611.19/5–354
The Secretary of Defense ( Wilson ) to the Secretary of State
Dear Mr. Secretary: I refer to your letter dated 25 March 19541 regarding the status of discussions currently being carried on between representatives of this Government and the Government of Panama. I fully concur with your concern as to the need for expeditious action in this matter.
Regarding the point made in your letter on the matter of the pay policy followed by the United States Armed Services in the Canal Zone, it appears to me that there are certain basic considerations that must be clearly understood if the discussions with the Panamanian Government are to be concluded in a manner satisfactory to the United States. The employment of non-US citizens by Department of Defense agencies has world-wide implications and it is neither practicable nor advisable to disassociate our policies in the Canal Zone from those in effect in other parts of the world. In this connection, I wish to point out that this Department is not contemplating the reorganization [Page 1443] of its world-wide personnel pay policies for non-US personnel. The establishment of a single-wage scale for all personnel employed by the Armed Services in the Canal Zone would establish a precedent and would have an immediate serious impact by the application of pressure from non-US citizen groups employed by the Armed Services in other parts of the world.
As you know, it is the policy of the United States Armed Services to pay non-US personnel liberal wages based on local prevailing rates. It is believed that this policy is proper from the US economic viewpoint and is least likely to cause economic problems to other governments.
The 1936 Accessory Notes do not mention the establishment of a single-wage schedule for all personnel employed by US Government agencies in the Canal Zone. The notes do, however, set forth the principle of equality of opportunity and treatment of Panama and United States citizens employed in the Canal Zone and this principle is applied by this Department.
It is my understanding, as the result of our meeting with the President at the White House on 27 February 1954, that the President agreed in substance with the position of this Department regarding payment of non-US personnel. A copy of the Department of Defense position in this matter is attached for your information.2 The original of the memorandum was left at the Whte House following the discussion.
To my knowledge, no mention was made of a single-wage scale for personnel employed in the Canal Zone in the discussions between the President and President Remon in Washington or in their joint communiqué issued on 1 October 1953. Assurances were given with respect to equality of opportunity and treatment, but in my view this does not imply a single-wage scale.
I wish to assure you that this Department regards the matter of a satisfactory settlement to the labor questions in the Canal Zone as being of extreme importance and recognizes the necessity of maintaining excellent relations with our Panamanian neighbors.
Sincerely yours,