the annual amount necessary to defray the cost of the military and naval defense, or $9,700,000 according to the estimates of Colonel Goethals. This would necessitate an income of $28,950,000 annually from the canal. To approximate such a revenue, it would be necessary to charge a rate of two dollars per net ton, such as the Suez Canal did on gross tonnage when it was first opened. If this were done, the Panama Canal would be on a paying basis by 1925, provided little or none of the traffic was diverted elsewhere by reason of the high rate, even if the coastwise trade was exempted from the payment of tolls. Not only could we pay for the military and naval defenses of the Canal Zone, but it would be possible before many years to maintain a series of naval stations all the way from New York to San Francisco, including those proposed to be erected in the West Indies, as well. For by 1945 the revenues from the canal tolls would, if the two-dollar rate was maintained, reach $97,000,000. Thus foreign commerce could be made to pay, in a way, a goodly proportion of our military and naval expenses; and, if the United States was opening the canal as a purely selfish, business venture, there might be some reason for such action. However, there would seem to be no solid or defensible grounds for such an extreme policy; and our country will probably gain more in the long run, through a liberal than through a penurious policy. No one can with reason complain of a charge of $1.20 with which the United States proposes to start the traffic through the canal, particularly as the Suez Canal toll rate has in this year been reduced to the same figure after 43 years of operation.

In his answer to Sir Edward Grey's contention that the exemption of the coastwise vessels would lay an undue burden upon the foreign. vessels, Mr. Knox showed by figures taken from Mr. Emory Johnson's estimates that this loss would fall entirely upon the United States, and that it would be nearly twenty years before the British ships would be paying the actual cost of their own transportation through the canal. This is probably correct, if the rate of $1.20 per net ton is maintained. If, however, as demonstrated by the table given above, the exemption of the coastwise ships postpones the lowering of the rate for some years, a good ground for the complaints of foreign states might arise. Such a contingency is not at this time sufficiently great or serious to warrant the use of diplo

matic pressure. It would be better to wait until the facts fully justify the contention.

As a purely financial measure, the best authorities do not concede that the exemption of the coastwise vessels from tolls will materially increase our merchant marine, lower the price of commodities or reduce the coast-to-coast rates. "Free tolls will do little to build American ships-the testimony is practically unanimous for that," said Mr. Stevens in the House. And the reduction in time by water between the coasts will do more to reduce rates than free tolls. For, when the difference between the rail and water time becomes one of days instead of weeks, the railways will have to come to terms with the ship companies; and the steamship lines will base their rates not primarily upon the cost of the service, but upon what the traffic will bear. So the exemption of the United States coastwise shipping is, in its final analysis, a question of national economy based upon the broad subject of our own national commerce and merchant marine, and not a question to be seriously raised in a discussion of international commercial traffic or international comity. It should be taken up and solved in a serious and exhaustive study of the whole problem of ship subsidies and the scientific development of our merchant marine and our national commerce and trade. Nothing is to be gained by tinkering, or half measures. A great problem is at stake. It must be met squarely and seriously, and not confused with other developments or enterprises.

The CHAIRMAN. Is there any discussion upon this subject? If not, we will pass to the next subject, which is the question, "Has the United States the right to exclude from the use of the canal any class of foreign vessels, such as railway-owned vessels ?"

As this seems likely to be a contentious question, we have two speakers, one taking the affirmative of the question, and the other taking the negative.

I am sorry to say that Professor Garner, who was to have been the first speaker this evening, telegraphs that he missed his train at Cincinnati, but that he was going to continue his journey at a later hour and will deliver his paper if he arrives in time.

I shall therefore call upon Mr. John Foster Dulles, of the New York Bar, to treat this subject.

It is a very great pleasure to introduce Mr. Dulles to you. He is a

recent graduate of Princeton University. He studied law in Washington, although he has forsaken the capital city to practice law in New York, and is well known to most of you here. I believe, leaving out an occasional appearance in court, this is Mr. Dulles' first formal appearance upon the lecture platform.

HAS THE UNITED STATES THE RIGHT TO EXCLUDE FROM THE USE OF THE CANAL ANY CLASS OF FOREIGN VESSELS, SUCH AS RAILWAY-OWNED VESSELS?

ADDRESS OF MR. JOHN FOSTER DULLES, of the New York Bar.

If the United States is entitled to exercise sole and exclusive sov- . ereignty over the Panama Canal, there can be no question that she may arbitrarily exclude from the canal whomsoever she will. Sovereignty necessarily implies such a right of exclusion, and, though a sovereign state frequently, by treaty, stipulates not to exercise this right in respect of the subjects of a foreign state, the right no less exists though held in abeyance.

On the other hand, if the United States exercises less than sovereign rights over the Panama Canal, the right to exclude may be qualfied, or even non-existent.

It therefore becomes necessary to consider the international status of the canal and to determine whether or not the United States is entitled to exercise all the rights of sovereignty thereover; and, if not, the extent to which any qualification of sovereignty may correspondingly qualify the right to exclude.

I shall not here consider whether or not the United States has, by any treaty, agreed not to exercise the right of exclusion as regards the nationals of any one nation, but rather the more fundamental question of whether the United States has acquired or can acquire such a proprietary interest in the Panama Canal as implies this right of arbitrary exclusion.

I ask you, in the first place, to consider the international status of the Panama Canal as affected by its physical nature and geographic location.

The very obvious fact that the canal is a waterway is of prime importance from the international view point. It is settled beyond dispute that sovereign rights can be acquired over land much more readily than over water, and it is the exception rather than the rule when

one nation is entitled to exercise the rights of exclusive sovereignty over navigable water.

This differentiation of land and water as spheres for the exercise of sovereignty is practical rather than theoretical. It is not that navigable water may not be susceptible of subjection to the exclusive domination of one nation, but that the practical consequences of permitting this are abhorrent to the civilized world. Freedom of commerce and communication is vital to the prosperity of all nations; navigable water is the ideal medium for international communication, in that it covers a great portion of the globe, is not exhausted by use, and, generally speaking, is of no intrinsic value. In view of such considerations as these, there has been a well-defined tendency to circumscribe the right of one nation to acquire over navigable water an exclusive sovereignty from which it could derive no positive advantage but only such negative benefit as might indirectly result from crippling the commerce of other nations by depriving them of free access to such water. Admit the general principle that navigable water may be subject to exclusive sovereignty and it will follow that every nation would ultimately become an "inland" nation with all the economic paralyzation that such a condition involves. Vital, living needs have prevailed, and today we see established the general principle that navigable waters are in times of peace international waters and not subject to exclusive national control. This rule is subject to the qualification that where a body of navigable water is reasonably useful for commerce with but one or a limited number of states, such state or states may exercise exclusive sovereignty thereover. This for the reason that, as no nation need be traded with against its will, any nation can always control the utility of water admittedly useful for commerce with it alone. With this reservation, I believe it can be stated generally that all navigable water is, in times of peace, open to the innocent commerce of the world.

Whether or not this proposition, so broadly stated, finds acceptance, the narrower proposition that navigable water connecting two open bodies of water must itself be open, is well established. The United States is thoroughly committed to this proposition which it has enunciated and urged on numerous occasions, as, for instance, in negotiation respecting the Danish Sound and the Straits of Magellan.

The Panama Canal falls clearly under this rule. It is-par excellence-a waterway connecting two open seas. If in the past the

economic needs and practical necessities of the world's commerce have demanded and obtained the internationalization of the Rhine, the Danube, Danish Sound and Straits of Magellan, in spite of the opposition of states claiming exclusive sovereignty thereover, surely a strong case must be made to withdraw from the operation of the rule there applied, the Panama Canal, which far transcends them all in its importance to the world's commerce.

It cannot be questioned that were the Panama Canal a natural waterway, it would be a waterway open on equal terms to the world's innocent commerce. Is, then, the fact that the Panama Canal is an artificial waterway sufficient to give it a different international status from that which it would assume were it a natural waterway?

It is urged with great force that a canal constructed by American genius, with American money, traversing soil acquired by the United States must, ipso facto, be an exclusively national waterway. This argument leads me to consider for a moment a sphere of common law where a similar argument is raised with almost monotonous frequency. It is a well-settled principle of common law that where an individual devotes his property, time, money and enterprise to the construction of a work in which the public has a vital interest, the public acquires an interest therein and the work is said to be affected with a public use.

We have long been familiar with the application of this doctrine to railways, canals, hotels, etc., and modern economic developments have led to its extension to enterprises of a less obviously public nature, as stock-yards, dry docks, stock exchanges, grain elevators.

It has been insisted with the greatest vigor that this doctrine does violence to property rights, that works constructed by private genius, upon private property with private funds, must belong exclusively to the individual proprietor. But the courts have said: private property does become clothed with a public interest when used in a manner to make it of public consequence and affect the community at large. What matters it that an enterprise represents private investment and is directed by private genius? The proprietors have seen fit to devote themselves and their money to the construction of a work in which the public is vitally interested. They need not have done so. But having done so, arguments based on private property rights will not be allowed to prevail against the practical necessity of according the public certain rights therein.