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When, and if, complaint is made by Great Britain that the effect of the Act and the proclamation together will be to subject British vessels as a matter of fact to inequality of treatment, or to unjust and inequitable tolls in conflict with the terms of the Hay-Pauncefote Treaty, the question will then be raised as to whether the United States is bound by that treaty both to take into account and to collect tolls from American vessels, and also whether under the obligations of that treaty British vessels are entitled to equality of treatment in all respects with the vessels of the United States. Until these objections rest upon something more substantial than mere possibility, it is not believed that they should be submitted to arbitration. The existence of an arbitration treaty does not create a right of action; it merely provides a means of settlement to be resorted to only when other resources of diplomacy have failed. It is not now deemed necessary, therefore, to enter upon a discussion of the views entertained by Congress and by the President as to the meaning of the Hay-Pauncefote Treaty in relation to questions of fact which have not yet arisen, but may possibly arise in the future in connection with the administration of the Act under consideration.

It is recognized by this government that the situation developed by the present discussion may require an examination by Great Britain into the facts above set forth as to the basis upon which the tolls fixed by the President's proclamation have been computed, and also into the regulations and restrictions circumscribing the coastwise trade of the United States, as well as into other facts bearing upon the situation, with the view of determining whether or not, as a matter of fact, under present conditions there is any ground for claiming that the Act and proclamation actually subject British vessels to inequality of treatment, or to unjust and inequitable tolls.

If it should be found as a result of such an examination on the part of Great Britain that a difference of opinion exists between the two governments on any of the important questions of fact involved in this discussion, then a situation will have arisen, which, in the opinion of this government, could with advantage be dealt with by referring the controversy to a commission of inquiry for examination and report, in the manner provided for in the unratified arbitration. treaty of August 3, 1911, between the United States and Great Britain. The necessity for inquiring into questions of fact in their relation to controversies under diplomatic discussion was contemplated by

both parties in negotiating that treaty, which provides for the institution, as occasion arises, of a joint high commission of inquiry, to which, upon the request of either party, might be referred for impartial and conscientious investigation any controversy between them, the commission being authorized upon such reference "to examine into and report upon the particular questions or matters referred to it, for the purpose of facilitating the solution of disputes by elucidating the facts, and to define the issues presented by such questions, and also to include in its report such recommendations and conclusions as may be appropriate."

This proposal might be carried out, should occasion arise for adopting it, either under a special agreement, or under the unratified arbitration treaty above mentioned, if Great Britain is prepared to join in ratifying that treaty, which the United States is prepared to do.

You will take an early opportunity to read this despatch to Sir Edward Grey; and if he should so desire, you will leave a copy of it with him.

I am, Sir,

Your obedient servant,




WASHINGTON February 27, 1913.


His Majesty's Government are unable before the Administration leaves office to reply fully to the arguments contained in your despatch of the 17th ultimo to the United States Chargé d'Affaires at London regarding the difference of opinion that has arisen between our two Governments as to the interpretation of the Hay-Pauncefote Treaty, but they desire me in the meantime to offer the following observations with regard to the argument that no case has yet arisen calling for any submission to arbitration of the points in difference between His Majesty's Government and that of the United States on

1Pamphlet printed by the Department of State, Washington, D. C.

the interpretation of the Hay-Pauncefote Treaty, because no actual injury has as yet resulted to any British interest and all that has been done so far is to pass an Act of Congress under which action held by His Majesty's Government to be prejudicial to British interests might be taken.

From this view His Majesty's Government feel bound to express their dissent. They conceive that international law or usage does not support the doctrine that the passing of a statute in contravention of a treaty right affords no ground of complaint for the infraction of that right, and that the nation which holds that its treaty rights have been so infringed or brought into question by a denial that they exist, must, before protesting and seeking a means of determining the point at issue, wait until some further action violating those rights in a concrete instance has been taken, which in the present instance would, according to your argument, seem to mean, until tolls have been actually levied upon British vessels from which vessels owned by citizens of the United States have been exempted.

The terms of the Proclamation issued by the President fixing the Canal tolls, and the particular method which your note sets forth as having been adopted by him, in his discretion, on a given occasion for determining on what basis they should be fixed do not appear to His Majesty's Government to affect the general issue as to the meaning of the Hay-Pauncefote Treaty which they have raised. In their view the Act of Congress, when it declared that no tolls should be levied on ships engaged in the coasting trade of the United States and when, in further directing the President to fix those tolls within certain limits. it distinguished between vessels of the citizens of the United States and other vessels, was in itself and apart from any action which may be taken under it, inconsistent with the provisions of the Hay-Pauncefote Treaty for equality of treatment between the vessels of all nations. The exemption referred to appears to His Majesty's Government to conflict with the express words of Rule 1 of Article 3 of the Hay-Pauncefote Treaty, and the Act gave the President no power to modify or discontinue the exemption.

In their opinion the mere conferring by Congress of power to fix lower tolls on United States ships than on British ships amounts to a denial of the right of British shipping to equality of treatment, and is therefore inconsistent with the treaty irrespective of the particular way in which such power has been so far actually exercised.

In stating thus briefly their view of the compatibility of the Act of Congress with their Treaty rights His Majesty's Government hold that the difference which exists between the two Governments is clearly one which falls within the meaning of Article 1 of the Arbitration Treaty of 1908.

As respects the suggestion contained in the last paragraph but one of your note under reply His Majesty's Government conceive that Article I of the Treaty of 1908 so clearly meets the case that has now arisen that it is sufficient to put its provisions in force in whatever manner the two governments may find the most convenient. It is unnecessary to repeat that a reference to arbitration would be rendered superfluous if steps were taken by the United States Government to remove the objection entertained by His Majesty's Government to the Act.

His Majesty's Government have not desired me to argue in this Note that the view they take of the main issue-the proper interpretation of the Hay-Pauncefote Treaty-is the correct view, but only that a case for the determination of that issue has already arisen and now exists. They conceive that the interest of both countries requires that issue to be settled promptly before the opening of the Canal, and by means which will leave no ground for regret or complaint. The avoidance of possible friction has been one of the main objects of those methods of arbitration of which the United States has been for so long a foremost and consistent advocate. His Majesty's Government think it more in accordance with the General Arbitration Treaty that the settlement desired should precede rather than follow the doing of any acts, which could raise questions of actual damage suffered; and better also that when vessels begin to pass through the great waterway in whose construction all the world. has been interested there should be left subsisting no cause of difference which could prevent any other nation from joining without reserve in the satisfaction the people of the United States will feel at the completion of a work of such grandeur and utility.

I have the honour to be,

With the highest consideration,


Your most obedient,

humble servant,




Asser, T. M. C., Minister of State, The Hague, The Netherlands.
Holland, Thomas E., Oxford University, Oxford, England.
Lammasch, Heinrich, University of Vienna, Vienna, Austria.
Nys, Ernest, 39 Rue St. Jean, Brussels, Belgium.
Renault, Louis, 5 Rue de Lille, Paris, France.


Bacon, Robert, Westbury, L. I., N. Y.

Bacon, Robert L., 1 Park Ave., New York City.

Balch, Thomas Willing, 1412 Spruce St., Philadelphia, Pa.

Baldwin, Simeon E., Governor of Connecticut, Hartford, Conn.
Barbosa, Ruy, Rio de Janeiro, Brazil.

Casasus, Joaquin D., P. O. Box 73 B, Mexico City, Mexico.
Drago, Luis M., 761 Avenida de Mayo, Buenos Aires, Argentina.
Fuller, Paul, 71 Broadway, New York City.

Hawes, Gilbert Ray, 120 Broadway, New York City.

Jackson, John B., American Minister, Bucharest, Roumania.

Kodera, Kenkichi, 3 Nakayamatedori-Gochome, Kobe, Japan.

Liang-Cheng, Chentung, Chinese Legation, Kurfürstendamm 218, Berlin,


Pardo, Felipe, care of Peruvian Legation, Washington, D. C.

Portela, Epifanio, Argentine Legation, Rome, Italy.

Sammons, Thomas, American Consul General, Yokohama, Japan.

Scott, James Brown, Carnegie Endowment for International Peace, Washington, D. C.

Straus, Oscar S., 5 W. 76th St., New York City.

Warner, James Harold, Calle Espiritu Santo No. 2, Mexico, D. F., Mexico.

Wetmore, George P., 1609 K St., Washington, D. C.

Wilson, Burton W., La Mutua, Mexico City, D. F., Mexico.


Abbott, Lyman, The Outlook, 287 4th Ave., New York City.

Adams, Charles Francis, 84 State St., Boston, Mass.

Adams, Charles Hall, 222 State St., Boston, Mass.

Adams, Edward B., Social Law Library, Boston, Mass.

Adams, George E., 530 Belden Ave., Chicago, Ill.

Adams, Joseph, Union Stock Yards, Chicago, Ill.

Alfaro, Ricardo J., Plazuela de Alfaro, 198, Panama, Panama.
Allen, Lafon, Lincoln Bank Bldg., Louisville, Ky.

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