The Panama Canal Conflict between Great Britain and the United States of America | Page 8

Panama tolls in the same way that she has
exempted her own coasting trade vessels? If she would not--and who
doubts that she would not?--she would certainly discriminate in favour
of her own vessels against foreign vessels. Could not the foreign States
concerned make the same assertion that is now made by the United
States, viz. that, foreign vessels being excluded from their coasting
trade, the exemption of their own coasting trade vessels from tolls did
not comprise a discrimination against the vessels of other nations? The
coasting trade of Russia offers a practical example. By a Ukase of 1897
Russia enacted that trade between any of her ports is to be considered
coasting trade, and the trade between St Petersburg and Vladivostock is,
therefore, coasting trade from which foreign vessels are excluded. Will

the United States, since the Panama Canal Act exempts all American
coasting trade vessels from the Panama Canal tolls be ready to exempt
Russian coasting trade vessels likewise? Surely the refusal of such
exemption would be a discrimination against Russian in favour of
American coasting trade vessels!
(3) The unheard-of extension by the United States of the meaning of
the term coasting trade would allow an American vessel sailing from
New York to the Hawaiian Islands, but touching at the ports of Mexico
or of a South American State, after having passed the Panama Canal, to
be considered as engaged in the coasting trade of the United States.
Being exempt from paying the Canal tolls she could carry goods from
New York to the Mexican and South American ports concerned at
cheaper rates than foreign vessels plying between New York and these
Mexican and South American ports. There is, therefore, no doubt that
in such cases the exemption of American coasting trade vessels from
the tolls would involve a discrimination against foreign vessels in
favour of vessels of the United States.
(4) It has been asserted that the wording of Article III, No. 1, of the
Hay-Pauncefote Treaty only prohibits discrimination against some
particular nation, and does not prohibit a special favour to a particular
nation, and that, therefore, special favours to the coasting trade vessels
of the United States are not prohibited. But this assertion is unfounded,
although the bad drafting of Article III, No. 1, lends some slight
assistance to it. The fact that in this article the words "so that there shall
be no discrimination against any such nation" are preceded by the
words "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,"
proves absolutely that any favour to any particular nation is prohibited
because it must be considered to involve a discrimination against other
nations.

VI.
There is one more contention in the memorandum of President Taft in

favour of the assertion that the United States is empowered to exempt
all her vessels from the Panama Canal tolls. It is thefollowing:--Since
the rules of the Hay-Pauncefote Treaty do not provide, as a condition
for the privilege of using the Canal upon equal terms with other nations,
that other nations desiring to build up a particular trade which involves
the use of the Canal shall not either directly pay the tolls for their
vessels or refund to them the tolls levied upon them, the United States
could not be prevented from doing the same.
I have no doubt that this contention is correct, but paying the tolls
direct for vessels using the Canal or refunding to them the tolls levied
is not the same as exempting them from the payment of tolls. Since, as
I have shown above in V (1), p. 30, every vessel using the Canal shall,
according to Article III, No. 1, of the Hay-Pauncefote Treaty, bear a
proportionate part of the cost of construction, maintenance, and
administration of the Canal, the proportionate part of such cost to be
borne by foreign vessels would be higher in case the vessels of the
United States were exempt from the payment of tolls. For this reason
the exemption of American vessels would involve such a
discrimination against foreign vessels as is not admissible according to
Article III, No. 1.

VII.
With regard to the whole question of the interpretation of Article III of
the Hay-Pauncefote Treaty, the fact is of interest that prominent
members of the American Senate as well as a great part of the more
influential American Press, at the time the Panama Canal Act was
under the consideration of the Senate, emphatically asserted that any
special privileges to be granted to American vessels would violate this
Article. President Taft, his advisers, and the majority of the Senate
were of a different opinion, and for this reason the Panama Canal Act
has become