The Secretary of State to the Panaman Minister ( Porras )

Sir: Your friendly note of September 16, 1918, reciting certain matters in which you intend particularly to interest yourself has been read with the deepest interest.3 It is a source of regret that the [Page 680] shortness of time intervening between the date of its receipt and the date of your departure for Panama does not permit of as comprehensive an answer, point by point, as the importance of the matters discussed should properly receive.

The administrative and executive reforms, the sound projects for the development and betterment of the condition of the people, both urban and rural, of Panama are the fruit of the lofty intellect of a statesman. A sympathetic acceptance of such ideas is assured by their very nature. Actuated by the frank and friendly spirit of sympathy and cooperation which has ever marked your relations with this Department and by your very evident intention to do your utmost to forward the happiness and peace of Panama, it does not seem inappropriate while discussing as a whole plans for the betterment of conditions in Panama to put forward a suggestion with regard to the Panaman police system.

Were the American Instructor of the Panaman Police placed under the direct orders of the President of the Republic, entirely independent and apart from the control of the Department of the Interior and were the police force as well as the Police Courts absolutely and irrevocably removed from political influence throughout the Republic, a great step toward assuring better conditions would have been made. The police of the entire Republic should be under the Instructor and the Instructor should have complete control over the punishing, rewarding and training of his force. These powers are obviously necessary to him. He and his force must be absolutely and permanently withdrawn from all political influences. This last suggestion should also be true of the Police Courts whose efficient functioning is a necessary corollary to the preservation of public order. The reform of the Police Courts should, it is believed, be undertaken only after consultation and in cooperation with the American Police Instructor.

In commenting on the plans you have for the future welfare of Panama, in the carrying out of which you desire the Government of the United States to assist materially, this single suggestion respecting the public order of the Republic is put forward as a much to be desired step.

The observations you make relative to the vice, drug and liquor evils and of your intention to use your best endeavors to make Panama as wholesome and attractive a spot as possible cannot fail but awaken a responsive echo. Your statement that the Government of the Republic of Panama will suppress every lottery of the country meets with the hearty approval of the Department of State.

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The thought which you put forward looking to the rehabilitation of the finances of Panama through the creation of some form of financial commission would seem to offer a method of supervision adequate to Panama’s present needs. From your conversations it would appear that this commission would be composed of one Panaman member of the Permanent Group Committee for Panama, organized at the time of the Pan-American Financial Congress in Washington in 1916 [1915], together with one American member, on which commission Governor Harding of the Canal Zone would act as member ex-officio, to be called upon only in the case of a want of accord between the other two members. This commission is to be vested with adequate powers to carry out any reform which, after consultation between the President of Panama, the Financial Expert and the Commission is found necessary for the economic well-being of the Republic.

In conjunction with this Financial Commission the suggestion was made that the Government of the United States suggest the name of a financial expert who would aid in the reorganization of the Pana-man finances. In commenting upon these ideas of yours, and while granting that no financial expert alone is infallible and that a Financial Commission would more fully guarantee the interests of the Republic, it is suggested that no method not giving adequate legal powers to the final authority to carry into effect the reforms suggested is likely to achieve all that is desired. Not only should the Financial Expert be dependent directly and solely upon the President of Panama alone, but it would undoubtedly be necessary for the Government of Panama to make special arrangements whereby the Financial Expert would be in a position assuring that any suggestions which he might deem necessary would bear practical results. The enactment of adequate legislation is in the last analysis the crux of the entire plan and in the study of the drafting of this legislation the Government of the United States would be most happy to lend any assistance desired through authorizing the Canal authorities to assist in the work, or in such manner as might be thought desirable by the Government of Panama.

The Government of the United States will be pleased to suggest the names of two customs appraisers of recognised probity and experience to aid the Government of Panama in arriving at a just evaluation of the merchandise imported into Panama, should the Government of Panama formally express such a wish.

With reference to the statement of the Acting Chief of the Latin American Division, which was made in an informal conversation, I take pleasure in confirming his utterance; namely, that were an [Page 682] adequate financial control put into being along the lines suggested by you, the Government of the United States would use its good offices in an earnest endeavor to interest private bankers in Panama’s assistance. As a fact, the Government of the United States is not permitted to make loans itself to foreign nations, except as provided for under the law of 1917, which permits of the limited granting of certain credits for war purchases; obviously not applicable in the case of the Republic of Panama. The Government of the United States, however, approves heartily in principle of your Commission and Financial Expert plan and there is reason to hope that American bankers will come forward to assist the Republic of Panama in the establishment of a better banking system in the Republic. An expert from the foreign loan banking system of the United States might even be sent to Panama to aid in founding a chain of branch banks throughout the rural districts of the Republic, with headquarters at the Capital.

With respect to the various other propositions put forward by you, namely provisions for an adequate system of roads; the anticipation of the Canal annuities to the extent of $3,000,000; and $1,000,000, payment on certain rights or equities; these questions are of such a nature as to require more thorough study and consideration than the limited time before your departure permits being given them, for which reason they will not be commented upon in this communication but will be reserved for further discussion. It seems appropriate, however, to state that they will receive the most sympathetic consideration,—the more so in view of the very evident desire entertained by you to do everything possible for the betterment of the peace, public order and general well-being of the Republic of Panama. You may rest assured that the sincere affection which is entertained by the Government of the United States for Panama and her people causes it [to] sympathise heartily with your desires for the betterment of your country.

Accept [etc.]

Robert Lansing
  1. Note not printed; Dr. Porras had been elected first designate to finish the term of President Valdez of Panama.