interest of speed. These negotiations would relate to certain questions in which an exact knowledge of the facts is important. The Secretary did not have these facts at first hand. He would have to communicate with the Canal authorities. The Panaman representatives would advance certain points; the Secretary would have to ask the Canal Zone authorities about them and then communicate with the Panaman authorities, and this triangular procedure would use up a great deal of time. The Secretary did not think that there was any reason for this. At the end the Treaty or agreement would have to be considered by the Department of State and considered in the light of the Panaman Government's considerations. The Secretary thought it would be quite possible to have the negotiations conducted without injury to the interests of Panama but in a manner which would facilitate. The Minister illustrated by saying that it was the practice, if they wanted some more land merely to send a notice or they would take it in an arbitrary and abrupt manner; that the Panaman Government was not treated courteously by the Canal Zone authorities. The Secretary said that he recalled that this matter had recently been brought before the Department and the Secretary had suggested that the Panaman Government should indicate the procedure it desired, and so far as he remembered the Panaman Government had not answered this inquiry. The Secretary asked just what it was that was in the mind of the Minister which, in view of the statements the Secretary had made as to the fundamental rights of this Government under the Treaty, the Minister regarded as the subjects for negotiation, apart from the question of land valuation. The Minister said that he had in mind the question of commerce and the prestige and position of the Panaman Government. The Secretary said that if this meant the question whether supplies could be furnished to ships going through the Canal, this had already been fully answered. It could not conduct the Canal without providing for supplies to ships. The Minister answered in a general way, referring to commerce without specification. The Secretary said it was quite impossible for him to form a judgment upon such a general statement; that it must be translated into something concrete that the Panaman Government desired, and then the Secretary could see whether it was possible or not. The Minister reiterated the desire of the Panaman Government to have direct dealings at Washington, and the Secretary again said that there was not the slightest objection to the Panaman Government presenting to the Department what they desired or the general principles which should govern the negotiations; that, of course, the Department would be willing to express its views upon these principles and then the negotiations could proceed in the light of the principles thus established. The Secretary said that he desired to retain the advantage of the direct knowledge of the facts on the part of the Canal Zone authorities and of the expedition which would follow negotiations on the spot, but he had no wish to prevent the Panaman Government from fully expressing their wishes to the Department and he could assure the Minister that whatever might be presented would be carefully considered and frankly answered. LOAN OF $4,500,000 TO PANAMA BY AMERICAN BANKERS 819.51/357: Telegram The Minister in Panama (South) to the Secretary of State PANAMA, December 15, 1922-4 p.m. 66. The following project to provide legislation anticipated by article 138 of Panama Constitution was introduced in the National Assembly on 11th instant and passed first reading on the following day with one dissenting vote. "Article 1. According as each mortgage, in which the six million treated of by article 138 of the Constitution are now invested, fall due and are canceled, the Secretary of Finance and Treasury shall order that they be placed in the National Bank. The sums which it receives in fulfillment of this law shall be invested in national securities in the form wherein said institution transacts such business. Article 2. The sum which is at present deposited to the order of the Panaman Government in the Metropolitan Trust Company of the United States, is ordered to be used for the amortization treated of by law 41 of 1915. The remainder of the loan shall be paid from the national funds." Department's attention is directed to vagueness of concluding sentence of first article by virtue of which practically no limitation is imposed upon manner in which sums may be invested. Save for changes in wording and omission of phrase providing that funds "should augment capital of national bank" project is similar to a bill recently approved by Assembly but vetoed by the President on the ground of unconstitutionality implied in the phrase quoted. It is their opinion present measure has administration's approval and Ruan believes that it will pass. SOUTH 819.51/357: Telegram The Secretary of State to the Minister in Panama (South) WASHINGTON, December 28, 1922-6 p.m. 58. Your December 15, 4 p. m. If the proposed law should be passed you will make formal and energetic representations to the President 30 to dissuade him from signing it. You will point out that the Government of Panama assured the government of the United States on December 31, 1903,31 before the ratification of the Canal Treaty, that it intended to invest the bulk of the $10,000,000 paid by the United States in a permanent manner, so that the fund would always remain intact in order to give stability to the finances of the Government. You will also remind the government that this matter was again discussed at the time of the payment of the $10,000,000 to Panama and that the United States insisted that the fund should be safely invested to secure the stability of the Government's finances and that Panama accepted the point of view of this Government.32 To transfer this fund to Panama, and to confide its investment to the National Bank does not appear to this Government a sound procedure, or a procedure consistent with Panama's undertakings above referred to, especially as no adequate safeguards appear to be provided to govern the investment of these funds. In view, therefore, of the understanding between the two Governments in accordance with which the Canal Treaty was ratified and the money paid over, the Government of the United States hopes that the President of Panama will not sanction the law in question. HUGHES 819.51/366: Telegram The Minister in Panama (South) to the Secretary of State PANAMA, February 17, 1923—11 a.m. 14. My despatch no. 192, January 15th." President yesterday approved bill authorizing loan up to $4,500,000 for road building purposes. Section providing for withdrawal from the United States of six-million-dollar fund eliminated. 20 Belisario Porras. Foreign Relations, 1903, p. 281. "See ibid., 1904, pp. 651-655. 83 'Not printed. SOUTH 819.51/369: Telegram The Minister in Panama (South) to the Secretary of State [Paraphrase] PANAMA, March 9, 1923-noon. 23. Pending the negotiations for loan of $4,500,000 Government has approached bankers here in regard to a loan of $100,000 for purpose of continuing program of road construction. Bankers are willing to loan $100,000 if Department has no objection. Reply awaited. SOUTH 819.51/369: Telegram The Secretary of State to the Minister in Panama (South) [Paraphrase] WASHINGTON, March 15, 1923-7 p.m. 18. Legation's March 9, noon. Cable immediately names of banking interests. Does Government regard loan of $100,000 as an advance on the $4,500,000 loan, to be repaid out of the proceeds thereof? As yet Department has not been consulted in regard to loan of $4,500,000... HUGHES 819.51/370: Telegram The Minister in Panama (South) to the Secretary of State [Paraphrase] PANAMA, March 16, 1923—4 p.m. 27. Department's cable number 18, March 15. I regard this matter as extremely urgent. Only $10,000 now remains for continuance of road construction and all operations will have to cease by April 1 unless more funds are forthcoming. Great losses would follow if operations are abandoned, since the oncoming wet season would destroy much uncompleted work. Likewise it would be necessary to remove men and equipment now on the roads. West and Baldwin 35 "R. K. West, chief engineer of the Junta Central de Caminos. 85 Floyd H. Baldwin, subfiscal agent in Panama. made the suggestion that Panaman Government secure $100,000 in equal amounts from International Banking Corporation, Banco Nacional and American Foreign Banking Corporation. There is no connection between the loan of $100,000 and the loan of $4.500.000, but the Government proposes to pay former out of proceeds of latter. Managers of above-mentioned banking interests were invited to a conference by Baldwin who acted for the Minister of Finance. The American interests would not respond until Legation's opinion had been ascertained. The Minister of Finance is greatly wrought up because of refusal of American managers and he has threatened to secure the whole amount at the Banco Nacional and withdraw deposit of $300,000 now deposited with American houses. Minister of Finance also told Baldwin that certain American banking interests had offered to loan Government large sum of money under authorization of the $4,500,000 loan, and without asking the opinion of the Department. . . . I have heard rumors that the National City Bank, subject to the approval of the Department, is interested in the matter. The loan of $100,000 is strongly favored by Baldwin, and it is my recommendation that no objection to it be interposed by the Department. Baldwin's confidential opinion in the matter of the loan of $4,500,000 is as follows: He regards a loan not exceeding $3,000,000 as beneficial, since it would make possible building of road between Panama City and Nata, thereby connecting capital with roads previously constructed costing $3,000,000, and would indicate advisability of extending road construction program. . . . SOUTH 819.51/383 Memorandum by the Chief of the Division of Latin American Affairs, Department of State (White) for the Secretary of State WASHINGTON, April 25, 1923. The Panaman Minister called today to state that Dr. Eusebio A. Morales, the Minister of Finance of Panama, will arrive in Washington tonight and that he would like to bring him in at the regular diplomatic hour tomorrow for a moment to present him to you. Dr. Morales is given the rank of Envoy Extraordinary and Minister Plenipotentiary for the purpose of negotiating a loan of not more than four million, five hundred thousand dollars for road construction in Panama. He is accompanied by Señor O. A. Vallarino and Señor Juan Morales R. as first and second secretaries respectively, and also by Mr. R. K. West, American Engineer in charge of road construction in Panama, as technical adviser. Señor Alfaro |