74 PANAMA CANAL AND AMERICAN COMMERCE. 
“The Canal, when constructed, and the entrance thereto shall be neutral in 
perpetuity, and shall be opened upon the terms provided for by Section I of Article 
III thereof, and in conformity with all the stipulations of the treaty entered into 
by the Governments of the United States and Great Britain on November 18, 1901.” 
Section 1 of Article III of the Hay-Pauncefote treaty has already been quoted. 
The international obligations assumed suggest the administration of the 
Panama Canal as a politico-financial entity or corporation, distinct from the 
general finances of the Treasury Department. To demonstrate to all nations 
that the charges are just and equitable the balance sheet should always be open 
to inspection, showing the daily expenses of the Canal, including an interest charge 
of about $30,000 a day. ‘To show that there has been no discrimination against 
any nation, that balance sheet should show the tolls paid in respect of every “vessel 
of war,” be it American, British or German, and the tolls paid in respect of every 
“vessel of commerce,’’ be it American, Italian or Swedish. There must be a pay- 
ment in respect of every vessel “‘of commerce and war’”’ at amounts fixed, and on 
bases fixed (displacement, register tonnage, or whatever be chosen) which shall 
not vary according to the flag the ship floats. The alternative is no tolls whatever. 
Thus far we are bound by treaties and no further. 
We might perhaps as proprietors have proposed for American battleships the 
privilege of passing through the Canal free of tolls. We did not do so, although part 
of the price we paid to Panama was the concession—for what it is worth—of 
transporting her troop-ships over the Canal “‘at all times without paying charges of 
any kind.’’ Payment apparently will be made for vessels of war and for vessels of 
commerce, but so long as there is no discrimination according to the flag the rates 
may vary. We may provide that all battleships shall pay fifty cents per displace- 
ment ton and all merchant ships shall pay $1.20 per register ton. 
The principle which underlies the treaty is that of contribution toward the 
maintenance of the Canal in proportion to use and without national favor. Under 
any other principle we should be at liberty, if it suited the preferences or prejudices 
of those at any time temporarily charged with the administration of canal finances, 
to require that payments for Russian ships, for illustration only, should be double 
or half the rates paid for French ships, or that payments for foreign ships should 
constitute the entire receipts and that nothing should be paid for American ships. 
So long as payment is made the treaties do not and cannot undertake to declare 
by whom they shal be paid. In respect of vessels of war, the payment of tolls, of 
course, will be direct from the Treasury of the nation whose flag they fly, respec- 
tively. In respect of vessels of commerce, the payment will be a matter of domestic 
policy to be determined by each nation for itself in accord with the views which it 
entertains of the usefulness of its merchant shipping and the importance and 
purposes of navigation under its own flag through the Canal. Some nations will 
doubtless require their shipowners to pay the Panama Canal tolls on their own 
vessels and to make good the tolls with other operating expenses out of freight 
