File No. 819.77/261
The Secretary of State to the Minister of Panama
Washington, January 4, 1917.
Sir: I have the honor to acknowledge the receipt of your note of December 26, 1916, in which further reference is made to the proposed extension of 18 miles, more or less, of the Chiriqui Railroad, to be built from the city of Concepcion in the direction of Charco Azul, and in which is set forth the method by which it is proposed to finance such contemplated extension.
Your attention is directed to the Department’s note of December 22, 1916, in which it was stated that the Government of the United States is disposed to approve an issue by your Government of 5% bonds to the amount of $400,000.00, provided that adequate provision be made for the retirement of these bonds within thirty years of the date of their issue and provided that $200,000.00 of such amount shall be delivered at the present time at a price not less than 97% par value, and that the delivery of the remainder of the issue shall be made with the approval of the Government of the United States when the money is required.
In order to secure the payment of interest on this proposed bond issue and to provide for the amortization of the same, the Department will approve the hypothecation of a sufficient amount of the $250,000.00 annuity which is to be paid by the Government of the United States to the Government of Panama under Article XIV of the Convention of November 18, 1903, with Panama for the construction of a ship canal. This approval of the hypothecation of this fund is made upon the condition that your Government will [Page 1183] assure this Government that the sum realized will be expended only upon the project of the eighteen miles of the Chiriqui Railroad extension.
Accept [etc.]