139. Memorandum of a Conversation, Ambassador’s Residence, Panama City, July 23, 19561
PRESENT
- The President
- The Secretary of State
- Asst. Secy Holland
- Ambassador Harrington
- Mr. Jack D. Neal (MID)
- President Arias
- President-elect de la Guardia
President Eisenhower expressed his appreciation of the excellent manner in which Panama had conducted the meeting of Presidents.
President Arias thanked the President for the personal sacrifice which he had made in coming and said that he was sorry Mrs. Eisenhower was not able to attend.
The President stated Mrs. Eisenhower did not like to fly long distances for short stays. He said he himself was afraid for awhile that he would be unable to make the trip but that his doctors had [Page 278] assured him he would regain his strength quickly and could attend. He stated that despite the lengthy signing session of Sunday when two speakers prolonged their remarks he had felt fine.
President Arias stated he wished to take this occasion to call the attention to some of Panama’s problems. He stated our two countries had their differences which he always tried to work out. He said he and Ambassador Harrington discussed problems in a frank and friendly manner; that he usually had good relations with the Embassy and the State Department, but that dealing with the Canal authorities was more of a problem.
President Arias said his country was very small and its problems as seen by the United States might seem small, but that they were important to Panama. He compared the relative positions of the two countries by pointing out that this morning he had been told by Dr. Milton Eisenhower that the budget for Penn State College is $30 million per year; whereas, the yearly budget for the Republic of Panama is only $50 million.
President Arias stated that despite our recent treaties, things were not going well and that we are “running in to trouble”. He said he had been unhappy from the start about the “equal pay” wage scale. He said he could foresee many difficulties in implementing this phase of the treaty and he believed in taking preventative action now rather than curatives later.
President Eisenhower said if there are any injustices being done he wants to know about them. He strongly emphasized his stand on this point saying he would not tolerate such practices. He said he knew the relationship between the Canal Zone and the Republic of Panama is a very complicated and technical one; that the Canal was operated by a separate corporation reporting to the Secretary of Defense, but that problems arising receive the attention of Secretary Dulles through Ambassador Harrington. He stated it is only natural that difficult problems will arise and that the United States will not always be able to agree with Panama on specific points because of requirements by the Defense Department, the Government of the Canal and because of our Congress. President Eisenhower stated that he had just returned from a drive through the Zone with Governor Potter. He said the Canal officials are very anxious to do away with the Panama Railroad because it is losing $500,000.00 per year, but Congress will not authorize this measure. He said he was one of the early advocates of a highway across the Isthmus but that the Canal Company fought the proposal because of the monopoly it had on freight and traffic. He said now they want to do away with the railroad!
President Arias said another problem which is causing more and more trouble is the Liquor Matter. He explained to President Eisenhower [Page 279] that as a result of the agreement the Zone residents are exempt from most of the Panama tax. Smuggling liquor from the Zone to the Republic is growing. He said it is no problem for him to get a case of whiskey from friends in the Zone.
The President said he was not familiar with the details of this matter but he realizes such things usually go on. He said when he was stationed here there was heavy traffic in cigarettes; they were practically legal tender.
The President said he thought maybe there should be a better channel for handling these problems which arise between Panama and the Zone. He said possibly we should have one person who could get these problems into the proper channels quicker.
President Arias said it disturbed him because these important matters were discussed on a high level here in Panama and were then transmitted to a low level in Washington for decision.
Assistant Secretary Holland stated this was not the case; that Ambassador Harrington transmits information to Washington by cable where it reaches the Secretary’s attention, his own attention and that of several specialists. The officer handling Panama affairs is in daily contact with him, that he (Holland) has also daily conferences with Secretary Dulles and that he (Holland) also has a regular one-hour weekly meeting with the Panama desk officer.
Mr. Holland stated he felt Washington coordination—White House, Department of Defense and State—was good and is improving as a result of recent procedures which the President had ordered.
The President said he had spoken to Secretary of Defense Wilson regarding Panama when President Remon visited Washington and had told him he did not want any injustice done in our handling of Panama affairs.
President Arias brought up the matter of Panamanian citizens residing in the Zone being exempt from Panama taxes. The President said this sounded most unjust and that these matters must be corrected. He said possibly the State Department had not always kept him as closely informed on the problem with Panama.
President Eisenhower asked if President Arias knew the new Governor of the Canal—General William E. Potter. President Arias said he did. President Eisenhower spoke very highly of Governor Potter saying he had known him many years and he was certain Panama would find him able and helpful.
President Eisenhower strongly expressed his insistence on “justice” in all our dealings. He said we are going to have problems between our two countries but that we must “go to the past and look to the future” when we are trying to solve them. President Eisenhower stated one of his strongest convictions is his belief in the sanctity of treaties. The President said that in his dealings he “won’t [Page 280] be guilty of injustices”. He asked President Arias to communicate with Ambassador Harrington at anytime who will get the information to the White House.
President elect de la Guardia raised the question of the 10% tax on transportation. The President stated he was not familiar with the details. Assistant Secretary Holland said the news on this point was good since only last week a bill to abolish the tax had been reported out of committees in both houses.
In connection with the statement that Panamanians were often disappointed that it took so long to obtain action from Washington the President-elect said that the Chase Bank here had a good deal of autonomy and could act on its own. On the contrary, he said, the National City Bank had to refer most matters to its head office in New York and, in consequence, Panama’s relations with the Chase Bank were better than they were with the National City Bank.
Secretary Dulles said he kept up with Panamanian matters but necessarily not as to detail. He pointed out he was constantly being confronted with international problems of grave import.
- Source: Eisenhower Library, Whitman File, International File. Official Use Only. Drafted by Neal on August 17. President Eisenhower was in Panama to attend the meeting of the Presidents of the American Republics.↩