CHAPTER V.

THE HAY-PAUNCEFOTE TREATY.

In 1893 a new corporation, known as the New Panama Canal Company, took over all the assets of the De Lesseps Company, including the railway, and the work of construction was continued, or at least not wholly interrupted. Meanwhile the people of the United States were not greatly displeased at the collapse of the great French enterprise. They became more and more determined to construct an American canal under American control. The Nicaraguan route was still favoured by many as compared with that at Panama. In 1887 a surveying party was sent to Nicaragua, and the next year the Maritime Canal Company was established to promote the building of a canal there. It is important to notice this particular scheme, for under it work was actually begun. Wharves, warehouses, and a breakwater were constructed at Greytown, a railway was built, and some progress made with the canal itself. Outside the Panama route this was the only actual work of canal construction performed in Isthmian and Central America. The project failed owing to the great depression of trade which occurred in 1893 and the impossibility of getting more capital. It should be noticed that these projects of constructing an American canal at Nicaragua quite independently of Great Britain were right in the teeth of the Clayton-Bulwer Treaty of 1850, which still remained in force. Most sensible persons saw that the first preliminary to an American canal was to get this treaty abrogated or modified. But this purpose and canal schemes in general were delayed by the outbreak in 1898 of the Spanish-American War.

This was a naval war, and the United States were to feel the inconvenience and danger of having no sea communication between their eastern and western coasts except _via_ the far southern extremity of the continent. United fleet action over the whole theatre of the war was rendered impossible. An event soon occurred which finally completed the conviction of the American people that, in the words of President Grant, "an American canal on American soil" was a national necessity. At the beginning of the war the battleship _Oregon_, one of the finest ships in the United States navy, lay off San Francisco. She was not wanted there, but she was very badly wanted at the West Indies, the main scene of the naval struggle. To get there the _Oregon_ had to sail 13,400 miles round Cape Horn instead of 4,600 miles _via_ a Panama canal, if there had been one. Everybody in the United States knew that the precious warship was making that perilous journey exposed all the way to the attack of the enemy. If she had been lost, the course of the war might have been very different, and even the delay of this long passage was a serious consideration at so critical a time. However, the vessel arrived safely and in a record time off Florida, and the suspense and anxiety of the American people were changed into jubilation. But "never again" was the moral they drew from this painful and exciting experience.

At the end of the war a fresh canal campaign broke out in Congress, the claims of Nicaragua and Panama being urged by their respective champions. The outcome of this rivalry was the appointment of a commission, the third of the kind, to go to the isthmus and investigate both Nicaragua and Panama. We shall have something to say about the report of this commission, which was issued in December 1900. But already, before that appeared, negotiations had been set on foot between the United States and Great Britain with regard to the Clayton-Bulwer Treaty. Allusions to the subject by Mr. M'Kinley in his second message to Congress had brought the question prominently before the people of both countries. The president had spoken thus:--

That the construction of such a maritime highway is now more than ever indispensable to that intimate and ready communication between our eastern and western seaboards demanded by the annexation of the Hawaiian Islands and the prospective expansion of our influence and commerce in the Pacific, and that our national policy now more imperatively than ever calls for its control by this government, are propositions which I doubt not the Congress will duly appreciate and wisely act upon.

It is obvious that the annexation by the United States of Hawaii and the Philippines, the beginnings of an American oversea empire, had greatly strengthened the case for a canal owned and controlled by the United States, and bringing the eastern coasts, the governmental centre of the States, into far more direct communication with these new acquisitions in the west.

Mr. M'Kinley's pronouncement was soon followed by conversations between Mr. John Hay, the American Secretary of State, and Lord Pauncefote, British Ambassador at Washington. The result was a treaty which was laid before the Senate in February 1900. This first attempt, however, was unsuccessful. The American people were annoyed to find that it did not abrogate the Clayton-Bulwer Treaty, but left the United States with something very short of that independent control which they desired. Amendments were introduced, and, so altered, the treaty was ratified by the Senate on December 20, 1900. But in this new shape it proved unacceptable to the British government, and it was permitted to lapse; Lord Lansdowne, however, suggesting that another attempt at agreement should be made.

It may be asked why Great Britain, who had hitherto taken the view that it had nothing to gain, and perhaps much to lose, from the reconsideration of the Clayton-Bulwer Treaty, should now have been so willing to bring it under review. There was a variety of reasons. The government of the United States had protested for nearly fifty years against the agreement, and this pertinacity, together with the changed conditions since the Spanish-American War, may have weighed with the British government. Then the Alaskan boundary question was at that time still under discussion between the two countries, and a settlement was proving difficult. An obstinate resistance to the United States over the canal question might have continued that deadlock indefinitely. At this time, too, England was at the beginning of the Boer War, and finding that business a good deal more intricate than she had expected. The sentiment of Anglo-American friendship had also grown much warmer since the days when Lord Granville had repulsed the advances of Mr. Blaine.

In November 1901 a new treaty made its appearance. This was ratified by the Senate without amendment, and was ultimately concluded between the two Powers, being known as the Hay-Pauncefote Treaty.[3]

It is very important to note the provisions of this treaty, because it establishes what is known as the political "status" of the new canal. The Hay-Pauncefote expressly supersedes the Clayton-Bulwer Treaty and provides for the construction of a canal (mentioning no particular route) "under the auspices of the government of the United States," which country is "to have and enjoy all the rights incident to such construction, as well as the exclusive right of providing for the regulation and management of the canal." It adopts the principles of "neutralization" which were embodied in the Treaty of Constantinople of 1888 in connection with the Suez Canal. Both treaties provide for:--

1. Freedom of transit in time of peace or war for the vessels of all nations.

2. Freedom of the canal and its terminals from blockade.

3. A code of procedure for war-vessels entering or leaving the canal.

No special reference is made to the question of fortification, but the United States are to be at liberty to maintain such military police along the canal as may be necessary to protect it against lawlessness and disorder. A treaty, however, subsequently concluded between the United States and the Republic of Panama (known as the Hay-Bunau-Varilla Treaty) contains the following provision:--

If it should become necessary at any time to employ armed forces for the safety and protection of the canal, or of the ships that make use of the same, or the railways and auxiliary works, the United States shall have the right, at all times and in its discretion, to use its police and its land and naval forces or to establish fortifications for these purposes.

But the most important provision of all related to the question of the charges and other conditions of traffic through the canal. The meaning of the section seems plain enough, though it became a subject of rather acute controversy:--

The canal 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 and charges of traffic, or otherwise. Such conditions and charges of traffic shall be just and equitable.

This provision is reaffirmed in Article XVIII. of the Hay-Bunau-Varilla Treaty. There is no doubt that the British government regarded this promise of equal treatment as some compensation for the surrender of those rights of joint construction and control which Great Britain enjoyed under the Clayton-Bulwer Treaty. In fact, Mr. Hay, in a memorandum he sent to the Senate Committee on Foreign Relations, described the treaty as a sort of contract between Great Britain and the United States by which the former gave up those rights just mentioned in return for the "rules and principles" included in the new treaty, the chief among these being, of course, the provision about equality of treatment for all nations.

It was, therefore, a surprise when the United States government decided that the expression "all nations" did not include the United States themselves, and that it was quite open to them to give preferential treatment to their "coastwise" traffic. Under the term "coastwise" the United States include the sea-traffic not only between ports along a continuous coast, but between such points as San Francisco or Washington and the Philippine Islands. As a matter of fact, an amendment proposed by Mr. Burd in the Senate, reserving to the United States the right of favouring its "coastwise" traffic, had been defeated, when the new treaty was under discussion.

But, leaving these controversial questions, the most important thing for us to notice is that the Panama Canal has what is known as an "international status." It is not quite the sole and absolute property of the United States in the sense in which the Kiel Canal belongs to Germany, the Corinth Canal to Greece, and the Amsterdam or North Sea Canal to the Netherlands. Its status is governed by treaties which impose certain obligations and restrictions upon the United States and lay down certain rules of administration. It was intended at first to make the status of the Panama and the Suez Canal identical. But there are considerable differences. The "neutrality" of the Suez Canal is guaranteed by all the Powers of Europe, that of the Panama Canal by two only, England and the United States, and it is safeguarded and maintained by the United States alone. Then the Suez Canal is and must remain unfortified, while the Panama Canal will be strongly fortified by the United States.

The reader may wonder what precisely is meant by the word "neutral" as applied to the new waterway. The position will be as nearly as possible that indicated by Dr. Vaughan Cornish in the following passage:--

If there be a war in which the United States is not a party, the canal will be used by belligerents in exactly the same way as was the Suez Canal--for example, in the Russo-Japanese War--and the government of the United States has pledged itself to see that such neutrality is preserved. But if there be a war in which the United States is a party, the circumstances of fortification and operation by the United States in fact render it impossible for the other belligerent to use the canal, and are intended to have that effect. This being so, the United States is preparing to defend the canal from attack. Thus it is important to the proper understanding of the undertaking on which the United States government has embarked that we should clearly realize that the canal is only neutral in a restricted sense.[4]

As a matter of fact the status of the Panama Canal lies somewhere between neutralization and American control. The Hay-Pauncefote Treaty also lays down the rules which are to be observed by the ships of war of a belligerent using the canal and the waters adjacent to the canal--that is, within three marine miles of either end. They are similar to those in force at Suez, and need not be repeated here.

FOOTNOTES:

[3] Appendix i.

[4] "The Panama Canal and its Makers," pp. 42, 43.