that cry. Subsidy is an unpopular word, and to label anything a subsidy is to discredit it.

But free tolls is not in any sense a subsidy. If to make free a Government improvement for the use of American citizens is a subsidy, then all public improvements are subsidies. Hundreds of millions have been spent on all kinds of public improvements all over the land. Harbors have been improved, rivers dredged and canalized, canals have been constructed-all have been made free to American citizens because paid for by their money, and yet these have not been regarded as subsidies. It is impossible to equalize the benefits of any public improvement. In the view of gentlemen here if a discrimination is shown a subsidy is established. On that line of reasoning a discrimination is made against the people of Indiana whenever a post office is built in Ohio. If that is logical, a discrimination is made against California whenever an Atlantic port is improved.

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The Soo Canal connects Lakes Superior and Huron. Through it passes an almost incredible commerce. Thirty-six million tons passed through it last year. Why not tax that commerce? That canal was built by the Government. It is maintained at large expense by the Government. But no one proposes tolls there. Is the exemption from tolls there a subsidy? And if not there, why at Panama?

But the question is not one of subsidy. To impose tolls on American ships at Panama is to tax commerce.

It is particularly noticeable that in this debate all appeals to American interests are deprecated and condemned. It has been said as applicable to those who think that American interests are entitled to consideration by an American Congress that "patriotism is the last refuge of a scoundrel." It has been said that we never hear of the American flag in this House but there is some sinister motive behind it. Singular sentiments these coming from Representatives of the American people! And remarkable certainly must be conditions that would warrant condemning as demagogic all arguments for the protection and preservation of American interests!

It may be thought by some gentlemen that the only persons professing patriotism in America to-day are scoundrels, and that no expression of love for the American flag is now made unless to cover graft. But there are some of us who refuse to accept such a belief. There are some of us who even confess to a belief that there is still some patriotism in the land; that there are still to be found among our people those who love the flag and what it represents. There are some of us who believe that the day has not yet come when it is necessary to apologize for an honest endeavor to protect and preserve the interests of the American people. [Applause.]

FROM ADDRESS OF HON. JOSEPH R. KNOWLAND, OF CALIFORNIA, BEFORE THE LAKE MOHONK CONFERENCE ON INTERNATIONAL ARBITRATION, LAKE MOHONK, N. Y., MAY 16, 1913.

[Published in Congressional Record Tuesday, May 20, 1913.]

The Rights of the United States at Panama-Significance of the Objections of Great Britain to the Panama Canal Act.

Mr. J. R. KNOWLAND. No patriotic American would countenance the violation by this country of a sacred treaty obligation. On the other hand, would not the citizen be lacking in patriotism who would hastily and without most careful and painstaking investigation blindly accept an interested foreign nation's interpretation of a disputed treaty, a construction that would not only deprive this country for all time of most important commercial advantages, but would be a surrender of invaluable rights affecting the very safety of the United States?

Treaty Obligations Fully Considered by Congress.

It has been charged that when the Panama Canal bill dealing with the subject of tolls was before Congress that the question of our treaty obligations was not given the proper consideration. The truth is, and I challenge a denial, because the record bears me out, that no question has been before Congress in years in which greater interest was manifested and upon which more exhaustive debate was had.

The bill was reported to the House from the Committee on Interstate and Foreign Commerce on March 16, 1912. I presented on March 20 the minority report which upheld the right of the United States Government to pass free of toll its own ships as well as American coastwise ships. Copies of both the majority and minority reports were placed in the hands of every Member of the House accompanied with a letter calling particular attention to the toll section. It was not until May 21, two months later, that the toll provision was voted upon. While the bill was actually considered in the House but six days, the time allotted was longer than usually accorded measures other than great appropriation bills. The chief debate was upon the toll provision which naturally provoked a discussion of the concomitant question of our treaty obligations. The amendment providing free tolls for our American coastwise ships was adopted on roll call by a majority of 19. This vote carries with it a particular significance when we consider that the majority of the committee in charge of the bill opposed free tolls, which made the fight more difficult owing to the inclination of Members to follow committee recommendations as a matter of regularity. Let it also be borne in mind that this vote was taken before either the national platforms of the Democratic or Progressive Parties had declared in favor of the policy of free tolls for American coastwise ships.

The Bill in the Senate.

The bill then went to the Senate, and on May 24 was referred to the Committee on Interoceanic Canals. It was not reported from that committee until June 12, and did not finally pass the Senate until August 9. In the meantime this Government was officially notified of Great Britain's protest. The vote in the Senate on the provision favoring free tolls for American coastwise ships was 44 in favor to 11 against, a decisive majority of 33. The debate in the Senate was even more exhaustive than that which took place in the House, and both in the Senate and House there was not a Member who voted for the exemption who was not firmly convinced, after careful investigation, that the enactment of the bill into law would not be in contravention of any treaty obligation. I know from personal knowledge that in the House many voted against the exemption because opposed to the policy, but still held strongly to the belief that our treaty obligations did not prevent us from favoring our own ships if we saw fit to do so.

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Provisions of the Panama Canal Act to Which Great Britain Objects. The Panama Canal act of August 24, 1912, which provides for the opening, maintenance, protection, and operation" of this American waterway is objected to by Great Britain

First. Because of certain language contained in section 5, which provides in fixing tolls that the rate may be less for "vessels of the United States and its citizens than the estimated proportionate cost of the actual maintenance and operation of the canal." The significance of this language is that it reserves to the United States the right to pass through this canal, constructed through what is practically American territory, and which will have cost our Government over $400,000,000 before completed, its own ships of war and other Government vessels free of toil. It also leaves open for the future determination of the President of the United States the question of favoring American ships utilizing the canal in the foreign trade. The President, however, in his Panama Canal proclamation of November 13, 1912, fixed the same rate of toll for American ships in the foreign trade as for foreign ships.

Second. Great Britain objects to the language of this same section by which we fulfill our treaty obligations with the Republic of Panama in accordance with article 19 of that convention, permitting the Government of the Republic of Panama "to transport over the canal its vessels and its munitions of war in such vessels at all times without the payment of tolls."

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."

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 threat-' ened 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 coastwise 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 chairman 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.