File No. 819.77/108.
The American Minister to the Secretary of State.
Panama, March 5, 1912.
Sir: Referring, to my dispatch No. 15, of November 29, last, and supplementing my telegram of to-day’s date, I have the honor to inform you that Señor Arjona, Minister for Foreign Affairs, called upon me to-day and advised me that the Panaman Government had canceled the contract with Mr. Augusto Dziuk for the construct ion of a railroad in the Darien region, which was approved; by Law 48 of 1911 (of January 29). The grounds for the revocation were, lie said, the non-fulfillment by Mr. Dziuk of certain terms of the contract, especially his failure to present the plans, etc., required by paragraph 2, of Article 10, of the contract (See dispatch 15 above referred to) and to maintain a representative in Panama, as required by Article 11 of the contract. Señor Arjona, however, informed me confidentially that the reason why his Government desired to cancel the contract was his Government’s opinion that this would be agreeable to the American Government and would facilitate the resumption of the negotiations for the exchange of certain lands in the Sabanas adjoining Panama City and forming part of the Canal Zone, for certain water rights in the harbor of Colon. He thought that the Dziuk concession had had the effect of at least temporarily stopping the progress of these negotiations and requested me to inform my Government that the Government of Panama was anxious to resume the negotiations and conclude them as soon as possible.
The question of the cancellation, of this contract has been under consideration for some time and has been mentioned to me on several occasions by members of President Chiari’s Government. I have refrained from expressing any desire as to this matter, but on some of these occasions I have casually remarked that although over a year had elapsed since this contract was approved, the contractor had as yet apparently done nothing, while his financial support seemed not to be clear. Mr. Dziuk is said to be mow in New York, but a request that a further extension of the time for presenting the plans (Articles 10, paragraph 2), was recently made to the Panaman Government by a local lawyer who, I am informed, presented no power of attorney or other authority to act for Mr. Dziuk.
I have [etc.]