Canal Toll Protest Is Just, Says Grey

New York Times 100 years ago today, March 2, 1913:
His Rejoinder to Knox Note Insists That the Issue Is Arbitrable Under Treaty.
DOUBTS PRESIDENT'S POWER
And Contends Arbitration Should Precede, Not Follow, Actual Toll Collecting from British Vessels.
Special to The New York Times.
    WASHINGTON, March 1.— Secretary Knox made public to-night the reply of the British Government to his note of Jan. 17, setting forth the argument of this Government against the British protest presented last August in regard to the exemption of United States coasting vessels from the payment of tolls on passing through the Panama Canal. The British reply came through Ambassador Bryce, and points out that it was not practicable to present fully before the Administration leaves office the arguments against Mr. Knox's views on the question at issue. The contention is made that it is entirely feasible to arbitrate the differences between the two Governments under Article I. of the treaty of 1908.
    One of the major points in the reply is that while no discrimination against any British vessel has actually been committed yet, the passage by Congress of the act directing the President to fix the canal tolls between certain limits, and declaring that no tolls should be levied on ships engaged in the coastwise trade of the United States, was in itself an act of discrimination inconsistent with the terms of the Hay-Pauncefote treaty, which guaranteed equality of treatment between the vessels of all nations.
    The British position, in short, is that the act of Congress, apart from any action that may actually be taken when the canal is open and equal terms are denied a British ship with an American ship engaged in coastwise trade, is a contravention of the treaty that should be made the subject of arbitration. Sir Edward Grey hints strongly that Congress may avoid the necessity of arbitration by reconsidering its action in regard to free tolls for American coastwise shipping. Otherwise, he urges, an arbitral case already exists.
    The hope is expressed in the note that there may be an interpretation of the meaning of the Hay-Pauncefote treaty before the occurrence of definite acts of discrimination, and before actual damage be done, which would be sufficient to take the controversy to the House.
    In view of the coming of a new administration, which will have to deal with the issue, Secretary Knox will not undertake to answer Mr. Bryce's note. A full memorandum of the case will be prepared and left to his successor for his guidance as to the facts of record. The British note reads:

Text of British Rejoinder.
    "His Majesty's Government are unable before the Administration leaves office to reply fully to the arguments contained in your dispatch of the 17th ultimo to the United States Chargé d'Affaires at London regarding the difference of opinion that has arisen between our two Governments as to the interpretation of the Hay-Pauncefote treaty, but they desire me in the meantime to offer the following observations with regard to the argument that no case has yet arisen calling for any submission to arbitration of the points in difference between his Majesty's Government and that of the United States on the interpretation of the Hay-Pauncefote treaty, because no actual injury has as jet resulted to any British interest, and all that has been done so far is to pass an act of Congress under which action held by his Majesty's Government to be prejudicial to British interests might be taken.
    "From this view his Majesty's Government feel bound to express their dissent. They conceive that international law or usage does not support the doctrine that the passing of a statute in contravention of a treaty right affords no ground of complaint for the infraction of that right, and that the nation which holds that its treaty rights have been so infringed or brought into question by a denial that they exist must, before protesting and seeking a means of determining the point at issue, wait until some further action violating those rights in a concrete instance has been taken, which in the presence instance would, according to your argument, seem to mean until tolls have been actually levied upon British vessels from which vessels owned by citizens of the United States have been exempted.

Questions President's Power.
    "The terms of the proclamation issued by the President fixing the canal tolls and the particular method which your note sets forth as having been adopted by him in his discretion on a given occasion for determining on what basis they should be fixed do not appear to his Majesty's Government to affect the general issue as to the meaning of the Hay-Pauncefote treaty which they have raised. In their view, the act of Congress, when it declared that no tolls should be levied on ships engaged in the coasting trade of the United States, and when in further directing the President to fix those tolls within certain limits it distinguished between vessels of the citizens of the United States and other vessels, was in itself and apart from any action which may be taken under it inconsistent with the provisions of the Hay-Pauncefote treaty for equality of treatment between the vessels of all nations. The exemption referred to appears to his Majesty's Government to conflict with the express words of Rule 1 of Article 3 of the Hay-Pauncefote treaty, and the act gave the President no power to modify or discontinue the exemption.
    "In their opinion the mere conferring by Congress of power to fix lower tolls on United States ships than on British ships amounts to a denial of the right of British shipping to equality of treatment, and is therefore inconsistent with the treaty, irrespective of the particular way in which such power has been so far actually exercised.
    "In stating thus briefly their view of the compatibility of the act of Congress with their treaty rights, his Majesty's Government hold that the difference which exists between the two Governments is clearly one which falls within the meaning of Article 1 of the arbitration treaty of 1908.
    "As respects the suggestion contained in the last paragraph but one of your note under reply, his Majesty's Government conceive that Article 1 of the treaty of 1908 so clearly meets the case that has bow arisen that it is sufficient to put its provisions in force in whatever manner the two Governments may find the most convenient. It is unnecessary to repeat that a reference to arbitration would be rendered superfluous if steps were taken by the United States Government to remove the objections entertained by his Majesty's Government to the act.
    "His Majesty's Government have not desired me to argue in this note that the view they take of the main issue — the proper interpretation of the Hay-Pauncefote treaty — is the correct view, but only that a case for the determination of that issue has already arisen and now exists. They conceive that the interest of both countries requires that issue to be settled promptly before the opening of the canal and by means which will leave no ground for regret or complaint. The avoidance of possible friction has been one of the main objects of those methods of arbitration of which the United States has been for so long a foremost and consistent advocate. His Majesty's Government think it more in accordance with the general arbitration treaty that the settlement desired should precede rather than follow the doing of any acts which could raise questions of actual damage suffered; and better, also, that when vessels begin to pass through the great waterway in whose construction all the world has been interested, there should be left subsisting no cause of difference which could prevent any other nation from joining without reserve in the satisfaction the people of the United States will feel at the completion of a work of such grandeur and utility."