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The exemption, he said, clearly violated the Hay-Pauncefote Treaty and there was nothing left to do but to set the matter right. The part of the President's address that aroused the greatest interest was the conclusion: "I ask this of you in support of the foreign policy of the Administration.
The American public did not appreciate at the time the true significance of the Hay-Pauncefote Treaty, and a few years later Congress inserted in the Panama Tolls Act a clause exempting American ships engaged in the coast-wise trade from the payment of tolls.
While the Hay-Pauncefote treaty was limited in terms to the canal question, it was in reality of much wider significance. It amounted in effect to the transference of naval supremacy in the West Indies to the United States, for since its signature Great Britain has withdrawn her squadron from this important strategic area.
It occurs to me that the proper reasoning is this and I believe I took the same position when the treaty was under consideration: The first and second Hay-Pauncefote treaties must be construed together; the first Hay-Pauncefote Treaty contained a prohibition against fortification; the second Hay-Pauncefote Treaty neither prohibited nor in terms agreed to fortifications, but was silent on the subject; therefore, the legal construction would be that Great Britain had receded from the position that the canal should not be fortified.
Colonel House informed the Foreign Secretary that President Wilson was now convinced that the Panama Act violated the Hay-Pauncefote Treaty and that he intended to use all his influence to secure its repeal. The matter, the American urged, was a difficult one, since it would be necessary to persuade Congress to pass a law acknowledging its mistake.
Secretary Hay had been Ambassador to Great Britain, and he enjoyed the confidence of the then existing British Ministry to a greater degree than almost any minister or ambassador we have ever sent to Great Britain. After entering the State Department, Mr. Hay at once directed his attention to the making of a new treaty with Great Britain and this resulted in the first Hay-Pauncefote Treaty.
By the terms of the Hay-Pauncefote treaty with Great Britain, the United States agreed that the canal should be free and open to all nations "on terms of entire equality." In 1912 Congress enacted legislation exempting American coast-wise vessels from the payment of tolls, despite the protest of Great Britain.
They had perhaps the sensitiveness of authors about their capacity to say exactly what they meant. They wanted to recognize their own international piece when it was put on the stage by the commercially minded producers of the Senate. The history of the Hay-Pauncefote treaty is interesting and unfamiliar.
She wisely decided, therefore, to recede from the position which she had held for half a century and to give us a free hand in the construction and control of the canal at whatever point we might choose to build it. While the Hay-Pauncefote treaty was limited in terms to the canal question, it was in reality of much wider significance.
An act passed in 1912 had exempted American coastwise shipping passing through the Canal from the tolls assessed on other vessels, and the British Government had protested against this on the ground that it violated the Hay-Pauncefote treaty of 1901, which had stipulated that the Canal should be open to the vessels of all nations "on terms of entire equality."
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