The Sentinel=record., 1912-12-10
MAKES FORMAL OBJECTION TO PANAMA CANAL ACT ON COAST
 WISE VESSEL TOLLS.
VIOLATION OF FORMER TREATY
Say English cargoes Could Be Land ed on One Coast and Reshipped at Saving-Would Submit
 Question to Arbitration.

Washington, Dec. 9.-Great Bri. tain's formal note of protest agains. that section of the Panama canal acl which exempts American coastwise shipping from payment of tolls 10. passing through the Panama canal l document written by Sir Edward Gray, British minister for foreign ar. fairs was presented to Secretary oi State Knox tonight by the British ambassador.
 James Bryce read the note word for word to the secretary at the lat ter's home. It is an elaboration o' the ponts of objection in the nots presented &to the state department last July.
 In brief these objections are
 That while it was in violation ot the -Pauncefote treaty eiIner to remit or refund tolls on all Ameri- can shipping using the canal, the same objection probably would apply to the coastwise trade shipping in view of the probable impossiDIlty of framng regulations that would not re. suit n a preference to American ship ping. In addition to supporting these points by long arguments Grey indi- cates very clearly that strong resist ance will be offered to any attempt 10 exclude from the canal her ships owned by Canadian railroads Or whose owners may be guilty of vioat- ing the Sherman antitrust act. --~ holds that this section of the act can ans.ttf fx4x .f,f fptp to United States vessels.
 He also indicates in his note that underlying the objection to the ex- amption from toll of American coast wise ships is an apprehension that in the future the principle might be extended to cover Amercan ships in the foreign trade
 Otherwise the nose is devoted al most entirely to an effort to demon strate that any such exemption Of AmeTican shipping as is proposed is in direct conflict wth the terms oi the Hay-Pauncefote treaty and that President Taft was clearly wrong when he took the contrary view.
 aenerally, the British note might be summed up as a clear definition Of the differences between the two gov ernments regarding tne construction of the Hay-Pnncefote treaty, winding up with a proposal that the issues should be settled by arbitration, pro- vided that they cannot be adjusted by mutual agreement, for which Q way remains open.
 Secretary Knox listened attenta lively to the reading or the note and promised to take the matter under careful consideration which he felt would require some time. It has been strongly intimated in official circles however. that it was the presidents intention to settle this important ques- ion before closing his administration, either by recommending the senate agree to submit it 70 arbitration, of preferably by the more direct means of an agreement between the two na- tions referred to in today's British note.
 The ambassador, accompanied ny MT. Innes the counsellor and secTc- tary of the embassy and in reading the entire British note to the secre- tassy followed the instructions Of Sir Edward Grey.
 Sir Edward Grey begins his note with the statement that the pTesi- dent does not fully appreciate the British point of view and has mis- understood even tle note of July 5. He says the British government does not seek to prevent the United states from granting subsidies to its own shipping passing through the canal nor does it seek to deprive the Unit ed States of any liberty which $ open to either themselves or to any other nation to encourage it's own shipping or own commerce by sub sides. The purpose of the United state in negotiating the Hay-Paunee- fote treaty was 10 recover their free dom of objection of obtain the right which they had surrendered in the Clayton -Bulwer treaty to construct the canal themselves.
 Rnt this complete liberty of action was to be limited by the maintaifi- ance of the complste principle of equal treatment for both English and United States ships. The word ''neu- tralization' in the preamble of tle Hay-Pauncefote treaty is not confined 10 bslligerent opinions but refers to the system of equal rights for which article provides. Joint protection and equal treatment are the only mat ters alluded to, to which that neu- tralization must refer
 Tt certainly was not the intention of the United States government says Sir Edward Grey. that any re- sponsibility for the protection of the canal should attach to them in t1e