The Secretary of State to President Harding

The President: In 1904 Mr. Taft, then Secretary of War, visited Panama in an effort to adjust certain difficulties which had arisen in connection with the execution of the Treaty of 1903 with that country. After discussions with the officials of the Panaman Government a temporary agreement was formulated to serve as a modus operandi during the period of the construction of the Canal. This agreement was embodied in Executive Orders issued by the Secretary of War on December 3, December 6 and December 30[28], 1904, January 10[7], 1905, and January 5, 1911. By the Panama Canal Act of August 24, 1912 (37 Stat. 560), these orders, together with all other orders and regulations promulgated in the Canal Zone by order of the President for the government and sanitation of the Canal Zone and construction of the Panama Canal, were ratified and confirmed as valid and binding until Congress should otherwise provide.

The Taft Agreement was intended as a temporary arrangement to cover the period of construction of the Canal. As such it has served its purpose, since the Canal has for some time been formally open to commerce. It no longer provides an adequate basis for the adjustment of questions arising out of the relations between the Canal Zone authorities and the Government of Panama, and it is [Page 762] the opinion of this Department, and, I am informed, of the War Department also, that the Agreement should be replaced in the near future by a more permanent arrangement.

I have the honor, therefore, to recommend that Congress be requested to authorize the abrogation of the Executive Orders above mentioned, which comprise the so-called Taft Agreement. When this authorization is granted it will be possible to terminate the agreement with Panama and to proceed at once with the negotiation of a new treaty.

Respectfully submitted,

William Phillips