By the President: T. F. Bayard to Jacob, November 3, 1885

Mr. Bayard to Mr. Jacob.

Sir: One of the first questions to be treated by you on your arrival at your post, is the recent action of the Colombian Government in imposing, under the fifty-third law of 1884, customs duties upon imports into the territory covered by the Panama transit, and especially into the cities of Colon (Aspinwall) and Panama, from the 1st of December next.

For your information I annex copy of the proclamation of President Nunez, of September 25, 1885, establishing the collection of duties as aforesaid, and also copy of a dispatch on the subject which has been received from Consul-General Adamson, No. 187, of October 10, 1885, with its inclosed article clipped from the Panama Star and Herald of October 10. This article presents in quite temperate language the objections to the proposed measure, as affecting the interests of the Isthmus which have grown up under the long regime of free trade there. With this we have little or nothing to do, although in view of the intimacy of our trade relations with the Isthmus, and the large investments of our citizens in business there, it may be proper to express doubts as to the wisdom of a measure which can only affect disastrously the prosperity of that district.

The thirty-fifth article of the treaty of 1846 between the United States and New Granada gives us, however, the right to call attention to the possible results of this measure, as affecting the unimpeded use of the Isthmian transit. The whole tenor of that article is that nothing shall be allowed to hinder the free transit of persons and goods passing over the Isthmus, from ocean to ocean, to countries beyond. It is stipulated that there shall be franchise of duties as to all merchandise so crossing, either by actual omission to collect the duties or by a drawback on re-exportation.

The original establishment of a free zone, embracing the ports of Colon and Panama and the transit route, was intended to accomplish the twofold object of developing the interests of the Isthmus and of leaving the transit absolutely free from any obstructive formality, such as the entrance into and exit from a customs cordon would almost necessarily involve.

It may be that the practical wisdom and foresight of the Colombian Government may successfully contrive and apply a revenue system at either end of the transit in such wise as to bear only on imports into Colombian territory without in any manner obstructing or delaying the guaranteed unintermpted through transit. The complex formalities usually attending bonded transit and re-exportation under drawback do not, however, afford much prospect that the through transit traffic will not seriously feel the burden of the new arrangements to be adopted, and if the operations of the transit be in any way hampered thereby, this Government would feel bound to regard it as a departure from the intent and letter of the treaty engagements in respect of such transit.

The question is naturally attracting attention and causing no little concern in this country. I transmit for your information copy of a letter of inquiry addressed to me by a mercantile house of New York, and of my reply.

You will take an early occasion to bring this matter of the free and unobstructed use of the transit to the attention of the Colombian Government, adding such arguments as your good judgment and discretion may suggest.

I am,