The Ambassador in Panama ( Damson ) to the Secretary of State

No. 806

Sir: I have the honor to refer to my despatch No. 804 of December 7, 1940,12 enclosing copies of recent correspondence concerning the leasing of tracts for defense purposes13 and particularly the Spanish text and an English translation of Note No. 3490 of December 3, 1940,14 addressed to the Embassy by the Panamanian Secretary of Foreign Relations.

As stated in my despatch, General Van Voorhis and I had found it impossible to meet for a discussion of Dr. De Roux’s note before the despatch of Saturday’s air pouch, but we hoped to find time for a conference on Sunday. In the meantime, after writing my despatch No. 804, I had with President Arias an interview (for the purpose of discussing the Debt Readjustment Plan) in the course of which he referred to the compensation to be accorded Panama in return for the leases. This afforded me an opportunity to take up with him certain other aspects of the question and in particular the term for which the leases are to be concluded. I enclose a memorandum covering this portion of my conversation with the President.12

This conversation confirmed my belief, already expressed in my despatch No. 750,12 that the President, while disposed to make available the tracts required by the Army, will seek to use the opportunity to obtain in return every advantage practicable in the form of concessions and financial compensation. It is obvious that he is keenly interested in obtaining very substantial pecuniary advantages for his country; and it seems likely that the extent to which we are able and willing to meet his desires in this respect will prove an important and probably controlling factor in determining how rapidly, smoothly, and satisfactorily we attain our own objectives.

[Page 1084]

This should be borne in mind in considering the following comments on Dr. De Roux’s note of December 3, which are submitted after a conference held on Sunday morning with General Van Voorhis (numerals and letters refer to those used in the Foreign Office note):

The contention that the installations contemplated by the Army constitute a danger to Panama and would prove a preferential objective for an eventual enemy would seem to be based either on a misconception or the desire to build up a case for Panamá. On the contrary, such installations should reassure the country as respects its own defense, and furthermore the various regions concerned should derive no little economic benefit from the presence of even relatively small bodies of well paid men. These points of view will be discreetly advanced orally as opportunity offers. I strongly doubt the advisability of attempting to engage in any written discussion regarding them.
(2a) and (2c).
There should be no objection to fixing a maximum limit on the number of men regularly stationed at different points in time of peace.
Road P–8, referred to by Dr. De Roux, is precisely the road which General Van Voorhis proposes to make a two-way concrete highway. As respects the suggestion that the United States convert other roads into similar highways at the request of the Panamanian Government, I pointed out to the President (see enclosed memorandum) that it appears excessive, particularly when we are being offered only short-term leases. Such a demand could not be accepted in its present form and I do not believe that it will be insisted upon. There should be no objection to making roads open to general use, provided suitable provision is made for keeping unauthorized persons out of the leased tracts.
No comment required.17
The term for which leases are to be concluded was discussed further with the President in our interview of December 7 (see enclosed memorandum). Dr. Arias insists on not committing succeeding administrations and considers ninety-nine years tantamount to perpetuity. In his note, Dr. De Roux offers, with the President’s approval of course, a seven-year term (the new six-year presidential period plus an additional year to give a new administration time to familiarize itself with the matter). In his conversation with me, the President said that national pride (amor propio nacional) was involved, and that on the other hand we must realize that no Panamanian [Page 1085] administration would decline to renew the leases. The argument that Panamá is assured that lands no longer needed for defense purposes will revert to it at once seems to make no impression on the President or his Foreign Secretary.
I do not believe that we can hope to obtain ninety-nine year leases. However, some satisfactory compromise formula may be worked out, particularly if Panamá’s desires touching compensation are satisfied.
General Van Voorhis informed me that he would be content with jurisdiction over military personnel. He intends, however, to interpret the term “military personnel” liberally—to include for instance what he terms “camp followers”.

As respects Dr. De Roux’s suggestion concerning a Mixed Commission for the preliminary study of the tracts required, General Van Voorhis told me that he was prepared to designate at once two officers who will cooperate with the Panamanian representatives. The latter—the Subsecretaries of Treasury and Finance and of Public Health and Public Works—are both young men possessing an excellent knowledge of English and believed to be friendly to the United States. The former is very close to President Arias and through him the President will probably obtain information which will give him a better understanding of the problems involved. General Van Voorhis tells me that the surveys already made by the Army are so advanced as to make the work of the Commission relatively simple.

In his closing paragraph, Dr. De Roux refers to “considerations …18 concerning the articles and merchandise which may be brought” to the leased tracts. He has in mind presumably measures designed to protect the country’s fiscal interests and to prevent smuggling. This should offer no serious problem.

Respectfully yours,

William Dawson
  1. Not printed.
  2. Notes Nos. 426 and 427 to the Panamanian Minister for Foreign Affairs, pp. 1079 and 1082.
  3. English translation not printed; for Spanish text, see Panama, Memoria … de 1943, p. 162.
  4. Not printed.
  5. Not printed.
  6. This section read as follows: “The installations on the islands of Melones and Boná were not mentioned in the previous conversations. Attention is called to the fact that these additions and changes could cause delay or confusion in the negotiation.”
  7. Omission indicated in the original despatch.