I have received from my government the following information respecting certain propositions made to Colombia by the government of the United States, which the government of Colombia has not accepted. The American propositions were as follows:
1. That Colombia should grant the United States an option for the construction of an interoceanic canal, starting from the Gulf of Uraba on the Atlantic to the Pacific Ocean, through the region of the Atrato River.
2. That Colombia should give to the American government the right to establish coaling stations in the islands of San Andres and Providencia, which are located in the Caribbean Sea.
3. In consideration of the above, the United States to pay to Colombia $10,000,000 and to use their good influence for the settlement of pending differences between Colombia and Panama. Also to grant Colombia preferential rights for the use of the canal and the settlement by arbitration of the claims of Colombia against the Panama Railroad Company.
The government of Colombia declined to accept the above proposals, insisting, at the same time, that all questions pending between Colombia and the United States should be settled by arbitration.
It is evident that the United States are not going to permit any competitive canal scheme in Central America if they can help it.
What will be the effect of the opening of the canal on Panamanian prosperity? The local merchants fear that the system of state-supply, which has prevailed in the zone during the constructional period, will be continued after completion and extended to the shipping which will pass through the canal, and that coal and ship-chandlery will become American government monopolies. Much depends on whether the Panamanian merchant will be allowed to import freely through Colon and compete in the supplying of the ships in transit.
No serious development can be expected in Panama until the country is better provided with railways. The only other line in contemplation is one from Empire, on the Culebra Cut, to David, a town close to the Pacific near the far western frontier, in the province of Chiriqui. This line would be 289 miles in length, and branches from it are proposed to Anton, 5 miles, and to Los Santos, about 67 miles.
It is pretty safe to prophesy that the blue streak through the isthmus of Panama will have a gradual but sure effect on the politics of Central America. The need to protect the canal, and to surround it with orderly conditions, social and political, will compel a good many states to put themselves to amendment or force the big republic responsible for the canal to provide them with good government whether they like it or not. If the United States had to intervene in Cuba in order to put down anarchy or misrule, they may be persuaded by an even stronger necessity to intervene in the affairs of Central America in the defence of the Panama Canal. It would be no surprise, especially after recent events in Mexico, if the south-western frontier of the States gradually advanced down the broad and narrow isthmus until it reached and passed the line of the canal. This would be quite in accordance with the law which makes it almost inevitable that a great and well-governed Power should absorb weaker states along its borders, especially when these are unable to keep their houses in order.
There is always the danger that foreign Powers will intervene in the affairs of these republics in the interests of their bondholders, and this would compel in turn the intervention of the United States in order to make good the Monroe doctrine, which is directed against any such foreign interference in American affairs. In order to avoid these complications Mr. Taft actually proposed not long ago to refund the debts of Honduras and Nicaragua, placing the custom-houses under the control of American officials. The object was partly to secure loans advanced by American bankers, but partly also to satisfy European bondholders and to make the politics of these republics more stable. Nothing came of this significant project. But I should not care to ensure, except at a very high premium, the permanence of the political arrangements now existing in these regions when the Panama Canal is in working order and becomes more and more essential to the safety and prosperity of the great republic. The canal may in the long run be not "virtually" but actually "a part of the coastline of the United States."