The Panama Canal and the Two Panamas Under the ‘2Nd Republic’ (1870S–1930S) After Panamanian Independence

CHAPTER TEN

THE PANAMA CANAL AND THE TWO PANAMAS UNDER THE ‘2ND REPUBLIC’ (1870S–1930S) AFTER PANAMANIAN INDEPENDENCE

A. American Extraterritoriality through the 1903 Hay-Bunau-Varilla Treaty

There were 20 different bilateral agreements between the United States and the Republic of Panama during the ‘2nd republic’ (1870s–1930s) after Panamanian independence in 1903, including the 1903 Hay- Bunau-Varilla Treaty .1 Treaties covered topics such as Canal Zone boundaries, extradition, legal tender and silver coinage, transits of United States troops and neutrality during World War I, claims for damages during the 1915 riot, smuggling of alcohol during Prohibi- tion, and other matters of jurisdiction and the sovereign authority. The only important modification to the 1903 Hay-Bunau-Varilla Treaty during the time of the ‘2nd republic’ was the 3 December 1904 Canal Rights treaty, otherwise known as the “Taft Agreement .” Article III of the Hay-Bunau-Varilla Treaty allowed the United States to exercise all the rights, power, and authority of sovereignty to the entire exclusion of any such exercise by the Republic of Panama.2 The ever-quoted Article III of the Hay-Bunau-Varilla Treaty reads: The Republic of Panama grants to the United States all the rights, power and authority within the zone mentioned and described in Article II of this agreement and within the limits of all auxiliary lands and waters mentioned and described in said Article II which the United States would possess and exercise if it were the sovereign of the territory within which said lands and waters are located to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority.

1 Treaties between the United States and Republic of Panama from November 1903 to the present are available through the online database HeinOnline (http://heinonline .org). 2 U.S. Congress (1977–78). 190 chapter ten

The Fifth Circuit Court in New Orleans in 1940 explained that Article III of the 1903 Hay-Bunau-Varilla Treaty gave the United States the “greatest possible jurisdiction in the Panama Canal Zone , without actually ceding the area to this country.”3 There have been many inter- pretations of Article III but the last sentence “to the entire exclusion” sounds like a federal government’s assertion of power over a State.

B. The Panama Canal and Canal Zone

1. The Canal Buffer Zone 1.1 An Extraterritorial Five-Mile Wide Buffer Zone around the Line of the Panama Canal The Canal Zone was established as a five-mile buffer zone around the center line of the Panama Canal within which the United States federal government could exercise its constitutional powers to the exclusion of sovereign rights exercised by the Republic of Panama (see Figure 17). The United States federal government exercised its constitutional powers within the Canal Zone not by virtue of the fact that the Canal Zone was a territory of the United States, but by virtue of the promises exchanged in the 1903 Hay-Bunau-Varilla Treaty . As a physical transportation infrastructure, the Panama Canal and its five-mile-wide buffer zone are comparable to the territorial system used by the federal government over the transcontinental railroads, but with two important differences. One difference was that the territory through which the canal line passed was not that of a State or Territory of the United States but foreign territory. Another difference was that the Panama Canal was not a self-contained transportation infrastructure in the same way as a railroad. Goods, passengers, finances, and messages in transit on a railroad are conveyed in rail cars guided by a single track owned and operated by the railroad com- pany and under the jurisdiction of a sovereign state all the way from their origin to the destination. Goods, passengers, finances, and messages in transit through the Panama Canal are conveyed in vessels that choose to pay a toll to transit through the Isthmus of Panama using the Panama Canal but the rest of the voyage follows sea lanes or high seas owned by no one.

3 U.S. Congress (1977–78, 1:622).