The Ambassador in Panama ( Wilson ) to the Chief of the Division of the American Republics ( Bonsal )

Dear Phil: I acknowledge receipt of your letter of May 17, 1943, in further reference to the disposition of the surplus collected from the water rates in the Republic of Panamá.

I am glad to note that you are of the opinion that it would not be the proper method of disposing of these funds to use them to liquidate the remaining unamortized capital cost of the systems from this existing surplus.

I also note that you feel strongly that this surplus water fund should be used only for capital purposes. In this connection you will have seen from my letter of May 19,37 which crossed your letter of May 17, that I had already adopted the idea of devoting the surplus to needed repairs of the systems, and that I had made a suggestion in this sense both to President de la Guardia and to Dr. Fábrega.

Governor Edgerton tells me that without having made a detailed estimate of the cost of repairs required by the systems and which have been deferred during the emergency, he believes that the cost would be between $200,000 and $300,000, certainly not beyond the latter figure. He mentioned that as a matter of fact the amounts spent on repairs of the systems during the emergency compare rather favorably with amounts spent for similar purposes prior to the emergency. Nevertheless, he believes that up to $300,000 could be well spent on additional repairs to the systems. Inasmuch as the surplus is now something over $900,000, and is being increased at the rate of about $25,000 a month, this would mean that with the earmarking of $300,000 for repairs we would still have a surplus at the time we transfer the systems to Panamá of close to $700,000. Governor Edgerton also informs me that expenditures on capital cost account of the water systems should be made in the residential section of Panamá City beyond Bella Vista, where the Panamanian Government installed water pipes too small in size to provide adequate pressure. This residential section has been developed considerably of late and will [Page 660] receive much greater development in the post-war period, and Governor Edgerton believes it would be desirable to install additional water pipes in order that that section may be properly serviced. We do not know as yet what the estimated cost of such installation would be and presumably it would still leave a balance available for capital purposes from the surplus.

[Here follows a discussion of legal aspects of the question of applying the fund to amortization or to repairs.]

With best of wishes,

Yours very sincerely,

Edwin C. Wilson
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