insure, in accordance with the first of these rules, that "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, so that there shall be no discrimination against any such nation, or its citizens or subjects, in respect of the conditions or charges of traffic, or otherwise," and also that "such conditions and charges of traffic shall be just and equitable."

This is the interpretation which the Government of the United States has accepted as expressing the true intent and meaning of this treaty, the effect of which under this interpretation has been aptly described as insuring to other nations "conditional favored-nation treatment, the measure of which, in the absence of express stipulations to that effect, is not what the United States gives to its own nationals, but the treatment which it gives to other nations."

Great Britain, on the other hand, although apparently admitting that none of the other rules adopted by the United States as the basis of neutralization apply to the United States, nevertheless contends that the first of these rules does apply to the United States as well as to other nations, and that by adopting it the United States has imposed upon itself an obligation to treat its own vessels and the vessels of any nation observing these rules on terms of entire equality, "so that there shall be no discrimination against any such nation, or its subjects or citizens," etc. In contending for this interpretation, however, Great Britain has recognized the necessity for determining what constitutes discrimination and particularly whether or not inequality of treatment in favor of vessels of war of the United States and of vessels of commerce engaged in the coasting trade of the United States would constitute discrimination against British vessels under this clause.

So far as other nations are concerned the British position is understood to be that this clause "embodies a promise on the part of the United States that the ships of all nations which observe the rules will be admitted to similar privileges" as enjoyed by the ships of the United States and Great Britain.

In support of the British contention that the words "all nations observing these rules" as used in Rule 1 include the United States, and therefore that British vessels using the canal are entitled to equal treatment with those of the United States, the only argument advanced by Great Britain is that the general principle of neutralization

established by Article VIII of the Clayton-Bulwer Treaty, as the basis of which principle the United States adopted these rules, is in effect nothing more than a general principle of equality of treatment.

Before taking up this argument it is necessary to examine briefly the provisions of Article VIII of the Clayton-Bulwer Treaty, and trace their connection with the present treaty. Article VIII of the Clayton-Bulwer Treaty recites:

The Governments of the United States and Great Britain having not only desired, in entering into this convention, to accomplish a particular object, but also to establish a general principle, they hereby agree to extend their protection, by treaty stipulations, to any other practicable communications, whether by canal or railway, across the isthmus which connects North and South America.

The first seven articles of that treaty related exclusively to interoceanic communications across Central America, and it was distinctly understood by Great Britain in making that treaty that the Isthmus of Panama was not regarded as a part of Central America. This article of the treaty, therefore, is the only part of the treaty which had any relation to a canal across the Isthmus of Panama. The significance of this is that this article expressed the only rights Great Britain ever had in relation to the Panama Canal route, so that Great Britain has actually sacrificed nothing by abrogating the rest of the Clayton-Bulwer Treaty. In other words, if the Clayton-Bulwer Treaty were in force today Article VIII is the only part of it which would apply to the Panama Canal, and in so far as the effect of Article VIII has been changed by the Hay-Pauncefote Treaty, it will be found that these changes have been made at Great Britain's suggestion.

The article then continues

In granting, however, their joint protection to any such canals or railways as are by this article specified, it is always understood by the United States and Great Britain that the parties constructing or owning the same shall impose no other charges or conditions of traffic thereupon than the aforesaid Governments shall approve of as just and equitable; and that the same canals or railways, being open to the citizens and subjects of the United States and Great Britain on equal terms, shall also be open on like terms to the citizens and subjects of every other State which is willing to grant thereto such protection as the United States and Great Britain engage to afford.

It is evident from this clause of the article that the agreement to extend protection was a conditional one, and the condition was that charges imposed on traffic should be approved by both governments as just and equitable, and that the canal should be open to their citizens and subjects upon equal terms.

It is clear that the right to equal treatment went hand in hand with the obligation to extend protection, but the general principle established by this article related primarily to the protection of the canal, the object being to secure its neutralization, and as an inducement to granting protection it was provided that equality of treatment should go with it. Clearly neutralization as used there meant exemption from interference, and equality of treatment was only incidental as an inducement to non-interference.

That both governments understood that neutralization rather than equality of treatment was the general principle adopted by Article VIII of the Clayton-Bulwer Treaty is evident from the fact that the preamble of the Hay-Pauncefote Treaty of 1901, as well as the preamble of the earlier treaty of 1900, characterized that general principle as "the general principle of neutralization established in Article VIII of that convention." The connection established by Article VIII of that convention between the obligation to protect the canal and the right to equal treatment is also recognized and carried into the first Hay-Pauncefote Treaty of 1900 by the second article of that treaty, which provides:

The high contracting parties, desiring to preserve and maintain the "general principle" of neutralization established in Article VIII of the Clayton-Bulwer convention, adopt as the basis of such neutralization the following rules, etc.

The first of these rules is as follows:

The canal shall be free and open, in time of war as in time of peace, to the vessels of commerce and of war of all nations on terms of entire equality, so that there shall be no discrimination against any nation or its citizens or subjects in respect of the conditions or charges of traffic, or otherwise.

It will be observed that in this treaty Great Britain joined with the United States in adopting rules which were to furnish the basis of neutralization, so that in that case both governments were equally com

mitted to the neutralization of the canal, and the rules recognized that in consequence of such joint obligation the vessels of both governments were entitled to equal treatment. As part of this policy of coupling equal treatment with the obligation of protection, that treaty also provided in Article III that

The high contracting parties will, immediately upon the exchange of the ratifications of this convention, bring it to the notice of the other powers and invite them to adhere to it.

That treaty, it will be remembered, was rejected by the United States Senate, and was subsequently amended materially before it was agreed upon in its present form. Certain of these amendments are of the utmost significance in connection with the questions under consideration, and show conclusively that the policy which had previously been adopted with respect to the protection of the canal was completely reversed by the later treaty. The article of the earlier treaty requiring the two parties to bring it to the notice of other Powers and to invite them to adhere to it was entirely omitted from the new treaty. This provision had been objected to by the Senate, and was omitted for that reason, and in consequence of its omission Great Britain insisted upon being relieved from the obligation of protecting the canal, which it had assumed in joining with the United States in adopting the rules of neutralization. The reason for relieving Great Britain of this obligation is found in a statement made by Lord Lansdowne in an instruction by him to Lord Pauncefote in the course of the negotiations wherein he says, in effect, that the amendment striking out the provision for the adherence of other Powers leaves the neutrality of the canal dependent upon the guarantee of the two contracting Powers, which would place Great Britain at a marked disadvantage in comparison with other Powers which would not be subjected to the self-denying ordinances which Great Britain is desired to accept. Accordingly the treaty was further amended so that the United States alone, instead of the United States and Great Britain jointly, adopted the rules of neutralization, and that this change was intended to relieve Great Britain of any obligation to protect the canal is evident from the position taken by the British Government in the recent diplomatic correspondence, in the course of which it is stated

It certainly was not the intention of His Majesty's Government that any responsibility for the protection of the canal should attach to them in the future.

In this connection it will be remembered that the Hay-Pauncefote Treaty was entered into pursuant to Article VIII of the ClaytonBulwer Treaty, whereby, in order to establish a general principle, they agreed "to extend their protection by treaty stipulations to any other practicable communications" which included the Panama Canal as now constructed. The obligation to protect, as has already been shown, was conditional upon equality of treatment, and Great Britain's repudiation of responsibility for the protection of the canal would seem to be wholly inconsistent with the stipulations of Article VIII above-mentioned, unless it was understood that Great Britain was not to receive equal treatment with the United States under the new treaty.

The changes by which the United States alone adopted the rules, and thereby undertook the whole responsibility of upholding them and maintaining the neutralization of the canal, made some changes in the rules themselves necessary. It appears from the diplomatic negotiations which resulted in the second Hay-Pauncefote Treaty that in order to make Rule 1 conform to the situation resulting from the amendments above noted, Great Britain had suggested that in Rule 1, after the words "all nations" there should be inserted the words "which shall agree to observe these rules," so that Rule 1 would then read:

The canal shall be free and open to the vessels of commerce and of war of all nations which shall agree to observe these rules.

Clearly the United States, as the nation which adopted the rules, was the nation with which the agreement to observe them would necessarily be made, and therefore it is evident that in proposing this amendment Great Britain understood that as a result of the proposed amendments the United States, as the nation adopting these rules, would stand apart from all other nations, and that "all nations" referred to in these rules did not include the United States. The exact form of amendment thus proposed was not agreed upon, but instead of the words "all nations which shall agree to observe these