published on the subject, that to allow any commercial vessels to pass through or use the canal free would be very unfair, not so much to foreign nations, but to all the rest of the people who have by taxes or otherwise contributed to construct the canal. We, who have no ships or vessels get no direct benefit from a remission of tolls. But these owners of vessels would, under the allowance of freedom from payment of tolls.

No. I think every owner of a vessel of commerce should pay his share for the use of the canal and for its support.

It should be recollected, also, that the coastwise vessels would only be of light tonnage, say 500 to 1,000 tons, while the large commercial vessels and all foreign vessels might be of heavy tonnage, say 10,000 to 30,000 tons, gross or net. And so the tolls for the former would be comparatively small and would not probably crowd or oppress them, while the tolls for the latter would be comparatively enormous.

But if were finally thought necessary to favor these coastwise craft they might be allowed to pay a somewhat reduced toll, say three-fourths or one-half the regular rates. At $1.20 per net ton they would then pay 90 cents or 60 cents. But I think they should in any case pay something for their use of the canal and not be mere deadheads, consuming the time and labor of those in charge of operations at the canal, but rendering no return for the same.

Only a few, a certain number of vessels, can be occupying the canal-passing through it at one time, and it does not seem fair or equitable for one or more or a line of these nonpaying vessels to take the time and places of the paying ones and obliging the latter to wait until the former have passed through or been put well on their way.

This might easily happen, and the number of these nonpaying vessels would probably increase, being invited, as it were, to enjoy their free favors, till the canal might be swamped with them-becoming a positive nuisance.

No. Let no such thing happen, but let all who use the canal pay for their use and the enjoyment of their great privilege.

It is chiefly, therefore, for the foregoing reasons, that I am in favor of repealing the exemption clause of the Panama Canal act of 1912, or, if this can not be done, of amending it as above suggested, with "Section 4132 of the Revised Statutes" following it in accordance therewith; not for the sake of foreign nations, but primarily for our own sakes; though the fact that, as I believe, Great Britain, France, Germany, Belgium, Italy, Japan, and South America, and perhaps other nations, look with suspicion upon us on account of our expressed intention to exempt any of our own commercial vessels from payment of tolls, thus discriminating against their commercial vessels, which they regard as unfair to them, and dishonest on our part, resulting in their deciding as nations, not to participate in the Panama Canal opening and celebration in San Francisco in 1915, should furnish us with an additional reason for the repeal of the said exemption clause, or its modification so as to require coastwise vessels to pay their share of the upkeep of the canal-a goodly proportion, if not the whole, of the regular rates charged other vessels.

I can not see any adequate ground for hostility toward Great Britain in regard to the canal, since by the Hay-Pauncefote treaty she yielded the entire construction, regulation, and management of it to the United States (see Art. 2), on the sole condidition of general neutralization to all other nations as well as her own, as in article 8 of the Clayton-Bulwer treaty; that is, of entire equality of tolls or charges of traffic, and for citizens or subjects, to all, as stated and adopted in rule 1 of the United States, in article 3 of the Hay-Pauncefote treaty, on our rules as in the convention of Constantinople, 1888, for the Suez Canal; and if Great Britain will have more ships pass through the canal than those of any other nation, it is also true, and should be well remembered, that she will pay in just the same proportion her tolls for the support and upkeep of the canal, correspondingly more than any other nation.

Hoping you and Senator Chilton will communicate in regard to this letter, and agree on some arrangement by which the rest of the Committee on Interoceanic Canals, and indeed the rest of the Senate, shall be put in possession of the contents, or the information therein contained, believe me, sir,

Yours, very respectfully,

ALBERT P. SCHACK.

Mr. WHEELER. The essence of article 3 of the Hay-Pauncefote treaty, already quoted, is that there shall be no discrimination against any nation using the canal. Wherein, then, do free tolls to American vessels in the coastwise trade result in discrimination against Great Britain or any other nation? I am prepared to admit that had the Senate committee bill, which provided freedom from

tolls to American vessels in the foregin trade, and that was the bill in my opinion which occasioned the original British protest, as well as in our domestic trade, been enacted into law, our position would be more difficult to defend.

Senator SIMMONS. What is your opinion about that now? Do you think that under the treaty we could exempt our overseas trade through that canal from tolls and impose tolls upon vessels of other

nations?

Mr. WHEELER. Senator, that is a matter that would require some very careful thought upon my part. I have arrived at my conclusions primarily upon the basis of the argument that I am bringing forth here.

Senator SIMMONS. You have not reached a conclusion as to that? Mr. WHEELER. I have not crossed that bridge yet.

Senator SIMMONS. Proceed. I do not want to interrupt you. Mr. WHEELER. As the law now stands, an American vessel sailing through the canal to or from a foreign port must pay exactly the same rate of toll as will be collected from any foreign vessel. If an American vessel sails from San Francisco through the canal to Liverpool laden with California products, she is given no advantage at the canal over her British competitor engaged in the same trade. If, however, that same American vessel sails to New York through the canal, it is no concern of the British shipowner whether she pays higher or lower tolls than he is charged, or any tolls at all. The matter does not interest him because he can not under any circumstances engage in the trade. Again I ask, wherein is the discrimination? Wherein is the inequality of treatment? Wherein is the violation of the treaty? Yes, there is discrimination, but not in violation of the HayPauncefote treaty. The discrimination I refer to occurs under our navigation laws and was wisely enacted more than a century ago, whereby our coastwise trade is reserved to our own vessels, and let me say that almost every nation on the globe discriminates in like manner in favor of its own shipping.

Senator WALSH. Let me inquire: I was following your coastwise trade against coastwise-trade argument. Does Canada exclude us from her coastwise trade?

Mr. WHEELER. She does.

Senator WALSH. Our ships could not ply between Halifax and Vancouver and return?

Mr. WHEELER. They could not.
Senator WALSH. Or Montreal?

Mr. WHEELER. They could not.

Senator PAGE. You say that so far as you know nearly all nations discriminate in favor of their own vessels in their coastwise trade? Mr. WHEELER. They reserve that trade to themselves.

Senator PAGE. Does England do that?

Mr. WHEELER. Not now, but up until

Senator PERKINS. England does it with her colonies.
Mr. WHEELER. Yes; as in the case of Canada.

Senator PERKINS. And in British Columbia

Senator PAGE. But not in regard to her own coastwise trade in the British Isles?

Mr. WHEELER. That is my information about it, and that is within the last 25 or 30 years, I think. I would not be exact as to

the date. It was until the time when a treaty to which I will refer you later on, with which you gentlemen are already familiar, that she did protect her trade.

Senator WALSH. Will you designate specifically some of the European nations which thus discriminate that is to say, giving a monopoly of it?

Mr. WHEELER. I could do so by turning to Mr. Chamberlain's report. I might hit upon the exceptions where they do not, but I am safe in saying that a majority of them do.

Senator WALSH. Do you know whether Mexico does?

Mr. WHEELER. With regard to her coastwise trade she has a peculiar way down there. I am not prepared to say what it is exactly. but under a certain arrangement or concession she permits foreign vessels to engage in her coastwise trade, for her convenience, but she holds it within her power to say whether they shall or not. There is no statute that permits them, as I understand it, to do so. It has to be a special permission. Senator Perkins was engaged in that trade for many years. He might be able to enlighten Senator Walsh on that much better than I can.

Senator WALSH. Never mind it.

Senator SIMMONS. I am not questioning at all the right of Great Britain, Canada, or any of the nine countries upon this continent that front on both oceans, to say that the vessels of no other nation shall engage in their coastwise trade. I think that is a legitimate and proper regulation if a country wants to make it, but the question here. is whether if we are going to classify and make one rule as to vessels engaged in foreign trade we should not also classify and make one rule as to vessels engaged in coastwise trade where they may legitimately engage in it. That is, if no vessel except an American vessel can engage in our coastwise trade, and none except a Canadian vessel can engage in Canadian coastwise trade, as we both have coastwise trade on this continent, putting them in the same class and feeding them out of the same spoon, then you have established equality to that class of trade, coastwise trade in these different nations. that are interested in the passage through the canal, and you have established equality in their overseas trade. Now, it seems to me, if you will permit me to say it--I am trying to bring out your views about it-we assume that all the nations of the world are equally interested now in getting their traffic through this canal upon equal terms, certainly their overseas traffic, and why are not the nine countries upon this continent that front on both sides of the ocean just as much equally interested each with the American in getting their coastwise trade carried through this canal upon the same terms-equal terms?

Mr. WHEELER. Senator, I am perfectly free to reply that they are equally interested in doing it, but is it equally just to give them the right to do it?

Senator SIMMONS. If they are equally interested, just as they are in the overseas trade, if you give one an exemption which is denied to the other it seems to me that a discrimination arises, and that is accentuated by the fact that a foreign vessel loaded at any point on the Atlantic seaboard of this continent, or on the Pacific seaboard of this continent, can take those identical goods to some point in the United States if they see fit and there dispose of them, just as an

American vessel could take them from a point on one coast to a point on the other and dispose of them. And if you charge one a toll and do not charge the other a toll you burden the foreign traffic-the traffic that originates upon a foreign coast upon this continent but which finds its ultimate consumer and purchaser on the American seaboard of this continent-with a charge from which you relieve that same character of traffic if it originates on an American seaport.

Mr. WHEELER. We likewise burden it with a customs charge, Senator, and the protective duty which we throw around if you might term it such for the sake of illustration-American shipping makes it impossible for the foreign vessel to engage in that trade. Senator PERKINS. That is, the navigation laws?

Mr. WHEELER. The navigation laws; yes, sir. So the same discrimination obtains with regard to our customs law. That is the best answer I can give you.

Senator SIMMONS. That is the answer you have been giving me all the time simply that we do not allow foreign vessels to engage in our coastwise trade, and neither does Canada.

Mr. WHEELER. The discrimination is not in the treaty. That is what I wanted to impress on you. The discrimination is in the navigation laws. That is where the discrimination rests. If those are wrong, of course that is a question of national policy which we have to consider.

Senator WALSH. Before we pass this coastwise traffic feature, do you observe any distinction in vessels plying between Halifax and Victoria, and vessels plying between Liverpool and Australian points?

Mr. WHEELER. I would observe the distinction which England itself for so many years observed. She never treated that as coastwise traffic of her own.

Senator WALSH. She never did treat as coastwise traffic the traffic from Halifax to Vancouver, either, did she?

Mr. WHEELER. The Canadian Confederation does that. I do not know what that was when those were Crown colonies, as that is so many years ago. I never looked that up. But the present Canadian Confederation, or the present Canadian Government, as constituted, has, as I understand it, coastwise laws similar to ours.

Senator SIMMONS. Let me call your attention to what Mr. Cleveland said. Before I do that I want to read just a little history here. I can read it quicker than I can state it from memory. That is a is a paper of Mr. Stone's. He says:

OUR TOLL WAR WITH CANADA.

In this connection our conflict with Canada to which Senator Burton referred in his speech in the Senate may well be recalled. It arose over an attempt on the part of Canada to levy higher tolls on American ships passing through the Welland Canal than on Canadian. We thought this was a violation of our treaty of 1871 with Great Britain which contained a provision in Article XXVII to this effect:

"The Government of Her Britannic Majesty engages to urge upon the Government of the Dominion of Canada to secure to the cieizens of the United States the use of the Welland, St. Lawrence, and other canals in the Dominion on terms of equality with the inhabitants of the Dominion; and the Government of the United States engages that the subjects of Her Britannic Majesty shall enjoy the use of the St. Clair Flats Canal on terms of equality with the inhabitants of the United States

*

The Canadian Government, desirous to promote Canadian shipping, issued an order in council providig for a rebate of 18 cents from the regular tolls of 20 cents

per ton on eastbound freight passing through the Welland Canal on goods going direct to Montreal. This meant that goods passing through the Welland Canal paid a toll of 20 cents, if their destination was New York or some other American port, and only 2 cents a ton if shipped via Montreal. Now, the treaty of 1871 did not expressly bind Canada to give us equal treatment in her waters; it merely stated that "the Government of Her Britannic Majesty engages to urge upon the Government of the Dominion of Canada to secure to the citizens of the United States," etc. Nevertheless, we took great exception to Canada's policy of discrimination against our shipping, and President Cleveland, in his message to Congress, August 23, 1891, clearly stated our case when he said

Now, this is what Mr. Cleveland said about this:

The equality with the inhabitants of the Dominion which we were promised in the use of the canals of Canada did not secure to us freedom from tolls in their navigation, but we had a right to expect that we, being Americans and interested in American commerce, would be no more burdened in regard to the same than Canadians engaged in their own trade; and the whole spirit of the concession made was, or would have been, that merchandise and property transported to an American market through these canals should bot be enhanced in its cost by tolls many times higher than such as were carried to an adjoining Canadian market. All our citizens, producers, and consumers, as well as vessel owners, were to enjoy the equality promised.

Senator WALSH. What is the date of that excerpt which you read? Senator SIMMONS. 1891.

Senator WALSH. Then it could not have been President Cleveland. Senator SIMMONS. I beg your pardon; he has clearly got that wrong.

Senator WALSH. There is an error in the date or else in the name of the President.

Senator SIMMONS. He has got that date wrong. At any rate, it was at the time of that controversy. Now, Mr. Cleveland clearly states that it is a discrimination against traffic, and that the citizen, whether he is a producer or a consumer, or an owner of a vessel, is interested in preventing that discrimination, and when Canada attempted that discrimination we went into a great trade war with her. Canada did not construe that treaty like we did. Canada thought she was not violating that treaty, or pretended to think she was not violating it. We will assume that she really thought she was not violating it. But Mr. Cleveland says it is a clear discrimination.

What I want to ask you is this: You say that you think we clearly have the right to make this differentiation-I will not call it discrimination, out of deference to you---I will call it differentiation. Mr. WHEELER. I thank you.

Senator SIMMONS. You say we clearly have the right to make this differentiation. You insist, because you think so, and because others over here think so, notwithstanding there may be a difference of opinion among ourselves about it, you insist we should construe this treaty according to our view. Now, have you no apprehension that the party of the other part, which is Great Britain, which evidently takes a different view of this matter, and thinks she has a deep interest in this very question, and that it does discriminate against her vessels or citizens, whether producers, consumers, or owners of vessels, if she should take the same course that we took with reference to Canada only a few years ago, and the British foreign office should occupy exactly the same position Mr. Cleveland describes in this excerpt, do you not think it might lead to a trade war?