Memorandum by the Secretary of State of a Conversation with the Panaman Minister (Alfaro), December 15, 1923

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Abrogation of Taft Agreement. The Minister said that his Government had viewed with concern the notice which had been given of the abrogation of the Taft Agreement on the first of May, 1924. The Minister reviewed the situation from the standpoint of the Panaman Government, referring to President Roosevelt’s statement that it was not intended to create a United States colony in the midst of Panama and to a statement attributed to President Taft that Panama had retained her “titular sovereignty” over the territory comprised in the Canal Zone. The Minister said that on the abrogation of the Taft Agreement there would be the same [Page 683] situation that existed at the time it was originally negotiated by Mr. Taft; that is to say, there was great dissatisfaction with the provisions of the Treaty and a feeling that if it had not been for Bunau-Varilla much better terms for Panama could easily have been arranged; that Mr. Taft and the United States Government had desired to take account of this feeling and had arranged in consequence the Taft Agreement. Now all the old questions would be brought up; the prestige and position of Panama as a nation were concerned. His Government felt that the Agreement could not be abrogated unless a new Agreement was provided to take its place and that this required a consideration of these questions relating to the position of Panama and her commerce. The Panaman Government did not dispute the control of the Canal Zone for the purpose of constructing and protecting the Canal, but when it came to commerce and other sovereign rights it was a different matter. The Panaman Government feared that the time allowed for the negotiation of a new agreement would be too short and that they wished to inquire as to the intentions of the United States Government and what would be the attitude of that Government in case a new agreement were not reached before May 1, 1924.

The Secretary said that this Government had received a note from the Panaman Government bearing upon the abrogation of the Taft Agreement and had instructed the Minister at Panama to make reply. The Secretary then read to the Minister (Mr. Alfaro) the substance of the instruction sent to Minister South in Despatch No. 150 of December 14, 1923. The Secretary said that this Government held there was no question as to its right to terminate the Taft Agreement. He pointed out, as stated in the instructions above mentioned, what Mr. Taft had said at the time of the negotiation of the Taft Agreement with respect to its being a temporary arrangement pending the construction of the Canal. The Secretary said that we were free at any time to abrogate the Agreement and we had given notice that it would be abrogated on May 1, 1924. In answer to the Minister’s inquiry as to what would be the situation in case a new agreement had not been effected by that time, the Secretary said that we would stand upon our treaty rights without the Taft Agreement which had been abrogated.

The Secretary said that there was no disposition, however, to deprive Panama of a proper opportunity for negotiations with respect to a new arrangement which would be mutually satisfactory and that for this reason, instead of abrogating the Taft Agreement outright, a period of time had been allowed, that is, until May 1, 1924, which was deemed sufficient time for the negotiations. The Secretary said that he hoped that negotiations would immediately proceed [Page 684] and they could be conducted between the Canal Zone authorities and the representatives of the Panaman Government, and if it was possible to reach any agreement, it could certainly be reached in the next five months. Replying to the general suggestions made by the Panaman Minister, the Secretary said that there were two sorts of considerations which the Minister had advanced,—those of a fundamental character in relation to the rights of the United States in the Canal Zone, and those of a practical sort with respect to certain particular exigencies where without prejudice to the fundamental rights of the United States it might be possible to meet the wishes of the Panaman Government.

The Secretary said that as to the first sort of considerations, this ‘Government would never recede from the position which it had taken in the note of Secretary Hay in 1904.29 This Government could not and would not enter into any discussion affecting its full right to deal with the Canal Zone under Article III of the Treaty of 1903 as if it were the sovereign of the Canal Zone and to the exclusion of any sovereign rights or authority on the part of Panama. The Secretary said that he was speaking to the Minister quite candidly, as he thought that candor aided friendship. It was an absolute futility for the Panaman Government to expect any American Administration, no matter what it was, any President or any Secretary of State, ever to surrender any part of these rights which the United States had acquired under the Treaty of 1903. The Secretary said that it would be well if the Panaman Government would recognize this fact and accept it. This would lead to much better relations between the two Governments. The Secretary said that in his recent note, in answer to the questions Panama had raised, he had reviewed the history of the Treaty and had answered the contentions made with respect to it. This must be regarded as ending the discussion of that matter. The Secretary would not enter into any discussion whatever with regard to the fundamental considerations involved. While this was so, this Government had every desire, as the President had recently stated to the Minister, and the Secretary had himself stated,—not to exercise the rights which the Government had in a manner unnecessarily prejudicial to the interests of Panama and therefore the Secretary, in his note to Panama, had expressed a willingness to enter into negotiations with regard to certain matters which might be satisfactorily adjusted. The Secretary spoke particularly of the valuation of property that might be taken in the future and said that, without repeating what he had said in his note, he must refer to that note as indicating the subjects which could be taken up.

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The Minister said that the position taken by the Secretary might be sound from a technical, legal standpoint, but the Government had frequently said that they had no desire to interfere with the prosperity of Panama and that what they wanted was such an administration as would give Panama the benefits to which she was rightfully entitled, and that the United States, apart from the management and protection of the Canal, would not attempt to be a commercial competitor, thus establishing a colony in the midst of Panama to her disadvantage.

The Secretary said that he could not understand the complaint of Panama with respect to her general prosperity; in fact, the Canal had made Panama. They had no complaint whatever. The United States, at enormous expenditure, had created a situation which was a constant and increasing benefit to Panama. The idea that the Panaman people had any ground for complaint against the United States because of the construction and administration of the Canal, in its general bearing upon the prosperity of Panama, seemed to the Secretary most extraordinary. Reiterating, however, the desire that there should be negotiations with regard to the particular points where it would be possible to avoid certain elements of hardship to which Panama had directed attention, the Secretary referred to his note on this subject.

The Minister said that his Government did not desire the negotiations to take place at the Canal Zone or with the Canal Zone authorities. He said the President expressed himself in a most friendly manner with respect to Panama; so did the Secretary. But the authorities at the Canal Zone were military authorities; they were disposed to be dictatorial; they desired constantly to impress upon Panama that they were the real masters of the situation and that the Panaman authorities were virtually subordinates. This created constant irritation. The Panaman Government felt that it would not have the sort of hearing that it ought to have and therefore earnestly desired the negotiations to take place in Washington.

The Secretary said that there was no objection, of course, to the Panaman Government presenting its views at any time to the Secretary; that the Minister was entirely right with regard to the feeling of friendship that existed on the part of the President and the Secretary toward the Panaman people. The Secretary said that he wished the negotiations conducted in this spirit. While he was bound to insist upon the fundamental rights of the United States, he had a most earnest desire to meet the wishes of the Panaman Government wherever he could consistently do so. The Secretary pointed out that the suggestion that the negotiations should proceed between the Panaman authorities and the Canal Zone authorities was in the [Page 686] interest of speed. These negotiations would relate to certain questions in which an exact knowledge of the facts is important. The Secretary did not have these facts at first hand. He would have to communicate with the Canal authorities. The Panaman representatives would advance certain points; the Secretary would have to ask the Canal Zone authorities about them and then communicate with the Panaman authorities, and this triangular procedure would use up a great deal of time. The Secretary did not think that there was any reason for this. At the end the Treaty or agreement would have to be considered by the Department of State and considered in the light of the Panaman Government’s considerations. The Secretary thought it would be quite possible to have the negotiations conducted without injury to the interests of Panama but in a manner which would facilitate.

The Minister illustrated by saying that it was the practice, if they wanted some more land merely to send a notice or they would take it in an arbitrary and abrupt manner; that the Panaman Government was not treated courteously by the Canal Zone authorities. The Secretary said that he recalled that this matter had recently been brought before the Department and the Secretary had suggested that the Panaman Government should indicate the procedure it desired, and so far as he remembered the Panaman Government had not answered this inquiry.

The Secretary asked just what it was that was in the mind of the, Minister which, in view of the statements the Secretary had made as to the fundamental rights of this Government under the Treaty, the Minister regarded as the subjects for negotiation, apart from the question of land valuation. The Minister said that he had in mind the question of commerce and the prestige and position of the Panaman Government. The Secretary said that if this meant the question whether supplies could be furnished to ships going through the Canal, this had already been fully answered. It could not conduct the Canal without providing for supplies to ships. The Minister answered in a general way, referring to commerce without specification. The Secretary said it was quite impossible for him to form a judgment upon such a general statement; that it must be translated into something concrete that the Panaman Government desired, and then the Secretary could see whether it was possible or not.

The Minister reiterated the desire of the Panaman Government to have direct dealings at Washington, and the Secretary again said that there was not the slightest objection to the Panaman Government presenting to the Department what they desired or the general principles which should govern the negotiations; that, of course, the [Page 687] Department would be willing to express its views upon these principles and then the negotiations could proceed in the light of the principles thus established. The Secretary said that he desired to retain the advantage of the direct knowledge of the facts on the part of the Canal Zone authorities and of the expedition which would follow negotiations on the spot, but he had no wish to prevent the Panaman Government from fully expressing their wishes to the Department and he could assure the Minister that whatever might be presented would be carefully considered and frankly answered.