711.1928/3188/10
The Chief of the Division of Latin American Affairs ( Wilson ) to the Panamanian Minister ( Alfaro )
Dear Doctor Alfaro: The suggestion which you made at our last meeting in the State Department on Friday, January 11, regarding the payment of the annuity, and which was the subject of your aide-mémoire of January 14, 1935, has been carefully considered.
The suggestion as I understand it is, in brief, that as there was no strictly Panamanian currency at the time the Canal annuity payments were agreed upon in the treaty of November 18, 1903, the use of the word “dollar” at that time might now be construed as referring to what might be termed the “successor” of the dollar in Panama, to wit, the balboa. Overlooking the very minor difference in the gold content of the balboa and the old dollar, I am advised that the suggestion that the dollar may therefore be considered one of the “foreign currencies” referred to in the Appropriation Act passed last year, could not be justified under existing law in this country. While it is possible that reference to dollars made before the adoption by Panama of her own currency might be construed as reference to balboas under Panamanian law, nevertheless, the dollar remains, and must be so regarded, as a domestic currency under United States law.
I venture to recall the suggestion made on various occasions by Mr. Welles22 when we have discussed the question of the annuity, namely, [Page 914] that the Government of Panama consider accepting the payment as tendered on February 26, 1934, as a payment “on account”, with reservation of all rights in the matter. In this connection, I remember that at our last meeting on January 11 you mentioned tentatively the possibility of considering such an arrangement, if in an exchange of notes reference could be made to the provisions agreed upon in the proposed treaty relating to the annuity payments. I should be happy, if it meets with your approval, in order to gain time and while awaiting the return of Mr. Welles, to explore further with you the possibilities of working out some such arrangement as that mentioned.
I am [etc.]
- Sumner Welles, Assistant Secretary of State.↩