The Panaman Minister ( Alfaro ) to the Secretary of State

No. D–369

Mr. Secretary: The Government of Panama is deeply interested in the realization of important and costly public works which the development of the country imperatively demands, but in the endeavor to carry out its desires it meets with an obstacle in the limited pecuniary resources at its disposal.

In connection with the conversations which I have held recently with the Department regarding the manner in which article II of the treaty of July 28, 1926, should be fulfilled, my Government desires to offer the following suggestion to Your Excellency’s Government. Panama would release the Government of the United States absolutely from the compensation which article II of the new treaty imposes on it, maintaining, regardless, the agreement concerning the transfer of jurisdiction in the area north of the city of Colon, provided that the Government of the United States will make or see that there is made to the Republic of Panama a loan of $30,000,000 for a term of not less than 50 years and at an interest rate not greater than 4 percent, the loan to be used for the total redemption of the present external debt of the Republic and for the construction of roads and other public works of vital importance, which program of construction could be the subject of a separate agreement. The Republic of Panama would guarantee the fulfillment of this obligation with its excise taxes, especially with the revenues pledged as a guarantee of the loan to be redeemed, and for this purpose it would seek authorization from the National Assembly which is now in session.

This agreement could be carried out by an additional protocol to the new treaty. If the United States by this means should lend its most valuable cooperation to the development of the Republic, no sacrifice whatsoever on the part of Your Excellency’s Government would be imposed.

I avail myself [etc.]

R. J. Alfaro
  1. File translation revised.