether such discrimination is racial (color) or national. It is to be observed, however, that there are some Panamanian citizens employed in the U.S.-rate group, in offices, PX’s, commissaries and even as doctors and surgeons [Page 1439] in the hospital. Theoretically there is no bar against the employment of Panamanians or, for that matter, West Indian negroes, in U.S.-rate positions, and we have repeatedly, since construction days, assured the Panamanians that we intended to give them equal opportunities with American citizens. In practice, however, the employment officers and the AFL union here have alleged in the past, as an excuse for failing to employ more Panamanians, that they were not sufficiently well trained for the more technical U.S.-rate jobs. This, it may be noted in passing, is somewhat inconsistent with the Union’s frequently-expressed fears that if they should let down the bars many of their jobs might be taken away from them by Panamanians at lower salaries.
In fairness, however, to the Canal Zone personnel management, it should be pointed out that the local-rate wage scale in the Zone is, nevertheless, higher than the wages generally paid in Panama for similar services. For example, recently when the Hotel Washington in Colon, formerly run by the Canal Zone Government, was leased to a Panamanian company, that company promptly made a general cut in the wages of the hotel staff. I understand that similar cuts were made in the wages paid to truck drivers and other workers in the Sanitation Department when garbage collection in the cities of Panama and Colon was turned over to the Panamanian Government.
The Panamanian attitude with regard to West Indian negroes was rather succinctly stated in an article by Professor John Biesanz in “Phylon, the Atlanta University Review of Race & Culture,” Vol. XI, No. I, 1950:
“Nor is Panama greatly concerned with the plight of her adopted children. Panamanian protests against discrimination in the Zone, loud as they may be when diplomats are bargaining for their country’s advance, are in part negated by two factors:
- “First, most of the silver workers are West Indian immigrants and their descendants. Panamanians regard them as an out-group, culturally different and economically competitive, and have prohibited further immigration of English-speaking Negroes. They feel no racial solidarity with them; few Panamanians will admit their Negro blood, if indeed they are conscious of it. They resent being lumped with this out-group by the caste system of the Zone. They do not want the system abolished; they consider it quite good enough for the West Indians. What they do want is upper-caste status for themselves on their own soil.
- “Second, Panamanian government officials do not really want wages raised. Members of the traditionally privileged group, they shudder at the thought of what a substantial raise in the Zone would do to their own labor market. They have brought private pressure to bear on Zone officials not to raise wages to any great extent.
“Thus, West Indian exploitability, Panamanian nationalism, and American race prejudice, assisted by the inertia of a going bureaucracy, have all tended to encourage persistence of the Zone dichotomy.”
In 1947 Brigadier General Frank J. McSherry, Ret., prepared for the Governor of the Canal a secret report on “Alleged Discrimination in Treatment of Citizens of Republic of Panama and Alien Employees of Panama Canal, Panama Railroad Company,” which sets forth in detail various aspects of discrimination and segregation in the Canal Zone. With only minor exceptions (I have noted the change in designation of Gold and Silver rates to U.S. and local rates) his observations are still true today. A copy of this report is understood to be on file in the Department.
More recently, the Embassy sent in a despatch, No. 84 of July 30, 1953,2 on the treatment of Panamanian labor in the Canal Zone, discussing the obligation of the United States toward Panamanian workers and the problems arising in the fulfillment of that obligation, including the existence of separate wage scales for local-rate and U.S.-rate employees, the extent of employment opportunities for Panamanian citizens, varying personnel practices of the U.S. agencies in the Canal Zone and the problem of racial discrimination.
In conclusion, I may say that Panamanian thinking on the question is certainly fuzzy. I do, however, feel that in addition to any tangible benefits which we may be prepared to offer Panama as a result of the conversations now taking place in Washington, it is most important that we offer something along the lines of a reasonably decent solution for their demand for equality of treatment for Panamanian labor. This seems much more important to me than the commissary problem, particularly from the point of view of Panamanian prestige.
With all kindest regards,
Sincerely yours,