Papers relating to the foreign relations of the United States, 1928, Volume III

711.192/354

The Panaman Minister ( Alfaro ) to the Secretary of State ²

undated

[Translation³]

Memorandum Concerning the Modifications Suggested by the Government of Panama for the Revision of the Treaty of July 28, 1926

Preamble.

The objections that have been made to the preamble agree with the remarks that have frequently been made by the Panaman Commissioners to the American Commissioners during the negotiations. The American negotiator well knows how strongly we objected to including in the preamble the expression “sovereign rights” of the United States, which, in the form in which it stands, does not impart to the United States any new right, nor increase in any way the rights it acquired under the treaty of 1903,⁴ nor recognize that the United States holds absolute and titular sovereignty in the Canal Zone. But although this be so, and so appear from the logical, grammatical, and juridical analysis of the preamble, yet it tends to produce an impression to the contrary which is therefore erroneous. Proof of this is found by references in various newspapers of this country, the New York Times among others, to the new treaty in which this sentence occurs: “It is understood that the new treaty finally determines the sovereignty of the Panama Canal Zone.”

This, and other similar utterances in the American press, formed the subject of a correction given to the press by the undersigned Minister under date of December 18, 1926. This correction was clear and specific and before it was given to the press was shown personally by the Minister to the Chief of the Latin American Division, Mr. Stabler, who did not object to it in any way. The statement ended with these words:

“It was specifically agreed during the negotiations that that language (that of the preamble) means solely a recognition of the rights conceded to the United States by article III of the treaty of 1903 and does not mean an extension of such rights.

“If the language used in the news despatches here referred to intended to express the idea that the new treaty contains any stipulation that makes or recognizes the United States as the absolute and titular sovereign of the Canal Zone, the Legation categorically declares that the treaty does not contain any such stipulation and that the Government of Panama has never shown even any intention to agree to any such stipulation.”

The impression made by the language of the preamble on the mass of the public of Panama is, nevertheless, that it is intended to force upon Panama an indirect and veiled recognition of the fact that the Republic conceded to the United States absolute and unrestricted sovereignty in the Canal Zone. As Panama has stated before, during and after the negotiations, this is a proposition to which it can never agree and, as said by the undersigned Minister on more than one occasion to the American negotiator, if Panama should have to pay that price for any concessions, no matter how advantageous, it would forego obtaining them rather than pay such a price.

What has happened since the treaty was signed has brought into prominence the reason why the Panaman Commissioners objected to inserting a sentence which besides being juridically ineffective and innocuous and therefore unnecessary and useless, is likely to cause erroneous impressions that may in the future lead to conflicting constructions which it is to our interest to avoid.

The Government of Panama, therefore, considers that the preamble would directly express the original purpose of the High Contracting Parties and that neither would be injured if the first paragraph should be changed as follows:

“The Republic of Panama and the United States of America desiring to settle certain points of difference between them and desiring also to regulate certain features of their future intercourse arising from the contiguity of the Republic of Panama and the Canal Zone, have resolved to conclude a treaty and have accordingly appointed as their plenipotentiaries.”

Article I.

The raison d’être for this article was Panama’s complaint about the construction put by the authorities of the United States on article VI of the treaty of 1903 in that part which has reference to the appraisal of the property expropriated for Canal purposes and the willingness of the Department of State to put in the place of the rule established by that article for appraisals another clearly stating that the expropriated property shall be appraised according to its value at the time of the expropriation. That purpose was achieved but the American Commission insisted on two points that have been the source of bitter criticism of that stipulation:

1. The declaration in the article that in every condemnation case “title to the property shall be deemed to have passed from the owner thereof to the United States when the formality of giving the notice has been complied with.”

2. The requirement of the United States that the Umpire be solely and exclusively an American citizen.⁵

Those two demands being insisted upon as conditions sine qua non instead of the fundamental demand made by Panama which the representatives of the United States positively and unhesitatingly declared to be fair, the Government of Panama could do nothing but agree to them. Nevertheless, the Government deems it proper to make the following remarks on the first point:

The stipulation that “title to the property shall be deemed to have passed from the owner thereof to the United States when the formality of giving notice has been complied with” is intended, as personally stated by the Secretary, Mr. Hughes, “to prevent speculation in the land over which the United States desires to extend control.” That purpose is achieved by reproducing in article I of the new treaty the stipulation contained in article VI of the treaty of 1903, that the proceedings of the Joint Commission or of the Umpire “shall not prevent, delay or impede any part whatsoever of the work on the Canal or the Railroad or any of the auxiliary works relating to both.”

It is a well known principle of law that expropriation puts out of human commerce the thing which it is intended to expropriate and therefore there is no occasion to indulge in speculation subsequent to the notice referred to in the article in question, which is the starting point of the expropriation proceedings. The best proof of this is that by operation of article VI of the Canal Treaty there have been miles of property expropriated for the construction of the work without a single case being recorded of speculation subsequent to the notice of expropriation that has had any effect upon the Government of the United States.

With respect to the second point, the Government of Panama can do nothing else than insist upon the reasons and statements contained in Document R,⁶ submitted by the Panaman Commissioners at the session of the negotiating Commissions held on May 3, 1924, and ask that in accordance with that document the appointment of an American Umpire be not a contracted obligation for the Government of Panama but a voluntary act based on friendship and confidence.

The Panaman Government asks, therefore, that the notes exchanged on the subject on July 28, 1926,⁷ and article I be modified by omitting the passage above referred to.

This is also the place to point to a defect in article I, consisting in that it covers only the cases of expropriation of land or estates owned by private persons. There are many cases in which the United States has extended its control to public land or bodies of water belonging to the Panaman Nation and the case might occur again in the future. As the proceeding in these cases is to be the same it would be desirable to insert at the beginning of paragraph 2 after the words “private property” the phrase “or occupied public lands” and further on after the words “said lands or properties” also insert the phrase “or occupied public lands.”

Article II.

The American negotiators well know how firmly the Panaman Commissioners objected to the stipulation in this article which transfers to the United States jurisdiction over a large part of the city of Colon, an extremely painful sacrifice to Panaman patriotism which violates to the injury of Panama the principle sanctioned by the treaty of 1903 of keeping the cities of Panama and Colon out of the Canal Zone.

The American negotiators know that Panama agreed to that stipulation forced upon it by the declaration of the United States, which for Panama constitutes a case of force majeure in that the United States would not sign any treaty with Panama unless we agreed to the said transfer. Panama found itself obliged to yield this point because it was indispensable to obtain through the other clauses of the treaty the basic security which its economic life imperatively demands.

Panama adheres to the sentiments expressed in documents C, S, EE and FF submitted during the negotiations,⁸ and at this date after the unanimous manifestations of public opinion against the transfer of jurisdiction dealt with in this article, holds that it should be wholly struck out.

In view of the persistence of the United States in making this article a condition sine qua non of the new pact, the Government of Panama thought it was performing a patriotic duty in submitting to the sacrifice demanded of it in Colon in return for guarantees for the economic life of her country. But evidence subsequent to the signing of the treaty and its presentation to the National Assembly for approval have served to demonstrate that article II is wholly inacceptable to the country and that the Panaman people would prefer facing the consequences that may flow from the failure of the treaty than to agree to any transfer of jurisdiction over a large part of the city of Colon. The fundamental reason for this attitude is that the transfer of jurisdiction is not indispensable for the operation and protection of the Panama Canal, but on the other hand profoundly wounds the national feelings and is the cause of the greatest apprehension and uneasiness on the part of persons who have interests in the city of Colon.

In the presence of the situation thus created the National Government deems it its duty to act in accord with the sentiment of all its citizens and confront, should the case arise, the consequences that might flow from a failure to conclude the treaty.

The one consideration which to the mind of the National Government might warrant or compensate a transfer of jurisdiction in the north part of the city of Colon would be the transfer by the United States as owner of the stock of the Panama Railway Company of all its rights, titles and interests to and in the land it now owns or holds in the city of Colon which is not occupied by offices, stations, yards, tracks, workshops, storehouses or any other property intended for the operation of the Panama Railway or its dependencies. (Document C.)

Consequently Panama again proposes to the Government of the United States to take as the element of that compensation the city lots held by the Railway Company in the city of Colon that are not necessary either for the work of the Canal or for the operation of the Railway.

During the negotiations it was represented that the city of Colon is built on territory given to the Railway Company in usufruct by the Government of New Granada with the exception of four hectares which the said Government reserved to itself and which Panama owns as the successor to the rights and obligations of Colombia in the territory of the Isthmus. And so practically all the homes and business houses are built in Colon on land leased from the Panama Railway Company, for 15 years in the case of frame buildings and 25 years for concrete or masonry buildings. The situation of the city of Colon is as a consequence most precarious, since it lies within the power of the Railway Company to refuse a renewal of leases or to raise the rentals to such high figures as to make them prohibitive, thus bringing in one way or another ruin upon the owners of houses in Colon. This possibility is not very remote from reality because it is a fact that lately the rentals have been increased in most cases by 500 percent and the apparent tendency is to continue increasing them more and more. And out of the enormous income so earned by the Railway Company it refuses to pay any tax whatsoever to the Republic of Panama, and holds as a dead letter article 18 of the contract of 1867 in force between the Panaman Government and the Railway Company and adduces in its place article X of the Canal Treaty.

The Panaman Government requests the American Government to study anew all the questions related to this article and, by reconciling as far as possible necessity with equity, agree to its being wholly stricken out or revised so as to make it acceptable to the Panaman Nation.

Article III.

Under section 4 of this article it was originally stipulated that for the maintenance of the roads therein stipulated Panama would assume the obligation of appropriating the sum of $25,000 yearly. The amount was afterwards increased to $55,000, account being taken of the keeping in repair of the roads north of Alhajuela whereby an annual outlay of $30,000 was considered to be needed.

When the stipulation relative to the construction of roads north of Alhajuela is stricken out of the treaty, section 4 should be amended by reducing the amount there stated to $25,000. Likewise, section 6 should be amended by substituting the word “article” for the word “treaty”

The wording of section 5 should be harmonized with the last paragraph but one of article VI. The first stipulation has been interpreted by some in the sense that it announces the free use of the roads by the two Governments only, seeing that the intention is the same as expressed in article VI that persons residing in the Canal Zone will have the use of the roads of Panama in the same way as persons residing in the Republic will continue to enjoy the right to travel over the roads of the Canal Zone which is recognized in article VI of the treaty of 1903.

The alternative of a bridge or a ferry across the Canal is not suitable. As the traffic of vehicles between the capital and the interior of the Republic increases it is felt in the main that the only satisfactory solution of the question of connecting the two sections of the Republic separated by the Canal is to build an adequate bridge to perform a service of a permanent character independent of the operation of the Canal. A bridge over the locks or a ferry service across the Canal may be acceptable as a temporary or provisional service while a bridge as suggested is being built. There might be also provided a tunnel between the two sides of the Canal instead of a bridge if that method were more practicable in the opinion of the two Governments.

Therefore there should be stricken from the said paragraph the following passage: “at Pedro Miguel Locks or establish and operate a ferry across the Canal on the Pacific side.”

As will be remembered, article III of the treaty reproduces the convention signed ad referendum in January 1923 by two special commissions of the two countries concerned which met at Panama. Should the Government of the United States prefer wholly to strike out this article and reserve for a special agreement the question of building roads through the cooperation of the two Governments, the Government of Panama declares itself quite agreeable thereto.

Article IV.

With regard to this article, the chief complaint of Panaman trade and the cause of greatest concern to the Government, is the considerable extension it gives to the privilege of the commissaries, consisting in the recognition of that privilege to contractors and all persons who reside in the Canal Zone. Among these last are included the officers, employees or workmen of companies that have a right to do business in the Canal Zone, the hucksters, settlers and small merchants who settle there and the members of the families and domestic servants of those persons.

The Government and the trade are resigned to having the commissary privilege enjoyed by the officers, employees, workmen and laborers of the Canal and the Railway and the members of the families of all those persons, as also by the members of the Army and Navy and their families. But the Government of Panama has not ceased to maintain the idea that it is very unjust for the United States to insist on giving the commissaries an extension as broad as that which implies the opening of their doors to all the persons mentioned in the foregoing paragraph. And since both the Government directly and the negotiators up to the last minute endeavored without result to arrive at an agreement on a stipulation conforming to that desire, the Panaman Government cannot but find good reason for the criticism that has been made on that ground of section 1 of article IV. It therefore points out again the expediency of striking out in that section the final part of the first sentence from where it says “and the other persons to whom the United States” etc., as far as “such sales.”⁹

Another serious objection which was pointed out during the negotiations and which has since become the occasion for serious criticism was the vagueness of some of its clauses. Precision is a most desirable element in treaties because vague clauses necessarily give rise to conflicting interpretations.

There has been no precise definition in writing, although it was requested by the Panaman Commissioners, of what is understood, for instance, by “contractors operating in the Canal Zone.” Merchants have felt considerable alarm at that phrase in the treaty because they think that certain public utility companies, as for instance, the power and light company which runs its tramways to the Canal Zone, the gas company which also supplies that territory with fluid, any transportation company whose cars cross the Zone, any entity or person residing or settled in Panama, but who performs services for or furnishes supplies to the Canal, the Railway or its employees under a contract, becomes a “contractor operating in the Zone” and naturally is included in the treaty stipulation which would remove from the field of the local trade a very large number of persons.

We, the Panaman negotiators, always remark in connection with those objections that that is not the spirit of the stipulation and that it was understood during the negotiations that “contractors operating in the Zone” are simply those contractors who perform in the Zone works of such a nature as permit them to be considered as genuine employees of the United States to whom compensation is paid in the form of a contract in place of doing so in the form of wages, giving as an example the companies that construct and put in place the gates of the locks of the Canal; and that merchants, concerns, farmers, cattle raisers and other persons who have their business headquarters in Panama or any other part and render services or furnish supplies to the Panama Canal, as they do with any other customer, may not be considered as such. Fear and concern, nevertheless, prevailed because the Government was unable to produce any document evidencing such agreement, since, as the Department of State is well aware, the American Commission declined to express this in the text of the treaty itself and persistently maintained that it was unnecessary to record it either in the minutes or in the notes exchanged at the time of the signing of the Treaty.

The phrase “settlers employed in the cultivation of small tracts” is considered vague. What may be understood by “small tract?” On that point, also, the Panaman Commissioners requested that some understanding be reached during the negotiations, but their request was not granted.

There is also the same doubt as to whether the “small traders” who are permitted to settle in the Zone have or have not the right to import merchandise free of duty, the same as the commissaries. The Panaman Government, when informed by its Commissioners, repeatedly declared that that was not the understanding during the negotiations, since what was intended to be stipulated was that only the commissaries, that is to say, the American Government itself, and the companies that supply coal and oil could import merchandise into the Canal Zone for consumption there. The bonded warehouses, it is clear, did not import for local consumption but only for distribution or reexportation.

With respect to the bonded warehouses there has also been felt some alarm and fear among the merchants and people of Panama. It is considered that the stipulations relating to those bonded warehouses (paragraphs 1 and 3) mean ruin to the local wholesale trade. This fear springs from a belief that when the treaty provides that the bonded warehouses which the United States permits to be established in the Canal Zone may “distribute merchantable articles in wholesale and not in retail quantities” it means that those warehouses will sell, as it is a fact that they are wholesale establishments in the Zone, they may sell to any merchant or private person who may go there to buy, not only those who come from abroad but also from the Republic of Panama itself.

The Republic is now carrying on a rather important business with merchants in Colombia and various neighboring countries in Central and South America which are supplying themselves with dry goods in the cities of Panama and Colon that are obtained in those ports at very reasonable prices, considering the light duty, 15 percent ad valorem duty, which is the rate usually charged on dry goods imported into the Republic. These goods so imported and sold allow a satisfactory profit to the trade and yield import duties to the Panaman treasury. If merchants abroad can go tomorrow to make that kind of purchases in the Canal Zone and buy there from bonded warehouses which would not be obliged to pay any duty whatsoever, that commerce will disappear, to the injury of both the merchants and the Panaman treasury.

There is a certain kind of goods which from its nature is always sold in such quantities that the sale cannot come under any other head than a wholesale business. One might mention as an illustration, timber, cement, structural iron, paints, and in general all building material. If a bonded warehouse established in the Canal Zone were allowed to sell such material at wholesale to any private person or company residing in or outside the Republic, the local merchant would have a direct competitor in the Canal Zone. It is true that what is imported into the Republic will pay to the Republic the import and other duties which may be established by the Republic. But, nevertheless, the merchant doing business in the Zone and on that account enjoying the privilege of the commissary, together with his employees, domestic servants and family, apart from other benefits and facilities which his residence there would give to him, would have a considerable advantage over the merchant established in Panama, who in the end would be compelled either to close his place of business or try to move into the Canal Zone to establish himself there in the character of “a bonded warehouse.”

This possibility is not met by the declaration which was reported on this point in the minutes of the last session. That declaration excludes from the right to reside in the Zone, and therefore to enjoy the privilege of the commissaries, only merchants or concerns which may limit themselves to renting space on the piers for the distribution of goods. But those merchants still have open to them the establishment of bonded warehouses of their own.

In confirmation of the prevailing fears in this respect there is a typical case cited in Panama: The Ford car agency in the Republic formerly maintained in the cities of Panama and Colon large stores and garages for the exhibition and distribution of its products. The officers, employees and workmen of the Ford agency lived in Panama and in this way formed a part of the economic life of the Republic to the advantage of the local trade, the treasury and the national capital. Now, since the Ford agency uses the bonded warehouses of the Canal Zone, the establishments which it formerly maintained in Panama have been reduced to small offices, and the cars and parts which the agency imports are stored in the Zone until they find a local purchaser or receive an order for foreign shipment. This case of the Ford agency will become general, and then it will happen that the population hereafter engaged in the business of importation and exportation on a large scale will go and establish themselves in the Canal Zone and there enjoy the same privileges that the Government of the United States grants to its own employees, while the Republic of Panama observes the decline and death of the possibilities of profiting from the privileged circumstance of its geographical position. Panama is unable to understand why the United States is bent on setting up a policy which deprives the Republic of Panama of the legitimate profits it expected to receive from the interoceanic traffic, in order to confer them upon private enterprises and merchants who go to the Isthmus to carry on their business.

All these circumstances tend to show the expediency of revising and suitably clarifying article IV in order to accomplish the purpose of the negotiators to insure for the employees and laborers of the Canal the benefits originally stipulated in the treaty of 1903 and at the same time protect the local trade and treasury from the enormous damages occasioned by the practically unlimited extension of those benefits to persons who, by not being in the service of the United States, have no right to enjoy those benefits.

In short, this privilege ought to be confined to the employees of the Panama Canal and Railway, the officers and privates of the Army and Navy of the United States stationed in the Zone and the contractors, since the American Government insists on including these. But it should be clearly established that the contractors referred to in the stipulation are those who are performing some work in the Canal at so much for a job or a part or whole of any, certain work within the Canal Zone; but in no case should the privilege be extended to employees of banks and of public service utilities such as tramways, gas and others that are established in Panama and have branches outside of the Canal Zone, or those of concerns that have special contracts for the supplying of goods or effects to be used and consumed in the Canal Zone.

Article V.

Fear has been expressed in connection with this article, that it may permit the introduction into Panama of all kinds of goods purchased in the commissaries and bonded warehouses without any other obligation on the part of the importer than that of paying the import duty to the Republic. When the first part of the article which only mentions those duties is read separately there is foundation for that fear.

There is no doubt that that Article must be harmonized with article XIII of the treaty of 1903 which in its second sentence speaks of “import or other duties” and with the remainer of article V itself which, following the passage here objected to, says: “without the payment of import or other duties” in referring to certain articles which are granted free entry in the Republic; and, finally, with article VI which in paragraph 3 also speaks of “duties and charges.”

Doubt has also been expressed as to whether it is lawful for any employee of the Canal to sell in Panama what he buys in the commissaries upon paying the proper duties. In this respect objections have been met with the remark that the final part of article V grants free entry into the Republic of articles purchased in the commissaries “when they are intended for their own personal use and benefit or that of their families,” but to this observation it was replied that as there is no such limitation in article IV, which is the one directly dealing with the commissary privilege, it may be considered as an indication that the treaty establishes the limitation solely for the employees of the Canal or of the Railway who reside in Panama and not for persons of all classes who reside in the Canal Zone.

The observations made in discussing article IV with respect to the phrase “contractors operating in the Canal Zone” are also applicable here.

The Government considers, therefore, that it is desirable to clarify this article in such a way that all objections that have been made against it will be completely eliminated, and that in its wording it be made to conform to what was the unmistakable judgment and will of the negotiators who represented the two contracting Parties.

Article VI.

The objections to this article are based upon the lack of clearness which has been pointed out with respect to articles III, IV, and V. If these are clarified in a suitable manner, this article would remain as it is, except for the following modifications:

Paragraph 3 ought to be harmonized with paragraph 2, taking into account the fact that the tolls, dues, taxes or charges referred to in the two paragraphs must be those which each one of the High Contracting Parties “may have established or will in future establish,”

The last paragraph but one ought to be harmonized with section 5 of article III. To do this it is desirable, as was already suggested during the negotiations, that the paragraph cited should not state through a negative stipulation that the United States “will not impose charges of any kind whatsoever upon persons passing from the territory of the Republic of Panama into the Canal Zone,” but that it be stated as a positive stipulation that “it shall grant free passage” as is later on stated in the same paragraph which is reciprocally granted by the Republic of Panama to persons who go from the territory of the Canal Zone to the Republic of Panama.

This is a desirable modification because, as the paragraph is now worded, it might permit the belief that the United States could prohibit the passage across the Zone of the inhabitants of Panama and that its obligation is solely that of not imposing charges while the passage is kept open.

Article VII.

There is no observation to make concerning this article.

Article VIII.

This article has been severely criticized on account of the idea that it involves new limitations of Panaman sovereignty which go beyond the sphere of action granted in the matter of sanitation to the United States by the treaty of 1903. The Panaman Government has endeavored to show that the article aims no further than to maintain the system which has been in force in the Republic in the matter of sanitation since the Taft Agreement¹⁰ was concluded, with the needful reservations and explanations. But the Government cannot cease to recognize that the wording of that article leaves much to be desired, nor can it forget the prolonged and lively discussion which the wording of the article created, a fact which is established by the documents relative to the negotiations. The documents of the Panaman Commission, as a matter of fact, constitute an anticipated expression of that which was afterwards expressed by the public of Panama and make it clear that within the necessities and desires of each one of the two Contracting Parties it was possible to word that article in a manner that would have given rise to no difficulty of any kind in the Panaman public opinion.

The explanation made by the American negotiators in the minutes of the session of July 27, 1926 merely proves the foregoing statement and makes it plain that the term “enforce” appears to have been used in the treaty of 1926 in a way which is conflicting with the meaning ascribed to it by the explanation given by the American negotiators themselves and with that which is also given to it in an unmistakable manner by article VII of the treaty of 1903.

The Panaman Government therefore suggests as desirable and expedient a modification of article VIII in accordance with the foregoing remarks when the pending treaty is revised.

Articles IX and X.

These articles provide that a number of stipulations looking to cooperation in the defense of the Canal in the matter of wireless and aerial communications in time of peace and of war.

The Panaman Government is animated by the best desire to lend that cooperation to the United States, but believes that it is not just that restrictions be required of Panama within the territory subject to its jurisdiction greater than those which the United States requires in its own, or that in those matters Panama be placed on a footing of inferiority with respect to other nations.

The Panaman Government thinks that the needs of the United States may be satisfactorily harmonized with the needs and the national prestige of Panama and that a revision of these articles would bring that about.

Article XI.

This article includes a number of stipulations dealing with the cooperation that Panama is ready to extend to the United States for the protection and defense of the Panama Canal.

The Panaman Government is firmly convinced that the safety of the Canal is a problem which affects the Republic of Panama the same as the United States. Panama cannot contemplate with indifference that the part of its territory where the Canal is constructed be attacked, or the Canal itself; and therefore, Panama from the time when the treaty of 1903 was concluded, cannot be neutral in a war in which the safety of the Canal is threatened, and must cooperate in its defense and protection with every means at its command in its well known position as an unarmed nation.

The European press has generally clamored against this article, which it considers to be inconsistent with the obligations assumed by Panama through the Covenant of the League of Nations. The Panaman Government is firmly convinced that the obligations of Panama under this article do not involve any more inconsistency with the Covenant of the League than that which might be involved in the obligations of Panama assumed under the treaty of 1903 which had been in force for 16 years when Panama signed that Covenant. Compliance with certain stipulations of the treaty of 1903 in time of war is incompatible with a status of neutrality. The obligations of Panama under the Covenant of the League can only refer to conflicts in which Panama should be a direct and original party but not to conflicts of the United States in which Panama might find itself indirectly involved against its will by reason of the ties created by the treaty of 1903 on account of the situation in which it is placed by the construction of the Canal and by virtue of the supreme law of self defense, which is as sacred to nations as to individuals.

In the Republic this article has been charged with unconstitutionality on the ground that the agreement therein entered into is incompatible with the power ascribed by the Constitution to the National Assembly in its article 65, section 7, to “declare war, and to authorize the Executive to make peace.”¹¹

The opinion of the Panaman Government in this respect is that there is not and cannot be any incompatibility between the stipulation of the treaty and the Constitutional provision. The stipulation points out a possible cause for belligerency in compelling Panama to perform certain measures of cooperation which on account of their being inconsistent with the condition of neutrality Panama must carry out, “considering herself in a state of war.”¹² The Constitutional provision lays down the manner in which the condition of belligerency will be formally pronounced if there should be occasion therefor. If an armed conflict in which the United States be a party should arise, it will devolve upon the Executive Power immediately to carry into effect the clause in the treaty, and the National Assembly, if it should not be in session, will have to be called in this grave emergency, and it will be for it to decide afterwards whether or not there is occasion to “declare war.”

The two points above stated do not call for any substantial change in the article and may be explained in a manner that will leave no room for doubt.

The article must also be clarified so that there may not appear on the part of Panama a belligerency of an offensive nature which was wholly out of the intent and purpose of the High Contracting Parties. The clause exclusively refers to the protection of the Canal. Its nature is therefore essentially defensive and its sphere of action cannot go beyond the territory of the Isthmus.

The Panaman Government deems it desirable and advisable to clarify that article in the manner suggested in the remarks that have just been offered.

Article XII.

No substantial objection has been made to this clause. In this connection it is enough to point to the expediency of making small changes in certain paragraphs introduced by the Treasury Department that do not conform to the predecessor of this article, which is the monetary agreement concluded in June 1904, which changes were suggested as desirable during the negotiations.

Articles XIII and XIV.

There is no remark to be made.

2. This undated memorandum was handed to Francis White, the Assistant Secretary of State, by the Panaman Minister on January 5, 1928.
3. File translation revised.
4. Foreign Relations, 1904, p. 543.
5. See exchange of notes, July 28, 1926, Foreign Relations, 1926, vol. ii, p. 853.
6. Not printed.
7. Foreign Relations, 1926, vol. ii, pp. 849–853.
8. None printed.
9. The part of the sentence meant is “and to such other persons as under the provisions of Section 4 of this Article may be permitted by the United States to dwell in the Canal Zone, and who actually do dwell in said zone, it being understood that guests of the hotels operated by the Panama Canal or the Panama Railroad Company are not included unless they come under one of the other classes to which such sales may be made.”
10. See Foreign Relations, 1904, p. 640 and 37 Stat. 560.
11. Foreign Relations, 1904, p. 569.
12. The whole phrase in article XI of the treaty of July 28, 1926, reads: “Consequently the Republic of Panama will consider herself in a state of war in case of any war in which the United States should be a belligerent.”