The Panama Canal Conflict between Great Britain and the United States of America | Page 3

lower tolls than those levied upon foreign
vessels, and that she may remit to her own vessels any tolls which may
have been levied upon them for the use of the Canal. The President
denies that Article III, No. 1, of the Hay-Pauncefote Treaty can be
invoked against such power of the United States, and he contends that
this Article III was adopted by the United States for a specific purpose,
namely, as a basis of the neutralisation of the Canal, and for no other
purpose. This article, the President says, is a declaration of policy by
the United States that the Canal shall be neutral; that the attitude of the
Government of the United States is that all nations will be treated alike
and no discrimination is to be made against any one of them observing
the five conditions enumerated in Article III, Nos. 2-6. The right to the
use of the Canal and to equality of treatment in the use depends upon
the observance of the conditions by the nations to whom the United
States has extended that privilege. The privileges of all nations to
which the use of the Canal has been granted subject to the observance
of the conditions for its use, are to be equal to the privileges granted to
any one of them which observes those conditions. In other words--so
the President continues--the privilege to use the Canal is a conditional
most-favoured-nation treatment, the measure of which, in the absence
of an express stipulation to that effect, is not what the United States
gives to her own subjects, but the treatment to which she submits other
nations.
From these arguments of the President it becomes apparent that the
United States interprets Article III, No. 1, of the Hay-Pauncefote Treaty
as stipulating no discrimination against foreign nations, but as leaving
it open to her to grant any privilege she likes to her own vessels.
According to this interpretation, the rules for the use of the Canal are
merely a basis of the neutrality which the United States was willing
should be characteristic of the Canal, and are not intended to limit or
hamper the United States in the exercise of her sovereign power in

dealing with her own commerce or in using her own Canal in whatever
manner she sees fit. The President specifically claims the right of the
United States eventually to allow her own vessels to use the Canal
without the payment of any tolls whatever, for the reason that foreign
States could not be prevented from refunding to their vessels tolls
levied upon them for the use of the Canal. If foreign States, but not the
United States, had a right to do this--so the President argues--the
irresistible conclusion would be that the United States, although she
owns, controls, and has paid for the construction of the Canal, is
restricted by the Hay-Pauncefote Treaty from aiding her own
commerce in a way open to all other nations. Since the rules of the
Hay-Pauncefote Treaty did not provide, as a condition for the privilege
of the use of the Canal upon equal terms with other nations, that other
nations desiring to build up a particular trade, involving the use of the
Canal, should neither directly agree to pay the tolls nor refund to their
vessels tolls levied, it is evident that the Hay-Pauncefote Treaty does
not affect the right of the United States to refund tolls to her vessels,
unless it is claimed that rules ensuring all nations against discrimination
would authorise the United States to require that no foreign nation
should grant to its shipping larger subsidies or more liberal
inducements to use the Canal than were granted by any other nation.

II.
It cannot be denied that at the first glance the arguments of the United
States appear to be somewhat convincing. On further consideration,
however, one is struck by the fact that the whole argumentation starts
from, and is based upon, an absolutely wrong presupposition, namely,
that the United States is not in any way restricted by the
Hay-Pauncefote Treaty with regard to the Panama Canal, but has
granted to foreign nations the use of the Canal under a conditional
most-favoured-nation clause.
This presupposition in no way agrees with the historical facts. When
the conclusion of the Hay-Pauncefote Treaty was under consideration,
in 1901, the United States had not made the Canal, indeed did not own

the territory through which the Canal has now been made; nor was the
United States at that time absolutely unfettered with regard to the
projected Canal, for she was bound by the stipulations of the
Clayton-Bulwer Treaty of 1850. Under this treaty she was bound by
more onerous conditions with regard to a future Panama Canal than she
is now under the Hay-Pauncefote Treaty. Since