domestic trade of the United States has been taken into account in fixing the rate. The estimates were made by Prof. Johnson, for the Panama Commission, and it is evident that no part of the tolls which might be imposed upon our domestic trade passing through the canal is borne by any other nation; that is to say, in plain English, they lose nothing by it, for we bear the loss. Why, then, should any outside nation complain of the exemption of our domestic trade from those tolls?

As pointed out by Senator Poindexter in his resolution the British embassy to this country has formally admitted that we have a right to exempt our coastwise trade from Panama Canal tolls, and the British Minister of Foreign Affairs has officially declared in writing that many of the material provisions of the Hay-Pauncefote treaty do not apply to the Panama Canal.

Who, or what, then is aggrieved by the exemption? Is it the corporations interested in transcontinental transportation in the United States and Canada which are masking themselves behind the pretense that Great Britain suffers?

The exemption of our coastwise ships and the bearing by the United States of the expense which those ships would otherwise have to undergo in paying tolls is purely a domestic matter which fact, it is evident the British Government plainly sees, and the interests now supporting the repeal bill are merely using that Government for a cover and, as those interests may be credited with sufficient perception to see that the American people would not tolerate any such interference in their affairs, they try to place an interpretation on a phrase in the treaty wholly at variance with its evident intent and with common sense.

With less want of reason, no matter how ridiculous and intolerable it would be, Great Britain might claim that the exclusive privileges afforded by American law to our domestic coastwise shipping would, when the vessels engaged therein pass through the canal, create an inequality or privilege in conflict with the provisions of the treaty. I should therefore respectfully suggest to your honorable committee that the most useful course in which its labors could be directed would be to unmask fully the hidden instrumentalities which have instituted and are maintaining this present agitation over the phraseology of the treaty and which maintain that, in giving to "all nations" equal rights in passing through our canal, we restrict absolutely our own control over a property which has cost us so much in effort, in life, and in money. Our dominion over the canal is absolute even if limited in duration and notwithstanding the fact that our Government pays in installments part of the agreed compensation to the former owner of the territory through which it passes. Respectfully submitted.

APRIL 25, 1914.

DENIS A. SPELLISSY, 256 Broadway, Manhattan Borough, New York City.

TREATY WITH PANAMA-ROOT--AROSEMENA.

[Jan. 9, 1901.]

ART. 4. Line 20. "And the United States of America further agrees that the Republic of Panama and the citizens thereof shall have and shall be accorded on equal terms all such privileges, rights, and advantages in respect to the construction, operation, and use of the canal, railroad, telegraph, and other facilities of the United States within the Canal Zone, and in respect of all other matters relating thereto, operating within or affecting the Canal Zone or property and persons therein, as may at any time be granted by the United States of America in accord with said treaty of November 18th, 1903, directly or indirectly, to any other nation or the citizens or subjects thereof, it being the intention of the parties that the Republic of Panama and its citizens thereof shall be with respect thereto placed at least on an equal footing with the most favored nation and the citizens or subjects thereof.

TREATY WITH COLOMBIA-ROOT-CORTES.

[Jan. 9, 1909.)

ART. 2. In consideration of the provisions and stipulations hereinafter contained it is agreed as follows:

The Republic of Colombia shall have liberty at all times to convey through the ship canal now in course of construction by the United States across the Isthmus of Panama the troops, materials for war and ships of war of the Republic of Colombia without paying any duty to the United States; even in the case of an international war between Colombia and another country.

While the said interoceanic canal is in course of construction, the troops and materials for war of the Republic of Colombia, even in the case of an international war between Colombia and any other country, shall be transported on the railway between Ancon and Cristobal, or on any other railway sustituted therefor, upon the same conditions on which similar service is rendered to the United States.

The officers, agents, and employees of the Government of Colombia shall, during the same period, be entitled to free passage upon the said railway across the Isthmus of Panama upon due notification to the railway officials and the production of evidence of their official character.

The foregoing provisions of this article shall not, however, apply in case of war between Colombia and Panama.

CORRESPONDENCE.

Secretary of State Root to Ambassador Bryce.

[Jan. 8, 1909.]

DEAR MR. AMBASSADOR: I send you confidentially a memorandum regarding an arrangement which we are proposing to bring about between Panama and Colombia and the United States, and which we consider of importance as enabling the United States to execute peaceably the purposes of the Hay-Pauncefote treaty concluded between the United States and Great Britain on November 18, 1901.

MEMORANDUM.

In 1903, in settling with Colombia the terms upon which the United States might obtain the opportunity to construct the Panama Canal, as contemplated in the HayPauncefote treaty of November 16, 1901, Mr. Hay included in the Hay-Herran treaty of January 22, 1903, a provision under which the war vessles of Colombia might pass through the canal free of duty. The United States has now by the use of good offices and additional concessions on its own part, brought the Governments of the two sections which at that time constituted the Republic of Colombia, namely Colombia and Panama, to the point of entering into an agreement under which Colombia will recognize the independence of Panama and confirm the title which Panama undertook to give to the United States to construct the canal by renouncing all Colombia's claims. The proposed agreement will adjust the relations of the two to the public debt of Colombia, arrange for the settlement of the boundary, and provide for the exercise of election as to citizenship, and will constitute in general a treaty of separation. As a part of the same arrangement of separation and to bring it about, the United States is about to agree to the continuance of the right of passage on the part of Colombia which was formerly stipulated in the Hay-Herran treaty. The United States has not been unmindful of the provision of the Hay-Pauncefote treaty under which the Suez rules were adopted as bases for the neutrality of the canal, including the rule against discrimination between different nations, but we have assumed that that rule had no relation to the terms by means of which the title to the site of the canal and the opportunity to build might be obtained.

The Government of the United States will communicate a copy of the different treaties immediately upon the final settlement of their terma and hopes that the accomplishment of this very important step towards executing the purposes which the United States and Great Britain have shared for so many years, and an expression of which is embodied in the Hay-Pauncefote treaty, will be received by Great Britain with special satisfaction.

DEPARTMENT OF STATE,

Washington, January 8, 1909.

Bryce to Root.

BRITISH EMBASSY, Washington, January 8, 1909. DEAR MR. SECRETARY OF STATE: I have to acknowledge the receipt of and to thank you for your letter of this day's date inclosing a memorandum relating to the treaty contemplated with the Republic of Colombia, and have communicated the substance of it by cable to my Government.

I note that the privilege proposed to be given to the Republic of Colombia for passing vessels through the Panama Canal without payment, to which the memorandum refers, is therein stated to apply to vessels of war only.

Secretary Root to American Ambassador at London.

AMERICAN EMBASSY,

London.

[Jan. 9, 1909.]

Following memorandum was sent yesterday to Ambassador Bryce: "The proposed treaty with Colombia refered to is not yet signed, but when signed copy will be forwarded to you. Meantime, as soon as practicable, explain situation to Sir Edward Grey, as described in the memorandum. Tell him we are making very considerable sacrifices, including payment of a million and a quarter dollars, to clear the title and secure peaceable possession of canal site. Discretly give him to understand that we should be both surprised and put out if there were any objections from Great Britain under Hay-Pauncefote treaty, the purpose of which we are making sacrifices to accomplish."

SECRETARY OF STATE,

Ambassador Reed to Secretary of State.

Washington.

[Jan. 11, 1909.]

Number 350. Confidential. January 11th, 11 p. m. Saw Sir Charles Hardinge, in the absence of Sir Edward Grey, with reference to Panama arrangement summarized in your memorandum to Mr. Bryce, as stated in your cipher telegram to me of January 10.

He was familiar with memorandum and moment I mentioned it said, "We shall have to enter a protest.'

I hastened to present to him the considerations you mentioned, sacrifices made and surprise and disappointment felt that objections should now be made under HayPauncefote treaty.

I ventured to urge also that the very thing they now protested against-the free passage of Colombian war vessels-had been agreed to in the Hay-Herran treaty, with the full knowledge and assent, as we understood, of the British Embassy at the time. He did not deny this, but said the circumstances were entirely changed, and that this consideration was given solely because the canal was then to pass through Colombian territory.

I pointed out that nevertheless this had been the foundation agreement under which we were enabled to build the canal, and that the consideration now given was the same. He said, "Yes; but the country that gets it is not now the country through which the canal runs," and insisted that for the sake of a precedent they should be compelled to enter their protest.

In that case, I urged that it should be worded so as to cause as little embarrassment as possible. He assured me that we need have no apprehension on that score, but insisted tenaciously that with a view to the future it was their duty to protest against any inequality in the treatment accorded foreign nations in the use of the canal, and that Colombia was now as much a foreign nation as any other.

Root to Brice.

DEPARTMENT OF STATE, Washington, January 13, 1909.

MY DEAR MR. BRICE: I send you confidentially copies of the Panama-Colombia treaties for the information of yourself and your Government only.

It is not contemplated that they should be acted upon by the Senate at present, and in the meantime I should like to talk with you further on the subject of the memorandum which I sent you shortly before the signature.

When you have looked the treaties over, can you come in and have a talk with me about them? Could you do this to-morrow afternoon?

Inclosures: Treaties as above.

Secretary of State.

[Jan. 15, 1909.]

I want an examination made of the correspondence with Great Britain during the entire period of the negotiation of the Hay-Herran treaty of January 22, 1903, and for a little while after, to determine whether there was any provision in the correspondence regarding the passage of war ships through the canal.

43756-14-63

There is no record of any communication, from or to the British Government, in any way relating to the Panama Canal, before, during or after the negotiation with Panama except an informal note, under date of April 2, 1903, from the British Embassy, submitting a request of Lloyd's to erect signal stations at both ends of the canal,

Dr. BUCK: Send in letter referred to.

Done.

D. A. S.

(Indorsement.) Filed January 20, 1909. F. W. 234.

Index bureau. Ja. 20. 1502/112. 1909. Department of State.
Received January 20, 1909. Diplomatic bureau. SdyS.

Panama, Colombia and U. S. treaty. Incl. 112. Department of State.

Memorandum by Mr. Martin, answering an inquiry of the Secretary and stating that there is no record of any communication from or to the British Government in any way relating to the Panama Canal before, during or after the negotiations with Panama, with the exception of an informal note of April 2, 1903, from the British Embassy, submitting a request of Lloyd's to erect signal stations at both ends of the canal. B.

REID, London.

Secretary Root to Ambassador Reid,

[Jan. 16, 1909.]

Confidential and for your own information and guidance only. The following letter sent to Ambassador Brice to-day. I presume Brice will mail it. Meantime you are at liberty to use it as you think best in your discretion to forestall premature action by British Government.

Your cable January 15th, No. 352, saying that protest in Colombian matter is not likely to be of nature to be of much embarrassment if reassuring, but it is most important to avoid anything called a protest. We feel that the case does not warrant any protest and that Great Britain instead of embarrassing ought to aid and encourage the consummation of an arrangement so useful for accomplishment of the purpose of Hay-Pauncefote treaty and so exceptional in character. Great Britain ought to consider that the good faith of the judgment of the United States as to the importance and necessity of this arrangement in aid of the enterprise is proved by our being willing not only to forego all dues from Colombia, but to pay a million and a quarter of dollars for the purpose of securing the arrangement. The position of the United States toward Great Britain in this matter is analogous to that of a trustee securing advantage for the trust by means of personal sacrifices on his own part, and any objection by Great Britain would be like a beneficiary of a trust taking the benefit of the arrangement made by its trustee and at the same time making a very technical objection to his action. We are confident that the idea of protest by Great Britain arose before the full nature of the arrangement was made known to her and under a misconception as to its nature and extent.

Secretary Root to Ambassador Brice.

[Jan. 16, 1909.]

DEAR MR. AMBASSADOR: I think on reflection that I had better follow your suggestion and put in writing the gist of the ideas which I conveyed to you orally in our interview last Thursday regarding the proposed concession to Colombia of the right to pass her war vessels through the Panama Canal, when completed, without the payment of any dues to the United States. The view of the United States upon this is, in substance, as follows:

The Hay-Pauncefote treaty of Nov. 18, 1901, provided for the building of a canal in territory which was not under the jurisdiction of either of the contracting parties. The title to the land through which the canal was to be built, the authority to construct and operate, and jurisdiction and control over the canal when finished, manifestly remained to be secured before the purposes of the treaty could be effected. The treaty said nothing about the way in which this should be accomplished. It follows by necessary implication that the agreements and arrangements to be made with the power or powers having right to grant or withhold the opportunity to construct and operate the canal must be quite different from the mere application of a scale of tolls to the nations of the world in general which had nothing whatever to do with the creation of the canal. Such agreements are ex necessitate outside of the rule of equality to all the world which was embodied in the Suez rules.

This view was recognized in the Hay-Herran treaty of Jan. 22, 1903, in which the United States of Colombia, while undertaking to grant the right to the construction of the canal, reserved the right "to pass their vessels, troops, and munitions of war at all times without paying any dues whatever." This treaty was confirmed by the Senate of the United States, but failed of confirmation by the Congress of Colombia. Then followed the revolution inaugurated on the 3rd of November, 1903, and the recognition of the independence of Panama by both the United States and Great Britain, and thereafter the grant by the Republic of Panama to the United States of various rights connected with the canal including, as well as the direct grant, a consent by Panama to the purchase by the United States of the property and concessions of the New Panama Canal Company which had been for a long time engaged in canal construction across the isthmus and which had rights, the acquisition or removal of which was necessary to vest in the United States the right to construct the canal in accordance with the terms of the Hay-Pauncefote treaty.

Notwithstanding the grant by Panama in her treaty with the United States, there remained three subjects for serious consideration by the United States as affecting the peaceable and unquestioned title to the property and rights the acquisition of which was necessary to the execution of the canal project. One of these was that there still remained in force a treaty made in 1846, between the United States and Colombia which was in existence at the time the Hay-Pauncefote treaty was made and under which the United States remained under special obligations to Colombia in respect of the very status of the canal. The second was that the only way to dispose of the prior and conclusive right of the French Panama Canal Company, which stood in the way of the construction of the canal by the United States pursuant to the Hay-Pauncefote treaty, was by purchasing those rights and becoming the successor of the Panama Canal Company under the concessionary contracts. In those contracts there were stipulations and reservations running to Colombia, including rights of forfeiture of property and including an express stipulation for the right to pass their war vessels through the canal without the payment of dues. The third was the fact that Colombia had continuously refused to recognize the independence of Panama and stood ready to retake possession of the isthmus and resume her control over it the moment she was not prevented by the superior military and naval force by the United States; so that the only possession which was possible under the grant of Panama alone was the possession to be continuously maintained by force.

Under these circumstances the United States has deemed it to be its duty, in the performance of the obligation which it assumed in the Hay-Pauncefote treaty with Great Britain, to fortify its title, and assure its peaceable possession of the canal for the purposes of the Hay-Pauncefote treaty by securing the assent of Colombia to the separation of Panama, the renunciation of Colombia's claims, and the consent of Colombia to the necessary modifications of the treaty engagements of 1846 between the United States and Colombia. In order to accomplish this, the United States has found it necessary to renew the reservation of the specific rights of Colombia to send its warships through the canal without the payment of dues, which has been insisted upon by that country in every concession and treaty she has made regarding it (for example, the Panama Canal concession of 1878, article 6: "The Hay-Concha accepted the proposal for a treaty between the United States and Colombia of Apr. 18, 1902, sent by Mr. Hay to the American Congress and printed as a public document, and the Hay-Herran treaty of Jan. 22, 1903, articles 16, 17, and 18), and also to make the very substantial payment of a million and a quarter dollars which the United States proposes to contribute toward the payment of Panama for the purpose of securing these rights.

The United States has considered not only that in prescribing the rule of equality in the Hay-Pauncefote treaty the parties must have contemplated the making of special arrangements by the United States with Colombia as the necessary source of