The Secretary of State to the Panaman Minister ( Alfaro )

Sir: I have the honor to confirm to you the understanding developed in the conversations that took place during the negotiation of the treaty signed by us today to aid in the prevention of the smuggling of intoxicating liquors into the United States, that the signing of this treaty will in no wise affect the inclusion in the treaty now under negotiation to take the place of the Taft Agreement of an article in the terms of Exhibit 8 of the American Commissioners reading as follows:

It is agreed that no penalty or forfeiture under the laws of the United States shall be applicable or attach to alcoholic liquors or to vehicles or persons by reason of the carriage of such liquors when they are transported under seal and under certificate by Panaman authority from the terminal ports of the Canal to the cities of Panama and Colon and between those cities and any other point of the Republic and between any two points of the territory of the Republic when in either case the direct or natural means of communication is through Canal Zone territory and provided that such liquors remain under said seal and certificate while they are passing through Canal Zone territory.

Accept [etc.]

Charles E. Hughes