File No. 819.77/181.
The Secretary of War to the Secretary of State.
Washington, April 4, 1914.
Sir: I inclose, for your information, a copy of the following self-explanatory correspondence relative to the consent which has been granted by the Panama Railroad Company, under Article II of the contract between the United States of Colombia and the Panama Railroad Company of 1867, to the construction by the Government [Page 1031] of the Republic of Panama of two lines of railroad, namely: one in the Province of Chiriquí from the port of Pedregal to Boquete, 28 miles, with a branch to La Concepción, 23 miles; and one in the Province of Los Santos from the port of Mensabe to the town of Macaracas:
Article II of the contract between the United States of Colombia and the Panama Railroad Company reads as follows:
Article II. The Government of the Republic binds itself, during the time that the exclusive privilege which is conceded to the company for the working of the railroad remains in force, not to contract for itself, nor to concede to any person or company, by any title whatever, the power to establish any other railroad on the Isthmus of Panama; and it also stipulates that, while the said, privilege continues in force, the Government shall not have the power of undertaking for itself, nor permitting any person to undertake, without the concurrence and consent of said company, the opening or working of any maritime canal which may unite the two oceans across the said Isthmus of Panama to the west of the line of Cape Tiburon on the Atlantic and Point Garachine on the Pacific.* * *
I presume that Señor Morales, the Panaman Minister at this capital, referred this matter to the Panama Railroad Company through me as he knew I, as Secretary of War, hold the majority of the stock of the Panama Railroad Company, which stock, as you are aware, is now owned by the United States Government. I would invite your particular attention, however, to that part of my letter to Senor Morales11 in which I advise him that it is presumed that the question of the approval by the United States of the contracts for the construction of the above-mentioned railroads will be taken up by his Government in the usual way through diplomatic channels.
In this connection, I would invite your attention to the fact that it has heretofore been customary for the Panaman Government to submit through diplomatic channels contracts for the construction of railroads in its territory to the United States for approval, and that your Department has usually submitted such contracts to the Secretary of War with a view to having them examined regarding the technical merits of the projects, as well as in reference to their desirability from a strategic viewpoint.
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