The Panamanian Embassy to the Department of State



The Government of Panama has received with the greatest pleasure the Memorandum which the Honorable Mr. Sumner Welles, Under Secretary of State, presented to the Ambassador of Panama and which concerns three of the twelve points contained in the Memorandum which under date of February 18, 1941, was presented by the Ambassador of Panama to His Excellency the President of the United States, describing the immediate aspirations of Panama, which he submitted to the United States Government for its kind consideration for the purpose of obtaining from the said Government certain partial compensations for the vital concessions which Panama has granted for the defense of the Panama Canal.

The Panamanian Government feels gratified by the spirit of cooperation manifested by the United States in the above-mentioned Memorandum and believes that this signifies a step forward on the road to an equitable settlement of the pending points which involve the minimum aspirations of Panama, by no means exaggerated, if they are studied in the light of other negotiations of the same kind.

The Government of Panama, being animated by the most earnest desire to cooperate with the Government of the United States in the defense of the Canal, and trusting that the latter Government will, in a broad spirit of understanding and justice, attend to the requests presented by the Panamanian Government, as an act of partial compensation and adequate aid in recognition of the vital cooperation rendered by Panama, has already facilitated to the military authorities of the Canal Zone the tenancy of the areas of land which were requested for air bases, electric detectors and searchlights, etc., and considers, therefore, that it is entitled to expect of the United States Government prompt and favorable attention to the Panamanian requests.

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With reference to the 12 points containing the Panamanian aspirations, included in the memorandum which the Ambassador of Panama submitted to His Excellency the President of the United States, the Panamanian Government desires to make the following statements:

The aqueduct and sewers of the cities of Panama and Colón shall pass into the power of the Panamanian Government in full and the latter shall be exempted from payment of amortization of the capital and still pending interest for the cost of the installations effected. As at the present time Panama could not furnish the water necessary for the cities of Panama and Colón, Panama would be disposed to pay for the said water at the rate of B/0.09 per thousand gallons (including escapes, wastes or water used for cleaning and for fire fighting). All this in the manner in which it is now furnished for the National Aqueduct of Las Sabanas. Panama undertakes to maintain the existing sanitary conditions in the operation of the said aqueducts and sewers.
The Government of Panama will enter into immediate possession of the lands occupied by the Panama Railway Company in the cities of Panama and Colón. The reservation made in the Memorandum of the 7th instant that those would be transferred to Panama “which are not now necessary or no necessity for which is foreseen for the functioning, maintenance, sanitation and protection of the Canal” is not as entirely clear as might be desired and the Government of Panama would prefer that such areas be clarified precisely in order to avoid misunderstandings in the future.
The Government of Panama has devoted especial interest to the study of this problem and suggests two feasible plans to the United States Government with a view to finding a solution of it:
  • Plan 1. The Government of the United States might establish a tax of 10 percent ad valorem on all goods imported into the Canal Zone for resale by the commercial entities of said Zone.
  • This tax would not apply to those articles of construction, machinery, munitions, etc., etc., which are imported into the Canal Zone exclusively for the upkeep, defense, operation and sanitation of the Panama Canal.
  • The sum collected by the United States Government from this tax could be returned at the end of each year to the residents of the Canal Zone only, in the form of dividends. No employee could buy coupons for a greater amount than a prudent and reasonable percentage of his wages except by special authorization from the Executive Secretary of the Canal Zone.
  • Plan 2. That there be established with respect to the goods imported into the Canal Zone for resale to the employees of the said Zone, the same Federal and State taxes as are in effect in the State of Louisiana, which is where the Court of Appeals of the Canal Zone has its seat. Also the amount of coupons which each employee might [Page 449] acquire would be limited to a reasonable and prudent percentage of his wages, except in special cases in which the Executive Secretary of the Canal Zone should grant a permit.
The Government of Panama hopes that there will be placed in operation as soon as possible larger ferries than those now used for the crossing of the Canal, on uninterrupted service, day and night. And it trusts that as soon as possible the construction of a tunnel or a bridge will be undertaken to join in a permanent and adequate manner the two sections of the Isthmus divided by the Canal.
The Government of Panama has decided to drop Point Five, as it considers that the Republic of Panama should have complete jurisdiction over all highways which are in territory under Panamanian jurisdiction.
The Government of Panama views with alarm the growing immigration of persons of the black race for the work of the Canal Zone. According to a note from the Governor of the Panama Canal received in the Panamanian Chancellery not long since, the possibility seems to be suggested that even larger contingents may be brought in. The Government of Panama repeats its desire that the United States Government formulate a formal promise not to bring into the Canal Zone any more individuals of a race whose immigration is prohibited by the Constitution of Panama and that it repatriate as soon as possible such as have been brought in in contravention of these wishes of Panama.
Panama, in reference to Point Seven, desires that the United States Government take the necessary measures in order that the Zone policemen, the members of the Army, Navy and Air Force of the United States may not bear arms of any kind on entering territory under the jurisdiction of the Republic of Panama, and hopes that this prohibition may be established, without reservations, as soon as possible.
The Government of Panama hopes that the Madden Dam (Represa de Alhajuela) will furnish to Panama, when so requested by the Panamanian Government, electrical power at a price of not more than one centésimo (¹⁄₁₀₀) Balboa per kilowatt hour.
The Government of Panama considers that the Government of the United States ought to cover in full the cost of the highway to Rio Hato, as compensation, if only in part, for the use which it has been making of the lands situated in the jurisdiction of Rio Hato, without the consent or authorization of the Panamanian Government, and hopes that it will reimburse Panama for the sums which it has spent in the building of the said highway.
The Government of Panama sees with satisfaction the promise made by the United States Government to change the railroad station [Page 450] of the city of Panamá, so as to facilitate the plans for urban improvement, as soon as a satisfactory plan is decided upon. It deems it desirable, however, that information be given as to whether the patio of the railroad also will be changed.
In the event that transit is interrupted on the highways of the Republic on account of the transportation of war matériel or troops of the United States, in time of peace, an adequate indemnity will be allowed to Panama as compensation for the damages suffered by the persons affected, including the loss for perishable products or products which are liable to putrefaction or exposed to decay due to delay in transportation. Moreover, damages suffered by the highways or roads will be repaired at the expense of the United States.
The Government of Panama is confident that a prompt settlement will be reached on this point, by ceding to it the space necessary for the installation, in a place near the Balboa docks, of three tanks for petroleum, gasoline, etc.

The Government of Panama deems that everything relating to the time for which the United States will occupy the lands ceded for air bases, electric detectors and reflectors, and the jurisdiction which the United States Government will exercise over the said lands has already been duly discussed and resolved by common accord. The United States Government will occupy the said lands for the time that the present emergency lasts and will exercise over them unrestricted military jurisdiction and civil jurisdiction of a judicial character in offenses related to sabotage and espionage.