can commerce. If the present bill, unamended and unmodified, becomes a law in relation to the Panama Canal, the net result is that we have spent $400,000,000 for no purpose on earth except to bring a battleship once in 40 years from the Pacific Ocean to the Atlantic Ocean in time of war. [Applause.] Every nation on the globe, with its ships, can use the canal to the same advantage as ourselves, and, in addition, we have even excluded ourselves from the ordinary advantage that every nation claims for its purely coastwise commerce.

If our treaties will not bear the construction that the coastwise commerce, at least of the United States is entitled to preferential rates in the canal, then we are worse off than we would be if we had not built the canal, for we have put forever the carrying trade and monopoly of the commerce of South America into the hands of the English and the Germans.

The cost of the canal is $400,000,000. The interest on that at 3 per cent is $12,000,000. The majority report of the committee says it is necessary that somebody pay for this canal, and gives this as a reason for charging tolls to American ships. The report further says that by the highest estimate placed on the tonnage that will go through the canal by no possibility can it pay the interest on the cost of the investment; therefore it is only possible for us to get any return from our investment by encouraging American commerce from the east coast to the west coast of America. We are told that we are bound by the Hay-Pauncefote treaty not to discriminate in favor of American ships as to the coastwise trade of the west coast of South and Central America. We are told that we have no such control over the commerce going to the Orient as will place us in any advantageous position in comparison with the subsidized ships of England or of Germany, and that the sole dividend the American people can draw on that $400,000,000 investment is the possible encouragement of shipping going through the canal between the east and west coasts of America.

If there be not that dividend, then there is no dividend from the $400,000,000 invested except the possible saving of the expense, once in 40 years, in taking a battleship around Cape Horn. We all hope that the need of such expenses of taking battleships from one coast to the other will be on rare occasions and very few and far between.

Those who favor charging the tolls can sit down and figure out that the toll is absorbed somewhere and does not reach the consumer. I have seen gentlemen figure that out in regard to a protective tariff. Gentlemen have figured out that all kinds of charges placed on commerce are absorbed somewhere, but my belief is that ultimately the consumer in domestic commerce pays the entire cost of transportation added to the article produced, and that in foreign commerce, where we come in competition with foreign people, the American producer pays the entire cost of transportation, and that there is no absorption of it at all.

I am very glad that these gentlemen on the west coast States have maintained this fight for free tolls, at least for American commerce; but we ought to go much further than that. We ought to provide for preferential duties on all goods coming in American bottoms. We ought to encourage by every possible means a financial and mercantile connection with every Central and South American country, and then the American people-not the Pacific coast alone, but every American producer and every American business man-will begin to realize a dividend upon that $400,000.000, which will vastly increase the prosperity, wealth, and power of our beloved country. [Applause.]

FROM SPEECH OF HON. HENRY CABOT LODGE, OF MASSACHUSETTS, IN THE SENATE OF THE UNITED STATES JULY 20, 1912.

Mr. LODGE. I made that statement because the question as to our right to exempt American vessels from tolls would be a question arising under the interpretation of a treaty. A question involving the interpretation of a treaty would undoubtedly go to arbitration under our general arbitration treaties now existing. I confess at that moment I thought only of that proposition. Since then the debate has developed a point which I had not thought of, speaking as I then did offhand--the question of the Canal Zone being domestic territory to all

intents and purposes. I am not prepared to say now, without further consideration, that we should be bound to submit a purely domestic question of that kind. I have no question, as I argued the other day, that the repayment of tolls to reach the same result of exempting American vessels would not be arbitrable, because that is purely a domestic question. Whether our territorial jurisdiction in the Canal Zone would not bring it within the same class I am not at all sure. I am not prepared to say that it would not, and that the Senator is not correct in the view he is now taking.

Before I sit down I should like, if I may, to call attention to one thing in this connection. We are now so familiarized with Panama that we think of nothing else. But in the preamble of the treaty that was adopted, the actual HayPauncefote treaty, you will notice that it says:

Being desirous to facilitate the construction of a ship canal to connect the Atlantic and Pacific Oceans by whatever route may be considered expedient, and to that end to remove any objection which may arise.

The route that was in everybody's mind at that time was the Nicaragua route. There was no possible prospect of our securing there what we have secured in Panama. All we could have hoped to secure from Nicaragua and Costa Rica would have been the right to build a canal. Therefore the situation contemplated by that treaty was one quite different from that which has arisen. That which has arisen was also contemplated as possible.

Mr. CULBERSON. Does not that treaty contemplate and fix terms in contemplation of the United States themselves becoming the owner of the canal? Mr. LODGE. Certainly it does. As I said, frankly, I had not thought of that side of the question-our taking over the Canal Zone and making it to all intents and purposes domestic territory. The titular sovereignty remains in Panama, but the actual sovereignty is in the United States. I think that opens a question of very grave doubt, which certainly I am not prepared to answer finally, so far as I am concerned, at this moment. I think it opens a question of very grave doubt as to whether that is not as much a matter that is wholly within our own jurisdiction as the tolls on a canal built in our territory, like the Sault Ste. Marie or any of those canals.

Mr. POMERENE. With the permission of the Senator from South Carolina, may I ask the Senator from Massachusetts another question?

Mr. LODGE. Certainly.

Mr. POMERENE. The Senator has just explained his reasons for voting against the Bard amendment, taking the position that without it we would have the right to regulate and manage the canal. The Bard amendment was a substitute for article 3 of the pending treaty. The treaty, as finally ratified, contained in paragraph 1 of article 3 this language:

The United States, however, shall be at liberty to maintain such military police along the canal as may be necessary to protect it against lawlessness and disorder.

If, under the treaty, we had general authority to control it and regulate it, why were we so specific in stipulating that we should have the right to maintain the military police which might be necessary?

Mr. LODGE. Because at that time it was not known, of course, on what terms we should have the zone or have the canal. It might have been built through the territory of Panama by a private company to which we might advance our credit. We could not tell what the conditions would be there. It was necessary, therefore, to reserve that right.

That clause as it stood in the first treaty contained a prohibition against fortification; and we put in the treaty a Senate amendment giving us the right to defend the canal in any way we pleased. When the second treaty was made that amendment of the Senate was left out as well as the fortification clause, so that no restriction at all in regard to fortification was placed upon the United States.

As the matter stands now the military police provision is perhaps needless. But as it stood then, when we did not know under what precise terms we should build the canal, it was necessary to put it in.

July 17, 1912.

*

*

Mr. LODGE. Mr. President, I was on the committee which had charge of the Panama treaty to which the Senator refers, and gave some attention to it at the time. So I am not unfamiliar with its provisions. * If we are to admit that a foreign Government can say to us what arrangements we shall make with our own shipping, it seems to me there is absolutely no limit to the domestic questions which may be carried before The Hague court for decision, and no limit to the power foreign Governments may exercise over us.

FROM SPEECH OF HON. J. HARRY COVINGTON, OF MARYLAND, IN THE HOUSE OF REPRESENTATIVES MAY 21, 1912.

Mr. COVINGTON. Mr. Chairman, the amendment now offered to the bill to provide for free tolls to American vessels in the coastwise trade passing through the canal is aptly described by the gentleman from Wisconsin [Mr. COOPER] as in no sense a ship subsidy. The time has gone by, as he states, when the mere characterization of an act by an epithet should deter gentlemen on the floor of this House from meeting squarely any issue.

I was constrained to consider for some time the argument so forcefully advanced by the gentleman from Minnesota [Mr. STEVENS] that the treaty prevented discrimination in favor of American vessels in domestic trade in the matter of canal tolls. It impressed me, but I have come to the conclusion that the United States, when it negotiated with England the Hay-Paunċefote treaty, never, in fact, intended to surrender the absolute right to control its domestic commerce, no matter through what waterways it may or may not pass. [Applause.] We must recall that to-day American vessels in the coastwise trade, sailing from the Atlantic to the Pacific coast, that have passed around the Horn or through the Straits of Magellan and up the Pacific coast, are within the laws relating to coastwise trade already passed by Congress. These vessels travel 10,000 miles, largely through foreign waterways, and yet not for one moment do those vessels cease to be subject to all the regulations of the coastwise trade. When we recall the history of foundation of this Government, when we look at the prime constitutional ideas that established the American Nation, we must understand that free and unrestricted intercourse between the States was very much the basis of creating this Nation in its present form and with its constitutional limitations. There is no man in this Hall who knows the history of the foundation of the American Nation who does not know that the Annapolis Convention was conceived in the idea that the restrictions on trade placed by the various Colonies and States before the Revolution and under the Articles of Confederation were sapping the vitality of the country, and one of the earliest and strongest purposes of the founders of the Constitution was that there should be a government that could forever guarantee free and uninterrupted intercourse between the States. You may to-day start a cargo in New York through the great canals of the State of New York, land that cargo at Buffalo, transship it by steamers that are the equal of ocean steamships, and land it at Duluth. You may then send it by transshipment from Duluth to the Pacific coast, and there is not one dollar of embargo, not one tithe of toll, placed upon that cargo of freight. The American Nation has in the last 40 years expended $625,000,000 in river and harbor improvements in this country for the benefit of free trade between the States, and I say that it has rightfully made that expenditure in order that this Nation may be bound together from coast to coast and from the Canadian line down to the waters of the Rio Grande. But, Mr. Chairman, there is no more right for us to say that those expenditures should have been made in order that trade between the States may pass freely than there is now to say that we shall now expend money to construct a canal which shall make possible freer intercourse between our States on the Atlantic and the Pacific coasts. [Applause.]

The argument of the gentleman from South Dakota [Mr. MARTIN], when he calls attention to the cost of the Panama Canal, is not sound or well stated. It was developed, Mr. Chairman, in the hearings before the Committee on Interstate and Foreign Commerce, that the most tonnage that can pass through that canal annually in the next decade will be 1,000,000 tons of domestic commerce, and that, at a maximum rate of $1 per ton, will yield the amount of $1,000,000

annually in tolls. When we speak in sums of money on the floor of this House in connection with the management and maintenance and protection of this canal, $1,000,000 becomes an insignificant part of the total sum. When we take into account the interest upon the bonds issued for construction and then take the cost of operation and the cost of protection of the canal, the question of the levy of $1 a ton upon only 1,000,000 tons of traffic in the coastwise trade using that waterway becomes so relatively small that it ought not seriously to weigh with gentlemen in this House when they are determining whether or not they want to provide for our domestic commerce through that canal in strict accordance with the great American principle of free intercourse between the States; and I want to assert in conclusion that, believing it is Democratic doctrine to guarantee at all times the free intercourse between our States, and that it is sound policy that this Nation should not fetter but encourage the commerce between any sections of it, I support the amendment. [Applause.]

FROM SPEECH OF HON. CHARLES E. TOWNSEND, OF MICHIGAN, IN THE SENATE OF THE UNITED STATES JULY 18, 1912. Mr. TOWNSEND. Mr. President, the canal has been dug through American territory acquired from a foreign country for the very purposes to which it has been applied. Due to treaty relations with Great Britain, it was necessary for the United States to do more than acquire the right of way from the Republic of Panama. Said treaty relations were entered into in 1850. They dealt with the possibility of canal construction across the Isthmus by private enterprise and provided for united protection of any canal which might be built. The treaty prohibited fortification by either signatory power and denied to each country the right to secure any special benefits not enjoyed by the other. All attempts at canal construction having failed, it was proposed in 1900 that the United States should undertake the enterprise. It was to do the work, pay all the expense, both of construction and of operation and maintenance. It is possible that the United States could have dug and operated the canal under the Clayton-Bulwer treaty if it had been willing unselfishly to have assumed all responsibility, to pay all bills, and then give Great Britain and all other countries demanding the same privileges the right to use the waterway on the same terms as the United States used it; but under that treaty the United States could not fortify property which would cost it $400,000,000; it could not grant any special privileges to its own people. The provisions of the treaty of 1850 rendered canal construction by the United States unwise and impracticable; hence the necessity for abrogating that treaty and the making of a

This Government had two objects in view when it undertook to construct the Panama Canal. One was to benefit commerce, the other was to provide for the national defense, and no rational man supposes that it did not have in conteniplation an especial benefit to American commerce, an especial aid to American defense. Certain it is that Great Britain will never claim that we entered upon the construction of this great work on American territory uninspired by a purpose to improve our purse and strengthen our arm. We build the canal, we pay the cost, we protect it against injury, we preserve its neutrality, we secure its sanitation, and we have promised to treat all nations equally, fairly, and equitably. It is evident to me that the nation which undertakes to do these things is exempted from the term "all nations," and we are clearly entitled to charge such tolls upon the foreign tonnage using the canal as we may determine, subject only to the proviso that they are just and equitable and that no discriminations are permitted.

It is insisted by some distinguished lawyers that the Hay-Pauncefote treaty forbids us to impose tolls upon foreign canal shipping if we permit our coastwise boats to pass through the canal free, but it seems to me there can be no good reason, and I say this respectfully, for at least none has been shown to me, for such belief. Certain it is that no foreign boat can now engage in our coastwise trade-in our interstate commerce-nor could they do so when this treaty was made, and if we now permit our American boats engaged in our coastwise trade and with which no foreign boat is allowed under existing law

to compete to pass without charge through the canal are we discriminating against English or German or other foreign tonnage when we impose tolls upon it? How is the foreigner affected by this alleged discrimination?

Certain it is we are not changing his relations to the American, for we are in this particular case dealing with commerce with which the former has not now nor will he have after the completion of the canal anything to do. This is a purely local matter and unaffected, so far as the foreigner is concerned, by the canal. If all of our transcontinental commerce now carried by the railroads was transferred to water carriers through the canal without tolls, would any foreign boat be denied any advantage which it now enjoys or which it could enjoy through the canal under the existing law as to coastwise traffic, which law it is not proposed to change?

It is needless to discuss in detail the circumstances which in 1850 revived the old desire for a canal. It is sufficient that such a desire was strongly revived at that time. The year before the United States had made a contract with Nicaragua whereby the latter granted to an American company the right to construct a canal via the San Juan River and Lake Nicaragua between the two oceans. It should be borne in mind that Great Britain was not favorable to this contract. She claimed an interest in and protectorate over the Mosquito Coast, and insisted that she had rights in Costa Rica and Nicaragua. The United States did not admit these British claims, but nevertheless she had to consider them, and they were influential in causing the Clayton-Bulwer treaty of 1850. The possibility of a canal built by private capital through alleged British territory was being considered. Another company was contemplating a waterway via Panama. Under these conditions it was finally agreed that neither Great Britain nor the United States should take or hold or enjoy any benefits in any canal built by private enterprise which the other did not have. Understand that the then pending proposition of a Nicaragua canal was not for one to be built by Great Britain or by the United States, and all the provisions contained in the Clayton-Bulwer treaty prohibiting the fortification, not of a canal which either country owned but fortifications in the vicinity of the canal, must be taken into consideration in order to determine exactly what the relations were between the United States and England at the time of the making of the treaty of 1850.

Some Senators, who readily admit that we have the right under the treaty of 1901 to remit tolls on our coastwise shipping passing through the canal, do not believe that we have the right to pass free of tolls boats of American registry engaged in trade between the United States and a foreign country, and I can see better grounds for this belief than in the case of our domestic shipping. But if my heretofore expressed opinion that "all nations," as used in article 3 of the treaty, excludes the United States, which is the owning, constructing, operating Nation-the Nation which provides the rules, and hence is responsible for the canal and its operation-then certainly we have the right to retain a benefit which common sense and common justice would warrant.

But the same gentlemen who would deny us the right to pass our merchantmen through the canal free of tolls insist that we can pass our warships through without charge. They contend that to admit the former under the treaty we would have to interpolate words and meaning which the letter of the treaty does not contain, but the same is equally true as to vessels of war. Gentlemen will use reason in interpreting the provision as to war vessels, but refuse to apply it in the case of vessels of commerce, although these two classes of ships are found in the same paragraph of the treaty. joined by the conjunction "and." It is generally admitted that nearly every foreign nation grants a subsidy to its boat lines engaged in foreign commerce, and it has been reported that some of the foreign countries are already making legal provision for paying to ships passing through the canal whatever tolls may have been paid to the United States. Will anyone contend that our Government could not do the same things to American boats? If this could be done indirectly by repayment, will it be contended that it can not be done directly?

But a majority of the committee, having in mind the desirability of building up our merchant marine, and wishing to satisfy, as far as possible, the objec tions of Senators who do not read the treaty as some of us do, has inserted in the bill a provision that the American boat engaged in the foreign trade in order