Meanwhile, and before Secretary Seward's prophetic words were generally accepted as verity, there ensued the de Lesseps attempt to construct the canal over the Panama route. The final abandonment of that attempt in 1889 forced upon the country the conviction that Secretary Seward was right, and that if the canal was to be built it must be built by the United States, both because the United States was the only American power with the necessary resources and because the construction and control of the canal by any European power would conflict with our settled policy respecting European interference in American affairs. President Hayes, in a special message to Congress in March, 1880, justly interpreted American sentiment by declaring: "The policy of this country is a canal under American control; the United States can not consent to the surrender of this control to any European power or to any combination of European powers." He condensed the whole argument for the policy into the fewest words by adding that the canal would be virtually a part of the coast line of the United States." President Cleveland, in his message of December, 1885, was equally explicit as to the inadmissibility of any control of the canal by a European power.

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The final phase of American opinion and policy being that the United States must build and control the canal, and that any share in its construction or control by any European power was to be excluded, the first step to be taken obviously was the removal of the obstacle presented by the Clayton-Bulwer treaty. That object was meant and thought to be attained by the Hay-Pauncefote treaty of 1901. It clearly permits the United States to build the canal. Does it also debar Great Britain from any control of the canal except such as results from the express provision that the canal shall be open for use to Great Britain and all other nations on terms of entire equality? The answer is to be found in the terms of the treaty itself interpreted according to their true intent. They can be so interpreted only by reverting to the previous relations of the parties to the canal enterprise, to the new relations to the enterprise the parties meant to assume, and to the objects each had in view in making the treaty.

1. The Hay-Pauncefote treaty of November 18, 1901, it is to be noted, does not merely authorize the United States to build the canal through the territory of some other power, though such would have been a possible construction of the rejected Hay-Pauncefote treaty of February 5, 1901, but the treaty of November 18, 1901, adds a clause not found in the February treaty to the effect that no change of territorial sovereignty of the country or countries traversed by the canal shall affect the obligations of the parties to the treaty, thus assenting in advance to the acquisition by the United States of the territory needed for the canal Hence, since the United States did afterwards acquire the Canal Zoue, the terms of the November Hay-Pauncefote treaty apply to the case of an artificial waterway constructed by a State on its own territory.

2. It is to be further noted that by way of asserting the exclusive control. of the canal by the United States and eliminating any semblance of control by other powers the November Hay-Pauncefote treaty omits article 3 of the February treaty, by which other powers were to have notice of the treaty and be invited to adhere to it.

3. The facts being, then, that the United States has rightfully built the canal through territory of its own; that besides having become the owner of the canal route, the treaty expressly accords to the United States all the rights incident to construction; and that in undertaking the canal as a United States enterprise the United States did so with the manifest purpose of excluding all foreign control beyond that resulting from the stipulation for equality of terms to all users of the canal--what is there in the language of the treaty to justify the claim that the United States has made a further submission to foreign control by a stipulation which prevents it from allowing the use of the canal by its own vessels or those of its nationals on any terms it chooses to fix?

4. The one provision possible to be relied upon for that purpose is rule 1 of article 3, declaring 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 And the single point is, Are the words "all nations" inclusive or exclusive of the United States?

*

It seems difficult to successfully contend that the United States is included. (a) The treaty is a contract by which the proprietor of a canal fixes the terms upon which it grants the use of the canal to its customers.

(b) It was needed for that purpose only--it was not needed to fix the terms upon which the United States and its nationals-its cestui que trust--should

use the canal, because its use without tolls or otherwise, as the United States might choose, is a necessary incident of its ownership of the canal.

It can not reasonably be argued that, in fixing the terms for the use of its canal customers, the United States looked upon itself as one of the customers. (c) The words under construction are in substance the first of a set of six rules adopted by the United States as the basis of the neutralization of the canal.

But the other five certainly apply only to parties other than the United States, so that there is the strongest reason for holding that the first of them is to be given a like application.

(d) And if the British construction be correct, instead of liberating the United States from all foreign control of the canal and from all duties to foreign powers in respect to its use-except not to discriminate between themthe Hay-Pauncefote treaty compels the United States to reverse its established policy and to devise a plan for subsidizing its own vessels in order that they may have such free or other use of the canal as the United States may decide to be demanded by United States interests.

(e) The claim sometimes made that by building and owning the canal the United States engages in a public calling and thereby undertakes to serve all comers without discrimination and at a reasonable rate would seem to have no application to the present case. The principle affects only the users of the public work and only prescribes entire equality as between them-it in no way prevents the owner of the work, or those for whom it holds the work in trust, from using it in any way and to any extent that the legal or beneficial owner or owners may determine.

Besides, so far as international law on the subject can be regarded as settled, the rule is that "while a natural thoroughfare, although wholly within the dominion of a government, may be passed by commercial ships of right, yet the nation which constructs an artificial channel may annex such conditions to its use as it pleases." (3 Moore, 268; The Avon, 18 Int. Rev. Record, 165.)

(f) Great stress is laid upon the preamble of the treaty and its reference to the neutralization of the canal as defined in article 8 of the Clayton-Bulwer treaty, which, it is claimed, compels the United States to forget that it is the owner of the canal, and, as regards its own vessels, forces it to look upon itself as a canal customer bound to pay for its use the regular tolls. It is elaborately argued that neutralization of this sort is a policy to which the United States has been committed from the earliest times.

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But the argument ignores necessary distinctions and fails to note that neutralization" of a canal describes a policy applicable as between the canal owners and customers of the canal, but in no way touches or restricts the canal owner's rights or the canal owner's policy as to the use of the canal by itself. The several phases of American opinion, official and otherwise, respecting the construction and control of the Isthmian Canal have already been pointed out. While merely in the position of a probable user of the canal, the United States always and consistently claimed that the terms and conditions of use should be the same for all comers, but in no way denied or disputed the inherent rights of the canal owner. Those rights, as already shown, are expressly recognized by the Clayton-Bulwer treaty, which allows the owner to fix terms at will for the use of the canal by States, withholding the protection to the canal given by the United States and Great Britain, and even permits the owner to deny to such States the use of the canal altogether. Since accepting its inevitable rôle of the canal builder and owner, the United States has always and consistently stood on its rights as such, and, beyond agreeing to the neutralization of the canal as between customers, has repudiated the idea of any control of the canal except its own.

How clearly such is the case is shown by the briefest examination of the neutralization provided for in article 8 of the Clayton-Bulwer treaty, the principle of which is not to be impaired by the Hay-Pauncefote treaty. What sort of neutralization is it? First, the United States and Great Britain are to determine what are just and equitable charges for the use of the canal by their citizens or subjects; second, the canal shall be open on those same terms to citizens and subjects of other states; but, third, the citizens and subjects of other states shall have the benefit of those terms only if such other states grant the same protection to the canal as the United States and Great Britain engage to afford. Now, there is no element of this species of neutralization which the

Hay-Pauncefote treaty leaves unimpaired, since the United States alone fixes reasonable and equitable rules for the canal traffic; since the canal may be used by all nations on no other condition than that they observe those rules; and since-as shown by the elimination from this treaty of article 3 of the unratified Hay-Pauncefote treaty of February, 1901-adherence to the treaty by the other powers is not to be invited. If by construing article 8 in connection with other articles of the Clayton-Bulwer treaty any controlling principle of neutralization is to be deduced, it is the simple requirement that the same terms shall be made to all customers of the canal, a requirement restricting the rights of the canal owner to just that extent and no more and not disabling it from treating its own shipping in any way it sees fit. The like result follows from the Constantinople convention of 1888, which is declared to be the basis of the neutralization of the canal and of the rules laid down in article 3 for its navigation. By that convention identical rules are to apply to all vessels using the Suez Canal in time of war or time of peace without distinction of flags, but "the rights of Turkey as the territorial power are reserved," together with the sovereign rights of the Sultan and the rights and immunities of the Khedive.

It has been contended that the Senate of the United States understood the Hay-Pauncefote treaty to mean what Great Britain now claims it to mean, because of the Senate's failure to pass the Bard resolution in favor of American coastwise shipping. But the claim seems to be thoroughly disposed of by proof that the reason of the failure was the opinion of Senators that the resolution was superflous, that nothing in the treaty prohibited the United States, as the builder and owner of the canal, from exempting its coastwise shipping from tolls. Senator Bard himself has since so stated in a letter which was publicly read in the House of Representatives. He is emphatically corroborated on that point by other Senators.

It is also contended that American vessels must pay tolls, because otherwise the reasonable and equitable tolls provided for by the treaty can not be ascertained. The contention assumes, of course, the very thing at issue, namely, that in the contemplation of the treaty and by its true construction American vessels are bound to pay tolls. But no other answer seems to be required than that, for the purpose of computing reasonable tolls for the use of the canal, it is not necessary that American vessels should pay tolls, but only that the amount they would pay if they were not exempt should be calculated and used in the computation as if paid.

To sum up the conclusions resulting from the foregoing considerations it is submitted that-

1. The United States, as builder and owner of an artificial waterway within its own territory, is entitled to dictate the conditions of its use unless and only so far as it has contracted the right of way.

2. It has made no such contract, except with Great Britain and by the HayPauncefote treaty and by the clauses of that treaty which stipulate for the use of the canal by "all nations" on equal terms and for reasonable and equitable tolls.

3. As the term "all nations" comprehends not only states, but their nationals, the crucial question is: Are the words “ all nations" inclusive or exclusive of the United States and its nationals?

4. The principle is well settled that a state conveys away its rights of sovereignty or property only by terms which are clear and express and are not susceptible of any other reasonable construction. If the terms are vague and of doubtful import, the presumption is against the state's intention to part with or abridge its jurisdictional or property rights.

5. Hence, as the term "all nations" as used in the treaty may be taken to mean either all without exception or all except the United States, the latter meaning is to be accepted as the true one, because the least restrictive of the normal rights and powers of the United States.

6. But it is unnecessary to rely upon presumption. The treaty assumes the United States to be the owner of a canal to be built by it on its own territory, and must be taken to have had as its natural and legitimate aim the fixing of the terms upon which other nations might use it. Except as necessarily abridged by such terms, nothing in the treaty indicates any purpose to further abridge the rights of the United States as canal builder and owner.

7. In short, the treaty is an instrument by which the proprietor of a canal fixes and states the terms of use to its customers.

There is an utter absence of evidence that the United States regarded itself as one of its customers.

8. The neutralization proposed by the Clayton-Bulwer treaty resembles that proposed by the Hay-Pauncefote treaty only in the idea that the operating charges and rules for use of the canal shall be the same for all nations. It differs, of course, in the vital feature of conditioning such equality of terms upon protection being afforded to the canal.

9. When five out of six of the treaty rules for the use of the canal do not apply to the United States it is a reasonable conclusion that the sixth also was not meant so to apply.

10. The different phases of American public and official sentiment respecting the canal are noteworthy and not to be overlooked in construing the HayPauncefote treaty.

While the United States was expecting to be merely one of the users of the canal, it strenuously insisted upon equality of rules and charges for the use of the canal and did not concern itself about the rights of the canal owner.

When the rôle of builder and owner of the canal was forced upon it, it as strenuously insisted upon complete ownership and complete control, and complete elimination of all foreign participation or control.

Its purposes and views are completely defeated if the Hay-Pauncefote treaty is to be construed according to the British contention, and the United States has lost the ordinary and normal right of the canal owner to be exempt from the tolls and charges it makes to customers.

On the grounds and in view of the considerations above stated, the United States may contend-and it is believed can rightfully contend-that the HayPauncefote treaty of November, 1901, does not, as justly interpreted, prevent the United States from exempting its coastwise shipping from the payment of tolls for the use of the Panama Canal. But to the English contention that the controversy should be referred to arbitration there seems to be no sufficient answer. Both countries are firmly committed to arbitration as the best method for the settlement of international disputes. It may be safely assumed without argument that if the matter in difference is not otherwise disposed of it will be left to an arbitral tribunal. It does not follow that resort must be had or should be had to The Hague or The Hague Permanent Court of Arbitration. Our existing arbitration treaty with Great Britain, article 1, expressly excepts from reference to that court differences which "concern the interests of third parties"-and in the case of the present difference over the meaning of the HayPauncefote treaty the "third parties" with interests concerned, but without legal standing in respect of them, include almost all the countries of Europe. That the present difference should not go to The Hague Permanent Court is as clear as that the parties are not bound to send it there. International arbitration derives its chief value from confidence in the arbitral tribunal and in its ability and purpose to do justice—an award lacking that confidence is not only likely to work unfortunately as regards the particular case, but also to discredit the cause of arbitration generally-and the fact must be reckoned with that in this country there is a widespread conviction which has been publicly voiced in high official circles that all Europe is interested in the success of the British contention, and that submission of the controversy to arbitration under The Hague convention would be in the nature of a farce. American sentiment on this point is no doubt in part due to the nature of the subject matter in controversy. The claim of Great Britain is, in effect, a territorial claim. The United States possesses no more costly and perhaps no more valuable piece of territory than the Panama Canal, and Great Britain's claim is that the Hay-Pauncefote treaty not only encumbers that territory with equal rights of use by all other nations, but impresses upon it a servitude by which the United States loses the free use of its own canal for its own vessels. It is rights of that nature as to which both countries are especially sensitive and which both countries have been peculiarly careful to safeguard. Thus, for territorial claims the general arbitration treaty of 1897 (perfected as such on the part of Great Britain, but killed in the United States Senate) provided a tribunal of six arbitrators, three of whom should be chosen by each party, and whose award should be final only when made by not less than five arbitrators. The same general idea governed in the case of the Alaska boundary, though the final award might be by four out of the six. A more important difference, however, is that in the case of the Alaska boundary the arbitrators were to consist of "impartial jurists of repute," whereas by the 1897 treaty they were to be taken from the judges of the highest courts of the

respective countries. That such a tribunal should be made the interpreter of the Hay-Pauncefote treaty, if arbitration of its terms becomes necessary, and would be greatly preferable to a tribunal constituted as in the Alaska boundary controversy is unquestionable. It would be superior in dignity, in impartiality, and in general competency. It would be infinitely more likely to be regarded as beyond the reach of any but the most correct motives and influences, and the results would be infinitely more likely to command the cheerful acquiescence of both countries.

[From Senate Document No. 32, Sixty-third Congress, first session.]

PANAMA CANAL TOLLS.

The Issues Between the United States and Great Britain in Regard to Panama Canal Tolls, as Raised in the Recent Diplomatic Correspond

ence.

(Address by Chandler P. Anderson, formerly counselor for the Department of State, before the American Society of International Law at the morning session on Apr. 25, 1913.)

It has seemed desirable to the committee in charge of the program for this meeting of the society that, as a preliminary to the discussion of the Panama Canal tolls questions which are included in the program, a brief outline should be presented showing the exact issues between the two Governments in that controversy as raised in the diplomatic correspondence, and the arguments which have been advanced on both sides in support of their respective contentions. It is for this purpose, rather than for the purpose of weighing the value of these arguments, that this paper has been prepared.

Before taking up the issues which have been raised in the diplomatic correspondence, it is important to have in mind the following considerations:

Inasmuch as the United States and Great Britain are the only parties to the Hay-Pauncefote treaty of November 18, 1901, Great Britain alone of all nations is entitled to question the course adopted by the United States under that treaty, but even Great Britain is not entitled under the terms of the treaty to question the course adopted by the United States toward other nations with reference to the use of the canal so long as that course involves no discrimination against Great Britain. Great Britain has no authority under the treaty or otherwise to speak for other nations on the subject of the canal tolls, and is not concerned with the attitude of the United States toward other nations in dealing with this matter except as Great Britain's own interests are affected thereby. The attitude of the United States toward other nations will unquestionably be that best adapted for securing their observance of the rules adopted by the United States for the use of the canal, the purpose of which rules is to carry out the traditional policy of the United States for the neutralization of the canal. In this connection, however, it is of interest to note that there is nothing in the treaty which would prevent the United States from granting equal treatment to any other nation even if that nation does not observe the rules, the observance of which would insure equal treatment. Moreover, it is open for the United States to make with any other nation any arrangement which is mutually agreeable on the subject, and the only interest of Great Britain therein is that there shall be no discrimination against British interests.

It is clear from these considerations that any discussion between Great Britain and the United States on the subject of canal tolls must be limited to the question of discrimination against British vessels, and it will be found upon examining the diplomatic correspondence that this limitation has been recognized by Great Britain.

There has apparently been considerable confusion in the widespread discussion about canal tolls which has been going on for the past eight months in this country as to the exact contentions of both Governments and the real question at issue between them. A large part of this discussion has been directed to the question of whether the United States is not at liberty under the treaty to do what it pleases in regard to the payment of tolls by its own vessels in its cwn canal. As a matter of fact, this contention is not made by Great Britain, and there is nothing in the treaty which would justify any such contention. The United States is clearly entitled to exempt its own vessels, either of war or of commerce, whether engaged in the coastwise or foreign trade, from the pay