Mr. Barrett to Mr. Hay.

No. 6.]

Sir: I have the honor to inclose copies of some correspondence bearing directly on the port question.

The first includes copies of certain letters exchanged between Governor Davis and the minister of foreign affairs which the latter placed in my hands, I would explain, however, that this represents [Page 589] only a small part of the entire correspondence between these two officials, copies of which General Davis has himself forwarded to Washington.

The second is a new statement of the Panama argument submitted to me by the minister of foreign affairs.

* * * * * * *

I have, etc.,

John Barrett.
[Inclosure 1.—Translation.]

Mr. Arias to Mr. Barrett.

Your Excellency: In accordance with the offer which I made to your excellency this morning I have the pleasure to inclose herewith copies in the English language of my note of the 9th instant, directed to Gen. George W. Davis, governor of the canal zone. I send this in order that your excellency may be able to inform yourself of the correspondence relating to the incident which has arisen over the interpretation of article 3 of the canal treaty.

Once again I present to your excellency the assurances, etc.,

Tomas Arias.

Mr. Arias to General Davis.

General: I have received your very esteemed communication of the 5th instant and have to express my sincere acknowledgment for your attention to my request, contained in my note of the same date, relative to the dispatch of the Chilean steamer Loa by the authorities of La Boca (district of Ancon).

Referring to the subject-matter of the foregoing communications, I consider the occasion propitious to intimate that the Government of the Republic of Panama has no other aim in view than that of cooperating with the American nation toward the accomplishment of the vast undertaking of the Interoceanic Canal, and to this end it has afforded every possible facility in the way of immediately sanctioning the Varilla-Hay treaty without the slightest objection to some of its clauses which appeared inconvenient for the Republic, and relying solely in the good faith and friendly relations that exist between the contracting governments to arrive at the settlement of any difficulty that in actual practice could present itself, otherwise by adhering strictly to one and all of the stipulations of the treaty; but for the very reasons just quoted my Government is desirous of avoiding every possibility of difficulties in the dealings of the contracting parties, and with that end in view the communication is addressed to you trusting to have a very important point clearly explained for the benefit of all concerned. The point I refer to is the following:

According to Article II of the treaty previously quoted the Republic of Panama ceded in perpetuity to the United States the use, occupation, and control of a strip of land and of lands under water for the construction, maintenance, operation, sanitation, and protection of a canal across the Isthmus of Panama connecting the Atlantic and Pacific oceans, the strip of land or zone being 10 miles wide—that is to say, 5 miles on either side from a central line in the projected waterway—said zone starting from a point in the Caribbean Sea 3 miles at mean low water, extending across the Isthmus up to a distance of 3 miles at mean low water on the Pacific side; it being expressly provided that the cities of Panama and Colon and ports adjacent thereto comprised within the described zone were not included in the above-mentioned concession, and by Article III of the same treaty the Republic of Panama ceded to the United States all the rights, power, and authority in the afore-mentioned zone, described in Article II, to be exercised thereby as if it were sovereign of the territory, the use occupation, and control of which were granted by the Republic of Panama, the [Page 590] cities of Panama and Colon and adjacent ports thus remaining beyond the jurisdictional action of the American Government.

The provisions of those clauses are quite to the point, hence the meaning according to the letter should not be disregarded in consulting the spirit in which they are framed.

Moreover, to better explain myself, I beg leave to make certain remarks relative to the meaning of the words “adjacent and port.” The word “adjacent” means close to or near by, hence, in geographical terms, it is quite proper to say that the Balearic and Pitusas islands are adjacent to the Spanish peninsula. The word “port” is a part of the sea wherein ships find convenient shelter from the heavy seas and winds; wherein water is to be found in sufficient quantity to permit navigation and to allow ships to ride at anchor.

It follows, therefore, that the spot around the islands of Flamenco, Naos, and Parico, fronting the city of Panama, used as anchorage by ocean steamers, is a port, inasmuch as the steamers find there convenient shelter from the heavy seas and winds, it offers ample room for navigation, and the ships are able to load and discharge therein; and it is, in fact, adjacent to the city of Panama, because it is close to or near by the city.

In accordance, therefore, with the exception provided in Article II of the Varilla-Hay treaty, though that spot is comprised within the zone, it does not, however, come within the jurisdictional action of the United States, and it is for this reason that my Government considers that when a ship casts anchor at the mentioned anchorage it comes forthwith under its jurisdiction, it being, of course, understood that this in no way is to be construed as affecting the rights acquired by the United States over the lands in the islands of Naos, Perico, and Flamenco.

The mere fact that in the provisional agreement of demarcation, relative to the cities of Panama and Colon and the zone, the port referred to was not expressly excepted can not be reasonably advanced against the rights claimed by my Government, because, apart from the fact that the agreement of demarcation is not definitive the contract has the force of law as concerns the parties who signed it, and it can not be altered, modified, or otherwise changed except by means of another treaty concluded with the same formalities.

On the other hand, the spot to which I refer is the only one situated within the Bay of Panama and close by the city of same name which offers shelter and anchorage for the shipping engaged in the trade between Panama and the ports of North, Central, and South America; and if my Government were to acknowledge that said port is not excepted by Article II of the treaty, so often quoted, Panama would remain by that fact without any port whereby to hold intercourse with the outside world, and its maritime commerce would be totally ruined for the simple reason that the part of the bay comprised between Punta de Chiriqui and Punta de Paitilla is not a port properly speaking, but a small open bay, where shipping of fair draft can not anchor, and it is hardly credible that the American Government could contemplate the idea of inflicting such a serious injury on the Republic of Panama in the face of the unmistakable interest which it has shown toward the development and progress of this nation.

Furthermore, if what is expressly provided in Article II did not exist the omission would in no way make less clear the claims advanced by my Government, since it is a well-known principle of law that the acknowledged intentions of the contracting parties shall prevail in preference to what is literally expressed in words, and the intention of the American Government of not exercising jurisdiction at the ports giving access to the zone is clearly determined in Clause XIII of the treaty in question, as otherwise that article in the treaty would be superfluous and devoid of value.

Regarding the spot denominated La Boca, the Government of the Republic has never considered it a port for international commerce, but simply as a place giving access to the canal, and in proof thereof I may mention that when the Panama Railroad Company was exonerated from the obligation of extending its line to the islands of Naos, Perico, and Flamenco, the Colombian Government declared that the Panama Railroad Company and other companies working in connection with it might use the maritime channel extending from said islands to La Boca wharf, provided the canal company gave permission for doing so, and, further, that the Government would assume no responsibility nor would otherwise interfere in any controversy relative to said permission.

I sincerely trust, General, that the foregoing remarks may bring about a change in your opinion relative to the matter at issue, and that, considering the justice which is clearly on the part of my Government, you will kindly cause to [Page 591] be conveyed the necessary orders suspending the further dispatch of vessels from La Boca wharf without appeal to our port authorities and without compliance with our law governing such matters.

My Government, as I have already intimated to you, faithfully fulfills and will fulfill all its treaty obligations undertaken for the benefit of the world at large and more particularly so for the benefit of the noble American nation, and it trusts that those same sentiments may eventually prevail in your distinguished opinion.

I avail, etc.,

Tomas Arias.
[Inclosure 2.—Translation.]

Mr. Arias to Mr. Barrett.


The undersigned, secretary of government and foreign affairs of the Republic of Panama, has received instructions from the President of the aforesaid Republic to submit to his excellency the envoy extraordinary and minister plenipotentiary of the United States the following:

Pursuant to orders given by the President of the United States of America for the creation of ports and establishments of customs regulations in the canal zone, the governor of said zone has forthwith declared as ports of entry the section denominated La Boca, wherein he has, in consequence, thought fit to assume, disregarding the Republic of Panama, the prerogatives of sovereign of the port, entering and clearing vessels, establishing and collecting port dues, and, finally, adopting measures tending to the establishment in the canal zone of the customs system of the United States.

In a similar fashion the postal tariff and postage stamps of the United States have been made obligatory within the limits of the canal zone, and it appears the belief was entertained that the United States could, at its option, establish in the canal zone a monetary system different from any adopted by the Republic of Panama.

Such proceeding and intentions are, undoubtedly, the result of the interpretation given by the United States of America to the treaty concluded with Panama on the 18th of November, 1903, on points such as those of vital importance for the growing Republic, and as said interpretation clashes with the opinion of the Government of Panama in what concerns the treaty itself and points at issue, the undersigned, in the name of the President of the Republic, respectfully invites his excellency the envoy extraordinary and minister plenipotentiary of the United States to exchange views in connection with the measures recently adopted in the canal zone, so as to convey to the treaty, by mutual accord, such interpretation as is found more to conform to the spirit and letter of its stipulations.

Although the Republic of Panama, when negotiating with the United States the treaty of the 18th of November, 1903, could not offer any obstacle whatsoever to the wishes and convenience of the United States, it did observe, nevertheless, with pleasure, when approving without restrictions said treaty, that the United States had waived in favor of the Republic of Panama that which was neither needed by the United States nor by the canal enterprise, but which for the Republic constitutes the most effective guaranty of its existence—in other words, fiscal and economical sovereignty within and without the canal zone.

This point is of great importance because if it is really a fact that a nation can cede part of its territory and sovereign rights in connection therewith, without materially affecting its proper existence, in surrendering life itself, and this very life, without the corresponding nourishment, is thereby doomed to sure death.

From this it follows that the treaty concluded with the United States amply provides, on the one hand, for all requirements of the canal enterprise, and, on the other hand, it fully provides for the perpetual existence of the Republic of Panama.

The said Republic thus agreed to surrender a strip of land of the required [Page 592] size and boundaries to be excavated for a canal and to be eventually used by the shipping communicating the Atlantic and Pacific oceans, and the zone thus surrendered was ceded to the Government of the United States, in perpetuity, for “the construction, maintenance, operation, sanitation, and protection of said canal.” (Article II of the treaty.)

Whatever was considered indispensable by the United States to secure perpetually the canal enterprise was readily granted by the Republic of Panama, By such concession the canal zone, properly speaking, was comprised in the grant, and such lands and waters without the zone as would be found necessary the islands of Perico, Naos, Culebra, and Flamenco, and, moreover, the rights, power, and authority (as per Article III of the treaty) which the United States “shall have and exercise as if it were sovereign of the territory wherein said lands and waters are located,” entirely precluding the Republic of Panama in the exercise of such sovereign rights, power, or authority.

But the general, and so to speak, the universal phase of these concessions of sovereignty has, to judge from the treaty, two conceptions—one conditional and the other exceptional, both indispensable to the existence of the Republic of Panama.

These two points are those which the undersigned believes have been disregarded by the authorities of the canal zone, by means of the measures set forth at the commencement of this memorandum.

According to the clause in question, referred to in Article II of the treaty, “the cities of Panama and Colon and adjacent ports which are included in the described zone shall not be considered as comprised in this concession.”

This provision has an object further than that of indicating the material possession of said cities and ports. The evident object of that provision tends to insure and safeguard the very existence of the Republic of Panama, reserving to it, in perpetuity, the aforesaid cities and ports as fiscal resources, wherefrom to derive the most effective means of subsistence.

The canal zone, before being ceded to the United States, and subsequent to its cession, forms part of the region wherefrom importation and exportation takes place and is the central spot between the two seas. The very existence of the Republic is derived from there; hence it was necessary to reserve that spot, although in other respects ceded to the United States.

Such is, in the opinion of the undersigned, the reason and the object why from the canal zone the cities of Panama and Colon are set apart and the ports adjacent thereto, virtually leaving the zone without jurisdictional ports.

Hence the right of levying and collecting maritime taxes, etc. (without regard to the exceptions provided in the treaty referring to all shipping and otherwise everything connected with the canal enterprise), has invariably been a prerogative of the Republic of Panama, and the Republic claims it by virtue of the spirit and letter of the treaty concluded on the 18th of November, 1903.

Not only that, the Republic claims the acknowledgement to the full extent of its economical and fiscal sovereignty within the canal zone, not only because it considers having right according to the treaty, but that its very existence and future depend on it. The fact stands, therefore, that Panama, being the original owner of the canal zone, clearly reserved what it did not expressly surrender.

The sovereign right of levying taxes within the zone does not appear by any of the stipulations of the treaty to have been expressly surrendered to the United States. On the contrary, the right is implicitly acknowledged by Clauses X and XIII, wherein are specified the effects that can not be subject to taxes. It follows, therefore, that other effects, are liable to taxation. In other words, national taxes and contributions take effect in the canal zone in so far as not expressly excepted by said Articles X and XIII.

This being the case, the fact of excluding from the canal zone, by order of the authorities there, the postal tariff and postage stamps the Republic of Panama is, to say the least, improper, inasmuch as such proceeding affects, in a marked manner, a source of revenue from which it expects brilliant results in the near future.

Finally, and as logical understanding of the meaning of the treaty whereby the fiscal and economical sovereignty is assured to the Republic, it considers that the rights which it so clearly and expressly reserved to itself have not been taken into proper consideration.

The foregoing are the ideas which have been considered as proper to submit to his excellency the envoy extraordinary and minister plenipotentiary of the United States of America as a true expression of the feeling of the national [Page 593] Government in order to serve as the basis of interpretation of the treaty of the 18th of November, 1903, in a matter of such vital importance for the Republic of Panama.

Tomas Arias.