File No. 711.21/203.

The American Minister to the Secretary of State.

No. 15.]

Sir: Referring to the Colombian Government’s ideas regarding bases for a settlement of the questions now pending between this country and the United States, I have the honor to enclose herewith copy and English translation of memoranda, which were informally handed to me by the Minister for Foreign Affairs for my private information only. Dr. Urrutia said that they had been prepared by the Consultatory Committee of the Foreign Office and considered by the Committee in computing the size of the indemnity.

I have [etc.]

Thad. A. Thomson.
[Inclosure 1—Undated Memorandum—Translation.]

The Minister for Foreign Affairs to the American Minister.

In order to fix the amount of the indemnity due to Colombia, amongst other things the following should be taken into account:

The reversionary rights in the Panama Railway, which according to the official report of Senator Bristow amount to $16,416,000, from which there should be deducted a sum for advance payment.

[Page 326]

The right possessed by Colombia to acquire the property of the Canal at the expiration of the 99 years of the concession, according to the contracts made with the Canal Company.

The right possessed by Colombia to receive during these 99 years an annuity of $250,000.

The right possessed by Colombia to receive during 66 years an annuity of $250,000, in accordance with the terms of the Panamá Railway contract.

The right to 8 annuities of $10,000 according to the terms of the contract with the Railway Company of 1880. These annuities are for the years between 1903 to 1910, which have not been paid to Colombia.

The value of the Isthmus of Panama, in other words of the “richest province of Colombia” as stated by Sir William R. Scott, in his work “The Americans in Panamá.”

[Inclosure 2—Undated Memorandum—Translation.]

The Minister for Foreign Affairs to the American Minister .

Money Indemnity.

Respecting this article1 of the draft treaty a sum of fifty million dollars will seem very moderate if the following be taken into consideration: That

1. Colombia renounces the right to 66 annuities of $250,000 in the Panamá Railway and to her exclusive ownership thereof at the conclusion of the concession, which represents an enormous sum, according to the calculations of ex-Minister Du Bois.

2. Colombia renounces the right to 99 annuities of $250,000 according to the terms of the Canal Contract and to her reversionary rights in the work at the expiration of the 99 years of the concession.

3. Colombia renounces her participation in the indemnity mentioned in the last part of Article II of the contract of 1876.

4. Colombia gives up “her richest province,” as stated by Mr. William R. Scott in his book “The Americans in Panama” (1912): a territory which affords the unique passage of the world for joining the two oceans, and which forms one of the most beautiful, safe and capacious bays of the globe, the Almiranto Bay.

5. Thanks to its occupation of the Isthmus, the United States have been able to construct the Panamá Canal, far more advantageously, more economically and more productively than the Nicaragua or any other canal, as is shown by the report of Admiral Walker presented to the Washington Government on November 30, 1910. According to this report, the actual cost of building the Nicaraguan canal would have exceeded one via Panamá by $58,000,000, “without taking into consideration the cost of acquiring the last-named property.” According to the same commission, “the Panamá Canal, after its completion, would be shorter, would have fewer locks and a lesser curvature than the Nicaragua Canal. We can gauge these advantages by the time necessary for a boat to make the transit, which is calculated for a ship of ordinary size at 12 hours for Panamá and 33 for Nicaragua.”

In this regard two points should be also kept in mind: (a) that the occupation of the Isthmus by the United States permits of the opening of the Canal for traffic in 1914, thanks to the great works carried out there during a period of more than twenty years by the French company in accordance with its contract with Colombia; and that the Nicaragua canal, scarcely commenced, could only have been terminated many years later with an accompanying great industrial, economic and political loss to the United States; and (b) that the volcanic nature of Nicaragua and of Central America in general, would have endangered to a considerable degree the colossal work of the canal.

According to the Spooner Law of 1901, “if the President of the United States cannot acquire from the Republic of Colombia the control and territory for the opening of the Panamá Canal, he shall obtain it from Costa Rica and Nicaragua to construct it by the route known by this name.”

It is well known that this provision of the Spooner law has not yet been carried out, and it is only by means of this arrangement, now being discussed, that [Page 327] the United States can legalize the acquisition of the control which was ordered by the Congress of that Republic;

6. By virtue of the treaty of Nov. 18, 1903, between the United States and Panama, the Washington Government not only acquired the Canal Zone but also a multitude of other rights in the territory of that Colombian Department, which will never be perfected until the treaty now being discussed shall enter into force, and in the form established thereby.

7. Many voices in authority in the Congress of the United States, as that of Senator Bacon and that of Representative Lewis, have stated that the damages suffered by Colombia could not be indemnified by any sum less than one of $100,000,000 in gold;

8. As the Herran-Hay Treaty is still unratified, Colombia was certain to acquire the part of the Canal completed by the French Company, as long as that company was unable to fulfill its obligations. This right possessed by Colombia may justly be estimated at the sum paid to the Canal Company for the work completed by it and for the properties accessory thereto.

Note.—Owing to the illness of his wife, the American Minister was obliged to return with her to the United States. On November 5 the Department instructed him that the negotiations with the Government of Colombia should continue in his absence, conducted by the Chargé d’Affaires ad interim, Mr. Harrison. On November 8 the Minister informed the Foreign Office of the necessity for his immediate departure and of the continuance of the negotiations in his absence by the Chargé d’Affaires. The Minister for Foreign Affairs replied on November 10 (File No. 711.21/207) saying:

The Colombian Government, whose highest consideration has been won by your excellency, sincerely regrets that such a deplorable motive should necessitate your excellency’s departure, and expresses the hope that upon the earnestly desired disappearance of the distressing events in your family, your excellency will again become the distinguished guest of Colombia.

The Government furthermore expresses the hope that the negotiations initiated by your excellency—which remain in the charge of the honorable Chargé d’Affaires, by direction of his excellency the Secretary of State, as your excellency has informed me—may be carried to a just and desirable conclusion, to which end your excellency can rest assured that the Honorable Mr. Harrison may count upon the same cooperation which your excellency has received.

The Minister departed on November 11. On November 24 the Colombian Legation at Washington requested that the American Chargé d’Affaires be instructed to continue at Bogotá the negotiations interrupted by the departure of the Minister. (File No. 711. 21/205.) The Secretary of State thereupon sent the following telegram to the Chargé d’Affaires:

  1. Article IV.