The Chargé in Panama ( Flexer ) to the Secretary of State
[Received 9:40 p.m.]
56. Referring to the Department’s 26, June 24, 6 p.m. It has been ascertained that Elliott will not immediately return to Panama but will sail for Europe on July 6 on the Europa.
In the circumstances it would seem advisable that the State or War Department initiate negotiations with him in New York or Washington.
I have kept Panamanian Minister for Foreign Affairs33 verbally informed of the status of Pinas Bay matter. Garay…authorizes attribution to the President of Panama of assurance that the transfer of properties to German interests will not be permitted by Panamanian Government. He was vague as to ways and means but mentioned grounds of national security. He said that Under Secretary of State34 [Page 827] had expressed the hope to the Panamanian Minister at Washington that the sale might be prevented. It was recalled to him that my instructions under the Department’s telegram above mentioned to initiate negotiations for lease were given subsequent to the Minister’s departure and that therefrom the Department’s view might be assumed that a leasing arrangement presented the most practicable solution. He reacted unfavorably to the suggestion of lease (even though purchase option was not mentioned) saying that he had not understood our proposal in this sense and had not spoken of it to the President. I have specifically requested that President’s views on such a lease be ascertained.
The military authorities are in agreement with the Legation that the stoppage of transfer to German interests simply as German may create embarrassing situation in the event of possible diplomatic protest alleging discrimination in as much as it cannot be hoped that the interest of the United States will remain unrevealed. This thought was advanced in my conversation with the Minister for Foreign Affairs. The possibility of a reversal of present attitude under future administrations should be considered. Dr. Boyd35 gives promises of being helpful and states that he has urged upon the President the necessity for preventing sale to Germans, possibly by purchase or expropriation by Panama. He is interested in War Department proposal which he will discuss with the President at earliest available opportunity.