Office of the Historian

819.51/968: Telegram

The Chargé in Panama (Flexer) to the Secretary of State

Panama, November 4, 1938—1 p.m.
[Received 6:47 p.m.]

123. A Foreign Office memorandum referring to the aide-mémoire directed by the Department’s telegram No. 59 of October 24, 7 p.m. justifies the guarantee bond bill as remedying the previous lack of banking legislation securing and guaranteeing interests of local depositors. With reference to the redemption of outstanding bond issues at depreciated prices, the memorandum places responsibility upon the alleged failure of the United States to pay Canal annuities22 since 1933, as specified in the convention of 1903, and upon the loss sustained by the constitutional fund.23

With reference to the Department’s telegram No. 61, October 28, 6 p.m. the Minister for Foreign Affairs yesterday informed me that he was authorized by the Secretary of Finance and Treasury to state [Page 818] that Articles 3 and 4 are not held to apply to deposits payable at a branch or agency in the Canal Zone. The Legation’s memorandum based upon the said telegram also anticipated the penultimate paragraph of the Department’s telegram No. 63 of November 2, 5 p.m. and in this connection the Minister for Foreign Affairs stated that the provisions of Articles 10 and 11 are not held to apply to deposits made in a Canal Zone branch or agency by persons embraced in the categories covered by Article 10 of the convention of 1903.

Concerning the first paragraph of the Department’s telegram No. 63 it is my view that the possibility of Article 9 being held to apply to the Panama railroad is extremely remote. However, action will be taken as instructed.

The Panamanian Government has been on holiday from November 2 to 4 and there will be no opportunity for reception by the Minister for Foreign Affairs before tomorrow. Inasmuch as the Minister is arriving Monday I believe it desirable for forceful effect that further representations be delayed until his initial call at the Foreign Office, and unless otherwise instructed this course will be followed.24

Flexer
  1. See Foreign Relations, 1934, vol. v, pp. 612 ff.; ibid., 1935, vol. iv, pp. 911 ff.; ibid., 1936, vol. v, pp. 856 ff.↩
  2. Article 138 of the constitution of Panama provided for setting aside $6,000,000 derived from negotiations for the opening of an interoceanic canal to be invested for the benefit of future generations of the people of the country. By decree 66 of April 11, 1908, the President appointed William Nelson Cromwell, Fiscal Agent of the Republic of Panama in the United States for the administration of the Constitutional Fund. The Chase National Bank of New York was appointed Fiscal Agent to replace Cromwell by decree 135 of October 23, 1937, in accordance with a contract executed between the bank and the Republic of Panama on October 21, 1937 (819.51/903). The contract was published in Gaceta Oficial, January 11, 1938.↩
  3. The aide-mémoire, not printed, was delivered November 8.↩