I stated to him, however, that I would send the enclosure back to the
Department with a request that careful and sympathetic consideration be
given to each of the topics listed. I assumed that the work of carrying
out the understanding with President Arias is going steadily
forward.
My best regards.
[Enclosure]
The Panamanian Minister for Foreign Affairs
(Arosemena) to the Secretary of State
Memorandum
As a result of President Arias’ visit to President Roosevelt in the
month of October 1933, certain pending questions between the United
States and the Republic of Panama were mutually and satisfactorily
settled. Other questions which were brought up were left open with
the idea of settling them at the earliest opportunity. The spirit in
[Page 582]
which the different
matters have been approached can best be rendered by referring to
one of the general declarations, which recognized that the Republic
of Panama as a sovereign nation had the right to benefit from the
commercial advantages derived from its geographical situation to the
extent that it does not interfere with the maintenance, functioning,
sanitation and protection of the Canal by the United States, who
desire ardently the prosperity of the Republic of Panama.
The pending questions and the aspirations of Panama are as
follows:
Radio Communications.—The Navy Department of
the United States has monopolized ship to shore communications so
that no ship can enter into radio communication with the existing
wireless stations in Panamanian territory.
The position of the Republic of Panama in the matter of wireless
communications is therefore extremely awkward. The Republic is a
signer of the Wireless Communications Agreement,3 of which
the United States is also a signer and takes the position that it
has the right to enter into communication by radio with all
countries and all ships without any other limitation than that of
not interfering with the maintenance, functioning, sanitation and
protection of the Canal.
It would be illogical to expect a country to be deprived of the
benefits of a modern invention by the mere fact that there is a
Canal within its boundaries.
Highway Between Panama and Colón.—The Republic
of Panama is extremely interested in there being highway
communications between its two largest cities. With regard to this
subject President Roosevelt told President Arias: “The United States
will make every effort to expedite its reply to Panama on this
question and to find a way to comply with Panama’s desire.”
It is hoped that the United States will find a satisfactory solution
toward this end.
Panama Railroad Co.—Business
Exploitation.—This company conducts certain lines of business
in Panama having nothing to do with the maintenance, functioning,
sanitation and protection of the Canal, such as the leasing of land,
the running of a hotel etc., without paying a single cent of taxes
to Panama in exchange for the services it receives as if it were a
taxpayer. Public opinion in Panama cannot understand that for
instance an itinerant fruit vendor must pay taxes to Panama for the
protection of his business, while the Panama Railroad Co. which does
business on a scale which offers no comparison with the above
mentioned case is exempt from all taxation.
[Page 583]
On this point President Roosevelt indicated to President Arias his
conformity with regard to the payment of taxes by the Railroad
Company, particularly in the case of real estate which it owns and
exploits in Panama.
Lands of the Panama Railroad Company in
Colon.—These lands which the Railroad Company uses for purposes
other than those having to do with the maintenance, functioning,
sanitation and protection of the Canal should have been returned to
the Republic of Panama in accordance with article 8 of the Canal
Treaty,4 when the ratifications of this instrument were
exchanged. Some are of the opinion that such lands should remain in
the possession of the Railroad Company until the expiration of its
contract, Panama thinks otherwise and the fact remains that a
considerable portion of such lands did not exist in 1904 and
accordingly could not have been in the possession of the Railroad
Company on such date.
On this point which is of vital importance to Panama it would be
highly desirable that a just and equitable decision be reached as
soon as possible.
Sales to Ships Transiting the Canal.—The sale
of tourist articles by the Commissaries to ships has been
prohibited. Articles which may be bought by ships from the
Commissaries have been limited to fuel, foodstuffs etc. “Sale of
other articles to ships will be prohibited, or a reasonable surtax,
such as say, 25%, will be placed on such sales.” What precedes is
extracted from President Roosevelt’s memorandum to President
Arias.5
It would be desirable that sales to ships transiting the Canal be
limited to the fuel necessary to the continuation of the trip, but
in case sales of other articles be permitted (this does not include
tourist articles the sale of which is prohibited) such sales should
take place in accordance with adequate regulations permitting the
free competition of the trade of Panama and Colon, which would be in
keeping with the spirit of the general declaration heading this
memorandum.
Sales at Prices Below Normal.—The Commissaries
and some agencies of the United States Army and Navy sell certain
articles such as beer and cigarettes at prices below normal, which
eliminates all competition and promotes smuggling of such articles,
particularly cigarettes, into the Republic of Panama.
President Roosevelt offered President Arias to have the case
“sympathetically studied in an effort to meet Panama’s views.”
It seems reasonable to expect that such articles should pay the
excise taxes which they would ordinarily have to pay if sold in the
United States.
[Page 584]
Panamanian Products.—The Appropriation Act for
the fiscal year ending June 30, 19346 seems to have been interpreted in such a way
as not to permit the purchase by the Canal and Army and Navy
Departments of Panamanian products such as certain construction
materials, which are abundant in the Isthmus, meat and other
foodstuffs etc. If this interpretation should prevail the production
of such articles will not fail to diminish appreciably.
As the result of President Arias’ visit to Washington this matter has
been taken into consideration in an effort to determine whether
enough latitude does not exist under the Act in question to permit
of direct purchases by the United States, through administrative
orders, of the products in question.
Luxury Articles in the Commissaries.—The
American Government has already decided that such articles should
not be sold to ships transiting the Canal, but the question of the
sale of such articles to the employees of the Canal remains an open
one. Presumably this matter will be resolved in accordance with the
indications advanced by President Roosevelt and Under Secretary
Caffery, namely, that the commissaries do not keep permanently in
stock such articles but limit themselves to buying them after
receiving special orders from the employees of the Canal.
Limitation of Commissary Sales to
Employees.—President Roosevelt declared that it was not
possible for the time being to establish equitable limitations owing
to the complexity of the wage scale in the Canal but that he would
give the necessary instructions so that the matter be studied and
some ruling be given on this point.
It seems natural that in no case should the sales to an employee
exceed the salary of the same.
