a balance of profits for 1910 of $15,908,419, paying a dividend of 31.6 per cent to its stockholders. Whenever the dividend exceeds 25 per cent the Suez Canal tolls are reduced. They are now $1.30 per net ton on ships with cargo, and 82 cents per ton on ships in ballast, and a charge of $1.93 each for passengers older than 12 and half that much for those younger, children under 3 going free. Up to the end of 1910 the cash expenditure on the Suez Canal amounted to $126,642,406. The company had outstanding capital obligations of $92,484,544.

Freedom of American ships from tolls at the Panama Canal will also enable that costly national undertaking to confer the largest measure of benefit upon the people of the United States. So will it be possible for American ships to transport coast-to-coast freight at lowest rates. It is believed that general cargo goods can be carried from Philadelphia to San Francisco for from $5 to $7 per ton.

Transcontinental railroads can not possibly meet such rates. Class freight rates from Philadelphia to San Francisco, figured to tons, are now $60 for first class, $52 for second, $44 for third, and $38 for fourth class. Commodity rates are lower, but in no case less than double the expected Panama route ship rates. The rate on steel rails from Bethlehem to San Francisco is $14 per ton.

With the Panama Canal, made free to American ships, while reasonable tolls are charged foreign vessels using it, this $375,000,000 work can become a means of restoring the American merchant marine to its rightful place, and thus save to the American Nation tens of millions of dollars now paid foreign shipowners every year for transporting American commerce and also of reducing the delivery cost within the United States of all kinds of goods which are now transported across the continent by rail.

Objection is made to such a policy. It is the violent objection of threatened interests. An American policy for the Panama Canal is questioned from abroad, attacked at home. The great transcontinental railroad interests are making an underhand fight to nullify, as far as possible, the benefits which should accrue to the American people from the isthmian waterway. They want to put a burden of tolls upon American commerce through the canal so as to make the freight charges as high as possible.

From abroad is raised the contention that we are under solemn treaty obligations not to use our American-built canal to promote our own interests. This sly appeal to honor has been urged with all force by designing interests. Do we fear the hurt-trade anger of England, of Germany, or any foreign power? Are we ready to yield the greater good of 100,000,000 people to the will and temporary interest of the transcontinental railroads? Americans will answer: No, never!

Let us examine this proposition. What are these treaty undertakings and what are our rights?

By the Hay-Pauncefote treaty of November 18, 1901, which was promulgated February 22, 1902, it was agreed between the United States and Great Britain that the Clayton-Bulwer treaty of April 19, 1850, should be superseded to the end that the Panama Canal might be constructed "under the auspices of the Government of the United States, without impairing the general principle' of neutralization'

The old treaty barred the United States from any exclusive control isthmian canal or railroad which might ever be built, and from any rights or advantages in regard to commerce or navigation through the said canal which shall not be offered on the same terms to Great Britain. The two nations were to determine what charges or conditions of traffic" were just and equitable," and undertook to see that any canal should be open on like terms to the citizens and subjects" of all nations engaging to observe and protect its neutrality. Under the present treaty the United States enjoys the exclusive right of providing for the regulation and management of the canal.” Acting upon its prime right it adopts, as the basis of the neutralization" of the Panama Canal substantially the rules established in 1888 by the convention of Constantinople, making the Suez Canal open for the passage of vessels of all nations, whether merchant or armed ships, in times of war as well as of peace.

Thus it is clear that the great actuating purpose of the HayPauncefote treaty was to establish over the Panama Canal for all time a condition of neutrality, even as such was the prime object of the convention of Constantinople with respect to the Suez Canal. This becomes doubly plain in the fact that this treaty specifies with exact precision the duties of nations to observe the neutrality of the Panama Canal and the rights of war vessels of a belligerent nation when within the canal zone.

Coming to the point at issue, the United States has undertaken to see that the Panama Canal

shall be free and open to the vessels of all nations on terms of entire equality, so that there shall be no discrimination against any such nation, or its citizens or subjects, in respect to the conditions or charges for traffic, or otherwise.

The United States has "the exclusive right" to determine what these conditions and charges shall be. As to this it is restricted by the treaty only to the extent that they "shall be just and equitable," but as to this no other nation may raise question. The treaty of November 18, 1903, between the United States and Panama, under which the Canal Zone exists, provides that no costs shall be imposed on vessels, or upon the cargoes, crews, or passengers of vessels using the canal "except such tolls and charges as may be imposed by the United States for the use of the canal and other works." Here again our authority stands forth.

Existing treaties, read in the light of that which stood before, clearly admit the right of the United States to construct, control, and operate the Panama Canal as a neutral waterway open to the commerce of the world without let or hindrance from any other nation. Our undertaking is limited to an obligation not to discriminate against any nation, nor the citizens or subjects of any nation.

In this regard the treaty is fairly open to two interpretations. Considering what Great Britain surrendered when she agreed to the Hay-Pauncefote treaty to supercede the Clayton-Bulwer treaty, it may well be held that she admits the sovereign right of the United States with regard to the Panama Canal. From this I submit that the treaty should be held to require of the United States only that there shall be no discrimination in Panama Canal charges and regulations as between foreign nations or their citizens or subjects.

That is the interpretation I would give the treaty. Fulfilling our clear and just duty to other nations and their peoples, which is obviously to put them all on the same footing in the use of the Panama

Canal, the tolls and other regulations must be on a uniform basis for all foreign vessels. To American ships give free passage through the great isthmian waterway which will exist solely through the enterprise and at the cost of the American nation.

Could there be just attack upon such a stand? Selfish interest might prompt some nation to cry out against a toll system which would give to the American people a preferential advantage in the use of their own canal. We are entitled to benefit from our work. If foreign nations, for selfish ends, make issue on the treaty, then let the American nation assert itself.

No power can exceed its source. The power which makes can unmake a treaty. In 1832 the United States and Russia made a treaty which provided that citizens or subjects of each country might enter the other and while there enjoy all the security and protection accorded to natives. There was a plausible basis for the contention of Russia that Jews, citizens of the United States, should not travel freely in Russia, because Jews, subjects of that country, were restricted in their movements.

None the less the American nation refused to tolerate any abridgement of the personal rights of her citizens abroad. What was done is recent history. Acting on a terminating clause, President Taft, on December 17, 1911, gave notice that at the end of this year the Russian treaty would stand abrogated. Congress ratified this action by resolution passed by the Senate December 19, by the House next day, and signed by the President on December 21.

The Constitution of the United States provides that the President "shall have power, by and with the advice and consent of the Senate, to make treaties," and that Congress shall have power to "provide for the general welfare of the United States." If necessary for the general welfare the President and Congress can annul or amend the Hav-Pauncefote treaty.

While it exists, we must, as an honorable nation, observe it, even should it be interpreted by foreign nations to bar the United States from allowing American ships a free passage of the Panama Canal while charging tolls to foreign vessels. It is probable that this interpretation will be put upon the treaty. Even so, the situation thus forced is not such as need rob us of the fullest benefits from our isthmian waterway.

In fact, it would interpose no serious obstacles in the way of our getting such benefits. The hands of the American people are not tied by any treaty in such way as to leave them helpless in this situation. We can in such case collect tolls from all vessels using the canal on precisely the same basis, and then distribute back to those American shipowners whose vessels had used the canal the tolls which such vessels had paid, doing this in the form of subsidies paid pro rata as were the canal tolls collected.

There can be no question that we have an assured right to allow free passage of the canal by all those American vessels which are engaged in our coastwise and domestic trade, sailing between ports of the United States, or to and from its island possessions, Hawaii, Porto Rico, and the Philippines. To this no tenable objection can be interposed. In the operation of the Panama Canal we undertake that there shall be no discrimination as between nations.

Under our navigation laws, which existed when the Hay-Pauncefote

trade between American ports. Thus in making the Panama Canal free to passage by American vessels engaged in such trade there can be no discrimination, for they run in competition with no foreign vessels.

If there is any bar in the treaty, let the United States frankly take the position that, observing a possible, although questionable, obligation to charge American ships engaged in foreign trade the same tolls for using the American isthmian canal that foreign vessels are charged, that all American vessels in domestic trade shall go free; that as to this we will no more tolerate outside interference than we would permit a foreign nation to meddle with our internal commerce, and further, that through subsidies, which Congress has a no less inalienable right to make in any form it may see fit than it has to appropriate moneys for coast defense or river and harbor improvement, all toll money collected at the canal on American ships shall revert back to the owners of those particular ships.

Let the American nation be perfectly frank and absolutely firm in declaring such purpose. Could Great Britain, a signatory power to the Hay-Pauncefote treaty, object? Not with any sincerity or with much force of argument in view of the fact that she pays annually to the Peninsular & Oriental Steamship Co. subsidies approximating the Suez Canal tolls paid by that great British line. Thus for 1907 the canal tolls aggregated £333.000. the subsidies £332,784; for 1910 such tolls were £357.989. the subsidies £297,143.

Again, what objection could Germany urge? To the North German Lloyd Line to the Orient there was paid during 1910 a Government subsidy of $1.385,160, which sufficed much more than to pay the Suez Canal tolls of the company's fleet. Next, take France, whose subsidies for 1908 to the three chief French lines via the Suez Canal amounted to $2,145,232. This cash aid paid the canal tolls three times

over.

For the fiscal year ended March 31, 1909, the Japanese Government paid $1,336,947 as a subsidy to the steamsbip line operating to Europe through the Suez, equal to about two and one-half times the canal tolls. These refunds of the Suez Canal tolls may be accounted indirect. The Austrian-Lloyd Steamship Co. is operating under a 15 years' agreement by which the Government undertakes to make up to the company annually its Suez Canal tolls, about $375,000 a year. Russia pays the canal tolls of the Russian Volunteer Fleet, not only the tonnage charges but the passenger tolls. For 1909 she so paid $334,750. Sweden subsidizes her regular steamship line to the Orient, on the basis of the canal tolls, about $100 000 a year. It is closely figured that one-fourth of the steamship tolls paid to the Suez Canal Co. during 1910 were reimbursed to steamship companies out of the treasuries of the nations whose flags they carried.

Thus have we abundant precedent to subsidize American ships using the Panama Canal. to the amount of the tolls they pay. Should any foreign nation maintain that under the Hay-Pauncefote treaty the United States is in honor bound to charge American ships engaged in foreign trade like tolls to those demanded from foreign vessels, then let us boldly announce a determination to so act as to protect

our own.

Almost as his last public thought William P. Frye. long a Senator from Maine. proposed a bill to this end. It provided "that all tolls and transit charges which may hereafter be imposed" on American vessels

"passing through the Panama Canal shall be paid" by the United States and "shall be deemed permanent annual appropriations." Urging this treatment of the problem, Eugene T. Chamberlain, United States Commissioner of Navigation, in his latest annual report, says of the Frye bill:

It is consistent with the most scrupulous respect for our treaty obligations; it accords with the accepted and successful practice of maritime nations, and it applies to the Panama Canal the same rule of untaxed American navigation which we have applied for a quarter of a century to the navigation of every river, harbor, and lake deemed worthy of the consideration of Congress.

"dismal

Americans have never accepted the English brand of political economy. As taught by the British school it was indeed a science." When we broke in a new country, the old laissez-faire theory crashed by the wayside of progress. The American school of economics holds high the rights of men to live and prosper, demands of government policies such as will promote enterprise while protecting the weak against the strong, such as will develop every home industry that has economic right to exist, such as will increase the general welfare of the country, advance every just interest of the nation.

Thus should it be the national policy to maintain a true economic protective tariff system, such as Henry C. Carey might rise from his grave and put his noble blessing upon. Standing upon the proposition that America should be industrially and financially, as well as nationally free, and holding that she can not enjoy her rightful measure of independence except she is, I ask:

Is our Government to withhold honest protection to American men and American capital employed on the high seas? Can we, as a nation, afford to pay tribute to foreign shipowners of $135,500,000 annually for the ocean carriage of American commerce with the world? Ponder well these questions!

With liberal, and in the main, wise hand our Government has expended since 1884 $527,000,000 for river and harbor improvement. For the Panama Canal we will have expended $375,000,000. Last year foreign shipowners earned as freight money for the carriage of American commerce a sum equal to one-third the total cost of this huge project.

Think of it! Thus are we under a tribute that is ever sapping our wealth and helping to swell the burden of foreign debt, now amounting to $6,600,000,000, which rests upon us as a people. Here is an economic condition which demands serious attention, a financial proposition which calls for correcting action.

It has been seriously proposed that foreign-built ships bought and owned wholly by citizens of the United States or by American corporations, shall be admitted to American registry, to engage only in foreign trade. This nation, in the courage of youth laid it down in 1792 as the American policy that the American flag should fly over no foreign built or owned ship, unless a prize of war.

We have maintained this policy. By the tariff of 1909 duties on all foreign materials used in construction of American-built ships are rebated where such ships do not ply in the preempted coastwise trade more than six months a year. Steel for shipbuilding now costs no more in American than in English shipyards.

The higher cost of building American ships results from much