Foreign Relations of the United States Diplomatic Papers, 1934, The American Republics, Volume V

711.1928/287

The Panamanian Minister (Alfaro) to the Department of State

[Translation]

Memorandum

The Minister of Panama has the honor to acknowledge the receipt of the State Department’s memorandum of October 30, last, which treats of the proposal made by the Panamanian Government that in the new treaty which it is intended to conclude the statement be made that Panama has already fulfilled the obligation of granting the use, occupation and control of all the lands and waters outside of the Canal Zone which might be necessary for the construction of the Canal and that, consequently, the obligation which she assumed by the Treaty of 1903 of granting the use, occupation and control of the said additional lands and waters has been extinguished.

In relation to this subject the Department of State transcribes the paragraphs marked 1 and 2 which are found at page 48 of the Message sent by the President of Panama to the National Assembly on the first of September, last, in which paragraphs, referring to the results of his interview with the President of the United States, President Arias expresses the idea that, as a result of the interview, it was established that the provisions of the treaty concluded in 1903 “no longer contemplate the use, occupation and control of the Canal Zone for purposes of construction”.

My Government believes that that view is most strictly in accord with the terms of paragraph one of the joint statement made by the Presidents of Panama and of the United States on the 17th of October, 1933, which paragraph reads as follows:

“Now that the Panama canal has been constructed, the provisions of the Treaty of 1903 between the United States and Panama contemplates the use, occupation and control by the United States of the anal Zone for the purpose of the maintenance, operation, sanitation and protection of the Canal.”

As may be seen, the paragraph transcribed expresses the understanding that the Canal having already been constructed, the provisions of the Canal treaty contemplate the use, occupation and control of the Zone “for the purpose of the maintenance, operation, sanitation and protection of the Canal”. As the term “construction” has not been used either in this paragraph nor in the following one, my Government has deduced from this clear language that it was evident and agreed upon that the provisions of the 1903 treaty do not and cannot contemplate the construction of a canal which has already been constructed.

My Government believes, further, that the United States Government stated more than twelve years ago that the construction period of the Canal has already passed and that such period came to an end with the formal opening of the Canal.

Indeed, when the abrogation of the Taft Agreement was effected,¹⁷ that was the precise reason given to justify that step, namely, that the construction of the Canal had already come to an end.

In a cablegram which the Secretary of War, Mr. Taft, addressed to the Secretary of State, Mr. Hay, reporting the arrangements concluded at Panama, Mr. Taft said:

“The order (executive) is of course revokable at will and its operations can be suspended by Panama by refusal to continue compliance with any of its conditions, but I believe from conference that, adopted, it will continue satisfactory basis of relations between parties until opening of canal.” (Cablegram of December 2, 1904).

In the official communiqué given to the press on the 7th day of September, 1922, the Department of State, with reference to the Taft Agreement, expressed itself, as follows:

“By this Agreement the United States waived temporarily, during the period of construction of the Canal, the exercise of certain rights granted under the Hay–Bunau–Varilla Treaty of 1903”.

In a note addressed to the President of the United States on the first day of September, 1922,¹⁸ the Acting Secretary of State, Mr. Phillips, said, with reference to the Taft Agreement:

“After discussions with the officials of the Panaman Government a temporary agreement was formulated to serve as a modus operandi during the period of the construction of the Canal”.

And he added further on:

“The Taft Agreement was intended as a temporary arrangement to cover the period of construction of the Canal. As such it has served its purpose, since the Canal has for some time been formally open to commerce.”

Lastly, the Executive Order issued by President Coolidge on the 28th of May, 1924,¹⁹ in declaring the Taft Agreement abrogated, states the following in its third “whereas”:

“… the purpose of the agreement in question has passed with the formal opening of the canal, and the agreement no longer provides an adequate basis for the adjustment of questions arising out of the relations between the Canal Zone authorities and the Government of Panama, and should be replaced by a more permanent agreement”.

The same Executive Order, in referring to the Taft Agreement in its second “whereas” calls it an “agreement reached between the Secretary of War and officials of the Panama Government to serve as a modus operandi during the construction of the canal”.

The Department expresses the view that when it was said in the joint declaration that the Canal is already constructed the statement was made “in the obvious sense that the principal stage of construction has been completed and that the Canal is now open to use”, but it is considered, nevertheless, that “in a project as vast as that of the Panama Canal, there will probably be required from time to time expansion of Canal facilities, including additional construction, in order to insure adequate water supply and adequate facilities for expected increase in traffic. Obviously, the exact extent of such future expansion cannot be foreseen at the present time”.

The memorandum states, for these considerations, that the Government of the United States is unable to renounce any of the rights granted to it by Article II of the Treaty of 1903.

The Government of Panama deeply regrets that it cannot agree with this interpretation of Article II, just referred to, because of the foregoing considerations and the considerations set forth below which support its point of view on the matter.

When the Treaty of November 18, 1903, was concluded, the question had not yet been settled as to what type of maritime channel—a sea-level canal or a lock canal—the United States would construct and of course the possibility was foreseen that a lock canal might be constructed which would require the creation of artificial lakes, the area of which would necessarily have to extend beyond the strip ten miles wide, the use, occupation and control of which were granted for the canal proper. Therefore, Article II of the treaty provided in the second sentence of its first paragraph, as follows:

“The Republic of Panama further grants to the United States in perpetuity the use, occupation and control of any other lands and waters outside of the zone above described which may be necessary and convenient for the construction, maintenance, operation, sanitation and protection of the said Canal or of any auxiliary canals or other works necessary and convenient for the construction, maintenance, operation, sanitation and protection of the said enterprise.”

By virtue of that provision the Government of the United States acquired, without any additional compensation for the Panamanian Government, during the construction period of the canal, the use, occupation and control of the following areas situated outside of the Canal Zone:

1. The lands necessary for the creation of the Gatún Lake up to the level of 87 feet above sea level;

2. The lands necessary for the elevation of the said lake to the level of 100 feet above sea level;

3. The lands adjacent to the former pueblo of Chagres and known by the name of Fuerte San Lorenzo;

4. The lands of Paitilla at the northern end of the Bay of Panama facing the capital of the Republic and adjacent to its perimeter with an area of fifty hectares;

5. The Island of Largo Remo in Bay Las Minas to an extent of 220 hectares;

6. An area of 14.95 hectares on the Island of Taboga;

7. The land necessary for the formation of Lake Alhajuela by means of the construction of the Madden Dam, in an area of 22 square miles and up to the contour line of 263 feet above sea level.

If a glance is cast on the map of the Canal Zone it will be easily seen that all the waters that flow toward the Canal have already been made use of and continue to be made use of for feeding the locks and that the lakes of Gatún and Mireflores receive the waters from the various rivers, small rivers, arroyos and other streams forming the river systems of the Gatún, Siricito, Agua Sucia, Siri Grande, Trinidad, Tripones, Caño Quebrado, Pescado, Paja, Bailamonos, Mandinga, Cocoli, Cardenas and Caimitillo Rivers; of the Chagres River, with its principal tributaries, the Chilibre, the Chilibrillo, the Indio, the Pequeñi, the Gatúncillo and in short all the other streams found on the various slopes that descend toward the Canal. The Chagres River not only feeds Gatún Lake but also the Lake of Alhajuela, formed by means of the Madden Dam, at a level higher than that of Gatún Lake. It seems evident, therefore, that there is no longer any system or utilizable stream of water for the Canal that has not already been utilized and which is not being utilized and neither is there any area of land that could be utilized for the formation of other artificial lakes, inasmuch as the three now in existence receive and store all the waters that flow over the slopes running toward the Canal basin. It must be taken into account, furthermore, that the supply of water for the locks has as a basis today a level in Gatún Lake of eightyseven feet above sea level and that the Republic of Panama has granted to the United States the use, occupation and control of the lands necessary for the elevation of the waters of the said Gatún Lake to the height of one hundred feet above sea level. This elevation, combined with the storage of water in the Lake of Alhajuela is sufficiently above the requirements of the Canal not merely with the two sets of locks now in existence but also with a third set of locks that may be constructed and put in use in the future for a traffic four or five times greater than that which at present exists.

When the possible enlargement of the facilities of the Canal has been spoken of the reference has always been specifically to the construction of additional locks, which signifies constructions that must be made within the Canal Zone and not outside of it. “As the Canal throughout its length of fifty miles,”—General Harry Burgess, Governor of the Canal, has said—”has a channel sufficiently wide for ships to be able to pass each other, no limitation whatever so far as concerns the channel of the Canal need be considered. The limiting factor lies in the locks.” Accordingly, the only thing that can be needed outside the Canal Zone is the use and the supply of water which, as has been explained, has already been granted, accepted and utilized. By the land and water utilized for such object, the Canal traffic is rendered secure not only in its present capacity but in the capacity to which it may attain in all the period up to the year 2000.

This is shown by the extremely conservative technical calculations made by the eminent engineer General Harry Burgess, Governor of the Panama Canal until the middle of 1932. From a study published by him in the magazine The Military Engineer, of September–October, 1929, we take the following passages:

“The combined supply from the two lakes (Gatún and Alhajuela) would be, in a dry season like that of 1920, 49,000,000,000 cubic feet. For an impounding of water at the height of 240 feet, the combined supply would amount to 53,000,000,000 cubic feet” … “Supposing Lake Alhajuela to have an elevation of 230 feet, the supply of water would be sufficient for fifty-six daily transits through the locks and if the elevation of the dam were 240 feet, the supply of water would be sufficient for sixty daily transits. It is apparent, therefore, that when the Alhajuela project is finished, the provision of water for the Canal will be sufficient to operate the three sets of locks to the limit of their practical capacity.”^*

The value of these figures may be estimated when the two following facts are considered: (1) That the Alhajuela reservoir has been given an ordinary elevation of 240 feet above mean sea level and a maximum elevation of 263 feet above the same level; (Report of the Governor of the Canal for 1931, page 30) and (2) that the average number of transits through the Gatún locks during the year 1928 was 16.7 daily. The average for the fiscal year ending June 30, 1933, was 12.0 for the same locks and in the preceding fiscal years it was 17.23 in 1929, 16.81 for 1930, 15.26 in 1931 and 12.06 in 1932.

“During the last five fiscal years”—General Burgess continues to explain in his above cited study—”the average number of tons (Panama Canal measurement) per transit is 5,000 … Twenty-seven daily transits at the rate of 5,000 tons per transit give an annual traffic of 49,000,000 tons (Panama Canal measurement) and at 6,400 tons per transit, an annual traffic of 63,000,000 tons by the same measurement. It may be affirmed with assurance that the present capacity of the Canal is from 60 to 65 million tons [per year], as measured by the Panama Canal.”

Attention is again called to the significance of these figures on the present capacity of the Canal, when it is taken into account that the highest annual traffic that the Canal has ever had since its opening was in the year 1929, when the number of tons transported reached the figure of 30,663,006. In the following years the annual traffic was 30,030,232 tons in 1930; 25,082,800 in 1931; 19,807,998 in 1932 and 18, 177,728 in 1933.

At the end of General Burgess’ work are found the following observations:

“A careful study made in 1927 by the then Governor of the Panama Canal (General Walker) of the statistics of Suez and Panama and the increase in world trade, led him to the conclusion that the probable increase in the traffic through the Panama Canal will be some 7,000,000 tons (tonnage measurement of the Panama Canal) per decade. It seems a well-founded prediction to estimate the increase in traffic at not more than 10,000,000 tons per decade and to affirm that the third set of locks will be needed within possibly thirty or thirty-five years” … “It is risky to use the predicted increase of 10,000,000 tons per year [decade?] for an indefinite time in the future but as the ultimate capacity of the Canal is [over] 112,000,000 tons per year, it appears entirely safe to say that the Canal can meet all the demands of commerce until the end of the present century.”

The foregoing views, supported by the very high authority of their eminent author, permit the affirmation without fear of falling into error, that the construction of the Canal has already terminated, not only for the needs of the present moment but even for those that may exist in as distant a future as it is given to the present generation to foresee. This authority beyond suspicion has shown that there does not exist in a reasonable and foreseeable future any possibility of extension of the Canal facilities involving a necessity for new land and water outside the Zone.

Panama considers, therefore, that there is no reason justifying the retention of an indeterminate, indefinite, unlimited and eternal clause, the retention of which affects its national prestige; which is a latent subject of alarm for all the citizens and inhabitants of the Republic who see following it the specter of sudden and unnecessary expropriations, and which therefore constitutes an obstacle to the free economic development of the country.

My Government cannot believe that the additional lands clause had the scope or purpose of creating a kind of international eminent domain of perpetual duration, but merely the purpose of granting in an indeterminate form a right, the extension of which could only be determined when the execution of the work which would permit us to know, as we now know, the factor unknown in 1903, of the lands and waters necessary for the construction and operation of a lock Canal. Interpreted in that manner, the clause would come to form a kind of capitis diminutio of the national sovereignty, which would not permit the Republic of Panama to esteem itself the real sovereign of its territory, the latter being subject to an unlimited and unrestricted encumbrance which would affect its whole area, from one border to the other.

What in 1903 was possible of explanation, in 1934 can have no justification. Panama’s sacrifices on behalf of the work on the Canal must have some limit. It could agree to the very burdensome and exceptional concessions which were imposed in 1903 by the force of insuperable circumstances. But Panama cannot agree to the perpetuation of a clause that inflicts upon it moral and material damage, without giving the United States any real equivalent benefit, because it retains the right to require that which there is no longer any need to require.

In view of the foregoing considerations, the Government of Panama hopes that the enlightened Government of the United States will see fit to reconsider what was stated in the memorandum of October 30, last, in the sense that there may be included in the new treaty that is contemplated, a clause containing in substance the declaration and agreement suggested in the draft article that the undersigned Minister had the honor to submit to the Department on September 22 last.

Washington , November 8, 1934.

17. See telegram No. 39, May 28, 1924, to the Minister in Panama. Foreign Relations, 1924, vol. ii, p. 522.
18. Ibid., 1922, vol. ii, p. 761.
19. 43 Stat. 1952.
20. The above is a faithful translation from the Spanish, but without benefit of comparison with the original English text, which is not available at this moment.—Tr[anslator] FGH [Footnote in the file translation.]