711.19/175

The Secretary of State to the Minister in Panama (Gonzalez)

No. 3

Sir: With reference to the recent visit of President Arias of Panama to President Roosevelt there is transmitted herewith a copy of a memorandum itemizing the points agreed to by the two Presidents, together with a press release of October 17, 1933,9 giving the joint statement of the two Presidents summarizing the results of their conversations. There is also transmitted herewith a copy of a self-explaiiatory memorandum of Assistant Secretary Caffery of October 16, 1933, recording two statements of President Roosevelt in this connection.

With reference to item 8 of the first mentioned memorandum you are informed that President Arias advised President Roosevelt that he would fully consider the question of controlling radio in Panama by a joint board similar to the Aviation Board after he returned to Panama. It is therefore assumed that he will desire to discuss this matter with you.

Very truly yours,

For the Secretary of State:
Jefferson Caffery
[Page 866]
[Enclosure 1]

Memorandum of Points Agreed to by President Roosevelt and President Arias

1. Restrictions on sales to ships by commissaries.

a)
Sales of “tourist goods” for resale on ships will be prohibited.
b)
Sale of articles required by shipping transiting the Canal, such as fuel, food supplies, et cetera, will be continued.
c)
Sale of other articles to ships will be prohibited, or a reasonable surtax, such as, say 25%, will be placed on such sales.

2. The question of measures to avoid sale at prices “below normal” of such articles as cigarettes and beer, which do not pay excise taxes, will be sympathetically studied in an effort to meet Panama’s views.

3. Special instructions will be issued to take all possible measures to prevent contraband activities on the part of those entitled to commissary privileges.

Sales to contractors and their employees will be restricted to those who operate exclusively in the service of the Canal, and who actually reside in the Canal Zone.

4. The use of restaurants and clubhouses in the Canal Zone will be limited to officers and employees of the United States Government and of the Panama Railroad Company and their families.

5. Admission to moving picture houses in the Canal Zone will be limited to officers and employees of the United States Government and of the Panama Railroad Company and their families.

6. The clause binding lessees or contractors of the restaurants to purchase their provisions from or through the commissaries will be abrogated.

7. The services of the United States hospitals and dispensaries in the Canal Zone will be restricted to officers and employees of the United States Government and of the Panama Railroad Company and their families, excepting only emergency cases.

8. Radio.

It is suggested that consideration be given to the creation by Panama of a Radio Board on the lines of the present Aviation Board. This Board would have, say, six members, of whom three would at all times be designated by the United States Government, for appointment by the President of Panama. This Board would issue regulations for the licensing, inspection, et cetera, of radio stations in the Republic of Panama. Appropriate measures would be agreed to for the limitation of licenses to Panamanian and American companies, and for appropriate safeguarding provisions to prevent endangering the operation or defense of the Canal Zone. The United States, under such conditions, would agree that no special restrictions be placed on “ship to shore” service with the exception of that relative to transiting the Canal.

[Page 867]

9. Assistance for repatriation of aliens who went to the Isthmus attracted by the Canal work and have become a charge on Panama.

The United States desires to lend its assistance to this end. The Secretary of War has authorized the Governor of the Canal to submit an estimate of appropriation for $150,000 for the purpose of giving this assistance. Panama, on her part, will of course also give financial assistance, and will enact the necessary measures to prevent admission to Panama of aliens who would become a charge, and also to prevent the readmission of such aliens as may be repatriated.

10. The local delivery into the Republic of Panama and the Canal Zone from “Hold for Orders” goods in the warehouses in the Canal Zone will be suspended.

11. The request made by President Arias for the suspension by the Panama Railroad Company of “all business transactions with persons or concerns other than the United States Government or the Panama Canal” is not clear. If specific points in this matter will be submitted, the matter will be given careful consideration.

In the meanwhile, measures will be taken so that services offered by the Panama Railroad Company such as the washing and pressing of clothes will be restricted to officers and employees of the United States Government and of the Panama Railroad Company and their families.

12. Article IX of the Treaty of 1903 gives the Republic of Panama “the right to establish in such ports and in the towns of Panama and Colon such houses and guards as it may deem necessary to collect duties on importations destined to other portions of Panama and to prevent contraband trade”. The United States Government is prepared to make the necessary arrangements to this end whenever the Republic of Panama so desires.

13. Desire of the Republic of Panama to construct links in the proposed trans-Isthmian highway.

The United States will make every effort to expedite its reply to Panama on this question, and to find a way to comply with Panama’s desire.

14. It appears that Title III of the Treasury and Post Office Appropriation Act for the fiscal year ending June 30, 1934, approved March 3, 1933, which requires the purchase of articles, materials and supplies mined, produced, and manufactured in the United States, with certain exceptions, has been interpreted in such a manner as to prevent the purchase of some of the products of Panama. Consideration will be given to the matter in order to determine whether enough latitude does not exist, under the provisions of Title III of the Act in question, so that the United States, through administrative orders, could direct that purchases of considerable quantities of Panamanian articles be [Page 868] made. If this does not prove to be the case, consideration will be given to seeking appropriate remedial legislation.

In addition to the foregoing specific points dealing with administrative matters, the United States agrees to the statement of certain general principles forming the bases for the relations between Panama and the United States in so far as the Canal Zone is concerned:

1.
Now that the Panama Canal has been constructed, the provisions of the Treaty of 1903 between the United States and Panama contemplate the use, occupancy and control by the United States of the Canal Zone for the purpose of the maintenance, operation, sanitation and protection of that Canal.
2.
In view of that purpose the Republic of Panama is recognized as entitled, as a sovereign nation, to take advantage of the commercial opportunities inherent in its geographical situation so far as that may be done without prejudice to the maintenance, operation, sanitation, and protection of the Panama Canal by the United States of America, which is earnestly desirous of the prosperity of the Republic of Panama.
3.
The Government of the United States would sympathetically consider any request which the Government of Panama might make for the solution by arbitration of any important question which might arise between the two Governments and may appear impracticable of decision by direct negotiations, provided that such question is purely economic in its nature and does not affect the maintenance, operation, sanitation and protection of the Canal.

[Enclosure 2]10

Memorandum by the Assistant Secretary of State (Caffery)

(1)
President Roosevelt remarked, after reading numbered paragraph 4 of the attached memorandum (and obviously the remark attached to numbered paragraph 5 also) that, of course, Panamanian guests could be invited to restaurants, clubhouses, et cetera, in the Canal Zone by persons entitled to the use of said restaurants, clubhouses, et cetera; all bills, however, must be paid by the persons entitled to use the restaurants, clubhouses, et cetera. President Arias accepted President Roosevelt’s observations as a matter of course.
(2)
President Roosevelt stated to President Arias that the State Department would make a study of the matter of the Panama Railroad’s not paying taxes on any of the property it owns, with the object of ascertaining whether the Railroad should not pay taxes on at least some of its properties.
J[efferson] C[affery]
  1. Department of State, Press Releases, October 21, 1933, p. 218.
  2. Filed separately under 711.19/175a.