File No. 819.77/201a.
The Secretary of State to the Minister of Panama.
Washington, June 29, 1914.
Sir: Referring to verbal conferences which we have held regarding the construction of a railroad in the Province of Chiriquí, Republic of Panama, I wish to state the Department’s position in response to your solicitations of its approval of the contemplated loan:
Investigation has convinced the Department that an issue of your Government’s bonds could not, without some form of special and acceptable guarantee, be sold at a price consistent with good financing. Therefore, on account of the treaty obligations of the United States with respect to the Republic of Panama, and on account of the present favorable financial condition of the Republic of Panama, the Department will approve an issue by your Government of Panaman Government five per cent, bonds to the amount of three million dollars ($3,000,000) provided that adequate provision be made for the retirement of these bonds within thirty (30) years from the date of their issue; and, provided also that only seven hundred and fifty thousand dollars ($750,000) of that amount shall be delivered at this time, at a price not less than ninety-seven per cent, of the par value, and that future deliveries of the issue shall be made with the approval of the Government of the United States only when additional money is required for such enterprise; and as the United States desires in every way to assist in the material development of your country and to facilitate this enterprise and loan, the Department will approve the hypothecation of so much of the income from the six million dollars ($6,000,000) belonging to the Republic of Panama, now permanently invested in New York, as may be necessary to secure payment of interest and amortization of this bond issue.
Accept [etc.]