Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-03-03
BY CASTOR NERvAL.

TOR the second consecutive time
- the Republic of Panama has re-
turned the United States Gov
L ernmentS check for S250,000
intended to cover the annual
obligation Of this country to Panama
under the terms of the canal treaty
of 1903.
The 1903 treaty stipulated that the
United States would pay in perpetuity
to Panama an annuity of S250,000
"in gold coin" in compensation for
the sum from the railroad concession
which was taken over by the United
States. together with other rights
granted by Panama, also in perpet-
uity. for the construction. use. main
tenance and protection of the inter-
oceanic canal.
When last years payment became
due. after the Government of the
United States had decided to devaluate
the dollar, changing its gold content.
and to make lawful currency" legal
tender in all sorts of obligations, de-
claring no longer valid the old gold
clause" in contracts, the fiscal agent
of Panama in New York refused to
accept the check forwarded from
Washington. The Minister of Panama.
after unsuccessful conferences with
representatives of the State and
Treasury Departments, presented
memorandum containing 25 PROPOSE
lions in support Of the right claimed
by Panama to receive the amount
Of the annuity stipulated in the Canal
treaty in gold coin of the standard
of value existing In 1903.
Met legal Obstacles"
The memorandum has not been an
swered up to the present, but in the
course Of conversations regarding the
matter the State Department held the
view that the payment of the annuity
could not be made in gold because
of legal obstacles" These legal
obstacles" were, apparently. those en-
countered in the joint congressional
resolution Of June, 1888, declaring
that provisions requiring payment in
gold or a particular kind of coin or
currency" were against public policy"
and providing that every obligation,
heretofore or hereafter incurred" shall
be discharged upon payment dollar
for dollar in any coin or currency
which at the time of payment is
legal tender for public or private
debts"
These illegal obstacles" although
contested from the beginning by Pan
anna on the ground that they could
not apply to contract with a foreign
nation, have now been removed by the
Supreme Courts recent decision that
the Government of the United States
must pay its gold obligations as con-
tracted. OF course, in the case of in
dlv1dual bondholders, the court ruled
that they could not sue the Govern
ment in order to enforce that pay
ment, but in reference to an interna-
tional agreement the implications of
that decision are obvious.
Barrier Now Removed.
In the particular case of the an
nuity due to Panama, although, juri-
ideally speaking, the decision Of the
supreme Court Of the United States
cannot affect the rights of Panama
one way or the other, it may be inter-
preted, however, as having removed
even the domestic illegal obstacles"
which Washington had claimed pre-
vented the payment in gold.
And these legal obstacles" having
been removed, the arguments pre-
sented by the Minister of Panama in
his memorandum of last year appear
now incontestable. These arguments
are in themselves too clear to need
elaboration. Starting from the premise
that the juridical relations of Panama
with the United States arising out of
the canal treaty are governed by
international law, the government of
Panama asserts that a contractual
obligation such as the gold annuity
cannot be changed, diminished or i'm
paired by the act of only one Of the
parties to the treaty.
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
$50 900 coins named dollars and hav-
ing q gold content Of 25.8 grains, |
900 thousandths fine. This value can
not be diyuipished now In .detyiment