The Secretary of State to Minister Magoon .
Washington , April 16, 1906 .
Sir: The department has again taken up the complaint of H. L. McConnell and the American Banana Company against the Government of Costa Rica, and given it most careful attention. As a result of such consideration the following telegram was sent you on March 19 last:
It appears on examination of the pending treaty that if the treaty was ratified the warehouses and sites of the proposed piers of American citizens will be within the territory of Panama. The companies claim title by what they allege to be a valid location under the laws of Colombia before the separation of Panama. We should deem it a violation of the rights of the American possessors of this property to interfere with their possession and enjoyment, except upon the judgment of a court, and we must insist that the officers of Costa Rica have no more right to do this than would the officers of Panama.
While some of the details of the case are involved in controversy, the department would invite your attention to three considerations which appear to be beyond dispute, and which, in the present aspect of the situation, the department regards as of fundamental if not of controlling importance.
The first of these is that under the Loubet decision of 1900, accepted as final by both Colombia and Costa Rica, the territory included in the McConnell plantation was awarded to Colombia (now Panama), and became subject to the jurisdiction of that country. The second is that Mr. McConnell, in 1903, entered upon a portion of these lands, planted a large area with banana trees, built houses, and started the construction of a tramway, expending large sums of money in his enterprise, and he alleges that his proceedings were based upon the authority of certain laws of Colombia relating to uncultivated lands. The third consideration is that the pending treaty of March 7, 1905, between Costa Rica and Panama, defining the boundary line between those Republics, will, when drawn, include the McConnell concession within the jurisdiction of Panama.
The department is not unmindful of the contention of Costa Rica that an understanding has existed between that state and Panama whereby the former has retained temporary possession and administrative control over the district, and pending the ratification of the [Page 1202] treaty of March 7, 1905, exercises police powers and other general attributes of de facto sovereignty within the territory. At the same time it is undeniable that the de jure sovereignty has been in Colombia and Panama since the Loubet award, accepted as it is by Panama and Costa Rica, so that either by virtue of that award or of the pending boundary treaty the territory will ultimately come under the jurisdiction of Panama. Meanwhile, certain American citizens, acting upon the assurances of the authorities of Colombia and Panama, and in accordance with the laws of those States, have gone into this territory, expended large sums in developing it, and by virtue of such acts have acquired certain possessory rights thereunder and are entitled to protection therein. In the adjustment of any conflicting claims of title which may arise or have arisen it would be improper for this department to interfere. But, on the other hand, after rights, possessory or otherwise, in this property have been acquired in good faith by American citizens and have become vested in them, the department is of opinion that they should not be divested except by due process of law by ejectment or other appropriate legal action.
In the department’s conception of this matter Costa Rica exercises at present a temporary de facto sovereignty over the territory included in the McConnell concession, subject of right to be divested at any time at the will of Panama, but actually continuing until such time as the pending boundary treaty is ratified. She exercises the powers of government that are necessary for the orderly administration of the district, but should not use this sovereignty in such a way as to impair the rights of the de jure sovereign of the territory. Her functions of government are limited by her tenure, which is of a temporary and precarious character. Her duty is to preserve the property, not to destroy it, and hand it over to her successor without the commission of any acts tending to impair the ultimate rights of the de jure owner. It is obvious, for instance, that it would have been an unwarranted exercise of sovereign power for Costa Rica to grant a concession to McConnell for the construction of his railroad beyond the termination of the de facto sovereignty of Costa Rica. In a word, Costa Rica stands in the position of a usufructuary entitled to the fruits and profits of the territory during the period of tenure, and it can not be admitted that Costa Rica can in any way destroy or impair the substance of the usufruct. In like manner it is equally clear that the title to property rights in this territory acquired since the Loubet award are determinable according to the laws of Colombia and Panama, and it follows that Costa Rica can rightfully exercise no jurisdiction within the territory which Panama could not exercise; and as Panama can not rightfully deprive possessors of title property acquired under Colombian laws, which remained in force after the secession of Panama, without due process of law, it would be equally unjust for Costa Rica to attempt to do the same thing.
In considering the present connection of Panama with the territory in question, it would appear that that State has consented that Costa Rica continue as the de facto sovereign until the ratification of the treaty. If Panama should interfere and seek to exercise at present jurisdiction north of the Sixola River, this would be inconsistent [Page 1203] with her recognition of Costa Rica’s temporary possession in that district. In the view of the department, as long as the latter Government is the sovereign in possession, whatever attributes that accompany or attend possession should be conceded to her, including the right to control, by taxation or otherwise, importations, etc., at Gadocan. But the ultimate attributes of sovereignty belong to the ultimate owner, and for this reason it is proper that Panama should see to it that rights and titles which have accrued concerning lands within this area should not be prejudiced by the State having accidental and temporary jurisdiction. It is suggested that this result may be reached by discreet representations by Panama to Costa Rica, perhaps by remonstrance or otherwise, rather than by a physical attempt to assert such jurisdiction.
You are instructed to call the situation as above set forth, together with the views of the department, to the attention of the Government to which you are accredited, and to say that this Government insists that the property of Mr. McConnell and those whom he represents be protected and preserved, without any destruction thereof, until such time as the ultimate rights of the parties may be passed upon by a court or courts of competent jurisdiction.
In this connection, however, it is proper to state that the department disclaims any intention to interfere in this case to the prejudice of the rights of the United Fruit Company, or any other American interest already acquired in the territory immediately in question.
I am, sir, etc.,