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of Panama to the United States in the preceding Articles are understood to be free of all anterior debts, liens, trusts, or liabilities, or concessions or privileges to other Governments, corporations, syndicates, or individuals, and consequently, if there should arise any claims on account of the present concessions and privileges or otherwise, the claimants shall resort to the Government of the Republic of Panama, and not to the United States, for any indemnity or compromise which may be required.

ARTICLE XXII.--The Republic of Panama renounces and grants to the United States the participation to which it might be entitled in the future earnings of the canal under Article XV. of the concessionary contract with Lucien N. B. Wyse now owned by the New Panama Canal Company, and any and all other rights or claims of a pecuniary nature arising under or relating to said concession, or arising under or relating to the concessions to the Panama Railroad Company, or any extension or modification thereof; and it likewise renounces, confirms, and grants to the United States, now and hereafter, all the rights and property reserved in the said concessions which otherwise would belong to Panama at or before the expiration of the terms of ninety-nine years of the concessions granted to or held by the abovementioned party and companies, and all right, title, and interest which it now has or may hereafter have, in and to the lands, canal, works, property, and rights held by the said companies under said concessions or otherwise, and acquired or to be acquired by the United States from or through the New Panama Canal Company, including any property and rights which might or may in the future, either by lapse of time, forfeiture, or otherwise, revert to the Republic of Panama under any contracts or concessions, with said Wyse, the Universal Panama Canal Company, the Panama Railroad Company, and the New Panama Canal Company.

The aforesaid rights and property shall be and are free and released from any present or reversionary interest in or claims of Panama, and the title of the United States thereto upon consummation of the contemplated purchase by the United States from the New Panama Canal Company shall be absolute, so far as concerns the Republic of Panama, excepting always the rights of the Republic specifically secured under this Treaty.

ARTICLE XXIII.-If it should become necessary at any time to employ armed forces for the safety or protection of the canal, or of the ships that make use of the same, or the railways and auxiliary works, the United States shall have the right, at all times and in its

discretion, to use its police and its land and naval forces or to establish fortifications for these purposes.

ARTICLE XXIV.-No change either in the Government or in the laws and treaties of the Republic of Panama sha'l, without the consent of the United States, affect any right of the United States under the present convention, or under any Treaty stipulation between the two countries that now exists or may hereafter exist touching the subject-matter of this convention.

If the Republic of Panama shall hereafter enter as a constituent into any other Government, or into any union or confederation of states, so as to merge her sovereignty or independence in such Government, union, or confederation, the rights of the United States under this convention shall not be in any respect lessened or impaired.

ARTICLE XXV.- For the better performance of the engagements of this convention, and to the end of the efficient protection of the canal and the preservation of its neutrality, the Government of the Republic of Panama will sell or lease to the United States lands adequate and necessary for naval or coaling stations on the Pacific coast and on the western Caribbean coast of the Republic at certain points to be agreed upon with the President of the United States.

ARTICLE XXVI.-This convention when signed by the Plenipotentiaries of the contracting parties shall be ratified by the respective Governments, and the ratifications shall be exchanged at Washington at the earliest date possible.

In faith whereof the respective Plenipotentiaries have signed the present convention in duplicate and have hereunto affixed their respective seals.

Done at the City of Washington the 18th day of November in the year of our Lord nineteen hundred and three.

JOHN HAY.

P. BUNAU-VARILLA.

FINANCIAL SITUATION.

The Council have been unable to obtain any information from Colombian sources regarding the finances of the country.

In the course of an interesting Report to the Foreign

Office (published in January last) on the trade of Colombia in 1903, Mr. Vice-Consul Dickson gives a review of the financial situation, from which the following passages may be extracted ::

"At the end of the year 1901 exchange stood between 4,000 and 5,000 per cent. During the first half of the year 1902 it remained stationary at about that figure, fluctuating a few hundred points up and down. About the month of July a sharp rise began, till exchange reached 10,000 per cent. Then came panic on the one hand and feverish speculation on the other. Exchange continued to rise above 10,000 per cent. . . .

"The great business was to borrow paper money, even at exorbitant rates of interest, and buy gold with the proceeds, in the hope that the paper debt would be paid by a small fraction of the gold purchased. Exchange rose rapidly, till it reached 22,500 per cent. Even then there were speculators, confident of a further rise, who bought gold at a month's credit at the rate of 25,000 per cent., hoping exchange would reach 30,000 or even 40,000 per cent. before settlement day. This exaggerated rise was, however, the outcome of a general panic. Bad news had been coming from the Isthmus, which rendered the situation of the Government extremely critical. With the news of the treaty of peace in Panama exchange fell as quickly as it had risen, settling, at length, at between 9,000 and 10,000 per cent. The result was ruin for many speculators. Upon this came, in the beginning of 1903, the news of the signing of the Hay-Herran Treaty for the construction of the Panama Canal by the United States Government. At that time little thought was given to its acceptability or nonacceptability on political and national grounds. There was no discussion on the subject of loss of sovereignty. The public could only concentrate its attention on the fact that a Treaty had been signed, the effect of which was to bring a sum of £2,000,000 into the country, and the same speculators who, when exchange was rising to 20,000 per cent., expected a rise up to 30,000 and 40,000 per cent., were now counting on a corresponding fall. Such low rates as 2,000 and 3,000 per cent. were confidently expected. They were as disappointed in this case as in the previous one. Exchange for a few days fell and even touched 6,000 per cent., but it very soon rose again to between 9,000 and 10,000 per cent., where, with the exception of slight fluctuations, it has remained ever since.

"The question of Colombian finances is one that, doubtless, closely affects many British interests, and I will, therefore, give the following short summary of the events which have gradually led to the present crisis.

"The history of the economic difficulties is the history of the National Bank of Colombia. That institution was started in the year 1880 (Law 39), and, as the shares that were offered to the public were never taken up, it had a purely official character from the beginning. From 1881 to 1885 its bills were exchanged for silver at sight and at par, and were, therefore, regarded as being equivalent to silver coin. During the civil war of 1884-85 there was a run on the bank, in consequence of which the Government provided for the suspension of cash payments. (Decree No. 1104 of 1885.) This decree has never been abrogated, suspended, or modified. By Law 87 of 20th December, 1886, the bills of the National Bank were declared inconvertible and of forced currency. They were also pronounced the only legal tender in Colombia, agreements in any other kind of money being prohibited. In 1887 (Law 124) the issue was limited to 12,000,000 pesos; this limit was, however, exceeded, and, in November, 1894, the Government decreed the liquidation of the National Bank (Law 70). From this date the National Bank ceased to exist as a Corporation and became a Government institution. On 16th October, 1899, the Government published a decree providing for the issue of such sums of paper money as the repression of the revolution should render necessary. At this date the issue of paper money in the country amounted to 46,000,000 pesos.

"From 16th October, 1899, to 28th February, 1903, the Government issued paper money almost as fast as the presses could work, but even this was not sufficient to supply the needs of the Government, and the Departments of Santander, Bolivar, Antioquia, and the Cauca were empowered to issue their own money.

"The Colombian Government has issued an official statement as to the quantity of paper money in circulation, which is as follows:

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"At the present rate of exchange, 10,000 per cent., the total amount of money now in the country is equivalent to £1,401,017. 14s. 8d. . . "The balances till due on the Internal Debt amounts to £1,379.25.2d. Compensation money still due to Colombian citizens for claims arising out of the wars of 1860, 1876, and 1885, and recognised by the Colombian Government, amounts to £21,877. 6s. 9d." .

BUDGET ESTIMATES FOR 1903-4.

Mr. Dickson also gives the following summary of the Estimates of Revenue and Expenditure for the financial year 1903-4 :

Expenditure
Revenue

Deficit

$451,557,929.55
426,031,000

$25,526,929.55

Reduced to sterling at the exchange of 10,000 per cent. the estimated Revenue would amount to £852,062 and the estimated Expenditure to £903,115, the deficit being, therefore, £51,053.

MONETARY LAW.

A Law" for the Regulation of the Monetary System and the Redemption of the Paper Money" was promulgated on the 25th October, 1903. The following are the chief provisions of this important measure :—

The monetary unit of Colombia to be a gold dollar of the same weight and standard as that of the United States. Foreign gold coins and silver coins of o835 and 0.900 fine to circulate in the country at their commercial value.

From the date of the passing of the Law, all issues of paper money to be absolutely prohibited.

The existing paper money to retain its character of forced currency, and its liberatory power in the places where it is in circulation, subject to the following provisions :-(1) The right of the parties in

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