File No. 819.77/159.
The American Minister to
the Secretary of State.
No. 341.]
American Legation,
Panama,
February 24, 1913.
Sir: Referring to my telegram of February 22,1
have the honor to enclose a copy of the paraphrase of the Department’s
telegram of February 17, which I sent to Señor Lefevre, Minister for
Foreign Affairs, for President Porras.
I also enclose a memorandum of my interview with President Porras. I have
not yet received the statement which he said that he would send me as to
the attitude of the Panaman Government. Regarding the statement made by
Señor Lefevre at this interview, that he had advised me duly that the
proposed general railway construction law would be considered in the
Assembly on February 14th, it will be remembered that I informed the
Department of this in my telegrams of February 7, and February 12.
I have [etc.]
[Page 1101]
[Inclosure 1.]
aide mémoire.
The Government of the United States has instructed the American
Minister earnestly to lay the following personally before His
Excellency the President of the Republic relative to the “Ley__ de__
sobre construcción de ferrocarriles y autorización al Poder
Ejecutivo para contratar un empréstito”:
Paragraph D of Article 3, of this bill appears to include the annual
payment of $250,000 United States currency, which will soon be
payable by the Government of the United States to the Government of
Panama, as well as the income of the fund of $6,000,000 United
States currency, which is at present invested in the City of New
York.
The position of the Government of the United States relative to the
former of these matters was made clear in the communication F. O.
No. 71 of June 3rd 1912, which the American Minister had the honor
to address to his excellency the Minister for Foreign Affairs of
Panama, relative to the proposed railway contract between the
Panaman Government and Messrs. J. N. Hyatt, H. G. Prescott, and R.
Wilcox.
Regarding the latter matter the Government of the United States
considers that this is a question which ought to be given the most
attentive consideration and determined only subsequently to the
consultation together of the Governments of the United States and of
Panama. The Government of the United States would accordingly have
objection to the bill being passed as it is framed at present and
considers that there should be included in it an addition to
Paragraph D of Article 3 that will exclude both the interest and
principal of the sum of $6,000,000 United States currency, and the
annuity of $250,000 United States currency.
The Government of the United States has instructed the Minister to
indicate that his Government would be unable to assent, to appearing
to be bound by any bill of this character in case it should pass and
that his Government would feel compelled to address representations
of a formal character relative to it to the Panaman Government.
American Legation,
Panama, February 18, 1913.
[Inclosure 2.]
Memorandum of interview of Mr. Dodge with
President Porras and Señor Lefevre, Minister for Foreign
Affairs, February 22, 1913.
After Mr. Dodge had explained the Department’s instructions, which
President Porras had already read from the paraphrase sent to him,
President Porras replied that the geographical situation of the
towns of Panama required in his opinion a lateral railway, otherwise
it would be necessary to have forty short lines running to the coast
where the ports would have to be improved, there being practically
no natural ones. It seemed to him that it was not the desire of the
United States that Panama should construct railways, which were
necessary for her development, for except through some guaranty of
the annuity or the revenue from the 6 millions it would probably not
be possible to obtain the money to build them. He did not see what
right the United States had to prevent Panama using these funds
which belonged to Panama and which she should be able to use as she
pleased. In the past the United States had never attempted to
restrain their use. The revenue from the 6 millions had been used
for general purposes, often useless ones, yet the United States had
never interfered nor even enquired into its use. According to Law 2
of 1911, providing for the construction of the Panama-David Railway,
which was still in force, these same funds could be used for
guaranteeing a loan, yet the United States had never objected to
this law.
Mr. Dodge stated substantially that his Government had many times
declared that it desired the development of Panama, that it was
prepared to assist Panama to secure this development in every way it
properly could, that the United States had no objection whatever to
the construction of railways in Panama provided their construction
did not interfere with the proper protection of the Canal, in which
Panama was as greatly interested as the United States, and provided
the plans for their construction appeared advantageous [Page 1102] to Panama from all
viewpoints including the financial one. He believed that from the
very beginning the United States had shown its interest in seeing
the funds which it had paid to Panama only used for the best
advantage and permanent benefit of the Panaman people. The terms of
Law 2 of 1911 did not seem very clear.
President Porras replied with some vexation that Panama’s financial
stability was a matter in which both he himself and his Government
took the greatest interest, which was apparent by the improvement in
the finances since the beginning of his administration. The interest
of the United States in the financial stability of Panama was new
and could not be greater than his own. He enquired why the United
States took this interest and Mr. Dodge replied that it seemed to
him to come directly from the fact that the United States had
guaranteed the independence of Panama: financial stability was
essential to political stability. President Porras then said that
although he had no objection to this new interest, he thought it
unnecessary in view of his own careful financial management.
President Porras enquired why Panama could not use the annuity and
interest of the 6 millions as she saw fit. As to the 6 millions
themselves, both he and his advisers were absolutely decided not to
touch it. I stated that as to the annuity a sufficient reason was
the fact that the Colombian treaties, which theoretically might be
ratified by Colombia at any time, made these annuities payable to
Colombia for a number of years. As to the interest of the 6 millions
he invited President Porras attention to the communication which he
had sent to him which nowhere stated that Panama could not use this
interest but that its use was a matter for the most attentive
consideration and consultation between the two Governments.
Señor Lefevre asked why the American Government assumed that Panama
intended to do anything contrary to the Colombian treaties as it was
not stated in the law that these funds were to be used. Mr. Dodge
replied that the law as worded appeared to include these funds and
that his Government was merely inviting attention to this
wording.
Señor Lefevre then stated that he had duly informed Mr. Dodge that
the discussion of this law would be postponed until February 14th
and that he had heard no objection from the United States to the law
until February 18th when the law had already passed. In fact he had
received a telegram on February 12th from Dr. Valdes, Panaman
Minister at Washington, stating that he had been informed by the
Department of State that there was no objection to the employment of
the interest of the 6 millions as security. President Porras added
that although he had not yet signed the law when he received Mr.
Dodge’s communication, yet as the bill had originally been presented
by him he could not then properly modify it and return it to the
Assembly. Nevertheless if the United States did not desire him to
use the annuity and interest of the 6 millions to carry out this
law, he would not do so; in that case this railway could probably
not be built. He would send Mr. Dodge a reply to his aide mémoire
which would give the attitude of the Panaman Government.
President Porras then said that he had promised Secretary Stimson
while he was here that he would build no railways without consulting
the United States; he would fulfill his promise. This law was simply
a general enabling law.
During this interview President Porras seemed vexed at the
Department’s communication, inclined to misunderstand the attitude
of the United States and to insist that the United States really had
no desire for Panama’s development.
