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soil and, therefore, the Hay-Pauncefote treaty is wholly inapplicable.
I shall not at this time attempt to trace the history of the numerous efforts made from time to time during the past century to construct an interoceanic canal. It will be remembered that in 1903 the Republic of Panama ceded to the United States in perpetuity a tract of territory 10 miles wide extending for 40 miles from the Atlantic to the Pacific Ocean. The Supreme Court of the United States, in Wilson against Shaw (204 U. S., 33), decided that the sovereignty of the United States over this tract, known as the Canal Zone, is the same as over any other part of the United States, and that was the specific concession made by the British Government in its second note of protest. It is part of our country. It is territory of the United States and constitutes part of our coast line. Unaided and alone, the United States built the canal through this zone and thus connected the two oceans. In the prosecution of this vast undertaking the United States has expended over $400,000,000. Its construction by American enterprise on American soil at the expense of the American people is the greatest engineering achievement of this or any other age. Unselfishly we offer its advantages to all the nations of the world. It is estimated that it will cost the United States not less than $5,000,000 annually for the maintenance and operation of the canal, and upward of $10,000,000 annually for its military defense, which, together with $12,000,000 annual interest upon the original investment, will make an annual charge of $27,000,000.
In our legislation two years ago Congress provided that the tolls should not exceed $1.25 per ton, with lower rates for ships in ballast, and it has been estimated that for some years 10,000,000 tons will annually pass through the canal at an average of $1 a ton, or $10,000,000 annually. The canal will not, therefore, be selfsustaining, and the United States, the owner of the canal, will for a long period be required to suffer an annual loss of upward of $17,000,000, which will be borne alone by the taxpayers of this country. In limiting the toll rate at $1.25 per ton, and in fixing the specific rate at $1.20 under the presidential proclamation, pursuant to the statute, Congress was required to meet the competition of the Suez Canal, now controlled by Great Britain, the toll rates for that canal at the present time being $1.20 per ton. It was not possible, therefore, to fix a toll rate on a basis of securing a reasonable return upon the cost of construction and maintenance.
In the legislation referred to Congress did not discriminate between American and foreign vessels engaged in over-seas trade. American vessels engaged in foreign trade are required to pay the same tolls that are paid by foreign vessels. Congress, however, did provide that American coastwise vessels shall be exempt from the payment of tolls.
The right to make this exemption has been challenged by the British Government, and the claim has been made that the exemption constitutes a violation of the Hay-Pauncefote treaty. There will be a subsequent reference to the details of this treaty. For the present it is sufficient to state that it is urged on behalf of Great Britain that under its terms vessels of all nations, including American "vessels of commerce and of war," are to be treated alike with respect to toll charges.
The canal referred to in the first Hay-Pauncefote treaty was the same canal described in the ClaytonBulwer treaty, namely, a canal to be constructed at Nicaragua.
Senators, this is important in reference to the plea which we have heard so frequently that Great Britain gave up some valuable right. She never had a right in Panama until it was conferred upon her by the second Hay-Pauncefote treaty. The restraint exercised by Great Britain was enlarged in the second Hay-Pauncefote treaty by extending the treaty to any canal "by whatever route may be considered expedient.” This modification was made so as to embrace Panama, and the concession cannot be defended as a wise one, inasmuch as the right of the United States to construct a canal at that point without the consent of Great Britain was not affected by the Clayton-Bulwer treaty. This diplomatic blunder can be explained only upon the theory that our negotiators did not know that Panama was not part of Central America in 1850, although the records of the State Department would have disclosed that fact, and the same information might have been ascertained in any encyclopedia.
The new treaty contains a further provision found in article 4 that the general principle of neutralization or the obligation of the contracting parties shall not be affected by any change of territorial sovereignty of the country traversed by the canal. The meaning of this provision is that the rights of the parties shall not be affected by a change in the sovereignty which may occur after the canal is constructed. It can have no application to a condition such as prevails here where the canal was constructed on territory of the United States, even though acquired after the execution of the treaty. If sovereignty had been acquired by the United States after the construction of the canal then this provision would be applicable.
Subdivision 1 of article 3 is the provision of the treaty which is the basis of the controversy and under which the supporters of the British contention claim that the expression "all nations observing these rules" embraces the United States, overlooking the obvious distinction between the nation that makes, establishes and promulgates the rule and the nations that observe the rule.
In other words, it is said that Great Britain and other nations have the same rights to the use of the canal that the United States has. If that be so, what compensation does the United States derive from the investment of $400,000,000 and for the $17,000,000 annual deficit in the operation of the canal? The United States must have some rights not enjoyed by other nations, because it is declared that the United States shall have all the rights incident to the construction as well as the exclusive right of regulation and management. What can these rights be if they are not rights of ownership and control, subject only to the permission of other nations to make use of the canal on such terms as the United States may impose?
What discrimination is there among the nations so using the canal by permission of the United States if all are treated alike? If you accept the British view, what are the rights we possess incident to the construction ?
What is our status? Do we own the canal, or are we only an international caretaker, with no special privilege except to foot the bills and to maintain a sufficient military force to defend the canal and preserve its neutrality? Did we engage in this great undertaking primarily for the United States, and incidentally for the rest of the world, or primarily for the world, without any particular advantage to the United States ? Is our only reward the glory of the achievement? In all the history of recorded time did any nation ever act 80 improvidently as we have acted, according to the
views of the British advocates? If we entered into a contract such as is claimed by Great Britain, where were the men whose duty it was to protect the rights of the American people?
There are six rules, and, as I have said, if one applies to the United States all apply. Again the language: “So that there shall be no discrimination against any nation;" if we accept the British interpretation and hold the United States to be one of the "all nations,” then we have the absurd situation of prohibiting our country from making charges that will dis*criminate against herself.
Note the words, “the nations observing these rules shall use the canal on terms of entire equality." How can an owner be on terms of entire equality with the mere grantee of a privilege? Where a foreign country fails to observe the rules, its ship will not be permitted to use the canal. Will it be claimed that the United States will be denied the use of the canal if it fails to observe the rules which it establishes ?
Who would prohibit the United States from using the canal if it neglected to observe any of these rules? Who could prohibit the ships of the United States from using the canal? Was it ever contemplated by the negotiators that such a contingency could arise? The other nations, however, for whom the United States makes these rules, do stand on an entire equality, and it is to them that the term "all nations” refers. *
I now invite your attention to my third proposition that treaties do not apply to changed conditions, and that therefore the Panama Canal is not burdened by the provisions of the Hay-Pauncefote treaty. It will be observed that the Hay-Pauncefote treaty was adopted in 1901, that it was the expectation of both nations that the canal would be built on foreign soil, and that for the