Memorandum by Mr. Murray M. Wise of the Division of the American Republics49

Ambassador Wilson and Governor Edgerton have conferred further with the Panamanian Foreign Minister concerning the draft instrument designed to transfer the water and sewerage systems. Dr. Fábrega insists that his Government cannot understand our view regarding the “surplus” funds and that a formal note will be sent the State Department through the Panamanian Embassy at Washington setting forth the Panamanian point of view. Ambassador Wilson assured him that the United States Government would maintain its position.

Governor Edgerton told Dr. Fábrega that there was no question in his mind that the spirit and intent of the exchange of notes of May 18, 1942 and of Public Law 48 provided for the transfer to Panama of the New Cristóbal systems, but that, as a practical matter, he felt it [Page 668] would be much better, particularly since it would be difficult for him to expend United States Government funds on the New Cristóbal systems once they had passed out of ownership of the United States, if such ownership could, in fact, be retained provisionally by the United States. Dr. Fábrega said this had been carefully considered by the Panamanian Cabinet which had decided that the New Cristobal systems should pass to Panama as intended by both Governments. Ambassador Wilson pointed out that he could find nothing in the Panamanian Constitution which would oblige the Panamanian Government to limit an operation contract to a period of twenty years.

Governor Edgerton feels that the Panamanian figures relative to a 7½ cent instead of a 9 cent water rate, are not convincing.

A further meeting with the Foreign Minister is contemplated and in the meantime Governor Edgerton is preparing an informal memorandum setting out in detail for the Panamanian Cabinet our points of view.50

  1. Addressed to the Chief and the Assistant Chief of the Division of the American Republics.
  2. The negotiation for the transfer of the water and sewer systems was not concluded until December 28, 1945.