Evening star., 1934-04-01
PANAMA DEMANDS GOLD
FOR CANAL OBLIGATION
Fiscal Agent Returns Check for
$25O,OOO Citing Provisions of
Treaty of 1904.

ANA will be benefited or not by such
payment in gold. The existence Of
right does not cease or vary, they
say, by reason of the fact that the
person vested with the right is or
is not benefited by its exercise.
1t has also been said that If Panama
demands payment in gold of the
Canal annuity the American hold
ers Of Panamanian bonds can also
demand payment in gold and thus
offset any benefit which might accrue
the former. But here the funda-
mental difference Is again disre-
garded. While the payment to the
government of Panama is ruled by
international law the relations of
Panama with the bond holders of her
foreign debt residing in the United
States are governed by the internal
laws of the United States. Who will
dispute the right of the Panamanian
government to discharge its obliga-
tions in the United States In ac-
cordance with the laws of the United
States?
Still another objection to the Pan
amanian demand seems to be that
Panama has already benefited by the
reduction in the value (not the
amount) of her debt, produced auto
matically by the devaluation of the
dollar, and that she should be salts
fled with that. Aside from the fact
that Panama has not been the only
one. and that every debtor in the
United States, whether a citizen or
an alien, whether natural or a
juridical person, has been equally
benefited, the Panamanians retort that
that has nothing TO do with the dis
charge of an international obligation
esta ablished by treaty.
Whether the debts of Panama IN
the United States are larger than her
credits or vice versa and whether
Panama had no debt at all or no
credit at all in the United States.
these facts are immaterial, in the
opinion OF the diplomatic representa-
tive Of Panama. with regard to the
international obligation of the United
States toward his country. Such
obligation exists and Is immutable.
1t cannot be affected or varied. EX-
cept by agreement of the two parties,
IL ItIIldlllS anu " Ia CAdNlIg
the same whether Panama happens
to have contracted loans in the United
States or in case she had contracted
the same loans in France and had now
to buy francs at the rate of 6.56 for
the service Of the debt.
Quotes From Loan Indenture.
The case for Panama" as presented
to the State Department by Minister
Ricardo ]. Alfaro with his charac-
teristically brilliant logic. ends by
quoting a clause from the loan in
denture of 1928, which provides that
the Republic of Panama will not at
any time, while any of the bonds
issued hereunder are outstanding. en-
ter into agreement or understanding
or do any act or thing whereby the
obligation of the United States of
America to make the treaty payments
al Isuuem 6us VI 90 6eu 10 ueus
leased. affected or impaired" To
acquiesce In the proposition that pay
ment may be made now not in gold
coin of 1904 but in any other lawful
currency" of a lesser value would
naturally be to allow that obligation
to be affected and impaired"
To these unanswerable arguments,
1t may be added that the payment in
gold to Panama would not set an
embarrassing precedent, for it Is the
only one of its kind. Other interna-
tional payments made by the United
States are in foreign currencies. 1t
may also be added that 1t would not
iDf .f-fth Tho oyictinn ha fhn
export of gold from the United States,
for all the money received would be
Immediately turned to the bondhold-
ers of the Panamanian debt in this
country. And, precisely because of
this, it is plain that not even on moral
grounds can the Panamanian attitude
be assailed. If Panama intended to
keep the difference-and she could
certainly use it today-there might be
some objection. not from a legal, but
merely from an ethical viewpoint.
But the Panamanian government has
already and cleverly overcome that
objection by announcing its decision
to devote the entire amount received
to the service of its debt in the United
States.
1t is difficult to conceive how a
demand of such solid reasoning and
of such juridical weight can fail to
win recognition in the end. The
more so when as an alternative. a
remote alternative, of course. looms
the possibility of the denunciation of
the canal treaty by the affected party.
(Copyrirht, 1a34D