FOREIGN RELATIONS, 1942, VOLUME VI



regarding the advisability of proposing to the Panamanian au-
thorities some type of management contract under which the water
and sewerage systems in Colon and Panama, when ownership is trans-
ferred to the Panamanian Government, would be operated by the
Panama Canal Department.
   There seems to be a definite consensus among the interested depart-
 ments of this Government that the intimate association of the resi-
 dents of the Canal Zone with the cities of Panama and Colon makes it
 advisable and necessary that this Government continue to bear the
 responsibility for the operation of the water and sewerage systems,
 when the transfer of ownership to Panama is approved by the Con-
 gress. The Department is, therefore, of the opinion that you should
 discuss this matter with the appropriate Canal Zone authorities with-
 out further delay and request that they, in close consultation with
 you, formulate a concise proposal for a management contract under
 the provisions of which the Panama Canal Department would con-
 tinue to operate the water and sewerage systems once the title to them
 has been placed in the hands of the Panamanian authorities. Such
 a contract should be arranged so as not to prejudice in any way the
 pertinent provisions of the agreement reached in Washington on May
 18, 1942, a copy of which was transmitted to you in the Department's
 instruction No. 807, dated May 21, 1942,41 and should definitely pro-
 vide for increased participation of Panamanian personnel in sanita-
 tion activities in those cities as set forth in the exchange of notes ac-
 companying the General Treaty of March 2, 1936, which in turn
 refers to the earlier proposal of October 1931.
 The Department will appreciate being kept informed of any prog-
 ress which is made on the drafting of such a contract and requests
 that before any proposal is made to the Panamanian authorities, the
 approval of the Department be obtained.42
 Very truly yours,                    For the Secretary of State:
                                                 SUMNER WELLES

711F.1914/496
   The Ambassador in Panama (Wilson) to the Secretary of State

No. 232:8                                   PANAMA, June 1, 1942.
                                               [Received June 4.]
  SnI: I have the honor to report that the Minister for Foreign Af-
fairs tells me that President de la Guardia has decided not to call
the National Assembly into special session to consider the Defense
"Not printed.
"The transfer of the water and sewer systems to Panama and the arranging
of a management contract which left the administration of this public works
in the hands of the Zone authorities, were not effected until December 1945.



610