The Panaman Minister (Alfaro) to the Secretary of State

No. D–387

Mr. Secretary: I have the honor to refer to Your Excellency’s courteous communication dated the 23rd instant, whereby Your Excellency answers my note of the 18th inquiring which are the provisions that Panama must make to reimburse the United States for the costs of construction of the roads north of Alhajuela in excess of the sum of $1,250,000. in conformity with the provision of Article II of the Treaty of the 28th of last July.

Your Excellency is pleased to inform me that the Government of the United States will undertake as soon as possible after the ratification of the Treaty by both parties the construction of the road from Colon towards Portobelo or from Colon to Alhajuela whichever the Government of Panama may prefer, expending thereon the sum of $1,250,000. From the point thus reached the United States Government will continue the construction of the road as soon as funds are deposited by the Republic of Panama to the credit of the Panama Canal, using those funds as they accrue until the road program is completed.

Under instructions from my Government, I have the honor to state that the measure proposed by Your Excellency’s Government would substantially depart from the stipulation of the Treaty, inasmuch as the Treaty speaks of a reimbursement of funds whereas the method set forth in Your Excellency’s note would constitute an advancement of funds. In other words Panama would not refund to the Government of the United States the sums disbursed by the latter in excess of the sum of $1,250,000, but it would draw funds from its treasury to deposit same to the credit of the Canal authorities for the purpose of having them use those funds in the construction of roads exceeding such amount.

If the final stipulation of Article II should be complied with in this manner there would be no reason for its being in the Treaty, as it is clear that when the National Government has funds available for public works that it can undertake by itself, it is not in a position to put another Government in charge of the disbursement of its own funds for the execution of such public works. Such a practice on the other hand would be incompatible with clear principles of our internal public law.

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My Government understands that in conformity with the stipulation of the final sentence of Article II of the Treaty the United States is to disburse the total cost of roads North of Alhajuela and the Republic of Panama is to re-imburse the United States for such cost, deducting therefrom the sum of $1,250,000. which is the consideration offered for the grants that Panama makes to the United States by said article.

If, as I hope, the learned Government of the United States concurs in this understanding, I pray Your Excellency to state which provision of the Government of Panama is deemed satisfactory to the Government of the United States for the purpose, as the Treaty says, of “reimbursing the United States for all costs of construction of all said highways North of Alhajuela excepting $1,250,000.”

I avail myself [etc.]

R. J. Alfaro
  1. Translation supplied by the Panaman Minister.