Foreign Relations of the United States Diplomatic Papers, 1938, The American Republics, Volume V

819.51/950: Telegram

The Secretary of State to the Chargé in Panama ( Flexer )

Washington , October 20, 1938—7 p.m.

57. Your 104, October 10, 6 p.m. In the course of an interview with the Panamanian Minister³ on October 18, the Under Secretary⁴ discussed with him the bill introduced into the Panamanian National Assembly for the issuance of “guarantee bonds” obviously aimed at repatriating outstanding bonds of the Panamanian external debt at depreciated prices. Mr. Welles expressed to the Minister personally and informally the concern of this Government at the generally extreme nature of the legislation recently introduced into the Assembly, including the income tax bill and the proposed new constitution.

With particular regard to the “guarantee bond” bill, Mr. Welles pointed out that such a measure if enacted and enforced might very well result in some agitation in this country leading to a renewal of pressure in the United States Senate to defeat the General Treaty of March 2, 1936.⁵

While this Government is not prepared at this juncture to make any formal representations to the Panamanian Government, you are authorized to discuss the situation informally with the appropriate Panamanian authorities at the next suitable opportunity and to point out that the legislation now pending in the Assembly may well affect adversely the future economic development of the Republic. Please continue to keep the Department closely informed of developments.

Hull

3. Augusto S. Boyd.
4. Sumner Welles.
5. Department of State Treaty Series No. 945, or 53 Stat. 1807; see also Foreign Relations, 1936, vol. v, p. 855.