File No. 819.77/158.
I enclose memorandum from the Chief of Staff upon the subject, which is
self-explanatory.
This contract would not only seriously interfere with the military
problems involved in the defense of the Canal Zone, but it is believed
would interfere with the rights which the Panama Railroad enjoys under
its concession.
It is therefore requested that steps be taken by the State Department to
prevent its consummation.
[Inclosure.]
The Chief of Staff to
the Secretary of War.
War Department, Office of the Chief of
Staff,
Washington,
February 19, 1913.
the duncan concession for a railroad in the
republic of panama.
On December 30, 1912, a contract was signed by Mr. Basil Barnes
[Burns] Duncan, an American citizen residing on the Isthmus of
Panama, with the Panaman Minister of Public Works for the
construction of a railroad, 50 kilometers long, starting from the
west side of the Chagres River, near its mouth, and running in a
generally southwest direction parallel to the Canal across the
continental divide and as far as the lower lock at Miraflores. In
addition, such branch lines were to be allowed as might meet the
approval of the Government of Panama. This measure was signed on the
same date by President Porras and sent to the Assembly with a
recommendation for favorable consideration. Action in the Assembly
has been suspended at the request of the American Minister pending
receipt of the State Department’s views in regard to the matter.
A Board was appointed by the Secretaries of State and War to consider
the contract, consisting of the following members: Hon. Percival
Dodge, American Minister, Chairman; Lieutenant-Colonel D. D.
Gaillard, Corps of Engineers, U. S. A.; and Lieutenant Frederick
Mears, U. S. A., Chief Engineer of the Panama Railroad.
The Secretary of State refers all papers in the case for the comment
of the War Department. In addition to the report of the Board, there
is a letter and cablegram, under date of February 8th, from the
Chairman and Chief Engineer of the Isthmian Canal Commission.
The Board found that it was impracticable to discuss properly the
technical merits of the proposed contract for the reason that
neither the exact location of the main line nor that of any of its
branches is shown either in the text of the contract or in the maps
accompanying same. Such indefinite description as is given is
further modified by the statement that the general direction may be
changed by the topographic conditions. There are no definite
stipulations as to the number of tracks, or limiting grade or degree
of curvature. The method of construction is not mentioned, nor is
any definite terminal point given at the southwest extremity of the
line. The contract contains no stipulations as to the quantity or
character of the rolling stock, the station buildings, or the water
tanks, etc., nor does it provide for the submission to the Panaman
Government of any maps, profiles or plans until eighteen months
after the approval [Page 1093] of
the contract by the National Assembly. It is the opinion of the
Board that there would be little or no business for such a railroad
at present, and it is therefore presumed that the sole purpose of
the project is the exploitation and development of the Government
lands as the various sections of the railroad are completed. The
Board furthermore believes that the sums to be deposited by the
contractor are inadequate to properly protect the Panaman Government
in a contract of this nature. It further asserts that there are no
assurances that the contractor possesses the financial backing
requisite for the proper prosecution of the work. It bases this
opinion to a large extent upon the fact that he took a contract in
December, 1910, for excavation of certain material in the Canal
prison which he was unable to complete for lack of financial
resources. As the total amount involved was less than $25,000, and
as monthly payments were made for a period stretching over 16
months, the amount of capital required was not large.
The contract provides for the improvement of the mouth of the Chagres
River but contains no description of the character of the work
proposed. Colonel Goethals in regard to this feature states that a
“deepwater port at the mouth of the Chagres, or anywhere on the line
of such a railroad, would threaten the safety of the Canal and would
require a modification of the plan of defense and an increased
armament.” He further believes that the main railroad line would
interfere with the rights which the Panama Railroad enjoys under its
concession, and that the branch lines stipulated are objectionable
from, a military standpoint.
Under date of January 27th, Mr. Duncan submitted a letter to the
Board in which he offers to alter or suppress any clause in the
contract which might be found to conflict with the interests of the
United States.
The Board recommends that the contract be not approved. In this
opinion Colonel Goethals evidently agrees.
In view of the above facts, it is recommended that the Secretary of
State be advised that this contract would seriously interfere with
the military problems involved in the defense of the Canal Zone, and
that he be requested that steps be taken by the State Department to
prevent its consummation.
