711.1928/893
The Assistant Secretary of State ( Berle ) to the President of the Foreign Bondholders Protective Council, Inc. ( White )
My Dear Mr. White: I have received your letter of October 19, 1939 wherein, on behalf of the Foreign Bondholders Protective Council, and as bearing upon its relation to the rights of the holders of bonds of the Republic of Panama, you submit several questions to the Department.
By way of reply I refer in the first instance to the following provisions of Articles VII and XI of the General Treaty of March 2, 1936 between the United States and Panama:
“Beginning with the annuity payable in 1934 the payments under Article XIV of the Convention of November 18, 1903, between the United States of America and the Republic of Panama, shall be four hundred and thirty thousand Balboas (B/430,000.00) as defined by the agreement embodied in the exchange of notes of this date. The United States of America may discharge its obligation with respect to any such payment, upon payment in any coin or currency, provided the amount so paid is the equivalent of four hundred and thirty thousand Balboas (B/430,000.00) as so defined.” (Article VII)
“The provisions of this Treaty shall not affect the rights and obligations of either of the two High Contracting Parties under the treaties now in force between the two countries, nor be considered as a limitation, definition, restriction, or restrictive interpretation of such rights and obligations, but without prejudice to the full force and effect of any provisions of this Treaty which constitute addition to, modification or abrogation of, or substitution for, the provisions of previous treaties.” (Article XI)
In relation to the reference in Article VII of the Treaty to an agreement embodied in an exchange of notes, I invite your attention to the notes attached to the Treaty as exchanged March 2, 1936 in regard to the Monetary Agreement of June 20, 190414 between the United States and Panama wherein reference is made to “the necessary [Page 757] condition of the Agreement that the standard unit of value of the Republic of Panama, the Balboa, should continue at a parity at the rate of one dollar for one Balboa”. A further statement is contained in these notes that “it has also been recognized that in the Republic of Panama and in the Canal Zone silver Balboas and fractional currency of the Republic are circulating together with United States currency at the rate of one Balboa for one dollar”.
Further replying to your inquiries I advise you that the annuity provided for in the Treaty of 1936 is not considered as the equivalent of the annuity for which provision is made in Article XIV of the Convention of 1903, but it is considered that $250,000 of the new annuity is equivalent to the former annuity and that the excess over that amount is intended as an additional grant to Panama made in consideration for grants made to the United States in the Treaty of 1936.
I also wish to refer to your request for copies of communications from the Government of Panama, and between this Department and the Chase National Bank, regarding the accrued annuity payments. Inquiries have been made in order to ascertain if the Panamanian Government has objection to the disclosure of these official documents. If there are no objections, I shall take pleasure in sending to you in the very near future, copies of the relevant notes and letters.15
Sincerely yours,