819.51/370: Telegram
The Minister in Panama (South) to the Secretary of State
[Received 10 p.m.]
27. Department’s cable number 18, March 15. I regard this matter as extremely urgent. Only $10,000 now remains for continuance of road construction and all operations will have to cease by April 1 unless more funds are forthcoming. Great losses would follow if operations are abandoned, since the oncoming wet season would destroy much uncompleted work. Likewise it would be necessary to remove men and equipment now on the roads. West34 and Baldwin35 [Page 690] made the suggestion that Panaman Government secure $100,000 in equal amounts from International Banking Corporation, Banco Nacional and American Foreign Banking Corporation. There is no connection between the loan of $100,000 and the loan of $4,500,000, but the Government proposes to pay former out of proceeds of latter.
Managers of above-mentioned banking interests were invited to a conference by Baldwin who acted for the Minister of Finance. The American interests would not respond until Legation’s opinion had been ascertained. The Minister of Finance is greatly wrought up because of refusal of American managers and he has threatened to secure the whole amount at the Banco Nacional and withdraw deposit of $300,000 now deposited with American houses. Minister of Finance also told Baldwin that certain American banking interests had offered to loan Government large sum of money under authorization of the $4,500,000 loan, and without asking the opinion of the Department. … I have heard rumors that the National City Bank, subject to the approval of the Department, is interested in the matter.
The loan of $100,000 is strongly favored by Baldwin, and it is my recommendation that no objection to it be interposed by the Department. Baldwin’s confidential opinion in the matter of the loan of $4,500,000 is as follows: He regards a loan not exceeding $3,000,000 as beneficial, since it would make possible building of road between Panama City and Nata, thereby connecting capital with roads previously constructed costing $3,000,000, and would indicate advisability of extending road construction program. …