See Way To Solve Canal Toll Tangle.

New York Times 100 years ago today, December 16, 1912:
Guarantee That Remitted American Tolls Won't Fall on Foreign Ships May Satisfy England.
SMALL SUBSIDY THE REMEDY
Grey's Fear That Our Over-Sea Vessels Would Also Have Free Passage Easily Removable.
Special to The New York Times.
    WASHINGTON, Dec. 15.— A week's study of the British protest against the free passage of American coasting ships through the Panama Canal has led, in informed circles, to a revision of the first impression that the only hope for escape from a hopeless impasse between the two nations lay in a recourse to arbitration, which, it was known, the Senate would never permit. It is now believed that Sir Edward Grey's carefully worded note suggests to the United States modifications of the Panama Canal act that will make it acceptable to his Majesty's Government; if not exactly satisfactory. The modifications proposed are of a nature so slight that in the opinion of those in a position to know, little objection can be raised to them in the United States.
    The objection most fully voiced by Sir Edward Grey is that, with American coasting vessels freed from tolls, no standard remains by which the toll-paying by the world's shipping can be made "just and equitable." Less emphatically he says that the collection of tolls from American ships, simply to have them remitted as a subsidy, would be unsatisfactory. But his whole argument makes it plain that the remission of the tolls, or their payment by the American Government in some other way, would not be objectionable, if only it could be guaranteed that the remitted moneys would not fall as an additional burden upon the shipping of the world.
    Sir Edward's construction of the phrase "just and equitable" simply limits tolls "to the fair value of the services rendered, i. e., to the interest on the capital expended, and the cost of the operation and maintenance of the canal." This stipulation, he adds, "entitles his Majesty's Government to demand on behalf of British shipping that all vessels passing through the canal, whatever their flags or their character, shall be taken into account in fixing the amount of the tolls."
    This, it is now believed, is far from saying that tolls be levied on all ships alike. It simply means that American tolls remitted ought not to be levied indirectly on foreign shipping. This point, once clearly understood, means nothing less than that the tolls proclaimed by President Taft are in exact accord with Sir Edward's demand, as they are based on the estimates of Prof. Emory Johnson, who assumed that American and foreign vessels would pay alike. In other words, the exemption of American ships means, under the President's proclamation and the Panama act, a loss of revenue to the American Treasury, and not an increased levy on British ships.

The Subsidy Factor.
    To make this feature of the proclamation come up to Sir Edward's requirements, it simply needs that the method by which the tolls are to be levied be incorporated in the statute. The actual enactment of a subsidy of some sort for American ships using the canal, with an express stipulation that the subsidy will not be raised by higher levies on foreign bottoms, would seem to satisfy the demand. How far a Democratic Congress will go in voting even a nominal subsidy is problematical, but, with only a nominal concession demanded, it is considered incredible that a settlement will not be made.
    Another point on which a concession can easily be made involves merely a change in the language of the Panama act that would at most simply make plain what every one here knows was the real intent of Congress. This simply requires the reinsertion of the word "exclusively" before the description of toll-free American ships as "in the coastwise trade."
    Perhaps the most interested discussion of the week has hinged around the paragraph in Sir Edward's note which suggests that through loose wording of one sentence in the Panama Canal act not only American coasting vessels are entitled to free passage, but that American ships in the over-sees trade might demand a similar exemption. The discussion has gained intensity from the discovery that while the bill as it passed the Senate limited the exemption to ships "exclusively" in the coastwise trade, the word "exclusively" was dropped in conference.
    Changes in the regulations, it can be stated positively, have no bearing on the matter, as the pertinent regulations are all statutory and can be changed only by Congressional amendment. But a strict reading of the no-toll provision of the Panama act does seem to raise at least an open question. Section 4,361 of the Revised Statutes makes it plain that an American ship registered for the foreign trade can, even with a foreign cargo on board, proceed in the coasting trade from one American port to another, "subject, except as to the payment of fees, to the same regulations, provisions, penalties, and forfeitures, and the like duties are imposed on like officers, as are provided for vessels licensed for carrying on the coastwise trade."
    The exception as to the payment of fees means simply that the registered vessel will have to pay tonnage dues of six cents per net registered ton instead of two cents as imposed on the enrolled coasting vessels, and perhaps make a few other immaterial payments. These payments, however, fall far short of covering the $1.20 a net registered ton that the vessel would save if, by making the coasting voyage, she escaped the canal tolls.

Free Tolls Aimed at Railroads.
    The Panama act provides in the toll-fixing section that "no tolls shall be levied upon vessels engaged in the coastwise trade of the United States." The British position seems to be that the extreme of that clause was to encourage the coasting trade, and the Congressional debates support the suggestion that it was intended to encourage competition by sea with the transcontinental railways. From this point of view the only requisite necessary to entitle a vessel to the favors of free passage is engaging in the coasting trade, regardless of her other occupations. The free passage then would be the "subsidy" paid by the Government for competition with the railways.
    The decided manner in which the British Government has presented this particular objection, however, is thought to present a possible opening for compromise. As Congress certainly did not intend the favor of free passage to apply to the foreign trade, the act could be at tended so as to make that restriction certain. That would seem to be a concession to the British demand and would pave the way for concessions on Great Britain's part.
    The Senate Committee on Foreign Relations has discussed Sir Edward's note informally, but it was decided to take no steps whatever until diplomatic exchanges have proceeded further.