By joint resolution of the Senate and House of Representatives, passed on the 3d of March, 1883, it was determined to give notice to Canada of the termination of the thirtieth article of the Treaty of Washington at the end of two years.

On the 2d and 24th of July, 1885, under orders issued by Secretary Manning, based upon the notice given, the privilege of carrying traffic duty free from one point in the United States to another point in the same territory across an intervening portion of Canadian territory was finally withdrawn from Canadian vessels, thus exacting from Canada the penalty for discrimination in the use of the canals, although no inequality really existed. This privilege has not been enjoyed by Canada since the 2d of July, 1885, though hitherto the Canadian government have abstained from taking any steps towards preventing the continuance to the United States of the corresponding privilege provided for by the thirtieth article of the treaty.

While therefore the Canadian government are unable to admit that any discrimination in the use of the Canadian canals is made against United States vessels by the terms of the order in council, they maintain that even if the fact that transshipment is confined to a Canadian port could be construed as constituting, such discrimination, the penalty agreed upon between the United States and Great Britain, in such an event, has already been exacted by the United States.

The government of the Dominion are nevertheless, as heretofore, desirous of maintaining friendly relations with the United States, and are willing to meet their views so far as is consistent with their position and with the interests of their people. They believe that the conditions of the Treaty of Washington in respect of international trade were eminently calculated to preserve such amicable relations between the countries, and in their opinion the most satisfactory way of meeting the present difficulty would be to revert in some degree to the terms of that treaty, in so far as they relate to the question under discussion. With a view to the furtherance of a good understanding on these points, they would be disposed to enter into an arrangement such as the fol lowing:

That, as regards the navigation of the Welland and St. Lawrence canals, the imposition of tolls, and the granting of rebates thereon, the same treatment will be accorded to citizens of the United States as is given to the subjects of Her Britannic Majesty without regard to ports of transshipment or export, and that the United States will continue to deal in like manner with the subjects of Her Britannic Majesty in the use of the existing Sault Ste. Marie Canal. That the provisions of article 30 of the Treaty of Washington granting carrying powers to vessels belonging to the subjects of Her Britannic Majesty, as described in that article, be restored.

In conclusion, I venture to express the hope that this proposal, which I am instructed by the Marquis of Salisbury to submit to your Government, will be received by them in the same friendly spirit in which it is made, and that it will be found to provide an amicable and satisfactory solution of the question at issue between the two countries.

I have the honor to be, with the highest consideration, sir, your most obedient humble servant. MICHAEL H. HERDERT,

Memorandum.

DEPARTMENT OF STATE,
Washington, June 28, 1892.

The reply of the Canadian government, as communicated by direction of Lord Salisbury, in Mr. Herbert's note of June 24, only deals with the statements in regard to discriminating tolls in the Welland and St. Lawrence River canals, presented in the memorials of the Lake Carriers' Association, which accompanied the Department's notes to Sir Julian Pauncefote, of October 10, 1891, and March 17, 1892.

The report prepared by Mr. Partridge, and which accompanied the President's message of June 18, deals more methodically with the question of the nature and effect of the discriminations. In that report the discrimination on grain cargoes moving eastward was shown to be threefold-first, that the toll on grain for export from Montreal or Canadian ports east of Montreal, is, by rebate, reduced to 2 cents per ton, while the toll on grain for export from American ports is 20 cents per ton.

As to this the Canadian reply says:

Under the provisions of the order in council, it is evident that the Canadian government allow the use of their canals both to their own vessels and to those of the United States upon such conditions as to influence a certain class of the traffic to pass down the St. Lawrence to Montreal; but in the inducement thus held out there is no distinction made as respects the payment for the use of their canals between the vessels of the United States and their own. In favoring their national route the Canadian government do so on precisely the same conditions with regard to both nations, and they contend, therefore, that they have acted in accordance with the obligations which Great Britain has requested them to take under article 27 of the Treaty of Washington.

The order in council does more, however, than favor a national route of transportation-it aims to favor the trade of exportation from the Canadian ports of departure for foreign traffic. The rebates of canal tolls are merely an instrument to favor the export trade from Canadian ports. If the object were to favor the use of the Canadian canals, and that object were carried out impartially, citizens of the United States would have little or no cause to complain. Moreover, the defense of the Canadian government is confined to alleging that no discrimination in fact is made between Canadian and United States vessels carrying the favored cargoes through the canals; when the Treaty of Washington makes the treatment of citizens the sole test of equality in the use of the canals. That the order does favor and is intended to favor the citizens of Canada at the expense of the citizens of the United States is clear, looking at the order as a whole. Were the purpose of fostering the Canadian export trade accomplished by a bounty to the vessels carrying grain cargoes from the St. Lawrence ocean ports, the case might be different; but the purpose is effected by levying differential tolls in and for the use of the Welland and St. Lawrence River canals, so that the encouragement of the export trade is converted into such a discrimination against the enjoyment of the canals by citizens of the United States as the Treaty of Washington expressly aimed to guard against.

Second. Another and more evident discrimination against the American citizen lies in refusing the lesser rate of 2 cents per ton on grain for export from Montreal or ports east of Montreal if it has been transshipped at an American port, while it is allowed if transshipment be effected at a Canadian port.

As to this the Canadian reply merely says, "the loss of rebate would

apply equally to both Canadian and American vessels," thus narrowing the contention to the equal treatment of vessels and ignoring the engagement of the treaty as to the equal treatment of citizens. The reply fails to meet the complaint. Moreover, it is at variance with the allegation elsewhere put forth that the purpose of the order is to encourage the passage of grain cargoes through the canals, for in fact it directly discourages a large traffic which would pass through the Welland Canal if the superior facilities for transshipments afforded by the elevators at Ogdensburg and Oswego were an inducement to send grain cargoes by the Welland route. The order is in this regard a naked discrimination against the American citizen, for the enforcement of which the canal tolls are employed as a convenient instrument.

Third. As to the traffic passing through the St. Lawrence River canals, a third discrimination exists which is in absolute and open violation of the intent of the treaty, for if the starting point of the grain cargo for export be a Canadian Lake Ontario port the toll is but 2 cents per ton, while the 20-cent rate is exacted on grain for the same destination from the American Lake Ontario ports. This is a new discrimination, appearing for the first time in the Canadian order of April 4, 1892, and imposes a differential treatment against American ports and American citizens not existing, or even contemplated as a probability, when the Lake Carriers' Association presented its memorial of September 18, 1891, to which the present note of the British chargé purports to reply. The Canadian argument is, therefore, silent as to this perhaps the most intentionally vexatious discrimination against the stipulated privilege of citizens of the United States to use the Canadian canals "on terms of equality with the inhabitants of the Dominion."

Fourth. A fourth discrimination as regards the system of tolls adopted in the Welland Canal was applied by a Dominion order of April 11, 1890, regulating the tolls on coal. By that order the toll on coal passing down the canal, eastward bound, was reduced from 20 cents to 10 cents per ton, but the full toll of 20 cents per ton was left on coal bound up the canal, westward. The memorial fully exhibits the discriminatory effect of this difference between eastward and westward rates, showing that the down-rate of 10 cents applied in 1890 to 22,781 tons of coal carried in Canadian vessels to Canadian ports, and to only 615 tons carried in an American vessel to an American port. Of the coal carried up the canal and compelled to pay a toll of 20 cents, 116,616 tons were carried between ports of the United States, 17,280 from a United states to a Canadian port, and 80 tons only between Canadian ports. This adroit manipulation of the tolls operates to tax the commerce of American citizens much more heavily than that of Canadians, and goes far to explain the statement "that of the total cargo tonnage of the Welland Canal during the year 1890, 57 per cent destined for American ports paid more than 72 per cent of the tolls; and 43 per cent destined for Canadian ports paid less than 28 per cent of the tolls.” This statement, supported as it is by Canadian official statistics, is dismissed by the Canadian reply as follows:

The Canadian Government can not attach any weight to the pretensions of Mr. Keep that there is inequality in the use of the canals between Canadians and Americans on the ground that the tolls for the use of the canals going westward "are 20 cents per ton, while those for the use of the canal going eastward are only 10 cents per ton. Except as regards the grain products already discussed, he does not assert that there is any difference in respect of the amount of these tolls between Canadian and American vessels going eastward or westward, respectively, nor that the destination of the cargoes eastward or westward in any way affects the tolls paid. Cana

dian and American vessels pay the same toll for passing through the canal in the same direction, and are entirely unrestricted in respect of such tolls by their destination or by any other extraneous circumstances."

Here again, as throughout the note, the language of the treaty as to the equal treatment of the citizens of the two countries in their enjoyment of the facility of coastwise transit is lost sight of and a defensive argument is based on the circumstances that no differential toll is imposed on the vessels of either party.

Of the four classes of discrimination existing under the differential system of tolls and the differential regulations as to points of origin and transshipment, the Canadian reply deals with three, and with those only, by denying that any differential rules are applied to the disfavor of American vessels.

The Canadian reply disputes the accuracy of the figures given in the memorial of the Lake Carriers' Association respecting the levy of tolls to the aggregate amount of $53,395.67 in discrimination against the freight shipped by Canadian canals in 1891 to Ogdensburg. By confining the examination to the grain stuffs actually transshipped at Ogdensburg to Montreal after having come through the Welland Canal, which in 1891 amounted to 17,817 tons, the Canadian reply concludes that—

The rebate on this quantity, if allowed, would have been $3,207, and this sum constitutes the sole difference in tolls between the two routes, and the only amount in respect of which any discrimination could be claimed to exist.

There is no suggestion that the reduction of the Montreal-bound transshipments at Ogdensburg to the paltry figure of 17,817 tons may not have been the direct result of the discrimination complained of; and had the result of the order been altogether prohibitory and no transshipments of grain for Montreal been effected at Ogdensburg, it may be inferred that the Canadian government would have found therein evidence that no "difference" whatever exists "in tolls between the two routes."

Quitting the defensive argument in support of the contention that no discriminating treatment results from the system of tolls adopted in the Canadian cauals, the reply of the Dominion goes on to propose a compromise agreement, as follows:

That, as regards the navigation of the Welland and St. Lawrence canals, the imposition of tolls, and the granting of rebate thereon, the same treatment will be accorded to citizens of the United States as is given to the subjects of Her Britannic Majesty without regard to ports of transshipment or export, and that the United States will continue to deal in like manner with the subjects of Her Britannic Majesty in the use of the existing Sault Ste. Marie Canal. That the provisions of article 30 of the Treaty of Washington, granting carrying powers to vessels belonging to subjects of Her Britannic Majesty, as described in that article, be restored.

The thirtieth article of the treaty of Washington reads as follows: ARTICLE XXX. It is agreed that for the terms of years mentioned in Article XXXHI of this treaty, subjects of Her Britannic Majesty may carry in British vessels, without payment of duty, goods, wares, or merchandise, from one port or place within the territory of the United States upon the St. Lawrence, the Great Lakes, and the rivers connecting the same, to another port or place within the territory of the United States as aforesaid: Prorided, That a portion of such transportation is made through the Dominion of Canada by land carriage and in bond, under such rules and regulations as may be agreed upon between the Government of Her Britannic Majesty and the Government of the United States.

Citizens of the United States may for the like period carry in United States vessels, without payment of duty, goods, wares, or merchandise, from one port or place within the possessions of Her Britannic Majesty in North America, to another port or place within the said possessions: Provided, That a portion of such transportation is made through the territory of the United States by land carriage and in bond,

under such rules and regulations as may be agreed upon between the Government of the United States and the Government of Her Britannic Majesty.

The Government of the United States further engages not to impose any export duties on goods, wares, or merchandise carried under this article through the territory of the United States; and Her Majesty's Government engages to urge the Parliament of the Dominion of Canada and the legislatures of the other colonies not to impose any export duties on goods, wares, or merchandise carried under this article; and the Government of the United States may, in case such export duties are imposed by the Dominion of Canada, suspend during the period that such duties are imposed the right of carrying granted under this article in favor of the subjects of Her Britannic Majesty.

The Government of the United States may suspend the right of carrying granted in favor of the subjects of Her Britannic Majesty under this article, in case the Dominion of Canada should at any time deprive the citizens of the United States of the use of the canals in the said Dominion on terms of equality with the inhabitants of the Dominion, as provided in Article XXVII.

With regard to the last clause of this article, giving to the United States the power to suspend the carrying rights of Canadians in the United States in the event of Canada's denying equal treatment to American citizens in the use of the Dominion canals, the Canadian reply quotes from the authorized protocol of the high commissionersThat they desired and it was agreed that the transshipment arrangement should be made dependent upon the nonexistence of discriminating tolls or regulations of the Canadian canals and also upon the abolition of the New Brunswick export duty on American lumber intended for the United States. (For. Rels., 1871, p. 514.) And proceeds to argue that

It is accordingly evident that from the language of the thirtieth article of the treaty, supplemented by the protocol of the conference on that article, the remedy which the United States reserved to themselves in the event of Canada depriving the citizens of the United States of the use of the canals on terms of equality with her own people, was provided for by that article and was long ago resorted to by the United States [through the termination of the article in question in July, 1885, by two years' notice given by the United States in 1883], thus exacting from Canada the penalty for discrimination in the use of the canals, although no inequality really existed. While, therefore, the Canadian government are unable to admit that any discrimination in the use of the Canadian canal is made against United States vessels by the terms of the order in council, they maintain that, even if the fact that transshipment is confined to a Canadian port could be construed as constituting such a discrimination, the penalty agreed upon between the United States and Great Britain, in such an event, has already been exacted by the United States. Article XXX was one of several regulating the fishing privileges and certain phases of the intercourse of the United States and Canada which were incorporated into the treaty of Washington, and to which a duration was assigned of ten years certain and thereafter until two years' notice of their termination should be given by either party, as provided in the thirty-third article of the treaty, as follows:

ARTICLE XXXIII. The foregoing Articles XVIII to XXV inclusive, and Article XXX of this treaty shall take effect as soon as the laws required to carry them into operation shall have been passed by the Imperial Parliament of Great Britain, by the Parliament of Canada, and by the legislature of Prince Edward Island, on the one hand, and by the Congress of the United States on the other. Such assent having been given, the said articles shall remain in force for the period of ten years from the date at which they may come into operation; and further until the expiration of two years after either of the high contracting parties shall have given notice to the other of its wish to terminate the same, each of the high contracting parties being at liberty to give such notice to the other at the end of the said period of ten years or at any time afterward.

The language of the protocol of the conference, quoted in the Canadian reply, may be rightly taken as representing the judgment of the high commission that an engagement binding the United States to grant a privilege to Canada for a term of years was not equitably correlative with the reciprocal qualified privilege granted by Canada in