Evening star., 1934-04-01
BY GASTON NERvAL.

"OR foreign government TO re-
l. fuse to make a payment to the
Government of the United
L States is no longer news. But
for a foreign government to
refuse to take a payment from the
Government of the United States, that
is newsi
And that is Just what happened
when, a few days ago. the fiscal agent
of Panama in New York returned tee
United States Governments check fer
$3.50 900, intended to cover the annual
obligation of this country to Panama
under the terms of the Canal treaty
of 1904.
The 1904 treaty stipulated that the
United States would pay in perpetu1ty
to the Republic of Panama an annuity
of s250.O0O lin gold coin" in COM
pensation for rights granted by Pam
ANA, also in perpetuity, for the con-
struction. use, maintenance and pro-
lection of the interoceanic canal.
Now the Government of the United
States has decided that it is in the
best interests of this country to de-
valuate the dollar, to abolish the old
gold coin. to change the gold content
of the new dollar and to make law
full currency" legal tender in all sorts
of obligations, and has so decreed by
law. Furthermore, it has ruled that
the gold clause in contracts Is no
longer valid.
Demand Payment in Gold.
All Of which, whether it is constitu-
lstional or not, is matter only for the
courts Of the United States to pass
upon. No foreign government can
question the sovereignty or the power
of the authorities Of the United States
to alter the legal tender TO be .m-
plcyed in all financial transactions
within the territory OF the United
States. And no foreign government
does question 1t. But when that al
teration, when that substitution of a
new" devalued dollar for the old
gold coin" affects the interests OF a
foreign nation, this foreign nation, OF
course. has something to say aboUJ 1t.
And when what it has to say hap
pens to be supported by the letter of
solemn and written international
treaty. it becomes an easy task for the
affected nation to show the justice of
its case. That is why all the legal
minds and the financial experts at
Washington will be unable to deny
the right of the small Panamanlan
republic to demand payment Of the
canal annuity in gold, that is, pay
ment in the gold coin" of 1904.
The arguments offered by the rep
resentatives of Panama are in them
selves too clear to need elaboration.
Starting from the obvious premise
that the juridical relations of Panama
with the United States arising out OF
the canal treaty are governed by in
.erna.ional law. the Panamanians as
sert that a contractual international
obligation cannot be changed, dimin-
ished or impaired by the act OF only
one Of the parties to it.
The value stipulated as a perpetual
compensation to be paid annually by
the United States to Panama was the
value represented by the sum of 250,-
900 coins named dollars and having
a gold content of 25.8 grains. 900
thousandths fine. This value cannot
be diminished now to the prejudice OF
Panama by reason of laws enacted by
the Congress of the United States.
which decree that the coin-named
dollar shall henceforth have a gold
content Of 1873 grains of the same
fineneSs.
The Congress of the United States
might likewise, and with indisputable
right, as the Panamanian Minister
says, enact some other law reducing
the gold content of the dollar to five
or to one grain, and. if dollars of such
a weight could legitimately be used in
discharge of the treaty annuity, the
compensation agreed upon in 1904
would be virtually wiped out.
Investors Can Also Demand Gold.
1t has been argued that Panama
should overlook the whole matter be-
cause the canal annuity has been for
years, and is still. allocated to the
service of the Panamanian bonds in
and that, therefore. the money not
going out of the United States, the
government Of Panama would not
be benefited by the payment in gold.
To this the Panamanians answer
that the right of Panama to receive
the gold coin stipulated in the treaty
is not dependent upon the use to
which the money may be destined or
upon considerations of whether Pam