Mr. Hay to Mr. Beaupré.
Washington, April 28, 1903.
Sir: I confirm to you my dispatch by cable of the 7th instant in the following terms:
Washington, April 7, 1903.
American Minister, Bogotá:
Referring requests Colombia to canal and railroad companies for appointment agents negotiate cancellation present concessions, etc.
If subject arises, inform Colombian Government that treaty covers entire matter and any change would be in violation of Spooner law and not permissible.
Hay.
and I now inclose to you copies of the notices given by the minister of hacienda of the Republic of Colombia to the New Panama Canal Company and the Panama Railroad Company, respectively.
You will observe that by these notices the Colombian Government contemplates the formal grant to these companies by the Colombian Congress of a further permission to transfer their concessions to the United States besides that contained in the treaty which is to be ratified by that Congress. You will also note that as a preliminary to this permission the companies are expected to enter into agreements with Colombia for the authorization and canceling of all obligations of Colombia to either of them contracted by Colombia under the concession.
[Page 137]Such action on the part of Colombia or on that of the companies would be inconsistent with the agreements already made between this Government and the canal company, with the act of June 28, 1902, under the authority of which the treaty was made, and with the express terms of the treaty itself.
By the act of June 28, 1902, the President was authorized to acquire, at a cost not exceeding $40,000,000, “the rights, privileges, franchises, concessions,” and other property of the New Panama Canal Company, and an agreement to that end was made by him with the company. It was, of course, known to the President, to the company, and to the Government of Colombia that, by articles 21 and 22 of the Salgar-Wyse concession of 1878, the company could not transfer to the United States its “rights, privileges, franchises, and concessions” without the consent of Colombia. Therefore, and before entering upon any dealings with the New Panama Canal Company, the present treaty with Colombia was negotiated and signed.
The first article of that treaty provides as follows:
The Government of Colombia authorizes the New Panama Canal Company to sell and transfer to the United States its rights, privileges, properties, and concessions, as well as the Panama Railroad and all the shares or parts of shares of said company.
The authorization thus given, it will be observed, covers expressly the “rights, privileges, * * * and concessions” of the company, as well as its other property.
Colombia, now, by these notices, indicates a purpose not only of disregarding the authorization thus explicitly given (a matter to which I shall refer more at length later on), but to destroy a great part of the subject-matter to which it refers. She states an intention of requiring the company to cancel all obligations of Colombia to it, and thus to deprive the United States of the rights, privileges, and concessions which she has expressly authorized the company to transfer to them, and which the canal company has contracted to sell and convey to the United States.
This Government can not approve such a transaction either by Colombia or by the company. If the company were to accede to the demands of Colombia, the President would be unable to consummate the proposed purchase from it, for it would have surrendered to Colombia a material part of the property for which he is authorized to make payment. Nor could the treaty itself be carried out, inasmuch as the payments to Colombia for which it provides are, by the express terms of Article XXV of the treaty itself, to be made in compensation, not only for the right to use the canal zone and to indemnify Colombia for the annuity which she renounces and the greater expenses which she may incur, but also “in compensation for other rights, privileges, and exemptions granted to the United States.” Among these other rights and privileges, one of the most important is the right of acquiring the rights, privileges, and concessions of the New Panama Canal Company, secured by Article I of the treaty, and if these rights, privileges, and concessions were to be canceled, it would fundamentally change the terms of purchase.
The act of June 28, 1902, requires the President, if he should maks the purchase of the New Panama Canal Company, to acquire ite “rights, privileges, franchises, concessions.” This act is annexed to the treaty, and the provisions of Article I of the treaty are framed [Page 138] expressly so as to enable this part of the law to be carried out. The action proposed by Colombia would constitute pro tanto an annulment of Article I, would render impossible the execution of the law, and is wholly inadmissible. Equally inadmissible would be any action by the canal company in the direction indicated which would destroy rights which it has agreed to convey to the United States.
Nor, upon the question of an authorization by Colombia of the transfers proposed, can it be admitted that any further or other authorization than that contained in Article I of the treaty is required or would be proper.
So far as the Panama Railroad Company is concerned, it is enough to point out that Articles XXVIII and XXIX of its contract with Colombia, and which contain the only provisions which impose any restriction upon any alienations of property connected with that com pany, have no bearing upon any transaction now in contemplation. These articles declare that “the present privilege can not be ceded or transferred to any foreign government,” under penalty of forfeiture. No transfer of this privilege by the company is contemplated, nor, indeed, any transfer by the company of anything. The purchase by the United States from the New Panama Canal Company of certain shares of the railroad company is the only operation now proposed, and this does not affect the railroad company itself. To this transfer of shares the railroad company is not a party and in it the company has no part. It neither makes it nor can it prevent it. Plainly, therefore, the provisions of the company’s contract with the Colombian Government can have no application to such a transaction. This is irrespective of the rights in relation to the railroad property and concessions which the United States acquires under and pursuant to the provisions of the treaty itself.
With regard to the New Panama Canal Company the situation is different in this respect, for that company will make a direct transfer of all its property and concessions to the United States, and such a transfer was originally forbidden by articles 21 and 22 of the Salgar-Wyse concession of 1878.
Passing, for the moment, the terms of the treaty by which consent is given, the consent of the Colombian Government to the proposed sale has been given so repeatedly and in so many different ways, and has been so frequenty and officially brought to the notice of this Government by the ministers plenipotentiary of Colombia, duly accredited to the United States, as to make it impossible for the Executive Government of that Republic to retract it. The entire action of this Government upon the subject has been taken in reliance upon these official assurances of the consent of Colombia, and any withdrawal or qualification of that consent would be wholly inconsistent with such assurances.
In a memorandum presented by Doctor Martinez-Silva, then minister plenipotentiary of Colombia to the United States, to this Department on March 27, 1901, this Government was officially assured that the Republic of Colombia would authorize the canal company to transfer its concessions to the United States, provided only that the latter agree with Colombia upon the terms on which the canal is to be constructed and operated by the United States.
On April 29, 1901, the Colombian minister wrote M. Maurice Hutin, then president of the canal company, requesting him to state generally [Page 139] the basis on which the company would transfer its property to the United States, assuming that the consent of Colombia be given.
This letter M. Hutin answered on May 1, 1901, and a copy of his answer was by the minister handed to Admiral Walker, president of the Isthmian Canal Commission. M. Hutin thereupon took up negotiations directly with Admiral Walker, of which fact he notified the minister by a letter of May 6, 1901. In answer to this letter the minister wrote M. Hutin on May 7, 1901, approving his action and stating to him the fact that it was stated that in the memorandum submitted by him to this Department “no condition is formulated relative to the sale of the private rights and interests of the company.”
It is in reliance upon these assurances, either made directly to this Government by the duly accredited minister of Colombia or communicated to it through his act, that the action resulting in the present treaty has been taken, and to raise new conditions and impose new terms upon the consent thus freely tendered or to cancel any provisions of the concessions would be a complete departure from them. The Government of Colombia initiated the negotiations, and it can not be conceived that it should now disclaim its own propositions, nor can this Government acquiesce in such a course.
It is further to be noted that the Republic of Colombia is the second largest shareholder in the New Panama Canal Company. At the meeting of the shareholders of this company held on December 21, 1901, at which the board of directors was authorized to make the proposal of sale to the United States which has been accepted, the Republic was represented by M. Uribe, her consul-general at Paris, specially accredited for that purpose, who was one of the officers of the meeting and voted the shares of Colombia in favor of the sale. Similarly at the meeting of the board of directors of the company on December 23, 1901, M. Samper, the representative of the Colombian Government on the board, voted in favor of the sale.
It is not to be supposed that these representatives of Colombia acted without or contrary to instructions, nor has their action ever been disavowed by their Government.
These various considerations show that the Republic of Colombia is fully committed to the United States, wholly apart from her express agreement by the treaty, to consent fully and freely to the acquisition of the property of the New Panama Canal Company by the United States without other terms or conditions than those embodied in the treaty. It is not necessary here to consider the questions of good faith toward the canal company which would be raised by new exactions of that company at this time.
The foregoing considerations, however, though sufficient in themselves to justify this Government in declining to recognize any right in the Republic of Colombia to limit the consent given by Article I of the treaty by any terms or conditions of any kind, are less important than others arising from the actual negotiations attending the making of the treaty. These other considerations render it impossible that any such new limitations should even be considered and give any attempt by Colombia in that direction the character of a serious departure from the agreement reached between the Executive Governments of the two nations.
The treaty in its present form is the result of certain modifications in an original form presented to the Department of State by Mr. José [Page 140] Vicente Concha, minister plenipotentiary of Colombia to the United States, on March 31, 1902. This form of treaty represented the original proposal of Colombia to the United States, and was presented by Mr. Concha shortly after the recall of the former minister, Dr. Martinez Silva. In this draft the terms of Article I, by which Colombia authorizes the sale by the New Panama Canal Company to transfer its property to the United States, were the same as in the actual treaty. In fact, this article has undergone no change in any of the negotiations and it now expresses Colombia’s original proposal.
No change in it was ever even suggested by Colombia, in all the discussions by which the presentation of the original treaty was followed, until November 11, 1902. On that day Mr. Concha submitted to this Department a memorandum of certain changes which he desired made in the treaty as it then stood. In this memorandum a modification of Article I was proposed in the following terms:
This same article shall clearly state that the permission accorded by Colombia to the canal and the railroad companies to transfer their rights to the United States shall be regulated by a previous special arrangement entered into by Colombia with the said company, and for which they have been notified that they are to appoint an attorney at Bogotá.
To this proposal this Department answered that “the United States considers this suggestion wholly inadmissible.” The proposition was then abandoned by Colombia, and the treaty, as has been said, was signed by authority of her Government, without any modification of the absolute authorization to the company to sell.
It will thus be seen that this proposition to make Colombia’s consent to the sale dependent upon an agreement between that country and the canal company is not new; that it has already been made to this Government and rejected, and that it was only upon the abandonment of it that the treaty was signed. It is impossible that this Government should even discuss the matter any further or permit this rejected and abandoned proposition to be put in force under any form.
The argument which it is understood has been advanced by Colombia in support of her pretensions upon this point (that the concession of the canal company, by its approval by the Colombian Congress, has become a law of Colombia, and must be obeyed as it stands until by another law it has been amended) can be allowed no force. The contract of concession was approved by the Colombian Congress in obedience to the provisions of Title VI, article 76, of the constitution of Colombia. The present treaty is to be ratified by the Congress of Colombia under the provisions of the same title and the same article in the same way. If every force be allowed to the constitution of Colombia, it can not be admitted that the approval of the treaty by the Congress should not be as effectual as approval by the same body of a new contract between the company and Colombia.
But the considerations which led to the rejection of the proposal of the Colombian minister in his memorandum of November 11, 1902, are of themselves decisive of the point.
The consent of Colombia to the sale of the canal company’s property and concessions to the United States is a matter of agreement between the two nations. It has not been granted by Colombia to the company alone, but also to the United States. To that agreement neither the canal nor the railroad company is or can be a party; nor can the United States permit its international compacts to be dependent in any [Page 141] degree upon the action of any private corporation. Such a course would be consistent neither with the dignity of either nation nor with their interests. To make the effectiveness of the agreement between Colombia and the United States depend upon the willingness of the canal company to enter into arrangements with Colombia, of a character satisfactory to that country, would not only give that company an influence which it can never be permitted to exercise in the diplomatic affairs and international relations of this country, but would enable it to control the acquisition by the United States of the rights granted by Colombia and the enjoyment by Colombia of the equivalent advantages secured to her by the United States.
It may be noted further that such a course would practically nullify Article I of the treaty. That article grants an unconditional consent to the sale. But if there be added the condition of an agreement between Colombia and the canal company this consent is wholly nugatory. No such arrangement may be reached, and in that case Article I of the treaty would never practically take effect. Such a possibility alone renders any such plan wholly impossible.
Upon every ground, therefore, the present proposals of the Colombian Government to make its consent to the sale to the United States of the property and rights of the New Panama Canal Company, contained in Article I of the present treaty, dependent upon arrangements between it and either the canal or the railroad company, is wholly inadmissible, and if the subject arises you will inform that Government that the United States can approve no dealings between either of these companies and Colombia relating either to that consent or to the sale.
I am, sir, your obedient servant,