File No. 811f.812/304.]

The American Ambassador to the Secretary of State .

[Telegram.—Paraphrase.]
No. 1032.

At Sir Edward Grey’s request I called at the Foreign Office today to converse with him about the Panama Canal. Sir Edward presented three points as follows:

In helping to get the Clayton-Bulwer Treaty out of the way, and in negotiating the Hay-Pauncefote Treaty, Great Britain has shown the friendliest feeling toward the United States.

Later on, by assenting to our fortification of the canal, she tried to render us a genuine service.

Great Britain, in doing this, was relying entirely upon what she considered to be the unequivocal pledge of the United States to manage the canal without discrimination in favor of any nation, not even of itself.

But the reported action seemed to Sir Edward to propose a distinct violation of that treaty pledge.

Furthermore, he called my attention to what he termed an invidious discrimination against important Canadian interests involved in the proposal to exclude from the privileges of the canal the steamships owned by railway companies.

The British Government, he said, did not wish to seem premature, but were unwilling to give ground for an assertion that their silence had been taken for consent.

After explaining that I was without instructions on the subject, and derived all I knew about it from cable despatches, I said that there were a few points worthy to be considered, it seemed to me, before taking definite position.

First, there was no probability that, if the United States had not taken up the construction of the Panama Canal, any other nation would have taken it up. The French effort to construct the canal had been a failure, and if an effort by any other nation had been made with seeming promise of success, invocation of the Monroe [Page 471] Doctrine against it would probably have been insisted on by the people of the United States. The United States, having practically no merchant marine, was the one great commercial nation which had no immediate means of using the canal to its profit.

I also thought that in view of the changes in sovereignty and the subsequent perpetual lease by the United States of the whole canal zone, there were publicists who questioned whether the Hay-Pauncefote Treaty could now be equitably, or even legally, applied to the full extent of its language.

Finally I observed that the investment already made and sure to be made before the canal could be opened was too colossal to justify any nation in supposing that the United States was making it from purely philanthropic motives; thus from the outset it must have been assumed that the United States saw some means of deriving from the investment a benefit for itself.

Sir Edward replied to these remarks that,

If great commercial nations other than the United States were the only ones to make much use of the canal, they would consequently be the only ones paying the tolls that would give us the interest on our investments;

The United States would surely derive a direct advantage from the facility with which we could transfer our naval supremacy from one coast to the other, even if we had no merchant ships whatever.

I made it perfectly clear that my remarks were purely personal and unofficial, but that I should report to you our conversation.

Reid.