Mr. RING. Yes; that is English territory. Senator BRISTOw. So you have no information as to any other countries except England? Mr. RING. No; but that is my belief. The CHAIRMAN. I will call on Mr. Smith next. Senator SIMMONS. Before Mr. Smith is examined, we have been having statements here about what the Merchants' Association of New York has done, and in addition to that there has been some discussion in the committee as to what position Mr. Ricard Olney, who was in Mr. Cleveland's Cabinet, and who is a great lawyer, occupies with reference to this treaty. I should like to read into the record a telegram to the President of the United States from Boston, Mass., dated April 4, 1914. It reads as follows: (Copy of telegram.) The PRESIDENT, White House, Washington, D. C.: BOSTON, MASS., April 14, 1914. The undersigned citizens of Massachusetts beg to congratulate you upon the stand taken in your last message relating to the repeal of the exemptions from tolls of the Panama Canal act, and assure you of our hearty support on the lines laid down in that message. We believe the course indicated to be essential to the best traditions of the American people and we trust that your support by the Senate in acting upon the bill will be most emphatic. WILLIAM A. GASTON. BENJAMIN Joy. FRANCIS PEABODY. EUGENE V. R. THAYER. EDGAR N. WRIGHTINGTON. STATEMENT OF MR. HOWARD CASTLE SMITH, DEALER IN COMMERCIAL PAPER, NEW YORK CITY. The CHAIRMAN. Mr. Smith, will you give your full name, residence, and occupation to the stenographer? Mr. SMITH. Howard Castle Smith, New York City, dealer in commercial paper. The CHAIRMAN. Will you kindly present such views as you have to offer to the committee on the pending legislation? Mr. SMITH. I should like to state first the method of government that prevails in the Chamber of Commerce for the city of New York. Questions such as this are presented to the chamber by a resolution, and are referred to a standing committee, or a special committee if necessary. The committee reports without power to bind the chamber in any manner, and the action is taken by the entire chamber, and a general vote, very much like a town meeting. There is no board of directors that expresses the view of the chamber. It is a general expression at a general meeting. I merely want to call attention to that fact and that action which the chamber has taken in support of the repeal of the coastwise exemption. I understand, sir, that all the arguments are very familiar to the Senators present, and I will not attempt to bring forward the same arguments in regard to the treaties that you are probably all familiar with, except that it appears to me as an individual that the Hay-Pauncefote treaty, or the Hay-Bunau-Varilla treaty, have both followed closely the convention of Constantinople, which declares very emphatically for equality without distinction of flag, and I am unable to see that a distinct exemption even to our coastwise shipping, which may be noncompetitive-I do not see how that bears with the language of the treaty of nondiscrimination. It would appear to me that there might be a discrimination against Canada. For instance, if we are shipping goods in coastwise vessels from New York to Seattle, for example, Canada might want to ship from New York to Vancouver. If our coastwise vessels were exempted, as they are, there would be a discrimination against the Canadian vessels. Senator SIMMONS. Would it not be rather a discrimination against traffic-the citizens? Mr. SMITH. I do not exactly understand that. Senator SIMMONS. The treaty states that vessels shall have entire equality of treatment so as not to discriminate against the citizen or subject as to traffic charges, and I am suggesting to you if that is not a discrimination against the traffic in which the citizen is interested? Mr. SMITH. Yes, sir. As far as the question of difference of charges and the effect on the consumer, as to whether this charge will materially affect the cost of the articles, the relation of this charge to the total freight carried must be borne in mind. It must be figured out to what extent the railroads can compete against the reduced values which will come in this freight. And as I have been informed that the opening of the canal means a saving of practically $4 a freight ton in transporting goods from New York to San Francisco by water. I have not the railroad figures in my possession, but I do not know whether the railroads are prepared to meet a reduction of that kind, and the consumers will certainly, even if our coastwise vessels pay the tolls-will have an opportunity to reap a considerable benefit if the rate is based exactly on the cost. But I understand the rate is generally based no what they can get. Senator TOWNSEND. That is the demand and supply? Mr. SMITH. The demand and the supply is quite as important an item in figuring the rate as the actual cost. That is the summary I wished to call your attention to, sir. Senator BRISTOW. You spoke of a ship going from New York to Vancouver and from New York to Seattle. The ship going from, we will say, Montreal to Seattle and from New York to Seattle, would be the same, would it not? Mr. SMITH. Yes, sir; as far as discrimination is concerned. Under the existing law one would pay a toll and the other would not. Senator BRISTOw. And at Seattle the Montreal ship has to pay port charges and the New York ship would not. Is that not a discrimination just the same? Mr. SMITH. If at Seattle Senator BRISTOW. Yes. Mr. SMITH. I do not consider that is a parallel case, sir. Senator BRISTOW. Why not? Mr. SMITH. Because I think port charges are not subject to this treaty. I am speaking of the law under this treaty. Senator BRISTOW. Were you present when I read the treaty of 1815? Mr. SMITH, I was, sir. Senator BRISTOW. Would you think that language was very plain? Is it as plain as this? Mr. SMITH. I do not understand that it had a similar bearing. Mr. SMITH. No, sir. Senator BRISTOw. That is all, as far as that is concerned. I should like to ask you another question now in regard to the treaty. Article 3-that is the one that is in discussion here: The United States adopts, as the basis of the neutralization of said ship canal, the following rules, substantially as embodied in the convention of Constantinople, signed the 28th of October, for the free navigation of the Suez Canal, that is to say This is what you refer to, is it? Mr. SMITH. Yes, sir. Senator BRISTOw. And, first: 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. You think "all nations" include the United States? Mr. SMITH. I do, sir. Senator BRISTOW. Then do you believe that the warships of the United States should pay tolls and be treated exactly as the warships of other nations? Mr. SMITH. Well, understand, it is paying money out of one pocket into the other, as far as the United States being both the owner of the canal and the owner of the ships. That is merely a bookkeeping entry, sir. Senator BRISTOw. Now, suppose that England, under this treaty of Constantinople, gives a subsidy to the ships that go through the Suez Canal in amount exactly equivalent to the tolls and pays it to them every time they pass the canal Mr. SMITH. Yes, sir. Senator BRISTOW. Do you think that would be in perfect harmony with the treaty? Mr. SMITH. I do, sir. Senator BRISTOW. Then, you would suggest that the United States, as to its war ships, do exactly the same thing, would you not? Mr. SMITH. I have made no suggestion, sir. Senator BRISTOW. The language is "the vessels of commerce and of war"? Mr. SMITH. Yes, sir. Senator BRISTOW. Now, the language applies just the same as to vessels of commerce, does it not? Mr. SMITH. Apparently. Senator BRISTOW. Suppose the United States owned vessels of commerce, as she does, the ships of the Panama Railroad Co. ? Senator PERKINS. Transports also. Senator BRISTOW. And transports. Suppose she puts those into commerce and begins to ply between South America, the west coast, and New York, we will say. Do you think the United States ought to pay tolls on those vessels? Mr. SMITH. I do not see any reason why the canal account should not be credited with the tolls on those vessels, sir. Senator BRISTOW. On those vessels? Mr. SMITH. Yes, sir. Senator BRISTOW. Then you would charge the tolls on the war vessels the same? Mr. SMITH. For the credit of the canal account, yes, sir. Mr. SMITH. Provided it is charged also to the same vessels of other nations. Senator BRISTOW. Then we will take section 2, which is the same article and one of the rules: The canal shall never be blockaded, nor shall any right of war be exercised nor any act of hostility be committed within it. The United States, however, shall be at liberty to maintain such military police along the canal as may be necessary to protect it against lawlessness and disorder. Do you believe that rule to necessarily mean that the United States shall never blockade the canal? Mr. SMITH. The language seems to be very clear, sir. Senator WALSH. That it shall not? Mr. SMITH. Yes, sir. Senator BRISTOW. Of course, you are familair with the fact that the most powerful fortifications in the world are being constructed now at both ends of the canal? Mr. SMITH. I know that fortifications are in course of construction now, sir. Senator BRISTOw. Then what are we constructing those fortifications for? Mr. SMITH. I am not in a position to answer, sir. Senator BRISTOw. That of course would be for the purpose of blockading the canal in the event that an enemy appeared there, would it not? Mr. SMITH. I do not know, sir. Senator BRISTOW. You do not think we have them there for ornaments, do you? Mr. SMITH. I do not think we are to have them there for ornaments, no, sir. Senator BRISTOW. Third: Vessels of war of a belligerent shall not revictual nor take any stores in the canal except so far as may be strictly necessary; and the transit of such vessels through the canal shall be effected with the least possible delay in accordance with the regulations in force, and with only such intermission as may result from the necessities of the service. Now, you understand by that that since we are to treat vessels of war and commerce the same, with entire equality, it makes no difference what the national necessity might be, we must not revictual our ships in the canal or exercise any of the functions of war; we can not take on supplies or put off supplies, and we would have to go through just as quickly as possible, just the same as the vessels of war of any other nation? Mr. SMITH. I am not clear on that subject myself. Senator BRISTOW. Or if we did do that then we must permit the vessels of all other nations to do the same thing? Mr. SMITH. I am not clear on that. Senator BRISTOW. Can any other construction be put upon the language if all nations are included? Mr. SMITH. It looks so, sir. Senator WALSH. You have not thought about it at all? Mr. SMITH. I have not considered it, sir. Senator OWEN. You do not appear as an expert in construing various other treaties of the United States in which the sovereignty of the United States is concerned, do you? Mr. SMITH. No, sir. Senator BRISTOW. We are dealing with this treaty, and since the gentleman comes as an expert Senator OWEN. He did not come as an expert on the question of the sovereignty of the United States, and the sovereignty of the United States was fixed by the Panama treaty two years after the treaty you are reading, in which the Government of the United States acquired sovereignty and ownership of this property. Senator BRISTOW. Yes; it has sovereignty of it so far as exercising one function if it does not interfere with preconceived notions of the transcontinental railroads, but if it comes into conflict with them that sovereignty is Senator WALSH. Is it your opinion that if we did not acquire the property we could not revictual in the canal? Senator OWEN. No; expressing my own opinion about it, I think when we assume the right of maintaining the neutrality and have guaranteed the provisions of this treaty, we laid down the six rules governing neutrality. Senator BRISTOW. That we did in the treaty? Senator OWEN. Yes; that we did in the treaty of 1901, the HayPauncefote treaty, so-called, that thereby we assumed certain obligations not only adopting these rules but observing them by enforcing them. We observe them in a different way, but we have the exclusive management and control of the canal even under the first treaty, but under the second treaty of 1903 we also acquired a conditional sovereignty, and we have the right in the protection of our sovereignty, and in the protection of our police rights of 1901, to both fortify and exercise power over it necessary to carry that out in good faith, under the powers we acquired by this treaty of 1901. Senator WALSH. I am simply curious to know what your view was provided we had not acquired the canal but had only built the canal, we still would have the right to revictual our ships and take on supplies and to take refuge there and stay there as long as we cared to stay? Senator OWEN. Yes. Senator WALSH. But foreign nations could not do that? Senator OWEN. No; we observe these rules in a different way. Senator WALSH. In other words that sections 2, 3, 4, 5, and 6 do not apply to the United States? Senator OWEN. They do apply to the United States in a different way. Senator BRISTOW. Section 4 is as follows: No belligerent shall embark or disembark troops, munitions of war, or warlike materials, in the canal except in case of accidental hindrance of the transit, and in such case the transit shall be resumed with all possible dispatch. 43756-14-20 |