File No. 819.77/150. The American Minister to the Secretary of State.1 No. 309.] AMERICAN LEGATION, Panama, January 30, 1913. SIR: Referring to my despatch No. 302 of the 27th instant, relative to Mr. Basil Burns Duncan's railway contract, I have the honor to inform you that Mr. Duncan called upon me on the following day and handed me a letter of which the following is a copy: LAS CASCADAS, C. Z., To the Technical Board appointed to examine the Chagres Railroad Contract, Panama. GENTLEMEN: In the knowledge that you are about to examine, in behalf of the American Government, contract No. 70, drawn up between the Panama Government and myself for the construction of the Chagres Railroad with the exclusive object of developing that part of the country, I desire to inform you that I am willing to alter or suppress any clause in the said contract which may be found to conflict with the interests of the United States. I trust, therefore, that you will kindly take note of this declaration before coming to any resolution which may be contrary to the carrying out of the above mentioned contract. Yours very respectfully, B. BURNS DUNCAN. In reply to his earnest request I then informed Mr. Duncan of the general tenor of the technical Commission's report at which he expressed some disappointment, repeating his willingness to alter his contract in any way desired. He further requested that the Department's decision might be expedited so far as possible as, if he was unable to submit his contract to the present Assembly, he would be obliged to wait for two years until the next session of the Assembly. I assured Mr. Duncan that the Department would not delay its decision any longer than was absolutely necessary. Señor Lefevre, Minister for Foreign Affairs, has now informed me that there must have been some mistake in President Porras' statement to me on January 8th to the effect that this contract had not then been sent to the Assembly, since it had actually been sent a few days before. Señor Lefevre added that in compliance with my request further proceedings upon it by the Assembly had been postponed pending the receipt from me of information as to the Department's desires. I have [etc.] File No. 819.77/153. H. PERCIVAL DODGE. The Secretary of State to the American Minister. [Telegram.] DEPARTMENT OF STATE, Washington, February 13, 1913. The following cable has been received by the Secretary of War from Colonel Goethals: Referring to correspondence, Duncan's concession for railroad from point near Chagres River: Report forwarded by American Minister. Under proposed A copy of this despatch and inclosure was sent to the Secretary of War February 12, for his information. contract a port can be created near mouth of Chagres River, and if sufficient to permit entrance of large vessels, change in plan of defense of Canal will be necessary. This feature and the branch roads that are stipulated are objectionable from military standpoint. The contract also interferes with rights of the Panama Railroad. GOETHALS. From this you will perceive that the Duncan contract as it stands is considered objectionable from strategic and other standpoints, and you will therefore direct an appropriate communication to the Minister for Foreign Affairs, referring to the Legation's action on Department's instruction to your Legation of September 20, 1911,1 and say that under the circumstances this Government considers that the contract should not be permitted to become effective by the Panaman Government. You will at the same time say that this Government, possessing every desire to assist the Government of Panama in the promotion of the growth, development, and welfare of that Republic, would be glad to approve this contract if it were possible to have it so amended as to meet the views its duty imposes upon this Government and the objections which have been made thereto by your commission and by Colonel George W. Goethals, or to approve any other railroad contract which will not be detrimental to the construction, maintenance, and operation of the canal, matters in which the two Governments should take an equal interest, and which promises to bring about the proper development of the resources of Panama. KNOX. File No. 819.77/157. The American Minister to the Secretary of State. [Telegram.] AMERICAN LEGATION, Panama, February 24, 1913. Department's February 13. Minister for Foreign Affairs informs me that in view of the objections of the Government of the United States the Duncan railway contract will be withdrawn from the Assembly. DODGE. File No. 819.77/157. The Secretary of State to the American Minister. [Telegram.] DEPARTMENT OF STATE, Washington, February 25, 1913. Your February 24. When the contract is withdrawn you will express to the Minister for Foreign Affairs the appreciation by the Government of the United States of the action of the Government of Panama. ΚΝΟΧ. 1 For. Rel. 1912, pp. 1171–1187. File No. 819.77/158. The Secretary of War to the Secretary of State. WAR DEPARTMENT, Washington, February 26, 1913. I have received your letters of the 11th and 12th instant,1 requesting the opinion of this Department upon the proposed Duncan concession for a railroad in the Republic of Panama. I enclose memorandum from the Chief of Staff upon the subject, which is self-explanatory. This contract would not only seriously interfere with the military problems involved in the defense of the Canal Zone, but it is believed would interfere with the rights which the Panama Railroad enjoys under its concession. It is therefore requested that steps be taken by the State Department to prevent its consummation." HENRY L. STIMSON. [Inclosure.] The Chief of Staff to the Secretary of War. WAR DEPARTMENT, OFFICE OF THE CHIEF OF STAFF, Washington, February 19, 1913. THE DUNCAN CONCESSION FOR A RAILROAD IN THE REPUBLIC OF PANAMA. On December 30, 1912, a contract was signed by Mr. Basil Barnes [Burns] Duncan, an American citizen residing on the Isthmus of Panama, with the Panaman Minister of Public Works for the construction of a railroad, 50 kilometers long, starting from the west side of the Chagres River, near its mouth, and running in a generally southwest direction parallel to the Canal across the continental divide and as far as the lower lock at Miraflores. In addition, such branch lines were to be allowed as might meet the approval of the Government of Panama. This measure was signed on the same date by President Porras and sent to the Assembly with a recommendation for favorable consideration. Action in the Assembly has been suspended at the request of the American Minister pending receipt of the State Department's views in regard to the matter. A Board was appointed by the Secretaries of State and War to consider the contract, consisting of the following members: Hon. Percival Dodge, American Minister, Chairman; Lieutenant-Colonel D. D. Gaillard, Corps of Engineers, U. S. A.; and Lieutenant Frederick Mears, U. S. A., Chief Engineer of the Panama Railroad. The Secretary of State refers all papers in the case for the comment of the War Department. In addition to the report of the Board, there is a letter and cablegram, under date of February 8th, from the Chairman and Chief Engineer of the Isthmian Canal Commission. The Board found that it was impracticable to discuss properly the technical merits of the proposed contract for the reason that neither the exact location of the main line nor that of any of its branches is shown either in the text of the contract or in the maps accompanying same. Such indefinite description as is given is further modified by the statement that the general direction may be changed by the topographic conditions. There are no definite stipulations as to the number of tracks, or limiting grade or degree of curvature. The method of construction is not mentioned, nor is any definite terminal point given at the southwest extremity of the line. The contract contains no stipulations as to the quantity or character of the rolling stock, the station buildings, or the water tanks, etc., nor does it provide for the submission to the Panaman Government of any maps, profiles or plans until eighteen months after the ap 1 See footnotes to Mr. Dodge's despatches 302 and 309 of January 27 and January 30. proval of the contract by the National Assembly. It is the opinion of the Board that there would be little or no business for such a railroad at present, and it is therefore presumed that the sole purpose of the project is the exploitation and development of the Government lands as the various sections of the railroad are completed. The Board furthermore believes that the sums to be deposited by the contractor are inadequate to properly protect the Panaman Government in a contract of this nature. It further asserts that there are no assurances that the contractor possesses the financial backing requisite for the proper prosecution of the work. It bases this opinion to a large extent upon the fact that he took a contract in December, 1910, for excavation of certain material in the Canal prison which he was unable to complete for lack of financial resources. As the total amount involved was less than $25,000, and as monthly payments were made for a period stretching over 16 months, the amount of capital required was not large. The contract provides for the improvement of the mouth of the Chagres River but contains no description of the character of the work proposed. Colonel Goethals in regard to this feature states that a "deepwater port at the mouth of the Chagres, or anywhere on the line of such a railroad, would threaten the safety of the Canal and would require a modification of the plan of defense and an increased armament." He further believes that the main railroad line would interfere with the rights which the Panama Railroad enjoys under its concession, and that the branch lines stipulated are objectionable from a military standpoint. Under date of January 27th, Mr. Duncan submitted a letter to the Board in which he offers to alter or suppress any clause in the contract which might be found to conflict with the interests of the United States. The Board recommends that the contract be not approved. In this opinion Colonel Goethals evidently agrees. In view of the above facts, it is recommended that the Secretary of State be advised that this contract would seriously interfere with the military problems involved in the defense of the Canal Zone, and that he be requested that steps be taken by the State Department to prevent its consummation. File No. 819.77/158. No. 108.] LEONARD] W[OOD]. The Secretary of State to the American Minister. DEPARTMENT OF STATE, SIR Referring to previous correspondence on the subject, I enclose for your information a copy of a letter from the Secretary of War, dated February 26 last, with which he forwards a memorandum from the Chief of Staff on the subject of the proposed Duncan Concession for a railroad in Panama. I am [etc.] File No. 819.77/158. W. J. BRYAN. The Secretary of State to the Secretary of War. DEPARTMENT OF STATE, SIR: I have the honor to acknowledge the receipt of your Department's letter of February 26 last enclosing a memorandum from the Chief of Staff in regard to the proposed Duncan Concession for a railroad in the Republic of Panama. Copies of your letter and its enclosure have been forwarded to the American Minister at Panama. I am [etc.] W. J. BRYAN. File No. 819.77/160. No. 360.] The American Minister to the Secretary of State. AMERICAN LEGATION, Panama, March 17, 1913. SIRS I have the honor to acknowledge the receipt of your telegram of February 25th, directing me to express the appreciation of the Government of the United States to the Minister for Foreign Affairs when Mr. Basil Burns Duncan's railway contract was withdrawn from the further consideration of the National Assembly, and to inform you that having on the following day been assured of this by Señor Lefevre, Minister for Foreign Affairs, I expressed this appreciation to him, handing him a memorandum to this eflect. Today I have received from Señor Lefevre a note informing me formally of the withdrawal of this contract "in view of the contents of my communication of February 14th last." I enclose a copy1 of my communication mentioned which is a paraphrase of the Department's telegram of February 13. Mr. Duncan has lately called upon me several times and I understand that he will not make any attempt to modify his contract in accordance with the Department's views for the present at least owing to the approaching end of the session of the Assembly. This session has now again been prolonged until the 22nd instant. I have [etc.] H. PERCIVAL DODGE. [Inclosure-Translation.] The Minister for Foreign Affairs to the American Minister. FOREIGN OFFICE, Panama, March 17, 1913. MR. MINISTER: I have the honor to inform your excellency that my Government, taking into consideration the contents of your esteemed communication of the 14th of the last month, has decided to withdraw from the National Assembly the proposed Contract No. 70, made with Mr. Basil Burns Duncan for the construction of a railway on the Atlantic Coast. I avail [etc.]. E. T. LEFEVRE. PROPOSED RAILROAD LEGISLATION IN PANAMA-ATTITUDE OF THE UNITED STATES. File No. 819.77/142. No. 291.] The American Minister to the Secretary of State. AMERICAN LEGATION, Panama, January 14, 1913. SIR: Referring to previous correspondence on the subject of the proposed railway from Panama City to David, I have the honor to enclose herewith a copy, as well as a translation which I have made, of a draft for a new law1 for the construction of this railway, which |