Arizona republican., 1913-01-24
GREY'SPR0TEST
 BRINGS REPLY
 FROM MR. KNOX
In Substance Advises Not Attempting to Cross Bridge Before Coming to it and Says Diplomacy Will Find Solution
ASSOCIATED PRESS DIsPATcH1

WASHINGTON, D. C., Jan. 23.- The reply of Secretary Knox to the British protest against the exemption of American coastwise shipping rom the Panama canal tolls, assures the British government that domestic coastwise trade will not be permitted to extend it's operation to foreign competitive fields The reply also gives an assurance that increased tolls will not be laid on foreign ship ping to balance the remission to the American ships.
 If Britain is not satisfied with these points, America proposes a speclai commission of adjustment of com munication is devoted to the purpose of reducing to the smallest point and numbers the issues upon which the two governments failed to agree, and as these are the only two contendlng. they are entirely susceptible to ad- iustment by diplomatic means, and without recourse to arbitration. Ii this course does not prove acceptable to the British government it Is sug- gested that the whole controversy be referred to a special commission of inquiry, provision for which IS made in the unratified Knox Bryce general arbitration treaty.
 The convention is approved by the senate with an amendment which curtaiIed the power of the special commission of inquiry to merely in yestigate and report and refused to permit the commission to bind either country in the course of the arbl- tration to its findings. Because of this amendment President Taft has so far declined to consummate the with the British government.
 To meet the needs of the present issue. Secretary Knox now offers to give life to the treaty by an inn mediate exchange of notifications, which would insure the existence of general arbitration treaty between America and Britain, after the lapse of the existing Hay Pauncefote treaty on June next
 As an alternative. the secretary is willing that commission be created for the special purpose of ascertain ing the facts with regard to the effect on British shipping of the Panama canal tolls act and the presi- dents proclamation fixing the tolls. Much of the secretary's argument in his contention that Sir Edward Grey's protest is being made to advance the issue of the presidents proclama tion fixing the tolls, is entirely in applicable to the controversy in it's present state, and that as a matter of fact, the British conention rests on he apprehension of things that may happen in the future to the injury of British shipping which in all probability will never occur. Secretary Knox begins his note which will be delivered to the British i foreign office through MT. Laughlin the American in charge in London by a flat statement that he will not argue on the British interpretation of the canal treaties so far as they 1 limit the freedom of the action oi America or infringe the British treaty rights.
 Pointing out that the Grey not was | issued without consideration of the presidents toll proclamation, the sec retary states that Sir Edward deals chiefly with the possibilities of what i the president might do under the | canal act, whereas the proclamation J has entirely changed the situation.