DIPLOMATIC RELATIONS BETWEEN THE UNITED STATES AND THE REPUBLIC OF PANAMA A Thesis Presented to the Faculty of the Department of International Relations The University of Southern California In Partial Fulfillment of the Requirements for the Degree of Master of Foreign Service by Daniel Webster Kaufman May 1941 UMI Number: EP58341 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Pub! shmg UMI EP58341 Published by ProQuest LLC (2014). Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code ProQuest' ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 T h i s thesis, w r i t t e n by .........../ 6 iT<S' u n d e r the d i r e c t io n o f h .l& . F a c u l t y C o m m it t e e , a n d a p p r o v e d by a l l it s m e m b e r s , has been presented to a n d accepted by the C o u n c i l on G ra d u a t e S t u d y a n d Research in p a r t i a l f u l f i l l m e n t o f the re q u ire m e n ts f o r the degree o f MASTER OF FOREIGN SERVICE Deaft S ecretary Date.. J 0NE^ 19 41 F a c u lty C o m m itte e <r*TJk INTRODUCTION Within the past two jears the Republic of Panama, through the instrumentality of a new treaty with the United States, has realized many long-desired ambitions and wishes regarding economic and political affairs, both within the Republic and in the Canal Zone, From the inception of the Republic until the ratification by the United States Senate of the latest treaty, Panama had found many reasons for com plaint at the treatment aceorded her by the United States. The new treaty has removed many causes of friction. More than that, it has gone far to remove Panama from the status of a protectorate of the United States, and has given to the small country the position of a sovereign nation. Panama was brought into being so that the Panama Canal could be built. From the beginnings of Panama down to within very recent times the Republic had waged a long fight against the United States, seeking greater freedom from northern con trol, and at the same time has attempted to curb the activi ties of this country In the Canal Zone. By slow and discon tinuous steps Panama has risen from the position of complete dependency to one of actual freedom. Sovereignty, always nom inal, now seems actual, at least in times of peace. It is the purpose of this paper to examine briefly the creation of the Republic and the struggles of the early period, during which the Canal was under construction, cating the.causes of the first disagreements.- indi With the com pletion of 'the Canal and the termination of the First World War, Panama assumed a more aggressive attitude toward the United States, whose policy from 1903 until the "Good Neigh bor” treaty of 1936 was signed was one of condescension and forbearance. In 1926 the United States and Panama sought a new agreement which would give, effect to the changed status of the Canal Zone, the Canal having been completed and opened to the commerce of the world. treaty, based on the same This fundamental principles as that of 1903* marked the high-water mark of American domination of Panama. The treaty was summari ly rejected by the National Assembly of Panama. Until the stringencies of the economic depression made themselves f e l t ‘in the.early 1930!s, matters were allowed to drift. Economic necessity provided the stimulus and the ad vent of the Good Neighbor policy gave the opportunity for Pana ma t<a> again seek redress of her grievances. Many months of negotiations culminated in the signing of a treaty in 1936* *his pact was ratified in 1939 and with its publication Panama entered upon a new phase of her history. While keeping In mind the routine relations of the two states,.this paper will be concerned primarily with the trea ties of 1926 and 1936. In the case of the former the power of the United States is seen at its marks the triumph of Panama. zenith, while the latter pact TABLE OF CONTENTS CHAPTER I. PAGE THE CREATION OF PANAMA............................. The New Panama Canal Company.................. ............. .'4 Bunau-Varilla and Amador. • • . • • • • • • • 7 ........... 11 The New Republic recognized . ................ 13 President Roosevelt receives a n e w minister . 17 THE TREATY OF 1903. ........... 19 The question of Panamanian sovereignty. . .. 21 . . . . . 22 EARLY D I S A G R E E M E N T S ............................. 25 Principal provisions of the treaty. III. Temporary delimitation of the Canal Zone. 17. V. 2 The Hay-Pauncefote Treaty Success of the Revolution • • • II. 1 . . 27 The Taft A g r e e m e n t s ........................... 29 Land compensation 35 RAILROADS AND WIRELESS. .................... . . . . . . . . . . . . 38 The Duncan C o n c e s s i o n ........................ 39 The United States approver a bond issue 43 ... Further railroad construction ................ 44 Panama surrenders wireless control........... 45 BACKGROUND AN D E A RLY NEGOTIATIONS OF THE TREATY OF" 1 9 2 6 ................................. 50 Panama asks for a new treaty. 52 The struggle over land requisitions . . . . . 52 V CHAPTER PAGE P a n a m a ’s list of grievances . P a n a m a ’s complaint against P a n a m a ’s complaint against 57 therailroad . . . 60 the 60 commissaries . Cancellation of the Taft A g r e e m e n t s ......... The problem of Panamanian investments . . . YI. THE TREATY OF 1926. 62 . ............. 70 ■ The question of commercial privileges . . . . Further negotiations. VII. 72 .................... 75 President Coolidge takes a h a n d ............. 77 Negotiations in P a n a m a ................. 80 Tentative a g r e e m e n t ................ 83 Failure of the n e g o t i a t i o n s .................. 87 Negotiations resumed........... 89 The treaty s i g n e d ........................... .' 89 Provisions of the treaty ...................... 92 Panama is a r o u s e d ....................... 94 PANAMA. CONTINUES THE STRUGGLE . . ............. Criticism of the t r e a t y . . . • . . . . Revolution sweeps Panama. VIII. 67 99 . . . 100 ............. 104 The Claims C o n v e n t i o n ........................ 108 THE GOOD NEIGHBOR POLICY IN A C T I O N ............. Ill P a n a m a ’s financial crisis .................... 112 President Arias appeals to President Roosevelt An agreement is reached . ............... 112 114 v i CHAPTER IX. PAGE THE. TREATY OF 1936. .^ . . Signature of the treaty .................... The Army and Navy object. . ................. '119 121 124 Panama ratifies the p a c t ..................... An exchange of notes. 126 ........................ Senate opposition . 130' 132 Ratification........... X. 129 Panamanian g a i ns ................................. 133 United States gains ............................. 136 Explanatory notes . . 138 .......................... SUMMARY AND C O N C L U S I O N S ......... .'............. B I B L I O G R A P H Y .............................................. BIBLIOGRAPHICAL N O T E ........... APPENDIX A . ...................... APPENDIX B ............... . . . 140 145 147 151 - . 152 CHAPTER I THE CREATION OF PANAMA Panama threw off the yoke of Spain in 1821.-*- From that time until the formation of the. republic in 1903, Panama led a troubled existence. The Isthmians united with Colombia in 1822,s only to fine that they had made a mistake. For the greater part of a century anarchy and turmoil were the order of the day in Colombia and in Panama. There were uprisings in 1840 and 1349*r-to mention only two of the better known revolts. Through most of the period Panama was at loggerheads with Colombia, and at times was almost separate from it. The United States and N e w Granada signed a treaty in 1846 by which the United States guaranteed the neutrality of the Isthmus and pledged herself to keep the Isthmus open to the commerce of the world. The sovereignty of N e w Granada over Panama was also guaranteed.^ This treaty was to have •*■ William D. McCain, The United States and, the Repubblic of P a n a m a ,(D u r h a m . North Carolina: Duke University Press, 1937), p. 7. 2 Lo-c. cit. ^ Colombia has been known as Nueva Granada, Confedgraclon Glranadina, Estados CJnidos de Colombia, Estados UnloSos de Neuva Granada and Gran Colombia at various times. (McCain, “T o e . cit., p. 9). E far-reaohing influence in Panama, and was to provide the legal basis for American intervention in Panama in 1903. The interest of the United States established by the treaty of 1846 was reenforced by the Clayton-Bulwer pact of 1850. By this instrument England and the United States agreed that neither government would obtain exclu sive control over any ship canal in Central America, nor would they fortify, colonize, occupy, or assume sovereignty over any portion of Central America for the purpose of building such a canal. In effect, Britain and the United States agreed that any cajaal in Central America would be a joint ehterprise.1 The initiative in canal construction, however, was taken by the French, rather than the British or Americans* After centuries of discussion, an attempt was made to cut a canal across the Isthmus under the auspices of Ferdinand de Lesseps. Work was begun in 1879 and was carried on for several years, coming to an end in 1888 when the finances of the builders were exhausted.2 The company went into bankruptcy early in 1889. A successor, known as the New Panama Canal Company, was active on the Isthmus without much sign of success from 1894 until 1899, when it too ^McCain, 0 £. c i t . , p. 8. 2 I b i d ., p • 10♦ 5 1 succumbed to financial troubles.' Under the terms of the concession, the Canal was to be completed by the fall of 1904, or else the holders of the concession forfeited what they had accomplished, together with the machinery and equipment brought to the Isthmus. This was the basic situation at the close of the century. Events were marching fast. was again in the making. On the Isthmus trouble In 1900 there had been serious disorder, and the following year the United States, acting under the terms of the treaty of 1846, had landed troops to preserveoorder and to keep the Isthmus open.‘ In the United States a series of events was prepar ing the way for the drama of 1903. The long voyage of the battleship Oregon during the Spanish-American war had inflamed the popular imagination and had brought vividly before the public the necessity of a Oa.nal which would shorten by m a n y thousands of miles the sea trip between the east and the west coasts. In 1901 Mr. John Hay, the aging Secretary of State, and Mr. Pauncefote, the British 1 L o c . c i t . The United States invoked the Monroe Doctrine to exclude the French government from partici pation in the company and to keep it a private enterprise. 2 Dwight Carroll Miner, The Fight For the Panama R o u t e . (New York: Columbia University P r e s s ) , 1940. p. 57. 3 McCain, op. c i t . , p. 11. ambassador, had signed a treaty vdiereby the disabilities of the Cl&yton-Bulwer pact were removed and the United States was given permission to build a canal under its own auspices. Through the accident of an assassin’s bullet, Theodore Roosevelt had become president of the United States. Roosevelt carried to the White House memories of San Juan hill, and his diplomatic technique reflected the swashbuckling m e thods he had employed in Cuba a few years earlier.^ Hay was a conservative man without anything of particular note to mark his career. By the time the youngish Roosevelt took office, Hay was close to the end of a long career, and he seems to have been of little influence in shaping Roose v e l t ’s foreign policy. of S t a t e . Loomis was the Assistant Secretary Able collaborator in unorthodox diplomatic pro cedure was Philippe Bunau-Yarilla, former chief engineer of the H e w Panama Canal Company, who moved, freely in the diplomatic circles of Washington and the financial circles of Hew York. 1 Miner, op. cit. , p. 117-18. ^ While events and circumstances were accumulating rapidly from about 1899 on, pointing toward a climax of some kind, it is interest to speculate upon the possible turn events might' have taken in 1903 if a man of say Calvin Coolidge’s stamp had been president instead of Theodore Roosevelt. Beyond a doubt Mr. Roosevelt furnished the spark that was necessary to carry through to success the fight for the Canal. 5 After the signing of the Hay-Pauncefot6 pact,-*- the next step was to acquire, if possible, the rights of the New Panama Canal Company* This would include the right to use that por tion of the Canal which had been dug and to take over the machinery and- equipment abandoned, in the jungles of Panama. Likewise, it would be necessary to secure from Colombia the right to take over the French concession. Since the original grant was to expire within a few years, it was necessary that a new concession be obtained. the Spooner act. To this end, Congress passed This act empowered the president to obtain ' the rights, franchises, and property of the New Panama Canal Company at a cost not to exceed forty million dollars, and also to secure from Colombia a strip of land across the Isthmus for the Canal.^ If the president should find it im possible to carry out these instructions within a reasonable length of time, he was then to proceed with steps to build Two days before the signing of the Hay-Pauncefote treaty the Walker commission filed its report favoring a canal through Nicaragua. At the time of the report the N e w Panama Canal Company had failed to place a definite price on . its concession and properties, but several weeks later offered to accept #40,000,000 for them, this being the price sug gested in the Walker commission’s report. This action by the Me w Panama Canal Company undoubtedly aided the friends of the Panama route (Miner, ojd . cit., pp. 115-17, 119). 2 Miner, 0 £. c i t ., p. 156. 6 a canal through Nicaragua.1 H a y and his collaborators proceeded to open negotia tions with Colombia, and in June, 1902, the Eay-Herran treaty V*' was signed by which the United States acquired the right to dig a canal across the Isthmus of Panama.^ Only a little more than a year later the Colombian Congress, after an historic session rejected the treaty.^ The stage was set. The necessity for the Canal was clearly seen, and an understanding had been reached with Great Britain. The New Panama Canal Company was at the end of its resources, and it wished only to salvage what it could from its huge investment on the Isthmus. of the Isthmus, stood in the way. Colombia alone, the owner Koosevelt was not a man of great patience, and he preferred the Panama to the Nicaragua route. Bunau-Varilla saw the forty million dollars which the United States was prepared to pay his company about to slip through his grasp. It was now the fall of 1903 and one year 1 Loc. c i t . 2 Miner, ojd . cit., p. 335. 3 Much can be said, and it is perhaps as well to leave a great deal unsaid, about the failure of the Colombian Con gress to ratify the treaty. By waiting a matter of months, the properties and finished work of the New Panama Canal Com pany would revert to Colombia. The United States had agreed to pay forty million dollars to the company for those proper ties. Would not the United States pay that same forty million dollars to Colombia? v 7 . remained before the N e w Panama Canal Company would lose its concession and with it a huge investment, Bunau-Varilla acted. He saw and talked with both Secretary Hay and President Roosevelt.1 Dr. Amador Guerrero, who is usually referred to simply as Dr. Amador, was the center of a revolutionary group on the Isthmus who used his home as a meeting place.2 Toward the end of September Dr. Amador came to New York and was soon in touch with BunauVarilla. Through the latter, Amador obtained funds, and it was agreed between the two men that Amador was to return to Panama for the purpose of starting a revolution that would have as its object the separation of Panama from-Colom bia. ® The precise roles that Roosevelt and Hay played during the crubial days following the Bunau-#arilla-Ainador meeting is a matter for speculation.4 Of his meeting with Panama., 211 . Secretary 1 Philippe Bunau-Varilla, The Great Adventure of (New York: Doubleday, Page, and Company, 1920T~PP* 192, % McCain, o p . c i t . , p..13. . 3 Bunau-Varilla, op. c i t ., pp. 202-04. 4 The literature on the subject is voluminous. Roose v e l t ’s part in the Panama imbroglio has been likened to that of a brigand on the one hand, and to that of a saving angel on the other. Mr. Roosevelt’s own recollections in later years are open to the usual suspicions with which latterday explanations, statements, justifications, etc., of states men are to be greeted. The truth probably lies in-the middle ground: Roosevelt was not the hero he chose to be; not the blackguard his enemies thought him. Hay, Bunau-Yarilla records that while Hay was non-committal with regard to a possible revolution in Panama, neverthe less, tfI knew all.«l Dr. Amador left for Panama on October 20. According to the plans which Bunau-Varilla had formulated, the rising in Panama was to take place two days after the arrival of Dr. Amador in Colon, that is, on October 29.^ Undoubtedly it is more than a coincidence that a few days after Amador sailed several naval vessels were ordered to stations near Panama.*. Among the ships so instructed were the D i x i e ,A t l a n t a , and Nashville.3 The Marblehead and Concord were ordered to proceed directly to Panama from Acapulco, Mexico, and the Nashville was despatched to Colon, on the Atlantic side of the Isthmus.4 The commanders of the Nashville and of the Marblehead and Concord were given identical instructions to keep the transit of the Isthmus open.3 This action was in accordance with the powers granted the United States under treaty of 1846 between .the United States and New Granada.6 1 Bunau-Yarilla, 2 op. cit. , 211. P* > £21. 3 ..Miner, op. c i t ., p. 358. 4 I b i d . , P. 361. 3 IM <W ^ *361-62.. * A n t e ., p . 1. The fateful day, October 29, came and went, and Bunau-Varilla paced his room in t h e .Waldorf-Astoria hotel in N e w York without news from his collaborator, Doctor Amador, Several anxious days passed; then, on the after noon of November 3, the habitual calm of the State Depart ment was broken by a cable from M a l m r o s , United States Consul -at Colon. The consul reported that ^ Revolution imminent. Government force on the Isthmus about 500 men. Their officers promised support revo lution. Tire department, Panama, 441 # men are well organize/i and favor revolution. Government vessel Cartagena with about 400 men arrived early today with new commander-in-chief, Tobar, Was not expected until November 10. T o b ar’s arrival is not probable to stop revolution. A little more than an hour after this message was delivered to the State Department, Assistant Secretary of State Loomis cabled the Consulate-General in Panama that: "Uprising on Isthmus reported. Keep Department promptly and fully informed."2 To Malmros Loomis cabled to inquire if troops from the Colombian warship Cartagena were preparing 1 Foreign Relations of the United States_, 1903, p. 235. 2 Ibid. p. 231. 10 to land.'1' Tension in the Department increased. A message for the Nashville went unacknowledged by the commander of the vessel, and Loomis asked Malmros if the message had been received and delivered.2 Early in the evening a cable from Ehrman, consul-general in Panama, that there was, ,#No uprising yet. told Hay Reported will be in night, Situation is critical*3 Only a few minutes after Ehrman1s wire was delivered to the Department, another message from Malmros gave the disquieting information that.4 Troops from vessel Cartagena have disembarked; are encamping on Pacific dock awaiting orders proceed to Panama from commander-in-chief who went there this morn ing.. No message for Nashville received. The absent commander*-in-chief, who had crossed the Isthmus with his staff in the morning for the purpose of 1 I b i d . , p. 236. Colombian troops, a s much as those of a foreign power, could interrupt the peaceful transit of the Panaman Isthmus. Using the treaty of 1846 as authority, the United States would have good legal ground for pre venting Colombia from sending her own troops Into her own territory* The inability of Colombian troops to cross the Isthmus to get at Doctor Amador and his friends was, of course, a great aid to the conspirators in giving them time to carry out their plans. ^ fforeigfl Relations of the United S t a t e s , 1903 p. 236. 3 I b i d .. p. 231. This brief cable is held by some to be proof that the-United States conspired with the revolution ists, since by implication, it tends to show a fore-knowledge of the uprising, It can also be argued with force that the tense situation on the Isthmus was a matter of common know ledge, and that Ehrman was only reporting in a routine manner on an event which many thought was likely to occur at any time. 11 inspecting the garrison in Panama, was, by the time Malmros* wire had reached Washington, languishing in the Panama bar racks, arrested by the revolutionists.b Loomis now wired Malmros that f!the troops which landed from the Cartagena should not proceed to Panama’ .^ At -9:50 that night, a wire from Ehrman told the story of the revolu tionists* success^ Uprising occured tonight, 6 ; no bloodshed. Army and navy officials taken prisoners. Government will be or ganized tonight, consisting three consuls, also cab inet. Soldiers changed. Suppose same movement will be effected in Colon. Order prevails so far. Situa tion serious. Pour hundred soldiers landed Colon today. Mr. Ehrman erred slightly in his report that there was no bloodshed. One Chinese was killed by a stray bullet while lying in bed. Success of the revolutionary group in Panama, no doubt, inspired Secretary Hay himself to wire Malmros forty minutes after the Ehrman wire was received that If despatch to Nashville has not been delivered, inform her captain immediately that she must prevent government troops departing for Panama or taking any action which would lead to bloodshed, and must use every endeavor to preserve order of Isthmus. n Miner, op. cit., p. 363. ^ - QC • 3 Ibld-> > P* &lso Cf. 231 • 4 -IfrlcL* , p. 237. ante.p. 7. Note 6. 12 By the evening?., of the next day Bhrman could report to Washington that "Independence publicly declared. Three con suls, approved, organize government composed irrederico Boyd, Jose Augustin Arango, Tomas A r i a s ’ .^- Meanwhile, Loomis had wired -Ehrman that the latter was to get in touch with the commender of the gunboat Bogota, which had arrived on the scene of action., and tell him that the United .states government wanted him "...to refrain from wantonly shelling the city." For his information, Ehrman was'told that the United States would have a naval force at Panama in twd days.** A long re port from Malmros .confirmed that everything was going well for the revolutionists.® On iJovemher 5 , the commander of the Bogota threatened to kill all Americans in colon unless luckless lobar, seized i n ’Panama, was released. By early evening he thought better of the act, and Malmros was able to report that "All Colombia soldiers at Colon now, 7 p. m. going on board Koyal Bail steamer returning to Cartagena. in sight. For his part, Ehrman hads -1 -i - ---n--- -m 1 iM.1- . P- g3S. g L o c . ci t . ® I b i d ., p. 237. 4 . Ibid. , p. 233. 5 Ibid. . p. 832. Vessel, supposed to be Dixie., 13 Received an official circular letter from the committee of the provisional government saying that on 4th, political move occured, and the Department of Panama withdraws from the- United States of Colombia and formed [sic) the Republic of Panama. Requested to acknowledge receilpt of circular leter. Loomis instructed. Ehrman t o .acknowledge receipt of the letter and to await further instructions before taking ] any other steps along this line. * Two hours later Loomis ner vously told Ehrman to keep the Department informed” .•.as g to situation.” On November 6 Malmros, borrowing a somewhat florid, jahrase, told the Department that "Tranquillity absolute in Colon.” E h r m a n ’s Qespatch of the same day stated that "Bunau-Yarilla has been officially appointed confidential 4 agent of the Hepnb.lie of Panama at Washington.” Hay, on the same day, r- a wire to Ehrman which gave the position of o the United Sltates in the following terms: The people of Panama have by an apparently unanimous movement, dissolved their political connections with the Republic of Comombia and resumed their independence. When you are satisfied that a de facto government, repu blican in form, and without substantial opposition from its own people, has been established ±n the state of Panama, you will enter into relations with it as 1 I b i d . , P. 232 2 I b i d . , P. 253 3 I b i d . , P* 239 4 Ibid., p. 233 5 Loc. Cit. 14 the responsible government of the territory and look to it for all due action to protect the persons and pro|)@rt^ of citizens of the United States and to keep open the Isthmian transit in accordance with the obliga tions of existing treaties governing the relations of the United States to that territory. Thus, Panama achieved de facto recognition two and a half days after the revolution had been launched. On the evening of the 6th, Ehrman wired Hay that "Felipe (sic) Buna u Tarilia has been appointed envoy ex traordinary and minister plenipotentiary to the ^nited States Of America."2 During the revolutionary activity, the Panamans had not been neglectful of the State Department in Washhiigton or of the Hough Rider in the White House. The city of Panama notified Roosevelt of its action in joining the revolutionists in a wire of November 4, and expressed the hope that the United States would grant "recognition of our cause." The revolu tionary junta on November 5, wired Hay that Bunau-Varilla had been named confidential agent of the republic.4 The next day 1 Attention is called to the fact that Mr. Hay, under the pressure of rapidly moving events, instructed a consulgeneral to accord recognition to the Panaman government. Mr. Ehrman, so far as the published despatches go, does not seem to have been given diplomatic rank, such as that of m i n ister. The discretionary power given Ehrman is worth r £ I b i d . , p. £34. 3 I b i d . , p. £39. 4.Loc. cit. 15 H a y was told that: The Board of Provisional government of the Republic of Panama has appointed Senor Philippe Bunau-Yarilla en voy extraordinary and minister plenipotentiary near your government with full powers to conduct diplomatic and financial negotiations.-*-' Bunau-Yarilla communicated by letter with Hay, and, in fulsome phrase, told the aged secretary that Panama:2 In selecting for its first representative at Washing ton a veteran servant and champion of the Panama Canal, m y government has evidently* sought to show a loyal and earnest devotion to the success of that most heroic conception of human genius as both a solemn duty and the essential purpose of its existence. The "selection” of which M. Bunau-Yarilla speaks, was in accordance with instructions given Dr. Amador by Bunauvarilla himself.^- The prospect of a French engineer waiting in N e w York to be made the first diplomatic agent of a twoand-a-half day old Central American republic to the United States government,is a situation fraught with fictional possibilities. 4 Bunau-Yarilla’s letter to Hay was dated November 7*' On November 11, P a n a m a ’s new envoy addressed another letter to Hay, this time from Washington, in which he asked the Secretary of State to secure an appointment for him with ^ L o o . cit. ■2 i b i d . , p f J0240* *# Bunau-Yarilla, o p . c i t . , p. 215. -'4k Foreign Relations of the United S t a t e s , p. 240 16 President Roosevelt in order that he might present his letters of credence.1 Loomis answered.for Hay-and told Bunau-Yarilla that President Roosevelt would receive him at 9:30 in the morning, November 13.2 Meanwhile, Ehrman wired Hay on November 10, that Frederico Boyd and Doctor Amador were leaving immediately for Washington in order” ...to arrange in a satisfactory manner to the United States the Canal treaty and other matters.”® Pablio Arosemena, legal adviser, was following by a later steamer.^" The trip by steamer from Panama to New York takes usually either six or seven days, depending on the vessel. Thus, while Bunau-Yarilla was presenting himself to President 1 P* 245 • 2 Loc. cit. 3 I b i d . , p. 235. 4 A wi^e,, Ehrman to Hay, on November 11, Stated that tfI am officially informed that Bunau-Yarilla is the author ized party cto.Makd treaties! atBo>yAda.%nd cAmador ihaye eother .. missions and are to assist minister.” (Foreign Relations of the United States, 1903, p. 236). Actually, when BunauY a r i l i a T e a m e d Amador was coming to v/ashington, he cabled Arango, member of the junta, while Amador was at sea, de manding full plenary powers under the implied threat that if they were not granted needed credits would be withheld. Arango" granted this request. Ehrman* s understanding of the matter was erroneous since Amador and Boyd carried a letter of instructions by whichBunau-Yarilla w a s ” ...to proceed strictly in accord with them.” (quoted in Miner, op. cit., p. 375). 17 Roosevelt on the morning of November 13, Amador and Boyd were on the high seas about half-way to N e w York. To Bunau-Varilla(s flowery speech President Roosevelt responded in the following words:1' In accordance with its long-established rule, this government has taken cognizance of the act of the ancient territory of Panama in reasserting the right of selfcontrol and, seeing in the recent events on the Isthmus an unopposed expression of the will of the people of Panama and the confirmation of their declared indepen dence by the institution of a de facto government, re publican in form and spirit, and alike able and resolved to discharge the obligations pertaining to sovereignty, we have entered into relations with the new republic. The morning after Bunau-Varillats reception as first envoy of the Republic of Panama, Mr. Hay issued a circular to all diplomatic representatives of the United States, stating t h a t : The President yesterday fully recognized the Republic of Panama and formally received its minister plenipoten tiary. You will promptly communicate this to the govern ment to which you are accredited^.. william I. Buchanan was named first minister of the United States to Panama. Mr. Buchanan presented his letters of credence to the j u n t a , the cabinet, and the supreme court on Christmas Bay, 1903.^ - The ceremony was attended by the •1 Foreign R e l a t i o n s , P* 247. ^ I b i d . . p. lxxxiii. " 5 I b i d . , P. 690 18 consular corps in Panama, with the exception of the consuls of Central American states, and those of Argentina and Chile.^ To the fulminating government of Colombia, the posi tion of the Untied States was made known through Minister Beaupre, who communicated to the Colombian government a cable from Secretary Hay which was dated November 6, Hay said that: *2 the people of Panama having by an apparently unanI,-\\:. ikous movement, dissolved their political connection with the Republic of Colombia and resumed their independence, and having formed a government of their own, republican in form, with which the government of the United States of Amerida has entered into relations, the President of the United States, in accordance with the ties of friend ship which have so long and so happily existed between the respective nations, most earnestly commends to the government of Colombia and of Panama the peaceable and equitable settlement of all questions at issue between them. He holds that he is bound, not merely by treaty obligations, but by the interests of civilization, to see that the peaceable traffic of the world across the Isthmus of Panama shall not longer be disturbed by a constant succession of unnecessary and wasteful civil wars. No nation was willing to take up the challenge implicit in this document, and the wrongs done Colombia, real or fancied, were to go unredressed for the time being.® Colombia was faced by a fait accompli. Panama had achieved de facto recognition in tjwo and one-half days; de jure recognition in ten days. 1 Loc. cit. 2 Loc. cit. 3 Difficulties between the United States and Colombia were settled under the treaty of 1921. CHAPTER II THE TREATY OF 1903 Time was of the greatest importance in drafting and signing the Treaty of 1903. Probably no diplomatic instru ment of the importance of the pact of 1903 has ever been put together and signed within such a short period of time. If it is stipulated that speed was of prime importance from the point of view both of the new republic and the United States, then it is futile to criticize the pact, for a treaty of twenty-six articles that will stand the test of time can hardly be drafted in four days. In point of fact, Bunau-Varilla had been mulling over various provisions of the Treaty in his mind for a period of several weeks.1 Whether Secretary of State Hay had similarly prepared himself in advance is unknown, but he proved an able collaborator for the impetuous Bunau-Varilla.2 Bunau-Varilla was received as minister of Panama by * President Roosevelt on November 13.^ On the 13th, Hay sent 1 Bunau-Varilla, op. cit., p. 252. 2 Miner states that Bunau-Varilla^ part in drafting the treaty was larger than Hay gave him credit for in his letters on the subject (Miner, o p . c i t . p. 375). 3 C f . ante., p. 13. the minister a copy of the suggested treaty. 1 Bunau-Varilla found much to criticize in the draft,£ and prepared a treaty of his own. On the morning of November 17, both the Hay and Bunau-Varilla drafts were sent to the State Department, from whence emerged in the early evening of November IS the final draft of the treaty. That evening Hay and Bunau-Varilla signed the treaty. With the ink on the pact not yet dry, Bunau-Varilla hurried from the Hay residence, where the treaty had been signed, to the railway station to meet .Amador and Boyd, who had tarried in New York for a day or two before leaving for Vfashington. Amador, when told of the signing, "... nearly A swooned on the platform.” To complete his work Bunau-Varilla now cabled the third member of the junta. Arango, that the treaty should be signed without delay and without the slight est alteration. Accordingly, the provisional government gave its solemn approval to the pact on December 2 .5 After a stormy debate, the United States Senate ratified the treaty, 66 to 14, on February 23, 1904, and it was proclaimed three Bunau-Varilla, op. cit.. p. 252. o Miner, op. cit.. p. 375. ® R. Miner and McCain agree that the text of the treaty was that of Bunau-Varilla, and that Hay made only slight al terations before signing the pact (McCain, 0£. c i t ., p. 17., and Miner, op. cit., p. 375). ^ Miner, ojd. cit.. p. 37S. 5 Loc. cit. 21 days later *1 In a consideration of the provisions of the treaty, it is well at the outset to emphasize that Panama was called into being to enable the United States to dig the Panama Canal. Such was the understanding of Bunau-Varilla, and he gave ex pression to this thought on many occasions. In the construc tion of the Canal the business interests on the Isthmus saw a golden opportunity to secure incalculable financial benefits from the expenditures which the United States would make in the course of building the waterway. The rejection of the Hay-Herran treaty by the Colombian Senate in the summer pre ceding the revolution was the overt act which brought into the open the very considerable discontent that had been felt on the Isthmus over the way Colombia habitually treated the province of Panama. The republic created by the revolutionists while nominally enjoying the sovereign attributes belonging to any state was actually no more than a protectorate of the United States. There were two important reasons why Panama did not, and in fact could not, enjoy full sovereignty. In the first place, Colombia was quite able, if the United States did not prevent it, to subjugate Panama and return the rebellious province to the union of Colombian states. 1 « p. 384. Second, it must be 22 remembered that the reason for the being of Panama was the Canal. The United States, after a lengthy a n d unsatisfactory diplomatic duel with Colombia, was not disposed to create on the Isthmus a new political entity which would thwart the e f forts of the United States in the same w a y that Colombia had done. To avoid these two undesirable possibilities, the Treaty of 1903 was drawn in a manner to plainly put Panama in leading-strings to the United States. Thus, the Treaty of 1903 was not a bilateral agreement between two sovereign powers of equal political standing. Rather, it was the type of agreement that may be found existing between a major state and a protectorate of the first class, such as, on the one hand, Great Britain, and on the other, the semi-independent native state of India. B y article I of the Treaty, the United States guaranteed the independence of Panama.1 Article II granted to the United States a strip of land, ten miles wide and extending across the Isthmus from one ocean to the other, was to be built. through which the Canal The United States was also granted the right to take such other lands and waters outside this zone as might be found necessary for the construction and maintenance of the Canal. '' The United States, b y implication at least, was made 1 Miller, op. text of the Treaty. 2 ' Loc. cit. cit., Appendix V. This gives complete 23 the sole judge of what additional lands might be necessary for the Canal, and no time or territorial limit was placed upon the right so granted. It goes without saying that the stipulations of article II were an infringement of Panamanian sovereignty. No state whose lands are subject to condemna tion and seizure by another power, (i^e., who cannot know from day to day what lands are within the state and what lands are not), can be called fully sovereign. The stipulations of this article were to be a fruitful source of trouble. Article VII^’ gave the United States the right to maintain public order: . . . in the cities of Colon and Panama and the ter ritories and harbors adjacent thereto in case the Republic of Panama should not be, in the judgment of the United States, able to maintain such order. The exercise of police powers within the territory of a state is one of the fundamental attributes of sovereignty and the impairment of this right, as contemplated by the provisions of article VII, is an obvious limitation upon Panama*s free dom of action, even in internal affairs. Other important provisions of the Treaty gave the United States the concessions and properties of the New Panama Canal Company and the Railroad Company. The United States agreed to pay Panama $10,000,000 for the "Rights, powers and Ibid..Appendix V 24 privileges granted in this convention. . . . Panama was to receive an annuity in the amount of ”250,000 beginning nine years after the ratification of the Treaty.^ Panama was granted the right to use telegraph and cable facilities in the Canal Zone, while the United States received a monopoly of rail and water transportation across the Isthmus. Special arrangements were made for sanitary facilities in Colon and Panama, and the sovereignty of the two cities was regulated by other provisions. Another article covered the harbor and wharfage facilities of Colon and Panama. While Panama at all times maintained the fiction of full sovereignty, the guarantee of independence, the right to expropriate land by unilateral action, and the police powers granted, all duties and privileges assumed and enjoyed by the United States, make it impossible to agree with the Isthmians that they were a free and independent people. American protectorate. 1 Ibid., Appendix V. •2 Loc. cit. Panama was an CHAPTER III EARLY DISAGREEMENTS The first troubles between the United States and Panama arose over commercial matters* On June 24, 1904, Mr. Taft, then Secretary of War, opened the Canal Zone to the trade of the world .1 In interpreting the terms of the Hay- Bunau-Yarilla pact which gave the United States full sover eignty over the Canal Zone, the government in Washington had established ports of entry, postoffices, a customs house and other commercial adjuncts in the Zone, and a tariff schedule similar to that in force in the United States was published .2 Cristobal, on the Atlantic side, and Anconj- on the Pacific side, were designated ports of entry. The business men of Panama protested. To them the Canal Zone had been created for the construction of a canal alone. Such construction did not in any way involve making the Zone a scene of ordinary business enterprise. At the very outset of Panama-United States relations this issue was joined. The United States, at that time, adopted the attitude which it has ever since maintained, namely, that this government had by the pact of 1 2 1903 achieved full and complete sovereignty McCain, o£. cit., p. 23. Loc. cit. over the Canal Zone, a n d to do w i t h i n that area as it wished as if the territory in question was a part of the United States. The Panamans, for their part, were soon to evolve the theory of "limited sovereignty." This theory, which years later was to receive such an able exposition before the League of Nations by the Panaman delegate to the League, held that the Canal Zone had been granted to the United States for the sole purpose of building the Canal. In connection with the Canal the United States exercised rights of sanitation, . . maintainence, construction and defense," -1-but these functions did not include all of those powers which a fully sovereign owner would exercise. Panama had, so this theory goes, re served to herself certain rights which gave to the Zone a sort of dual control. Upon this theory, Panama was later to justify her alliance with the United States, the Panamans holding that in joining the United States in defending the Zone she was only defending her own territory. The problem is one to confound an authority on inter national law. Its importance lies in the different conceptions which Panama and the United States held as to the relations which they each enjoyed w i t h regard to the Canal Zone. It was a clevage over a fundamental concept as to the status of the Zone, and because of this difference it was possible for the 1 Miller, o£. cit., Appendix Y. 27 two countries to wrangle for years. Like two persons talking about entirely different subjects, the United States and Panama could reach no agreement since they differed as to the very basis of their quarrel. compromis was: possible. In arbitral terminology, no It was a most unfortunate contretemps, and from the beginning of our relations with Panama, it put all understandings of a political nature upon an unsure founda tion. To Panamans protests, Mr. Hay, on October 24, 1904* made reply. He stressed the sovereign rights of the United States in the Canal Zone ,1 thus enunciating for the first time the principle which the United States was ever to uphold in coming struggles. Mr. Hay suggested by implication that a reading and understanding of the pact of 1903 was desirable, and that if the Treaty was interpreted in accordance with the plain English used in its composition it would be seen that the Canal Zone was completely under American sovereignty, and from that it followed that it was also within the economic sphere of the United States. Further, he intimated to the Panamans that they were no longer dealing with the New Canal Company, but were in fact, negotiating with a sovereign state. In June of 1904, the limits of the Canal Zone had been provisionally set through an agreement signed by the governor 1 McCain, o£. cit., p. 24# 28 of the Canal Zone and the Panamanian Secretary of State.1 This document was the first diplomatic instrument signed by the two countries since the conclusion of the Treaty of the previous Pall, Under the agreement, temporary boundaries were set up, especially with regard to the cities of Panama and Colon. Maps accompanied the pact to show more clearly the lines drawn. Special agreements, drafted from time to time, were to delimit the ”auxiliary lands of waters outside the Canal Zone,” thus making early use of the latter portion of article II of the Treaty of 1993.^ The Canal Zone author ities were given the right, previously granted in paragraph II of article VII of the pact of 1903, of employing citizens of Panama on construction work in the Zone.^ To placate the Panamanians, Taft, then Secretary of War, accompanied by a large entourage, went to Panama in November, 1904. 1 The jovial statesman was well received in 67th Cong., 4th Sess. Senate Poo. Wo. 348, Vol. Ill, P. 2754. 2 Ibid.. pp. 2753-2754. 3 Ibid., p. 2754. 4 The word ntemporary” is found liberally used in this document, which after all constituted no more than a modus vivendi. The importance of the agreement lies in the fact that it evoked the first construction and interpretation of the Treaty of 1903. The agreement shows a literal rendering of the 1903 pact, in accordance with the theory held by the United States. 29 the southern republic and spent some days in drafting and signing an executive agreement which he had been empowered by the president^ to execute. This order, dated December 3, 1904, limited the importation of goods into the Canal Zone to those required for the construction of the Canal and the food, clothing, medicines, et cetera, required by the personnel engaged on the project .2 Thus the general commerce of the Zone was brought to an end. The order was not to be opera tive unless Panama did certain things. Panama had to yield complete jurisdiction in the matter of sanitation and nuartz antine in the waters of the ports of Panama and Colon. Panama had to agree to the enforcement of the provisional limitations of the agreement of June 15, and a currency agreement, then pending in Washington, was to be put in effect. The United States, for her part, made concessions regarding the importations of Panama goods into the Zone, agreed to build and maintain certain roads, and granted certain port * and wharfage facilities. The United States also agreed to build and maintain a hospital for lepers and the insane to which Panamans would be admitted with the government of the 1 67th Cong., 4th Sess. Senate Doc. No. 348. Vol. XXI, P. 2757. “2 Ibid.. p. 2758. p. -3 2760. 67th Cong., 4th Sess. Senate Doc. No. 348. Vol. Ill, republic paying a small fee f or each patient.-1' The postal services in the Zone were reorganized to give Panama some revenue. The United States postal authorities were to buy Panama stamps, surcharged with a Canal Zone marking, at 40 per cent of their face value. These stamps were to be used to frank mail within the Zone and from the Zone to outside points, United States postal rates applying .2 The last article of this executive order should be 3 given in full; The operation of this executive order and its en forcement by officials of the United States on the one hand, or a compliance with and performance of the conditions of its operation by the Republic of Panama and its officials on the other, shall not be taken as a delimitation, definition, restriction, or restrictive construction of the rights of either party under the treaty between the United States and the Republic of Panama. It will be seen from this that the United States re garded the agreement as a temporary expedient, drafter on the one hand to satisfy the Panamans in commercial matters, and at the same time used as a lever to force compliance from the Isthmians on certain matters that involved the Canal Zone. It was, in no way, as the final article of the agreement so clearly states, a surrender, delimitation, or permanent change 1 P- 2761. Loc. cit. 31 in the basic Treaty of 1903 • A second executive order, dated December 6, 1904, re moved the unintended disability on goods destined for Panama which the non-entry proviso of December 3 imposed.^ Article I of the order of Thus goods accompanied by consular in voice of the Republic of Panama could be landed at Canal Zone ports, en route to Panama. could be landed. Also goods intended for the Zone Panama customs duties had to be paid. The- free transit of persons and the export of goods from Panama through the Zone and the terminal ports thereof, were per mitted.^" A third executive order, dated December 28, 1904, was unilateral in character and revised the customs service and the carrying out of its functions .3 Wot satisfied with the restrictions already imposed upon the commercial activities in the Zone, an executive order of January 7, 1905 followed by little more than a month the sweeping order of December 3. The latest executive order went a step further in protecting the merchants of Panama. Before goods could be admitted to the Zone, they had to be certified 1 PP. 67th Cong., 4th. Sess. Senate D o c . Wo. 348. Vol. XIX, 2763- 2764. 2 Loc. cit. 3 Ibid., p. 2764. 32 by an official as being needed for the construction or ser vices of the Canal, or for the use of persons engaged in the construction of the C a n a l . T h e various agencies which were to have this power of certification were listed, as were "household" goods which might be brought into the Zone by the Canal personnel. Pinally, personnel who are "natives of tropical countries" were excluded from the benefits of the commissaries. Panama was warned that "Should it develop here after that merchants charge prices in excess of legitimate profits, or practice other extortion, the United States . . . will supply its commissaries with such staple articles as are required and desired by the inhabitants of tropical countries. It is well to summarize at this point. In the first few years of Panama’s existence as an independent state, the Isthmians found as their chief complaint the economic compe tition of the Canal Zone. This competition, for a period of a year or so, was that of one full-fledged commercial entity against another; later the emphasis of complaint shifted against the commissaries maintained by the government in the Zone. How these complaints were met has been shown in the 1 P. 2765. 2 67th Cong. 4th Sess. Senate Doc. No. 348, Vol. Ill, Loc. cit. 33 executive orders. The United States was principally concerned with securing the limits of the Zone and making such arrange ments as were necessary for carrying on in an efficient manner the work of digging the Canal. Of common interest to both countries, with the emphasis first by one protagonist and then by the other, was the use of ports and harbor facilities, the postal system, customs services, and facilities and general measures of sanitation. It'may be safely said that the Pana mans were, on the whole, well pleased by the results achieved by the Taft agreements.1 Of the minor questions that arose to vex the relations of Panama with the United States in the years before the First World War, two are worthy of note. ter of elections in Panama. First of these was the mat There is ample material easily a- vailable to make possible a formidable volume on the role of the United States in Panamanian elections. Despite the size of the problem, it is pertinent to inquire into the general attitude of the United States toward those elections. Inso far as elections represent one of the prime internal concerns J of a state, they are important as an illistration of the atti tude of the United States toward Panama’s internal economy in those matters which in no way impinged upon the Canal. So far as her foreign affairs were concerned, the United States watched '**■ One must always except a small but articulate group of malcontents, which is to be found in any country. 34 Panama with an attentive eye; domestic affairs linked in any way to the Canal commanded the combined attention of the S’tate, War, and Navy Departments, as will be developed later. Panamanian activities not included in these two classes of activities were of no concern to the United States, and this government told Panama in clear fashion that these matters were, for the disposition and control of Panama alone. In 1906, the Liberal party in Panama approached the United States through Blihu Root, Secretary of State, charging a coming election would be unfair and would be irregularly con ducted. The Liberals wanted to know if the United States would guarantee Tt...public order and constitutional succession in this R e p u b l i c . Root, through the American minister in P a n a m a , told the Isthmians that the treaty of 1903 did not relieve Panama of the responsibility of maintaining public peace, nor was the onus of such maintenance thrust on the United States. United States refused to take sides in any election, The since the correct operation of election laws was a prime requisite of a well-ordered state.^ The Panaman minister in Washington told Hoot that his declaration had "...created a pleasing impression among the people of Panama, and absolutely assured the maintenance of McCain, o£. c i t . , p. 64. ^ Foreign Relations, 1906, Vol. II, p. 1£03-07. peace in the Republic of Panama.tT^'. The minister was too op timistic, for in the years ahead the United States was called upon more than once to supervise elections on the Isthmus. The second question was that of compensation for lands seized. Under Article VI of the treaty of 1903, the United States had agreed to compensate owners of land and other prop erties in the Canal Zone where such land and properties had been taken over by the United States in the course of digging the Canal.*5 Article VI provided for a joint commission, .ap pointed by Panama and the United States, to determine the com pensation due the owners of the confiscated property. mission, A com consisting of two members from the United States and two members from Panama, held sessions during 1907, but failed to reach an agreement.^ Article XV of the treaty of 1903 stipulated that in' the event of disagreement between members of the commission appointed under the provisions of Article VI, the two governments were to appoint an umpire, who, as fifth member of the commission, would cast the deciding.vote.4 Early in 1908 Panama asked that the provisions of Article XV be made operative and the fifth member of the com- 1 Foreign R e l a t i o n s . 1906, Vol. II, p. 1207. M i l l e r . op. cit., Appendix V. 3 EoreigflfRe1a t i o n s . 1908, p. 670. L o c . cit. 36 mission be appointed.^ The Panaman minister in Washington was empowered to consult with.the American government over the question of an umpire.2 Toward the end of May, a conference was held in Panama which was attended by Secretary of War Taft, the United States minister to Panama; Arias, .Panaman foreign secretary, and a number of legal advisers. At this meeting, it was decided that the commissioners should have the authority "... to decide the controversies as to rights that may arise from whose suffered damages" with reference to titles of possession to lands involved in the claims. The commission was thus in vested with certain judicial powers. The two sets of commissioners having been appointed,^ Panama magnanimously proposed that Mr. Denby, one of the American commissioners, be made umpire. The commisson labored through a good part of the summer, delivering its findings on August 8. The award covered fifteen parcels of land and estat es, comprising about 86,000 hectares, and appraised by the commission at a total of $204,980.6 The American charge was ^ Foreign Relations , 1908, p. 670. ^ U o c . cit. 3 PPv 672-73. . 4 I b i d .'. p. 674. ® I b i d . , p. 675. 6 Ibid. , pp. 674-75. 37 able to report to tile State Department that:^ It may not be amiss to state that the final result reached in these long-pending claims has made a good impression both on the Panama people and the Americans resident here and is very favorably commented on as an evidence of the generous justice of the American government. ^ ffQPQign R e l a t i o n s » 1908, pp. 675-77. CHAPTER TV RAILROADS AND WIRELESS No better proof of the impairment of P a n a m a ’s sover eignty is to be found than in the correspondence and end result of the railroad controversy, which began a few years before the First World War and continued until after the out break of hostilities. The Panama government at times gave signs of rebelling against the dictation from Washington, but in the end was to give w a y on every point. The victory was not to be completely one-sided, however, as the United States finally consented to Pa n ama’s floating a bond issue in the United States, with a portion of the Canal annuity hypothecated to service the interest and amortization of the bonds. Panama sought development of her northern provinces, particularly the province of Chiriqui on the Costa Rican border, and to that end wanted a railroad built that would link Panama with David and L a C o n c e p c ion, important points in the north. This ambitious program is not fulfilled, even today, but certain short lines have been built in the north, leading from ports to internal towns. An extensive concession, comprising both lands and rail road right-of-way, was granted to an Anglo-German syndicate 39 headed by one Augusto Dziuk in 1910.^ When Dziuk sought a revision of this concession in order to gain more lands and right-of-way, Panama seized the opportunity to cancel the con cession.2 This cancellation took place on March 5, 1912. The ostensible reason was that Dziuk had failed to live up to the terms of the concession, but the American minister in Panama was advised by the foreign secretary that, the real reason for Panama*s. action was n . . * his g o v e r n m e n t s opinion that this would be agreeable to the American government".® In the early part of 1913, Panama granted a tentative railway concession to an American, Basil Burns Duncan, who was singularly inept financially and seemed entirely unable to carry through an enterprise of the magnitude envisioned by the con cession. Mr. Dodge, the American minister, went post haste to the foreign office where he was assured that before the govern ment of Panama gave legislative approval to the contract, ". . . the Government of the United States would be given an opportunity to examine it".4 A copy of the text of the conces sion was sent to Washington by Minister Dodge, and the State Department turned the document over to the War Department for 1 Foreign R e l a t i o n s , 1912, p. 1195. 2 I b i d . , p. 1197. 3 I b i d . . p. 1198. 4 Foreign R e l a t i o n s . 1913, p. 1085. 40 the latter to ascertain the w . . . desirability from a stra tegic viewpoint of the railroad". 3Lest the wrong impression be given, it is essential to point out that at this point Panama was acting in accord ance with treaty obligations. A treaty in 1867 between Colom bia and the Panama Railroad company, the trahs-Isthmian line, provided that no other lines could be built in Panama without the permission of the railroad, company.2 The Panama Railroad company was acquired by the United States by virtue of Article VIII of the treaty of 1903.3 , A commission consisting of the American minister, the chief engineer of the Panama Railroad company and a member of the Isthmian Canal commission met in Panama to examine the Duncan concession and disapproved the grant on the ground that the terms of the concession were too vague, and the proposed line would constitute a strategic menace to the Canal. 4 Mr. Dodge was then able to cable Washington on February 24 that the " Minister for Foreign Affairs informs me that in view of the objections of the Government of the United States, the Duncan railway contract will be withdrawn from the assembly". Mr. Dodge was instructed by the State Department to express the 1 Foreign R e l a t i o n s , •15-1 3y p • 3108 5. ^ Foreign R e l a t i o n s , 1914, p. 1031. 3 Miller, 0 £. c i t . , Appendix V. ^ Foreign R e l a t i o n s . 1913, p. 1088 5 •ibia.Q-fe.io9i. 41 appreciation of the United States at this action of the Panama government But Panama was champing at the bit* In October of 1911, two bills dealing with financial matters were passed by the National Assembly. The first of these bills forbade the cong traction of debt in order to build the Panama-David line. The second measure allowed the' government to use all of the funds remaining from the #10,000,000 paid by the United States for the Oanal concession to build the road. Of the original purchase price Panama had used #4,000,000 for governmental expense in Panama. The remaining #6,000,000 had been invest- ed, at the insistence of the United States, in N e w York City real estate, the funds to remain permanently invested in the United States in order to stabilize both the Panaman government and the currency of the republic. The defeat of the Dziuk and Duncan concessions did not dampen Panaman ardor. On February 22, 1913, the National Assembly passed a bill which permitted the government to nt borrow for railway construction purposes. The American M i n ister secured the reluctant promise of the Panaman president that neither the $6,000,000 invested in the United States, nor the Canal annuity would be used for the purpose.4 The Secretary 1 Foreign R e l a t i o n s , 1913, p. 1091. ^ Foreign R e l a t i o n s , 1912, p. 1188. 3 Qj). c i t . , p. 1100. 4 L o c . cit. 42 of State corroborated the action of the American minister and indicated that the' United States was still unwilling to con sent to the pledging of any portion of the Canal annuity. The annuity was to be joined to the #6,000,000 to create a ” . . . fund which would assure a permanent revenue for the maintenance of a stable government on the Isthmus’* Panama went ahead on her own. On February 4, 1914, Panama signed a contract with Hebard and company for the construction of a railway in the province adjoining Costa Rica, the line to cost an estimated #1,500,000. Minister Price advised the State Department that Panama intended to have ,T Details of bond issue left for consultation with State Department. It is contemplated incumbering the income from six million loan in N e w York City” . The Secretary of State replied at once that the United States objected to the con tract on three counts. First, that it contravened article V of the treaty of 1903; second, that provisions of the con tract were objectionable from a strategic point of view; and finally, that it involved pledging the Canal annuity or the p six million dollars invested in N e w York. Minister Price was instructed to consult General Goethals, chairman and chief engineer of the Canal commission, on the strategic aspect of the railroad. ^ Foreign R e l a t i o n s . 1913, pp. 1102-1103. 2 Foreign R e l a t i o n s . 1914, p. 1030. 43 Two days later, Price reported that General Goethals found nothing objectionable in the contract from a strategic point of view,'*’ and that Panama did not contemplate the pledg ing o f ,her two funds but would finance the project through a bond issue. Matters dragged during the spring while the State Dep artment and Panama negotiated. On June 29, Secretary of State Byyan advised the Panaman minister that: 2 the Department will approve an issue by your government of Panama Government five per cent, bonds to the amount of $3,000,000, provided that adequate provision be made for the retirement of these bonds within 30 years from the date of issue; and provided that only $750,000 of that amount shall be delivered at this time at a price not less than ninety-seven per cent, of the par value and that future deliveries of the issue shall be made with the approval of the. Government of the United States only when additional money is required for such enterprise. The foregoing quotation from the correspondence of the State Department leaves any comment on the sovereignty of Panama in the year 1914 superflous. Permission for the rail road, which far from being a line from Panama*to David was merely a twenty-eight mile line from the port of Pedregal to B o q u e t e , with a branch to La Concepcion, a secondary line twenty-three miles long, 3 was obtained from the War Depart ment acting as nominal holder of the shares of the Panama Railroad company. ^ Foreign R e l a t i o n s , 1914, p. 1031. 2 I b i d . p. 1032. 3 I b i d . p. 1031. 44 The National City bank of N e w York offered t'oct.ake -the railroad bonds at a discount of three per cent., the bonds to bear five per cent interest and to run from fifteen to thirty years. Panama accepted this offer on the recommen dation of President Porras who, ional Assembly, in a speech before the N a t characterized it as the best offer Panama could hope to obtain.'*’ In November, the State Department approved the trust indentures between Panama, on the one hand, and the F a r m e r s ’ Loan and Trust company of N e w York and William Nelson g Cromwell, as joint trustees, on the other. The State Department approved the hypothecation of as much of the income from the six million dollars invested in 2 N e w York as was necessary to service the loan. -The American 4 minister in Panama was told to: Discretely inform Panama Government that Department ap proval of loan based on hypothecation of income of six million dollars permanently invested in N e w York, was based on the understanding that this money should be used only for the building of railroads in Province of Chiriquiz. In 1916 Panama secured permission to build another ^ Foreign R e l a t i o n s » 1914, p. 1033. 2 I b i d ., p. 1034. 3 I b i d .. p. 1032. 4 I b i d ., p. 1034. 45 branch line, this to run from La Concepcion toward Chareo Azul.1 Of the original issue of $3,000,000 approved for the* first line, Panama had used only $2,350,000, and the State Department readily approved an issue of $400,000 against the p unissued balance."' The State Department approved use of part of the N e w York investment to service this portion of the loan. Panama was not allowed control of her own wireless com munications. In June, 1913, Panama granted to the United Fruit company a franchise for a wireless station in Colon, and in August the Marconi company of America sought another 4 wireless franchise. In 1911, the Joint Board of the Army and Navy had urged that the president of the United States be empowered to reach an agreement with Panama over wireless problems. The fran chise given to the United Fruit company and the activity of the Marconi company stimulated the War Department to advise the State Department that the effort of the latter company should be frustrated, and an agreement should be reached with Panama "• . . whereby private wireless installations should Foreign R e l a t i o n s , 1917, p. 1181. 2 Loc. c i t ♦ 3 I b i d ., P* 1182. 4 Foreign R e l a t i o n s , 1914, p. 1036. 5 Loc. cit. 3 be prohibited from the Zone and from the territory of Panama” The Secretary of State responded that since 1910 Pan ama had given frequent oral assurances that it would permit no further wireless installations in its territory? . . with out the consent of the United States” .^ The State Department agreed that a definite undertaking by Panama was wanted, and would begin negotiations to that end. The Army and Navy de partments were consulted as to provisions of the projected agreement which they would find desirable. made short work of the question. The Joint Board The Board recommended that the United States should have a monopoly of all radio com munication in Panama and the Zone, that ships were not to use their radios except in certain special cases while within the territorial waters of Panama, that Panama land telegraph system should be hooked up to the Zone system, that Panama should sign the London Radio-Telegraphic convention, and, last, that the United States should have the right to take over all existing private stations whenever it should elect to do so. 3 • The Army and Navy authorities thus sought wireless control on the ground that they could not adequately protect ^ Foreign R e l a t i o n s , 1914, p. 1036. 2 $££• ♦ 3 Ibid. . p. 1039-40. 47 Panama, in accordance w ith treaty terms, unless the systems of communication were in their hands.^ At the beginning of 1914, Panama let it be known that she was considering establishing several wireless stations at strategic points within the Republic. 2 The Secretary of State was quick to instruct the American minister that he was to inform Panama "in an informal manner", that the United States rz was seeking a wireless monopoly in Panama. The American right to demand control of wireless in Panama was based by the State Department on Articles II, III, VI, VII, and XXIV of the 4 treaty of 1903. All that was required was for the United States to advance the claim that wireless control was essential to the m a i n t e n a n c e , control, protection, and sanitation of the Canal, and since the United States was clearly empowered by the treaty to do whatever was necessary to secure these ends, it followed that the right of wireless control was merely one more adjunct to the great Canal project.. By late July, the war clouds in Europe stimulated Panama to agree in principle to United States control, but 5 some modification of details was sought. 1 Foreign R e l a t i o n s , 1914, p. 1036. 2 I b i d . , p. 1040.' 3 I b i d .. pp. 1040-41. 4 I b i d . , p. 1042. ® I b i d .. pp. 1044-45. By mid-August, 48 Bryan was telling Minister Price that the war in Europe was forcing the United States to demand immediate control ” . . . of all wireless stations in the Republic of Panama and control (of) the radio equipment of all ships in the territorial waters of P anama” .-*- Panama agreed at once to United States control, but limited this control to the duration ofthe p European crisis. During the next two weeks, Minister Price carried on negotiations with Panama. On his own account he pledged the United States to give consideration to Panama’s request for special handling of the question of interior telegraph lines, providing that the decree giving the United States the desired monopoly was issued first. by Price, 3 A few days after this pledge the Panaman president signed the desired decree giving permanent control of wireless to the United States. In part the decree read:^ F r o m this date the radio-telegraphic stations fixed and moveable and everything relating to wireless communications in the territory and the territorial waters of Panama shall be under the complete and*permanent control of the United States of America; and to attain that end said Government will take measures which it deems necessary. ^ Foreign R e l a t i o n s . 1914, p. 1046. 2 I b i d . . pp. 1047-48. 3 I b i d ., pp. 1049-50. 4 I b i d . , p. 1051. This monopoly was to become a greivance with Panama. Agitation for repeal or modification of the decree continued until- 1936 when Panama achieved her objective in the "Good N e i g h b o r ” treaties of that year. CHAPTER V. BACKGROUND AN D EARLY EEGOTIATIONS OF THE TREATY OF .1926 Panaman dissatisfaction with the treaty of 1 9 0 5 , .which first resulted in the Taft executive agreements, continued’ to grow* as Panama and the United States clashed over various subjects in which both were interested. The difficulties over railroads and wireless have been noted. ssaries or government stores continued to troubld. The commi be a source of Toward the close of 1905, Panaraan business men, under the leadership of President Amador, again complained about the c o m m i s s a r i e s . T h e commissaries had been closed to to the native personnel, that is, to those indigenous to tropical countries, by the executive agreement of January 7, 1S05.2 A boundary convention signed on September 2, 1914, disposed of certain problems in connection with the delimit ing of the Canal Zone and the cities of Panama and Colon, and the harbolr limits of Panama and A n con.4 A n easement was given Panama through waters of the Canal Zone for the benefit of 1 McCain, op. c i t ., p. 226. ^ 67th Congress, 4-th session, Senate Doc. No. Y o Y ^ I I I , p. 2765. ^LoO. cit. 4 Ibid. pp. 2770-77 548, 51 the harbor of Colon., and wharfage facilities of the Panama Railroad Company were extended to Panama* .article ’ r of this agreement stipulated that: "...this combination shall not diminish, exhaust, or alter any rights acquired by them (The United States and Panama) heretofore in con formity with the Canal treaty of November 18, 1903.” This provision gives the whole treaty a provisional character, since ! the boundaries drawn could, in consequence of Article X, be changed at any time by the United States, acting under the power granted in the basic treaty of 1903. Thanks largely.to the effective blockade maintained by the A l l i e s P a n a m a * s problems in the ?forld war were not great ones. A n agreement of October 19, 1914., between the United States and Panama provided t-hat.:*v v Hospitality extended in the v/aters of the Republic of Panama to a belligerent vessel of war or a vessel belligerent or neutral, whether armed or not, which is employed by a belligerent power as a transport or fleet auxiliary or in any other way for the direct purpose of prosecuting or aiding hostilities, whether by land or sea, shall serve to deprive such vessel of like hos pitality in the Panama Canal Zone for a period of three months, and vice versa. Panama.As other war problems centered around interned Germans. The United States eventually took charge of these prisoners, thus relieving Panama of the burden.3 1 67th Congress, 4-th session, op. .cit.,, p . 2777. 2 Foreign R e l a t i o n s , 1S14, Supplement, p. 556. 3 McCain, op. c i t ., p. 227. 52 The dissatisfaction with the treaty of 1903 culminated in the request by Panama in 1915 that a new pact be drawn. World “ w ar conditions made it impossible to carry on nego tiations, In 1919 panama appointed a committee to study the trecity of 1903 and make recommendations,2 By the end of the following year Panama was pressing her demand that something be done about remedying conditions. The commissaries stood in the foreground of causes for complaint. Panama in parti cular complained about the sale of luxury or tourist goods to ships transitting the Canal, she also asked the return of areas in Panama and Colon owned by the Panama Railroad Com pany and increased wharfage space and facilities in those two cities. ^ P a n a m a ’s ill-will was undoiibtedly increased by an u n fortunate contretemps over some lands seized by the Canal .commission in the,.-same year. On January 19, Lansing noti fied the Panaman charge that the U n i t e d ,States would acquire a portion of the island of Taboga "for the safety and pro tection of the Cana 11*4 as it is the intention of this 1 McCain, Ibid., p. 226. 2 Loc. 3 Ibid., p. 227• The sale of tobacco eventin the post exchanges~or~"the army was to be banned, if Panama got its way. ^ Foreign Relations, 1920, p. 314. 53 government to fortify the island. The United States promised to adopt a liberal policy toward the land-owners who in con sequence of this action would he dispossessed. To the Lansing note, the charge replied more than a month later that in September of the previous year the Gov ernor of the Canal Zone had notified the President of Panama that the United States had occupied a piece of land owned by Panama and known as Largo Remo, in Las Minas Bay. The reason given for this occupation was that it w a s 'necessary for pro tection of the. Canal.^ The charge protested that this action in the case of Largo Remo was irregular since no previous notice had been given of the intention to occupy the land. Panama asked suitable compensation for the dispossessed land-owners, and that a modus operandi be reached which the United States would use in connection with any future land acquisitions.^ That Panama v*rould like some formal document as evidence of intention of confiscation seems reasonable. Such action would be a sop to the dignity of the country. On April 30 the charg^ told the Secretary of State that Panama would like to know what part of the island of Taboga this government required, and asked that the requisi tion be held to a minimum. 1 Further, Panama considered that * Lo c . cit. 2Foreign R e l a t i o n s . 1920. p. 316. 54 this island did not come under the requisition privilege contained in Article II of the treaty of 1903, the island, not being among those definitely named in the treaty.-*- The Canal Zone authorities had sent a man named Genac to Taboga to settle land claims. Panama protested that this m a n had consistently, been antagonistic to Panaman claims in the past, and therefore the Isthmian government could not consider him impartial. Lastly, Panama charged that the Canal Zone autho rities had ignored the usual diplomatic channels in handling this affair, and had in fact acted through subordinate offi cials and private parties.s This wholesale blast was followed a week later by another letter in which Panama requested that (1) the lands on Taboga island taken by the United States be limited to 250 hectares, (2) that the lands be condemned only as actu ally needed, and (3) great consideration be shown the Tabogans, who were already greatly upset b y an attempt of the United States to occupy the cemetery on the island.^ Shortly after this last note the Canal Zone authori ties were notified that Panama, by provisional decree, agreed to the occupation of areas on Taboga, although the Panaman government pointed out that a valid title to the lands could not be conferred "by official communications exchanged between subordinate employees."4 iForeign H e l a t i o n s , 1920, p. 317. %iQC. cit. 3 l b i d . , p. 318. ^Loc. cit. 55 A few months after this Panama took formal steps looking to the drafting of a new treaty. The American m inis ter was told by the Panaman foreign secretary that Panama sought a n e w pact, and would broach the matter formally in Washington as soon as a new minister plenipotentiary to the United States was appointed.^- Informed of P a n a m a ’s inten tion, the State Department instructed the American minister that: In view of the importance of this subject the Depart ment desires that you report minutely any information you may acquire relative to the modifications in the a g r e e ments now In force which the Panaman government contem plates submitting at the time negotiations for a n e w treaty m a y be entered into.^ Ricardo J. Alfaro was sent to'-Washington to attend the inauguration of President Harding. Before returning to Panama he left a memorandum at the State Department setting forth the Panaman position, and giving the principal grievances which the Isthmians would like rectified in the treaty to be*' drafted.3 The opening paragraphs of the memorandum reminded the government of the United States that the treaty of 1903 was signed only fifteen days after the independence of Panama was declared and that the haste attendant upon such a feat explains: ^Foreign R e l a t i o n s . 1922, Vol. 2Loc. c i t . 3Loc. cit. II, p. 751. 56 w h y such a document contains articles, some of which are y a g u e , some too broad, some inconsistent, and which, applied as interpreted by the American authorities of the Isthmus, impart to that covenant a unilateral charac ter which it is impossible to admit was the mature thought or deliberate intent of the two signatory countries.^ It is well to point out here that Panama is n o w for m a l l y protesting against the unilateral character of the treaty of .1903, and that for. the first time the Isthmians are asking that they be placed on a political'equality with the United States and the semi-feudal pact of 1903 be done away with* It is more than a mere protest against specific provisions of a treaty; it is a request that the entire spirit and intent, the unwritten aura, of the pact of 1903 be ended* Panama demanded to be a llowed to bargain across the treaty table as one major power would treat with another; the United States refused, although never in concrete terms, to concede to Panama this equality* The attitude of .the United States was that of a s u p e r i o r 'power toward a small but exceedingly troublesome minor state clamoring, most unreasonably, for various concessions* The United States refused to bargain openly, but sought only to make a s ’few changes as possible, and to give way only on irrelevant points, thus creating the shadow of change while leaving the substance unimpaired. The next several years were to be given over to the struggle. P a n a m a ’s objective could be gained by two means* First, a n e w treaty, amending and explaining the treaty of 1903, could be drawn. tocol in which, The second course was the signing of a p r o by w a y of explanation, the juridical scope 1I b i d .. p. 752. 57 •of each of the articles of.the Oanal treaty, about which there were d i v e r g e n t ‘interpretations, could be fixed* 1 The Alfaro memorandum .then listed thirty-two points as follows:^ 1* Final determination of the lands necessary for the construction, maintenance, operation and sanitation of the Oanal. 2 . Aocjuisition of lands necessary for the protection of the C a n a l . 3. Expropriation of lands for the protection of the 4. Legal status of the Panama Railroad company. Canal. 5. Payment for water and sewerage on the lands owned by the Panama Railroad company. 6. Lands in the city of Colon. 7. General taxes on Panama Railroad company lands and industrial activities of the company distinct from the opera tions of the railroad. 8. Freight rates on the Panama Railroad line. 9. Administration of the commissaries. 10. Sales and services to vessels going through the 11. Marine facilities in the port of Balboa. 12. Private enterprises in the Canal Lone. Canal. 13. Legalization of the invoices and manifests of cargoes consigned to the merchants of Panama and Colon. 14. Cemetery for the city of Colon. 15. Maintenance of the order of depopulation in con formity with the Panama Canal Act. 16. Warehouses of deposit. 17. Customs houses in Panama and Colon for baggage and merchandise examination. -^Foreign R e l a t i o n s . 1922, Vol. Ill, p. 752. 2 I bid., pp. 752-761. 18. Passports. 19. Application of the' Volstead act. 20. Radio communicat ions • 21. Aerial communications. 22. and Colon. Sanitary jurisdiction in the cities of Panama 23* Collection of the water and sewerage tax in the cities of Panama and Colon. 24. Communication between the cities of Panama and Colon and the rest of the republic. 25. Postal service. 26. Money. 27. Status and administration of the wireless stations in the territory of the Republic of Panama owned by the United States. 28. Extradition. 29. Exequaturs to the consuls who exercise their functions in the Canal Zone. 30. Santo Tomas hospital. 31. Exercise by the officials of the United States of the rights and privileges stipulated to said government by the Canal treaty and the contract celebrated with the Panama Railroad. 32. Coastal trade in relation to Article IV of.the Canal Treaty. A considerable number of these complaints were of a trivial nature, and were obviously included in' Dr. A l f a r o ’s list to give it an imposing bulk. The real questions at issue centered around the expropriation of land, the Panama Railroad company, the commissaries and the control of wireless communications. 59 The-.memorandum stated thatr^ The authorities of the Panama Canal maintains the theory that they can take and occupy immediately any area of the Republic and place it under the jurisdiction of the United States without any more formality than ra notice to the Panaman government that they have taken that area as being necessary for the construction, m a i n t e n a n c e , and operation, sanitation, or protection of theCanal. Panama cannot accept such an interpretation, since it would be tantamount to placing in the hands of foreign authorities the absolute power of destroying the existence of the state...such an interpretation is u n acceptable and never could be intended by the contract ing parties... The vagueness of Article II of the basic treaty was criticized, and a long list of lands seized under its terms was appended. Relative to the taking of lands for fortifi cations, Panama denied such a right existed under Article II, but was willing to enter into ai> agreement relative to such l a n d s . 2 Likewise, Panama wished the valuation of the requisi tioned lands to be based on the opinions of the United States Attorney-General, given in 1913, that improvements made on the lands since 1903 must be taken into consideration in placing a fair value on the property, the value of the lands of 1903 serving as a basic point of departure.3 Panama cited an opinion of Secretary of State Lansing, given in 1915, on the same point. Foreign Relations, 1922. 2 L o c ♦ cit. 3 Ibid., g . -155. vol. II, p. 753. 60 P a n a m a ^ complaint against the Panama Railroad Com pany was based on several points. The Company charged a preferential freight rate on goods destined for the commissar ies, the merchants of Panama paying higher r a t e s . T h e lands owned by the railroad in the city of Colon were held under usufruct, and f,were to return to Panama as soon as the Canal treaty was approved as provided in Article VIII, and the Pana ma n government has claimed that right and insisted on a de livery of the lands • rl2 The railroad engaged in enterprises that were not properly connected with the business of being a common carrier. These businesses included the renting of lands, maintenance of stables, city express, etc. The rail road paid no taxes on these enterprises since the railroad Itself was exempt from taxes by the treaty of 1867 between Colombia and the railroad company. The commissaries were the oldest source of complaints. In the Alfaro memorandum the introduction of luxury goods, particularly tobacco, into the stock of these stores, was bitterly criticized. The Panamans charged that tf...the commi ssaries yearly import for a population of about 25,000 more » merchandise than does the Republic of Pahama that has 450,000 • • • »• 3 1 I b i d . - p. 758. 2 I b i d ., p. 757. 3 3Tbid. . p. 758. 61 Ho records of* cash sales were kept in the commissaries, and the Canal authorities were'charged with granting permits to purchase to various persons who were in no way connected with the Canal* The effectiveness with w hich the goods, par ticularly tobacco, were smuggled from the Zone into Panama was so great that the sale of chewing tobacco had ceased in the republic, and the sale of smoking tobacco, had shown an amaz ing decline#1 The sales to ships passing through the Canal were alleged to be in violation of both the basic treaty of 1903 and the Taft agreements of 1904*^ Supplies to ships should be Restricted to fuels, according to Panama. Closely linked to the commissary question, which in the last analysis was only a Panaman protest against busi ness enterprise in the Zone in competition with Panaman m e r chants, was the problem of independent business houses estab lished in the Zone* Panama complained that the Canal authori ties had given permission to Panama business firms to move into the Zone and then to buy from the commissaries and to import building materials, without in either case paying any duties to Pa n a m a • 1 hoc * c i t * 2 -I b i d * . p. 759* 3 Xbid./p. 757* It was not until a year and a half later that the United States took any formal action# Panama had meanwhile been engaged in a boundary dispute with Costa Rica and matters had been allowed to drift# Finally on September 1, the Stateo Department, through Mr. Phillips, the acting Secretary of State, asked President Harding to recommend to Congress the abrogation of the Taft agreements#1 Phillips pointed out in his letter to the president t h a t ;^ The Taft agreement was intended as a temporary arrange ment to cover the period of construction of the Canal# As such it has served its purpose, since the Canal has for some time been formally open to commerce. It no longer provides an adequate basis for the adjustment of, questions "arising out of the relations between the Canal j£one author ties and the Government of Panama, and it is the opinion of this department, and, Iaam informed, of the War Depart ment also, that the agreement should be replaced by a more permanent arrangement. It should be noted that nothing was said about distur bing the basic treaty of 1903. The Taft agreements had been placed on the statute books by the Panama Canal Act of August 24, 1912,3 anct could not be abrogated except by Congressional action. Harding transmitted the request of the State Depart ment to Coolidge, president of the senate, with the request that any action.taken by Congress should leave the exact T 67th Congress, 2nd session, Senate Document Ho. 248. 2 Loc. cit. 3 Loc. cit. 63 date of abrogation open, since it was impossible to tell h6 w long it would take to secure the new arrangement with Panama* ^ The immediate effect of President H a r d i n g fs letter was to cause a misunderstanding in Panama* The Panaman mini ster told the Secretary of State that it was believed in Pana m a that the United States would abrogate the Taft agreement and then go ahead and make new orders without any reference to the rights of Panama, and that there would be no "effort to make an agreement with Panama* !,2 i>he Secretary explained that the Taft agreements had been given the full force of law by the Congressional act of 1912, and that until suitable action to repeal that act was passed it would be impossible to-draft an y new agreement. This explanation satisfied the minister, Mr* A l f a r o . 3 Senator Lodge introduced a jpiht resolution on Decem ber 19, 1922, abrogating the T a f t agreements.*^ Lodge explained the temporary character of the arrangements, and after routine consideration the bill was passed and laid on the T Loc * c i t . 2 Foreign Relations j 1922, Yol. p # 762. 3 L o c * cit. 4 Congressional R e c o r d ,,bp. cit. Yol. p. 664* 64, part 1, 64 p r e s i d e n t s desk for signature on February 10.3- tpwo days later President Harding signed the bill. On October 15, Secre tary of State Hughes reminded Coolidge^ who was now president, of the abrogation of the Taft agreements, and suggested that May 1, 1924, be set as the date of a b r o g a t i o n . ^ president Coolidge agreed to this procedure, and the American minister in Panama was instructed to inform Panama of the contem plated action, at the same time giving Panaman foreign office a copy of the Senate Joint Resolution by which the agreements were terminated.^ Panama criticized the action of the rfsmeriean -Oongress as a unilateral action inconsistent with international usage in the matter of !lcontracts of this class. fr4 and doubted the wisdom of setting a probable time limit on the negotiations. Further, Panama refused to recognize the right of the United States to. terminate the Taft agreements if, on Mayl, 1924, there was no new pact to replace the a g r e e m e n t s . 5 The United States took sharp issue with this view of the Taft agreements.. The State Department felt- 1 i b i d ., part 4, p. 3383. ^ foreign R e l a t i o n s . 1923, ¥ol. & Z h l d . , p- 678. 4 v I b i d . , p. 679. 5 hoed *cit . I I 5 p. 676. : 65 constrained to call the attention of the government of Panama to the fact that it was not the under standing of this government either before or after the negotiations preliminary to the" establishment of the agreement that it-was anything other than a modus vivendi to serve as a temporary basis for settlement of difficulties outstanding between the two governments during the construction operations of the Panama Canal, Pansaa was reminded that Taft, in the presence of President Amador in the G-overnment Palace on November 28, 1904, before signing of the agreement, had said that the projected p a c t ^ Will continue indefinitely until the construction of the Canal shall so affect the relations and conditions existing as to require a new adjustment of the relations between the two governments* Taft was further quoted to -show that the agreements were merely a fAodus vivendi which should bind neither party t o ■any permanent construction of the t r e a t y . P a n a m a was told that the United'-States reserved to itself the right of Freedom of action as specially stipulated in section XII of the Taft agreement, "should it at a subsequent time desire to withdraw from the agreement.ft^ .In closing, the State Depart -ment 1 Ibid., p. 680. ^ ibid., p. 681. ^ hoc. cit. ~ Foreign Relations, 1923, Vol II, p. 682. 66 censored Panama for its note, and' issued a veiled threat in the following term;2. The Government of the United States, relying upon the announced intention of the Government of Panama in enter ing upon such negotiations to deal with the United States openly and frankly as a staunch friend,and not to assume the attitude of a nation whose interests are antagonistic to those of the United States, entertains the hope that these negotiations will not he protracted beyond the date specified* This note left the State Department on December 14, 1923, but in spite of this attitude the treaty was not to be signed until July 28, 1926* Before passing on to a consideration of the negotiatins which resulted in the drafting of thettreaty of 1926, certain other specific causes of friction should be examined* Appli- cationsof the Volstead Act was one of the complaints in the Alfaro memorandum* In June of 1922, Panama took the view that the carrying of wines and liquors b y vessels of Panaman registry in territorial waters of the United States, provided that such liquors were kept under seal during the transit of the territorial waters, was not a violation of the Volstead Act or the Eighteenth amendment *2;: To this'view Mr* Hughes, Secretary of State, replied 4 that the Supreme court had already ruled adversely on a case that was based on the Panaman contention and that h e ,r** .could cit* 2 Ibid., y o l * 1, 159-60 5 , P* 160-61. 67 not accept any suggestion questioning the competence of the Congress to enact the legislation to which you refer.^" Two years after this interchange Panama and the United States signed a ’’liquor treaty” , in which the principle ad2 vaneed by Panama was vindicated. This treaty, it should be noted,, was only- one of a large number which the United States found it advisable in the interests of international amity to sign. The end of 1922 found Panama attempting to assume control of her investmentsin the United States. A bill introduced into the National Assembly provided that as the mortgages on Ne w York real estate fell due and were paid, the money was to be deposited in the National Bank of Panama to be invested later in ’’National securities” . Mr. Hughes instructed the .American minister to enter an energetic pro test against this porposed action, and to persuade President Porras to veto the bill if it was passed by the National Assembly. Mr. Hughes told the minister to remind Panama that an early declaration of policy had pledged the funds in,question to investment in the United States, in order 1 I b i d . p. 160-161. 2 Department of State, Treaty S e r i e s . §707. 3 Foreign R e l a t i o n s , 1923., Vol. II., p. 687. ' 68 to give stability to the government. 1 The Panamans promptly switched on a new track. Porras approved a road-building loan in the amount of $4,500,000, but the real estate funds were not to be disturbed. 2 Panama had certain roads under construction and wished to carry the program further. Pending the outcome of the $4,500,000 loan, the government sought an advance of $100,000 in order 3 to prevent stoppage of work then under way. The American minister told Secretary Hughes that the bankers were willing 4 to m a k e the loan if the State Department had no objection. Hughes replied with a request for the names of the bankers involved, and said that the department had not been approached regarding the larger loan of $4,500,000. Months later the prospectus for the loan reached the State Department. Mr. Hughes, after an examination of the proposed scheme, told Alfaro, the Panaman minister, that the Canal annuity which in part was pledged to the service of the loan, was already 5 pledged to pay the v/ater rates of Panama. City. What pro vision, therefore, would be made to care for the water rates? 1 I b i d ., p. 688. S Lo_c. cit. 3 I b i d . , p . 689. 4 Foreign R e l a t i o n s , 1923, vol. II, p. 689. 5 I b i d . , p. 690. 69 Senor Alfaro replied that the day following the dis patch of the Hughes note Panama had paid her water rates with out use of the annuity funds, and that his government had already signed a contract for placing the bonds necessitated by the loan.'*' Hughes was left with little choice, and to an inquiry he told W. A. Harriman and company, of N e w York, that the State Department had no objection to them handling the loan. 2 The bonds were to bear five and one half per cent interest, and were to run for thirty years. The Canal annuity was pledged in part to service the bonds. It will be noted in connection with this bond issue that Panama* s attitude was more independent than that shown a few years before, and the whole transaction was consumated within what, for Panaman affairs, was a very short length of time. Ibid., p. 693. 2 I b i d . , p. 694. CHAPTER VI.., THE TREATY OE 1926 The techniques of drafting treaties vary considerably, depending upon the questions- at issue, both as to number and importance, and the willingness of either or both parties to reach an early understanding. P a n a m a ’s long list of griev ances, and the attitude of the United States that it was dealing with a small and annoying country, were elements which presaged long and involved negotiations; and so it proved. The actual negotiations occupied a number of discontinuous periods covering in all about twenty-seven months. That the treaty was signed by Panama at all is undoubtedly due, as will be developed later, to the feeling on the part of the Isthmian officials that it was the best pact which they could obtain from this government. The day of the Good Neighbor policy was still some years away, and it is not amiss to postulate at the outset the statement that the treaty of 1926 was drawn in the old atmosphere which had surrounded all previous neg otiations with Panama. On January 29, 1924, Panama took the initiative in get ting negotiations under way. Senor Gary, foreign secretary, asked the American minister to cable the State Department, supplementing a request made a few days, earlier b y Alfaro in Washington, that the United States name a commission to nego- 71 tiate a new treaty with Panama*1 Mr. Hughes replied that the United States was quite willing to appoint such a commission, and would enter upon negotiations at the convenience of Panama*2 On February 5 Panama notified the Secretary of State that the Pa naman commissioners would be Ricardo J. Alfaro, Eusebio A. Morales, Eduardo Chiari, with Eugenio J. Chevalier secretary of the commission*3 Two weeks later Mr. Hughes told the Panaman minister that the American commission would consist of himself, acting as chairman; Francis White, chief of the Division of Latin American affairs; Joseph R. Baker, assistant solicitor of the Department of State, and Edward L* Reed, of the Division of Latin American affairs of the 4 State Department. Negotiations began on March 17. 5 On May 28 Mr. Hughes notified the Panaman minister that the president had issued a. proclamation abrogating the Taft agreements as of June 1, but that n . .* . in order to provide ample time for the con clusion of the treaty negotiations, the War Department is today instructing the Canal authorities to continue, as heretofore, for a period of one month, the rules and practices ^ Foreign R e l a t i o n s , 1924, Vol. II, p., 521. 2 L o £. c i t * 3 I b i d . , p. 522. 4 Loc. cit. ® Me Cain, on. c i t ., p. 233. 72 . . . in the matter of commercial operations in the Canal Zone".^ Whether this was another veiled t h r e a t ’ to Panama, or merely optimism cannot be said. The negotiations were still two years from completion. By July President Porras was writing directly to Pres ident Coolidge that Panama was greatly disturbed by reports from Washington. President Porras told President Coolidge t h a t :2 Panama has declared herself willing to agree to all requests of the United States including the transfer of jurisdiction over a large part of the city of Colon, which for Panama means the distressing sacrifice of witnessing a further mutilation of her territory in the principal part of the Republic. and that Panama asi^dthat the policy outlined b y President Theodore Roosevelt in 1904 and afterwards confirmed by his successor and various Secretaries of State be given expression in the n e w treaty so that she m a y find there in the guarantee of the security that is most wanting, for if the essential stipulations are not laid down as permanent in the same terms as are used in the HayBunau-Varilla treaty, she will ever lie under the threat of commercial, industrial and physical ruin brough on by the erection of a competing commercial colony in the Canal Zone. President Porras found that the "present difficulties are due to insistence by the American commissioners in sti pulating a fifteen-year period for the only clauses vital to ^ Foreign R e l a t i o n s , 1924, Vol. II, pp. 522-23. 2 Ibid.,pp. 524-25. 73 Panama?^ These clauses dealt w ith the commercial privileges in the Zone which the United States had denied itself in the Taft agreements. Finally, the Panaman president told President CoPlidge that all of the concessions made by Panama had been in perp etuity, and that equity dictated that the one vital point sought by his country should, also be in perpetuity. 2 The benevolent intervention of the American president was sought in this connection, might be achieved. so that the economic stability of Panama 3 The acting Secretary of State replied for President Coolidge through the American minister in Panama* President Porras was reminded of the circumstances surrounding the. drafting of the treaty of 1903, and the temporary character of the Taft agreements was emphasized, while it was made clear that the basic treaty of 1903 was and would remain the basis of United States-Panama relations.4^ The American position is ably summarized: While it was possible to grant certain concessions to Panama in the Taft agreement, through the non-exercise of certain of our rights under the treaty of 1903 because that agreement was a temporary one and was expressly stated not to be a delimitation, definition, restriction, or restrictive construction of the rights of either party under the treaty, it is manifestly impossible for the United States to make such concessions in perpetuity when its eventual needs cannot n o w clearly be foreseen. Foreign R e l a t i o n s , 1924, Vol. II, pp. 524-25. 2 L o c . cit. 3 I b i d . , p .525. 4 L o c . cit. 74 The Panaman interpretation of Roose v e l t ’s policy was regarded as too broad, as it was claimed that the former presi dent never intended to limit the rights definitely accorded to the United States by the treaty of 1903, The United States was willing to grant certain privi leges to Panama through the non-exercise of commercial privi leges in the Zone for a period that could be "safely foreseen", but "...the American government must preserve its complete freedom of action for the future to avail itself should necessity therefore arise of the rights, powers and authority granted to the United- States by the treaty of 1903".^ Regarding the transfer of jurisdiction over a portion of Colon, the American note stated that the lands in question belonged to the Panama Railroad company, and at the expiration of that company’s concession, the reversionary rights to those lands being held by the United States, the lands would continue to be under American jurisdiction in accordance with the treaty of 1903.2 Finally, Panama was reminded that the question of perpetuity was not one-sided at all. Certain concessions made by the United States were p e r m a n e n t . These include payments for lands, which were to be based upon value of the lands at time of acquisition and not upon their value in 1903; road 1 Foreign R e l a t i o n s , 1924. 2 Loc. cit. Vol. II.,p.,526. 75 construction in Panama was to cost the United States about $2,000,000; the land to be given Panama for customs houses in the Canal Zone, certain concessions regarding the trans portation of liquors across the Zone, and, last, the making of Panaman currency legal tender in the Zone.^* In fact, the n o t e ^ o n c l u d e d , only the concessions regarding commercial priveleges in the Zone were of a temporary character. On August 6 Dr. Alfaro left Washington, his colleagues having quitted the capital a few days earlier.^ From March 17 to August 6 the commissioners had. held twenty-one meetings, or one meeting about every nine days. The matters submitted in the Alfaro memorandum of 1921 formed the basis of a series of informal discussions which the author of the memorandum had with the State Department in February and the early part of March before the treaty commission was assembled. When the treaty commissions began their conferences it was found that m a n y of the problems before them could be disposed of without serious difficulty.^ The two points which proved stumbling blocks to the negotiators were the question of more territory in the city of Colon, advanced by the United States; and P a n a m a ’s desire for the commercial concessions to be made permanent. 1 I b i d . p. 527. 2 Loc_. c i t . 3 Foreign R e l a t i o n s , 1924. Vol. I I . ,p. 527. 76 In exchange for the land gains in Colon, land which would round out the Panama Railroad company holdings and per mit more efficient administration of the Canal, the United States was prepared to cancel the debt which Panama owed for the construction of water works, sewers, etc., in Colon.^ Panama made a counter offer to give the Colon lands requested if the United States would turn back the lands of the Panama Railroad company which were not used for Canal purposes. Ob viously this proposal had no chance of acceptance since what the United States sought was to increase, not diminish, its holdings in Colon. The United States now offered to refund to Panama what had already been paid for the Colon water works, the cash value of this offer amounting to about $1,250^000. ama .deblinedcthisroffer. Pan From subsequent negotiations it appears that Panama held the Colon lands problem in reserve as a weapon with which to bargain for the permanent relinquish ment of American commercial privileges. sioners advanced a third proposal: The American commis that the area sought in Colon be reduced to the absolute minimum consistent with the with the objectives in view, and that the United States cede to Panama a small portion of Cristobal abutting on Boca Chica.2 1 I b i d . p. 5S8. 2 I b i d . p. 529. 77 This final proposal was tentatively included in the draft of the treaty, although it had not been initialed by the Panaman commissioners before they left Washington as being acceptable The difficulties over the article dealing with the non-exercise of commercial privileges were of degree more than of k i n d . The Panamans seemes willing to accept the temporary character of the proposed article, but they wished the self-denial clause to have an initial life of thirty years, while the united States at first insisted the time limit be fixed at ten ye a r s , 2 After some discussion the United States agreed to a term of fifteen years, but would not extend the time limit beyond that period. For a time the commissioners passed over the commer cial privileges question to consider other matters. When the subject was again taken up the Panaman commissioners” ...made the acceptance of their views that the article be of perman ent effect a condition for their acquiesence in the American commission’s proposals regarding the cession of land in C o lon” .3 The chairman of the Panama commission sought and ob tained an interview with President Coolidge. 1 I b i d . p. 529. 2 Loc. cit. ® Loc. cit. The president 78 merely repeated what had already been said time and again during the period of the negotiations, that while the United States did not as a matter of policy intend to set up a com mercial colony in the Canal:'Zone.1 . ..it could not give up its rights under the treaty of 1903, but at most would agree to a non-exercise of those rights for so long a period as it can safely foresee what its requirements may be. Meanwhile rumors came from the Isthmus that' Panama might not sign the treaty when completed. The declaration by President Coolidge indicated that Panama would lose nothing by failing to sign the pact, and on the other hand the gains were not great.^ these rumors. The State Department took cognizance of Considering the progress already made toward a solution of the difficulties, i£ was felt that nothing should hinder the conclusion of the pact. President Coolidge was consulted, and he authorized a public statement which it was hoped would quiet the fears of the Panamans. As a statement intended to reassure the fearful it is undoubtedly unique. After numerous assurances of the feelings of goodwill and friendship which the United States had for Panama, and after drawing attention to the cordial atmosphere in which the negotiations had taken place, unusual document hurled the threat that: 1 Ihid. p. 529. . 2 Loo. olt. this 79 Should a treaty not be concluded, the United States while it will continue as in the past to deal not onljr in a. friendly but also in a generous manner with Panama must, reserve the right to act in such circumstances in accordance with the full rights granted to it by the treaty of 1903, In conclusion it was said that the statement was issued in order that there might be no misunderstanding of the presi d e n t ’s remarks to Dr. Alfaro. The suggestion is that Presi dent Coolidge might have gone a bit far in committing the United States in the matter of relinquishing the commercial privileges. In defense of the State Department it must be remembered that that branch of the government had been put to some pains within the past year or so to make clear that the Taft agreements were of only a temporary character, and President Roosevelt had been quoted by the Isthmians in de fense of their thesis. The State Department undoubtedly wished to avoid any impression that a committment had been made which was anything more than a generous but temporary modus v i v e n d i . It was only borrowing trouble to allow the Panamans to construe too liberally the remarks of President Coolidge, which, in a decade or so, would rise to plague the then incumbents in the State Department. The threatening portion of the statement is not in the best State Department tradition. Dr. Alfaro said that he understood perfectly the purport 1 Foreign Relations, 1924., Vol. II., p., 530. ao of President C o olidge1s remarks, and nothing that the president had said could be construed as limiting in any way the pro visions of the treaty of 1903.1 Dr. Alfaro informed the State Department that it was his understanding that his government wished to hold in abeyance the treaty negotiations until his return to Washington in October.2 While the members of the Panamanacommission were taking their vacation of two months, the American minister in Panama had a conference w ith the president of Panama. The Minister was told that the administration in Panama was anxious to sign the treaty before it went out of office on October 1. As this statement was made on September 8, and the Panaman commissioners were not due back in Washington until October, it is a little p difficult to see just ho w this was to be brought about. The Panaman president offered a solution of the two problems that were blocking negotiations;^ 1. The question of the water works debt was to be lef in abeyance. The United States was to spend up to $1,250,000 on the construction of a road from Panama to Colon, with an extension to Porto Bello. Panama would supply additional funds, if the #1,250,000 was not enough. 1 Foreign R e l a t i o n s ,, 1924* I b i d .fp . .. 531. 3 Loc. cit. Each country was to maintain Vol. II,p., 530. 81 that portion of the road within its boundaries 2. The United States should cede to Panama that portion- o f .Cristobal abutting on Boca Chica, and in addition a strip of land about four hundred meters long near the American club in Colon, and now owned by the Panama Railroad company. The latter piece of land would be used for dock facilities. 3. A compromise should be reached over the time limits in the commercial privilege clause. A limit of twenty or twenty-five years is suggested, with renewal periods six or seven years in length. The American minister adds'*’ There seems to be little doubt that present assembly would ratify treaty immediately. Both the Assembly and its committee on foreign relations would be favorably disposed. There will probably be only a short session. It is still uncertain whether Chiari will agree to accept treaty in its present form. The President appears enthusiastic over finishing the treaty and now seems to be the time to close negotiations. The minister also gave it as his opinion that President Porras woflld not insist upon the second proposal as a condition of signature.^ Whatever chance t’ treaty had oB being concluded quickly, was seriously jepardized by friction which arose 1 Foreign A f f a i r s , 2 I b i d . p . . 531. 1924., Vol. II, p. 532. 82 between President Porras and Dr. Alfaro. Soon after his re turn to Panama Dr. Alfaro found that President Porras would not support him for the office of first vice-president at the elections soon to be held.-*- The American minister thought that there was little chance that any further progress could be made in the negotiations until the new administration took office.^ From the comments of the American minister, it appears that the State Department was not interested in President Porras* suggestions. The minister felt that the informal talks which he had held with the president had in no way prejudiced the success of the negotiations in Washington. He informed the State Depart ment that through Dr. Morales that President Porras had w i t h drawn his suggestion regarding the four-hundred meter strip of land in Colon, and that the article of the treaty which provided for the transference of jurisdiction of a portion of Colon would now be acceptable to Panama if the United States would accept the following provisos:® 1. That the United States would request no further extension of jurisdiction in Colon. 2. That the boundary line would follow the course of the streets, which were to remain under the jursidiction of ■*■ Foreign Affaird, 2 Ibid., p.532. 3 IbiiL,., P. 533. 1924, Vol. II, p. 532. 83 Panama. 3. That the city of Colon should be permitted to determine in its discretion where the statue of Christopher Columbus should be located. 4. That an allowance should be made to Panama to cover the cost of pavements, aqueducts and sewers in the area ceded to the United States. 5. That the jursidiction over the Bay of Folks River, as provided in the tentative draft of the treaty, transferred to Panama, should be excluding the cession of marine cables. To this latest suggestion the Secretary of State re plied on September 18 that the United States would agree to the proposals regarding the construction of the road from Panama to Colon, providing the road ran near the Canal and that Panama made arrangements in advance to care for her share of the cost. The United States would spend up to $1,250,000 on the road, and allow the sewer debt to be liquidated in accordance with exist ing arrangements. The road matter would be regarded as a quid pro quo for the land in Colon**’ Regarding future land requisitions in Colon the Department was adamant, 2 saying that: foreign R e l a t i o n s , 1924^} Vol* II,,p.. ^ Loc* cit. 533. 84 While this government does not now foresee the necessity for asking for any further cession of the city of Colon to the United States, it cannot bind itself in a treaty never to do so since future exigencies cannot be foreseen at this time. You may point out to the president that this request seems unusual and unnecessary in view of the fact that Panama is in no wise obligated to grant any further request for transfers of jursidiction. It is impossible to understand what the State Department meant by the closing words of the abofe statement. As Long as the United States insisted that the treaty of 1903 should remain the basis upon which Panama-United States relations stood, the United States by virtue of Article VII of that treaty had the right to "acquire by purchases nor the right of eminent domain’^ such lands in Colon as it needed for the use of the Canal. The boundary question was compromised b y making the line of demarcation the middle of the streets, although the United States pointed out the cost of paving and maintenance to which Panama would be put. The difficulties and cost of a new survey were also n o t e d . 2 The statue of Columbus did not appear to be covered by the proposed treaty, but the United States would give P a n ama. a supplementary letter allowing the Isthmians to do with the statue as they wished. Miller, o jd. c i t . , Appendix V. ^ Foreign Relations, 19S4V Vol. 11^ p., 533. 85 The United States would pay Panama for any improve ments actually made by the latter country in the areas to be ceded, the compensation to be determined by a Joint board. A small water area would be granted in Cristobal adjoining Boca Chica, but the United States would retain control of all cables and cable landings.’*' Most important of all, the United States would allow the commercial privilege clause to operate for a period of twenty years, with succeeding renewal periods of seven years each.^ The American minister was instructed to transmit these terms to President Porras orally and not to put them in wri-ting. An examination of the terms offered by- the State Department will show that the United States had taken a long step in trying to meet the requests of the Panamans. While Panama had asked that the commercial privilege clause be drawn for a m i n imum of thirty years, and the United States had at first insis ted upon ten years as the maximum period, the final term offered by the United States was a fair compromise. The length of the renewal periods was that specified by President Porras. The concessions regarding Boca Chica and the street boundaries were in the nature of compromises, but in the matter of the Panama-Colon road the United States met P a n a m a ’s wishes, the ^ Foreign R e l a t i o n s ^ 2 I b i d . , p . , 535. 1924*. Vol. II, p. t 534. 86 only reservation being the logical one of providing for the financing necessary for the undertaking. There appear two reasons for the concessions granted by the United States. In the first place it may be argued that much work had already been done on the treaty with con freres who were willing to compromise, and it was therefore desirable to make some additional concessions in order to bring the negotiations to a happy conclusion before a change of administration brought into office more exacting and less pliable negotiators. At least, this seems more logical than the explanation given by the State Department, that the United States was anxious to meet President P o r r a s ’ wish that the treaty be concluded before October 1, when he left office.-*The Department w a s explicit that the latest offer was continp gent upon immediate a c c e p t a n c e ; ...and that should this not occur for any reason whatsoever these concessions will be considered as withdrawn and the United States vail stand upon the proposals made in the treaty negotiations in Washington. Bn September £0 Minister South wired Mr. Hughes that President Porras accepted all of the terms proposed by the United States with the sole exception that the final proposal, that dealing with the commercial privileges, would be accepted ^ Foreign R e l a t i o n s , 2 Ibid,.p. 534. 19E4. Vol. I I %>p %}534. 87 if two years instead of one y e a r ’s notice was given before denunciation or abrogation.^The next day? South wired that President Porras had told h i m that the proposals were favorably received at a con ference of leaders attended by President-elect Rodolfo Chiari and the treaty commissioners. Senor Chiari was said to be familiar with the previous negotiations.^ Five days after this heartening news Minister South.was compelled to tell Mr. Hughes that* There is no prospect of reaching an agreement under the present administration. The president evidences the desire that the conversations should be allowed to be continued after October 1. I have again in formed h i m and the commissioners that the Depart m e n t ’s informal proposals are definitely withdrawn and that the negotiations will have to be continued between the two commissions in Washington after agreement has been reached on the two principal points of contention. Meanwhile Panama found new demands to make. The very day that President Porras told Minister South of the favorable reception accorded the State Department’s offer, the Panamans were framing new requests. demands to Washington. Minister South transmitted the Panama wanted the Colon street bound aries made definitive and perpetual. ^ Foreign R e l a t i o n s . 2 I b i d . , p., 536. 3 Loc. cit. 1924^ Bonded Warehouses in the Vol. II, ,p'. . 537. 83 Canal Zone were to be under the control of the United States, and private warehouses were to be prohibited. The right of the United States to make use of the harbor anchorages at Panama and Colon was to be restricted to use ffin case of emergency only.” Lastly, the right of. the United States to enforce quarantine and sanitary regulations was to be limited to those which were not of a strictly municipal character. The Statd Department rejected these proposals. Regard less of the merits or demerits of the proposed treaty, it must be recognized that Panama introduced three new subjects for discussion at a time when the United States was meeting the Panaman demands on other points which had been under consider ation for some time and which were thought to be the only ones blocking the signing of the treaty. If questions of anchorages, warehouses and quarantine and sanitary control had formed a part of the Panaman bill of particulars, then they should have been included in ter South in It is the matter. the list President Porras furnished to Minis the early days of September. not too much to charge Panama with bad faith in The real reason for these new proposals ■undoubtedly lies in the obstructionist tactics of the incoming administra tion, which refused to allow an outgoing group, in the final days of its administration, to execute a stroke of state for ^Foreign Relations, 1924, Vol.- II, p. 536. 89 which it might possibly receive credit. It appears that negotiations were in abeyance ftom the end of September 1924, until June 18, 1925^*, when they o were formally resumed in Washington* Apparently the United States was willing to give further consideration to the com mercial privilege clauses, and might even consider meeting P a n a m a ’s wish by making them permanent, but the Washington government stood firm by its demand for the Colon lands.® By the end of the winter of 1926 the Panaman commissioners seem to have reached the corclcusion that they had obtained all the concessions possible, and that negotiations could be brought to a close. 4 T hey returned to Panama in June for one last con ference with their government, States again on July 19.^ and embarked for the United The treaty was signed on July 28, three days after Senors Alfaro and Morales landed in N e w Y o r k . 6 The provisions of the treaty were not made public. ^ The excellent State Department series published under the title of "Papers Relating to the Foreign Relations of the United States", in the volume for 1S25, fails to give any details of the negotiations and in fact ignores the subject completely. McCain offers no explanation of the delay, which was probably due to the preoccupation of the new administration with internal problems. % Me Cain, ojD. cit. , p. * 234. ^ Loc. ci t . 4 Loc * c i t . 5 The N e w York T i m e s . July SO, 19S6. ^ The N e w York T i m e s , July 30, 1926. 6 . / 90 The secretary of foreign affairs read, the treaty ^tothe National Assembly on September 1, and Doctor Alfaro, who had returned to Panama for the p u r p o s e , explained the document to his countrymen.-^ The pact was not to be consid ered until December, at which time it was to be presented to p the Panamanian Senate. Until that time members of the Aoaaembly ” ... were requested to keep secret the treaty clauses not 3 already p u b l ished” . A month later President Chiari asked the postponement of fiscal legislation until the fate of the treaty was known.^ The world first knew the terms of the pact through the H e r a l d o , of Havana, and the Reportorio A m e r i c a n a , of San Jose, Costa Rica, the two papers publishing the text simultaneously on December 14. Copies of the papers were seized in Panama. Later, Doctor Alfaro gave permission to the Dairio de Panama to print the text.^ The treaty as published was copied undoubt edly from an official printing made by the Panama Government ' i, ■’i ^ _. ^ N ew Y o r k T i m e s , September 2, 1926. 2 T o o . cit. . L o c . c i t . A general claims convention between the United States and Panama was signed on the same day as the treaty, but was not ratified by Panama until December 22, 1930. (Department of S t a t e , Press K e l e a s e s , No. 65, December 27, 1930}* 4 New York T i m e s , October 3, 1926. ^ No w Y ork T i m e s , December 15, 1926. 91 Printing office for the use of members of the government.! The New York Times correspondent reported on December 17 that publication of the treaty had not caused much general discussion in Panama. the matter calmly.2 El Tiempo called on the nation to study The London Sunday Observer was the first of European papers to comment- on the pact, and the general tone of its reaction was favorable.*5 President Chiari gave an inter view to newsmen on December 20. He found the new padt a gain over the old one and pointed out that the door to future nego t i a t i o n s was not closed.v Panama, he said, by serious and judicious conduct could win at another conference what she had failed to gain in the present pact. Meanwhile the Foreign Affairs Committee of the National Assembly declared that preliminary study of the treaty indicated that the ten days set aside for consideration was not enough and the matter would go over into January*^ Dr. Morales, one of the negotiators, announced that the treaty was the best Panama could obtain and he would defend the pact in the forthcoming deliber ations. Like President Chiari, he found his handiwork an im- ^ N e w York T i m e s , December 15, 1926. I b i d y .December 17, 1926. 3 I b i d D e c e m b e r 19, 1926. ^ Ibid , ,December 20, 19 26. 5 Loc. cit. 92 provement over the old pact, and he agreed that future n e g otiations were possible*"*" The treaty 2 consisted of thirteen articles. The chief points of contention were settled as follows:^ The Colon lands sought by the United States were yield ed by Panama. Slight rectifications of the Colon-Canal Zone boundary line favored Panama. The United States agreed to cooperate in building the road across the Isthmus to the extent of spending $1,250,000. Panama to pay the balance and also to spend at least $50,000 annually on maintenance. In the matter of the commissaries the treaty, in effect, reenacted the Taft agreements. The sales to ships would con tinue, while the commissaries would sell only to employees, officials and workmen, and their families$ In the service of the Canal or the Panama Railroad company* The United States retained the right to requisition land for use of the Canal administration, but agreed to give notice in writing in advance when such requisitions were con templated. A joint commission would appraise the land. Article VII gave Panama the right to ship liquor across The H e w York .T i m e s , December 22, 1926^ 2 Congressional R e c o r d , 69th Congress, 2nd session, Vol. 6 8 ., Part 2. Senate, p. 1848-1852. 5 Extradition, postal services, consular exequaturs and the Panama Railroad problems were not included in the treaty. 93 the Zone under seal, and to export liquor through Canal Zone ports. As an off-set to this concession, the United States retained absolute control of radio communications in Panama, applications for radio installations were to be sub mitted to Canal Zone authorities and the United States was to have the right to construct and operate such radio stations in Panama as it deemed necessary. Less important were provisions by which the United States retained sanitary control in Panama and Colon, the harbors -pf. the two cities were to be forever free to ships using the Canal, free interchange of goods between the Zone and Panama was provided, private businesses were prohibited in the Zone, and the United States promised to help end the smuggling evil. The two really significant Articles are the following: Article XI The Republic of Panama agrees to cooperate in all possible ways with the United States in the protection and defense of the Panama Canal. Consequently the Republic of Panama will consider herself in a state of war in case of any war in which the United States should be a belligerent; and In order to render more effective the defense of the Canal, will, if necessary in the opinion of the United States Government, turn over to the United States in all the territory of the Republic of Panama, during the period of actual or threatened hostilities, the control and operation of wireless and radio communications, aircraft, aviation eenters, and aerial navigation.:.... . Article XIII This treaty does not limit or affect rights of either party as provided in the treaty of 1903, nor can it... 94 be taken as being a limitation, definition, restriction or restrictive construction of the rights of Either party under the treaty of November 18, 1903,.. Speaking broadly, the treaty merely reaffirmed the Hay-Buanu-Varilla pact and indicated that the United States was going to continue its existing policies in the Canal Zone. P a n a m a ’s only gains involved road construction and the privi lege of shipping liquor across the Zone. Article XIII gave to the treaty the same temporary character that marked the Taft agreements. It must be remembered that this pact was, by the unchallenged testimony of Article XIII, another modus viviendi,^and that in case of necessity the United States had reserved the right to fall back on the more sweeping and vague terms of the treaty of 1903. In no w a y can it be considered to have been a definitive document. Regardless of the present treaty, the pact of 1903 would remain the basis of United States-Panama relations. The storm broke in Panama on January 1, 1927. The municipal council of Colon passed a resolution condemning the 2 pact and urging the National Assembly to reject it. The government wired the provincial governors that: In view of the.insidious and unpatriotic propaganda n o w being carried on against the treaty negotiated between Panama and the United States, the Government of Panama believes it is its duty to counsel all the in habitants of the republic to maintain the calm and m o d eration required at this' time, during which the National Assembly needs tranquility for a sane study of the com pact, the approval or disapproval of which is of trans cendent importance for the future of the republic. 95 A week later Dr. Harmodio Arias, a former delegate to the League of Nations, told the Rotary Club of Panama that opposition to the treaty was growing in all parts of the country, and that even "'...those who negotiated on behalf of Panama, seem dissatisfied, as their principal argument in its favor is that it is the most they could obtain from the United States".-*On the day of Doctor A r i a s ’ speech Doctor Alfaro arrived in Panama from N e w York for the avowed purpose of defending the treaty before the National Assembly. 2 Morales, another treaty commissioner, was heckled with "more rudeness than reason" 3 while.speaking in favor of the pact before the Panama Federation of Labor. into the provinces, Anti-treaty forces sent agitators and the annual Panama carnival was post poned because of the growing tension. The Times correspondent found a growing anti-United States feeling of unexact origin; but there was a suspicion that it was fomented by.foreign sources.* Feeling continued to mount. On January 18 El Tiempo published a letter communicated to it in which the members of N e w York T i m e s , January 9, 1927 2 IblSr. January 10, 1987. ^ Loc. cit. ^ Loc. cit. 96 Thei National Assembly who should vote for the treaty were threatened with death.^ The representative from the province of Chiriqui said that his constituents were ready to ceded from Panama and join Costa Rica, and that many men were hiding in the mountains under the impression that they would be drafted into the war service of the United States.2 On January SI the Accion C o m m u n a l , a nationalistic militant youth organization of apparently fascist hue, and the Sindico General de Traba-jadesr: o r e s , announced a three-day drive during which tags would be sold bearing a demand that the treaty be rejected.^ Possible serious trouble was avoided when the National Assembly on January S6, by a vote of thirty-nine members, passed a resolution suspending further consideration of the pact, and asking the president to reopen negotiations with the United States.^ The committee appointed to study the treaty had filed no report.5 The following day the American State Department admitted that negotiations were under way involving minor changes, but 1 New York T i m e s , January 19, 1927. 2 L o c . cit. ^ Ibid^j January 22, 1927. ^ Ihid.j January 27, 1927. 5 v Supra / This body had been appointed in December and was to make known its findings in ten days; more than a month after its appointment it had not filed a report. the Department insisted that the changes would the substance of the treaty".-*- 97 "hot effect On January 28 Doctor Alfaro was ordered to return to Washington for a conference with Secretary of State Kellogg on the possibility of reopening the negotiations. Meanwhile the American State Department refused comment on the situation. For his government, P r e s ident Chiari expressed the hope that the opportunity might exist for negotiations looking toward a treaty more favorable to Panama.2 On January 29 the State Department asked the Senate to defer action on the treaty until it could be sub mitted in modified form. The Senate was told that no important changes were contemplated, it being the understanding of the Department that the Panaman requests were of a minor nature.3 Thus the treaty failed to find favor in Panama. There was nothing in the negotiations between the United States and Panama, and in the famous Alfaro memorandum, to give the State D e p a r t m e n t .any reason to believe that the changes sought by Panama would be of a "minor" nature. No one in the Department who had been in contact.with the negotiations which had covered such a protracted period could help but know that the treaty as it was finally signed and subsequently transmitted to Panama N e w Y o r k T i m e s . January 28. 1927. ^ Ibid j>gJanuary 29, 1937. 2 Ibid., January 30, 1927. 98 failed by a very wide margin to meet the Panama demands. The basic treaty of 1903 remained in force. Panama- got a highway and liquor transit privileges; United States rights were more clearly stated and were enlarged. P a n a m a 1s gains were trivial at most, and on the great, basic questions she had gained not a thing. Another decade was to elapse before her demands were finally realized. CHAPTER YII PANAMA CONTINUES THE STRUGGLE That the United States and Panama were as far apart as the poles in their approach to the problem has already been indicated. Panama sought an entirely new pact; the Iiay- Bunau-Varilla treaty was to be superseded in all respects. The United States sought a treaty which might be superimposed on the treaty of 1905 and would be subordinate to that treaty and revocable in essence .at any time. President Coolidge had emphasized the importance of Article XIII*** of the treaty in his message of transmissal to the Senate.s The pact was for . . . the settlement of certain points of difference between them, the United States and Panama, which have arisen out of the exercise by the United States of sovereign rights in the Canal Zone by virtue of the Panama Canal treaty of November 18, 1903. The injunction of secrecy laid on the Senate was removed at 18. 3 The text of the Cuban and Costa Rican treaty in the the request of Senator Borah on January treaty had been made known through the newspapers more than a month before, and it was officially published in the United States a matter of days before the Panaman National Assembly administered the coupe de grace. ^Supra. sCong. R e c . Senate, 69th Cong., 2nd. Session, Vol. 68, part 2, p. 1846. ^Loc. cit. 100 A period of inaction began.-1* At the end of February the Chamber of Commerce of Panama appealed to Senator Borah to investigate the damage done to Panaman business by the Canal commissaries.2 A number of influential American business men attending the Pan-American Commercial conference in mid-May filed a protest with the State Department against the C o m m i s s a r ies. They charged that the commissaries were being operated in a manner that violated the spirit of the Canal treaty. Presi dent Coolidge let it be known that the commissaries operated under treaty rights, while President Arias said that if it were not for the sale of liquor, Panaman revenues would be ”in dire straits. Dr. Alfaro had returned to Washington in March. By the end of August the treaty was-in the same position that it had been the previous winter. made in August, To Doctor A l f a r o ’s request, that Panama be granted certain changes in the treaty, the State Department replied^ that it ” ... would be glad to consider any changes he might propose,” but he had ^ Until the volumes covering the years in question are published in the Foreign Relations series by the State Depart ment, the details of negotiations will be unknown. M c Cain sheds no light on this period. 2 ^ ew Y ork Times, February 27, 1927. 3 I b i d . M a y 14, 1927. 4 L o c . cit. 5 2This reply in part contradicts the statement of McCain that Panaman attempts at reopening negotiations accomplished nothing. The D e partment’s contention is that no s t e p ^ w e r e taken to follow up its offer to consider new proposals. Cf. McCain, op. c i t ., p . 240. 101 taken no further step at that time.-*- At the Panaman legation reporters were told that attempts would be made to reopen negotiations in the fall. Secretary Kellogg saw in European criticism the m ain reason for Panaman failure to ratify the treaty.^ The pot was newspapers that the kept boiling by the charge in Mexican Panaman commissioners had been coerced into signing the treaty under threat that the United States would break off diplomatic relations. Doctor Alfaro called the M e x ican char g e s " ... completely false and a b s u r d . " 4 The State Depart ment added its voice in denial. To the Kellogg charge that European criticism and agi tation had prevented Panama ratifying the pact, the Panama newspapers Star and Herald and The Panama American European criticism had had no effect upon P a n a m a ’s the pact. replied that opinion of European newspapers enjoyed a very limited circula tion in Panama and were very little quoted in the Panama press*5 The conservative Star and Herald was almost the first Panaman agencytto give thought to the idea that opposition to the treaty ^ N e w Y ork Times, August 25, 1927. ^ H o c . cit. ® L o c . cit. 4 New Y o r k Times, August 28, 1927. ^ I b i d . » September 5, 1927. 102 was not sincere on the part of all those who had worked against it. The Star and Herald commented^ We believe some modifications should be made in the pact particularly as it concerns t h e .sovereignty of the country and its relations to the League of Nations. However, regardless of any changes that m a y be made, the treaty will be violently opposed as soon as it is returned to our Assembly for consideration. No treaty.could possibly be drawn up that would satisfy certain elements,^ whose very existence is opposition to everything. Senor Morales, chief of the Panaman delegation to the League of Nations, had a busy time explaining to the eighth session of the League the meaning of Article XI of the treat#. Morales explained that P a n a m a ’s agreement to join the United States in defending the Canal was in no way a violation of Panaman obligations to the League under the Covenant.^ Morales contended that sovereignty eonsisted of many elements, and that Panama had surrendered to the United States in the Canal Zone the right to exercise certain of these elements, but there were other factors comprising the entity of "sovereignty," and these factors had been reserved by Pahama. In other words, Panama in joining the United States in defense of the Canal would only be joining in the defense of her own t e r r i t o r y .4 ^ N e w York T i m e s , August 28, 1927. 2 This is undoubtedly a reference to the semi-fascist Accion C o m m u n a l . an organization of very young men. As in Italy, . the love of uniform and its prec|uisites has a strong appeal to the mediocre, who otherwise would spend dull lives behind the plow 5 League of Nations, Official Journal. Special Supplemeift No. 54. 4 'Loc. cit. 103 Panama contended that the Canal Zone was ,!. . .a part of its own territory in which another country possesses vital in terests'. '*1 This was the traditional position of Panama, the one upon which objection to the commissaries and business en terprises was based, and Morales suggested that the question of sovereignty we decided once and for all by an arbitral body.^ President Chiari endorsed the stand taken by Morales.^ Bunau-Varilla, ed the United States. in a letter to the Paris Figaro, defend He found the new pact merely brought the treaty of 1903 up to date, and that the controversial Art icle -XI was merely a restatement of Article I of the treaty of 1903.4 The witch-burning section of the Panama press saw in the forthcoming American army maneuvers, an annual routine military exercise, the preliminary circumlocutions that would end with the occupation of Panama. The normal complement of troops in the Zone had been augmented for the maneuvers, and the increase had been made with the lull knowledge and con sent of American c h a r g e . b The conservative Star and Herald charged the other newspapers with flalarmist tactics”. But the treaty was a dead issue, and gradually the ' League of Nations, Official Journal. Spec.Supplement,No.54 ^ ^ ew iork Times. September 11, 1927. 3 Iftidt September 18, 1927. 4 Ibid, December 18, 1927. 3 Ibid, December 27, 1927. 6 Loc. cit. 104 various reverberations died out* brought no n e w activity. The years 1928 and 1929 The world seemed too prosperous to be disturbed by tie acrimony of a treaty debate. the fall of 1929 was slow in being felt in Panama. The crash in The large number of Panamans employed on Canal works had kept the unem ployment on the Isthmus at a minimum,-*- and road building and the heavy tourist business contributed to the prosperity of Panama. • On August 12, 1950 Doctor Alfaro told the American press that the treaty of 1926 had been drafted under unfavorable diplomatic conditions^, and that he had high hopes for better things which would emerge from n e w negotiations which the State Department had indicated it would be glad to undertake. The Claims Convention which had been signed in 1926, was finally ratified by Panama on December 22, 1930.4 Before the treaty could be proclaimed and work begun under its pro visions, revolution swept Panama. The revolution was the first to disturb the Isthmus ^ McCain, ojd. c i t . , p. 242. 2 The unfavorable conditions had continued for at least twenty-seven months. Doctor A l f a r o ’s observation seems a thin apologia for the general character of the treaty of 1926 and its very swift and complete failure. ^ ^ ew Y o r k T i m e s . August 13, 1930. ^ Yress R e l e a s e s t No. 65. December 27, 1930$ 105 since 1903. The movement began on the night of January 2, and within a few hours complete success rewarded the revol utionists. President Arosemena was put out of office and placed under arrest in the presidential palace. were killed and twenty-four were wounded. -Ten persons A revolutionary .junta consisting of Arias, Francisco Paredes, and Doctor J. J. Yallarino assumed charge of the government. The American minister, Davis, was hurridly summoned from his bed to the presidential palace, where, after a brief conference with President Aroseman$, the latter' resigned.-*-, For his role in the imbroglio, such as it was, Arias thanked Davis in fulsome terms. Davis was credited with tact, courteousness and earnestness in coping with'a "very difficult situation."^ The picture of an American diplomat mediating b e tween the rebognized government to which he was accredited, and a group of "palace revolutionists", would have been most pleas ing to Theodore Roosevelt, who no doubt would have found in the ministers actions a vindication of the Rough Rider methods which he himself employed in Latin America. Pablo Arosemena had been elected president of Panama on August 5, 1928. 3 Hi s opponents charged him with failing tp ^ N e w Yo r k T i m e s , January 3, 1931. 2 Loc. cit. 2 Loc. cit. 106 carry out election pledges with regard to electoral reform^-, and with fiscal mismanagement. In connection with the latter, an American financial committee had surveyed Panaman finances and had criticized the government for living beyond its means and accumulating a floating debt. The salary-cutting campaign that had followed the committee’s report had hit the small wageearner, while those in the higher brackets had not been touched . 2 Under Arosemena Panama also had issued bonds in the amount of $500,000, bearing seven per cent, interest, to meet the cost of government, and later had borrowed a million dollars from the Panaman branch of the National City' bank, of N e w York.^ Further Arias had made himself conspicuous by his fight against the treaty of 1926. It is probable that Arosemena was no worse an administrator than the average Panaman president, but he had the misfortune to take office during a period of great prosperity when long-range expenditures were predicated upon high revenues, and then to continue in office after prosperity had vanished and a money stringency had taken its place. The revolutionists moved swiftly to quiet foreign fears and obtain international approbation. They announced that P a n ama would honor all of her international obligations, including ^ The president was elected by the National Assembly, whose members were chosen by direct vote of the people. The election in which Arosemena was elected over Boyd was character ized as "flagrantly mishandled" (N e w York T i m e s . January 3, 1931) ^ Loc. cit. ® Loc. cit. 107 the financial committments of the r e p u b l i c .1 The .junta offered the presidency to Doctor Alfaro, who was still in Washington as Minister of Pahama, a position he had held since 1922.^ The American State Department moved cautiously so that no charge of favoritism could be brought against it. On Jan u a r y 5 Doctor Alfaro conferred with Francis White, of the div ision of Latin American Affairs. In an interview Alfaro Maid that the question of recognition had not been taken up,^ but expressed the opinion that the United States would consider his assumption of the presidency a legal transfer of power.^ A few days after his conference with White Alfaro left for Panama, where he arrived on January 16. He was inaugurated a few hours later. Italy extended de facto recognition to the junta on January, an act which the Panaman foreign office claimed was nnnecessary. Germany found that the change had taken place within the constitution, and formal recognition of the new 5 government was not necessary. The Times correspondent found 1 N e w Y ork T i m e s , January 3, 1931 2 L o c . cit. 3 This is very difficult to believe. The change of government, and all it involved, could hardly have escaped serious discussion. Doctor Alfaro was also being cautious. 4 Apparently Alfaro was of the opinion that the Panaman constitution provided for changes of administration by revol ution as a pleasant alternative to regular elections. 5 Germany agreed with Alfaro (Cf/ note No. 4). 108 that the body of the revolutionary forces was drawn from the members of the Accion C ommunal, whose members ranged in age from about twenty to twenty-two years President Alfaro had been in office less than two months when he announced that Panama would open negotiations for a new treaty. Arias, of the revolutionary Junta, was appointed minister to the United States, and Alfaro said that the purpose of the negotiations would be to seek a modification of the treaty of 1926” in a form that will fulfill as nearly as possible the hopes of P a n a m a . . . " . 2 A month later the P a n aman president told the Panama Association of Commerce that "...in recent conversations the State Department in Washington manifested a favorable disposition that permitted the hope a satisfactory understanding would be reached in the near future." It was not until the end of August however, that Doctor Vallar- ino, the acting Secretary of Justice, instructed Minister Arias to begin negotiation of a new treaty.^ The Claims convention ratified by Panama in December of 1930^, was finally proclaimed in the same month of 1931. ^ N e w Y ork T i m e s , January 12, 1931. 2 I b i d . Mar c h 9, 1931. 3 I b i d . April 11, 1931. I b i d . August 31, 1931. 5 Sfupra. 109 By April of the latter year the commission was on the verge of beginning, its work, and persons having claims were told to get in touch with the State Department.*** The Claims commission to consider all claims of Panamans and Americans which had arisen since the inception of the Republic, except those involv ing the construction of the Canal, these latter were provided for by Article VI of the treaty of 1903.2 Senor Cruchaga, Chilean ambassador to thh United States, was selected by the two governments to act as neutral presiding c o m m i s s i o n e r J o s e p h R. Bakey, assistant legal advisor to the State Department, represented the United States, and Doctor Alfaro, Panaman minister to the United States,^ represented his country.^ By the time the closing date for the filing of claims arrived there were twenty-six cases involving 145 claims on the docket.^ Before any work could be done a new Claims convention 1 Press R e l e a s e s . No. 79. April 4, 1931. 2 Press R e l e a s e s , No. 105. October 3, 1931*. American claims arising from the Colon fire of 1885 were the subject of special negotiations. ^ Press R e l e a s e s , No. 117, December 26, 1931. Senor Cruchaga resigned as Ambassador to the United States on November 29, 1932. Panama and the United States, failing to agree on another neutral commissioner, appealed to the Permanent Court at the Hague. The president of the administrative council of the Hague court named Baron Daniel Van Heeckeren, who accepted the post (Press Releases No. 175, 177, February 4 and 18, 1933). 4 Harmodio Arias was elected President of Panama in the regular election of 1932. Dr. Alfaro returned to his old post in Washington. ^ Press R e l e a s e s . No. 129. March 19, 1932. ^ Ibiji, No. 160. O c t o b e r ‘2 2 , 1932. had to be drawn extending the time in which the commission could do its work.l The new convention was ratified by P a n ama on March 25, 193 3 . 2 It extended the time for the examin ation of claims to July 1, 1933, and also extended the time which the debtor nation could pay until July 1, 1936.^ Department of State, Arbitration series No. 6 , American and Panamanian General Claims A rbitration. 2 Do£. cijt. ~ • 3 Press R e l e a s e s . No. 183, April 1, 1933. CHAPTER ¥111 THE GOOD NEIGHBOR POLICY IN ACTION A reduction in the tempo of Canal Zone construction work, resulting in unemployment of thousands of Panamans; a decline in the tourist trade and the general reduction of business volume hit Panama with full force in the first part of 1932* In the early part of the year, American relations with Panama were improved b y the signing of a treaty b y which Panama could ship liquor across or through the Zone, and could use Zone ports for the importation and exportation of liquor, provided in all cases that the shipments were sealed and were properly authenticated b y Panaman documents. Ratifications were exchanged on March 25, 1933.^ In May, Panama borrowed at the high rate of seven per cent $100,000 f r o m the Panama branch of the National City Bank with which to meet governmental salaries and ftpressing local b i l l s ” .^ Finances deteriorated rapidly. In June, there was a general salary cut of ten per cent, with a m onthly deficit of $125,000 under the budget estimates.^ On August,1, there L Department of State, Treaty S e r i e s . No. 861. ^ Loc* c i t . ® ^ew ¥ork Times, M a y 22, 1932* 4 L b i d , June 16, 1932. 118 were further salary cuts and President Alfaro reduced his own salary by thirty per c e n t I n September, the minister of finance Introduced a bill in the National Assembly which pro vided for a moratorium on any and all debts of the national government.2 This measure was followed b y a bill signed by President Arias on October 2 b y which two hundred employees of the government were dropped. The chief of the Panama fire department took charge of the police without any additional compensation.^ Modification of the Eighteenth Amendment early in 1933 after President Roosevelt took office, made it possible for the clubs and commissaries in the Zone to sell beer, thus depriving Panama of additional revenue. The sale of beer caused ill-will far out of proportion to the issue involved. The financial stringency, already bad in 1932, became worse as 1933 wore away, and help from the United States appear ed to be the only hope that Panama had of avoiding complete collapse. President Arias decided to make a trip to Washington, there to lay a personal appeal before President Roosevelt. an advance announcement of the trip^ In Arias said that no technical or legal questions would be dealt with, and that he ^ Ibid «, A u g u s t 1, 1932. ^ Ibid^^September 13, 1932. 3 Ibid ^.October 4, 1932. 4 Ibid^ .September 29, 1933. 113 wanted n . . . to discuss our relations in general in a sincere, frank and friendly manner".^* His departure was the signal for an outburst of national feeling. Business houses closed so that all could bid farewell to the presi2 dent. The Panama press reacted favorably to A r i a s 1 m i s sion. Two days after his departure the Archbishop of Panama called upon all Panamans to make daily prayers for 3 the success of the trip. President Arias reached N e w York on the United Fruit company ship Q,uiragua on October 8 and left the next 4 day for Washington. He met President Roosevelt on the 9th and was the guest of honor at an informal White House . dinner that evening. At the invitation of President R o o s evelt, Arias was a guest at the White House for a portion 5 of his stay in ?vrashington. On October 10 Arias and Secretary of State Hull had a conference at the State Department. The meeting was also attended by Assistant Secretary Caffery, General 1 Loc. cit. 2 I b i d . , October 2, 1933. 3 I b i d . .October 4, 1933. 4 N e w Y o r k T i m e s . October 9, 1933. 5 I b i d . , October 5, 1933. 114 MacArthur and Admiral Standley.^ The presence of the last two officials gives an indication that questions involving the strategy of the Canal were on the agenda for discussion. The next day President Roosevelt invited President Arias to attend a White House Press conference. The two exec utives told the newsmen that they were well pleased with the discussions they had had, and a proper solution of the p problem could be expected. On October 17 Presidents Roosevelt and Arias isrz sued a joint statement indicating that sweeping changes in Panama-United States relations were about to take place, and that Panama was to realize m any of her wishes. In . 4 part, the statement said; We have talked over in the most friendly and cordial manner the field of Panamanian-American re lations.. .We are in accord on certain general principles as forming the basis of the relations between Panama and the United States infar as the Canal Zone is concerned... The statement set forth three general .topics which 5 would form the basis of the negotiation of a new treaty. ^ Ibid. ,,October 11, 1935. ^ I b i d . O c t o b e r 12, 1933. 3 I b i d .> October 18, 1 9 3 3 y 4 , \/ Press Releases,Na'^l2. October 21, 1933. 5 Press R e l e a s e s ,N<$212« v/ October 21, 1933. 115 F i r s t , now that the Panama Canal had been completed, the provisions of the treaty of 1903 between the United States and Panama contemplated the use, occupation, and control by the United States of the Canal Zone for the purpose of the maintenance, the Canal. operation, sanitation and protection of Second, in view of the purposes for which the United States used the Canal Zone, Panama was recognized as being entitled to take advantage of the geographical situation which she occupied, so long as this exercise of opportunity did not in any way prejudice the maintenance, operation, sanitation and protection of the Canal. Panama was hailed as a sovereign nation in this portion of the statement, and the United States was said to be ” ... earnestly desirious of the prosperity of the Republic of Pan a m a 1*. Third, the United States volunteered to arbitrate any economic question which did not affect the vital interests of the Canal and which seemed impractical of settlement by direct negotiation. These three general expositions of policy were followed by concrete declarations. With regard to the activities of the United States in the Canal Zone, Panama feels that some of them constitute a competition prejudicial to Panamanian commerce. The United States has agreed to restrict and regulate certain activities; for example, special vigilance will be exercised to prevent contraband trade in articles purchased from the commissaries; for resale on ships transiting the Canal will be 116 prohibited; sales of other goods to ships from the Canal Zone commissaries will be regulated with the interests of Panamanian merchants in view. The services of hospitals and dispensaries in the Zone were to be restricted to Canal and Panama Railroad company employees and officials and their families. The same restrictions were to be applied to restaurants, clubhouses and m o v i n g picture houses.'1' Panama was to receive help in solving the unempoloyment problem: The United States also intends to request of Congress an appropriation to assist in repatriating some of the aliens w ho went to the Isthmus attracted by construction w o r k of the Canal and have now come to constitute a serious unemployment problem for Panama. The clauses in restaurant contracts which bound the lessees or contractors to buy provisions from the com missaries were to be abolished. Panama was given the rights to establish in the terminal ports of the Canal customs houses and to station guards to prevent smuggling from the Zone. The vital portion of this preliminary understanding from Pa n a m a ’s point of view was the drastic restriction put on the commissaries, clubhouses, restuarants and moving The author visited Panama in 1934, 1935 and 1936' and in the latter year spent several days in the Canal Zone. Despite the restrictions placed on clubs and restaurants, the author found no trouble in obtaining service in any of these institutions. It was said that the low sanitary standards observed in Panaman restaurants had forced Zone officials to ignore enforcement of the restrictions. Panama has two fine beer gardens, both American owned, one by the Womack family. 117 picture houses. The first portion of the statement pre saged a revolution in the American attitude toward the question of sovereignty in the Canal Zone. This latter de claration was to cause much uneasiness in Congress and in the V'/ar and Navy Departments when the definitive treaty came up for ratification. Tender solicitude for the Panaman "businessman mrould seem largely misplaced. The retail business of Colon and Panama, that is, that portion of the commercial life of Panama with which the Zone commissaries conflict, is almost entirely in the hands- of foreigners.-1- As McCain points out2 the stores of the two cities which adjoin the terminal ports of the Canal are owned and operated by Hindus, Greeks, Chinese^, Japanese, Armenians and others. Hindu stevedores on the docks of Panama are not an uncommon sight. Politics and the professions are the leading occupations for the true Isthmians; retail trade is their last choice for a career. The Canal Zone authorities went ahead to put into operation the details of the Roosevelt-Arias agreement. By November the principles outlined In the Washington declaration -1- The absence of Spanish names is one of the most striking facts about the shops of Panama and Colon. 2 S McCain, pp. cit., p. 242. The Chinese and Japanese own what Is probably the major share of the restaurants and bars of Panama. 118 were, in theory at least, applied to the Zone and its agencies. Five days after the joint statement the Panama press hailed President R o o s e v e l t ’s Good Neighbor Policy as meaning exactly what it said, ”a square deal and generous justice for weaker countries ” .1 It now remained to draft the treaty; it was to be almost six years before the United States Senate would finally agree to surrender American privileges' in the Canal Zone by ratifying the treaty. 1 New Y ork T i m e s . October £2, 1933. CHAPTER IX THE TREATY OF 1936 The ways of governments are inscrutable* Having secured from President Roosevelt' far more than he probably had hoped for, President Arias allowed the matter of a new treaty to languish from mid-October 1933 until the end of May1934* On the last day of that month President Arias announced 1 that he had decided to n e g o t i a t e s new treaty, and he called upon the people of Panama to support h i m . A few days later he told a press conference that the article in the Panaman constitution which allowed'the United States to intervene in Panama could be abrogated without International complications* Because the United States had dropped the Platt amendment, Arias felt that the United States would surrender the right of Intervention in a m e w treaty *2 Dr. Narciso Garay, Secretary of Education, and Br. Car los Lopez were named treaty commissioners in October* Dr. G-aray left on the twenty second of October for the United States, and Lopez followed him a few days later.^ Dr. Alfaro was added to the treaty group, he being in Washington at his 1 N e w /York T i m e s ,: May 31; 1934. ^ Ibid., June 2, 1934. 3 Ibid., October 22, 1934. 120 old post of Panamanian minister. The first conference was held on November 5 in the State Department, and it was announced that the first conver sation was most satisfactory.-*- By November 24 Arosemena, Panamanian foreign secretary, was able to announce that at that stage of ,the negotiations Article I of the treaty of 1903 had been cancelled, but no details of the negotiations could be made public. The Accion Communal published an al leged draft of the new pact, which was at once discredited rz. by the Panamanian government. To the abrogation of Article I of the 1903 pact, BunauVarilla pungently dissented, with more than a modicum of truth, that4 Sense of gratitude seems to be entirely absent in the leadership of this little republic which owes its life to my initiative and to the protection X was happy enough to obtain for it from the United States President, Theodore Roosevelt. They v/ish to eliminate that protection, which is not very wise . . . The people of Panama, instead of cherishing the memory of the historical circumstances owing to which they are free, rich and independent, and keeping them well pro tected, want to forget them. It appears that negotiations continued through the winter and spring, and in August the treaty commissioners 3-Press Releases. No. 267, November 10, 1934. %few York Times, November 25, 1934. 5L o c . c i t . ^Ibid., December 20, 1934. Varilla. Letter from Philippe Bunau- went to Panama to consult their government, United States in October 1935*-** returning to the Before leaving the United States the commissioners had authenticated'the treaty for identification purposes,^ and for this reason the Isthmians were told that the pact would be signed early In the fall.3 The announcement was premature as the negotiations were not entirely finished, and it was admitted'that two or three points remained to be settled. It was expected that these would be the subject of direct diplomatic representations between the two governments.^ Mr. Welles, Assistant Secretary of State, who had been the principal American negotiator, went on vaca tion in August, the understanding being that when the Panama nian commissioners returned in the fall the negotiations would be brought to a formal conclusion as speedily as possible.5 Finally on March 2, 1936, Messrs.- Hull and Welles and Senors Alfaro and G-aray signed a-series of four agreements as f o l lows * 6 1. A general treaty revising in some aspects the con vention of November 18, 1903, between the United States and Panama. This -treaty Is accompanied by sixteen e x changes of notes embodying interpretations of the new t r e a t y ”or agreements pursuant thereto;: I McCain, og; c i t ., p. 248. New York T i m e s , August 16, 1934. ^ Ibid., August 2, 1934. ^ Ibid., August 1 6 , 1935* 5 Press Rele a s e s , No. 307? August 17? 1935* This is the only press release In 1935 which bears on the negotiation of the ne w treaty. 6 Press Releases, No. 336, March 7, 1936. 122 2. A convention for the regulation of radio communi cations in the Republic of Panama and the Canal Zone, ac companied by three supplementary exchanges of notes; 3 . A convention providing for the transfer to Panama of two naval radio stati o n s ; -and 4* A convention with regard to the construction of a trans-Isthmian highway between the cities of Panama and Colon. A statement which accompanied the publication of the V summary reviewed briefly the history of the negotiations, mentioning that since the abrogation of the Taft agreements the need for a new arrangement had be e n felt, and that the basis for the present conventions had been laid by the conver sations of Presidents Roosevelt and Arias in October 1933**** The atmosphere was soon rendered even more amicable by P a n a m a 1s payment bn July 4 of #111,246.25 in satisfaction of the awards made in favor of American nationals by the G-eneral Claims Commission under the conventions of July 28, 1926 and December 17* 1932. #111,396.25, 0 The actual award to Americans totaled from which was deducted #3,150.00 awarded to Pana?- manians• The general treaty was sent to the Senate, where Sena tor Key Pittman of the Foreign Relations Committee asked that it be considered behind closed doors because of the "military 1 Press R e l e a s e s , No. 336, March 7, 1936. 2 I b i d ., No. 353, July 4, 1936. and naval aspects" of the document.**- On the eve of the signa-? ture of the treaty, military and naval considerations h a d a l most brought negotiations to a standstill. It was reported in the press'tnat the United States^requested that no limit be placed on Canal Zone military maneuvers in Panama, and the foreign minister had made a public statement that Panama could not sign a treaty which contained 11such an obscure point with reference to sovereignty of national territories .*! Sumner Welles declined to comment on this contretemps on the ground that 11. . . both governments had agreed not t o discuss'them (the negotiations) until they were concluded". ^ By mid-April b o t h Mr. Hull and Mr. Welles had made numerous appearances before the powerful Foreign Relations Committee of the Senate to answer questions regarding the treaty. The going was tough, since^ The high commands of the army and navy are extremely dubious about the military and naval provisions of the treaty, but it is^understood that both services have come to consider the terms lessvdangerous than they did at first. This was the situation as reported by the Times Washington bureau. On April 26 the text of the general treaty was published 1 'N e w York T i m e s g April 11, 1936. 2 February 24, 1936. 3 Loc. c l t . 4 Ibid., April 1 1 , 1936. in the N e w York Times! It" was reported from Washington that army and navy officials, who had yet to testify before the Senate Committee, were perturbed by a convention which accompanied the treaty and which would “put' vital Canal Zone p communications under the control of Panama” * Three days later administration leaders abandoned the attempt to secure passage of the treaty at that session of Congress*^ Reasons for this action were that the pact had become a campaign issue in an election in Panama, the desire not to have any violent debate on the subjedt during the forthcoming Pan-American Peace Conference and the premature ” , . . revelation of the Issues involved, through publication of an incorrect draft of the treaty in the New York T i m e s . • . Further, the United States wanted Panama to take action on the treaty first. The Panamanian Congress was not in session, and the president was reluctant to call a special:meeting until after the election, which was scheduled for June 7 . 5 The Times also found that some Senators s a w 1,danger of sabotage of the Canal through the concessions made to Panama. 1 2 3 4 It would seem that the most Ifcld-., April 26, 1936. Loc. c i t . Ibid., April 30, 1936. Loc. cit. l2Sf cogent reason for the delay in acting on the treaty was the objection raised by the array and navy high commands* Un doubtedly these officials wanted.to make American control over the Zone as complete as possible, and saw in the relin quishment of sovereignty grave dangers involving the p r o t e c tion of the Canal. Obviously, the fears of the army and navy people would have to be quieted before they would approve the pact. Their testimony before the Senate Foreign Relations Committee, though perhaps not decisive, could be of ample force to encompass the defeat of the pact unless it was found so desirable that other considerations would be outweighed. This was far from the case. The treaty was a general sur render of rights, and even a Roosevelt-controlled'Senate was likely to balk at such a surrender. The treaty was submitted to the Panaman National Assembly on September 9 by the new foreign minister, Narciso G-aray, who had been one of the treaty commissioners .-** The Star and Herald and The Panama American editorially favored ratification of the treaty. The Star and Herald found that Panama would not gain- all that she wished and all that right fully belonged to her, but it was all that na small weak .1 country like Panama” could obtain. ^ 2 , September 10, 1936. 2 Ibid., September 12, 1936. 18& Dr* Juan Demostenes Arosemena.was inaugurated presi dent on October 1. In his first speech after becoming presi dent Arosemena told of his part in drafting the pact* left approval up to the National Assembly, He calling: attention to the changed attitude of the United States which had re sulted from the Good Neighbor Policy*2 The National Assembly passed the treaty on second read ing on December 22* The more pessimistic found that the treaty had no arbitration clause, and that in all5 probability regardless of what the pact said the United States would in terpret it to suit itself, as it had the treaty of 1 9 0 3 *2 The next day the treaty was passed, on its third reading by 3 the substantial margin of 27 to 4* It was now the turn of the United States to balk at a treaty* Indications of the troubles that lay ahead have al ready b e e n given. By late July, 1937, President Arosemena was urging the United States to ratify the treaty* In ae p u b l i c 'statement he declared that Panama would do nothing to impede the passage of American troops from the Zone Into Panama if such action was necessary to defend the Oanal.^ ^ Ibid., October 2, 1936. 2 Ibid., December 23, 1936. 5 I b i d ., December 24, 1936* 4 I b i d ., July 26, 1937- 127: Arosemena said Panama wished speedy ratification so as to end American use of lands and waters outside the ten-mile zone as,, allowed "by the treaty of 1903* Meanwhile, it had become known that some high-ranking American army and navy officers were -1 still disturbed over the rights Panama would gain*. On Octo b e r 31 the Star of Panama r eported that American opposition to the treaty was in part based on the totalitarian drift of the Isthmian government.^ Pepper, Byfthe end of November Senator Claude member of the Foreign Relations Committee, was moving in the Senate that consideration of the pact be put off until the Far Eastern crisis was over. Senator Pepper alleged that under the pact the plans of defending the Canal would have to be altered greatly, a thing that would require months or even years to bring to completion. While the treaty reposed peacefully in the bosom of the Senate.Foreign Relations Committee, Panama was "acting up" over the Canal annuities^ W h e n the United States reduced the gold content of the dollar Panama refused to accept the Canal annuity oh the basis of $250,000. The first such refusal came A in 1934. On M a y 24, 1938, President Arosemena announced that Panama would make no more payments on the five and a half 'n 2 Loci cit * I b i d ., November 1, 1937. 3 Ibid., November 29, 1937* . 4 Ibid., M a rch 7, 1934. . 126 per cent Ponds of 1923 until the United States paid the a r rears on the annuity. due, Panama claimed that $2,000,000 was now and it would not divert money from the general revenues'1 I ■’ to meet the interest payments on the bonds, due June 1. In September Arosemena declared in opening the National Assembly that"relations with the United States would be more cordial if the treaty were ratified. Panama intimated that unless": bond-holders were willing to taice a reduction in the interest rate on their holdings, there would be no payments.2 Secretary of State Hull passed through Panama on November 30 on his way to the Lima Conference. He expressed the belief that the-treaty would be ratified and refused to comment on the alleged opposition of*army and'navy offlcials.3 On his return from Lima on January 3, Hull again passed through Panama and conferred with Arosemena, but no details of the . conversation were made public*4 On June 15, 19.58, the four conventions had all been reported favorably by Senator Pittman, no reservations being demanded by the Committee on Foreign Relations, 5 but more than a year,was to elapse before final ratification. By March of 1939 it was reported that the opposition of ^ N e w 1York T i m e s , May 29, 1938. 2 I b i d ., September 2, 1938. ^ Ibid., December 1, 1938. ^ Ibid., January 4, 1939. 5 Congressional R e c o r d , Senate. session, Vol. 83, Pt. 8, p. 9419. • 75th Congress, 3rd 1£9 army and navy officials had been withdrawn. President Roose velt gave a boost to the Panamanian ego on March 13 when he raised the legation in Panama to the rank of embassy-*- and appointed William Dawson, a career diplomat'of Minnesota, first' ambassador. The ostensible reason for this action, in the ?/ords of the State Department, faa to further friendly relations, for "an ambassador is in better position to obtain such relations than a minister” The withdrawal of army and navy opposition was the re sult of an understanding between the two governments affected by an exchange of notes, all dated February 1, 1939. Mr. Hull wrote the Panamanian minister that members of the Senate in their consideration of the treaty, 11. . . may ask for c l ari fication as to the precise meaning of certain important p r o visions of the General Treaty which affect the security and neutrality of the Panama Canal". 3 Mr. Hull” then set forth the interpretation which the United States placed on three provisions of the treaty. First, the word "maintenance" as applied to the Canal was to be so construed that the United States could expand its facilities in the Zone and undertake new construction. Second, the holding of army maneuvers in Panama was assured. Third, in the event of great emergency ^ N e w vYork T i m e s , March 14, 1939* ^ Loc. c i t . 3 Department of State, Treaty S e r i e s , No. 945 > p. 63*• T3G w h e n it would be impossible to consult with Panama, in advance due to lack of time, the United States was allowed to take such measures for the protection of the Canal as were deemed necessary The Panamanian minister replied that the interpreta tion's given by Mr. Hull on the three points in question co incided with the Panamanian view. It was probably this exchange of notes which Senator Pittftan found 11conclusive11 in clearing the way for ratifica-t i o n of the pact.2 A subcommittee of the Senate, headed by Senator George, was not so easily impressed and demanded to know whether the National Assembly of Panama had had before it the minutes of the negotiations when it ratified the pact. The minutes went into all phases of the negotiations In full detail and laid the foundation for the Hull note of February 1. H a d the National Assembly not had access-to these notes, there might later on have been a question of the interpretation agreed upon b y the American and Panamanian foreign departments, and also upon the authority of these two governmental agencies to construe a bilateral pact, which had been ratified by only one party, in a way so that the second party was induced to passnthe pact, the first ratifier having acted before the **• Department of State, Treaty S e r i e s , No. 945, pp. 63-64. 2 New York Times, June 15, 1939. 130i interpretive notes were exchanged. The minutes of the n e g o tiations indicated the intention of the treaty commissioners, and set forth completely, in a way not possible in a formal £reaty, the exact interpretations and understandings reached. A ’knowledge of these minutes made it impossible for the Pana^ manian National Assembly later to repudiate the Hull notes, since they merely restated in concise form the understandings incorporated in the minutes. On July 24 the Senate failed to muster a quorum for consideration of the treaty. Senator Johnson, of California, attacked the proviso that Panama aid the United States in the protection of the Canal. Realistically, the California Sena tor found that l,Panama .has: never been of any help to the United States and I venture to say never will be of any help.11^ The debate centered around concessions of former Canal Zone territory to Panama. Senator Pitttnan pleaded for ratification on the ground that nothing would do more to win a friendly atmosphere for this country in Latin America. Senator B'Orah added his endorsement to the pact, but an amendment making American rights in the Zone and its vicinity more explicit was^offered, and again the question of whether the Panamanian National Assembly had known the details of the negotiations when it ratified the pact came up* p 1 M e w York Times* July 25, 1939* 2 Loc. cit. 13B On July 2 5 Mr* Hull obtained a note from the Panamanian minister in which the latter stated that the Panamanian N a tional Assembly had, in accordance with the constitution, seen the minutes of the negotiations before it ratified the pact#-*' The treaty was finally ratified by the Senate, 65 to 16, fifteen Senators not voting*2 with The treaty passed without amend ment, although at the last minute an attempt was made to change the pae:t so that in case of emergency it would not b e neceshary for the United States to consult Panama before sending troops, into that country. This amendment was offered by Senator Con- nally and was beaten 49 to 30, after Senator Pittman read the Hull note covering this point to the S e n a t e *3 The amendment - covering a-more concise definition of American rights was withdrawn by its author, Senator Gerry. 4 Almost unnoticed, the trans-Isthmian highway treaty was passed the same day without a record v o t e *5 amendments were offered to this pact. The treaties covering the transfer of the two naval radio stations, and the regulation of radio communications, although reported favorably out of committee,^ received no further consideration 1 Department of State, Treaty Series, No. 945, pp. 68-69** 11 Congressional R e c o r d , Senate. 76th Congress^ 1st session, Vol. 8-4, Pt. 9, p. 9907* 3 NewvYork Times, July 26, 1939* Loc . cit. Congressional R e c o r d , Senate. 76th Congress, 1st session, Vol. 84, Pt. 9, pp. 9907-9908. 6 Congressional R e c o r d , Senate. 75th Cbngress, 5rd session, Vol. 83* Pt. 8, p. 9419. Known as Executive C and D (Exec* R e p t s . , Nos. 18 and 19)* 13* at this time* But the main objective, the general treaty, had been passed* The treaty consists or eleven articles, exclusive of the article outlining the ratification procedure* Forsaking the usual method of analyzing a treaty article by article, method frequently clumsy and confusing, a the provisions of the pact, may be set forth in the following manner:^ PANAMA GAINS 1. Article I of the treaty of 1903 was revoked, re moving any stigma of "protectorate" that might attach to Panao m a Ts sovereignty. (Article I, treaty of 1936). 2. The United States renounced its right in perpetuity to lands and waters outside the Canal Zone* XArticle II, 1936 cancels latter portion of Article II, 1903)*^ 3* The United States renounced in a broad way its commercial privileges, limited the sales of commissaries, the sales to ships, and also limited the use of laundries, moving picture houses, restaurants, e t c 4, maintained in the Canal **• Department of State, Treaty S e r i e s , No. 945, PP* 1-21 Body of text, pp. 1-21; ratification proclamation, p. 22; ex changes of notes, pp. 23-69*2 The treaties of 1936 and 1903 will be referred to in this list by their numerals, 1936 and 1903, alone. The United States under Article VI, 1936, retains the right to obtain lands and waters outside the Zone by purchase. The privilege of obtaining lands by right of eminent domain, as provided by Article VII, 1903, was surrendered by the United States. 134 Zone. (Article III, 1936).1 A. The United States limited the classes of persons who could rent houses in the Zone. (Article III, Section 3)• B. The United States limited the private "businesses that might operate in the Zone. C. (Article III, Section 5)*^ The United States pledged its aid to Panama to stop the smuggling of goods from the Zone into Panama. (Article III, Section 4). D. The United States surrenders its right to make unrestricted use of the harbors of Colon and Panama. These harbors could be used by the United States only in time of emergency. E. (Article III, Section 6).. The merchants of Panama were granted the n e ces sary facilities in order for them to visit ships transit ing the Canal. 4. (Article III, Section 7)* Article IX, 1903, was repealed and Panama was given permission to levy harbor, pilot, anchorage, etc., fees on American ships used in connection with the Canal, ships made use of Panamanian harbors. if those Ships transiting the Canal and not touching at Panamanian harbors were to remain free from any Panamanian tax, as in the past. (Article V, 1936). For details of the limitations imposed, 2 see Appendix. Private enterprises exempt from this^restriction were those engaged in the operation of cables and telegraphs, ship ping, the selling of fuel oil to ships using the Canal, et<r« Existing private businesses were also exempt. 13b 5* The United States agreed to furnish Panama with sites in the Ganal Zone where customs houses could be built. Panama is to use these customs facilities for the inspection of baggage, merchandise and passengers arriving in the Canal Zone and destined for Panama points. 6. (Article V, 1936).^ Panama was granted the right to have its immigra tion officials visit inbound liners off Cristobal and Balboa for the purpose of examining passengers bound for Panama points. (Article V, 1936). 7- The United States surrenders the right to acquire lands and waters in Colon and Panama by use of the right of eminent domain. 8. (Article VI, 1936).^ Tiie United States renounced its right to intervene in the cities of Panama and Colon to preserve order. VI, 1936, cancelling specifically Article VII, 9. (Article 1903)* The United States^agreed to pay the Canal annuity, beginning with the 1934 payment, in balboas.' The payment is to be reckoned at 430,000 balboas, it being agreed that this sum shall represent the equivalent of $250^000 in gold. ^ Most shipping lines seem to prefer to use Canal Zone ports rather than Panamanian. This is probably due to the superior facilities in the Zone ports. The author knows of no steamship line sailing to Panamanian ports. 2 Article VI, 1936, reenforces the provisions of Article II, 1936, in this regard, but the force of Article II Is weak ened by the provision that the United States may still requi sition lands outside the Zone in the event.of “ some now unfore seen contingency11. This fatter provision seems to vitiate the force of both Articles II and VI. 136 10* f !h.e United States ceded to Panama a narrow strip of land in the Canal Zone so that the city of Colon might be linked by an all-Panama route with the rest of Panama.^UNITED STATES GAINS--* The United States made only one gain* This was a s m a l l \strip of land linking the Canal Zone with the site of Madden Dam, and given to the United States by Panama-.so that the power lines from the dam to the Zone might traverse t e r ritory under American jurisdiction. (Article IX, 1936). The series of sixteen notes, which Mr. Hull and the Panamanian commissioners exchanged on the day the treaty was signed, covered the following points: 1. The treaty covered all possessions of the United States on the Isthmus, whether in the Canal Zone or not. 2. W i t h reference to those allowed to purchase in the commissaries, this class was specifically said to consist of officers, employees*' laborers and workmen of the Panama Canal, the Panama Railroad Company and their auxiliary works, and to duly accredited representatives of any branch of the government of the United States exercising official duties in the Republic of Panama, including diplomatic officers and consuls. Colon occupies a large thumb of land almost completely surrounded by water. The very narrow strip of land which con nects Colon to the mainland is about four hundred yards wide, and is a portion of the Canal Zone. 137 . 3, J Panama recognized the right of a small number of truck gardners and hucksters to live and cultivate ground in the Zone in order to supply residents with vegetables, 4. The temporary guests of the Canal Zone hotels were exempt from Zone residential restrictions; the United States was to withdraw from the hotel business when Panama is able to meet the demand with, institutions 5* of her own. Servants of those allowed to reside in the Zone were permitted to purchase food, clothing and medicines.in the commissaries. 6.The United States was to withdraw from warehouse, the bonded business as soon as Panama has institutions capable of assuming the business now conducted in Zone w a r e h o u s e s . 7 . Facilities of lunch rooms, restaurants, hospitals, moving picture houses, be limited. clubs, etc^, in the Canal Zone are to These facilities will not be available to passen gers and members of crews of ships transiting the 8. The United States was to cooperate Canal. with Panama in stopping smuggling from the Zone into Panama. 9 . The ban on private businesses in the Zone shall not be extended to temporary private enterprises which are en gaged in construction work in connection with 10. Schedules of various classes of goods sold in the Zone to ships must be kept. 11. the Canal. See Appendix A. Panama makes a special reservation of its rights 135' in connection with commissary sales. 12. The right of the Panama Railroad Company to oper ate port facilities under its concession, and the reversion ary rights held by the United States to continue this practice, were confirmed. 13* '^he right of Panama to exclude such persons as it wishes does not prejudice the right of persons employed by the United States in the Zone to enter the Republic of Panama* 14. Health agreements regarding Panama and Colon were to be concluded by the appropriate authorities of the two g o v e rnments♦ 15. Details of the negotiations looking to separate settlement of the water works and sewer question. 16. Panamanian citizens were guaranteed equality of opportunity for employment on government works in the Zone. The special provisions of the monetary agreement re duced the gold content of the balboa so that it was made equal to the dollar. In effect, Panama wasto receive about |7>500 more per year than under the gold payments. The United States was relieved from accepting payment or Canal tolls in Panama nian silver.***5 Besides these notes, signed at the same time as the treaty, the Hull note of February 1, 1939*2 with its three' *** Department of State, Treaty S e r i e s , No. 94-5* PP* 58-60. ^ Cf. ante., p. 109* 13.9 provisions must be considered a portion or the explanatory material which accompanied the general treaty. contained two general provisions, by the Hull note. The treaty one of which was amplified This article provides that in Case of in ternational conflagration the two governments shall consult together as to the best means to be adopted for the protection of their common interests. The second general article stipu lates that the treaty of 1903 shall remain in force', the pre sent treaty in no way limiting or restricting the earlier pact, except^ that those specific additions, abrogations and modifications made by the treaty of 1936 shall supersede the relevant clauses and provisions of the treaty of 1903* ^ Author*s italics. CHAPTER Xu SUMMARY A N D CONCLUSIONS N o detailed comment on the- treaty of 1936 seems n e ces sary. In large measure Panama achieved all of her major ob jectives and a number of minor ones. For the United States the treaty was merely a rear-guard action in which this coun try was lucky to have escaped from the diplomatic battlefield with what it did. The present administration in Washington which has carried forward the Good Neighbor policy first formulated by Herbert Hoover, was in power in 1933 when President Arias made. his famous trip to Washington, and has continued in power through the negotiation and ratification of the treaty. Pres ident Roosevelt has followed a policy of placating Latin A m erica. There was no greater sore spot than Panama, and here the United States leaned over backwards to accommodate itself to the wishes of the Isthmians. position in this country, That this policy met with o p from those persons charged with the defense of the Canal, has already been shown. Panama was brought into being to make the Canal possible. As a political entity it was no more than a protectorate of the United States. This was the position clearly marked out for it by the treaty of 1903* The position of Panama with regard to finances, radio communications, railroads and other 141 matters of vital internal concern has been shown, Panama made no moves without the consent, tacit or implicit of the * State Department in Washington* debit side* This has not all been on the Panama has been saved from foolish and b u rden some expenditures during the years that she was growing into nationhood. The position p f Panama athwart the Isthmus has been tempting to every type of adventurer, and the steadying, If restraining, hand of the United States hassnot always been stretched forth to strangle Panama, as some weepy antiimperialists would have one believe. The treaty of 1926 was drawn by the United States upon the same fundamental premise that had been the basis of the treaty of 1903; that Panama was a protectorate of the United States* That treaty showed no change in the American attitude, and it contained some few concessions to Panama, but in es sence it represented a continuation of the policy inaugurated in 1903. The treaty of 1936 was drawn in a far different atmo sphere. The G-ood Neighbor policy is one of cooperation and helpfulness, with all nations meeting as equals around the conference table. The treaty granted P a n a m a ’s two great wishes. First, the protectorate established by the first article of the treaty of 1903 was removed and the limited nature of the sovereignty enjoyed by the United States in the Canal Zone was recognized. Second, and of more importance from a practical 142 point of view, the commissaries and many other commercial activities of the United States were curbed* Also looming large, but taking place well behind these two points were the surrender of the right of eminent domain in connection with lands in Colon, the surrender of the privileges of free use of Panaman harbors, the surrender of the right of interven tion in Panama and Colon and the customs and inspection rights granted.to Panama* Panama was not quite able to achieve the surrender of the right by the United States to intervene with armed forces in Panama in case-of international crisis in order to protect the Canal. The army and navy authorities balked at this, and it took an exchange of notes to confirm and make clear this right* Panama also had to confirm the right of the United States to hold military maneuvers on Panamanian soil, and the right to acquire additional lands for use of the Canal was grudgingly given* Panama won her independence in the treaty of 1936 as far as she will ever have complete independence * Canal is too important, But the it is too large an investment, and it is too hard to defend, being so far from the United States, for the State Department ever to grant to Panama all of the things that she wants* In the last analysis, when tne Canal is threatened, no policy, G-ood Neighbor or other, will stand in the way of the army and navy making their own arrangements, 14i3 and in their own time, place and manner, the C a n a l • Until that time comes, for the defense of if ever, Panama is free to enjoy the fruits of the treaty of 1936* BIBLIOGRAPHY BIBLIOGRAPHY A. GOVERNMENT PUBLIGATIONS Congress^ Cdngresslonal Record 62nd. Congress/ 2nd session 69th Congress, 2nd session 75th Cdngress^ 3rd session 76th Congress, 1 s t - session Senate Documents 61st Congress, 2nd session, No. 357* Treaties, Conventions, International Acts, Protocols and Agreements between the United States of America and Other Powers. Edf William M. Malloy. 2 vols. 67th Congress/ 4th session, No. 348. Treaties, Conventions, International Acts, Protocols., and Agreements between the United States of America and Other Powers. 6?th Congress, 2nd session, No. 248. Department of State Hunt, Bert L*, American and Panamanian General Claims Arbi tration under the Conventions between the United States and Panama of J u l y 2 8 , 1 9 2 6 f""and December 17, 1 9 5 2 . Washington,~TArbitration series, N o . 6), 1934* Papers Relating to the Foreign Relations of the United S t a t e s , 1903-1925. Washington, 1904-197)O. Press R e l e a s e s , 1929-1939* -Treaty S e r i e s , Nos. 7 0 7 j 861, 945, and 946. B. OTHER DOCUMENTS League of Nations, Official Journal* Eighth Ordinary Session of the Assembly. Special Supplement, No. 54* C'i BOOKS? Bunau-Varilla, Philippe, The G-reat Adventure of Panama^ New York; Doubleday, Page, and Company, 1920.. McCain, William D., The United'States and the Republic off P a n a m a . Durham, North C a r o l i n a : Duke University Press, 1937 • Miller, Hugh Cbrdon, The Isthmian H i g h w a y . Macmillan Company, 1929* Newv Y o r k T h e Miner, Dwight Carroll, The Fight for the Panama R o u t e . York: Columbia University Press, 1940. D. New York Times, 1922-1939* NEWSPAPERS New, BIBLIOGRAPHICAL NOTE The author has sought so far as the resources of the available libraries have been concerned to base this paper upon official government documents. The Congressional Record has been of service in giving the text of the treaty of 1926, and in connection with discussions of Panamanian affairs. The excellent series of the State Department published under the title of Papers Relating to the Foreign Relations of the United S t a t e s , has been invaluable for the period from 1903 to 1926. Unfortunately this series is published about fifteen years after the events described took place. and notes are omitted. Also, some dispatches The P r e s s -Releases of the State De partment were first published in 1929, and while satisfactory in the absence of other material, and touch only the high points. they are of necessity brief The N e w York Times has been of great value in making possible a running account of various events, particularly the revolution of 1931* The author recog nises that the value of this study is much impaired by the lack of Panamanian sources, but this material appears to be available only in the large libraries of the east, and in manu script form in. various places.' Dr. Miner's book is of recent publication and may per haps be called a definitive study of the background of the revolution of 1903, so far as American-Colombian-Panamanian relations are concerned. Dr. Miner had access to m uch manu- 148 script material. Dr. M c C a i n ’s study is well documented, but he has set himself an ambitious pro j ec.t in studying Panama from pre-Spanish times to the present in a volume of two hun dred and fifty pages. It is, nevertheless, the best study the author has found on the subject of United States-Panamanian r el a t i o n s . APPENDIX APPENDIX A' Schedules and classifications of goods which may he sold by the commissaries to ships transiting the Canal, t o gether with lists of restricted goods which may not be sold.^* I The following goods may be sold by the commissaries: A. Articles classed by the Panama Canal authorities as Hships stores11, such as articles, materials and supplies necessary for the navigation, B. propulsion and upkeep of vessels. Articles classed by the Panama.Canal authorities as 11sea stores11,, such as articles for the use or consumption of the passengers and crew of the ship upon its voyage, and articles of other classes,2 will be sold at prices which, in the judgment of the G-overnment of the United States and Inso far as may appear feasible, will afford merchants of Panama fair opportunity to sell oh equal terms. II The following goods may not be sold by the commissaries': Articles classed by the Panama Canal authorities as tourist or luxury g o o d s *. 1 Department of State, Treaty Series, No* 945 > PP* 4-3-45* 2 Articles of other classes are comprised in list IV. Cf. a n t e * , p. 121. APPENDIX B.: I SHIPS* STORES Fuel Oil and grease Hardware ('bolts, nuts, nails, tools, etca) Paints Disinfectants and insecticides Rope, cable, cahin II SEA STORES G-oods only of standard quality and almost without exception of American source Food supplies Medical supplies. Stationery and stationery supplies Galley and table utensils and equipment Table and bunk linen III TOURIST OR LUXURY GOODS Articles of personal adornment W o m e n ’s and children’s fancy and foreign wearing apparel Perfumes and expensive lotions and fancy and for eign toilet articles Foreign high quality linens, table ware and house furnishing articles 153 Tourist or Luxury G-oods (Continued) Expensive and foreign "bolt goods Men*s. foreign articles and wearing apparel Panama hats Liquors/ wines and beer IV ARTICLES OF OTHER CLASSES G-oods similar to those listed under sea stores, but of better than standard quality Many articles of many classes, department stores, such as those sold in excepting those articles classed ■under "tourist or luxury goods" . These four lists were to be considered illustrative of the goods in the various classifications, but were not considered by the United States to be exhaustive.