the Canal territory and had not made the Canal at the time when she agreed with Great Britain upon the Hay-Pauncefote Treaty, she ought not to maintain that she granted to foreign nations the privilege of using her Canal under a conditional most-favoured-nation clause, she herself remaining unfettered with regard to the conditions under which she could allow her own vessels the use of the Canal. The historical facts are five in number:—

Firstly, in 1850, Great Britain and the United States, by the Clayton-Bulwer Treaty, agreed that neither of them would ever obtain or maintain for herself any exclusive control over a future Panama Canal, or fortify it, or occupy or colonise any part of Central America; that the Canal should be neutralised, should be open to the vessels of all nations under conditions of equality; and so forth.

Secondly, in 1901, the two parties to the Clayton-Bulwer Treaty agreed to substitute for it the Hay-Pauncefote Treaty, Article II of which expressly stipulates inter alia that the Canal may be constructed under the auspices of the Government of the United States and that the said Government, subject to the provisions of Articles III and IV, shall have the exclusive right of providing for the regulation and management of the Canal.

Thirdly, the parties agreed—see the preamble of the Hay-Pauncefote Treaty—that the general principle of the neutralisation of the Canal as established by the Clayton-Bulwer Treaty should not be impaired, and that, therefore, the United States—see Article III of the Hay-Pauncefote Treaty—agrees to adopt as the basis of the neutralisation of the Canal certain rules, substantially the same as those embodied in the Suez Canal Convention of 1888, and amongst these a rule concerning the use of the Canal by vessels of all nations on terms of entire equality without discrimination against any such nation, or their citizens or subjects, in respect of the conditions or charges of traffic, or otherwise, such conditions and charges to be just and equitable.

Fourthly, the parties agreed—see Article IV of the Hay-Pauncefote Treaty—that no change of the territorial sovereignty or of the international relations of the country or countries traversed by the future Canal should affect the general principle of the neutralisation or the obligation of the parties under the Hay-Pauncefote Treaty.

Fifthly, when, in 1903, the United States by the Hay-Varilla Treaty, acquired from the Republic of Panama the strip of territory necessary for the construction, administration, and protection of the Canal, she acquired sovereign rights over this territory and the future Canal subject to the antecedent restrictions imposed upon her by the Hay-Pauncefote Treaty, for Article IV of the latter stipulates expressly that no change of territorial sovereignty over the territory concerned shall affect the neutralisation or obligation of the parties under the treaty.

These are the unshakable historical facts. The United States did not first become the sovereign of the Canal territory and make the Canal, and afterwards grant to foreign nations the privilege of using the Canal under certain conditions. No, she has never possessed the power of refusing to grant the use of the Canal to vessels of foreign nations on terms of entire equality, should she ever make the Canal. Free navigation through the Canal for vessels of all nations on terms of entire equality, provided these nations were ready to recognise the neutrality of the Canal, was stipulated by the Clayton-Bulwer Treaty, and this stipulation was essentially upheld by the Hay-Pauncefote Treaty, and it was not until two years after the conclusion of the Hay-Pauncefote Treaty that the United States acquired sovereign rights over the Canal territory and made preparations for the construction of the Canal. For this reason the contention of the United States that she has granted to foreign nations the use of the Canal under certain conditions and that such grant includes a conditional most-favoured-nation treatment, is absolutely baseless and out of place. She has not granted anything, the free use of the Canal by vessels of all nations having been the condition under which Great Britain consented to the abrogation of the Clayton-Bulwer Treaty and to the stipulation of Article II of the Hay-Pauncefote Treaty according to which—in contradistinction to Article I of the Clayton-Bulwer Treaty—the United States is allowed to have a canal constructed under her auspices.

III.

If the assertion of the United States that she herself is entirely unfettered in the use of the Canal, and that the conditions imposed upon foreign vessels in return for the privilege of using the Canal involve a most-favoured-nation treatment, were correct, the United States would not be bound to submit to the rules laid down by Article III, Nos. 2-6, of the Hay-Pauncefote Treaty. She could, therefore, if she were a belligerent, commit acts of hostility in the Canal against vessels of her opponent; could let her own men-of-war revictual or take in stores within the Canal even if there were no strict necessity for doing so; could embark and disembark troops, munitions of war, or warlike materials in the Canal, although all these were destined to be made use of during the war generally, and not only for the defence of the Canal against a possible attack. There ought, however, to be no doubt that the United States is as much bound to obey the rules of Article III of the Hay-Pauncefote Treaty as Great Britain or any other foreign State. These rules are intended to invest the Canal with the character of neutrality. If the United States were not bound to obey them, the Canal would lose its neutral character, and, in case she were a belligerent, her opponent would be justified in considering the Canal a part of the region of war and could, therefore, make it the theatre of war. The mere fact that Article III of the Hay-Pauncefote Treaty refers to the rules in existence concerning the neutralisation of the Suez Canal, and that Article IV of the Suez Canal Treaty of 1888 expressly stipulates the neutralisation of the Canal even should Turkey be a belligerent, ought to be sufficient to prove that the neutralisation of the Panama Canal is stipulated by the Hay-Pauncefote Treaty even should the United States be a belligerent.

Furthermore, one must come to the same conclusion if one takes into consideration the objects, which are three in number, of the neutralisation of an inter-oceanic canal.

The first object is that a canal shall be open in time of war as well as in time of peace, so that navigation through the canal may be unhampered by the fact that war is being waged. If the canal were not neutralised, the territorial sovereign would be compelled, if he were neutral in a war, to prevent the passing through the canal of men-of-war of either belligerent, because such passage would be equivalent to the passage of belligerent troops through neutral land territory.

The second object is that the territorial sovereign shall be prevented from closing a canal or interfering with the free use of it by vessels of all nations in case he himself is a party to a war. If the canal were not neutralised, the belligerent territorial sovereign could, during the war, close the canal or interfere with its free use by neutral vessels.

The third object is that a canal shall not be damaged, nor navigation thereon be prevented or hampered by the opponent in case the territorial sovereign is himself a belligerent. If the canal were not neutralised, it could be blockaded, militarily occupied, and hostilities could be committed there.

With these points in mind one may well ask whether it was worth while to agree at all upon the five rules of Article III, Nos. 2-6, of the Hay-Pauncefote Treaty if the United States were not to be considered bound by these rules. That two years after the conclusion of the Hay-Pauncefote Treaty the United States