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 coastwise trade of the United States. These two provisions raise somewhat different considerations and I propose to discuss them separately.

As to the first of them, you will observe that the minimum tolls exacted are to apply only to foreign ships. In regard to vessels of the United States or its citizens there is no fixed minimum at all and it is left to the President to prescribe such reduced tolls for them as he pleases. In other words, this provision authorizes the President to discriminate between British vessels and United States vessels engaged in foreign trade, and that this is the intention is clear from the Memorandum of the President which accompanies the Act: to which your attention has been called. I have already discussed this wider claim and submitted to you that it is untenable. The power has not yet been exercised, for the tolls prescribed do not differentiate between vessels engaged in foreign trade of whatever flag, but the Legislature has endorsed the claim and Great Britain cannot allow that to go unchallenged.

The second provision exempting coastwise shipping of the United States stands on a footing which may seem on the first view to be somewhat different, although, in my judgement, the difference is not a real one. Coastwise shipping, according to the law of the United States, is restricted to vessels flying the United States flag, and it is contended that since foreign vessels cannot take part in coastwise trade, there is no competition in regard to that trade between United States vessels and foreign vessels, and therefore no discrimination within the meaning of the Treaty. But if the basis on which this argument rests be examined it will be found to be wrong in fact. Coastwise vessels, as defined by the law of the United States, will compete with foreign-going vessels, and a discrimination in their favour will defeat