CHAPTER V.

BASES OF RECONSIDERATION OF THE TOLLS EXEMPTION ISSUE.

Economic considerations doubtless will loom larger than diplomatic complications in the course congress takes on canal shipping regulations during President Harding's administration. International aspects are not likely to assume nearly so important a place in legislative treatment of the issue as they did a decade ago. The view that Article III of the Hay-Pauncefote treaty provided for equal treatment of shipping of all other nations, exclusive of the United States, seems to be the one that will prevail. This, in fact, was the position reported to have been taken by a majority of the senate committee on interoceanic canals which (1) began consideration of tolls legislation on May 9, 1921.

There is an important ruling by the highest American judicial tribunal upon which proponents of this view may rely with cofidence in supporting their position. The commercial treaty entered into by the United States and Great Britain in 1815 provided that "no higher or other duties or charges shall be imposed in any of the ports of the United States on British vessels than those (2) payable in the same ports by vessels of the United States." The supreme court in its decision in the case of Olson v. Smith in

1

Washington dispatch to Chicago Tribune, date of May 9, 1921. (2) A Convention to Regulate the Commerce Between the Territories of the United States and of His Britannick Majesty, July 3, 1815, in Treaties, Conventions, International Acts, Protocols and Agreements Between the United States of America and Other Powers, 18761909, compiled by William M. Malloy, Vol. I, p. 625.

!

1904 declared that this treaty was not violated by either a Texas statute or a federal statute that exempted coastwise vessels from paying pilotage charges. Mr. Justice White in giving the opinion of the court laid down the position on the point as follows:

"Neither the exemption of coastwise steam vessels from pilotage resulting from the law of the United States nor any lawful exemption of coastwise vessels created by the state law concerning

vessels in the foreign trade, and therefore, any such exemptions,

do not operate to produce a discrimination against British vessels engaged in foreign trade and in favor of the vessels of the United (1) States in such trade."

Here is a clearcut rule laid down on a set of conditions almost identical with those raised in the controversy between the United States and Great Britain over the interpretation of the Hay-Pauncefote treaty. The fact that no foreign vessels can, under American law, engage in our coastwise trade, coupled with the further fact that the American government fixed tolls on a basis including all shipping, American and foreign, fairly refute the British argument that there is under a tolls exemption policy discrimination against foreign governments. There can be no direct competition between American and foreign shipping in the coastwise trade; hence how any discrimination? Moreover, since foreign vessels would, under tolls exemption, be bearing no more than their share of the cost of maintaining the canal, our government making up the American share equivalent to the amount of

(1) 195 U. S. 344.