140. Memorandum From the President to the Secretary of Defense (Wilson)1

While I was in Panama, the President of that country told me that in certain instances the arrangements between the Canal authorities and his country were not, in his opinion, working fairly, or were tending in such a way that he foresaw future trouble.

I recall instances that he mentioned specifically. The first had to do with the tax on liquor. It being manifestly impossible to establish custom guards or any kind of surveillance on the numerous roads leading from the Zone into Panamanian territory, it is clear that if an article can be purchased much more cheaply in the Zone than in Panama, smuggling will occur. He said that this was the case in the matter of liquor. As I understand it, Zone personnel, whether in the civil or military service, are able to purchase liquor at such a low rate of taxation that the total price in the Zone is little more than one-third what it is in Panama. He pointed out that the liquor tax [Page 281] was an item on which they had to depend for considerable revenue and that the existing situation was working great hardship on them.

Another point of complaint was what he termed the “slowness” in securing action on any Panamanian complaint or protest. He said that while the Ambassador was always readily available for hearing a complaint and forwarding it promptly to Washington, when a matter got into the hands of the Defense Department and the Canal authorities, seemingly endless delays ensued. With respect to this one, I told him that I would ask you to keep as close touch with such matters as possible so that you could personally determine that no unwarranted delays occurred.

He then referred to a difficulty that he foresaw as arising out of the recently concluded treaty. One article of that treaty provides for equal pay for equal work. But the President said that a system of work classification was being developed which the Panamanians were fearful was designed to place all the Panamanians in the lowest of pay categories. He asked assurance that entry into any grade would be strictly on merit, conducted by fair examination. To this I replied that the United States was in the habit of maintaining the spirit as well as the letter of its treaties.

I bring these matters to your attention because, first of all, I know that you would want to know of them. My more important reason is, however, that we must be exceedingly careful that the future years do not bring about for us, in Panama, the situation that Britain has to face in the Suez.

Local politics can feed on resentments brought about by real or imagined injustices to the native population. I think it behooves us to be scrupulously fair and considerate of Panamanian problems, and more than ready to meet them halfway, in any matter that seems to require adjustment between us, but without incurring the risk of divided control or beclouding our clear title to ownership.

  1. Source: Eisenhower Library, Whitman File, DDE Diaries.
  2. Printed from a copy which bears these typed initials.