711F.1914/12–2846: Telegram
The Ambassador in Panama (Hines) to the Secretary of State
us urgent
[Received 3:40 p.m.]
776. Following a luncheon yesterday given to the Guatemalan Minister prior to his departure from Panama, I had an opportunity of talking with the Acting Foreign Minister. I opened the conversation by saying that I had contemplated asking for an appointment to again discuss the subject of defense sites with him in view of the fact that he had now had an opportunity of going over the draft of the agreement together with the memorandum giving details in regard to the individual sites, and I was anxious to get his reaction on the defense sites draft. The Acting Foreign Minister said that he understood that Dr. Alfaro would arrive tomorrow, Saturday morning, but why not discuss the matter right there. I agreed with him and after going over some of the same ground covered in the initial discussion the Acting Foreign Minister indicated that after reading the detail of the amount of acreage required as outlined in annex A, he found that the amount of acreage asked for was a great deal more than he had understood would be required. He said so far as he was concerned he was prepared to recommend the acceptance of the defense sites agreement as presented to him if the US would agree with Panama on carrying out the following program:
- 1.
- Assurance of a permanent market in the Canal Zone for articles produced in the Republic of Panama at the prices and conditions prevailing in a typical city in the US like New Orleans.
- 2.
- Gratuitous return to the Republic of Panama of Paitilla Point and other areas in Taboga which will be subsequently determined.
- 3.
- Construction within a fixed time, at the exclusive expense of the US of a concrete highway on a route which will be determined by Panama from a point on the (present) highway to Rio Hato to the Costa Rican border.
- 4.
- Gratuitous transfer to the Republic of Panama of one of the docks of Cristobal suited for international navigation.
- 5.
- Payment of the sum of Balboa’s 50 per year per hectare for all the lands occupied as defense sites though they be private property or national lands.
- 6.
- Gratuitous transfer to Panama of the Cativa Hospital with jurisdiction over the land on which it is located.
- 7.
- Permanent right to Panama to sell, free of all tax, customs duties or import duties, 30 million litres of Panamanian liquors per year in the US.
With reference to Point 1, I indicated that at a conference Friday morning we had made considerable progress in setting up a permanent market in the Canal Zone for produce of the Republic of Panama; that the first step in such a program, as I understood it, required an organization to be set up by Panama with which small producers could deal in order that the central agency established could offer produce in sufficient quantities to justify the handling by the Canal Zone authority. The Foreign Minister agreed that such steps were necessary.
With reference to point 2, I indicated that I thought there was a good opportunity of arranging for the return of Paitilla Point, the Aspinwall site on Taboga which undoubtedly the Minister has in mind, if we could first finally reach an agreement on the defense sites agreement.
With reference to point 3, I indicated that the construction of a concrete highway as against a macadam highway would greatly increase the costs. As a matter of fact it would increase it approximately $25,000 per mile. I stated that while the US was committed to pay two-thirds of the cost of the inter-American highway, it would seem to me that it would be much more reasonable to discuss the building of a macadam highway as originally contemplated and applying the amount that it will cost the US to correct the difficulties in regard to the present highway at Rio Hato by building a new road around it.
It is my hope that in connection with this item desired by Panama that we endeavor to delay whatever we do in making any commitment on building the highway to eliminate our agreement to build the tunnel under the Canal.
Request of Panama for a lock at Cristobal, Point 4, is related to their establishment of a free port as recommended by Dr. Lyons55 in his survey of the possibilities down here. It is also in lieu of two roads requested at the initial conference with the Panamanians, one of 20 miles in length and the other approximately 10 miles (reEmbtel 770 December 23).
With reference to point 5, this rate was expected to be proposed by Panama because of their discussion at the recent conference in regard to some remuneration being given for national lands. I believe it will [Page 1142] be possible in certain localities to reduce the cost per hectare but undoubtedly the Panamanians will hold out for such a rate at the main air fields at David and Rio Hato, possibly the army will consider reduction in acreage.
Item 6 is the same as previously reported to Department.
Item 7 is a new request and one that I am not fully familiar with as to our ability to undertake such a commitment. At the present time it would mean very little so far as the tax receipts to the US are concerned, but it is undoubtedly based on the Panamanian desire to build up the manufacture of liquors and beer, probably also the production of alcohol.
I have just received secret telegram 62756 which I will take up with the Acting Foreign Minister this morning. I will do all possible to hold them on discussion of the defense sites agreement.
The reaction of the Dept to the foregoing is requested at the earliest practical date.