policy, are accorded preference for employment in the Canal Zone over other aliens under the provisions of the Executive orders of December 23, 1908, February 2, 1914, and February 20, 1920. If these Panamanians were to be excluded from employment by the Canal enterprise an embarrassing international problem would be created both by reason of the commitments of our Government in connection with the 1936 treaty and by reason of the fact that these discharged employees would soon create an unemployment problem with which the Republic of Panama would be unable to deal and which would result in a serious economic disturbance. The gravity of this international problem would be heightened by the fact that the common-labor supply in the Republic of Panama in normal times is already greatly in excess of the demand.

NUMBER OF AMERICAN EMPLOYEES IN THE CANAL ENTERPRISE

Since the American employees of the Canal enterprise constitute the backbone of the organization-men who were selected for their special fitness and to set the tone and pace for the whole organization--their number has remained fairly constant since the Canal was opened in 1914. The fluctuation in the total number of American employees is not great. For instance, there were 3,542 Americans employed in 1916 when quite a number of important construction projects were still under way, and in January 1939 the number was 3,444-only 98 less-when only a small amount of construction work was being done.

FLUCTUATION IN NUMBER OF ALIENS ON PAY ROLL

On the other hand, there were only 10,627 aliens on the pay roll in January 1939, as against 19,970-nearly double that number-in 1916. In 1911, when construction operations were at their height, 32,549 workmen were employed. This number dropped rapidly each year, and in 1921, 7 years after the opening of the Canal, only 8,168 workmen of this kind were employed. With an increase of traffic through the Canal the number of these workmen increased to 12,330 in 1929, and again decreased to 8,557 in 1933 at the bottom of the depression.

FLEXIBILITY OF PRESENT EMPLOYMENT POLICY

The fundamental policy of employing a fairly constant number of Americans in positions requiring a reasonably high degree of skill, and tropical labor in the lower-grade positions, has made for flexibility and has permitted the Canal to meet great variations in the volume of business at the Canal with only slight changes in the American personnel. It has also obviated the necessity of either retaining a large force of American employees during periods when the volume of business did not require their services, or of discharging these American workmen and transporting them and their families to the United States. When Canal operating conditions have made it necessary to increase the number of workmen the neighboring cities of Colon and Panama have been drawn upon to supply the additional number of needed workmen immediately. This would not be possible if the present policy were changed, since American workmen must ordinarily

be recruited in the United States, a process which requires a considerable amount of time and expense.

OBTAINING OF WORKMEN EVERY 2 YEARS FOR OVERHAUL OF LOCKS

To illustrate the working of the existing system-the overhaul of the locks of the Canal which is undertaken every other year, requires some 800 additional workmen in the skilled, semiskilled, helper, and ordinary laborer groups. Of this number about 150 highly skilled American mechanics are required, and all but a few of these Americans have to be recruited in the United States, although all the other workmen are quickly obtained locally. Recently, with improved economic conditions in the United States, a certain amount of difficulty has been experienced in obtaining properly qualified mechanics from the United States because well-trained mechanics are not so easily obtainable for temporary positions. If the entire 800 workmen required for the locks overhaul had to be obtained from the United States the task of recruiting them would assume major proportions if it could be carried out at all within the permissible time. Then, too, if all of these workmen were recruited in the United States, there would remain the problems incident to bringing such a force from the United States to the Canal Zone for a 5-month job and of returning them to the United States upon the completion of the work.

Senator AUSTIN. Let me understand this. Does that situation of 5-months' service recur every year?

Governor RIDLEY. Every 2 years we overhaul one of the locks. Senator AUSTIN. Your practice has been to get some of this skilled labor from Panama itself, has it?

Governor RIDLEY. We have obtained journeyman machinists and electricians from the United States. All others are from Panama.

EFFECT ON EMPLOYMENT OF SEASONAL

BUSINESS

VARIATION IN VOLUME OF

The seasonal variation in the volume of business in various divisions of the Canal organization would present the same difficulties if all or a considerable portion of the employees in the lower grades were required to be American citizens. Such seasonal variations are now met without difficulty. On the docks at the terminal ports, for instance, there is a great fluctuation from day to day in the number of workmen who are paid by the hour when employed. A good supply of experienced men is always available in Colon and Panama under the present system, but if only Americans were to be employed it would be necessary to employ a reserve force and to provide quarters and other facilities for these employees and members of their families. The resulting increased cost to shipping interests would be prohibitive.

REPLACEMENT OF ALIENS NOT NECESSARY FOR NATIONAL DEFENSE

Proponents of the proposed amendment frequently in the past have advanced the view that replacement of aliens in the Canal Zone is necessary in the interest of national defense, but such a view is wrong. As a defense measure the proposed replacement plan is entirely unnecessary. This phase of the question has been given thorough study and the Secretary of War in 1936 stated that the enactment of an

alien replacement bill then under consideration "is not essential to the security of the Canal" and that it was inadvisable. With respect to the same legislation the Secretary of the Navy stated that he did not recommend its enactment. Testifying before a subcommitte of the Senate Military Affairs Committee in connection with the same legislation, the Chief of Staff of the Panama Canal Department, United States Army, who served with the Canal during a part of the Canal construction period and who was intimately familiar with the local situation from the point of view of the Army, as well as that of the Panama Canal, expressed his opinion that the legislation was unnecessary and possibly undesirable. The policy of the Canal enterprise has been not to employ alien workers in positions or places where their presence might constitute a potential threat to the safety of the Canal. Ample statutory authority now exists for replacing alien employees with American citizens if such action should hereafter be deemed advisable. However, those who know the character of these employees intimately know they are thoroughly faithful and loyal to the Panama Canal. They served the Canal faithfully during one World War and they would do so again.

NUMBER OF EMPLOYEES AFFECTED

As stated heretofore the cost to be incurred by reason of adoption of the proposed amendment would depend on the number of employees affected and this number cannot be determined even approximately without considerable time and expense. However, it was stated on the floor of the House of Representatives that the measure will affect from 3,500 to 5,000 employees. If it should be found that any such numbers are affected, the costs would be enormous.

DIFFERENCE IN ECONOMIC AND SOCIAL STATUS OF TWO CLASSES OF WORKMEN

The replacement by American citizens of a large number of tropical native workers would raise problems of great magnitude, particularly because of the great difference in the social and economic status of these two classes of workmen. The workers recruited in this tropical area have for generations occupied social and economic positions far below the standard long established for American employees of the Government on the Isthmus. At the same time, the status of these workers recruited in the tropics is considerably above the average native employees outside of the Canal Zone.

AVERAGE COMPENSATION PAID TO NATIVE AND AMERICAN WORKERS

The average compensation paid to the workers recruited in the tropics is about $55 per month, while that of the average American employee is about $250. Living quarters, schools, commissary stores, and all other similar facilities are necessarily furnished in the Canal Zone by the Government since no private enterprise exists. The facilities furnished to American employees are necessarily proportionate to their social and economic status, and these quarters and other facilities are, of course, far superior to those which are furnished to the workers recruited in the tropics.

Senator THOMAS. Do you mean to say you can secure so-called native labor for $55 a month to do the same kind of work, as much work, and as good work as American labor at $250 per month?

Governor RIDLEY. No, sir. None of them would compare with the Americans.

Senator CHAVEZ. The $250-a-month man can do better work than the $55-a-month man; is that your contention?

Governor RIDLEY. They do a different kind of work, Senator, due to our division of the work done by Americans and that done by the natives.

Senator CHAVEZ. Who would do the $55-a-month work if the Panamanians and Jamaicans were left out? Who would do that class of work? I do not understand what the difficulty is. Who would replace the Panamanians?

Governor RIDLEY. The proponents of this amendment are proposing to replace them with American citizens.

Senator CHAVEZ. That, in your opinion, would cost around $250 a month?

Governor RIDLEY. No, sir; I am coming to the cost later. That was just the average of all the Americans employed, including the highest paid. It is an average, to give you an idea.

Senator CHAVEZ. Thank you.

PROBLEM INVOLVED IN PROVIDING LIVING QUARTERS FOR LARGE NUMBER OF AMERICAN WORKMEN

One of the major practical problems involved in such a large replacement would be that of providing suitable living quarters for the Americans who would necessarily have to be brought from the States. No such quarters exist at the present time and, as a matter of fact, there are insufficient quarters for the American citizens already employed. The living quarters now occupied by the workers recruited in the tropics and who would be replaced would not be suitable for use by American citizens and their families. With the rapid development of the facilities of the Canal and for its defense, there are no areas available which would be suitable for the establishment of the townsites which would be required if a considerable number of replacements were made. Moreover, it is believed to be impossible in the limited time available to develop new townsites and construct the necessary living quarters and numerous facilities which would be required. This problem would involve the purchase of sufficient materials to construct the quarters, their transportation to the Isthmus, and the assembling of the force necessary to construct the quarters, as well as the actual design and construction thereof. Such a program could not possibly be completed in the short time available.

Senator ADAMS. What is the time limit that you have in mind? Governor RIDLEY. The time is stated in the bill-January 1, 1941.

LIVING QUARTERS OF ALIEN WORKMEN

Senator RUSSELL. General, I came in a little late. Perhaps, I just missed hearing you testify as to this point; but if you do go on with this large construction program, it will require a large number of additional employees. How do you propose to house them? If you bring in a large number of employees from Jamaica, for example, to

work on this new project, are there living quarters there which are available?

Governor RIDLEY. Those quarters are of the roughest camp type, entirely unsuitable for the regular force which we have to place down there.

Senator RUSSELL. Are they any different from the quarters occupied by the so-called silver employees down there at the present time? Governor RIDLEY. Yes.

Senator RUSSELL. They would be even poorer than that?

Governor RIDLEY. Yes; now they are living in family quarters, in general. Almost all of them have families; whereas, in the camps we would have barrack-type quarters in which only men would be accommodated, 300 men to the barrack.

can.

QUESTION AS TO SOURCE OF LABOR SUPPLY

Senator RUSSELL. Where do you propose to get those employees? Governor RIDLEY. Senator, we shall have to get them wherever we We should prefer to use people who are used to the tropics. Senator RUSSELL. Have you given any consideration to employing Negro citizens from the southern part of the United States? Governor RIDLEY. No, sir.

TEXT OF PROVISION IN 1939 ACT REQUIRING AMERICAN CITIZENSHIP FOR CERTAIN TYPES OF EMPLOYMENT

Senator HAYDEN. Let me ask you a question in that connection. When the bill authorizing the building of additional locks at the Panama Canal was under consideration the same question arose, and it is my understanding that a suitable compromise was worked out at that time. Just what it was, I do not know; but the argument was made, at least, that the situation was a temporary one, and that although there were unemployed Americans in the United States, it could not be expected that Americans, would go down there in sufficient numbers to build the new locks, and therefore that the situation would be somewhat different than that of the permanent establishment. The plan contemplated, as I recollect it, was that all the skilled and supervisory personnel should come from the United States, but that the remainder of the workers should be obtained locally.

This is the act approved August 11, 1939, providing for the construction of additional facilities on the Canal Zone, and for other purposes. It reads, in part:

Provided, however, That all new personnel in such construction work occupying skilled, technical, clerical, administrative, and supervisory positions shall be citizens of the United States.

Senator TOWNSEND. That probably applies now; does it not?

DIFFERENCE BETWEEN PROVISION IN 1939 ACT AND HOUSE AMENDMENT TO H. R. 8668

Senator HAYDEN. Unskilled and untechnical employees, and those who had no administrative or clerical duties, could be natives of Panama, or tropical labor. That is the way you compromised the matter in that act.