Lastly, Article IV of the Hay-Pauncefote Treaty must be read in
conjunction with Article II. The latter does not exclusively
contemplate the construction of the Canal by the United States, it
contemplates rather the construction _under the auspices of the United
States, either_ directly at her cost, _or_ by gift or loan of money to
individuals or corporations, _or_ through subscription to or purchase
of stocks and shares. The question may well be asked whether, in case
the United States had not acquired the Canal territory and had not
herself made the Canal, but had enabled a company to construct it by
the grant of a loan, or by taking shares, and the like, she would then
also have interpreted the words "all nations" to mean "all foreign
nations," and would, therefore, have claimed the right to insist upon
her own vessels enjoying such privileges in the use of the Canal as
need not be granted to vessels of other nations. Can there be any doubt
that she would _not_ have done it? And if we can reasonably presume
that she would not have done it under those conditions, she cannot do
it now after having acquired the Canal territory and having herself
made the Canal, for Article IV declares that a change in the
territorial sovereignty of the Canal territory shall neither affect the
general principle of neutralisation nor the obligation of the parties
under the treaty.

V.

I have hitherto only argued against the contention of President Taft
that the words "all nations" mean all foreign nations, and that,
therefore, the United States could grant to her vessels privileges
which need not be granted to vessels of other States using the Panama
Canal. For the present the United States does not intend to do this,
although Section 5 of the Panama Canal Act--see above I, p. 6--empowers
the President to do it within certain limits. For the present the
Panama Canal Act exempts only vessels engaged in the American coasting
trade from the payment of tolls, and the memorandum of President Taft
maintains that this exemption does not discriminate against foreign
vessels since these, according to American Municipal Law, are entirely
excluded from the American coasting trade and, therefore, cannot be in
any way put to a disadvantage through the exemption from the payment of
the Canal tolls of American vessels engaged in the American coasting
trade.

At the first glance this assertion is plausible, but on further
consideration it is