Watch Out for Panama


A FRENCHMAN, Ferdinand de Lesseps, dreamed of harnessing the tides of two oceans in a canal; but the United States Army engineers accomplished it. Even now, twenty-five years after its completion, the Panama Canal ranks first among the engineering wonders of the world. As it winds between green, neatly landscaped banks, with only the rough-hewn walls of Culebra Cut recalling dimly the struggle of the builders, it looks deceptively simple and innocent— hardly more than an overgrown ditch, equipped with a few outsize mechanical devices. Its dramatic potentialities are not apparent on the surface. Thus, when the average American watches a newsreel of our battleships steaming through the Panama Canal, he is likely to be more stirred by the mobile power of the fleet than by the ’big ditch’ upon which that mobility so greatly depends. He takes the Canal for granted, and supposes its welfare to be automatically assured when he hears that Congress has just voted an extra twenty millions or so to strengthen the Canal defenses.

He does not guess bow often the interplay of politics in Washington may put party strategy above patriotic needs. At present, for instance, there is no comprehensive treaty in force between the United States and the Republic of Panama, and the rent payments on the Panama Canal for the last three years repose in the Treasury at Washington instead of Panama City. This confused situation has helped to intensify an atmosphere favorable to would-be troublemakers.

The Panama Canal is at once the greatest trade route on earth and the stronghold which permits the United States to maintain first place among the world powers. Long ago William Paterson, the canny Scot who founded the Bank of England, saw that he who held Panama held ‘ the key of the commerce of the world.’ And the British, incidentally, were the first to take a hand in negotiating the treaty under which the United States agreed to extend the benefits of the Canal in peacetime to ships of all nations, at a charge just sufficient to cover the maintenance of the Canal itself. Since every ship using the Canal saves thousands of miles at sea, and the saving in commercial time and operating expenses far exceeds the Canal toll, it becomes apparent that the real cost of the Canal to foreign merchant vessels is a little less than nothing. After nearly twenty years of such free traffic, there is no question but that some nations have ceased to think of this as a privilege and have come — perhaps quite humanly — to regard it as an inborn right.

Possibly they have forgotten that the formal opening of the Canal as an international highway was delayed until 1920 — fully six years after the first vessel moved through the locks in 1914 — because of the delicate problems of neutrality and later of active defense which the World War imposed upon the United States. It is true that during the twenties, when trade was booming and the United States was scrapping battleships in fulfillment of disarmament promises, the basic military purpose of the Canal was largely overlooked by everyone except the officials directly responsible for its care.

In a world made nervous again by talk of war, the military significance of the Canal tends to-day, as in 1914, to outweigh its importance as a world trade route. As usual, the dictator nations are proving to be the most active and the most tactless of our guests. Where agents of other countries will devote themselves to spying on our military installations if possible, it is evident that the Germans, and more especially the Italians, are also attempting to create somewhat the same type of embarrassment for the United States in Panama as they have done for Britain in Egypt and the Moslem East. Possibly with an eye to the future, they have already been able to ingratiate themselves with certain influential personages on the spot. At the same time that they are developing latent feeling against the military power of the United States, they seem to be instructing Panama’s politicos how to exploit the possibilities of President Roosevelt’s Good Neighbor Policy. Already the situation has played so far into their hands that an Administration-sponsored bill was lately introduced into our House of Representatives which would lend a million and a half dollars to the Panamanian Government to construct a United States military highway leading to a new United States military airfield in southern Panama. It seems reckless to let so important a road be built without subjecting it to Army supervision and specifications.

The recent remarks by Virginio Gayda, Mussolini’s official spokesman, to the effect that the Fascist frontier is now in Panama were regarded by most Americans as a mere retort discourteous to statements attributed to President Roosevelt that, the United States frontier is on the Rhine. Though the Fascist jibe made headlines, and produced amusement or indignation according to the temperament of the reader, it was discounted by the general public — as no doubt, it was intended to be. Only persons who have spent some time on the Isthmus realized that Gayda’s words implied a sober warning to the United States to concentrate on straightening out its own back yard before adventuring overseas.

From a purely geographical point of view, the Rome-Berlin-Tokio axis does cut directly across the Isthmus of Panama. The fact is obvious enough if one stops to think of it. For the muchpublicized axis is actually a world-wide cooperative venture of three ‘have-not’ powers in the fields of politics, economics, and military intelligence, while the Panama Canal is the crossroads of the world, in addition to being the most vital single factor in the military defense of the United States to-day. At present five to six hundred ships on an average pass through its giant locks each month. During the three-year period ended June 30, 1937, the ocean-going vessels employing the Canal wore of 34 nationalities, with United States ships forming 37 per cent, of the total number. About 28 per cent of the cargo was in the United States intercoastal trade, which has since been largely discontinued by action of President Roosevelt’s Maritime Board; so that the sum total of American commerce through the Canal is still less in comparison to foreign nations than in 1937. Thus it is evident that, on the commercial side the Canal has become primarily an international rather than a national highway — a fact which is reflected in the increasingly cosmopolitan character of Panama’s chief cities. Furthermore, the Canal Zone has become a central junction for air travel moving north and south.

While the small army of United States civil and military employees which administers the Canal remains quite solidly American in outlook, there is no question but that various long-range schemes of Fascist hegemony and Fascist commercial expansion in the most varied sections of the world float at one time or another through those winding waterways. Agents of all three powers of the Fascist axis are believed to meet in transit on the Isthmus to-day, exchange orders, plans, or information in forms not always readily detectable, and presently drift away to other points of the compass. Some few remain and take refuge in the Panamanian hinterland, where the authority of the Canal Zone military police cannot easily follow them.


With the general increase in world tension and world-wide espionage efforts to-day, it is a fact that such dubious traffic has increased at every important artery of world travel. Panama enjoys no special immunity; but on the contrary, because of its geographical convenience as well as the new defense measures now being planned by the United States, the fugitive activities of foreign agents there may be expected to multiply still further. It is estimated with authority that every vessel of the axis powers traversing the Canal, as well as some flying other flags, carries at least one representative of the military intelligence of a foreign nation aboard. He is seldom a conspicuous individual. Sometimes he is an ordinary seaman, an oiler, or a fireman.

There are literally hundreds of casual ways in a seaport, town that questionable information may be transferred, many of them picturesque or fantastic, but arguing a high degree of skill in transmission. Since the data exchanged are not necessarily related to espionage on the Isthmus itself, but may deal with matters as far afield as China or Patagonia, the persons concerned cannot always be prosecuted by local authorities, even if it were always possible to spot them. The Japanese, being more noticeable than others by reason of their color, tend mainly to keep to themselves, and to delegate the better part of their activities to their Aryan colleagues of Italy and Germany.

Such things are perhaps to be expected nowadays, and there is nothing alarmist in calling attention to them. In times like these it is impossible that the Canal Zone and the adjacent Republic of Panama should not to some extent become a crossroads for activities foreign to the aims of the United States. Spy scares are headlined with growing frequency in the Panama newspapers; and though they are sometimes merely funny — as when a recent alarm turned out to be only a superstitious Indian woman burying a love potion at midnight in the accidental vicinity of our fortifications — they cannot always be so easily laughed off. In spite of extensive precautions by our c. vn officials, it is difficult to see how espionage against our military installations can be completely controlled as long as the same Canal continues to serve for both military and commercial purposes.

Last winter’s spy trial in Cristobal, after four young Germans had been arrested for taking photographs of undoubted military value in a fortified region near the Canal, was evidently aimed at discouraging amateurs and preventing foreign nations from regarding Panama as a handy training ground for promising youthful spies. During the trial, testimony was brought forward to the effect that the principal defendant confided his photographs ‘for safekeeping’ to Kurt Lindenburg, the German Consul in Cristobal.

Since there is no law now operative which permits conviction of spies in peacetime on grounds of damage alone, it was necessary for the prosecution to build up its case on grounds of intention to damage the United States — a process verging on the metaphysical. Otherwise the only charge that could legally have been made against the prisoners, who were clearly guilty of something far more serious than loitering, would have been a possible charge of vagrancy, carrying with it a $25 fine and a thirtyday jail sentence. Perhaps the most striking feature of the trial was that it revealed, quite inadvertently, the weakness of our own existing legislation in defense of military secrets. A law which would have covered the Cristobal affair precisely, making conviction in this case an open-and-shut affair and saving the government the costs of a long-drawn-out, tedious trial, was passed by Congress as far back as January 1938. It is not yet operative because President Roosevelt has not signed it.

Less spectacular, but symptomatic of the weakness of our diplomatic lines of defense in the Caribbean area, is the way in which propaganda in the Republic of Panama is succeeding in stirring up sentiments hostile to United States business and military establishments and kindly to Italian and German trade and political methods. For the last thirty years, Panamanian merchants and politicians have complained from time to time about the rôle of the United States Commissaries in the duty-free Canal Zone. Although the United States has restricted Commissary sales to civilians more sharply than ever within the past two years, and has forbidden any individuals not directly employed by our government to reside in the Zone, small appreciation of these gestures has been evinced. On the contrary, the Government of Panama has imposed discriminative restrictions and taxes upon United States business firms in the Republic proper, notably in the case of American banks.

Last winter I talked with a number of Panamanian politicians who — forgetting they owed their very existence as a class to the recognition which the United States accorded to newborn Panama in 1903 — told me flatly that the Canal was proving less profitable than it should to Panama, and that Panama’s ‘sovereign dignity’ was not receiving sufficient deference. It was easy to see how, in some cases, this point of view might in time develop into real disaffection and even possible acts of sabotage against the United States, provided inducements were offered by other agencies in time of crisis. Oddly enough, tins type of ‘patriotism’ is being cultivated by so-called Liberal as well as Fascist influences in the Republic. Black Shirt and Nazi as well as Communist-front organizations hold meetings in Panama as freely as in the United States, with the Fascist groups at present rather in the ascendant.

During the past year, Dr. Harmodio Arias, an ex-president of Panama whose brother is Panama’s Minister to Italy, acquired a leading newspaper, the Panama American. Although the Englishlanguage portion of the paper reads as if inspired by some of our own radical New Dealers, the Spanish-language section, chiefly read by Panamanians, is devoted to boosting the Fascist stock, politically and commercially. On April 2, for instance, a long and flattering article appeared about Dr. Hans Dieckhoff, who was described rather ambiguously as ‘the last German Ambassador to Washington.’ Regular editorials in Spanish in the Panama Star-Herald, signed Leo Pardo, are the work of a Venezuelan whose real name is Manuel F. Rodriguez, and who under pretext of attacking Communism takes every opportunity to create sympathy for Germany and Italy.

Shortly before our fleet went through the Canal in January, the Panama American took occasion to reprint in both English and Spanish a little pamphlet written some years ago by a certain August Dziuk. Herr Dziuk is a naturalized Panamanian of German birth, who was interned in the United States as an enemy alien during the World War and who, in his present capacity of commission merchant in Panama City, has occasionally acted as agent in Latin America for the German munitions firm of Krupp. His pamphlet described a dream he claims to have had, all about the destruction of the Panama Canal by the Japanese in 1956, during a great war in which the United States finds itself deserted by the peoples of the world, including the Panamanians, and is ultimately destroyed as a world power. Thereafter, according to Dziuk, the Canal is repaired and converted into a truly international highway, with the Panamanian Government operating it and pocketing the tolls. In reviving this forgotten masterpiece, the Panama American editorially expressed its disgust for Herr Dziuk’s apocalyptic vision, but at the same time succeeded in giving wide circulation in Panama to what, under the guise of fantasy, is actually one of the most vicious propaganda attacks on the United States ever written.

By dwelling on minor grievances until they assume the proportions of major injuries, by appealing to race feeling, envy, and exaggerated nationalism, and, most fantastic of all, by instilling the vain hope that Panama might one day, with the help of the Fascist powers, be able to collect Canal tolls for itself, a dangerously reckless state of mind might be developed in time among some of the more impressionable Panamanian politicians. At best, they are inclined to interpret the claims of Panama’s independence, achieved in the Revolution of 1903 against Colombia, somewhat more literally than realistically. For the present, the political clique in power there does not seem averse to extracting what profit it can from flirting privately with the Fascists, while flirting publicly with the New Deal.


Without meaning to discount in any sense the polite doctrine of independent sovereignty, one must admit that little Panama, by reason of its strategic position on the Isthmus, seems to have been created in perpetuity for the rôle of a protectorate. With an area of 33,667 square miles and a population of 467,459 persons, an area only slightly larger than our State of Maine and a population somewhat more than half as large, this tropical republic has necessarily been regarded since its birth in 1903 as a virtual protectorate of the United States. All of its trade moves through the United States ports of Cristobal and Balboa; and perhaps its most stable source of income, apart from customs duties, has been the $250,000 per year which the United States originally agreed to pay as rent for the strip of fortified jungle and sea, ten miles wide and fifty miles long from deep water to deep water, that contains the Panama Canal Zone and adjacent islands.

Under a treaty concluded in 1903, the United States was accorded the right of eminent domain, permitting it to rent or purchase any land in Panama that proved necessary for the defense of the Canal. It has also enjoyed, though seldom overtly exercised, the right to intervene to maintain order in Panama, whenever anything threatened to interrupt the even flow of traffic across the Isthmus. When one realizes that the width of a single street is all that separates the restless capital of Panama from the Pacific port of entry to the Canal, the reasons for such a precaution become obvious.

Since 1936, however, — the same year, by the way, in which the RomeBerlin-Tokio axis was first made public and its coöperative drive for trade in Latin America began, — little Panama has displayed a puzzling tendency to assert its independence of the United States. During the Pan-American Conference at Buenos Aires in 1936, Panama’s delegates took the lead with Mexico’s delegates in demanding that nonintervention in the internal affairs of any state be adopted as a cardinal rule of inter-American relations.

Moreover, since 1936 Panama has flatly refused to accept the Canal Zone rent in devaluated dollars, insisting that it was originally promised in gold. This was a point nicely calculated to embarrass official Washington, especially as there seems to have been some justice in the claim. For several years the Panamanian Government has been returning Washington’s checks on arrival at the first of January, in spite of the financial strain this gesture imposed upon the smaller country.

The Panama Government’s financial pangs culminated recently in an effort to obtain a substantial loan from American and British banks by methods that could only be described as strong-arm. Last August, before the National Assembly convened, Panamanian officials tried to borrow $600,000 jointly from the National City Bank, the Chase National Bank, and the Royal Bank of Canada — the only foreign banks operating in the Republic. The banks refused politely, declaring that they would gladly lend the money on authorization from the National Assembly, but could not do so merely on the President’s signature.

Apparently by way of retaliation, a new banking law was presented to the Assembly in October 1938 and passed after only three debates. This law would have forced the banks in question to purchase up to $1,200,000 worth of a new $6,000,000 Panamanian bond issue, in addition to making them invest at least 50 per cent of their total deposits in the Republic of Panama. During the week before the bill was presented, Panamanian bonds in New York shot up 30 points as if by magic.

As a result of numerous protests, the law was soon repealed in its more stringent aspects, but not until it had resulted in the Royal Bank of Canada’s closing its doors and moving bag and baggage from the Isthmus. Meanwhile, in the interests of security, the two American banks have transferred their offices from Panamanian territory into the Canal Zone. Who their successors, if any, in Panama will be, it is impossible to predict; but it has been suggested that the National Bank of Panama, fired by the example of the United States Treasury’s proposed loan to Brazil, now aspires to be similarly financed out of United States public funds and to enjoy a clear monopoly of the banking business in Panama.

A rather disturbing sequel to the bank controversy last winter was an amendment to the Panamanian Constitution, placing all financial authority in the hands of the President of the Republic between meetings of the National Assembly, which occur only once in two years. It may be noted in passing that similar extraordinary powers were conferred temporarily on President Lazaro Cardenas of Mexico, during a period in 1937 when sub rosa transactions were in progress relative to the operations of a barter pact with Germany, Italy, and Japan.

While there is no evidence that matters have developed quite as far in Panama as in Mexico, still Panama’s relations with Germany and especially with Italy have become conspicuously cordial during the last few years. Panama’s friendship with Italy was cemented in 1936 by a species of dynastic alliance, when the daughter of President Juan Demostenes Arosemcna was civilly married to a secretary of the Italian Legation in Panama, Signor Emanuel Conzani. Since that gentleman had a previous wife and two children in Genoa, his new marriage was not recognized by the Catholic Church. Obliged to resign his post at the Legation, Signor Conzani is still known to maintain close ties with his former colleagues, and to be a leading spirit among the unofficial Black Shirt groups on the Isthmus.

Furthermore, on December 30, 1937, the Panamanian Minister to Germany, Dr. Francisco Villaloz, publicly followed Mussolini’s example in supporting Germany’s claims for the return of its colonies. In a New Year’s greeting printed by leading Berlin newspapers, he announced that a policy of opposing Germany’s desires ‘is a threat to world economy and world peace.’

Although his statement was promptly disavowed by the then Foreign Minister of Panama, Dr. José Lefevre, it is instructive to note that. Dr. Lefevre has since been replaced, while Dr. Villaloz continues to serve as Minister to Germany. During a recent visit home, Dr. Villaloz brought a decoration from the Nazi Government for President Juan Demostenes Arosemena. He also took occasion to declare, in an interview quoted in both English and Spanishlanguage sections of the Panama press, that ‘competition in Latin American markets would be beneficial to Panama, because it would permit customers to buy at favorable prices and would maintain an equilibrium of interests in the country, which should not for its own good he absorbed by the economic invasion of one country alone.’ The invader to which he refers is presumably his Good Neighbor, the United States.

In a slightly different connection, it was noticed that Panama’s present Foreign Minister, Dr. Narcisso Garay, was repeatedly wined and dined last summer and fall by the Italian Minister to Panama. This occurred during the same weeks that a complete new Constitution for Panama was in process of being drafted. It is not surprising that the finished document was discovered to contain many points of similarity with the Constitution of Fascist Italy. Moreover, it included two notable innovations in the direction of practical dictatorship, one permitting reëlection of a president, another increasing the presidential term from four to six years, as in Mexico. Although pressure of one kind or another has so far prevented the new Constitution from being voted upon, there is no guarantee that it may not be adopted at some future time.

While it is doubtful that President Arosemena has personal expectations of becoming the Mussolini of the Isthmus, the man currently slated to follow him may very well have imbibed such ideas. According to an opinion generally held in Panamanian political circles to-day, that man is Señor Arnulfo Arias, longtime Minister to Italy and younger brother of the ingenious Dr. Harmodio. Such a selection would break a timehonored custom by which an appointment as Minister to Washington has always been the steppingstone to the presidency of Panama; but it would be in line with Dr. Harmodio Arias’s policy of establishing a political dynasty in which he still remains the ruling force. Since the Doctor is already past, fifty, his brother, who is more than ten years younger, might be expected under proper guidance to perpetuate the family name and authority for a number of years to come.

Dr. Harmodio Arias is a shrewd and agile politico, and incidentally one of the wealthiest men in Panama to-day. Like many aspiring dictators, he is small in stature. In 1931 he engineered the revolution that brought him to power as the leader of the socialistic Accion Comunal and the self-appointed champion of the common man. Even before taking office as President in 1932, he had already ditched the Acción Comunal in favor of the newly created Doctrinary Liberal Party, which he likewise abandoned in founding the National Revolutionary Party in 1936 —incidentally borrowing the name of Mexico’s official political party at that time. Five minutes after being sworn in as President in 1932, he cried, literally with tears in his eyes, ‘I did not. want this! I am only obeying the will of the people!’

During his first, two years of office. Dr. Arias ran the country pretty well, being advised in many respects by his Comptroller General, the late Dr. Martin F. Sosa, previously on the staff of the Guarantee Trust Company. Late in 1934, Dr. Arias first sent his brother and trusted confidant as Minister to Italy. It was not until Arnulfo Arias returned from Italy in 1935 that the political fireworks began in Panama which led to the founding of the National Revolutionary Party and the forcible outlawing of all other parties. Since that time the country has operated strictly under a oneparty system, with vigorous police measures being applied to aspiring rivals.

It is an amusing sidelight on Panamanian politics that during the nowforgotten disorders of 1931 Dr. Arias should have ordered Juan Demostenes Arosemena to be arrested and put to sweeping out the jail in Panama City. To-day President Arosemena owes his position largely to the forceful support of Dr. Arias, and their sympathies appear to coincide on practically every point.


One of Arosemena’s first acts as President was to convert the Panamanian police force into a national army which, liny though it is, nevertheless exists in defiance of the 1903 treaty with the United States. This ‘army’ of 69 officers and 750 men was apparently authorized in the expectation that a new treaty, presented on March 2,1936 to the Senate of the United States, would be ratified. Article X of that treaty provides that, in the event of a military threat against the Panama Canal, any measure which it appears essential for the United States Government to take in defending the approaches to the Canal via Panamanian territory ‘will be the subject of consultation between the two countries.’ This, in effect, would provide for military cooperation on an equal footing between the two countries.

Since the Panamanian army could not help us much in an emergency, and since President Arosemena and his probable successor have been exposed to the siren songs of European dictators, it would be a strange thing for us to risk inevitable delay as well as the precise revelation of United States defense plans in wartime to persons of uncertain loyalty. For this reason, and others that can be specified, it is perhaps fortunate that the United States Senate has not yet chosen to ratify that particular treaty, the fate of which appears to be something of a mystery in Washington to-day.

The history of the new treaty has been lengthy, and its end is not yet in sight. Negotiations on the subject were officially begun in 1934, following a visit by Dr. Harmodio Arias, then President of Panama, to President Roosevelt in Washington. Mr. Sumner Welles, our Undersecretary of State, and Dr. Ricardo Alfaro, then Panama’s Minister to Washington, headed the commissions for drafting the treaty. A total of 109 formal meetings took place, not counting hundreds of informal sessions, before the slender document was finally completed. If the amount of time consumed by those discussions is any sign of the way future consultations provided for under the treaty will be handled, it seems as if Gatun Dam could be in ruins before the two nations had even agreed on the location of anti-aircraft guns in Panama.

On March 2, 1936 this treaty was signed by the assembled diplomats in Washington, and in December of that year it was ratified after much debate by the Panamanian National Assembly. The reactions of our own Congress are somewhat more obscure. During the last session of the 75th Congress, a New Deal majority on the Senate Foreign Relations Committee reported favorably on the treaty; but the Senate body failed to take any action on it pro or con. With the opening of the 76th Congress, the matter has once more been referred back to committee, where it rests to-day. Members of the Senate Foreign Relations group, when interviewed on the subject, said merely that it appeared to be indefinitely postponed by the pressure of other business; but from informed sources it was learned that a pitched battle on the Panama Treaty had developed inside the Committee itself, with Senators Borah and Johnson leading the patriotic opposition.

No copies of the treaty and attached correspondence could be obtained in Washington, although it was fully published several years ago in the Panamanian press. A careful reading shows it to be indeed a remarkable document, more like an exchange of diplomatic amenities than a realistic solution of the defense problems that face the United States in Panama. In the main, it is a nontechnical document, becoming precise only where it treats of mercantile and territorial concessions directly profitable to the Panamanians. On so serious a thing as the status of the Canal in wartime it is strangely vague, in Article II committing both countries to ‘preserve the neutrality of the Canal’ and failing to mention that the Canal would cease to be neutral if the United States ever became involved in another war.

In Article VI of this liberal treaty, the United States renounces its guarantee of Panamanian independence, along with the right to intervene to maintain order in the cities of Panama and Colon. Article VIII would grant Panama a corridor through the Canal Zone, with the right of building a highway there and installing foreign telephone and telegraph lines in the immediate vicinity of United States fortifications. Again, in Article VI the United States renounces the right of eminent domain, by which it was permitted to rent or purchase lands in Panama necessary to the defense of the Canal. In the future, all such questions would be negotiated separately by diplomats, and subject to the generosity of the powers that be in Panama.

As a matter of fact, the Panamanian Government has always been scrupulously compensated for such expropriations as have proved necessary to the outlying defenses of the Canal. It is conceivable, however, that emergencies could arise where there might be no time to debate the price in advance, and where the failure to take prompt action might have fatal results for the United States. Of such distant but possible contingencies the new treaty takes no account. And, since necessity of that sort knows no law, the United States might at some future day be forced to violate its solemn obligations if our Senators should ratify the treaty of March 2, 1936 as it stands.

As for those who drafted the treaty, it must be confessed that the general situation has changed in ways which they did not foresee. In March 1936, Dr. Alfaro was not aware of the Fascist intrigue already under way in Panama, which was to culminate in his own betrayal no later than June 1936 in the manipulated presidential elections, and to make him an exile in Washington to-day. Mr. Sumner Welles, in March 1936, did not anticipate the national defense program under way to-day, which would suffer from possible delays or difficulties in obtaining land or guarantees for new installations. (At least one new airfield and an ammunition dump arc contemplated in Panama proper, as well as extension of the defensive road system under United States supervision.) The surprising fact, however, is that Mr. Welles and Dr. Alfaro both appear unwilling to admit the altered situation, and have both gone on record recently for full ratification of the treaty they helped to negotiate.

In hearings before the Senate Military Affairs Committee during January and February, 1939, General Malin Craig, as Chief of Staff of the United States Army, indicated as plainly as the proprieties permitted that defense experts considered the proposed treaty with Panama to be of very doubtful value. His published testimony reads as follows: —

SENATOR LEWIS: General Craig, have you the view of anybody in the State Department [with reference to the treaty], where the results might be such as you have mentioned, inimical to our welfare from a defensive point of view?

GENERAL CRAIG: I would not put it that way.

SENATOR LEWIS: DO you know if your view has been communicated to the State Department, as to the defensive quality or lack of it?

GENERAL CRAIG: My own views have probably not been so communicated.

The reticence of military experts as regards the Panama Treaty and the tactful deletion of some of General Craig’s remarks from the record arise undoubtedly from the fact that the treaty as originally sent to Congress was accompanied by a warm recommendation from President Roosevelt. His message described that treaty as ’a fair and equitable solution of the peculiar problems which have arisen between the United States and Panama as a result of the construction of the Panama Canal. They are equally important, however, from the standpoint of our relations with all the American Republics.'

It is probably true that a sound treaty with Panama in 1936 might have helped to inaugurate an era of useful relations with our neighbors to the south. The pity is that the first attempt did not meet requirements, and was so stubbornly insisted upon by the Administration after its weaknesses were pointed out.

Such instruments of policy could be most valuable to us in the present state of world unrest, provided they wore clear-cut and definite in stating the joint obligations as well as rights of both parties. From this point of view the Panama Treaty would long ago have merited action of some kind, even if the only result of such action had been to return the treaty for revision.

Because of the prolonged delay which has occurred, the entire status of our present relations with Panama is in a fog. We appear to be operating in part under the 1903 treaty, abrogated in 1924; in part under the new treaty, as regards mercantile matters and roads; and in fact under no treaty at all. With Panama returning our checks for the Canal rental, and insisting upon the promised payments in gold, our very title to the Canal might conceivably be questioned by international jurists.

No objection has been raised in this country to increasing the Canal rental to $430,000, which is just about $13,000 more than the equivalent in gold of the former payments and which is provided for under the pending treaty. Neither does anyone object to extending somewhat greater consideration to Panama, especially in matters affecting trade, than was provided in the hastily concluded treaty of 1903, which John Hay himself in his published letters admitted was ‘not so advantageous to Panama.’ We dare not, however, base our intimate and necessary relations with that country upon the mere presumption of good will, rather than concrete agreements — particularly in view of the European influence that has existed in ruling circles there since the fall of 1935, which is not lessened by our delay in effecting a substantial pact. Only a few months ago, while the Pan-American Conference was meeting in Lima, Peru, a blunt editorial appeared in the newspaper owned and inspired by Dr. Harmodio Arias, stating that if something is not done very soon about the new treaty ‘Panama wall know where to stand on the question of continental solidarity.'