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I can perceive no sufficient reason for holding that a different construction should now be adopted. The language used is clearly susceptible of that construction. The legislative history of the act also confirms this view, as it shows that the purpose of the act was simply to subject foreign vessels to inspection after they had entered our ports.

I have the honor to advise you, therefore, that the navigation of the steamship Europa, under the circumstances stated, was not in violation of any of the provisions of title 52 of the Revised Statutes to which reference has been made. Respectfully,




Articles manufactured in Panama should be transported by the Panama

Railroad Co. at the reduced freight rates provided for in article 20 of the agreement between the Republic of Colombia, now Panama, and the Panama Railroad Co., irrespective of whether the raw material from which they are made is of home or foreign production.


April 1, 1911. SIR: I have the honor to acknowledge receipt of your communication of January 27, 1911, in which you ask my opinion as to whether article 20 of the agreement between the Republic of Colombia, now Panama, and the Panama Railroad Co. includes articles manufactured in Panama from materials imported into that country from foreign countries.

The material facts, as they appear, are as follows:

In 1867 the Republic of Colombia made a concessionary agreement with the Panama Railroad Co., by article 20 of which it was stipulated that “Colombian productions shall be transported by the railroad during the first 20 years of this contract, paying one-half the rates of freight or transportation previously fixed by the company for foreign

products of the same class, but this term being concluded they shall pay a charge or freight not exceeding two-thirds of that previously fixed in the tariff of the companytariff rates which the company can not increase in future in regard to Colombian productions."

By an amendment of this contract August 18, 1891, this portion of article 20 was made to read as follows:

“From and after July 1, 1892, Colombian products passing over the Panama Railroad shall pay only half of the rate of freight established by the company for foreign products of the same class.”

The original agreement, with this amendment, is in the Spanish language, but the above quotations are from the accepted English translation.

Upon the separation of Panama from Colombia and the recognition of the former as an independent government, Panama became the successor of Colombia in this contract.

For a long time the railroad company limited the application of this contract to the natural products of the soil, mines, and waters. But this was mainly because there were then very few articles manufactured in that country, and not because this was the proper interpretation of article 20. In 1906 the question whether said article, as thus amended, referred to manufactured products as well as to natural products of the soil came in definite and specific form before the War Department and the Isthmian Canal Board, and it was decided that it did. This decision of the Secretary of War was reached after the most careful and deliberate examination, and was concurred in by the President, the Secretary of State, and the Canal Commission.

In his examination, the Secretary of War had the benefit of the opinion of Messrs. Sullivan and Cromwell, counsel for the Panama Railroad Co., rendered to that company on August 22, 1906, in which, after quoting the same English translation of article 20, as amended in 1891, as that above quoted, they say:

“The question which arises is whether these provisions apply to manufactured Colombian products, or only such products in their natural condition. We do not see any

thing in the language of the contracts in question which justifies the restriction of their provisions to the natural products of the soil. The products of the industry of the Isthmus are, equally with the products of the soil, within the language used. Undoubtedly the backward state of manufactures in Colombia resulted in the application of the provisions of the contracts almost exclusively to natural products, there being substantially no manufactured products; but this resulted not from the terms of the agreement, but from the circumstances of the country. The words ‘Colombian products’ may as well include the products of Colombian manufacture as the products of Colombian soil.

“In fact, it appears that the practice of the company has been in accordance with the broader interpretation. It appears from the statement of Mr. Delevante, the local auditor of Panama, that for years back, among the articles which were recognized as entitled to the benefit of the lower rate were aerated waters, rum, seco, anisado, molasses, jars, native biscuits, leather, native liquors, fruit sirups, ice and bricks. It also appears from the special net local tariff issued on July 1, 1892, which was intended to cover articles entitled to the lower rate, that charcoal, lime, sugar and starch were also included. These are all manufactured articles. While many of them are the product of only a very elementary manufacturing process, yet there is no doubt that they are not natural products of the soil, and that they are manufactured articles.

“Since the language of the contracts is so broad and the practice of the company has been in accordance with an interpretation which would include, at any rate, some manufactured articles, we can see no reason for restricting the provisions of the contract to products of the soil, and our opinion is that the articles which are the products of Panamanian industry are equally entitled to the benefit of them.”

Mr. Rogers, general counsel for the Isthmian Canal Board, in an opinion rendered to President Shonts on July 27, 1906, expressed himself as clear that the article referred to embraced manufactured products as well as natural

products. The conclusion reached was, on October 25, 1906, thus communicated by Mr. Shonts, chairman of the Isthmian Canal Commission, to Mr. Carlos C. Arosemena, chargé d'affaires of the Panama Legation:

“I am pleased to advise you that a conclusion has been reached to extend to Panamanian products, both of the soil and of manufacture, the reduced rates provided for by Article XX of the contract entered into between the Colombian Government and the Panama Railroad Co. July 5, 1867, as amended by article 1 of the agreement supplemental thereto, entered into between the railroad company and the Republic of Colombia August 18, 1891. Instructions to this effect have been forwarded to the railroad company."

This construction was at once accepted and agreed to by the railroad company, and no one disputes its correctness or seeks to change it.

But inasmuch as the manufactured products then under consideration were all made from raw materials produced in Panama, the question now is whether the same construction shall be extended to products manufactured from raw materials shipped into Panama from foreign countries.

The determination that the article in question refers to and includes manufactured as well as natural products, has gone very far toward an answer to this question. For, if the manufactured article is a product within the meaning of the article, it is so irrespective of the place where the material of which it is composed was obtained.

There are here two kinds of products—the raw material and the article made from it—and each is a “product” within the meaning of article 20. If the material is transported as such it must be the product of Panama in order to be carried on this reduced rate. So, if the manufactured article is transported, that manufactured article must be the product or manufacture of Panama.

In the commercial and business world the terms denoting the manufactured article and the material from which it is made are never confused. Thus, cloth is never called wool; bread is never called flour or wheat, and cigars are

never called tobacco; nor is wool ever called cloth, wheat or flour bread, or tobacco cigars. So, when in a contract or otherwise, a stipulation is made with reference to a manufactured article, it is always by general acceptance understood to refer to that article and not to the material of which it is made. And when cloth, bread, or cigars are offered for transportation, it is that article or product which is offered and not a different product, namely, the material of which it is composed.

If an article manufactured in Panama is a "product" of that country, it is so quite irrespective of the country from which the raw material came, and if articles manufactured in Panama are products of that country within this contract, then, as it is the article itself which is the subject of transportation, it is entitled to the half-rate charge specified, and none the less so because its raw material, if offered as such, would not have been entitled to that rate.

The natural products of Panama are those which are raised or produced there; just so, the manufactured products of Panama are those which are manufactured in that country. Natural products are mainly the productions of the soil. Manufactured products are the results of manufacture, and articles thus produced are equally the products of the country which produce them.

In my opinion there is nothing in this contract, or its subject matter, or in the language used, which will warrant the making of any distinction in this regard between articles manufactured in Panama from domestic material and such articles manufactured from raw materials imported from a foreign country.

I have, therefore, the honor to advise you that under the contract referred to articles manufactured in Panama should be transported by the Panama Railroad Co. at the reduced rate provided for in article 20, irrespective of whether the raw material from which they are made is of home or of foreign production. Respectfully,


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