Senator HAYDEN. In this estimate of $81,000,000, how much would be due to skilled labor and how much to unskilled, according to Mr. Hushing's interpretation of it?

Mr. SMITH. I do not have the detailed figures upon which the Governor based his estimate. I only know in a general way.

Senator HAYDEN. What do you think about it in a general way? Mr. SMITH. I think it would include the employment of American citizens and also the erection of quarters and everything else connected with it.

Senator HAYDEN. In a general way, considering the number of men employed. I was there in 1913. General Goethals had 40,000 men at work. I have no way of judging how many were skilled and how many were unskilled. I saw steam-shovel operators there from the United States. I saw West Indians doing pick-and-shovel work and other unskilled labor. The impression I got was that there were very many more unskilled than there were skilled laborers.

Mr. SMITH. I would say between five and six thousand Americans, and the rest are mainly West Indians. There are some from Spain and Italy.

Senator HAYDEN. To do this secondary job, you would not need to employ as many as 40,000?

Mr. SMITH. Ñо.

Senator HAYDEN. Improvements and labor-saving machinery would reduce the number?

Mr. SMITH. Yes, sir. I have some figures showing what they expect to employ.

Senator HAYDEN. Let us see what they are.

The CHAIRMAN. Mr. Hushing has raised a question that I think should be submitted to the Canal authorities.

Senator HAYDEN. Do you have the text of the amendments?

Mr. HUSHING. Yes; I have them here. Take the first amendment Mr. Smith submitted. He was kind enough to give it to me some weeks ago. You have the amendment before you.

The CHAIRMAN. You have the amendment before you.

Senator HAYDEN. That is the original draft?

Mr. HUSHING. Yes.

The CHAIRMAN (reading):

For the purposes aforesaid, the Governor of the Panama Canal is authorized to employ such persons as he may deem necessary and to fix their compensation, but all such persons so employed above the grade of common laborer shall be American citizens, and the compensation of such persons shall not be lower than the compensation paid for the same or similar services to other employees of the Panama Canal on the gold roll: Provided, That rates of compensation in excess of those authorized by law shall not be paid without approval of the Secretary of War: And provided further, That the Governor of the Panama Canal, with the approval of the Secretary of War, is authorized to engage under agreement, when deemed necessary, assistance in the various arts and sciences upon terms and rates of compensation for services and incidental expenses in excess of the maximum of salaries authorized herein and by chapter 13, title 5, of the United States Code, to authorize the making of any and all necessary contracts to carry out the purposes of this act: Provided further, That the terms of the Thomas amendment to the Independent Offices Appropriation Act of 1934 shall apply to all employees of the Panama Canal and Panama Railroad on the Canal Zone.

I am not willing to include general legislation in this act.

159231-39-pt. 2- -3

Senator HAYDEN. I think you will have to draw a distinction, Mr. Hushing, between the maintenance of the Canal and this construction. Our function is to deal with the construction. Some of this language not only covers what the law should be with respect to the new construction but also with reference to the maintenance of the existing Canal.

Mr. HUSHING. That is right. There is a bad situation there. Employees of the Panama Railroad and Panama Steamship Co. are not considered employees of the Government, although they are all to all intents and purposes.

The CHAIRMAN. That is a very different proposition from constructing additional locks.

Mr. HUSHING. Oh, yes.

Senator HAYDEN. I think you will have to separate them.

Senator PEPPER. Do you want all skilled labor to be American labor?

Mr. HUSHING. Yes.

Senator PEPPER. But not unskilled labor?

Mr. HUSHING. Common labor.

Senator PEPPER. Do you think you can get enough skilled labor?
Mr. HUSHING. Certainly.

Senator PEPPER. What would be the transportation cost?

Mr. HUSHING. They run Government boats up and down there all the time. It is the practice now to furnish transportation free of cost.

Senator PEPPER. Somebody has to pay for it, but the Government should provide it?

Mr. HUSHING. They do it now.

Senator HAYDEN. At the cost of the Government?

Mr. HUSHING. Yes. They run the boats regularly.

Senator HAYDEN. The Government would pay their transportation down there.

Mr. HUSHING. Yes, sir. They run a regular line.
The CHAIRMAN. The Government pays for it.
Mr. HUSHING. Yes.

Senator PEPPER. The compensation would be not less than what? Mr. HUSHING. Whatever the Panama Canal is paying down there. I believe there is an element in my amendment which will result in keeping down the rates of pay as General Goethals had unlimited authority in the construction of the Canal, and he was paying very well, I suppose, due to the insistence of the men that they should have more money. He had to come to Congress to get authority to reduce the rates. They were paying from 40 to 75 percent more than they were paying in the United States, and he came up here and had that clause adopted which reduced it.

Senator HAYDEN. There was a reason for that.

Mr. HUSHING. I am not criticising him. He was a good friend of mine.

Senator HAYDEN. If an American citizen can go down there and do that work successfully, in spite of climatic conditions, and undergo no suffering of any kind because of his white blood or race or tem

perature, if he can do that without any serious results, that would be all right.

Mr. HUSHING. I understand that.

Senator HAYDEN. If that is true, then he is not entitled to extra compensation for working in the Tropics.

The CHAIRMAN. There would be no justification for the bill we just reported.

Senator HAYDEN. There is a difference between a man who goes down there on a maintenance job and stays there 30 years, and a man who goes down there to operate a steam shovel for a limited period of time. That is why we must keep the two subjects entirely separate.

Senator PEPPER. How would it do to provide that preference, where reasonably possible, shall be given to American citizens?

Mr. HUSHING. There is no use to talk about preference. You can't get away with anything with the officials unless you make the language clear. It is just the practice that has grown up there. All these Governors are military men and follow the same general practice. The man that becomes Governor has grown into it because he started there as an engineer or an assistant engineer or something of that kind, a sort of lieutenant governor. When the other fellow goes out he steps in, and he follows the same general policy. I don't criticize these officials. I have been very friendly with some of them. I like the present Governor very much. He can't help these things. If he revolutionized it, he would be in a terrible spot. The only way it can be done is by the Congress.

Senator HAYDEN. I am inclined to agree with you.

Mr. HUSHING. The Secretary of War governs the Canal under the President. The President delegates the power to the Secretary of War, and the Secretary of War delegates the power to an Army officer. The Secretary of War does not know much about the Canal, and neither does the President. They can't know very much about it. When employees go to the Governor and are turned down, we go to the Secretary of War and stall along with him, and eventually have to refer it back to Congress for year after year, and that is the way it is handled. Congress adjourns and we are out for another year. I have been working on this question since I first went to the Canal in 1916.

Senator HAYDEN. You will admit, will you not, that as a general proposition it has been a sound public policy to let the Governor of the Canal Zone select the engineers and similar employees?

Mr. HUSHING. Certainly.

Senator HAYDEN. You say that by reason of that they have become accustomed to doing certain things in a certain way and it is difficult to have it changed. It seems to me a very much modified form of Senator McCarran's amendment might be more acceptable. He wants to require every man jack to be an American citizen. On the face of it, it seems to me that is absurd, and could not be done without not only tremendous cost to the Government but would be a bad thing for the common laborers taken down there from the United States and would place an enormous burden on the Government.

As I understand your present proposal, you distinguish between the common laborer and those above the grade of common laborer. Mr. HUSHING. Yes.

Senator HAYDEN. I think the committee might be interested in one more matter, and that is an analysis of this additional cost of $81,000,000.

The CHAIRMAN. The matter must be submitted to the Canal authorities before we act upon it. The present proposal is much preferable to that offered by Senator McCarran.

Mr. SMITH. May I give you these figures before Senator Pepper leaves?

The CHAIRMAN. Yes.

Mr. SMITH. Under existing policies of employment on the Canal, which it is proposed to follow in the construction of the third lock under S. 2229, as it now reads, the average number of employees of all classes will be about 12,000, of which 3,000 will be required from the United States. Skilled, technical, clerical, administrative, and supervisory employees would be United States citizens.

That is the statement of the Governor of the Panama Canal Zone. Senator HAYDEN. That would show a higher ratio of Americans than were employed in the original construction.

Mr. SMITH. That is correct.

Senator HAYDEN. You stated that in the original construction there were 40,000 employees, 5,000 of whom were Americans. Mr. SMITH. Yes, sir.

Senator HAYDEN. On this job it would be 12,000, of whom 3,000 would be Americans.

Mr. SMITH. That is right.

Senator HAYDEN. Analyze this $81,000,000.

Mr. HUSHING. I would like to refute some of those figures. There are 3,616 to be replaced by 1,954. It might cost a little more to replace them with the 1,954 if you considered only the cost to the Canal, but it is my belief and my assumption that if you take 1,900 people away from the United States, all skilled, it is going to make that many jobs for people here, take that many off the relief rolls, and will be beneficial to the extent of 1,900 people. You know better than I how much it costs to maintain a man on relief. I have been told it figures $81 a month. If you add 1,900 times 81 to the wages paid these 3,600 aliens, you could pay every American $279 a

month.

The CHAIRMAN. Is that what they are asking?

Mr. HUSHING. No. I am just showing you what that cost would really be, if they pay these men on relief $81 a month.

Senator HAYDEN. There are more people now crying for relief than we can supply.

Mr. HUSHING. Some Americans would benefit from it.

Senator HAYDEN. Oh, yes.

Mr. HUSHING. It would have that much effect on the present labor market at home.

Senator HAYDEN. I think that statement from which you have quoted should go in the record.

Mr. HUSHING. I intend to put it in the record. I would like to insert this statement in the record, and in it you will find a letter

from the Assistant Administrator of the P. W. A., where he makes the statement that one American does the work of three aliens. The CHAIRMAN. Without objection, the statement may be incorporated in the record.

(The document referred to is here printed in full, as follows:)

PREPARED STATEMENT BY W. C. HUSHING IN BEHALF OF THE AMERICAN FEDERATION OF LABOR ON S. 2229 AND H. R. 5129, IDENTICAL BILLS TO ENLARGE THE PANAMA CANAL FACILITIES

H. R. 5129 as reported by Mr. Bland, chairman of the House Committee on Merchant Marine and Fisheries, is identical with S. 2229, which the Senate recommitted because of objection made by the American Federation of Labor to the language on page 2, which is as follows:

"For the purposes aforesaid, the Governor of the Panama Canal is authorized to employ such persons as he may deem necessary and to fix their compensation without regard to any other law affecting such compensation."

This clause abrogates all laws regarding hours, wages, or citizen requirements and empowers the Governor of the Canal Zone to employ anyone-whether citizen or alien-at any rate of pay he sees fit and to work them any hours he chooses.

The bill does away with the 8-hour law enacted in 1868, and the Thomas amendment providing for a 5-day week for certain classes of Government employees on the Zone.

The argument is advanced that additional locks and other facilities are a military and commercial necessity and that the work must be expedited by removing all restrictions regarding hours, wages, or citizenship requirements. It is agreed that the project is a necessary one, but the matter has been under consideration for a considerable period of time and a little more delay-in order to pass proper legislation-cannot vitally affect it.

It is further stated that General Goethals was given full authority in regard to wages, hours, etc., and was, therefore, able to do the job. As a matter of fact, the authority granted to General Goethals resulted in the payment of wage rates from 40 to 100 percent higher than those paid for similar services in the United States and he was obliged to come to Congress and have these wages reduced by legislation. Congress should lay down specifications to guide not only officials but labor, and if this is done it will eliminate endless arguments and permit the officials and labor to apply their full energies to the job without distractions.

The committee is offering an amendment which is designed to offset the complaint of labor, but it does not do so and this committee amendment should be amended by provisions continuing the 8-hour law, extending the Thomas amendment, and providing for the employment of citizens.

Government officials state that they are following the practices of other countries and corporations, under similar circumstances, by employing "natives." These officials are misleading Congress as these alien Negroes are not natives, but are imported from the West Indies. The Panamans are natives but as they are supposed to have equal rights, regarding employment, with American citizens, which would cost money, the alien Negro West Indian is used because he is cheap.

Government officials are fast building, on the Canal Zone, a condition similar to that which brought on the Civil War in the States. Some of our forefathers profited greatly by the labor of aliens imported into this country, but it resulted in the Civil War and we have been paying through the nose since for their mistakes.

The West Indians on the Zone are not slaves, but the conditions under which they live and work are deplorable. Officers and members of the American Federation of Labor do not hold these West Indians in contempt or bear them malice. On the contrary, we are sympathetic, as we know they are underpaid and that they are exploited, for, while our Government officials applied American sanitation and housing (for citizens) on the Canal Zone, they failed to apply American wage standards for these West Indian aliens and as they are prolific in reproduction their meager wages are not sufficient. Government offi