Captain Mahan, writing of these conditions, said: “These islands are the key to the Pacific. For a foreign nation to hold them would mean that our Pacific ports and our Pacific commerce would be at the mercy of that nation.” In the early part of the Spanish war (July, 1898) the resolution for the annexation of the Hawaiian Islands was passed by Congress and approved by President McKinley, and the string of pearls was cast about Columbia’s fair neck. Pius Fund It seems strange that the first case to be tried in the peace court of the nations at the Hague should have been in regard to the Pius Fund of the Californias collected by the Jesuit padres two hundred and thirty years before, to build missions for the Indians of California. The way in which this money was obtained is described in Chapter IV of this history. It grew to be a large sum, of which the Mexican government took control, paying the interest to the Roman Catholic Church in Upper and Lower California. After the Mexican war, Mexico refused to pay its share to the Church of Upper California. The United States took up the matter, claiming that according to the treaty which closed the war, the Catholic Church of the state of California had a right to its Mexican property. In 1868 it was agreed by the two countries to leave the matter to the decision of Sir Edward Thornton, English ambassador at Washington. He decided that Mexico should pay an amount equal to one half the interest since the war. Mexico did this, but had paid nothing during all the years which had passed since that time. To settle the dispute finally, it was decided to leave it to arbitration by the Hague court. The verdict given was that Mexico should pay the Roman Catholic Church of California $1,400,000 for the past, and one half the interest on the fund each year from February, 1903, forever. Panama Canal The natural result of the nation’s need in the Civil War was the overland railroad. The danger to the Oregon on its long journey, the difficulties in getting reinforcements to Admiral Dewey, and the possession of new lands in the Pacific led to decided action in regard to the building of a ship canal through the Isthmus of Panama. For years the plan had been talked over. In General Grant’s first term as President he saw so plainly our need of this water way, that he arranged a canal treaty with Colombia, and it seemed as though the work would soon begin, but the Colombian government refused to allow the matter to go on, hoping to make better terms with the United States. This was not possible then, so the plan was not carried out. Later, a French company undertook to build a canal across Panama, but after several years of work failed.