Mr. Lee to Mr. Hay.
Panama, July 18, 1904.
Sir: I have the honor to embody in this dispatch the principal points in a memorial addressed to the President of Panama by the local chamber of commerce. This memorial was presented to the President on July 15:
- First. That the canal zone has been granted to the United States in perpetuity, for the use, occupation, control, maintenance, operation, sanitation, and protection of the canal exclusively for such purpose, but not in order to establish ports, custom houses, and tariffs.
- Second. That although according to article 3 of the canal treaty it seems that the United States may exercise sovereignty over the said zone, it is clearly understood that it shall do so only as far as may be necessary for the construction, maintenance, etc., of the canal within said zone. This is what has been leased to the United States by the Republic of Panama and confirmed in article 13 of the canal treaty whereby the United States may import into the zone, free from any charges, all that it may need for the construction and maintenance of the canal.
By the above-mentioned article 13 the United States is exempt from import duties of any nature. If this stipulation had not been made, the Republic of Panama could levy duties, but neither in articles 2 nor 13 is the United States empowered to establish ports, customs-houses, or tariffs; on the contrary by article 9 the Republic of Panama is the one empowered to establish ports, custom-houses, and tariffs.
As the Republic of Panama has stipulated that it is authorized to establish custom-houses in Panama and Colon (article 9) this fact alone makes it still more necessary that the United States should have provided for itself such authorization.
In summarizing all the articles of the treaty pertinent to importation, etc., it is clearly shown that neither the spirit nor the wording authorizes either of the contracting parties to establish custom-houses, tariffs, or ports within the zone of the canal.
Had there been any intention that the United States would establish them within the zone it should have been so stipulated, the same as the Government of Panama stipulated in regard to the cities of Panama and Colon.
If custom-houses be established in the zone, all merchandise and produce save those of the United States would be shut out, and the produce of this country, such as rice, corn, beans, rum, coffee, tobacco, cattle, etc., certainly a very small production, would be shut out from the very place where the people of Panama would expect to have a ready sale and receive some benefit thereby.
Commerce, agriculture, and the cattle business would be strangled, and the Government of Panama, which should derive its revenues from these sources, would suffer the same fate.
Disaster would be general and all would be forced to emigrate. By article 1 of the treaty, the independence of the Republic of Panama is guaranteed by the United States. By the proposed establishments the Republic of Panama would be reduced to the worst kind of dependence and servitude that exists, that of starvation.
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I am, etc.,