Michael Murphy


IBEW Local Union 520



Michael Murphy

10708 Oak View Dr.

Austin, TX  78759

Tel. (512)461-9184

Fax. (512)326-9596


 Anthrax Strike:  The 1976 Outbreak of Labor Militancy in the Panama Canal Zone


Senior Seminar

October 2005



        In the twenty first century the word “anthrax” conjures up visions of terrorism.  But among the US citizen employees of the Panama Canal Company/Canal Zone Government (PCC/CZG) in the mid 1970s, “anthrax” referred to the sheep-borne illness that caused many of them to get sick of the uncertainty, wage cuts, benefit reductions, school integration, and lack of respect that was served to them by the canal administration.  “Gutless sheep” was what Under Secretary of the Army, Arthur “Victor” Veysey called them, and so they called in sick—first, in small numbers and then by the hundreds, until the Panama Canal, for the first time since 1915, was shut down.[1]

        What was it that caused employees of the United States Government to risk their jobs, their homes, and even their very freedom to take such a stand?  This question occurred to me when, applying to the Bachelor’s Degree program at the National Labor College, I was asked about my first impression of organized labor.  While contemplating the question, I reached back into the recesses of my memory and recalled, from my youth in the Panama Canal Zone where I lived in the town of Gatun from 1967 to 1982, something I had not thought about in many years—the 1976 sickout that closed not only the Panama Canal, but more importantly to me at the time, my high school.  To refresh my memory and to ascertain its accuracy I searched the internet for references to the sickout and, surprisingly, found absolutely nothing.  With the exception of a small reference in Herbert and Mary Knapp’s 1984 work, Red, White and Blue Paradise: The American Canal Zone in Panama, nothing has been published on what, to me, was a momentous event. [2]   In this paper I will set out to answer the question I posed at the beginning of this paragraph.

        My search for that answer began with a query to Suzanne Fleming (Steele), a classmate of mine at Cristobal High School, Coco Solo, Canal Zone.  Suzanne provided me with some newspaper clippings from the Miami Herald and the Star & Herald (an English language daily published in Panama).  Next, I contacted Chuck Hummer at the Panama Canal Museum in Seminole, Florida.  Chuck sent me some clippings from The Panama Canal Spillway (an official weekly publication of the PCC/CZG) and some relevant minutes to Panama Canal Company Board of Directors meetings.  I reviewed published literature on the Panama Canal Zone and found that, while there is a wealth of literature on the general subject of the Panama Canal Company and the Canal Zone, there is very little literature on the subject of Canal labor relations.  There is one book by Michael L. Conniff that focuses on the labor relations of employees of West Indian descent.[3]   There is also an excellent work by John Majorthat describes the structure and function of the Canal Zone Government.[4]   For the definitive piece on life in the Canal Zone there is Herbert and Mary Knapp’s work, referenced above, and for construction of the Canal, the definitive work is by David McCullough.[5]  It became clear, after the literature review, that the bulk of the information I would need to answer my question would be found in primary sources.

        I began my search of primary sources at the George Meany Memorial Archives (GMMA) in Silver Spring, Maryland.  The GMMA contained a series of letters between William Sinclair of the American Federation of State, County and Municipal Employees (AFSCME) Local 900, and Andrew C. McClellan, Inter-American Representative, AFL-CIO, wherein Sinclair updated McClellan on the events leading up to, during, and following the sickout.[6]  Included in the correspondence was discussion of the substantive issues that precipitated the job action and developments that resulted from it.  From there, I went to the National Archives in College Park, Maryland.  The National Archives contains some 20,000 linear feet of records on the Panama Canal, from construction of the Canal right up until the turnover of the enterprise to the Government of Panama on December 31, 1999.  During a one day search of the archives I was able to find a good number of relevant documents including, most importantly, a detailed account of the strike prepared for Canal Zone Governor, Harold Parfitt by Labor Relations Director, Paul Simoneau.[7]

        The Simoneau report contained the names of the key labor leaders and, with the help of then President of the Fire Officers Union, Roy Gelbhaus, I was able to find Alfred Graham, President of the Canal Zone Central Labor Union-Metal Trades Council (CLU-MTC).  Graham has been particularly helpful in understanding the facts that led employees to conduct an illegal wildcat strike.  Other primary witnesses have been Sue Stabler, a teacher in the Canal Zone Schools at the time of the events, and Jim Murphy, my father and a welder at Gatun Locks.  Some of this work is also drawn from my own knowledge of the Canal Zone.  Because the majority of the witnesses I have contacted were employed on the Atlantic end of the Canal, Atlantic side events may be overrepresented in this work.

        An understanding of the people and forces that drove the events of 1976 requires a general overview of the history and environment of the Panama Canal Zone.  The United States Government entered into a treaty with the newly formed Government of Panama in 1903.[8]  The treaty provided that the Republic of Panama would lease to the United States, “in perpetuity” a strip of land 50 miles in length and 10 miles in width for the purpose of building a canal that would connect the Pacific Ocean to the Caribbean Sea.  The United States was granted the right to act “as if it were sovereign” within the confines of this strip of land, which came to be known as the Canal Zone.[9]  Acting as sovereign, the United States government created, within the Zone, a slice of America, with its own Courts, Schools, Post Office, police/fire protection, commissaries, housing developments and all of the other things you might find in a typical American community. 

        One aspect of the typical American community that did not exist in the Zone was free enterprise.  All real property in the Canal Zone was owned by the Panama Canal Company/Canal Zone Government (itself an agency of the United States Government).  All residents of the Canal Zone were either employees or dependents of the Company/Government or another United States Government Agency, such as the Department of Defense or the Federal Aviation Administration.  As Canal Zone Governor in 1965, Robert J. Fleming described this arrangement to US Senator, Sam Ervin “…The Company/Government operates all the facilities of daily living and naturally virtually all United States citizen employees and their dependents are housing tenants, retail store customers, hospital patients, etc., of the Canal agencies.”[10]  Thus, many of the problems that plague the typical American community were non-existent in the Canal Zone.  There was, for instance, no unemployment.  If you were not employed (or a dependent of an employee) you were not permitted to reside in the Canal Zone.  There was no aging population, as immediately upon retirement, all employees were expected to vacate the Canal Zone.  The Canal Zone has been described by one observer as a “socialistic utopia.”[11]  The premise of Herbert and Mary Knapp’s book is that the Canal Zone was much like the utopia described by Edward Bellamy in his 1887 novel, Looking Backward.[12]

        As with all “utopias,” the Canal Zone suffered its share of problems.  Key among these problems was the control the PCC/CZG held over the life of its employees.  “Although it is not the general policy to interfere with the private lives of employees, the nature of the Canal enterprise necessarily imposes certain restrictions on off-the-job conduct not ordinarily found in other employer-employee relations.”[13]  One important problem that would be integral to the cause of the sickout was the racial/national origin policies practiced by the PCC/CZG.

        From the very beginning of construction of the Panama Canal in 1903, Canal authorities planted the seeds of the 1976 strike by adopting and maintaining a Jim Crow policy toward its workforce.  American workers (mostly white) were paid in gold, and foreign workers (mostly blacks imported from Barbados) were paid in silver.  This came to be known as the Gold and Silver system.  All canal facilities were segregated into Gold and Silver facilities.  This included housing and schools.  The Gold and Silver system was not as strictly enforced as Jim Crow because there were instances of blacks on the Gold roll and whites on the Silver roll.  The line of demarcation was more a matter of national origin than color.  The whites on the Silver roll were primarily immigrants from Spain and southern Europe and the blacks on the Gold roll were, in most cases, United States citizens.  Division of the workforce along these lines accomplished the same mission in Panama as it did in the United States—it allowed the employer to divide the workforce against itself.[14]

        Upon completion of the construction project in 1914, Canal workers were faced with massive layoffs.  In addition to the layoffs, George W. Goethals, Governor of the Canal Zone,[15] proposed to cut the wages of Gold roll employees.  Gold roll employees, since the beginning of construction, had been paid 50% above the wages paid to similar employees in the United States.  This premium was known as the “tropical differential” and would become a key issue in the 1976 sickout.  Goethals proposed to cut the tropical differential down to 25% and Congress agreed to do so in the Panama Canal Act of 1914.  In response to this, the American Federation of Labor (AFL), in 1914, formed the Metal Trades Council and consolidated the thirty blue-collar Gold roll employee unions under its banner.  It later organized the white-collar Gold roll employee unions into the Central Labor Union.[16]  One of the early battles fought by the Central Labor Union-Metal Trades Council (CLU-MTC) was the campaign against Goethals’ 1915 attempt to bill employees for their housing, fuel and electricity.  CLU-MTC succeeded in killing the plan for Gold roll employees but left the Silver roll employees, who were not organized into unions, to fend for themselves.  They didn’t do well and ended up paying for their housing and utilities, further increasing the gap between Gold and Silver employees.  For the next 35 years the lower paid Silver roll workers paid their rent while Gold roll employees lived rent-free.[17]

        In 1916 Silver roll employees conducted a strike to protest their low wages and high cost of living.  American Federation of Labor had not sought to organize Silver roll employees so the employees sought assistance from Panamanian unions after Canal authorities announced a pay cut.  Panamanian labor leaders called for a joint strike and shut down several businesses in the Republic of Panama.  An estimated 6,000 of the 21,000 Silver roll employees on the Canal workforce joined the strike.[18]  Governor Chester Harding summoned the President of Panama and threatened to use the authority granted him under Article 7 of the canal treaty to break the strike by the use of US troops.[19]  The Panamanian government cracked down hard on the strikers, ending the strike after 5 days.  Because the Canal Company’s labor policy was based on the ready supply of cheap Silver roll workers, any attempt to ameliorate conditions of Silver employees by pay increases would break the budget.  Nevertheless, a small raise was granted the Silver employees after they returned to work.[20]

        In 1919 a colossal labor struggle shook the United States and Canal authorities did not escape that struggle.  In that year, an African-American employee of the Panama Railroad named Nicolas Carter began to agitate Silver roll employees about forming an AFL affiliated union.  Answering Carter’s call, AFL sent two Organizers from the black dominated United Brotherhood of Maintenance of Way Employees (BMWE) to the Canal Zone to organize Silver roll employees, promising to raise their wages to the level of Gold employees.  Both Governor Harding and CLU-MTC demanded that AFL recall its Organizers or they would be deported.  Samuel Gompers, in the midst of an effort to bring black workers into unions in the United States, resisted appeals to recall the Organizers and they were successful in organizing about 80% of the Silver workers into BMWE.  In May there was a walk-off of 1,000 Silver roll employees from the docks at Cristobal, the Atlantic terminus of the canal, when they were told that their ten hour work-day was to be cut to eight hours without any increase in the hourly rate to compensate them for lost earnings.[21]  In February 1920 11,000 of the 16,000 man Silver roll workforce went out on a strike called by BMWE in the face of Harding’s refusal to budge on its demands for wage increases.  Again, Harding threatened to bring in troops to break the strike.  After the first day, Governor Harding fired all workers who refused to go back to work and evicted 300 families from their Company-owned homes in the Canal Zone.  After eight days the Local Union was broken and Silver workers remained non-union for another twenty five years.[22]

        Gold employees took advantage of the situation by scabbing out the jobs of the Silver employees while they were on strike.  As a result, Harding ordered that those jobs that were necessary to the operation of the Canal would be held only by Gold employees.[23]  By the time of the 1976 strike, these positions were called “security” positions. 

        The proposal to make Gold employees pay for their housing resurfaced in 1921 when United States Secretary of War, John Weeks, sent General William Connor to the Canal Zone to study ways to cut costs.[24]  Connor concluded that implementation of an “open-shop” policy toward the workforce would free management of the control that unions had over it.  All of the Gold roll employees were unionized and the managers remained in the union after their promotion to supervisory positions.  By breaking the “closed shop”, Silver employees could more freely move up the ranks and costs would be cut.[25]  Connor proposed a wholesale “silverization” of the workforce, replacing Gold roll employees with the cheaper Silver workers.  Canal Zone Governor Jay Morrow and AFL President Samuel Gompers teamed up to kill the silverization proposal, but this time President Warren G. Harding accepted Connor’s proposal to charge Gold employees for their housing and utilities.[26]  CLU-MTC responded by going to the courts, and when losing there, to the Congress.[27]  CLU-MTC President William Hushing told the New York Times that silverization of the Canal workforce had already resulted in malaria outbreaks in the Canal Zone and urged that Congress go no further down that path.  He was summarily fired by the Panama Canal Company, demonstrating the control the Company/Government exercised over the lives of employees.[28]

        With the onset of the Depression beginning in 1929, competition between Gold and Silver employees for the dwindling number of available jobs grew more intense.  In 1931 CLU-MTC sought to eliminate the jobs of 3,800 semi-skilled Silver roll employees to create positions for the dependents of Gold roll workers, who were now coming of age.  After much haggling, Canal Zone Governor, Harry Burgess agreed to phase Silver roll workers out of clerical positions and replace them with young Americans.[29]  CLU-MTC went over Burgess’ head and lobbied hard for legislation requiring that all Silver employees now be replaced by workers, hired from the United States and they would have Gold roll wages and benefits.  The labor union also lobbied for legislation requiring that all workers hired for construction of the Third Locks, which would increase the size of the ships that could traverse the canal, be United States citizens.  The prohibitive cost associated with replacing the Silver workforce would undermine the central plank of the labor policy that had governed the Canal enterprise from its beginning—cheap Silver roll labor.  CLU-MTC was, however, successful in getting the Third Locks Act to include language requiring that all skilled and supervisory positions be reserved for US citizens, but because an attachment to the Roosevelt-Harmodio treaty of 1936 with the Republic of Panama (the Hull letter) required equality between US and Panamanian citizens with respect to employment on the Canal, President Roosevelt got the language in the Third Locks Act changed to read that the skilled and supervisory positions were to be reserved for “US and Panamanian citizens.” [30]

        In the 1940s pressure began to mount on Canal authorities to eliminate the Gold and Silver system.  In July, 1943 Mexican labor leader, Vicente Lombardo wrote a letter to President Roosevelt complaining of “blatant racial discrimination” in the Canal Zone and characterizing MTC/CLU as a “cabal of old timers and a labor aristocracy bent on preserving white supremacy.”[31]  In May, 1944 the Panamanian delegation to the International Labor Organization conference embarrassed the United States by presenting Labor Secretary Francis Perkins with a tribute to the discrimination against non-US citizen employees of the Canal Company.  Also, in 1943 a pamphlet called A Forgotten People, detailing the plight of non-US citizen employees of the Canal Company, made the rounds at the Anglo-American Caribbean Commission in Washington. [32]  In 1946 Harry Truman, fearful of Communist influence in Latin America, launched an investigation into employment practices at the Panama Canal.  To that end, he sent retired Brigadier General Frank McSherry to the Canal Zone.  McSherry issued a blistering report in 1947, declaring that the personnel department was dominated by MTC/CLU and needed a complete overhaul.  He recommended the dismantling of the Gold and Silver system and its replacement by a single payroll structure.  Canal Zone Governor Joseph Mehaffey successfully resisted most of the changes proposed in the McSherry report but scrapped the designations “Gold” and “Silver” and replaced them with “US-rate” and “local-rate” in November, 1948.[33]  In 1949 another investigation of Canal employment practices was initiated by the Department of Commerce, which sent Deputy Director George Vietheer (who was a former employee of the Canal Company).  His report echoed McSherry’s, calling for a plan very similar to the silverization plan that General Connor had tried to impose on the Canal Company back in 1921.[34] 

        Representatives of US Government agencies were not the only ones investigating disparities among Panama Canal employees.  In January 1949 a committee appointed by the American Federation of Labor and the Inter-American Federation of Workers visited the Canal Zone and issued a report on labor conditions.   According to its report, silverization was well under way.  The committee found that there were many “local rate” employees performing skilled tasks but being paid at the unskilled local rates, thereby displacing US workers.  The committee found that continued application of the wage disparity would end up removing US workers from all but the most highly skilled positions.  MTC/CLU recommended adoption of “equal pay for equal work” but qualified that recommendation with a proviso that skilled work should only be performed by those who had completed an apprenticeship program or had qualified by on-the-job training.  Clearly, the adoption of this suggestion would have resulted in the displacement of the local rate employees who were performing skilled labor because, historically, only US citizens had access to apprenticeship programs.  The committee also looked into housing and educational disparities and pointed out a wide gap between amenities available to US employees and those available to locals.[35]  Like most of the Government sponsored studies before it, the Labor study produced no changes in the order of business.[36]

               In 1950 the Panama Canal and the Panama Railroad were consolidated into one entity called the “Panama Canal Company.”  Administrative functions were split off into a “Canal Zone Government.”  Along with consolidation came belt tightening and a call for further silverization of the workforce.  Instead of receiving appropriations from Congress, as had historically been the case, the Canal would have to operate entirely off of the revenues collected by tolls.[37]  In October 1950 those few non-US citizen employees who were paid at US rates had their 25% tropical differential cut off.  In that same year Local 900 of the Government and Civic Employees Organizing Committee, a labor organization of local-rate employees, was spawned after the collapse of the more radical Local 713 of the United Public Workers of America.  Much to the pleasure of Canal authorities, local-rate employees had avoided unionization after the debacle of the 1920 strike.  In the 1940s CIO organizers began busily organizing Silver roll workers.  Because of the pressures on Canal authorities to eliminate discrimination, and Roosevelt’s general support of the rights of workers to organize, Local 713 was allowed to form despite the historical antipathy of the Canal organization to the unionization of Silver employees.  The post war red scare led to a rift within Local 713 between the more conservative elements within the union and its more radical leadership.  Conservative leaders within Local 713 split off to create Local 900 which was quickly recognized by Canal authorities.  Local 713 withered away shortly thereafter.

        Local 900 President Ed Gaskin immediately demanded equality for local rate employees, including, among other things, a single wage scale, US minimum wages for local rate employees, equal pay for equal work, elimination of race or national origin as qualification for certain positions, and elimination of racial segregation.  Canal Zone Governor, Francis Newcomer rejected each and every demand, pointing out that the reorganization of the PCC/CGZ left the enterprise without the capital to pay for the improvements that Local 900 demanded.[38]  In 1955 the United States negotiated a new treaty with the Republic of Panama that proved disastrous for local rate employees.  Local rate Panamanian employees’ wages became subject to Panamanian taxes and those who lived outside the Canal Zone lost the privilege to shop in Canal Zone commissaries, where prices were much lower than in the local Panamanian economy.  In 1958 the US Congress created the Canal Zone Merit System, which was designed to adopt the principle of equal pay for equal work and to eliminate race or national origin as a factor in employment.  The actual effect of the Canal Zone Merit System was to keep the two separate wage scales intact but to tack them end to end “to give the semblance of a single wage ladder.”[39]

        Another change affecting local rate employees living in the Canal Zone during the 1950s grew out of the US Supreme Court decision in Brown v. Board of Education.[40]  Schools in the Canal Zone had been segregated throughout the history of the Zone.  US citizens attended US accredited schools staffed by US trained educators.  The dependents of Silver employees who resided in the Canal Zone attended a separate, and decidedly unequal, school system, called the “colored schools.”  Since most of the Silver employees who lived in the Canal Zone were of West Indian descent, the colored schools were taught in English.  In 1954, in order to avoid integration, Canal authorities hurriedly changed the “colored” schools to “Latin American” schools and changed the curriculum and the language to more closely resemble the education provided in Panamanian schools.  Canal Zone Governor, John Seybold announced that the purpose of the conversion from “colored” to “Latin American” schools was to assimilate the students into Panamanian, rather than American society.  This, he said, was appropriate and was demanded by Panamanian authorities.[41]   Integration of schools was kicked down the road for another twenty years and would become one of the pressures that led to the 1976 sickout.

        The 1960s brought some key developments that set the stage for the 1976 job action.  In 1962 President John F. Kennedy signed Executive Order 10988, titled “Employee-Management Cooperation in the Federal Service”.  The order mandated a system of union recognition for federal agencies, depending upon the level of union support among workers in a given bargaining unit.  For those units in which union support was less than 10% the agency was required to grant only “informal recognition.”  The agency was not required to consult with a union that was granted informal recognition, nor was it permitted to deduct union dues from members’ paychecks.  The only status granted to a union under informal recognition was that it might be “heard on matters relating to wages, hours, and working conditions.”  A union that had the support of 10% or more of the employees in a given bargaining unit was entitled to “formal recognition”, which required the agency to “consult” with the union over terms and conditions of employment and to deduct union dues from members’ paychecks.  Formal recognition was not exclusive so, theoretically, there could be up to ten unions with formal recognition status in a given bargaining unit.  The third form of recognition mandated under EO 10988 was “exclusive recognition.”  Exclusive recognition was reserved for those unions that were supported by more than 50% of employees in a given bargaining unit.  A union attaining the status of the exclusive representative was entitled to negotiate a collective bargaining agreement with the agency that covered all employees within the unit.  Once exclusive recognition was attained by a union, all other unions within the bargaining unit would be relegated to informal recognition status and dues check-off would be terminated.[42]

        Executive Order 10988 allowed for exceptions for overseas agencies and Governor William Carter quickly seized on his authority to apply one of those exceptions.  Carter refused to grant exclusive recognition to any union, instead granting only formal recognition.[43]  There were several reasons that Canal authorities were reluctant to grant exclusive recognition, key among these being that, given the nationality breakdown of the workforce, a union dominated by Panamanian employees would be likely to win any election for exclusive representation.[44]  Refusal to grant exclusive recognition would come back to haunt Governor Harold Parfitt when lack of an identifiable representative frustrated his efforts to settle the 1976 sickout.

       There was another strike initiated by local rate employees in the Terminals Division in January 1962 when the International Longshoreman’s (ILA) union tried to organize the stevedores.  ILA’s objective was to get the Panama Canal Company out of the stevedoring business so that they could negotiate directly with the steamship companies.  The workers returned on the fourth day of the strike after Governor Carter met with ILA representatives and the Second-Vice President of the Republic of Panama.  The labor dispute did not end with the return of employees to work.  ILA boycotted any cargo passing between Panama and US seaports on the eastern seaboard and gulf coasts of the United States.  Midway through the year George Meany, President of the AFL-CIO, convinced the ILA to abandon its efforts in the Canal Zone and allow the National Maritime Union (NMU) to represent the local rate employees in the Terminals Division.  Canal authorities pointed to the 1962 job action, coupled with the strikes by Silver employees in 1916 and 1920 to justify its fears of granting exclusive recognition to a union dominated by Panamanians.

        In 1964 deadly riots broke out in the Canal Zone when US students at Balboa High School insisted on flying the United States flag at their school, an act that had been prohibited by an order of Governor Robert Fleming[46].  Fleming had designated certain locations (which did not include the schools) in the Canal Zone where US and Panamanian flags would fly side by side, pursuant to an agreement with the Republic of Panama.  Panama had insisted that its flag fly over the Canal Zone as a symbol of its titular sovereignty over the Zone.  Panamanian students marched on Balboa High School and demanded that their flag be flown over the school.  A scuffle broke out and 3 days of rioting ensued, resulting in the deaths of 21 Panamanians and 3 Americans.  The riots prompted a change in the relationship between Panama and the United States, causing President Lyndon Johnson to commit to a new round of treaty negotiations.[47]

        Perhaps in response to critics who claimed, in the wake of the 1964 riots, that US citizens in the Canal Zone lived in undue colonial luxury, Canal employees saw the first change in the tropical differential since the Panama Canal Act of 1914 had reduced it from 50% to 25%.  United States Secretary of the Army, Stephen Ailes, pursuant to the authority granted him by Executive Order 10794 over wage and employment practices in the Canal Zone, promulgated a regulation designed to reduce the tropical differential to 15% for new US citizen employees.[48]  Existing US employees would see a gradual reduction in their 25% differential until they eventually received 15%.  Married women whose husbands resided in the Canal Zone had their differential entirely eliminated.  CLU-MTC and several individual employees immediately sued to prevent implementation of the new regulation in the United States District Court for the District of the Canal Zone and were granted an injunction by US District Judge Guthrie Crowe in November, 1965.[49]  Two years later Crowe’s ruling was overturned by the 5th Circuit Court of Appeals.[50]  The 5th Circuit declared that it was entirely within the discretion of the Secretary of the Army to determine whether or not to pay a tropical differential, or the amount of that differential, to any given employee, just so long as it was not greater than 25%.  The Secretary didn’t hesitate to use that authority, and would do so repeatedly until faced down by employees in 1976.[51]  Approximately140 married women sued the Secretary, claiming gender discrimination in the 1964 regulation, and were vindicated when the Justice Department declined to defend the suit.[52]  The Secretary responded to this defeat by adjusting the tropical differential regulations in 1971 and again in 1974, on a gender neutral basis, in order to ensure that only one of the members of a married couple would receive the differential.[53]

        Negotiations for a new treaty proceeded quietly until 1967 when President Johnson announced that the outlines of a new agreement had been reached.  The text of the draft treaty was leaked to the local newspapers and both CLU-MTC and the unions dominated by local rate employees (AFSCME Local 900 and NMU) raised the alarm bells.  For the first time in the history of labor on the Panama Canal, CLU-MTC worked in cooperation with the local-rate unions.  One detail of the treaty that particularly alarmed Local 900 was the Panamanian proposal to apply Panamanian wage rates and labor laws.  Local 900 President Saturnin Mauge pressed Governor Walter Leber to assure that US Civil Service rules would remain in effect for local rate employees and that housing for those local rate employees residing in the Canal Zone would be secure.[54]  Employees were granted a reprieve when negotiations were suspended pending the 1968 elections in both countries.  The suspension was extended when General Omar Torrijos overthrew the elected government of Panama in a coup d’etat in October.  The election of Richard Nixon also delayed resumption of treaty negotiations, as he was somewhat less eager to turn over the Panama Canal than was President Johnson.[55]

        Torrijos did not like the draft treaty any more than Nixon, but liked it even less when Nixon backed away from some of Johnson’s commitments after negotiations resumed in 1971.  Panama broke off negotiations in 1972 and started an international political campaign to pressure the United States to offer more favorable terms.  In March 1973 Panama hosted a meeting of the United Nations National Security Council and embarrassed the United States by introducing a resolution calling on the United States to grant Panama true sovereignty over its territory in the Canal Zone.  All nations present voted in favor of the resolution, forcing a US veto.  Nixon, having been chastised over US intransigence in the treaty talks, appointed Ambassador Ellsworth Bunker to restart the negotiation process.  Bunker quickly moved the negotiations forward, allowing Henry Kissinger to go to Panama and sign a framework agreement for a new treaty in February 1974.[56]

        Kissinger’s visit to the Canal Zone was met with trepidation by US citizen employees and their families.  Anti-Kissinger graffiti began to appear around the Zone.  One anonymous spray painter painted “DON’T GIVE ‘EM NOTHING, HENRY!” on a prominent building on the Atlantic side of the Isthmus while another anonymous writer responded to a “KISSINGER, REMEMBER VIETNAM!” sign with “TORRIJOS, REMEMBER HIROSHIMA!”  The New York Times quoted several US citizen residents of the Canal Zone:  “Kissinger always gives something away and with these people, the more you give, the more they want” and “I hope Kissinger doesn’t give it all away because I want to stay here.  Look at the dirt in Panama City.  They’d make the Zone look like the city.”[57]

        In the meanwhile, Canal administrators commissioned Peter Pestillo, a labor consultant, to examine and analyze labor relations in the Canal Zone after an August 1973 job action initiated by the Panama Canal Pilots Association.  The Pilots were the highly skilled seamen that guided vessels through the canal.  They were the aristocracy of the labor force.  Housing in the Canal Zone was assigned based on seniority and Pilots insisted, due to their indispensable skills, that they be awarded an extra five years seniority for purposes of housing assignments.  When Governor David S. Parker refused their demand they responded by transiting ships “by the book.”  Parker, accepting the advice of his inexperienced labor relations staff, fired five of the Pilots.  The remaining Pilots walked off the job and were followed by a spattering of the workforce.  Parker was ordered by Secretary of the Army Alexander to immediately do “whatever it takes” to get the Pilots back to work.  Parker reinstated the Pilots and Canal operations resumed at full capacity.[58]

        In July 1974 Pestillo issued his report to Under Secretary of the Army, Victor Veysey.  Pestillo concluded that PCC/CZG tended to ignore brewing labor issues until they rose to the level of a crisis.  He suggested that this practice tended to make every labor problem a crisis because union leaders knew that that was the only way problems were solved.[59]  Pestillo included some choice comments on the character of some of the leaders of CLU-MTC affiliated local unions.  He called William Drummond, President of the Police Union, and Lou Fattorosi of the American Federation of Teachers, two of the stupidest union leaders on the Zone.[60]  The report was leaked to Al Graham, President of CLU-MTC, and made its way to the Panamanian press.  Pestillo’s report torpedoed any goodwill that may have existed between CLU-MTC and Parker’s administration.[61]

        AFSCME Local 900 President William Sinclair had been pressuring the Canal Zone Government to desegregate housing.[62]  In response, Governor Parker formed an Ad Hoc Committee on Housing.  In January 1975 Al Graham warned that any move on housing in the existing climate would exacerbate the growing fears of US citizen employees who were already contending with treaty negotiations and pending wage and benefit reductions.[63] 

        AFSCME Local 900 and NMU, with the support of the Panamanian Labor Confederation, were also pushing for leave parity between local-rate employees and US rate employees.  US citizens, going back to the Gold roll days, had always enjoyed much more in the way of leave benefits than the local-rate employees and pressure was growing to change that.  On February 10, 1975 PCC/CZG sent a letter to all Canal Zone unions to begin the so-called “consultation” process due formally recognized unions pursuant to Executive Order 10988 on the Company’s “leave parity” proposal.  There is a substantial difference between “consultation” and the “bargaining” that would be due to a formally recognized union.  Bargaining is a give and take process while “consultation” has been described as:  “the employee gives and the employer takes.”  A CLU-MTC official described it as “Consultation—that meant they did what they wanted and then called you in and told you.”[64]  The letter set off a rift between CLU-MTC affiliated unions and local rate unions (AFSCME Local 900 and NMU).  CLU-MTC feared that any effort to grant leave parity to local rate employees would come at the reduction of US rate leave benefits, and they were right. 

        None of labor organizations found satisfaction when the Governor on March 7 announced his decision on leave parity.  The decision reduced the leave benefits for US-rate employees and improved benefits for the local-rates, although local-rate employees were not to be accorded equal benefits.  Locally hired US citizens would no longer receive “Home Leave.”  Home leave was a benefit granted to US citizens so that they could visit their relatives in the United States.  Traditionally, home leave was granted even to those US citizen employees who were second or third generation Zonians and, therefore, had no relatives to visit back in the United States.  Now they were to be cut off from this benefit if hired after July 5, 1975.[65]  PCC/CZG Personnel Director Gordon Frick cited a provision of the 1955 treaty to justify the company’s decision to continue to provide greater benefits to US-rate employees than those that would be provided to local-rate employees even under the new leave system.[66]

        In the absence of reports coming from the US treaty negotiating team, rumors ran rampant on the Zone.  A story appeared in the March 22, 1975 edition of the Star & Herald claiming that Omar Torrijos had promised to abolish the Canal Zone Police as the first order of business upon activation of the new treaty.  No statement was issued by US negotiators in response, so employees and residents of the Canal Zone assumed the Torrijos proclamation to be true.  There was nothing US Canal Zone residents feared more than being subject to the authority of the Panamanian Government and a sense of panic swept the Zone.[67]  The Canal Zone Lieutenant Governor was dispatched to quell the fears stoked by rumors that policeman, teachers, firemen and postal workers were to be terminated on May 2, 1975.  Another source of fear for Zonians were the claims by both US and Panamanian Government officials that failure to negotiate a treaty on terms favorable to Panama would result in violent actions against the Canal Zone.[68]  American Federation of Government Employees Local 14 (AFGE) President James O’Donnell fired off a cable to George Meany upon hearing rumors that the treaty was substantially complete with no labor guarantees included.  AFL-CIO officials quickly shot a telegram back to O’Donnell, assuring him that the treaty was no where near complete and that AFL-CIO would ensure that any new treaty included a labor annex.[69]   Ellsworth Bunker met with unions and Civic Councils on September 15, 1975 but, because of the secrecy of the negotiations did not tell the residents anything that assuaged their fears.[70]

        A Government Accounting Office report on Canal employment conditions was released on May 28 that contributed to the employees’ sense of siege.  The report raised the possibility of further rollbacks of wages and benefits and hinted at the probability of lowering the employee grade level that separated US-rates from local-rates.  By now PCC/CZG had changed the designation that began as “Silver” once more, from “local rate” to “Canal Zone Wage Base”.  The line that separated “Canal Zone Wage Base” (called the “cutoff”) from “US Wage Base” was, for non manual employees, grade NM-4 and for manual grade employees, grade MG-10.  In other words, all white collar employees below grade NM-4 were paid the Canal Zone Wage Base and those employees in grades NM-4 and up would be paid the US Wage Base.  Similarly, for blue collar employees, grades below MG-10 were paid the Canal Zone Wage Base and grades MG-10 and up were paid the US Wage Base.  The GAO report forecast a potential raising of the “cutoff” for both non-manual and manual employees, threatening to push US-rate employees down into the local-rates.  At this point “the atmosphere [was] highly charged.”[71]

        On September 19, 1975 Governor Harold Parfitt informed the unions that there was a budget crunch and more belt-tightening measures could be expected.  On November 10 Parfitt announced a 3-point proposal to integrate the schools and housing communities and to reduce by half those positions designated “security positions,” including police and firefighter posts.  This would open up positions that had been reserved for US citizens to Panamanians.  CLU-MTC immediately recognized these proposals as the revival of General Connors’ 1921 silverization plan, and the pressure cooker started smoking.  AFSCME Area Director, Sinclaire reported “strong, almost violent opposition” from CLU-MTC.[72]  Of course, this proposal, once more, set the US unions and the local rate unions against one another.

        The unique “socialist” structure of the Canal Zone took these changes beyond the realm of a labor dispute and ignited a revolution in the community at large.  Unions formed a coalition with the Civic Councils and named it “The Ad Hoc Committee of Organized Labor and Civic Councils”.  The Ad Hoc Committee issued its manifesto in an open letter to US citizens in the Canal Zone:

We Americans are slow to act, but our patience is not infinite.  Year after year we have suffered adverse reaction: reduction in the tropical differential, reduction in security positions, reduction in community services….There is no use in deluding ourselves. Unless we stand united, we may soon have nothing worth saving.  If we do not make a stand on the issue that confronts us now, when shall we make a stand?  Shall we wait until our leave system is further curtailed and our tropical differential eliminated?....This is no time for weakness and apathy.  The time to act is now.[73]


The manifesto came with a poll attached, asking US citizens to vote on the Governor’s proposals and concluded by asking citizens to indicate “the strongest action to which I would commit myself…in the event [our demands] are ignored.”[74]  At the Coco Solo meeting where this manifesto was created, Al Graham was asked by one of the members of the Civic Council “what if we only get back 50 responses to the poll?”  He replied by saying that they would report the result by percentages of the responses and not by the number, i.e., if 40 out of the 50 respondents voted against the Company’s position they would report that 80% were opposed rather than 40 people were opposed.  The woman who directed the question shot back “Jimmy Hoffa lives! He’s standing right there at the podium!”[75]  The manifesto attempted to inoculate its signatories to charges of racism by noting that the American Federation of Teachers had endorsed the position of the Ad Hoc Committee at its National Convention with no dissenting votes, despite the fact that the Convention was attended by “hundreds of black…delegates.”[76]

        On February 6, 1976 Governor Parfitt announced that the 3-point proposal regarding schools, housing and security positions was going to be implemented despite the protests of the US community.  Parfitt added fuel to the growing fire by informing unions that further changes to employment conditions could be expected in the short term.  During the “consultation” period for the 3-point proposal, 300 employees had been laid off as part of the austerity measures Parfitt had announced back on September 19 of the previous year.[77]  Labor and community leaders were at the breaking point and called a rally on the steps of the Administration Building in Balboa for the night of February 16.  At the rally, William Drummond of the Police Association called for a sickout.  A rumor circulated that Secretary Victor Veysey rejected Governor Parfitt’s reservations about the changes to be announced on February 17 by saying that Canal employees were “gutless sheep” and would take whatever was coming to them.[78]

        The day after the rally Parfitt called employees’ bluff by proposing to change the Canal Zone Wage Base “cutoff” to grades NM-7 and MG-11. This meant that those white collar employees in grades NM-4 thru NM-6 and blue collar employees in grade MG-10 who had been on the US Wage Base would be dropped to the Canal Zone Wage Base.  Parfitt also proposed to eliminate the tropical differential entirely for new hires hired locally, regardless of their grade level.[79]   The Ad Hoc Committee called another rally for Monday February 23 to energize the community in response to the latest provocation by Canal authorities.  The rally would be at the Balboa Stadium which, like the Administration Building, was located on the Pacific side of the Isthmus.  Rumors of a strike were boiling over.  With the exception of William Drummond, labor leaders called for calm at the rally.  Drummond urged that now was the time to take a stand.  It was decided to go over Governor Parfitt’s head and send a delegation to Washington.  Workers passed the hat and raised enough money to send Al Graham.  Captain Coleman of the Masters, Mates & Pilots (Tugboat Masters), and Captain Oster of the Panama Canal Pilot’s Association volunteered to go at their own expense.  A follow up rally was called for Sunday March 7.  Rank and file employees were primed to strike but labor leaders knew the dangers involved in striking against the federal government and were more cautious.[80]

        All employees of the federal government sign an oath upon taking office declaring that they will not strike against the government.  Federal law provides that:

An individual may not accept or hold a position in the Government of the United States…if he…participates in a strike, or asserts the right to strike, against the Government of the United States or the government of the District of Columbia…[81]


Union leaders knew that taking the stand that was being advocated by the more radical among them carried substantial risk, for not only do employees make themselves ineligible for continued or future employment with the federal government for striking, they also are ineligible if they simply declare the right to strike.  In addition:

Whoever violates the provision of § 7311 of Title 5 that an individual may not accept or hold a position in the Government of the United States…if he…participates in a strike, or asserts the right to strike, against the Government of the United States…shall be fined not more than $1,000 or imprisoned not more than a year and a day, or both.[82]


        Graham, Coleman and Oster headed for Washington where they met with US Representative, Leonor Sullivan, D-Mo, the leaders of their respective International Unions and Veysey.[83]  Sullivan, at Graham’s request, sent a telegram to the labor leaders back in the Zone, imploring them not to strike: “Do not rock the boat by striking or walking off the job or by slowdowns at this critical time.  We have faith in your good judgment.  I implore you, please have faith in ours.”[84]  In deference to the Sullivan letter, the rally scheduled for March 7 was rescheduled for March 12.[85]

        The Friday, March 12 rally, also held at Balboa Stadium, was the largest rally yet.  Al Graham had been personally assured by Veysey that he never called Canal workers gutless sheep.  When his letter to that effect was read at the rally the crowd was in no mood to hear it.  Graham urged the gathered workers to think seriously before taking any rash action and pointed out that George Meany would never, nor could he ever, sanction an illegal strike.  Graham and the other union leaders were walking a fine line, as an open call for a strike could subject their respective unions to liability for any damages the Canal enterprise sustained as a result of the job action.  They also ran the risk of personally being charged with criminal conspiracy.  Oster walked the line and corroborated what Graham had said.  Coleman edged closer to the line and called on the crowd to “work safely.”  William Drummond leaped right over the line and cried out that the whole thing made him “sick.”  AFGE President, O’Donnell repeated, over and over that the workers should allow their consciences to be their guide.[86] Graham left the rally thinking that a strike had been averted for the time being.[87]  What Graham didn’t account for was that Atlantic side employees who had attended the rally would have an hour long train ride back to Gatun—an hour in close quarters where they could plot their next move.  There on the train, perhaps fueled by the free flow of malt beverages, Atlantic employees came to a conclusion—they were sick.[88]

        Governor Parfitt and his staff were well aware of the brewing trouble.  On March 4 Parfitt warned the Panama Canal Company Board of Directors that the Company was “now dealing with a strong emotional tide….It is essential that this serious situation be defused immediately.”[89]  The Canal administration was hypervigilant for outward signs of employee unrest when reports trickled in that some employees on the graveyard shift immediately following the Friday night rally had called in sick.  It was just a small number of employees on the Atlantic side of the Isthmus at Gatun Locks and the Cristobal Admeasurers office that had called in sick that first post-rally shift.  Later that morning Paul Simoneau, Special Assistant to the Governor for Labor-Management Relations, met with Captains Dertien and Gallin, Director and Deputy Director of the Marine Bureau, to discuss rumors of an impending sickout.  At this point the number of employees who had called in sick was small enough to leave room for doubt as to whether a sickout was actually in progress.  By Sunday afternoon’s shift it was undeniable that a job action was underway.  All of the Control House Operators at Gatun Locks were sick and the only thing that prevented a shut-down was the availability of management officials to operate the mechanisms of the Locks.  Admeasurer operations were shut down when a substantial number of Admeasurers came down with a case of “anthrax.” [90]

        The epidemic spread to the Pacific side Monday morning when the graveyard shifts at Pedro Miguel and Miraflores Locks were infected.  On Monday afternoon the teachers at the various Canal Zone schools took strike votes and the results of those votes became apparent Tuesday morning when the plague wiped out half of the teachers.  All seventeen schools were shut down, releasing students for an unexpected spring break. 

        A more important vote was held that afternoon at the Rebecca Lodge in Balboa.  The Panama Canal Pilots Association was meeting there and they held the key to the effectiveness of the strike.  The Pilots were the indispensable element of the workforce--without them no ships would transit the canal, regardless of how many managers or local rate employees the Administration rounded up to replace the rest of the sick US-rate employees.  The craft workers were at the Balboa Knights of Columbus waiting for word from the Pilots when Al Graham got an idea.  Pilots had a well earned reputation for a love of distilled beverages.  The Rebecca Lodge forbid alcohol on its property, so Graham and Vic Enyart of the Machinists Union bought a cold case of beer and brought it over to the Pilots’ meeting.  Graham placed the case of beer on Oster’s desk and said “I hope you can join us.”  Within ten minutes the entire Pilot’s union showed up at the Knights of Columbus and joined the craft workers for a toast to their decision—they were sick, too.[91]

        Parfitt immediately went to work trying to stem the spread of the rebellion.  Simoneau put in calls to the “responsible union leadership,” speaking with Graham, Oster, Coleman, IBEW Local 397 President W. Muller and IBEW Local 677 Business Manager Glen Heath.  Parfitt had solicited the union’s responses to the latest proposed changes when they were announced on February 17 and Simoneau wanted to speed up the consultation process in light of the growing strike.  Graham pointed out that there would be no written responses to the Company/Government’s position because the affected employees were making their position clear by their actions.  At a meeting on Monday night, attended by the leaders of the Boilermakers, Plumbers & Pipefitters, Fire Fighters, Operating Engineers, Pilots, NMU, IBEW, Nurses, Police Lodge, Machinists, AFGE, Customs, Masters, Mates & Pilots, and Graham all of the union leaders stressed that the unions were not striking or actively encouraging their members to strike.  They pointed out that employees who were not members of any of their unions were also out sick.  Oster and Graham insisted that the only possibility they could see for ending the walkout was through direct negotiations with Veysey.

        In the meanwhile, there were some agreements among the leaders of the constituent unions that made up CLU-MTC that, in order not to alienate the public, certain employees or classes of employees should remain at work.  Police, fire and medical personnel would not call in sick.  Three tugboats would remain on duty in case there were any accidents in the canal that required their assistance.  Graham had tried Sunday to talk apprentices out of joining the work stoppage because they were probationary employees and subject to termination without cause.  The apprentices refused Graham’s advice and stuck with their journeymen.  He also pointed out that those employees of the Locks whose only duties were to operate the locomotives that pulled ships through, could go to work without harming the effectiveness of the sickout because, without Tugboat Masters, Pilots, or Control House Operators, there would be no ships to be pulled.  Another group of employees that Graham encouraged to remain on the job was the Teachers.  The American Federation of Teachers Local was a particularly militant group and there was no way they were going to sit this job action out.[92]  There were several attempts by the Canal Zone Government to reopen the schools but even when they could scrape together enough teachers to open one, they found that many parents held their children out of school in solidarity with the teachers.[93]

        The sickout continued to grow on Tuesday while Parfitt conferred with Veysey about the unions’ demand to negotiate directly with the Secretary.  Veysey refused to come to the Isthmus, so the Governor asked for authority to settle with the workers.  Veysey’s position was that the Governor had all the flexibility he needed to “talk about anything.”  What Parfitt was looking for was not authority to “talk about anything” but to make a deal that would settle the strike.  The actual authority to make decisions about pay and benefits rested, not with the Governor, but with the Canal Zone Personnel Policy Coordinating Board which was headed by the Secretary of the Army.  Veysey suggested that the Governor might find an outside intermediary helpful and offered to contact the Federal Mediation and Conciliation Service (FMCS) about getting one.  With the employees firm in their position that only a complete withdrawal of the February 17 proposal would end the work stoppage, and Veysey’s refusal to come to the Canal Zone, Parfitt began planning measures to “crackdown” on the employees.

        Later that day, the Regional Director of the NMU Local, Rene Lioeanjie, asked the Governor to read a message issued by the International Vice President of NMU, over the Armed Forces Radio and Television Service.  The statement declared that NMU was not involved in any illegal strike activity in the Canal Zone.  In addition to the claim that NMU was not involved in the sickout, the statement called for all NMU members to “exercise every safety precaution and pay rigorous attention to all safety regulations.”[94]  The Governor was not about to read the call for a “work to rule” campaign over the Government controlled airwaves but partially obliged Lioeannjie by allowing the first part of the message to be read on air.  The NMU message shared airtime with Parfitt’s message stating that the strike was illegal and urging all employees to return to work.  Tuesday ended with an effort by Simoneau to convince Drummond, who everyone knew to be an informal ringleader, to call for a return to work.  Drummond was not at all disposed to ending the sickout he had worked so diligently to bring about.

        By Wednesday March 17 the story was plastered across the front pages of American newspapers.  “’Sickout’ Almost Shuts Panama Canal” blared the banner headline of the Miami Herald that morning.  A backlog of ships carrying cargo in international commerce was starting to develop on both ends of the canal.  The Governor’s office claimed that 700 of the 3,500 US citizen employees had called in sick by midday Tuesday.  The unions claimed it was “closer to 1,500 or 2,000.”[95]  The Panama Canal had never been closed since the 1915 landslide and the Governor was bound to see that it didn’t happen on his watch either.  The Company claimed that twenty one ships transited on Monday and nineteen were scheduled for Tuesday.  On a normal day thirty five to forty ships transited the canal.  The chambers of the locks on the Panama Canal are 1,000 feet long by 110 feet wide.  With no tugboats available, transits were only possible for ships with a beam of seventy five feet or less, so the larger ocean-going vessels were the ones backed up for the news photographers to see.  By Tuesday afternoon the Governor scaled back Canal operations, which normally run 24 hours a day, to two shifts.

        Enough teachers reported to work Wednesday to open two of the seventeen US schools, but overall, the strike was growing.  The Governor decided to take action against the teachers and their union by preparing a motion for an injunction to order teachers back to work.  He also declared that anyone who did not report to work on Thursday morning would be considered on unauthorized leave and would have their pay docked.  These measures were announced during a news conference and broadcast repeatedly throughout the day over the Southern Command Network (SCN) TV and Radio.  The only workers whose absence would be excused would be those with written notes from either of the two Company hospitals in the Zone, Gorgas and Coco Solo.  Employees found little trouble getting these excuses, as all Canal Zone medical personnel were subject to the same cutbacks as the rest of the employees and, while not participating in the sickout, expressed their solidarity in a most helpful manner—with sick excuses on demand.[96]

        Veysey contacted Parfitt to tell him that he had lined up two mediators from FMCS who were ready to travel to the Canal Zone but wanted an invitation from both management and labor.  Simoneau called Graham and Oster and both of them told him, in no uncertain terms, that they were not interested in negotiating with anyone who did not have the authority to rescind the February 17 proposals.  Graham knew that negotiating with someone who did not have the power to grant the relief he sought would be negotiating with himself.  Since he was not prepared to offer something that he could not deliver—a return to work—and the mediators had no authority to order a rescission of the proposals, a meeting with them would be an exercise in futility.  With that in mind, he rounded up a few Machinists and headed for a vacation to the interior of the country.  In his absence, Jim O’Donnell (AFGE Local 14) tried to take over CLU-MTC, telling Simoneau that he could more effectively lead the labor organization and get some flexibility from the workers.  That did not prove to be the case and Simoneau quickly came to doubt that he spoke for CLU-MTC.[97]  Simoneau was to get more bad news by the end of the day when Lioeanjie informed him that NMU and the steamship companies that utilized the canal would issue a joint appeal to President Ford on Thursday.  Lioeanjie also informed him that shipping companies were considering re-routing cargo by ground transportation to avoid the back-up at the Panama Canal.

        On Thursday March 18 Parfitt called in all of the union leaders to try the carrot and stick approach.  He offered a proposed settlement to the sickout combined with threats of increasing consequences if no solution was achieved.  Present were O’Donnell for CLU-MTC, William Sinclaire, AFSCME Area Director, Saturnin Mauge for AFSCME Local 900, Oster for the Panama Canal Pilots Association, Captain Johnson, International Vice President for the Masters, Mates, and Pilots (tugboats), R. Lioeanjie for NMU, E. Gaskin for NMU, and Captain George Coleman for Masters, Mates and Pilots Local 27.  Only one ship could be scheduled for transit that day and the backlog had grown to over 100 ships.  The Atlantic Side community was merrily pouring salt into the Governor’s wounded pride.  The ostensibly sick employees were not exactly bed-ridden.  They held a picnic right outside the gates of Gatun Locks, complete with a softball game and fun for the kids.[98]  The picnic “really pissed [management] off” and Parfitt lit into the union leaders, emphasizing the illegality of the sickout and warning that people “might be hurt.”[99]  He threatened legal action against both the unions and the leaders.  He also laid down an offer.  He would advocate, on behalf of the workers, to rescind the wage base proposal provided that the employees returned to work forthwith.  He stressed that he could not commit the PCC/CZG to his offer because the authority was not his, but he stressed that he would advocate forcefully before the Canal Zone Civilian Personnel Policy Coordinating Board.  Union leaders said they would take the proposal back to the workers.  Upon leaving the meeting, Parfitt instructed the PCC/CZG General Counsel to immediately file, in the US District Court for the District of the Canal Zone, the motion for preliminary injunction against the American Federation of Teachers (AFT) Local 29.  The Teachers elected to sickout another day.  At the end of the day he learned that Jim O’Donnell was not able to deliver support from CLU-MTC and his offer had been rejected.

        Beginning early Friday morning on March 19 Parfitt ratcheted up the pressure.  US District Judge Guthrie F. Crowe had issued a temporary restraining order against AFT and Parfitt immediately moved to decertify the local union and summarily fire two of its officers.  He then ordered the General Counsel to seek restraining orders against the Panama Canal Pilots Association and Master, Mates & Pilots Local 27.  He planned to decertify those unions as soon as the temporary restraining orders were issued.  He ordered that the same action be taken against both IBEW Locals, the Machinists, and the Marine Engineers’ Beneficial Association immediately following the issuance of restraining orders against the Pilots and Tugboat Masters.  The intended effect was to give the unions the impression of growing pressure.  Judge Crowe issued temporary restraining orders against the Pilots and Tugboat Masters later that afternoon and scheduled a hearing for a preliminary injunction on Monday March 22.[100]  The Defense Department announced that thirty five ship Pilots were being dispatched to the Canal Zone to transit ships if the Panama Canal Pilots Association did not return to work promptly.  The replacement Pilots were members of the Coast Guard, Navy and Army Transportation Corp.  This threat rang hollow to Canal Pilots who knew that taking 900 foot long ships into the narrow Lock chambers was not a job for novices.[101]  More ominous was the purported plan to call to active duty those members of the Panama Canal Pilots Association who were in the Naval Reserve.[102]

        When Saturday morning broke union leaders were at the Rubicon.  The Teachers were under a restraining order to return to work.  Two officers had been dismissed and had narrowly beaten criminal contempt charges when they produced sick excuses provided by their good union brothers and sisters at the hospital.[103]  Captain Oster had been served with a temporary restraining order Friday evening, enjoining him and his union from further participation in the wildcat strike.  Tugboat Masters had been enjoined and the Electricians and Machinists were next.  Replacement Pilots were on the way. The Department of Defense was preparing to call Naval Reservists among the Pilots to active duty.

        Facing all of this, a variation of the proposal that Parfitt had placed on the table the past Thursday must have taken on a new luster.  Parfitt now placed on the bargaining table the following Memorandum of Understanding:

To initiate action immediately to formulate a labor-management committee to commence a study, with full participation of unions, of all ramifications of application of Executive Order 11491, as amended, or other mutually acceptable form of collective bargaining with employees of the Panama Canal Company and Canal Zone Government.


This is what Canal Zone unions had been seeking since President Kennedy issued Executive Order 10988 concerning union recognition back in 1962.  Governor Carter had refused to grant collective bargaining rights and organized labor in the Zone had been saddled with “consultation” ever since.  Executive Order 11491 was an improvement over Executive Order 10988 and provided for an agency to enforce the collective bargaining rights of federal employees—the Federal Labor Relations Authority (FLRA).  This new sweetener, combined with the same proposal Parfitt offered the previous Thursday, along with a promise to reinstate the fired Teachers, was enough to make the difference.  First the Tug Masters, then the Pilots, followed by the Teachers, the Electricians and the Machinists voted to return to work.  The sickout that started eight days before now ended.

        Anthrax was eradicated from the Canal Zone that Saturday afternoon, which is not to say that health was restored.  While the Canal Zone Wage Base “cutoff” was left unchanged in the wake of the strike, elimination of the tropical differential to locally hired US citizens went forth as originally proposed on February 17.  Unions gained long coveted collective bargaining rights but fast moving treaty developments rendered those rights a nullity.[104]  An important gain for employees was the respect--maybe even fear-- that they earned from the Canal administration.  Planned further changes in employee leave benefits were scrapped.[105]  Parfitt, with approval of the Board of Directors, ruled out any “witch hunt” to retaliate against militant employees.[106]  The Company/Government even declined to implement a planned closing of the Ancon Laundry for fear of arousing renewed employee unrest.[107]

        Participation in the sickout was limited to US-rate employees, with only moral support provided by the local-rates.  Ironically, Governor Chester Harding’s 1920 decision to reserve those positions necessary for the operation of the Canal to Gold roll employees—a decision made in order to protect against Silver roll strikes--ensured that US citizen employees could shut down the Canal unassisted by local-rates.  Governor William Carter’s 1962 refusal to grant exclusive recognition to any Canal Zone unions—the purpose of which was, in part, to fracture organized labor into small, controllable factions—left Governor Parfitt with no “corpus against which management could direct a conventional counter attack”.[108]  The “socialist” structure of the Canal Zone--with all workers across the entire economy employed by a single employer-- made PCC/CZG particularly vulnerable to a general strike, in spite of the analogous vulnerability of workers, over whom “the Canal Zone Government has the power to fire…from his job, which in addition loses him his commissary privileges, his home, and his right to enter any Canal Zone facility.”[109]

        So, what was it that caused employees of the United States Government to risk their jobs, their homes, and even their very freedom to take a stand?  It wasn’t school integration, or the tropical differential, or the Canal Zone Wage Base “cutoff.”  It was powerlessness and uncertainty.  As first demonstrated in 1914 when CLU-MTC went to Congress to keep their rent-free housing, Canal employees always could exercise considerable political clout in the halls of the legislature.  Powerful friends in the 1976 Congress stood in vigorous opposition to Executive Branch efforts to negotiate a treaty that would relinquish US control over the Canal Zone.  Many employees were convinced that the relentless assault on their standard of living that began to gain steam after the 1964 riots was orchestrated by the State Department to force US citizens out of the Canal Zone and out of the way of treaty negotiations.[110]  One need only look to the manifesto of the Ad Hoc Committee of Organized Labor and Civic Councils to see that, for Zonians, “The time to act [was] now!”[111]

        The American labor movement has often found itself in a position analogous to that of Panama Canal employees in the mid 1970s.  Government has often used laws and injunctions to compel workers to remain on their jobs despite a collective decision to withhold their labor.  Labor’s greatest victories (and defeats) have come when workers have defied these governmental commands.  Defiance comes with great risk, as American history is replete with examples of workers being beaten and imprisoned for having the audacity to exercise their fundamental right to withhold labor.  Panama Canal employees rose up in defiance of a federal statute forbidding collective refusals to work and in doing so, faced down fines, imprisonment and loss of their livelihood.  They join ranks with the courageous workers who defied criminal trespass statutes and occupied auto factories in the great “sit down” strikes of the 1930s.  Defiance of the law is not always a winning strategy, as demonstrated most recently by the air traffic controllers, who just five years after the sickout, were summarily fired for doing essentially what Canal workers had done.  There comes a time when workers have to make the hard choice between powerlessly accepting intolerable conditions and taking a stand that risks everything.  Panama Canal employees took that risk and earned a respect that landed them favorable terms in the eventual enactment of legislation implementing the Torrijos-Carter treaty.  Air traffic controllers took that risk and were decimated by the results.  Federal employees today are under the relentless assault of the Bush administration’s campaign to strip them of collective bargaining rights.  While struggling with the decision as to whether to take a stand or come to terms with their powerlessness, the story of the Anthrax strike may be inspirational.



Conniff, Michael.  Black Labor on a White Canal: Panama, 1904-1981.  Pittsburgh: Pittsburgh University Press, 1985.


Egolf, Kathy.  Personal e-mail communications, October 2005.


Forbath, William.  Law and the Shaping of the American Labor Movement.  Cambridge, Massachusetts: Cambidge University Press, 1989.


Franck, Harry.  Zone Policeman 88.  New York: The Century Co., 1913.


Gelbhaus, Roy.  Personal e-mail communications, October 2005-March 2006.


George Meany Memorial Archives, Record Group 18-010, “International Affairs Department, Country Files.”


Gompers, Samuel.  “Conditions of Life and Labor on the Panama Canal Zone.”  The American Federationist, 31 (1924): 209.


Greene, Julie.  “Spaniards on the Silver Roll: Labor Troubles and Liminality in the Panama Canal Zone, 1904-1914.”  International Labor and Working Class History Journal 66 (2004): 78.


Graham, Alfred.  Telephone interview, March 16, 2006.


Houston Post, March 13,-March 22, 1976.


Hummer, Chuck.  Personal e-mail communications, December 2005-March 2006.


Jorden, William J.  Panama Odyssey.  Austin: University of Texas Press, 1984.


Knapp, Herbert and Mary.  Red, White and Blue Paradise: The American Canal Zone in Panama.  San Diego: Harcourt, Brace, & Jovanavich, 1984.


Major, John.  Prize Possession: The United States and the Panama Canal, 1903-1979.  New York: Cambridge University Press, 1993.


Maloney, Gerardo. “El Canal de Panama y los Trabajadores Antillanos: Panama 1920: Cronologia de una Lucha,” Biblioteca Nacional de Panama, 1988.


McCullough, David.  The Path Between the Seas: The Creation of the Panama Canal, 1870-1914.  New York: Simon & Shuster, 1978.


Miami Herald, March 13-March 22, 1976.


Murphy, James.  Telephone interview, March 20, 2006.


National Archives, Record Group 185.8 “Records of the Canal Zone Government and Panama Canal Company, 1908-1984.”


New York Times, 1903-1977 (all entries under the heading “Canal Zone”, “Panama Canal”).


Panama Canal Spillway, January 1976-April 1976.


Pope, James Gray.  “The Thirteenth Amendment Versus the Commerce Clause: Labor and the Shaping of American Constitutional Law, 1921-1957.”  Columbia Law Review 102, no.1 (2002): 1.


Star & Herald, January 1975-April 1976.


Stabler, Sue.  Personal e-mail communications, March 2006.


Steele, Suzanne.  Personal e-mail communications, December 2004-March 2006.



[1] “Canal Shut for 6 Months”, New York Times, November 19, 1915.


[2] Herbert and Mary Knapp, Red, White and Blue Paradise: The American Canal Zone in Panama (San Diego, Harcourt, Brace and Jovanavich, 1984).


[3] Michael L. Conniff, Black Labor on a White Canal: Panama, 1904-1981, (Pittsburgh, University of Pittsburgh Press, 1985).


[4] John Major, Prize Possession: The United States and the Panama Canal, 1903-1979, (New York, Cambridge University Press, (1993).


[5] David McCullough, The Path Between the Seas: The Creation of the Panama Canal, 1870-1914, (New York, Simon & Shuster, 1978).


[6] William Sinclaire, AFSCME Area Director to Andrew C. McClellan, AFL-CIO Inter-American Representative, Box 7, RG18-010, George Meany Memorial Archives, Silver Spring, Maryland (Hereafter cited as GMMA).


[7] Parfitt served as Governor of the Canal Zone from March 24, 1975 to October 1,1979; Paul Simoneau, “Labor Relations Summary March 15-19, 1976”, RG185-78, National Archives, College Park, Maryland, (Hereafter cited as NA).

[8] Hay-Bunau-Varilla Treaty of 1903.


[9] Ibid.

[10] Governor Robert J. Fleming to Senator Sam Ervin, January 15, 1965, RG185-50, NA.


[11] Conniff, Black Labor on a White Canal, pp. 55.


[12] Knapp, Red, White and Blue Paradise.


[13] Fleming to Ervin, January 15, 1965, NA.

[14] Conniff, Major, and McCullough all describe the Gold and Silver system at length.


[15] Goethals was the last of the Chief Engineers of the Canal construction project and was appointed Governor of the Canal Zone upon completion of construction in August, 1914.  He served in that capacity until January 10, 1917.  Major, Prize Possession, pp. 382.

[16] Major, Prize Possession, pp. 86-87; Conniff, Black Labor on a White Canal, pp. 50.


[17] Conniff, Black Labor on a White Canal, pp. 50.


[18] Major, Prize Possession, pp. 88; Conniff, Black Labor on a White Canal, pp. 52.


[19] Harding replaced Goethals on January 11, 1917 and served as Governor until March 27, 1921, see Major, Prize Possession, pp. 382.


[20] Major, Prize Possession, pp. 89.


[21] Conniff, Black Labor on a White Canal, pp. 52-53.


[22] Ibid. pp. 54-58.


[23] Major, Prize Possession, pp. 92.


[24] “Weeks to Cut Down Panama Canal Costs”, New York Times, April 21, 1921.  See also, “Labor Unions Fight Canal Zone Report”, New York Times, October 7, 1921.


[25] Conniff, Black Labor on a White Canal, pp. 61-64.


[26] Morrow replaced Harding as Governor on October 16, 1924 and served until October 15, 1928.  Major, Prize Possession, pp. 382.


[27] Major, Prize Possession, pp. 94.


[28] “Declares Epidemic Prevails at Panama”, New York Times, July 6, 1922, and “Accuses Panama Officials”, New York Times, July 27, 1922.


[29] Burgess served as Governor of the Canal Zone from October 21, 1932 until June 26, 1936, see Major, Prize Possession, pp. 382; Ibid. pp. 203-204.


[30] The Hull letter promised “…Panama Canal…will maintain as its public policy the principle of equality of opportunity and treatment…, consistent with the efficient operation and maintenance of the Canal…as will assure to Panamanian citizens employed by the Canal…equality of treatment with employees who are citizens of the United States”. , quoted from “Report to the Executive Council of the American Federation of Labor by the Committee Appointed to Investigate Labor Conditions in the Canal Zone”, January, 1949. Box 7, RG98.001, GMMA; Conniff, Black Labor on a White Canal, pp. 88.


[31] Conniff, Black Labor on a White Canal, pp. 101.


[32] Ibid, 102-107.


[33] Major, Prize Possession, pp. 219-220.


[34] Conniff, Black Labor on a White Canal, pp. 109-110.


[35] “Report to the Executive Council of American Federation of Labor by the Committee Appointed to Investigate Labor Conditions in the Canal Zone”, January, 1949.  GMMA.


[36] Major, Prize Possession, pp. 224.


[37] Ibid, pp. 225.

[38] Conniff, Black Labor on a White Canal, pp. 112-119.


[39] Major, Prize Possession, pp. 228.


[40] 347 US 483 (1954).


[41] John Seybold served as Governor of the Canal Zone from May 27, 1956 to June 30, 1960, see  Major, Prize Possession, pp. 382; For a complete analysis of the Canal Zone Schools and segregation, see Conniff, Black Labor on a White Canal.


[42] Acting Governor of the Canal Zone, David S. Parker to Deputy Undersecretary of the Army John M. Steadman, April 14, 1965.  RG185-150, NA.


[43] William Carter served as Governor of the Canal Zone from July 1, 1960 to January 31, 1962.  Major, Prize Possession, pp. 382.


[44] Parker to Steadman, Aril 14, 1965, NA.

[45] Parker to Steadman, April 14, 1965, NA.  See also Connif, Black Labor on a White Canal, pp. 142.


[46] Robert J. Fleming served as Governor of the Canal Zone from February 1, 1962 to January 31, 1967.  Major, Prize Possession, pp. 382.


[47] Knapp, Red, White and Blue Paradise, pp. 54-57 and Conniff, Black Labor on a White Canal, pp. 145.


[48] Executive Order 10794 was enacted on December 12, 1958.


[49] Canal Zone Central Labor Union and Metal Trades Council v. Fleming 246 F. Supp. 998 (1965).


[50] Leber v. Canal Zone Central Labor Union 383 F. 2d 110 (5th Cir. 1967), cert. denied sub nom. Bramlett v. Leber, 389 U.S. 1046 (1968).


[51] Hendricks v. United States, 1976 WL 4729 (Ct. Cl.).


[52] Hendricks v. United States, Ct. Cl. No. 202-68.


[53] Hendricks v. United States, 1976 WL 4729 (Ct. Cl.).


[54] Walter Leber served as Governor of the Canal Zone from February 21, 1967 to February 3, 1971, see Major, Prize Possession, pp. 382; Conniff, Black Labor on a White Canal, pp. 148.


[55] Major, Prize Possession, pp. 340-341.


[56] Ibid, pp. 341-342.


[57] “Canal Zone Americans Debate Change”, New York Times, February 9, 1974.


[58] Alfred Graham, telephone interview by author, March 16, 2006.


[59] Knapp, Red, White and Blue Paradise, pp. 86.


[60] Graham, interview, March 16, 2006.


[61] Harold R. Parfitt, “Labor Problems in the Canal Zone”, Minutes of Meeting of Panama Canal Company Board of Directors, March 4, 1976, RG185-98, NA.


[62] Graham, interview, March 16, 2006.


[63] Parfitt, “Labor Problems,” March 4, 1976, NA.


[64] Knapp, Red, White and Blue Paradise, pp. 86.


[65] “Questions Answered on New Leave System”, Panama Canal Spillway, March 14, 1975.


[66] Panama Canal Company/Canal Zone Government Personnel Director, Gordon M. Frick to AFSCME Local 900 President, Saturnin Mauge, March 7, 1975, Box 7, RG18-010, GMMA.


[67] “US Residents of Canal Zone are Jittery,” New York Times, October 10, 1975.


[68] Parfitt, “Labor Problems” March 4, 1976, NA.


[69] Telegram from AFL-CIO Public Employees Dept. to American Federation of Government Employees President, James O’Donnell, July 18, 1975, Box 7, RG18-010, GMMA.


[70] Civic Councils were created by Governor Ridley in 1937 to allow residents to elect representatives to deal with the Canal Zone Government on their behalf “to further promote democratic processes in the absence of official local self government,” see Knapp, Red, White and Blue Paradise, pp. 84; Parfitt, “Labor Problems,” March 4, 1976, NA.


[71] Parfitt, “Labor Problems,” March 4, 1976, NA.


[72] Sinclaire to McClellan, November 12, 1975, GMMA.


[73] “US Groups to Fight Zone Integration”, Star & Herald, December 18, 1975.


[74] Ibid.


[75] Graham, interview, March 16, 2006.


[76] “US Group to Fight Zone Integration”, Star & Herald.


[77] Parfitt, “Labor Problems,” March 4, 1976, NA.


[78] Knapp, Red, White and Blue Paradise, pp. 260-261; Graham insists that Drummond concocted that quote out of whole cloth, Graham, interview, March 16, 1976.


[79] Sinclaire to McClellan, February 17, 1976. GMMA.


[80] Knapp, Red, White and Blue Paradise, pp. 261.


[81] 5 USC § 7311(3).


[82] 5 USC § 1918.


[83] “Canal Workers Call Off Rally”, Houston Post, March 7, 1976; Graham, interview, March 16, 2006.


[84] “Canal Workers Call Off Rally”.


[85] Ibid.

[86] Knapp, Red, White and Blue Paradise, pp. 261; Graham, interview, March 16, 1976.


[87] Graham, interview, March 16, 1976.


[88] James Murphy, telephone interview by author, March 21, 2006.


[89] Parfitt, “Labor Problems,” March 4, 1976, NA.


[90] Simoneau, “Labor Relations Summary,” March 19, 1976, NA; Unless noted otherwise, all of the details of the day to day events are drawn from Simoneau.

[91] Graham, interview, March 16, 2006.

[92] Ibid.


[93] Harold R. Parfitt, “Legal Aspects of the Strike by Panama Canal Company/Canal Zone Government Employees”, Minutes of the Meeting of the Panama Canal Board of Directors, April 19, 1976, RG185-98, NA.


[94] Simoneau, “Labor Relations Summary,” March 19, 1976, NA.


[95] “Sickout Almost Shuts Panama Canal”, Miami Herald, March 17, 1976.


[96] Sue Stabler, e-mail to author, March 15, 2006; and Suzanne Steele, e-mail to author, March 20, 2006.


[97] Simoneau. “Labor Relations Summary,” March 19, 1976, NA; and Graham, interview, March 16, 2006.

[98] Murphy, interview, March 20, 2006.


[99] Graham, interview, March 16, 2006.

[100] “Injunction Cites Unions in Panama Canal Strike,” Houston Post, March 20, 1976.


[101] Knapp, Red, White and Blue Paradise, pp. 262.


[102] Parfitt, “Legal Aspects of the Strike,” April 19, 1976, NA.


[103] Ibid.

[104] Collective bargaining rights were later included in legislation implementing the Torrijos-Carter treaty in 1979.


[105] Panama Canal Company Press Release, April 26, 1976, RG-185-98 NA.


[106] Parfitt, “Legal Aspects of the Strike,” April 19, 1976, NA.


[107] Press Release, April 26, 1976, RG-185-98, NA.


[108] Parfitt, “Legal Aspects of the Strike,” April 19, 1976, NA.


[109] Major, Prize Possession, pp. 216.


[110] “Panama Canal Co. Goes to Court to Get Schools, Waterway Open”, Miami Herald, March 19, 1976.


[111] See footnote 73.