711.1928/341
Memorandum by the Chief of the Division of Latin American Affairs (Wilson)
Dr. Alfaro, Minister of Panama, came in at my request in order to discuss the Canal annuity matter. I said that following my last conversation with him we had at once taken up with the Treasury and the Department of Justice the question raised by his Government whether the recent opinions of the Supreme Court in the so-called gold clause cases would not permit this Government to make payment of the annuity in gold dollars of the 1904 value. I said that the question of the effect of the Supreme Court opinions on the Canal annuity question was under careful study by all appropriate authorities of this Government, but that a decision had not as yet been reached. In view of the fact that the annuity payment is due tomorrow, February 26, I said that we would be obliged to transmit a check for $250,000 to the Fiscal Agent of Panama in New York, which is the payment authorized in the current Appropriation Act. I said that I appreciated the suggestion Dr. Alfaro had made in conversation with me that an agreement might be reached between the two Governments that pending the conclusion of our study of the matter the United States would not be regarded in default if it failed to transmit the payment on February 26, but that in view of our treaty obligation and the nature of the “irrevocable instructions” which the Department had received from the Panamanian Government regarding the transmission of the annuity payment, we felt that the only course open to us was to transmit this check when due.
Dr. Alfaro said that he appreciated our point of view; at the same time he said that we of course understood that Panama could not accept the payment and that he would be obliged to instruct the Fiscal Agent in New York to return the check to the Department, as had been done last year.
I said that I would advise Dr. Alfaro as soon as an opinion had been reached by our authorities as to the effect of the Supreme Court action in relation to the annuity question.