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 country. That is the main controversy, and the only controversy which we need consider for the moment. There is a subsidiary point as to whether the exemption from tolls of American coastwise shipping would be an infringement of the Treaty, even on the British construction, and upon that I will say a word or two at a later stage.

Turning, then, to the main controversy, we have to observe in the first place that the United States have now obtained sovereign control over the Canal—in the words of Sir E. Grey, they are the 'practical sovereigns' of it. It follows that, in the absence of any limitation of their sovereign power, they can impose tolls at such rates and with such exemption and discrimination as they please. The onus is on Great Britain to establish that these powers have been restricted, and this she seeks to do by reference to the Hay-Pauncefote Treaty of 1901.

The difference between the two countries turns, therefore, primarily on the construction of the Treaty of 1901, and I now invite your attention to it, and in the first instance to the preamble and to Article III, Rule 1, on which Great Britain relies. To the rest of the Treaty I will return at a later stage.

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His Majesty Edward the Seventh, &hellip; and the United States of America, being desirous to facilitate the construction of a ship-canal to connect the Atlantic and Pacific Oceans, by whatever route may be considered expedient, and to that end to remove any objection which may arise out of the Convention of the 19th April, 1850, commonly called the Clayton-Bulwer Treaty, to the construction of such canal under the auspices of the Government of the United States, without impairing the 'general principle' of neutralization established in Article VIII of that Convention.