[From the Congressional Record, Nov. 15, 1977, S19070]

PANAMA CANAL TESTIMONY

Mr. ALLEN. Mr. President, on October 28, 1977, the Subcommittee on Separation of Powers received the testimony of Mr. Karl Bendetsen on the subject of the Panama Canal Treaties. Mr. Bendetsen is well-known to many Senators, but I might mention that he was Under Secretary of the Army during the administration of President Truman and was for a period of many years Chairman of the Board of the Panama Canal Company. Mr. Bendetsen, after his service in Government, returned to private industry where he became chairman of the board and director of Champion International Corp., a company with facilities in many States and a company employing many thousands of American citizens. Mr. Bendetsen is both a lawyer and an engineer and his life typifies the best in public service and private initiative.

Mr. Bendetsen's testimony before the Subcommittee on Separation of Powers is, in my judgment, the best existing statement of all of the facts which ought to be considered in assessing the Panama Canal Treaties. The study he has given to this topic is truly remarkable, and the contribution he is making to the public discussion of this issue is invaluable.

Accordingly, Mr. President, I ask unanimous consent that the statement of Mr. Karl Bendetsen be printed in the Record so that it will be easily available to the Congress and to interested members of the public.

There being no objection, the statement was ordered to be printed in the Record, as follows:

STATEMENT RE PROPOSED CANAL ZONE TREATIES

(By Karl R. Bendetsen)

I. INTRODUCTION

By way of introduction, between 1948 and 1952, I served as Under Secretary of the Army. Among my many duties was that of Chairman of the Panama Canal Company. By delegation from The President of the United States to the Secretary of the Army and from him to me, I was made the responsible agent for supervising the reorganization of the Canal Zone and its activities pursuant to an Act of Congress, Public Law 841, 81st Congress, 2nd Session (64 Stat. 1038) approved September 26, 1950. This Act, adopted under the leadership of former Congressman Clark W. Thompson of Texas, constituted the first basic change in the permanent Canal operating organization from that originally established in 1914 pursuant to the Panama Canal Act of 1912.

Under the Act of 1912, in time of peace, the Canal was operated on an appropriations basis, under a single civilian agency as an interoceanic public utility headed by a governor. In war. that Act placed the Canal Zone and all of its functions under the supreme control of the Commanding General of the U.S. Army on the Isthmus.

The concept of the Act of 1950 was significantly different from that of the Act of 1912. A new corporation was chartered by the Congress known as the Panama Canal Company. The Panama Railroad Company, a New York corporation, was merged into the Panama Canal Company. The new company was placed under the control of a Board of Directors under a Chairman. The President of the Company became the general manager of business operations on the Isthmus. The Governor of the Canal Zone serves ex-officio, as President of the Canal Company.

The Panama Canal Company was charged with the operation of all of the transit tollmaking, navigational and commercial activities on a self-sustaining basis. It became the sole taxpayer and was required under the Act to fund all governmental functions in the Zone which were strictly separated from the public utility functions.

Following my resignation as Under Secretary of the Army in the late fall of 1952, I was requested to remain as Chairman. This request was repeated by President Eisenhower in 1953 and I remained as Chairman until the end of that year when the pressure of my other obligations and those associated with the chairmanship of the Canal Company came into conflict, simply because of the unavailability of adequate time to do both.

I will set forth briefly some important highlights bearing upon the historical background which culminated in the Isthmian Canal Convention between the United States of America and the Republic of Panama signed at Washington November 8, 1903. Having briefly described the streams of influence which converged in that Convention, I will then arrange a series of observations and comments relative to the pending Panama Canal Treaties.

Immediately upon ratification, and wholly without any consideration whatever, these treaties would:

(a) Extinguish United States jurisdiction in the Canal Zone;

(b) Terminate its juridical, legal and national presence there;

(c) Terminate the all-inherent rights to the United States under the 1903 Convention;

(d) Place all U.S. citizens there resident, including members of the Armed Forces of the United States and their dependents, under Panamanian jurisdiction;

(e) Convey all U.S. right, title and interest in all of the land and all of the fixed installation and property there except for certain temporarily excluded properties; and

(f) In thirty months, terminate all police power and all vestiges of governance, both executive and judicial.

II. HISTORICAL BACKGROUND

A. The treaty of 1846 with Colombia (New Granada)

On December 12, 1846 at Bogotá, a new American charge d'affaires, Benjamin Allen Bidlack of Wilkes Barre, Pennsylvania, acting entirely without instructions of any kind, on his own initiative, negotiated and signed a treaty. This treaty which he negotiated with the President of New Granada, Sr. Tomás Cipriano de Mosquera, proved to be critical and important. Its vital section was Article XXXV. Under the provisions of this Article, New Granada guaranteed to the United States the exclusive right of transit across the Isthmus of Panama (the State of Panama, a province of New Granada) "upon any modes of communication that now exist, or that may be hereafter constructed." In exchange. the United States guaranteed "positively and efficiently" the "perfect neutrality" of the Isthmus and New Granada's rights of sovereignty there. It was this agreement by which the Panama Railroad was to be made possible.

The United States Senate did not act on ratification for a year and a half and then only when a new and special envoy was sent to Washington, the very able Pedro Alcantára Herrán to lobby for the agreement. The Bidlack Treaty. as it has been commonly called, was Bidlack's only diplomatic triumph. He died seven months after the treaty was ratified. Prior to Bidlack's appointment as an envoy to Bogotá, he had served briefly as a member of Congress.

B. The Discovery of gold in California and the war with Spain

Although there were dreams and visions of a waterway connecting the Atlantic and Pacific Oceans through some pathway across the Isthmus connecting North and South America, Central America nevertheless remained a backwater until January of 1848, when gold was discovered in California at Sutter's Mill.

There were only three routes to California. They were the Plains across, the Horn around, or the Isthmus over. Thousands chose the "Isthmus over." It was a bruising experience. Many never made it at all-neither the men nor the mules. Uncounted men died of snakebite, cholera, yellow fever and malaria, and of a thousand hardships and miseries. But on they came. After all. it was 13.000 miles around the Horn from New York to San Francisco. It was 5,000 miles by way of the Isthmus. Those who went from New Orleans to San Francisco across the Isthmus were to save 9.000 miles.

So it was the discovery of gold in California that first heightened intensively the interest of the United States in a route across the Isthmus. Ultimately, however, it was not gold; it was the war with Spain and the dramatic voyage of the battleship Oregon from the west coast of the United States around the

Horn. Our first true battleship, the Oregon, was in San Francisco when the Maine blew up in Havana harbor and victory in the Caribbean was said to depend on her. Every American was caught up in the excitement. She was a fine vessel and she got there in time to play a part in the Battle of Santiago Bay, but it took her almost seventy days. This was the great catalyst. But much was yet to happen.

C. The Panama Railroad

It was a man named John Lloyd Shephens who visited Nicaragua and the State of Panama. He became convinced that Panama was where the future lay. He organized the Panama Railroad Company, a New York corporation. The railroad was begun in 1850. It was finished five years later at a cost of $8 million, six times beyond anyone's estimate. It was the world's first transcontinental railroad, the most expensive line on earth. A one-way ticket at that time was $25 in gold. It was a bonanza.

Panama had been known as a pesthole since its earliest Spanish settlement. Horror stories came out of Panama as the railroad was pushed ahead. Probably more than 6,000 or maybe even twice that number died in the effort to build it. They died of cholera, dysentery, yellow fever, malaria, smallpox. There was then no cure known for any of them.

Thanks to Benjamin Bidlack and Article XXXV of his treaty, to U.S. initiative, the Isthmus at Panama was spanned. And the United States was obliged, as well as privileged, under the treaty to keep the railroad open and to protect it against all comers, by force of arms if need be. U.S. naval vessels customarily stood off at Colon and Panama City.

D. President Grant

Surprisingly to many who may still think that President Grant had no initiative, it was he who directed a series of practical investigations seeking to find the most advantageous route for an interoceanic canal. He considered such a canal absolutely essential to the future of the United States and of great benefit to the whole world. Grant authorized and directed under the leadership of Admiral Ammen (a friend since boyhood) seven expeditions to Central America between the years 1870 and 1875. Throughout the nineteenth century there had been many theoretical and conjectural claimants to knowledge about where a canal should be built but none of them really knew what he was talking about. Remarkably however, as early as 1552, a Spanish priest designated Panama, Nicaragua, Darien and Tehuantepec as providing the best choices. Among these, he thought Panama and Nicaragua to be favored. The Grant expeditions were carefully done. President Grant commended to the people of the United States "An American Canal, on American soil."

E. The French effort

Much has been written about the French effort led by Ferdinand de Lesseps. He was the hero of Suez, a sea-level canal bearing no real relationship to the gigantic problems at Panama. He organized an International Congress which met in Paris in 1879 to consider an Interoceanic Canai. The Congress wrestled with the problems of which route and whether it should be a sea-level or a lock canal. However, de Lesseps "railroaded" through a decision for a sea-level canal, despite the fact that a French engineer, Adolphe Godin de Lepinay, presented a plan for a lock canal which turned out to be almost exactly the precise canal which the United States ultimately built. It was his plan that was eventually adopted in 1906 by John F. Stevens, the Chief Engineer of the Isthmian Canal Commission appointed by President Theodore Roosevelt. Congress by an Act approved June 29, 1906 formerly approved the recommendations of John Stevens after protracted and lively debate on the merits of Lepinay's concept.

The French effort collapsed in 1889 and the Panamanian Isthmus returned to the jungle.

F. The canal at Panama was second choice

In 1899, the United States established the Isthmian Canal Commission for exploration purposes. Rear Admiral John G. Walker was President of the Commission. The objective was to recommend a route somewhere across the Isthmus as well as the type of canal to be built.

Nicaragua was recommended. It had popular support across the United States and very strong support in the Congress, particularly in the Senate under the leadership of then Senator Morgan.

G. The Spooner Act

A period of intensive struggle known as the Battle of the Routes was waged. Finally, however, Congress on June 28, 1902 passed the Spooner Act to provide for the construction of a canal connecting the waters of the Atlantic and Pacific Oceans. This Act favored the route across the Province of Panama.

The President of the United States was directed to acquire from the Republic of Colombia "perpetual control of a strip of land" not less than six miles in width from the Caribbean Sea to the Pacific Ocean and thereupon to excavate, construct and "perpetually maintain, operate and protect thereon a canal," which would afford convenient passage of ships of the greatest tonnage and draft then in use. The President was also directed to provide for the perpetual maintenance and operation of the Panama Railroad and to have "jurisdiction over said strip and the ports at the ends thereof to make such police and sanitary rules and regulations as may be necessary to preserve order and preserve the public health thereon and to establish judicial tribunals as may be agreed upon thereon as may be necessary to enforce such rules and regulations."

When the French effort collapsed a new French company was created by the French to obtain what might be salvaged out of the wreckage of the French effort. The name of this company was the New Panama Canal Company (Compagnie Nouvelle). The Spooner Act provided in Section 3, that when the President had acquired the necessary territory for the United States from the Republic of Colombia, he was authorized to pay the French company $40 million for its rights and equipment and "to the Republic of Colombia such sum as shall have been agreed upon."

It is important to recall however that Section 4 of the Spooner Act provided for an alternative. If the President proved to be unable to obtain for the United States "control of the necessary territory of the Republic of Colombia" he, the President, was authorized to obtain control by treaty of the necessary territory from Costa Rica and Nicaragua for the construction and the perpetual maintenance, operation and protection of a canal via the Nicaraguan route.

There followed the adoption of the Spooner Act, after months of arduous negotiation between then Secretary of State Hay and Thomas Herran, charge d'affaires, a very favorable canal treaty for the United States. The treaty was concluded and signed January 22, 1903 and ratified by the United States Senate on March 17 of that year. Colombia did not act.

Communications between Washington, D.C. and Bogota were difficult at best. It took three arduous weeks to reach Bogota over land and the cable connection was intermittent. The Colombian Senate was called into session on June 20, 1903 to consider ratification of the treaty. However, things did not go smoothly and the Colombian Senate ultimately declined to ratify the treaty. One of the reasons not generally understood was because the rights of the New Panama Canal Company (Compagnie Nouvelle) were due to expire in the course of several months and the Colombians naturally had in mind that upon the expiration of those rights Colombia would be eligible to receive the $40 million payment scheduled to go to the French company in addition to the $10 million specified in the pending treaty.

It is important to underscore here clearly that the treaty called for a payment of $10 million and an annuity of $250.000. Many people have called this annuity rent and many members of the State Department have currently so described the annual annuity as rent. It is not. The $250,000 payment was to be made in lieu of the annual annuity paid to Colombia by the Panama Railroad Company which was itself to be acquired by the United States. It is this same $250,000 annuity, later increased to $2.300,000 which has been paid to Panama.

There were a number of unfortunate misunderstandings between Colombia and the United States which also contributed to the rejection of the treaty. Herran so devoted himself to bringing the ill-fated Colombia treaty to a successful conclusion that sheer exhaustion cost him his life.

H. Was the Panama Canal Treaty forced upon Panama?

A great body of outrageous propaganda has been fabricated and a web of falsehoods has been spun by the Department of State and loudly declaimed by Panama's dictator, all designed to generate false impressions-impressions which many people erroneously entertain.

These false notions are that the Canal Zone was wrested from the Panamanians under duress; that the U.S. Naval forces were brought to bear to obtain the treaty with Panama by which she ceded the Canal Zone in perpetuity. The State (or

Province) of Panama seceded from Colombia eagerly and avidly. The leaders knew what they were doing. They sought their own enrichment and the vast benefits they knew would accrue to the new nation by selling and ceding the Zone in perpetuity. They were zealous in their efforts to dissuade the United States from dealing with Nicaragua and Costa Rica to acquire a Canal Zone and construct a canal across the Isthmus there. She seceded. The United States recognized the Republic of Panama. The United States sheltered and defended the fledgling Republic from Colombia after secession.

It is errant nonsense to contend that force was used against the State of Panama soon to become the Republic of Panama to secede from Colombia. It is total fabrication to assert that the Panamanians did not want the treaty.

It is true that Dr. Manuel Amador and Sr. Federico Boyd raised initial objections; it is true that Secretary of State Hay observed that there are provisions to which some Panamanians might object and it is also true that on behalf of Panama the treaty was not signed by a Panamanian. What treaty between nations has ever been unanimously hailed? Very few. This one was unanimously ratified by the Panamanian Parliament before the United States Senate did-Amador and Boyd joined.

1. Was Panama under duress?

Eight men made the Republic of Panama. They were José Augustin Arango, Dr. Manuel Amador, Federico Boyd, Nicanor de Obarrio, Carlos C. Arosemena, Manual S. Espinosa, Tomás Arias, and Ricardo Arias. They knew that following the rejection by the Colombian Senate of the Treaty which had been negotiated with Colombia, the United States would switch rapidly and inexorably to the favored Nicaraguan route.

These men, all citizens of Colombia resident in the State of Panama, desired for themselves and their associates the enormous and continuing benefits to be derived from the United States, from the payments that would be made, the mighty undertaking of construction and the succesful operation of the canal. The first meeting of the movement to secede was held July 25, 1903. Following this, Arango, Amador and Arosemena became the nucleus of the conspiracy against Colombia. The people of Panama had a low regard for the government in Bogota. It should be remembered that under the treaty with Colombia of 1846, pursuant to Article XXXV, the United States had a duty to guard the neutrality of the Panama Railroad. The conspirators never had direct word from any agent of the United States that if they conducted a revolution and seceded from Colombia they would be protected from an attack from Colombian troops, but they believed that this would be the case, as indeed it was.

On November 2, 1903, Commander Hubbard, the Captain of the U.S.S. Nashville, received secret and confidential orders via the American Consul at Colon to: "Maintain free and uninterrupted transit. If interruption threatens by armed force, occupy the line of the railroad. Prevent landing of any armed force with hostile intent, either government or insurgent, either in Colon, Portobello or other point. Send copy of instructions to the senior officer present at Panama on arrival of U.S.S. Boston. Have sent copy of instruction and have telegraphed Dixie to proceed with all possible dispatch from Kingston to Colon. Government force reported approaching Colon in vessels. Prevent their landing if in your judgment this would precipitate a conflict. Acknowledgement is required"

The uprising occurred at 6 p.m. on the evening of November 3, 1903. The presence of the ships of the United States standing off Panama and Colon prevented Colombia from retaking the Province of Panama. The Panamians had seceded in order to obtain the Canal and the beneficience of the United States. No pressure has been applied to them at any time. No United States troops were landed. Some Colombian troops joined the rebels. The others voluntarily withdrew. There was no engagement. No shots were exchanged or fired.

The conspirators now having formed a provisional government designated Philippe Bunau-Varilla as their "Envoy Extraordinary and Minister Plenipotentiary near the Government of the United States of America." By November 8, 1903, he was installed in Washington ready to negotiate. The conspirators had designated Bunau-Varilla because they felt he was in a position to secure their objective. They were entirely correct. He served them well. They and he had a mutual interest in the outcome and so a pervasive understanding.

At the signing ceremonies of September 7, 1977. Torrijos observed of the 1903 treaty: "It was never signed by a Panamanian."—another blatant effort to generate false impressions and erroneous inference.