The Secretary of State to the Chargé in Panama (Flexer)
26. Your 53, June 23, 2 p.m. The War Department now has informed the Department that it considers it desirable that negotiations [Page 826] be entered into for a long term lease on the part of the War Department for the rental of the lands in question with the option of purchase at any time during the life of the lease. The War Department letter states in part:
“In view of the pending ratification of the treaty with Panama, signed March 2, 1936,32 it is believed desirable that the preliminary arrangements be made by the State Department rather than by the War Department.”
Immediately upon the return to Panama of Mr. Elliott please initiate negotiations with him and in collaboration with the Commanding General of the Canal Zone for a 5-year lease of the property at an annual rental of not to exceed $2,300, with option of purchase at any time during the life of the lease at a price not to exceed $30,000. The 5-year lease is deemed necessary in connection with obtaining the required legislative appropriations of funds for the purchase. If and when a lease is agreed upon it will be signed by the military authorities. The War Department is instructing General Stone by telegram in the sense of this paragraph.
With reference to paragraph (a) of your telegram 53, you will use your own discretion about participation in the negotiations after your preliminary conversation with Elliott.