Memorandum of Conversation, by Mr. Murray M. Wise and Mr. Fred G. Heins of the Division of Caribbean and Central American Affairs

Participants: Mr. MacDonald, Public Roads Administration
Mr. James, Public Roads Administration
Mr. Wilson, Public Roads Administration
Mr. Braden, Assistant Secretary of State
Mr. Briggs—ARA
Mr. Cochran—CCA
Mr. Heins—CCA
Mr. Wise—CCA

PRA officials called at the request of the Department to discuss activities in Panama and the $25,000,000 Inter-American Highway Appropriation Bill now in Congress.


There was a discussion of the situation in Panama which led to the signing by Mr. Humbard, PRA representative in Panama, and the Panamanian Minister of Public Works, of an agreement which provides that:

Panama will rent from PRA equipment necessary for the airport construction;
PRA will lend the necessary technical personnel for the execution of the work which will be subject to the direction and approval of Panama;
Panama will have an option to buy this equipment, deducting rentals paid; and
Panama will make available for use on the Inter-American Highway any equipment thus purchased.

The agreement had been made in Panama subject to the approval of Mr. MacDonald and the question before the meeting was whether the Department would approve of the arrangement as the best possible solution to the situation which had arisen in Panama.

Ambassador Hines had given his full support to the request of the Panamanian Government that the Department assist in securing Mr. MacDonald’s approval of this agreement.2 PRA officials were advised that the Department went along with this arrangement although it was in principle opposed to United States Government agencies operating abroad in competition with local enterprises.

Mr. MacDonald felt that PRA had been unjustly accused of pushing itself into a position of assisting the Panamanians on the construction [Page 1170] of the airport beyond that which was generally agreed to during a meeting in Panama at the time of the visit of General Fleming and Mr. MacDonald.

Later, upon leaving Mr. Braden’s office, Mr. Wise remarked that he assumed Mr. MacDonald would approve the agreement entered into between Mr. Humbard and the Panamanian Minister of Public Works. Mr. MacDonald replied “maybe” with somewhat of a doubtful tone in his voice and added that the work was going on at the airport without any agreement. He said that he was “fed up” with the whole situation in Panama and wondered if it might not be well to pull out.

Corridor Road

Mr. MacDonald said the main reason for proposing, in the agreement for the work at the airport, that Panama make available for use on the Inter-American Highway any equipment purchased was to provide a legal basis for making the transfer to Panama. He indicated that the Bureau of the Budget would probably approve such a transaction only if it were in some way related to the Inter-American Highway Project. Mr. MacDonald went on to say that some of this equipment could be used in realigning the Corridor Road, if an agreement were reached on this project.

It came out in the meeting that both Panamanian and Canal Zone authorities were interested in changing the route of the Corridor Road and that while Panama would probably ask this Government to provide some $200,000 of the total cost this would presumably be borne by the War Department. It was agreed that this was a matter for Panama to work out with the Canal Zone authorities and that the State Department would come into the picture when the question arose as to whether the proposed realignment of the Corridor Road deviated so much from the 1936 Treaty3 stipulations that a new political convention would be required. PRA officials felt that such a convention would not be necessary. The Department’s Legal Section had informally expressed an opinion that a new convention would be required.

With respect to the question of the future of PRA activities in Panama Mr. Braden was emphatic in his statement that he was opposed to any agreements between PRA and the Panamanian Government for road building or construction work which could be undertaken by local firms. Mr. Briggs had emphasized this same point with respect to the airport, stating that once the provisions of the proposed agreement, if it should become effective, had been complied [Page 1171] with any completion work beyond the stipulations of the arrangement should be contracted for by the Panamanian Government on the basis of bids.

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  1. In a memorandum of May 8, 1946, by Murray Wise, which indicates the terms of this agreement, a marginal comment appears as follows: “I’m not convinced of wisdom of this. S. B[raden].” (819.154/5–846)
  2. Department of State Treaty Series No. 945; 53 Stat. (pt. 3) 1807.