Third. Great Britain further objects to the exemption from the payment of tolls of "American vessels engaged in the coastwise trade of the United States." Fourth. It is attempted to limit and restrict our power even to remit tolls as is done by certain foreign nations using the Suez Canal, although the HayPauncefote treaty, according to the British note of November 14, 1912, aimed 'at carrying out the neutralization of the Panama Canal by subjecting it to the same régime as the Suez Canal.”

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Fifth. Section 11 of the act, which seeks to prevent railroad control of this waterway is questioned by Sir Edward Grey because of the fear that its provisions may apply, as they unquestionably do in my opinion, to the Canadian transcontinental railroads which have voluntarily placed themselves under the provisions of the interstate-commerce act of the United States.

Significance of British Objections.

To sum up the British objections, we are denied the right to pass free of toll our own battleships and other Government vessels; ships engaged in the coastwise trade of the United States, in which traffic the ships of England can not now engage, must pay a toll in passing through this American waterway; we are virtually asked to violate our treaty obligations with the Republic of Panama; there is a practical denial of, or at least an attempt to limit, our right to follow at Panama the practice of foreign nations in remitting tolls to merchant ships through the Suez Canal, thus placing this country at a disadvantage, and finally, in reference to the excellent provisions of section 11, we are threatened with a protest if Canadian steamships owned by Canadian railroads, which railroads have voluntarily come under the interstate-commerce act and thus subjected themselves to the same restrictions and regulations as American railroads, are to be amenable to the same laws. Was there ever a more striking example of inconsistency? Equality of treatment demanded for British shipowners in sharing benefits, but a protest against equal treatment when the act imposes restrictions applying to American shipowners!

I call attention in detail to these British objections because there are evidently many citizens who have been led to believe that the protest refers only to the exemption of American coastwise ships. By this brief statement it can be appreciated that the protest is more far-reaching and consequential.

British Protest Inspired by Canadian Railroads.

It is generally believed in Washington that the British protest was due to the action of Canadian railroad officials. Prior to the receipt of the first English note certain Government officials of Canada visited England, and we were informed by cable dispatches printed in the newspapers that they took up this question with particular reference to the provisions of section 11, the railroad section. Of course, they had the sympathy and active support of American transcontinental railroad interests, which interests are now engaged in urging the repeal of the objectional provisions of the canal act, namely, sections 5 and 11. I am fair and frank enough to admit that many excellent citizens, advocates of peace-and I am a peace advocate and in favor of arbitration, as I will show later-favor repeal because of the belief, and in some instances solely upon the authority of certain Americans, that we have violated a treaty. I am constrained to direct attention to the fact that there are representatives of powerful interests favoring repeal who are crying "live up to our treaty obligations," but who are, I fear, far less interested in this phase of the question than they are in the more important consideration of preventing the canal from becoming too great a competitor of the transcontinental railroads.

Analysis of Situation.

Article 3, paragraph 1, of the Hay-Pauncefote treaty, which it is claimed we violate, reads as follows:

That the canal shall be free and open to the vessels of commerce and of war of all nations observing these rules on terms of entire equality, so that there shall be no discrimination against any such nation or its citizens or subjects in respect to the conditions or charges of traffic or otherwise. Such conditions and charges of traffic shall be just and equitable.

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I have always contended that this section simply bound us as the owners of the canal to treat all foreign nations fairly, preventing discrimination in favor of one foreign nation as against another. The use of the words "vessels of war" to my mind is conclusive evidence that the word vessels" referred exclusively to foreign nations, for it is inconceivable and a reflection upon the patriotism of the framers of the treaty that the United States would foreclose its right to pass free of toll through its own waterway warships as well as lighthouse tenders, revenue cutters, transports, and other craft. Realizing the force of this argument the opponents of exemption now say that we must consider this section in connection with certain language of the Clayton-Bulwer treaty (which many had supposed was superseded by the Hay-Pauncefote convention) contained in article 8, which still compels us to carry the burden of that instrument. What is the meaning of neutralization? Many authorities contend, and I think rightfully, that neutralization can not by any strained construction be inferred to mean conditions of traffic, but relates only to conditions of war.

Interpretation of Senators Present When Hay-Pauncefote Treaty Was Pending.

The contention has been made that the Senate understood that the words "all nations" included the United States and, with this conception of the treaty, voted down an amendment which in specific language reserved to the United States the right to exempt American coastwige ships from the payment of tolls. They neglect to mention that several amendments were decisively rejected that permitted us to fortify the canal, their rejection being due to the belief on the part of Senators that we had that right without such a provision. Evidence which I will now submit proves that the same opinion prevailed touching our right to exempt American coastwise shipping.

The Bard Amendment.

I have here a letter from Senator Bard, who resides in California, which is conclusive. I will read the following extracts from this letter:

When my amendment was under consideration it was generally conceded (the italics are his) by Senators that even without that specific provision the rules of the treaty would not prevent our Government from treating the canal as part of our coast line, and consequently could not be construed as a restriction of our interstate commerce, forbidding the discrimination in charges for tolls in favor of our coastwise trade, and this conviction contributed to the defeat of the amendment.

We will not rest our case in this particular upon the statement of the author of the amendment, but will quote a Senator who voted against the amendment, no less an illustrious Member of the Senate than Hon. HENRY CABOT LODGE, who was one of the 11 Senators who voted last year against exempting coastwise ships, so he must be regarded as a disinterested witness. I quote from the Congressional Record of July 17, 1912:

Mr. LODGE. Mr. President, it so happened that I was in London when the second HayPauncefote treaty was made, and, although the draft was sent from this country, that treaty was really made in London. I mention this merely to show that I had some familiarity with the formulation as well as the ratification of that treaty. When the treaty was submitted by the President to the Senate, it so happened that I had charge of it and reported it to the Senate.

The second Hay-Pauncefote treaty, as Senators will remember, embodied, in substance, the amendments which the Senate had made to the first Hay-Pauncefote treaty. England had refused to accept those amendments, and then the second treaty was made embodying in principle all for which the Senate had contended.

When I reported that treaty my own impression was that it left the United States in complete control of the tolls upon its own vessels. I did not suppose then that there was any limitation upon our right to charge such tolls as we pleased upon our own ves sels, or that we were included in the phrase "all nations."

Again, on July 20, 1912, Senator LODGE stated on the floor of the Senate in reiteration of this view:

I voted against it in the belief that it was unnecessary; that the right to fix tolls, if we built the canal or it was under our auspices, was undoubted. I know that was the view taken by the then Senator from Minnesota, Mr. Davis, who was at that time chairman of the committee. I certainly so stated on the floor.

*

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I personally have never had any doubt that the matter of fixing tolls must necessarily be within our jurisdiction, and when I referred to our going to The Hague as useless I did not mean because our case was not a good one. I meant because, in the nature of

things, we could by no possibility have a disinterested tribunal at The Hague. It would be for the interest of every other nation involved to prevent our fixing the tolls according to our own wishes. I know that was my opinion and the opinion of the chair

man of the Committee on Foreign Relations at the time.

Senator CLAPP, of Minnesota, who was present when the Bard amendment was voted upon, holds similar views, as here set forth, and I quote from the Congressional Record of July 17, 1912:

I know I was here at the time, although I do not recall all of the speeches. But while some of us voted insisting, in some instances, that these things should be explicit and in others voting with the majority upon the ground that they were covered anyhow, I believe, both with reference to the coastwise trade and especially with reference to the question of fortification, that many of the votes cast against those express provisions were cast upon the theory that without them we nevertheless had the right to do them. Mr. O'GORMAN. That the provisions were unnecessary?

Mr. CLAPP. Yes; that they were unnecessary.

Senator PERKINS, then and still a Member, stated in the Senate on August 6, 1912:

I wish to state that Senator Davis, of Minnesota, was at that time chairman of the Committee on Foreign Relations. He was, as is conceded by all, an authority on international law, and took the view stated by the Senator from New York and that stated by the Senator from Washington. There is no question about it that the rules we did make were to govern other nations than ourselves.

Situation Affecting the Republic of Panama.

As I have already set forth, the British note of November 14, 1912, protests against article 19 of our treaty with the Republic of Panama proclaimed in 1904. For over eight years there was no protest on the part of Great Britain against this alleged discrimination in favor of the ships of Panama. Why this belated protest, might we ask? The answer is plain. The contention of Great Britain would become untenable as to American ships if exception was not taken to the Panama treaty.

Senator RooT, while Secretary of State. negotiated a treaty with the Republic of Colombia which permitted that Republic to pass through the canal-

Troops, material of war, and ships of war without paying any duty to the United States, even in the case of an international war between Colombia and another country. It was ratified by the United States, but rejected by Colombia. The point I wish to make is that the then distinguished Secretary of State presumably did not consider the Colombian convention a violation of the Hay-Pauncefote treaty, although England now claims that a similar treaty with Panama is in contravention of treaty rights.

Similar Question Passed Upon by the Supreme Court.

One phase of this canal controversy has been directly passed upon by the Supreme Court of the United States, the question of exempting coastwise ships. Mr. Justice White, now Chief Justice, wrote the opinion. It is the case of Olson v. Smith (195 U. S., 332), in which the court held that the State law exempting American coastwise vessels from pilotage charges was not in violation of the treaty, which provided that "no higher or other duties or charges shall be imposed in any ports of the United States on British vessels than those payable in the same port by vessels of the United States." The point of this decision bearing upon the present question at issue, namely, the contention that British ships would not be discriminated against by the canal act because they are now barred by law from engaging in coastwise traffic, is as follows:

Nor is there merit in the contention that as the vessel in question was a British vessel, coming from a foreign port, the State laws concerning pilotage are in conflict with the treaty between Great Britain and the United States. Neither the exemption of coastwise steam vessels from pilotage resulting from the law of the United States nor any lawful exemption of coastwise vessels created by the State law concerns vessels in the foreign trade, and therefore any such exemptions do not operate to produce a discrimination against British vessels engaged in foreign trade and in favor of the vessels of the United States in such trade. In substance, the proposition but asserts that because by the law of the United States steam vessels in the coastwise trade have been exempt from pilotage regulations, therefore there is no power to subject vessels in foreign trade to pilotage regulations, even though such regulations apply without discrimination to all Vessels engaged in such foreign trade, whether domestic or foreign.

Tolls Just and Equitable Regardless of Exemption.

The point raised by Great Britain that by exempting coastwise ships we might be placing a greater burden upon that nation has been fully answered by Secretary Knox. If we had levied a toll sufficient to pay interest upon the investment as well as cover expenses of maintenance and operation, Great Britain might have had cause to complain, but in framing the act we had in mind a toll that would attract traffic and at the same time pay the expenses of maintenance and operation. The total cost of operation and maintenance, including sanitation and civil government,, as carefully estimated by Col. Goethals, will not exceed $4,000,000 annually.

The tonnage for 1914-15 when the canal is opened, is estimated at 10,500,000 tons. Of this but 1,160,000 net register tons are estimated as coastwise. Deducting this from the total leaves 9,340,000 tons, and with a toll of $1.20, which is in accordance with the President's proclamation, the annual income will be $11,208,000, over seven millions in excess of the cost of operation and maintenance. The coastwise exemption in no way, either directly or indirectly, will affect the charges to Great Britain. We have been most fair in our dealing with foreign nations as to charges.

Foreign Ships to Receive Chief Benefit of Waterway.

Foreign ships will derive the chief benefit from the canal because we have practically no American ships in the foreign trade. Ninety-one per cent of our foreign commerce is carried in foreign ships. Unless we grant some favors to our own ships in the coastwise trade our benefit will be small. I know it is contended that remission of the toll will be so insignificant as affecting a ton of freight as to be negigible. If so, then what great anxiety for repeal? If a ship with a 7,000 ton net register capacity passing between New York and San Francisco pays a toll of $8,400, some one must pay, and it will be hard to make American consumers and producers believe that they will not assume the burden. If a ship is half loaded the toll upon each ton of freight will double, because the ship pays in accordance with its total net register capacity.

Free Tolls a Benefit to Interior of Country.

In my opinion it will be the great interior of the United States that will profit chiefly because of free tolls, and particularly those sections drained by the mighty navigable rivers. Every burden placed upon traffic will impair the usefulness of the canal as a competitive route and narrow its benefits geographically. Every reduction forced by sea competition will be reflected upon rail rates throughout the entire country, as has always been the case. The output of American shipyards, according to the Department of Commerce, will be greater during the current fiscal year than for many years past. Not one of these ships I am informed is for the foreign trade, but are all to engage in the coastwise traffic. This will bring about the keenest competition, particularly in view of the fact that railroad owned or controlled ships are barred from the canal, and be a guaranty that to the American people will inure the chief benefit of free tolls. This great activity in shipbuilding should carry some significance.

An Impartial Arbitral Tribunal Possible.

While I am a Californian it does not follow, even in view of recent happenings in my native State, that I am particularly belligerent. A serious contention with Great Britain over this question is not probable. A mere suggestion of war is abhorrent. While many who hold similar views to mine upon the abstract question of our right to control the canal are strongly opposed to submitting this question-a question which I will admit largely concerns a domestic policy-to arbitration, I will frankly state I do not go so far. A fair arbitral tribunal should be possible for the determination of this question if it can not be settled by diplomacy. The Hague would not be such a body, in my opinion. The common sense of the American and English people should enable these English-speaking nations to agree upon impartial arbitrators. Before such a body our case is so strong we have nothing to fear.

Repeal of Law Inadvisable.

To repeal the toll provision at this time would be a humiliating acknowledgment that after expending $400,000,000 in the construction of an American canal, through what is practically American territory, this Nation was estopped forever from according a single advantage to an American ship. Other nations might remit tolls to their ships as they are doing at Suez and preparing to do at Panama, but our hands would be virtually tied. We would be compelled to pay a toll upon Government ships. According to some very high authorities, we would surrender rights that might imperil our very existence as a nation. Repeal under present circumstances, when our Government, through the Department of State, has taken a position and negoliations are under way, would be most inopportune. It would be an unwarranted, uncalled-for, and abject surrender of American rights, for-reaching in its effect, and disastrous to American interests.

[Senate Doc. No. 31, 63d Cong., 1st sess.]

FROM ADDRESS OF DR. HANNIS TAYLOR BEFORE THE AMERICAN SOCIETY ON INTERNATIONAL LAW, APRIL, 1913.

Rule of Treaty Construction Known as Rebus Sic Stantibus.

In speaking to the question, "What is the international obligation of the United States, if any, under the treaties, in view of the British contention?” Dr. Hannis Taylor said, in part:

At the end of a century of peace between Great Britain and the United States we have a pending problem, whose solution is to test the strength of the so-called moral alliance now existing between the two grand divisions of English-speaking peoples. That moral alliance made a tremendous advance after Lord Salisbury was wise enough to accept, in 1895, our supreme arbitrating power in the New World as asserted by President Cleveland and Mr. Olney in the Venezuelan boundary controversy. Great Britain simply enlarged that policy of conciliation when, in 1901, she practically abrogated the Clayton-Bulwer treaty with the avowed purpose of advancing the construction of a ship canal "by whatever route may be considered expedient." Great Britain really had nothing to give up in abrogating that treaty which, as a whole, rested upon the assumption that Europe was to have an interest in the canal because European capitalists were to build it. The fact that not one dollar of European money was ever invested in the enterprise deprived the basic idea of the transaction of its raison d'être. As Great Britain's claim of a protectorate over the Mosquito Indians in Nicaragua was in open defiance of the Monroe doctrine and without legal or moral foundation her case can draw no strength from that source.

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Is that statement justifiable? In a notable speech made in the Senate of the United States on January 21, 1913, the Hon. ELIHU ROOT said Great Britain had a protectorate over the Mosquito Coast, a great stretch of territory upon the eastern shore of Central America which included the River San Juan and the valley and harbor of San Juan de Nicaragua, or Greytown. All men's minds then were concentrated upon the Nicaragua Canal route, as they were until after the treaty of 1901 was made. Great Britain did surrender her rights to the Mosquito Coast so that the position of the United States and Great Britain became a position of absolute equality." Against that statement, in which Senator RooT has made a forceful summary of all that can possibly be said in favor of the British claim, I desire to set some extracts from a remarkably calm and lucid monograph entitled "Great Britain and the Panama Canal," published on April 10, 1913, at Heidelberg, by George C. Butte, who says "the writer has endeavored to consider all questions from an objective standpoint- sachlich,' as the Germans expressively say. This has been made the more possible because the writer, being in a 'neutral' land, has at least remained uninfluenced by local sentiment." This manifestly impartial writer, after describing the treaty of December 12, 1846, with Colombia (which, he declares, was a "defensive alliance directed against the only power that was at that time hovering about these coasts"), says:

Following the treaty of 1846 relating to the Panama route, agents of the United States were active also in negotiating with the Government of Nicaragua for the control of the Nicaraguan route (the Hise-Selva convention of June 21, 1849, and the Squier-Zepeda general treaty of September 3, 1849). To offset this diplomatic advantage Great Britain