Memorandum of Conversation, by the Under Secretary of State (Welles)

The Ambassador of Panama called to see me this afternoon at my request.

I told the Ambassador that I had submitted to the President the Ambassador’s request for an audience in order to submit to the President in the name of the President of Panama a series of very far-reaching suggestions which, if carried out, would imply the turning over by the Government of the United States of a great many millions of dollars. I said to the Ambassador that the President had requested me to inform him that due to the heavy pressure of official business at this time, the President was unable to receive him for the moment, but that the President, of course, would be glad to see him later on. I said that the President had also requested me to say that he believed that in view of the explicit treaty obligations of Panama contracted in the Treaty of 1936 with the United States, the Government of Panama should immediately proceed to make available to the Canal authorities the sites outside of the Zone required for the defense of the Canal and agree upon equitable and full compensation therefor. I said that in the judgment of the President the world situation was grave and speed in turning over to the Canal authorities the defense sites necessary was of the utmost importance. Finally, the President requested me to say that when Panama had in this manner complied with the treaty obligations, this Government would be very glad to consider any suggestions for further cooperation between Panama and the United States which Panama desired to present.

The Ambassador argued at very great length. He brought up the same questions which had arisen during past years alleging that the commissariats were depriving the people of Panama of their just commercial advantages, that the roads of Panama were being destroyed by the military forces of the Canal Zone which were using them, et cetera, et cetera.

I went into a long exposition of this Government’s policy which had been manifested by its willingness to negotiate the Treaty of [Page 422] 1936. I said to the Ambassador that I did not believe there was another government in the world that would have been willing voluntarily, through a treaty negotiation, to relinquish some of the rights accruing to it under the Treaty of 1903. I said that this Government had done that because of its desire to show the Panamanian people its true friendship through willingness to relinquish to the Panamanian people all commercial and material advantages possible in connection with the operation of the Canal, and at the same time, what was perhaps even more important, to remove from the Treaty of 1903 all of the provisions which had in any way appeared to be derogatory to the Republic of Panama as an independent and sovereign nation. I said the one advantage, in my opinion, that had been obtained from the Treaty of 1936 was that both Governments recognized their joint obligations as partners to defend and operate the Canal. I said that as a partner in this enterprise, Panama was now obligated to make possible the efficient defense of the Canal, particularly in this grave world emergency. I said I could not for a moment concede that Panama required any further compensation in order to carry out these obligations.

I stated that when the Treaty of 1936 had been ratified, the then Government of Panama, through its official representatives, had informed me that Panama believed that all of its just aspirations had been fully met. I said it would be an intolerable situation if, with every new administration that came into power in Panama, this Government found itself required to pay vast sums to Panama in the nature of new concessions as a means of persuading Panama to carry out her treaty obligations.

The Ambassador then blandly made the suggestion by instruction of his Government, that the United States advance to Panama all of the Canal annuities for the next fifty years. The Ambassador said that in this way the American bondholders could all be paid off and Panama would be able to relieve her economic situation. I said that this situation to my mind was inconceivable and that I could not comprehend the reference to the economic situation of Panama since, to my knowledge, Panama was the only one of the twenty-one American Republics which today was in a highly prosperous situation and that this was due entirely to the work on the Canal which had been undertaken at the expense of the Government of the United States, the money being spent on this work accruing, of course, to the benefit of Panama and likewise making possible the employment of practically every employable Panamanian citizen.

At the conclusion of our conversation, I summarized by saying that I desired to impress upon the Ambassador, by instruction of the President, the belief of this Government that the Government of [Page 423] Panama should immediately reach an agreement in Panama with the Canal authorities so that the defense sites necessary might be turned over to the Canal authorities. I said that if this were agreed to, I would be very glad to initiate discussions with the Ambassador covering the points raised in his memorandum but with the definite statement on my part that this willingness to discuss these points in no sense implied any responsibility on the part of this Government to accede to any one of them. I said that this Government during the past eight years had time and again, in a material way and in a very practical way, shown its desire to cooperate to the advantage of Panama and that this policy would continue. I said that this policy was inherently reciprocal and required reciprocal consideration on the part of the Government of Panama for the legitimate requirements of the Canal and for the legitimate interests of the United States.

I took occasion to say to the Ambassador that Secretary Hull had told me that he would like to have a talk with him on this same matter and that I had no doubt that an appointment would be arranged for the Ambassador by the Secretary’s office.

S[umner] W[elles]