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

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 American Municipal Law.
It is likewise of interest to state the fact that the majority of the Senate as constituted thirteen years ago took a different view from the majority of the present Senate, a fact which becomes apparent from an incident in the Senate in December 1900, during the deliberations on the Hay-Pauncefote Treaty of February 5, 1900, the unratified precursor of the Hay-Pauncefote Treaty of November 18, 1901. Senator Bard moved an amendment, namely, that the United