Memorandum by the Chief of the Division of Latin American Affairs (Wilson)
Dr. Alfaro, Minister of Panama, came in. He said that he had instructions from President Arias to inquire regarding the payment of the Canal annuity “in gold coin of the United States,” as provided in the 1903 Treaty.26 In this connection President Arias desired him to refer to the conversation which President Arias had with President Roosevelt on this subject.27 President Arias stated that the first night at the White House he had mentioned the matter and had asked that payment be made on a gold basis. At this point Dr. Alfaro read me a letter he had received from President Arias in which the latter stated that President Roosevelt had answered, in effect, that there would be no question of making the payment on a good [gold?] basis, because it was an obligation of an international character.[Page 613]
Dr. Alfaro then said that he recalled that President Arias had mentioned to him, the day following the afore-mentioned conversation, that President Roosevelt had added something to the effect that he wanted the benefit of the gold payment to accrue to Panama and not “to the bankers,” Dr. Alfaro stated that under the terms of the trust agreement for the 1923 loan and subsequent instructions issued by the Government of Panama, the Canal annuity of $250,000 was paid over by the United States Government to Mr. William Nelson Cromwell as Fiscal Agent of the Republic of Panama, for application against the service of the loan. Dr. Alfaro said that it was his understanding that all of the $250,000 was not required for the service of the 1923 loan, since the revenue from the Constitutional Fund of six million dollars was also pledged to the service of this loan. The 1928 loan, now in partial default, had a second lien on the Canal annuity and the income from the Constitutional Fund, as well as having certain specific revenues pledged in its favor.
Dr. Alfaro said that it was the intention of the Republic of Panama to deposit with Mr. Cromwell, as heretofore, the $250,000 in legal tender money, in accordance with the Republic’s obligations; however, Panama desired that the additional amount, representing the difference between the annuity in “legal tender” and on a gold basis should be made available directly to Panama.
I told Dr. Alfaro that I had not known before that this matter had been discussed between the two Presidents. I said that we would at once give consideration to it and would advise him later.