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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 Roor 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 fensive alliance directed against the only power that was at that time hovering about these coasts"), says:

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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

was seizing territory on one pretext or another along the Mosquito coast and in Belize and threatening to take the port of San Juan de Nicaragua (Greytown) in order to get the strategic control over the proposed interoceanic highway by way of Lake Nicaragua. The control of this canal route, important as it was thought to be to the welfare and safety of the United States, was apparently to be won only at the cost of another vital national policy namely, that the Western Hemisphere should not be made a field of future colonization by European powers.

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Will anyone attempt to deny that that is a perfectly fair statement of the conditions under which Great Britain, in open defiance of the Monroe doctrine, 'seizing territory on one pretext or another along the Mosquito coast and in Belize and threatening to take the port of San Juan de Nicaragua (Greytown) in order to get the strategic control over the proposed interoceanic highway by way of Lake Nicaragua ? Whatever moral equity vested in Great Britain

under the terms of the Clayton-Bulwer treaty rested upon that basis alone. After reaching that conclusion, Mr. Butte says:

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Just how much of the Clayton-Bulwer treaty, if any, was in force at the time it was suspended in 1901, and what fragments of it, if any, had any practical application to the radically changed conditions, is one of the riddles of diplomacy which some modern Edipus may solve. We shall in a subsequent paragraph hazard an opinion as to the meaning of the reference in the preamble of the Hay-Pauncefote treaty of Article VIII of the Clayton-Bulwer treaty. * * No more fundamental error is committed generally by those defending the British view on the present controversy than appears in the following statement of the Government's protest. "The HayPauncefote treaty does not stand alone. It was the corollary of the Clayton-Bulwer treaty of 1850." The Hay-Pauncefote treaty contains five articles, and the very first article unconditionally abrogates the treaty of 1850.

"ARTICLE I. The high contracting parties agree that the present treaty shall supersede the aforementioned convention of the 19th of April, 1850.

It would be difficult to say any more clearly that the parties intended to give that maimed and decrepit instrument a decent burial. * * It is unreasonable to advance claims which magnify the relation and enlarge the rights of Great Britain beyond those she would have had if the canal had been constructed in 1850. In 1901 the British Government itself declared that it had no intention then of giving "to Article VIII of the Clayton-Bulwer treaty a wider application than it originally possessed." * * The Clayton-Balwer treaty, it should be emphasized, was never at any time in effect as to any canal route but the Nicaragua route. Before 1901 the United States was entirely free to build an isthmian canal without consulting Great Britain, by any one of the other 18 different routes that had been surveyed and declared feasible. By virtue of her treaty of 1846 with New Granada, she was directly and solely charged with the prosecution of the Panama route. Great Britain was well aware of these facts. They gave her concern. * We believe the meaning of the Hay-Pauncefote treaty can be found within the four corners of the treaty itself. "To go elsewhere in search of conjectures is to endeavor to elude it." From the standpoint of abstract justice, the pretension of Great Britain that she should be put on the same footing as respects the use and enjoyment of the Panama Canal as the United States seems presumptuous. The restriction which she invokes against the sovereign right of the United States to enact legislation affecting its internal affairs must appear in express language in the Hay-Pauncefote treaty. No mere implication or argumentative deduction will suffice. And if we adopt the rule Lord Clarendon applied against the United States in construing the Clayton-Bulwer treaty in the case of the Mosquito Indians, to the effect that "the true construction of a treaty must be deduced from the liberal meaning of the words employed in the framing," it will be hard indeed for Great Britain to prove her claims.

* *

And yet far be it from me to belittle Great Britain's good and wise motives in doing all she could to advance the building of an interoceanic canal. The interests of civilization demanded it; the interests of the moral alliance between Great Britain and the United States demanded it; and she was sincerely anxious to advance both. Let us never forget that through the canal at Panama the fleets of Great Britain and the United States are to unite as a great police force for the preservation of the peace of the world. It is not a good time to quarrel just at the moment when we are about to join hands in such an undertaking. And here it may be well to remember that we have already made a bad beginning. Through a restless and unnecessary impatience we committed an unparalleled act of international violence in taking away the Canal Zone from Colombia. Despite the treaty of 1846, wherein we solemnly guaranteed her sovereignty over the Isthmus, we ended that sovereignty through a transaction which has, I fear, shocked the sensibilities of the world. Does it not, therefore, behoove us to be calm, discreet, fair-minded in dealing with the second great question of international law and diplomacy which the building of the canal has presented for solution?

Everyone who has had any diplomatic experience knows that a great deal depends upon the form in which a question of international law or diplomacy is stated. In one form it will arouse every possible antagonism; in another it will draw all minds toward conciliation. Nothing could be more unfortunate, more untactful, than the form in which the question of the canal tolls is now pending. A large body of our citizens, if not a majority of them, believe that the regulation of tolls in a canal built with $400,000,000 of our money (without

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a single foreign contribution) through our own territory is purely a domestic question with which foreign nations have nothing to do whatever. Upon that theory the Congress of the United States has acted already; it has disposed of the question upon that basis. When under those circumstances Downing Street demands the repeal of that act of Congress, no matter how respectful the terms of the demand may be, a large body of our people, probably a majority, are up in arms against what they denounce as an insolent attempt at foreign dictation. Under such conditions I feel sure that the act in question can not be repealed. If it could be, through the driving force of the party to which I belong, I believe it would wreck its future. The need of the hour is to suspend the menacing and probably hopeless contest in Congress for the repeal of the act to which Great Britain objects until diplomacy can find a path leading to compromise and conciliation.

As treaties stånd upon a basis of their own, entirely apart from private contracts, the law of nations has always recognized the fact that all such agreements are necessarily made subject to the general understanding that they shall cease to be obligatory so soon as the conditions upon which they were executed are essentially altered. The principle that all treaties are concluded upon the tacit condition, rebus sic stantibus, clearly recognized by Grotius (Chap. XVI, s. XXV et seq.), and Vattel (Book 2, c. 13, s. 200), has been denied by no modern authority. Hall, the greatest of the recent English publicists, whose book is the vade mecum of the British foreign office, declares in his work on International Law (s. 116) that neither party to a treaty " can make its binding effect dependent at will upon conditions other than those contemplated at the moment when the contract was entered into; and, on the other hand, a contract ceases to be binding so soon as anything which formed an implied condition of its obligatory force at the time of its conclusion is essentially altered." Mr. Oppenheim, now professor of international law in the University of Cambridge, has, in his great work, Volume I, page 550, section 539, said:

It is an almost universally recognized fact that vital changes of circumstances may be of such a kind as to justify a party in notifying an unnotifiable treaty. The vast majority of publicists, as well as all the Governments of the members of the family of nations, agree that all treaties are concluded under the tacit condition rebus sic stantibus. In my own work on International Public Law (sec. 394) I have stated the matter in this way:

So unstable are the conditions of international existence, and so difficult is it to enforce a contract between States after the state of facts upon which it was founded has substantially changed, that all such agreements are necessarily made subject to the general understanding that they shall cease to be obligatory so soon as the conditions upon which they were executed are essentially altered.

Having thus restated the rule, it was not strange, perhaps, that I should have been the first to apply it to the construction of the Hay-Pauncefote treaty of 1901, which contemplated the building of an interoceanic canal by the United States in foreign territory. It seems to me that a radical breach of the tacit condition, rebus sic stantibus, occurred when in November, 1903, the Canal Zone became, by purchase, the domestic territory of the United States. It is hard to deny that by that event the tacit condition, rebus sic stantibus, was broken; and yet the subject is a delicate one-it should be approached with great calmness. great caution. The existence of the rule, rebus sic stantibus, as applied to the construction of treaties, has never been denied, so far as I know, and it is not at all likely that Great Britain will deny its existence in the present instance.

On the other hand, controversy is almost sure to arise as to its application to the facts of a particular case whenever it is invoked. As it will always be possible to invent some specious reason for invoking the rule in any case in which a treaty is at all ancient, the burden should always be cast upon the party who sets it up to demonstrate clearly that the state of facts upon which the treaty was founded have been essentially altered."

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All of the contemporaneous evidence demonstrates beyond any doubt whatever that no one contemplated the possibility of the United States acquiring the territory through which the canal was to be built when on November 18, 1901, the Hay-Pauncefote treaty was concluded. Just two years thereafter, on November 18, 1903, M. Bunau-Varilla, the accredited representative of Panama, signed with Secretary Hay the so-called treaty of Panama, which was duly ratified. By its terms it granted to the United States in perpetuity a zone of land and land under water for the construction, operation, maintenance, pro

tection, and sanitation of the canal, of the width of 10 miles, beginning in the Caribbean Sea and extending to and across the Isthmus of Panama into the Pacific Ocean, excepting the cities of Colon and Panama. The treaty grants to the United States "all the rights, power, and authority within the zone mentioned" which the United States would possess and exercise if it were the sovereign of the territory within which the said lands and waters are located, "to the entire exclusion of the Republic of Panama of any such sovereign rights, power, and authority." Great Britain's recognition of the present situation has been thus expressed: But "now that the United States has become the practical sovereign of the canal His Majesty's Government do not question its title to exercise belligerent rights for its protection." In order to protect the condition of things fixed by the Hay-Pauncefote treaty, from disturbance from any revolution that might occur in any of the countries which the canal was to traverse, it was provided in the treaty "that no change of territorial sovereignty or of the international relations of the country or countries traversed by the beforementioned canal shall affect the general principle of neutralization or the obligation of the high contracting parties to the present treaty."

No serious person will ever attempt so to distort these plain and explicit terms as to make it appear that they were intended to cover the then entirely unforeseen acquisition of the territory now known as the Canal Zone, by the United States. In the first place the explicit terms used exclude such an idea. The terms of the treaty fix the fact that the “change of territorial sovereignty' referred to was such change as might take place in "the country or countries traversed by the before-mentioned canal." As the country or countries to be traversed were thousands of miles from the limits of the United States, there can be no possible doubt, no possible ambiguity, as to the meaning intended. The clause was naturally inserted to guard the treaty against impairment by the not infrequent revolutionary changes that periodically occur in LatinAmerica. It had no possible reference to the acquisition of sovereignty by the United States, a contingency of which no one then dreamed.

Mr. Butte opens the monograph heretofore quoted with this statement:

He deceives himself grievously who believes the United States made the stupendous sacrifice of human energy and public money necessary to build the Panama Canal, "the greatest liberty man has ever taken with nature," with any other purpose in view than the national advantage of the United States-commercial and, above all, political advantage.

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Through our own unaided efforts, and the expenditure of $400,000,000 of our own money, we are about to realize the dream of centuries-a dream in which Goethe indulged as early as 1827, wishing at the same time that his life might be prolonged 50 years so that he could see it realized. What candid mind is willing to declare that the conditions under which we are now completing this great enterprise, at our own expense, through territory as completely our own as the District of Columbia, are not essentially" different from the conditions existing in 1901 when we undertook to build the canal through foreign territory? Who can believe that if we were concluding the Hay-Pauncefote treaty to-day we would make any stipulation with a foreign power, not contributing one cent to the enterprise, to the effect that we shall not exercise the sovereign right to legislate as to our own property and our own citizens within our own territory without the consent of that foreign power, especially when we remember that the Clayton-Bulwer treaty was never in effect as to any route but the Nicaragua route?

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The conclusion is irresistible that by the radical changes wrought in conditions existing at the time the Hay-Pauncefote treaty was made, through the subsequent purchase of the Canal Zone by the United States, the treaty as a whole became voidable. Or, to use the words of Prof. Oppenheim, the vital change wrought by the subsequent purchase of the Canal Zone rendered an otherwise unnotifiable treaty" notifiable. Under the universally accepted rule of rebus sic stantibus, so luminously expounded by the greatest of the recent English publicists, we have the right and Great Britain has the right to call a diplomatic conference in order to make such modifications in the terms of this voidable, or "notifiable," treaty as either party may desire. We may admit, if we see fit, for the sake of the argument at least, that the expression "all nations" in article 3 of the treaty was originally intended to include the United States. If it did, we now have a perfect right, under the rule of rebus sic stantibus to demand a modification as the treaty, as a whole, has become voidable, or "notifiable," because the conditions upon which it was executed

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