The despatch concludes:

Knowing as I do full well the interest which this great undertaking has aroused in the New World and the emotion with which its opening is looked forward to by United States citizens, I wish to add before closing this despatch that it is only with great reluctance that His Majesty's Government have felt bound to raise objection on the ground of treaty rights to the provisions of the Act. Animated by an earnest desire to avoid points which might in any way prove embarrassing to the United States, his Majesty's Government have confined their objections within the narrowest possible limits, and have recognized in the fullest manner the right of the United States to control the Canal. They feel convinced that they may look with confidence to the Government of the United States to ensure that, in promoting the interests of United States shipping, nothing will be done to impair the safeguards guaranteed to British shipping by treaty.

AMERICAN VIEWS ON THE BRITISH PROTEST.

Fundamentally important though it be, there is an inclination in dealing with Sir Edward Grey's despatch to brush aside the "all nations" controversy in favour of consideration of the dues controversy in its more direct aspects. Nor is much attention given to the ethical side of the question implied by the comparison of the ClaytonBulwer and Hay-Pauncefote Treaties.

Interest for the moment is concentrated in the prospects of a diplomatic settlement and not in the prospects of arbitration. In some quarters, indeed, it is felt that the British case, for all its moral justice, is weakened by the fineness of the distinction between the acknowledgment that the United States may give financial help to their vessels using the Canal which it is open to other nations to give, and the statement about those methods of subsidizing which are rather vaguely mentioned as discriminatory. It is, of course, recognized in certain quarters that what the distinction really means is that such financial help on the part of the United States should, to meet the British view, be a declared subsidy, and that the Canal as a neutral body cannot be used as an instrument for the private commercial policy of the United States. But at the same time it

is not believed that the United States-were their right to what appears to be rather comprehensive preferential policy finally recognized-would be averse from giving the guarantees implied by the distinction.

THE PANAMA CANAL ACT.

AMERICAN REPLY TO THE BRITISH PROTEST.

A Parliamentary paper [Cd. 6585] was issued last week giving the text of the reply of the Washington Government to the British despatch protesting against certain provisions of the Panama Canal Act.

The American Secretary of State says at the outset that his Government does not agree with the interpretation placed by Sir Edward Grey upon the Hay-Pauncefote Treaty, or upon the Clayton-Bulwer Treaty, "but, for reasons which will appear herein below, it is not deemed necessary at present to amplify or reiterate the views of this Government upon the meaning of those treaties."

The British objections, Mr. Knox declares, are, in the first place, about the Canal Act only, but that Act does not fix the tolls. He summarizes the matter in the following words:

They (the objections) ignore the President's proclamation fixing the tolls, which puts at rest practically all of the supposititious injustice and inequality which Sir Edward Grey thinks might follow the administration of the Act, and concerning which he expresses so many and grave fears. Moreover, the gravamen of the complaint is not that the Canal Act will actually injure in its operation British shipping, or destroy rights claimed for such shipping under the Hay-Pauncefote Treaty, but that such injury or destruction may possibly be the effect thereof;, and, further, and more particularly, Sir Edward Grey complains that the action of Congress in enacting the legislation under discussion foreshadows that Congress or the President may hereafter take some action which might be injurious to British shipping and destructive of its rights under the Treaty.

VOL. XXXIII. C.L.T.-6

concerning this possible future injury it is only necessary to say that, in the absence of an allegation of actual or certainly impending injury, there appears nothing upon which to base a sound complaint concerning the infringement of rights claimed by Great Britain; (but) it may be remarked that it would, of course, be idle to contend that Congress has not the power, or that the President, properly authorized by Congress, may not have the power, to violate the terms of the Hay-Pauncefote Treaty in its aspect as a rule of municipal law. Obviously, however, the fact that Congress has the power to do something contrary to the welfare of British shipping, or that Congress has put, or may put, into the hands of the President the power to do something which may be contrary to the interests possessed by British shipping, affords no just cause for complaint. It is the improper exercise of a power, and not its possession, which alone can give rise to an international cause of action; or, to put it in terms of municipal law, it is not the possession of the power to trespass upon another's property which gives a right to action in trespassing, but only the actual exercise of that power in committing the act of trespass itself.

When, and if, complaint is made by Great Britain that the effect of the Act and the proclamation together will be to subject British vessels as a matter of fact to inequality of treatment, or to unjust and inequitable tolls, in conflict with the terms of the Hay-Pauncefote Treaty, the question will then be raised as to whether the United States is bound by that Treaty both to take into account and to collect tolls from American vessels, and also whether, under the obligations of that Treaty, British vessels are entitled to equality of treatment in all respects with the vessels of the United States. Until these objections rest upon something more substantial than mere possibility, it is not believed that they should be submitted to arbitration. Existence of an arbitration treaty does not create a right of action; it merely provides means of settlement to be resorted to only when other resources of diplomacy have failed. It is not now deemed necessary, therefore, to enter upon a discussion of the views entertained by Congress and by the President as to the meaning of the Hay-Pauncefote Treaty in relation to questions of fact which have not yet arisen, but may possibly

arise in the future in connexion with the administration of the Act under consideration.

It is recognised by this Government that the situation. developed by the present discussion may require an examination by Great Britain into the facts above set forth as to the basis upon which the tolls fixed by the President's proclamation have been computed, and also into the regulations and restrictions circumscribing the coastwise trade of the United States, as well as into other facts bearing upon the situation, with the view of determining whether or not, as a matter of fact, under present conditions, there is any ground for claiming that the Act and proclamation actually subject British vessels to inequality of treatment or to unjust and inequitable tolls.

If it should be found as a result of such an examination on the part of Great Britain that a difference of opinion exists between the two Governments on any of the important questions of fact involved in this discussion, then a situation will have arisen which, in the opinion of this Government, could with advantage be dealt with by referring the controversy to a commission of inquiry for examination and report, in the manner provided for in the unratified Arbitration Treaty of the 3rd August, 1911, between the United States and Great Britain.

The necessity of inquiring into questions of fact in their relation to controversies under diplomatic discussion was contemplated by both parties in negotiating that Treaty, which provides for the institution, as occasion arises, of joint high commission of inquiry, to which, upon the request of either party, might be referred for impartial and conscientious investigation any controversy between them, the commission being authorised upon such reference “to examine into and report upon the particular questions or matters referred to it, for the purpose of facilitating the solution of disputes by elucidating the facts, and to define the issues presented by such questions, and also to include. in its report such recommendations and conclusions as may be appropriate."

This proposal might be carried out, should occasion arise for adopting it, either under a special agreement, or under the unratified Arbitration Treaty above mentioned, if Great Britain is prepared to join in ratifying that Treaty, which the United States is prepared to do.

SOME FURTHER OBSERVATIONS UPON CANADIAN BANKS AND BANKING.

A COMPARISON OF THE BANKING ACTS OF CANADA AND THOSE OF OTHER COUNTRIES.

BY PETER RYAN, ESQ.

WHAT SOME FOREIGN BANKS PAY TO THEIR SEVERAL STATES FOR THEIR FRANCHISES.

The banks of the United States pay substantially for the privilege of issuing notes which are furnished by the Treasury of the Republic.

The United States Banks are not allowed to establish branches. Every Bank is a local Bank and not, as in Canada, used to bleed the rural districts white. Their directors are local men, who help build up local industries, merchants and farmers.

They are subjected to Government inspection without one moment's warning, and must shew up on demand.

The Banks of the United States have no combine rate of interest to depositors, nor do they try to control the Government. They would like to, but the people and Congress won't let them.

AMERICAN BANK INSPECTION AND CANADIAN BANK

INSPECTION COMPARED.

The Canadian bankers object to Government inspection for obvious reasons, and the directors who are in the Senate and Commons will be very busy if any attempt is made to subject their institutions to examination except by their own officials.

If their business is done on the sound principles they claim they should welcome independent Government inspection; and if on unsound or immoral methods, the sooner depositors and the public know it the better. The real obpection to Government inspection is believed to be the numerous "skeletons" in their cupboards.

WHY NOT THE STATE BE PAID FOR THE CURRENCY ISSUED?

If the Banks of the United States can pay, and do pay, for the very valuable franchise of issuing currency, why cannot Canadian Banks do so also?