What is the difference between the situation with respect to permanent employees on the Zone and the temporary employees on the new contruction? Governor RIDLEY. I explained that in the beginning of my statement that this third-lock act relates only to persons who have not yet been employed, and is of a temporary nature, whereas the amendment which we are now discussing relates to persons who are now employed and have been employed for many years, and is of permanent application. It is quite a different proposition. QUESTION AS TO NUMBER OF AMERICANS NOW EMPLOYED IN SKILLED, TECHNICAL, CLERICAL, ADMINISTRATIVE, AND SUPERVISORY POSITIONS Senator HAYDEN. The point I want to make, though, is this: In your present administration do you employ American citizens in skilled, technical, clerical, administrative, and supervisory positions? Are all those positions occupied by Americans? Governor RIDLEY. No; but, as I said, we cannot tell which ones there are, or how many, until we make a detailed survey to see how this law affects them. The proponents of the bill have stated that we are employing from 3,500 to 5,000. We cannot tell how many there are until we make this survey. It is impossible to say. Senator RUSSELL. You do not mean that from 3,500 to 5,000 would be affected by section 2? Governor RIDLEY. That was stated on the floor of the House. Governor RIDLEY. It is impossible to make an estimate, Senator. I cannot possibly tell you even approximately until we make this survey. Senator RUSSELL. If you had to make a guess at it, you would not think it was quite that many; would you? Governor RIDLEY. I hope not. Senator THOMAS. It must be obvious that you are now filling, or expect to fill with funds appropriated by this bill, nonskilled, nontechnical, nonclerical, nonadministrative and nonsupervisory positions with persons who are not citizens of the United States. That must be obvious, or else you would not be here making this statement. Governor RIDLEY. Yes, Senator; we want to continue our present policy, which I have described in my statement. Senator THOMAS. Then you are now using non-Americans in some of these positions? Governor RIDLEY. Yes. Senator THOMAS. But you are not prepared to tell us how many? Governor RIDLEY. It is impossible to say. QUESTION AS TO STATEMENT ON HOUSE FLOOR CONCERNING NUMBER AFFECTED BY SECTION 2 Senator ADAMS. General, you referred a couple of times to a statement made on the floor of the House. Is there anybody on the floor of the House who has as many sources of information as you have? Governor RIDLEY. No; of course, they are not expected to have the sources of information that I have. Senator ADAMS. Then that is hardly an authentic figure that was given on the floor of the House. Governor RIDLEY. Well, Senator, this matter is not a new matter. It has been going on for years, and they have made estimates right along, and stated the positions that were to be affected, and all that. It has been considered time and time again; but when this provision becomes a law it depends on the interpretation of the law, because it affects persons who already have jobs there, and we are not going to discharge anybody who is not affected by the law. Senator ADAMS. What I am getting at is, you do not want us to rely on the House estimate from somebody who knows less about it than you do? Governor RIDLEY. Oh, no; I would not have you rely on that at all. Senator ADAMS. But you reminded us a couple of times of this statement made on the floor of the House, and you told us that that is not a reliable figure. Governor RIDLEY. When you are faced with somebody who is trying to do something to you, you take what he says he is going to do to you, and try to show what effect that would have. That is my only object here. I do not think this figure was carefully made up, or with means which would produce the correct figure at all. UNFAIRNESS OF APPLYING PROVISION ΤΟ LONG-TIME EMPLOYEES Senator HAYDEN. This much can be said that it would obviously be unfair to apply a provision of this kind to a Jamaican or a Panamanian or a tropical laborer who had faithfully served the United States for many, many years, and arbitrarily say to him, "Regardless of your good service, you are to be discharged on January 1." There is force to that argument. APPLICATION OF PROVISION TO FUTURE EMPLOYMENT ONLY If this provision were made applicable only to future employmentthat is, if it were said that "hereafter," in making new appointments on the Canal Zone, no one occupying a skilled technical, clerical, administrative, or supervisory position should be appointed unless he was an American citizen-what would the effect of that be? Governor RIDLEY. If the matter is to be done at all, that would be the logical way to do it. You would then see that gradually the policy which you wanted to effect would be put in force; but many of the objections would still obtain, and there are other objections to it which I have pointed out, such as the rigidity of it, no escape to take care of emergencies, and the objection which has been raised in regard to the treaty; and there are other objections. Senator TOWNSEND. And the cost? ADDITIONAL COST HOUSE AMENDMENT WOULD OCCASION Governor RIDLEY. And the cost. The cost of replacing such a large number of employees as stated on the floor of the House, may be judged from the results of a detailed analysis made in 1935 by the Panama Canal to determine the cost of replacing a specified group of native tropical workers with Americans. This analysis was very carefully made and the replacement involved required bringing to the Canal Zone 3,144 additional Americans. The results showed that the capital cost amounted to $26,525,000, 216797-40-2 or in round figures $8,400 per new American employee, and that the continuing annual cost thereafter would be approximately $5,350,000. This estimate takes into account the superior efficiency, the higher wages, the shorter week, the more liberal vacation privileges, and the costs of recruitment in the States and transportation to and from the Isthmus involved in the employment of Americans. The estimate is conservative. It does not take into account the extra expense likely, but not theoretically, necessary to be incurred in periods of slack work through attempts to provide work for employees temporarily not needed so as to reduce enforced lay-offs. One of the serious consequences of the addition of between five and six million dollars to the annual cost of operating the Canal would be the necessity of increasing the tolls charges on vessels passing through the Canal if the present financial policy is to be continued. PROVISION WOULD INTERFERE WITH PRESENT WORK ON IMPROVING DEFENSE OF THE CANAL Another serious consequence of such a large replacement would be to greatly disrupt and delay the important large construction program now going on in connection with improving the defenses of the Canal. This program, which taxes the capacity of the Canal construction forces, will be going on at maximum speed all during the fiscal year 1941, and anything which interferes with this highly important work should be avoided. OTHER EFFECTS OF HOUSE AMENDMENT It is obvious that such a large replacement project could not be completed by the time stated in the bill. It is also obvious that an attempt to do so would be most demoralizing to the Canal organization. Such a large replacement as suggested by proponents of the amendment would soon take away the means of livelihood of 15,000 to 25,000 persons, including dependents of the employees discharged, who would be thrown onto Panama or nearby islands to care for. International repercussions would be inevitable and the United States would be charged with an act of unjust cruelty. The view may well be taken that many of these workers who are now proposed to be summarily dismissed and thrown out on the world with little prospect of maintaining themselves are, in equity, wards of the United States and are entitled to the privilege of continuing to work in the Canal Zone. Many of them helped in the construction of the Canal at a time when other sources of labor were insufficient and most of them have served the Canal faithfully and well for years. They look to the Canal for their continued livelihood. RELATIVE REQUIRED NUMBERS OF AMERICANS AND OF NATIVE WORKERS Proponents of this measure have stated that, in replacing native workers with Americans, there would be a substantial saving in number of employees required and it has even been stated that the productivity of the American workman would be three times that of the native worker. Such a proposition is absurd and has no basis of fact. This matter was studied in detail in connection with the analysis made in 1935 and it was found that, if the replacement were made, the number of Americans would be only about 3 percent less than the number of native workers replaced. This is clear when the nature of the employments and their scattered locations are understood. In some types of positions the number replaced per American is much higher and in others it actually requires more Americans than native workers due to the shorter work week and to the annual leave granted to Americans. On the average, it may be stated positively that, for the large replacement heretofore discussed, between 90 and 97 Americans would be required for each 100 native workers replaced. It is my firm conviction, after nearly 11 years' service with the Panama Canal, that if the Congress and the people of this country fully understood all the facts and circumstances surrounding the employment of native workers in the Canal Zone there would be no change in our present practice. Certainly, if the object of the proponents of this change is to relieve unemployment in the United States, it would be much better from the viewpoint of the Panama Canal, the Treasury of the United States and the Americans who are proposed to be employed, to pay at least $1,600 per year for life to each of these Americans and then permit them to remain in their own country among their friends and relatives. It is urged therefore that this proposed restrictive amendment be stricken from our appropriation bill. Opportunity for full consideration of this same question will undoubtedly be given in connection with the bill, H. R. 8496, now pending before the Committee on Merchant Marine and Fisheries of the House of Representatives. Senator THOMAS. Please summarize, General, in just a few sentences, your opposition to this section. First, as I understand, you contend that it violates a treaty obligation between the United States and the Panamanian Government? Governor RIDLEY. Yes. Senator THOMAS. Now proceed and give the other reasons, just in sentences. Governor RIDLEY. I summarized them at the beginning of my statement. Shall I read it again? Senator THOMAS. Yes. It is all new to some of us, and if you will do that it will be helpful for the record, just giving your reasons in a series of sentences. SUMMARY OF OBJECTIONS TO HOUSE AMENDMENT Governor RIDLEY. This proposed limitation should not be adopted for the following reasons: First, the provision would be in conflict with the commitment of our Government made in connection with the 1936 treaty with the Republic of Panama. Second, the provision would require discharge from the regular force of persons who have served the United States faithfully. Third, the provision would effect an important change in the employment policy, and this should not be done without full hearing, so that Congress might be informed. Fourth, this change would come at a time, as prescribed in the bill, when it would have a disturbing and possibly critical effect on defense construction now proceeding. Fifth, the effect of the bill is entirely uncertain, and cannot be determined without considerable expense and time. Sixth, it puts a rigid requirement on the employment of certain classes, and does not, therefore, take account of emergencies which may arise, and for which we could not get Americans in the time required. Seventh, it would be costly. Eighth, if the amendment affects anywhere near the number of people its proponents claim it would affect, there is not time enough to do it. TOTAL NUMBER OF EMPLOYEES IN CANAL ZONE Senator RUSSELL. Can you state the total number of employees in the Canal Zone? Governor RIDLEY. At the present time we have approximately 22,000 on the Panama Canal and the Panama Railroad. NUMBER OF AMERICAN CITIZENS EMPLOYED IN CANAL ZONE Senator HAYDEN. Of that number, I judge from what you said, about 4,000 are American citizens. Governor RIDLEY. I can give you the exact figures as of the last force report. There were employed on the Panama Canal and Panama Railroad 22,683, total. Senator RUSSELL. Is that "gold" employees? Governor RIDLEY. No; that is both. Senator RUSSELL. "Gold" and "silver"? Governor RIDLEY. Yes; of those, 4,778 were "gold" employees. The remainder, 17,905, were "silver" employees. EMPLOYEES TO WHOM HOUSE AMENDMENT APPLIES Senator RUSSELL. All the "silver" employees would not be affected by the language of section 2, would they? Governor RIDLEY. Not all of them, no. Senator RUSSELL. It applies only to skilled, technical, clerical, administrative, and supervisory employees. Governor RIDLEY. Yes. Senator RUSSELL. So that would not conflict with the employmentof the "silver" employees who are doing the general labor? Governor RIDLEY. Senator, this is the situation. Taking the Panama Canal alone, and leaving the Panama Railroad out of it, just the Panama Canal organization, we have 14,500, total, "silver" employees. Of those only 3,500 are carried on the pay roll, under pay-roll designation, as "laborers." That leaves 11,000 who are carried on the pay roll with 70 different pay-roll designations. Senator RUSSELL. Does that include your clerks in the commissary who serve as "silver" laborers? Governor RIDLEY. It includes all those doing some clerical work. They are there on the pay roll, 11,000 of them, with 70 different payroll designations to indicate what kind of work they are doing. It is absolutely impossible to tell how many of those are skilled and how many of those are clerical, in the terms of this bill, without a survey, and without going through the thing carefully. We cannot even estimate. Senator RUSSELL. I should think you would be able to arrive at some estimate of the difference between the common laborers and |