To one unskilled in legal technicalities, the Panama controversy involved no great difficulty.  Since 1850 the United States and Great Britain had had a written understanding upon the construction of the Panama Canal.  The Clayton-Bulwer Treaty, which was adopted that year, provided that the two countries should share equally in the construction and control of the proposed waterway across the Isthmus.  This idea of joint control had always rankled in the United States, and in 1901 the American Government persuaded Great Britain to abrogate the Clayton-Bulwer Treaty and agree to another—­the Hay-Pauncefote—­which transferred the rights of ownership and construction exclusively to this country.  In consenting to this important change, Great Britain had made only one stipulation.  “The Canal,” so read Article III of the Convention of 1901, “shall be free and open to the vessels of commerce and war of all nations observing these rules, on terms of entire equality, so that there shall be no discrimination against any such nation, or its citizens or subjects, in respect of the conditions or charges of traffic, or otherwise.”  It would seem as though the English language could utter no thought more clearly than this.  The agreement said, not inferentially, but in so many words, that the “charges” levied on the ships of “all nations” that used the Canal should be the same.  The history of British-American negotiations on the subject of the Canal had always emphasized this same point.  All American witnesses to drawing the Treaty have testified that this was the American understanding.  The correspondence of John Hay, who was Secretary of State at the time, makes it clear that this was the agreement.  Mr. Elihu Root, who, as Secretary of War, sat next to John Hay in the Cabinet which authorized the treaty, has taken the same stand.  The man who conducted the preliminary negotiations with Lord Salisbury, Mr. Henry White, has emphasized the same point.  Mr. Joseph H. Choate, who, as American Ambassador to Great Britain in 1901, had charge of the negotiations, has testified that the British and American Governments “meant what they said and said what they meant.”

In the face of this solemn understanding, the American Congress, in 1912, passed the Panama Canal Act, which provided that “no tolls shall be levied upon vessels engaged in the coastwise trade of the United States.”  A technical argument, based upon the theory that “all nations” did not include the United States, and that, inasmuch as this country had obtained sovereign rights upon the Isthmus, the situation had changed, persuaded President Taft to sign this bill.  Perhaps this line of reasoning satisfied the legal consciences of President Taft and Mr. Knox, his Secretary of State, but it really cut little figure in the acrimonious discussion that ensued.  Of course, there was only one question involved; that was as to whether the exemption violated the Treaty.  This is precisely the one point that nearly all the