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treaty,” or is it perhaps a mere subsidy? Upon questions of this kind our Courts are constantly passing judgment. They are frequently called upon to decide whether a given practice, such as the granting of rebates in disguised forms, constitutes a discrimination or rebate in the sense forbidden by our statute or common law. Clearly these are questions which can and should be “settled by reference to known rules."

* The above phrase set in quotation marks in Westlake's famous definition of a legal question. This definition has been accepted, so far as the writer is aware, by all authorities who have discussed this problem. Political differences are those which result from serious conflicts of political, social, racial, or economic interests. They are usually regarded as questions of national policy to the solution of which it is either difficult or impossible to apply judicial methods.

DIFFICULTIES IN THE WAY OF ARBITRATION.

It has been maintained that there are practical difficulties in the way of a just and impartial arbitration of this question, arising either from defects inherent in the arbitral system or from the alleged impossibility of finding Judges who do not belong to interested nations.

It may be admitted that so-called Courts or commissions of arbitration too often, in the past, have sought a solution of the controversy submitted to them by way of compromise, rather than through the application of legal principles to the case in hand. But in the administration of international justice, during recent years, great progress has been made in the direction of substituting better methods, higher ideals, and more carefully selected Judges for mixed commissions and occasional tribunals. Arbitral decisions are coming more and more to represent the application of principles of law and equity by trained jurists working in a judicial spirit instead of by arbiters animated by a mere desire to compromise the issue. In a word, in the settlement of international differences, more advanced judicial methods and a better judicial organization are taking the place of the older system of haphazard, compromising arbitration. • The defects in the arbitral system of the past have been due mainly to a want of care in the selection of Judges, or to the lack of a carefully drafted agreement clearly defining the questions at issue and the rules of procedure to be observed. But none of these defects are beyond remedy, and the Hague Conferences of 1899 and 1907 have furnished us not merely with a better method of selecting-Judges than was previously in vogue, but also with an elaborate code of arbitral procedure which should prove adequate in most CaSCS.

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As to the alleged impossibility of finding fair and impartial Judges to settle this particular disagreement, it may again be admitted that the difficulty is a real one. But we are here dealing with a difficulty—not an impossibility. It is true that all the maritime powers of the world (including those of South America) are in a sense interested in the decision of this case. It has been suggested that “Switzerland is perhaps the only country capable of furnishing international jurists of high standing, who would probably be free from all pressure of selfish public opinion when acting as Judges of the case.” "

* The Outlook for Dec. 7th, 1912.

Switzerland could undoubtedly furnish them. So could many other countries, including Great Britain and the United States. In a tribunal composed wholly of arbitrators selected by the interested Governments for the settlement of the Alaskan boundary dispute (1903), Lord Alverstone, the President of the Tribunal, sustained the contention of the United States that it should continue to enjoy a continuous strip of mainland separating the British territory from the inlets of the sea. In nearly all countries of the civilized world there are to-day international jurists who, whether engaged in the practice of law at the bar, administering it on the bench, or holding chairs in our Universities and Law Schools, possess the requisite knowledge, courage, and judicial spirit to declare and administer the law applicable to this and similar differences of a legal nature. The time has, indeed, passed when it can be seriously maintained that such disputes are incapable of judicial solution. Least of all can the United States afford to refuse to settle such a controversy whether by arbitral or judicial methods.

PANAMA CANAL ACT.

PROTEST BY THE BRITISH GovePNMENT.

SIR EDWARD GREY's DESPATCH.

The second British protest against violation by the United States of the Hay-Pauncefote Treaty alleged to be implied in the United States policy regarding Panama Canal charges was presented on Monday afternoon by Mr. Bryce to Mr. Knox, Secretary of State.

The protest is contained in a despatch dated November 14 from Sir Edward Grey to Mr. Bryce, which was issued on Monday as a Parliamentary paper [Cd. 6451], and lays down the considered views of the British Government on the whole controversy. It takes the form of a reply to Mr. Taft's memorandum and states with admirable lucidity the case for the British interpretation of the Hay-Pauncefote Treaty.

THE CASE FOR GREAT BRITAIN.

Sir Edward Grey says that a careful study of the President's memorandum has convinced him that Mr. Taft has not fully appreciated the British point of view and has misunderstood Mr. Mitchell Innes' note of July. 8.

THE “ALL NATIONS” INTERPRETATION.

The President in his memorandum treats the words “all nations” as excluding the United States. He argues that, as the United States is constructing the Canal at its own cost on territory ceded to it, it has, unless it has restricted itself, an absolute right of ownership and control, including the right to allow its own commerce the use of the Canal upon such terms as it sees fit, and that the only question is whether it has by the Hay-Pauncefote Treaty deprived itself of the exercise of the right to pass its own commerce free or remit tolls collected for the use of the Canal.

For the reasons they have given above his Majesty's Government believe this statement of the case to be wholly at variance with the real position. They consider that by the Clayton-Bulwer Treaty the United States had surrendered the right to construct the Canal, and that by the Hay-Pauncefote Treaty they recovered that right upon the footing that the Canal should be open to British and United States vessels upon terms of equal treatment.

Sir Edward Grey says that the case cannot be put more clearly than it was put by Mr. Hay, who, as Secretary of State, negotiated the Hay-Pauncefote Treaty, in the account of the negotiations which he sent to the Senate -Committee on Foreign Relations (Senate Document No. 746, 61st Congress, 3rd Session): “These rules are adopted in the treaty with Great Britain as a consideration for getting rid of the Clayton-Bulwer Treaty.” If the rules set

out in the Hay-Pauncefote Treaty secure to Great Britain

no more than most-favoured-nation treatment, the value o of the consideration given for superseding the Clayton-Bul- v. wer Treaty is not apparent to his Majesty's Government. Nor is it easy to see in what way the principle of Article 8 of the Clayton-Bulwer Treaty, which provides for equal treatment of British and United States ships, has bcen maintained.

To the argument that the words “all nations” cannot include the United States because, if the United States were at war it is impossible to believe that the country could be intended to be debarred by the treaty from using its own territory for revictualling its warships or landing troops, Sir Edward Grey replies that

The Hay-Pauncefote Treaty of 1901 aimed at carrying out the principle of the neutralization of the Panama Canal by subjecting it to the same régime as the Suez Canal. Rules 3, 4 and 5 of Article 3 of the treaty are taken almost textually from Articles 4, 5 and 6 of the Suez Canal convention of 1888. At the date of the signature of the HayPauncefote Treaty the territory, on which the Isthmian Canal was to be constructed, did not belong to the United States, consequently there was no need to insert in the draft treaty provisions corresponding to those in Articles 10 and 13 of the Suez Canal Convention, which preserve the sovereign rights of Turkey and of Egypt, and stipulate that Articles 4 ond 5 shall not affect the right of Turkey, as the local sovereign, and of Egypt within the measure of her autonomy, to take such measures as may be necessary for securing the defence of Egypt and the maintenance of public order and, in the case of Turkey, the defence of her possessions on the Red Sea.

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Now that the United States has become the practical sovereign of the Canal his Majesty's Government do not question its title to exercise belligerent rights for its protection. Other arguments are advanced to emphasize the conclusion that any system by which particular vessels or classes of vessels were exempted from the payment of tolls would not comply with the stipulations of the treaty that the Canal should be open on terms of entire equality, and that the charges should be just and equitable.

The President in his memorandum argues that if there is no difference, as stated in Mr. Mitchell Innes’ note of July 8, between charging tolls only to refund them and remitting tolls altogether, the effect is to prevent the United States from aiding its own commerce in the way that all other nations may freely do. . This, Sir Edward says, is not so. His Majesty's Government have no desire to place upon the Hay-Paunceforte Treaty an interpretation which would impose upon the United States any restriction from which other nations are free or reserve to such other nation any privilege which is denied to the United States. Equal treatment, as specified in the treaty, is all they claim.

It has been argued that as the coastwise trade of the United States is confined by law to United States vessels, the exemption of vessels engaged in it from the payment of tolls cannot injure the interests of foreign nations. It is clear, however, that the interests of foreign nations will be seriously injured in two material respects. In the first place, the exemption will result in the cost of the working of the Canal being borne wholly by foreign-going vessels, and on such vessels, therefore, will fall the whole burden of raising the revenue necessary to cover the cost of working and maintaining the Canal. The possibility, therefore, of fixing the toll on such vessels at a lower figure than $1.25 per ton, or of reducing the rate below that figure at some future time, will be considerably lessened by the exemption. In the second place, the exemption will, in the opinion of his Majesty's Government, be a violation of the equal treatment secured by the treaty, as it will put the “coastwise trade” in a preferential position as regards other shipping.

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