treaty have a different legal sense within the two contracting States, they are to be understood in the sense which is proper to them within the State to which the condition. containing them applies; when the words of a treaty fail to yield a plain and reasonable sense, by recourse to the general sense and spirit of the treaty as shown by the context-or by the provisions of the instrument as a whole -or by taking a reasonable instead of a literal sense of the words. No treaty, again, can be taken to restrict by implication the exercise of rights of sovereignty, or property, or self-preservation, whilst whatever may be necessary to the enjoyment of things granted by it is understood to be tacitly given or imposed by the gift or imposition of that upon which it is attendant.

The question, therefore, must be solved in one of three

ways

(1) By the precise words of the particular provisions of the Hay-Pauncefote Treaty;

(2) By the context and preamble of that treaty; or (3) By what may be termed natural justice.

It will scarcely be contended that natural justice, unfettered by documentary construction, would refuse to the United States the privilege of the limited discrimination incorporated in the Bill.

The following considerations may be briefly noted:

(A) The importance to the United States of the encouragement of their coasting trade, compared with its relative unimportance to other States using the canal; compare the percentage of ocean-borne goods carried by American ships in the year of the Clayton-Bulwer Treaty with that appearing in the Navigation Report for the year preceding the Hay-Pauncefote Convention; and it will be found to have declined from 75°2 per cent. to 93, that is to say, a reduction of from nearly four

fifths to under one-tenth. Compare, on the other hand, the increased statistics during the same period of the coasting trade, and the trend is precisely in the opposite direction.

(B) The responsibility cast upon the United States, not only in the construction and management, but also in the maintenance and protection of the canal.

(c) The risks, whatever they may be inherent to every commercial undertaking, and essentially to such an enterprise, risks which deterred all comers to such an extent that the canal has only been brought into concrete being after the delay or failure of fifty years.

(D) The absence of any guarantee of monopoly of traffic across Central America, because conceivably canals, and probably other means of communication, e. g., railway facilities, may be brought into active competition.

(E) There is no international convention of recognition of neutrality except by Great Britain, and no guarantee of the maintenance of neutrality by any State whatever. Even the provision for the neutrality of alternative routes contained in the Clayton-Bulwer Treaty, has possibly been superseded.

(F) If there be by implication a guaranty on the part of Great Britain not to encourage or discourage the use of the canal, by any system of bounty, subsidy or the like, there is no obligation upon any other State, save that of observing the rules elaborated in the HayPauncefote Treaty during the actual user of the canal.

The case against the United States must therefore be based upon the strict construction of the precise words of the treaty, adopting the language of Lord Clarendon in the construction of the Clayton-Bulwer Treaty in the case of

the "Mosquito Indians," alleging that "the true construc"tion of a treaty must be deduced from the literal meaning "of the words employed in the framing."

It is necessary for the opponents of the United States to contend that the expression "free and open to the vessels

. . of all nations observing these rules” implies “including "the nation owning and administering the canal," and that the expression "no discrimination against any such nation," i. e., "observing these rules," implies "or in favour of the "nation which enforces these rules." It seems that this would be a strained, though perfectly possible, construction. But it is scarcely a construction of "literal meaning." Nay more, having regard to the obvious intention to deal with the position of States external to the convention, and not even intended to signify their adherence thereto, it is submitted that such a construction is the necessary or even the reasonable one.

Equally it would appear that recourse to context and preamble would enable the United States, having regard to the "general sense and spirit," to succeed. There is no contractual undertaking by any States outside the United States, on the one hand, and Great Britain on the other. There is no provision analogous to that contained in the Clayton-Bulwer Treaty providing for the adherence to the convention of any third State. The whole of the advantages are to be enjoyed by any State for the time being accepting the conditions of working, without any obligation on the part of any State to remain bound to such conditions, further than during periods which may be of intermittent user. Even between the actual contracting parties, Great Britain and the United States, there are no collateral or reciprocal obligations by way of consideration explicitly undertaken. Any State for the time being using the canal, and so assenting to be bound by the conditions, can by bounty to its own vessels, or in any other way not

amounting to a breach of international obligations, differentiate in favour of its own vessels and against those of any other State, including the United States.

To sum up, it is reasonably arguable :

(A) That the United States can support its action on the precise words of the material articles of the treaty, that its case is strengthened by reference to the preamble and context, and that its case is difficult to challenge on grounds of general justice;

(B) That there is no international obligation to submit the construction of its legislative act to any process of arbitration; and

(c) That any aggrieved party has an appropriate, an impartial, and a competent tribunal in the Supreme Court of the United States.

EDWD. S. COX-SINCLAIR.

THE

II. THE PANAMA CANAL ACT.

HE Republic of Panama comprises some 40,000 square miles, and has a population of about 300,000. On November 18, 1903, a treaty was signed between the Republic and the United States whereby the Republic of Panama granted to the United States in perpetuity the use, occupation and control of a zone of land and land under water, for the construction, maintenance, operation, sanitation and protection of a canal, of the width of ten miles, five miles on both sides of the centre thereof, and extending into the Pacific Ocean and Caribbean Sea three miles from low water. By this treaty the Republic of Panama granted to the United States all the rights, power

and authority of a sovereign. The grant was a grant of land and sovereign rights thereover, and not a mere concession or privilege. The Panama Canal Zone is a territory appurtenant and belonging to the United States. This zone is as much and as exclusively the property of the United States as are the rivers and territory of Alaska, and is subject to such laws as the Congress of the United States may make respecting it; and when made such laws become the sole and only rule of action within the territory, even superseding the provisions of a treaty in conflict therewith. Congress has plenary power, under the Constitution of the United States, over its territories, and its power to deal with trade or commerce in the territories does not depend upon the authority of the inter-state commerce clause of the Constitution; and this plenary power gives to Congress the undoubted right to pass laws and make uniform regulations governing the use of its appurtenant territory.

In conformity with this power Congress in August last passed an Act to provide for the opening, maintenance, protection and operation of the Panama Canal, and the sanitation and government of the Canal zone, by sect. 5 of which it is provided that no tolls shall be levied upon vessels engaged in the coastwise trade of the United States. After the passage of this Act the British Government filed a protest thereto, alleging that the Act of Congress was in violation of the Hay-Pauncefote Treaty:

(a) Because it vests the President with discretion to discriminate in fixing tolls in favor of American ships and against foreign ships engaged in foreign trade, although there is nothing in the Act to compel the President to make such a discrimination.

(b) Because it discriminates in favor of the coastwise trade of the United States by providing that no tolls shall be charged on vessels engaged in that trade passing through the canal.