The Birmingham age-herald., 1912-12-10
Objects to Exemption of American Coastwise Shipping From
 Canal Rates
CLAIMS VIOLATION
 OF HAY-PAUNCEFOTE TREATY BY CANAL ACT
Would Be Impossible to Frame Regu- latiOns Which Would Not Result in Preference to American
 Shipping, Is Ground Taken

Washington. December 9.-Great Brit aims formal note of protest against that section of the Panama canal act which exempts American coastwise shipping from payment of tolls for passing through the Panama canal, a document written by Sir Edward Grey, British minister for foreign affairs, was presented to Secre- tary of State Knox tonight by the British ambassador
 James Bryce read the note word for word to the Secretary at the latter S home. It is an elaboration of the points of objection in the note presented to the state department last July. In brief these objections are:
 That while it was clearly in violation of the Hay-Pauncefote treaty either to re- init or refund tolls on all American ship ping using the canal the same objection probably would apply to the coastwise trade shipping in view of the probable im- possibility of framing regulations that would not result in a preference to Amer ican shipping.
 Another Ground of Protest
 In addition to supporting these points by long arguments, Sir Edward Grey in dicates very clearly that strong resist ance will be offered to any attempt to exclude from the canal British ships owned by Canadian railroads or whose owners may be guilty of violating the Sherman antitrust act. He holds that this section of the act cannot apply to British shipping, but only to United States vessels.
 He also indicated in his note that un- deriving the objection to the exemption from toll of American coastwise ships Is an apprehension that in the future the principle might be extended to cover American ships in the foreign trade
 Otherwise the note is devoted almost entirely to an effort to demonstrate that any such exemption of American ship ninr as is proposed is in direct conflict with the terms of the Hay-Pauncetote treaty and that President Taft was clear lv wrong when he took the contrary VleW. Generally, the British note might pc summed up as a clear definition or the differences between the two governments regarding the construction or the Hay pauncefote treaty, winding up with a pro nosal that the issues should be settled bv arbitration, provided that they can moi he adjusted by mutual agreement, Tor which a way remains open
 Knox Listens Attentively
 Secretary Knox listened attentively 10 inc reading of the note and promised to take the matter under careful con sideration which he felt would reaare sonna time It has been strongly hll- mated in official circles, however thal if was the Presidents intention to settle this important question before eiosihs his administration, either by recommend ing that the Senate agree to submit u to arbitration. or preferably by the more direct means of an agreement between the two nations referred to In touay $ British note. -
 The ambassador was accompanied by Mir Innes. the counsellor and first sec letary of the embassy, and m iedulhS the entire British note to the secretary, followed the instruction of Sir Edward.
 Sir Edward Grey begins his note with kthe statement that the President does not fully appreciate the British roint ! of view. and has misunderstood even the note of July s. He says the Brltlsh government does not seek to prevent the United States from granting subsidies to it's own shipping passages through inc canal. nor does it seek to deprive the United States of any liberty which is open to either themselves or to any other nation, to encourage it's own snip x fr-4.a ping or own commerce by subsidies Tho uurpose of the United States in ncso- tiating the Hay-Paucefote treaty WAS to recover their freedom of action and cb- tain the right which they had surren- dered in the Clayton Buwer treaty to construct the canal themselves
 Liberty of Action Limited But this complete liberty of action was to be limited by the maintenance Of the complete principle of equal treatment for both English and United States ,hips. The word naturalization in the preamble of the Hay-Puncafote treaty is not confined to beligerent operations. | hut refers to the system 1f equal rights for which article provides. Joint protection and equal treatment 1 ----->--~>---~>-~>--~---~~--~ - tContinued on Page Sevcn)