Of the joint authors of this work, one is a distinguished member of the Bar of the Supreme Court of the United States, was a Federal Attorney under the McKinley administration and Special Assistant to the AttorneyGeneral of the United States in charge of important cases in that Court and elsewhere under the administrations of both Roosevelt and Taft; was an important Commissioner of the State of New York under the administrations of Governors Higgins and Hughes, and held an important commission to go abroad under the Taft administration. He is a member of the State Committee of the Progressive Party in New York, one of the organizers and principal supporters of that party, and its choice in the fusion movement of 1913 for Supreme Court Justice. The other, also a prominent Progressive, and a former Professor of Political Economy in Cornell College, is now statistician with the Public Service Commission for New York City and hence as well qualified to discuss the financial, economic as well as the public utility phases of the Canal tolls problem as any other authority in the United States. Both authors, therefore, are peculiarly qualified, professionally and politically, to prepare the history of this vital and lately menacing problem without bias toward the President or the party happening to be in power at the time of the repeal of the tolls-exemption clause of the Panama Canal Act complained of by practically all of the maritime nations of the world.

Having been a member of Congress in 1912 when the Canal Act was passed with the objectionable clause, and a member of the United States Senate in 1914 when the

same was repealed, and having heard the notable and exhaustive debates on the subject on both occasions, I am justified in saying, after an examination of the work, that the essence of the whole matter is contained in this volume. In my judgment it will at once become the authoritative work on this great question, not only in the United States, but in all nations interested in the use of the Panama Canal.

I may also add that the manuscript of this book was shown to President Wilson, who examined it hurriedly. He then stated that it appeared to him "to have been most intelligently conceived and well executed," and that "it would stand securely on its own merits."

Further commendation of this work-The Panama Canal Tolls Controversy is unnecessary. It should be as widely circulated as possible by those who believe that the United States should manage the Panama Canal in accordance with the world-view design embodied in the Hay-Pauncefote treaty.

WILLIAM HUGHES,

United States Senator from New Jersey.

CHAPTER I

The Meaning of the Hay-Pauncefote Treaty

Early Spanish explorers ascended every river of Central America for the purpose of finding a passage through which their vessels might reach those lands of boundless wealth of which Marco Polo had given a vivid description. They were bent on finding the shortest route from Cadiz to Cathay, and thus sought a natural interoceanic waterway.

With the advent of settlements arose the idea of artificial transit across the Isthmus. A wagon road was built from Porto Bello to Panama in the sixteenth century. More ambitious projects flourished and decayed during the lapse of centuries. They furnish a history of failure and blighted hopes. Spain, Holland, Belgium, France and England were at one time or another interested in the construction of an Isthmian Canal.

The United States became interested in 1826. Henry Clay, Secretary of State, wrote to our representatives to the Panama congress held that year:

"A cut or a canal for purposes of navigation somewhere through the Isthmus that connects the two Americas to unite the Pacific and Atlantic Oceans will form a proper subject of consideration at the congress. That vast object, if it should be ever accomplished, will be interesting in a greater or less degree to all parts of the world. But

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to this continent will probably accrue the largest amount of benefit from its execution, and to Colombia, Mexico, the Central Republic, Peru and the United States more than to any other of the American nations. What is to rebound to the advantage of all America should be effected by common means and united exertions and should not be left to the separate and unassisted efforts of any one power. If the work should ever be executed so as to admit of the passage of sea vessels from ocean to ocean, the benefits of it ought not to be exclusively appropriated to any one nation, but should be extended to all parts of the globe upon the payment of a just compensation or reasonable tolls."

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The declaration by the then Secretary of State that the benefits of the canal should be extended to all parts of the globe and should not be exclusively appropriated by any nation has been confirmed by American statesmen of all parties-Whig, Democratic and Republican-with substantial unanimity. The principle has been enunciated by presidential messages, by instructions from Secretaries of State and by resolutions of the House and Senate of Congress.

Senator Burton is credited with the following:

"The romantic triumphs of Decatur, Bainbridge and the other heroes of our early days against the Barbary pirates of the Mediterranean were particularly notable because they secured to our commerce and to the commerce of other nations the assurance of safety in those waters without the payment of ransom or tribute. If there is one policy to which as a nation we have been committed during the entire time of our existence, it is

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that of neutralization of waterways and the use of all waterways, natural and artificial, by all nations on equal terms. Our country was one of the most active in protesting against the sound dues imposed by the Danish Government, although ships had to pass from the North Sea to the Baltic Sea within cannon shot of shore, and these channels were furnished by the Danish Government with such aids to navigation as lights and buoys. We insisted upon the continued neutralization of the Strait of Magellan. In 1879 Mr. William M. Evarts, then Secretary of State, declared that the United States would not tolerate exclusive claims by any nation whatsoever to the Strait of Magellan and would hold any nation responsible that might undertake by any pretext to lay any impost or check on the commerce of the United States through that strait."

The foregoing shows the traditional policy of the United States in its formative period. We will trace its development.

In the year 1835, during the administration of President Jackson, the Senate of the United States unanimously adopted a resolution, as follows:

"Resolved, That the President of the United States be respectfully requested to consider the expediency of opening negotiations with the Governments of other nations, and particularly with the Governments of Central America and New Granada, for the purpose of effectually protecting, by suitable treaty stipulations with them, such individuals or companies as may undertake to open a communication between the Atlantic and Pacific Oceans by the construction of a ship canal across the isthmus