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President[ William H. Taft

         Date[ December 7, 1909

The relations of the United States with all foreign governments have

continued upon the normal basis of amity and good understanding, and are

very generally satisfactory. EUROPE.

Pursuant to the provisions of the general treaty of arbitration concluded

between the United States and Great Britain, April 4, 1908, a special

agreement was entered into between the two countries on January 27, 1909,

for the submission of questions relating to the fisheries on the North

Atlantic Coast to a tribunal to be formed from members of the Permanent

Court of Arbitration at The Hague.

In accordance with the provisions of the special agreement the printed case

of each Government was, on October 4 last, submitted to the other and to

the Arbitral Tribunal at The Hague, and the counter case of the United

States is now in course of preparation.

The American rights under the fisheries article of the Treaty of 1818 have

been a cause of difference between the United States and Great Britain for

nearly seventy years. The interests involved are of great importance to the

American fishing industry, and the final settlement of the controversy will

remove a source of constant irritation and complaint. This is the first

case involving such great international questions which has been submitted

to the Permanent Court of Arbitration at The Hague.

The treaty between the United States and Great Britain concerning the

Canadian International boundary, concluded April 11, 1908, authorizes the

appointment of two commissioners to define and mark accurately the

international boundary line between the United States and the Dominion of

Canada in the waters of the Passamaquoddy Bay, and provides for the

exchange of briefs within the period of six months. The briefs were duly

presented within the prescribed period, but as the commissioners failed to

agree within six months after the exchange of the printed statements, as

required by the treaty, it has now become necessary to resort to the

arbitration provided for in the article.

The International Fisheries Commission appointed pursuant to and under the

authority of the Convention of April 11, 1908, between the United States

and Great Britain, has completed a system of uniform and common

international regulations for the protection and preservation of the food

fishes in international boundary waters of the United States and Canada.

The regulations will be duly submitted to Congress with a view to the

enactment of such legislation as will be necessary under the convention to

put them into operation.

The Convention providing for the settlement of international differences

between the United States and Canada, including the apportionment between

the two countries of certain of the boundary waters and the appointment of

commissioners to adjust certain other questions, signed on the 11th day of

January, 1909, and to the ratification of which the Senate gave its advice

and consent on March 3, 1909, has not yet been ratified on the part of

Great Britain.

Commissioners have been appointed on the part of the United States to act

jointly with Commissioners on the part of Canada in examining into the

question of obstructions in the St. John River between Maine and New

Brunswick, and to make recommendations for the regulation of the uses

thereof, and are now engaged in this work.

Negotiations for an international conference to consider and reach an

arrangement providing for the preservation and protection of the fur seals

in the North Pacific are in progress with the Governments of Great Britain,

Japan, and Russia. The attitude of the Governments interested leads me to

hope for a satisfactory settlement of this question as the ultimate outcome

of the negotiations.

The Second Peace Conference recently held at The Hague adopted a convention

for the establishment of an International Prize Court upon the joint

proposal of delegations of the United States, France, Germany and Great

Britain. The law to be observed by the Tribunal in the decision of prize

cases was, however, left in an uncertain and therefore unsatisfactory

state. Article 7 of the Convention provided that the Court was to be

governed by the provisions of treaties existing between the belligerents,

but that "in the absence of such provisions, the court shall apply the

rules of international law. If no generally recognized rule exists, the

court shall give judgment in accordance with the general principles of

justice and equity." As, however, many questions in international maritime

law are understood differently and therefore interpreted differently in

various countries, it was deemed advisable not to intrust legislative

powers to the proposed court, but to determine the rules of law properly

applicable in a Conference of the representative maritime nations. Pursuant

to an invitation of Great Britain a conference was held at London from

December 2, 1908, to February 26, 1909, in which the following Powers

participated: the United States, Austria-Hungary, France, Germany, Great

Britain, Italy, Japan, the Netherlands, Russia and Spain. The conference

resulted in the Declaration of London, unanimously agreed to and signed by

the participating Powers, concerning among other matters, the highly

important subjects of blockade, contraband, the destruction of neutral

prizes, and continuous voyages. The declaration of London is an eminently

satisfactory codification of the international maritime law, and it is

hoped that its reasonableness and fairness will secure its general

adoption, as well as remove one of the difficulties standing in the way of

the establishment of an International Prize Court.

Under the authority given in the sundry civil appropriation act, approved

March 4, 1909, the United States was represented at the International

Conference on Maritime Law at Brussels. The Conference met on the 28th of

September last and resulted in the signature ad referendum of a convention

for the unification of certain regulations with regard to maritime

assistance and salvage and a convention for the unification of certain

rules with regard to collisions at sea. Two new projects of conventions

which have not heretofore been considered in a diplomatic conference,

namely, one concerning the limitation of the responsibility of shipowners,

and the other concerning marine mortgages and privileges, have been

submitted by the Conference to the different governments.

The Conference adjourned to meet again on April 11, 1910.

The International Conference for the purpose of promoting uniform

legislation concerning letters of exchange, which was called by the

Government of the Netherlands to meet at The Hague in September, 1909, has

been postponed to meet at that capital in June, 1910. The United States

will be appropriately represented in this Conference under the provision

therefor already made by Congress.

The cordial invitation of Belgium to be represented by a fitting display of

American progress in the useful arts and inventions at the World's Fair to

be held at Brussels in 1910 remains to be acted upon by the Congress.

Mindful of the advantages to accrue to our artisans and producers in

competition with their Continental rivals, I renew the recommendation

heretofore made that provision be made for acceptance of the invitation and

adequate representation in the Exposition. The question arising out of the

Belgian annexation of the Independent State of the Congo, which has so long

and earnestly preoccupied the attention of this Government and enlisted the

sympathy of our best citizens, is still open, but in a more hopeful stage.

This Government was among the foremost in the great work of uplifting the

uncivilized regions of Africa and urging the extension of the benefits of

civilization, education, and fruitful open commerce to that vast domain,

and is a party to treaty engagements of all the interested powers designed

to carry out that great duty to humanity. The way to better the original

and adventitious conditions, so burdensome to the natives and so

destructive to their development, has been pointed out, by observation and

experience, not alone of American representatives, but by cumulative

evidence from all quarters and by the investigations of Belgian Agents. The

announced programmes of reforms, striking at many of the evils known to

exist, are an augury of better things. The attitude of the United States is

one of benevolent encouragement, coupled with a hopeful trust that the good

work, responsibly undertaken and zealously perfected to the accomplishment

of the results so ardently desired, will soon justify the wisdom that

inspires them and satisfy the demands of humane sentiment throughout the

world.

A convention between the United States and Germany, under which the

nonworking provisions of the German patent law are made inapplicable to the

patents of American citizens, was concluded on February 23, 1909, and is

now in force. Negotiations for similar conventions looking to the placing

of American inventors on the same footing as nationals have recently been

initiated with other European governments whose laws require the local

working of foreign patents.

Under an appropriation made at the last session of the Congress, a

commission was sent on American cruisers to Monrovia to investigate the

interests of the United States and its citizens in Liberia. Upon its

arrival at Monrovia the commission was enthusiastically received, and

during its stay in Liberia was everywhere met with the heartiest

expressions of good will for the American Government and people and the

hope was repeatedly expressed on all sides that this Government might see

its way clear to do something to relieve the critical position of the

Republic arising in a measure from external as well as internal and

financial embarrassments. The Liberian Government afforded every facility

to the Commission for ascertaining the true state of affairs. The

Commission also had conferences with representative citizens, interested

foreigners and the representatives of foreign governments in Monrovia.

Visits were made to various parts of the Republic and to the neighboring

British colony of Sierra Leone, where the Commission was received by and

conferred with the Governor.

It will be remembered that the interest of the United States in the

Republic of Liberia springs from the historical fact of the foundation of

the Republic by the colonization of American citizens of the African race.

In an early treaty with Liberia there is a provision under which the United

States may be called upon for advice or assistance. Pursuant to this

provision and in the spirit of the moral relationship of the United States

to Liberia, that Republic last year asked this Government to lend

assistance in the solution of certain of their national problems, and hence

the Commission was sent.

The report of our commissioners has just been completed and is now under

examination by the Department of State. It is hoped that there may result

some helpful measures, in which case it may be my duty again to invite your

attention to this subject.

The Norwegian Government, by a note addressed on January 26, 1909, to the

Department of State, conveyed an invitation to the Government of the United

States to take part in a conference which it is understood will be held in

February or March, 1910, for the purpose of devising means to remedy

existing conditions in the Spitzbergen Islands.

This invitation was conveyed under the reservation that the question of

altering the status of the islands as countries belonging to no particular

State, and as equally open to the citizens and subjects of all States,

should not be raised.

The European Powers invited to this Conference by the Government of Norway

were Belgium, Denmark, France, Germany, Great Britain, Russia, Sweden and

the Netherlands.

The Department of State, in view of proofs filed with it in 1906, showing

the American possession, occupation, and working of certain coal-bearing

lands in Spitzbergen, accepted the invitation under the reservation above

stated, and under the further reservation that all interests in those

islands already vested should be protected and that there should be

equality of opportunity for the future. It was further pointed out that

membership in the Conference on the part of the United States was qualified

by the consideration that this Government would not become a signatory to

any conventional arrangement concluded by the European members of the

Conference which would imply contributory participation by the United

States in any obligation or responsibility for the enforcement of any

scheme of administration which might be devised by the Conference for the

islands.

THE NEAR EAST.

His Majesty Mehmed V, Sultan of Turkey, recently sent to this country a

special embassy to announce his accession. The quick transition of the

Government of the Ottoman Empire from one of retrograde tendencies to a

constitutional government with a Parliament and with progressive modern

policies of reform and public improvement is one of the important phenomena

of our times. Constitutional government seems also to have made further

advance in Persia. These events have turned the eyes of the world upon the

Near East. In that quarter the prestige of the United States has spread

widely through the peaceful influence of American schools, universities and

missionaries. There is every reason why we should obtain a greater share of

the commerce of the Near East since the conditions are more favorable now

than ever before.

LATIN AMERICA.

One of the happiest events in recent Pan-American diplomacy was the

pacific, independent settlement by the Governments of Bolivia and Peru of a

boundary difference between them, which for some weeks threatened to cause

war and even to entrain embitterments affecting other republics less

directly concerned. From various quarters, directly or indirectly

concerned, the intermediation of the United States was sought to assist in

a solution of the controversy. Desiring at all times to abstain from any

undue mingling in the affairs of sister republics and having faith in the

ability of the Governments of Peru and Bolivia themselves to settle their

differences in a manner satisfactory to themselves which, viewed with

magnanimity, would assuage all embitterment, this Government steadily

abstained from being drawn into the controversy and was much gratified to

find its confidence justified by events.

On the 9th of July next there will open at Buenos Aires the Fourth

Pan-American Conference. This conference will have a special meaning to the

hearts of all Americans, because around its date are clustered the

anniversaries of the independence of so many of the American republics. It

is not necessary for me to remind the Congress of the political, social and

commercial importance of these gatherings. You are asked to make liberal

appropriation for our participation. If this be granted, it is my purpose

to appoint a distinguished and representative delegation, qualified

fittingly to represent this country and to deal with the problems of

intercontinental interest which will there be discussed.

The Argentine Republic will also hold from May to November, 1910, at Buenos

Aires, a great International Agricultural Exhibition in which the United

States has been invited to participate. Considering the rapid growth of the

trade of the United States with the Argentine Republic and the cordial

relations existing between the two nations, together with the fact that it

provides an opportunity to show deference to a sister republic on the

occasion of the celebration of its national independence, the proper

Departments of this Government are taking steps to apprise the interests

concerned of the opportunity afforded by this Exhibition, in which

appropriate participation by this country is so desirable. The designation

of an official representative is also receiving consideration.

To-day, more than ever before, American capital is seeking investment in

foreign countries, and American products are more and more generally

seeking foreign markets. As a consequence, in all countries there are

American citizens and American interests to be protected, on occasion, by

their Government. These movements of men, of capital, and of commodities

bring peoples and governments closer together and so form bonds of peace

and mutual dependency, as they must also naturally sometimes make passing

points of friction. The resultant situation inevitably imposes upon this

Government vastly increased responsibilities. This Administration, through

the Department of State and the foreign service, is lending all proper

support to legitimate and beneficial American enterprises in foreign

countries, the degree of such support being measured by the national

advantages to be expected. A citizen himself can not by contract or

otherwise divest himself of the right, nor can this Government escape the

obligation, of his protection in his personal and property rights when

these are unjustly infringed in a foreign country. To avoid ceaseless

vexations it is proper that in considering whether American enterprise

should be encouraged or supported in a particular country, the Government

should give full weight not only to the national, as opposed to the

individual benefits to accrue, but also to the fact whether or not the

Government of the country in question is in its administration and in its

diplomacy faithful to the principles of moderation, equity and justice upon

which alone depend international credit, in diplomacy as well as in

finance.

The Pan-American policy of this Government has long been fixed in its

principles and remains unchanged. With the changed circumstances of the

United States and of the Republics to the south of us, most of which have

great natural resources, stable government and progressive ideals, the

apprehension which gave rise to the Monroe Doctrine may be said to have

nearly disappeared, and neither the doctrine as it exists nor any other

doctrine of American policy should be permitted to operate for the

perpetuation of irresponsible government, the escape of just obligations,

or the insidious allegation of dominating ambitions on the part of the

United States.

Beside the fundamental doctrines of our Pan-American policy there have

grown up a realization of political interests, community of institutions

and ideals, and a flourishing commerce. All these bonds will be greatly

strengthened as time goes on and increased facilities, such as the great

bank soon to be established in Latin America, supply the means for building

up the colossal intercontinental commerce of the future.

My meeting with President Diaz and the greeting exchanged on both American

and Mexican soil served, I hope, to signalize the close and cordial

relations which so well bind together this Republic and the great Republic

immediately to the south, between which there is so vast a network of

material interests.

I am happy to say that all but one of the cases which for so long vexed our

relations with Venezuela have been settled within the past few months and

that, under the enlightened regime now directing the Government of

Venezuela, provision has been made for arbitration of the remaining case

before The Hague Tribunal. On July 30, 1909, the Government of Panama

agreed, after considerable negotiation, to indemnify the relatives of the

American officers and sailors who were brutally treated, one of them

having, indeed, been killed by the Panaman police this year.

The sincere desire of the Government of Panama to do away with a situation

where such an accident could occur is manifest in the recent request in

compliance with which this Government has lent the services of an officer

of the Army to be employed by the Government of Panama as Instructor of

Police.

The sanitary improvements and public works undertaken in Cuba prior to the

present administration of that Government, in the success of which the

United States is interested under the treaty, are reported to be making

good progress and since the Congress provided for the continuance of the

reciprocal commercial arrangement between Cuba and the United States

assurance has been received that no negotiations injuriously affecting the

situation will be undertaken without consultation. The collection of the

customs of the Dominican Republic through the general receiver of customs

appointed by the President of the United States in accordance with the

convention of February 8, 1907, has proceeded in an uneventful and

satisfactory manner. The customs receipts have decreased owing to disturbed

political and economic conditions and to a very natural curtailment of

imports in view of the anticipated revision of the Dominican tariff

schedule. The payments to the fiscal agency fund for the service of the

bonded debt of the Republic, as provided by the convention, have been

regularly and promptly made, and satisfactory progress has been made in

carrying out the provisions of the convention looking towards the

completion of the adjustment of the debt and the acquirement by the

Dominican Government of certain concessions and monopolies which have been

a burden to the commerce of the country. In short, the receivership has

demonstrated its ability, even under unfavorable economic and political

conditions, to do the work for which it was intended.

This Government was obliged to intervene diplomatically to bring about

arbitration or settlement of the claim of the Emery Company against

Nicaragua, which it had long before been agreed should be arbitrated. A

settlement of this troublesome case was reached by the signature of a

protocol on September 18, 1909.

Many years ago diplomatic intervention became necessary to the protection

of the interests in the American claim of Alsop and Company against the

Government of Chile. The Government of Chile had frequently admitted

obligation in the case and had promised this Government to settle. There

had been two abortive attempts to do so through arbitral commissions, which

failed through lack of jurisdiction. Now, happily, as the result of the

recent diplomatic negotiations, the Governments of the United States and of

Chile, actuated by the sincere desire to free from any strain those cordial

and friendly relations upon which both set such store, have agreed by a

protocol to submit the controversy to definitive settlement by His

Britannic Majesty, Edward VII.

Since the Washington Conventions of 1907 were communicated to the

Government of the United States as a consulting and advising party, this

Government has been almost continuously called upon by one or another, and

in turn by all the five Central American Republics, to exert itself for the

maintenance of the Conventions. Nearly every complaint has been against the

Zelaya Government of Nicaragua, which has kept Central America in constant

tension or turmoil. The responses made to the representations of Central

American Republics, as due from the United States on account of its

relation to the Washington Conventions, have been at all times conservative

and have avoided, so far as possible, any semblance of interference,

although it is very apparent that the considerations of geographic

proximity to the Canal Zone and of the very substantial American interests

in Central America give to the United States a special position in the zone

of these Republics and the Caribbean Sea.

I need not rehearse here the patient efforts of this Government to promote

peace and welfare among these Republics, efforts which are fully

appreciated by the majority of them who are loyal to their true interests.

It would be no less unnecessary to rehearse here the sad tale of

unspeakable barbarities and oppression alleged to have been committed by

the Zelaya Government. Recently two Americans were put to death by order of

President Zelaya himself. They were reported to have been regularly

commissioned officers in the organized forces of a revolution which had

continued many weeks and was in control of about half of the Republic, and

as such, according to the modern enlightened practice of civilized nations,

they were entitled to be dealt with as prisoners of war.

At the date when this message is printed this Government has terminated

diplomatic relations with the Zelaya Government, for reasons made public in

a communication to the former Nicaraguan charge d'affaires, and is

intending to take such future steps as may be found most consistent with

its dignity, its duty to American interests, and its moral obligations to

Central America and to civilization. It may later be necessary for me to

bring this subject to the attention of the Congress in a special message.

The International Bureau of American Republics has carried on an important

and increasing work during the last year. In the exercise of its peculiar

functions as an international agency, maintained by all the American

Republics for the development of Pan-American commerce and friendship, it

has accomplished a great practical good which could be done in the same way

by no individual department or bureau of one government, and is therefore

deserving of your liberal support. The fact that it is about to enter a new

building, erected through the munificence of an American philanthropist and

the contributions of all the American nations, where both its efficiency of

administration and expense of maintenance will naturally be much augmented,

further entitles it to special consideration.

THE FAR EAST.

In the Far East this Government preserves unchanged its policy of

supporting the principle of equality of opportunity and scrupulous respect

for the integrity of the Chinese Empire, to which policy are pledged the

interested Powers of both East and West.

By the Treaty of 1903 China has undertaken the abolition of likin with a

moderate and proportionate raising of the customs tariff along with

currency reform. These reforms being of manifest advantage to foreign

commerce as well as to the interests of China, this Government is

endeavoring to facilitate these measures and the needful acquiescence of

the treaty Powers. When it appeared that Chinese likin revenues were to be

hypothecated to foreign bankers in connection with a great railway project,

it was obvious that the Governments whose nationals held this loan would

have a certain direct interest in the question of the carrying out by China

of the reforms in question. Because this railroad loan represented a

practical and real application of the open door policy through cooperation

with China by interested Powers as well as because of its relations to the

reforms referred to above, the Administration deemed American participation

to be of great national interest. Happily, when it was as a matter of broad

policy urgent that this opportunity should not be lost, the indispensable

instrumentality presented itself when a group of American bankers, of

international reputation and great resources, agreed at once to share in

the loan upon precisely such terms as this Government should approve. The

chief of those terms was that American railway material should be upon an

exact equality with that of the other nationals joining in the loan in the

placing of orders for this whole railroad system. After months of

negotiation the equal participation of Americans seems at last assured. It

is gratifying that Americans will thus take their share in this extension

of these great highways of trade, and to believe that such activities will

give a real impetus to our commerce and will prove a practical corollary to

our historic policy in the Far East.

The Imperial Chinese Government in pursuance of its decision to devote

funds from the portion of the indemnity remitted by the United States to

the sending of students to this country has already completed arrangements

for carrying out this purpose, and a considerable body of students have

arrived to take up their work in our schools and universities. No one can

doubt the happy effect that the associations formed by these representative

young men will have when they return to take up their work in the

progressive development of their country.

The results of the Opium Conference held at Shanghai last spring at the

invitation of the United States have been laid before the Government. The

report shows that China is making remarkable progress and admirable efforts

toward the eradication of the opium evil and that the Governments concerned

have not allowed their commercial interests to interfere with a helpful

cooperation in this reform. Collateral investigations of the opium question

in this country lead me to recommend that the manufacture, sale and use of

opium and its derivatives in the United States should be so far as possible

more rigorously controlled by legislation.

In one of the Chinese-Japanese Conventions of September 4 of this year

there was a provision which caused considerable public apprehension in that

upon its face it was believed in some quarters to seek to establish a

monopoly of mining privileges along the South Manchurian and Antung-Mukden

Railroads, and thus to exclude Americans from a wide field of enterprise,

to take part in which they were by treaty with China entitled. After a

thorough examination of the Conventions and of the several contextual

documents, the Secretary of State reached the conclusion that no such

monopoly was intended or accomplished. However, in view of the widespread

discussion of this question, to confirm the view it had reached, this

Government made inquiry of the Imperial Chinese and Japanese Governments

and received from each official assurance that the provision had no purpose

inconsistent with the policy of equality of opportunity to which the

signatories, in common with the United States, are pledged.

Our traditional relations with the Japanese Empire continue cordial as

usual. As the representative of Japan, His Imperial Highness Prince Kuni

visited the Hudson-Fulton Celebration. The recent visit of a delegation of

prominent business men as guests of the chambers of commerce of the Pacific

slope, whose representatives had been so agreeably received in Japan, will

doubtless contribute to the growing trade across the Pacific, as well as to

that mutual understanding which leads to mutual appreciation. The

arrangement of 1908 for a cooperative control of the coming of laborers to

the United States has proved to work satisfactorily. The matter of a

revision of the existing treaty between the United States and Japan which

is terminable in 1912 is already receiving the study of both countries.

The Department of State is considering the revision in whole or in part, of

the existing treaty with Siam, which was concluded in 1856, and is now, in

respect to many of its provisions, out of date.

THE DEPARTMENT OF STATE.

I earnestly recommend to the favorable action of the Congress the estimates

submitted by the Department of State and most especially the legislation

suggested in the Secretary of State's letter of this date whereby it will

be possible to develop and make permanent the reorganization of the

Department upon modern lines in a manner to make it a thoroughly efficient

instrument in the furtherance of our foreign trade and of American

interests abroad. The plan to have Divisions of Latin-American and Far

Eastern Affairs and to institute a certain specialization in business with

Europe and the Near East will at once commend itself. These

politico-geographical divisions and the detail from the diplomatic or

consular service to the Department of a number of men, who bring to the

study of complicated problems in different parts of the world practical

knowledge recently gained on the spot, clearly is of the greatest advantage

to the Secretary of State in foreseeing conditions likely to arise and in

conducting the great variety of correspondence and negotiation. It should

be remembered that such facilities exist in the foreign offices of all the

leading commercial nations and that to deny them to the Secretary of State

would be to place this Government at a great disadvantage in the rivalry of

commercial competition.

The consular service has been greatly improved under the law of April 5,

1906, and the Executive Order of June 27, 1906, and I commend to your

consideration the question of embodying in a statute the principles of the

present Executive Order upon which the efficiency of our consular service

is wholly dependent.

In modern times political and commercial interests are interrelated, and in

the negotiation of commercial treaties, conventions and tariff agreements,

the keeping open of opportunities and the proper support of American

enterprises, our diplomatic service is quite as important as the consular

service to the business interests of the country. Impressed with this idea

and convinced that selection after rigorous examination, promotion for

merit solely and the experience only to be gained through the continuity of

an organized service are indispensable to a high degree of efficiency in

the diplomatic service, I have signed an Executive Order as the first step

toward this very desirable result. Its effect should be to place all

secretaries in the diplomatic service in much the same position as consular

officers are now placed and to tend to the promotion of the most efficient

to the grade of minister, generally leaving for outside appointments such

posts of the grade of ambassador or minister as it may be expedient to fill

from without the service. It is proposed also to continue the practice

instituted last summer of giving to all newly appointed secretaries at

least one month's thorough training in the Department of State before they

proceed to their posts. This has been done for some time in regard to the

consular service with excellent results.

Under a provision of the Act of August 5, 1909, I have appointed three

officials to assist the officers of the Government in collecting

information necessary to a wise administration of the tariff act of August

5, 1909. As to questions of customs administration they are cooperating

with the officials of the Treasury Department and as to matters of the

needs and the exigencies of our manufacturers and exporters, with the

Department of Commerce and Labor, in its relation to the domestic aspect of

the subject of foreign commerce. In the study of foreign tariff treatment

they will assist the Bureau of Trade Relations of the Department of State.

It is hoped thus to coordinate and bring to bear upon this most important

subject all the agencies of the Government which can contribute anything to

its efficient handling.

As a consequence of Section 2 of the tariff act of August 5, 1909, it

becomes the duty of the Secretary of State to conduct as diplomatic

business all the negotiations necessary to place him in a position to

advise me as to whether or not a particular country unduly discriminates

against the United States in the sense of the statute referred to. The

great scope and complexity of this work, as well as the obligation to lend

all proper aid to our expanding commerce, is met by the expansion of the

Bureau of Trade Relations as set forth in the estimates for the Department

of State.

OTHER DEPARTMENTS.

I have thus in some detail described the important transactions of the

State Department since the beginning of this Administration for the reason

that there is no provision either by statute or custom for a formal report

by the Secretary of State to the President or to Congress, and a

Presidential message is the only means by which the condition of our

foreign relations is brought to the attention of Congress and the public.

In dealing with the affairs of the other Departments, the heads of which

all submit annual reports, I shall touch only those matters that seem to me

to call for special mention on my part without minimizing in any way the

recommendations made by them for legislation affecting their respective

Departments, in all of which I wish to express my general concurrence.

GOVERNMENT EXPENDITURES AND REVENUES.

Perhaps the most important question presented to this Administration is

that of economy in expenditures and sufficiency of revenue. The deficit of

the last fiscal year, and the certain deficit of the current year, prompted

Congress to throw a greater responsibility on the Executive and the

Secretary of the Treasury than had heretofore been declared by statute.

This declaration imposes upon the Secretary of the Treasury the duty of

assembling all the estimates of the Executive Departments, bureaus, and

offices, of the expenditures necessary in the ensuing fiscal year, and of

making an estimate of the revenues of the Government for the same period;

and if a probable deficit is thus shown, it is made the duty of the

President to recommend the method by which such deficit can be met.

The report of the Secretary shows that the ordinary expenditures for the

current fiscal year ending June 30, 1910, will exceed the estimated

receipts by $34,075,620. If to this deficit is added the sum to be

disbursed for the Panama Canal, amounting to $38,000,000, and $1,000,000 to

be paid on the public debt, the deficit of ordinary receipts and

expenditures will be increased to a total deficit of $73,075,620. This

deficit the Secretary proposes to meet by the proceeds of bonds issued to

pay the cost of constructing the Panama Canal. I approve this proposal.

The policy of paying for the construction of the Panama Canal, not out of

current revenue, but by bond issues, was adopted in the Spooner Act of

1902, and there seems to be no good reason for departing from the principle

by which a part at least of the burden of the cost of the canal shall fall

upon our posterity who are to enjoy it; and there is all the more reason

for this view because the actual cost to date of the canal, which is now

half done and which will be completed January 1, 1915, shows that the cost

of engineering and construction will be $297,766,000, instead of

$139,705,200, as originally estimated. In addition to engineering and

construction, the other expenses, including sanitation and government, and

the amount paid for the properties, the franchise, and the privilege of

building the canal, increase the cost by $75,435,000, to a total of

$375,201,000. The increase in the cost of engineering and construction is

due to a substantial enlargement of the plan of construction by widening

the canal 100 feet in the Culebra cut and by increasing the dimensions of

the locks, to the underestimate of the quantity of the work to be done

under the original plan, and to an underestimate of the cost of labor and

materials both of which have greatly enhanced in price since the original

estimate was made.

In order to avoid a deficit for the ensuing fiscal year, I directed the

heads of Departments in the preparation of their estimates to make them as

low as possible consistent with imperative governmental necessity. The

result has been, as I am advised by the Secretary of the Treasury, that the

estimates for the expenses of the Government for the next fiscal year

ending June 30, 1911, are less than the appropriations for this current

fiscal year by $42,818,000. So far as the Secretary of the Treasury is able

to form a judgment as to future income, and compare it with the

expenditures for the next fiscal year ending June 30, 1911, and excluding

payments on account of the Panama Canal, which will doubtless be taken up

by bonds, there will be a surplus of $35,931,000.

In the present estimates the needs of the Departments and of the Government

have been cut to the quick, so to speak, and any assumption on the part of

Congress, so often made in times past, that the estimates have been

prepared with the expectation that they may be reduced, will result in

seriously hampering proper administration.

The Secretary of the Treasury points out what should be carefully noted in

respect to this reduction in governmental expenses for the next fiscal

year, that the economies are of two kinds--first, there is a saving in the

permanent administration of the Departments, bureaus, and offices of the

Government; and, second, there is a present reduction in expenses by a

postponement of projects and improvements that ultimately will have to be

carried out but which are now delayed with the hope that additional revenue

in the future will permit their execution without producing a deficit.

It has been impossible in the preparation of estimates greatly to reduce

the cost of permanent administration. This can not be done without a

thorough reorganization of bureaus, offices, and departments. For the

purpose of securing information which may enable the executive and the

legislative branches to unite in a plan for the permanent reduction of the

cost of governmental administration, the Treasury Department has instituted

an investigation by one of the most skilled expert accountants in the

United States. The result of his work in two or three bureaus, which, if

extended to the entire Government, must occupy two or more years, has been

to show much room for improvement and opportunity for substantial

reductions in the cost and increased efficiency of administration. The

object of the investigation is to devise means to increase the average

efficiency of each employee. There is great room for improvement toward

this end, not only by the reorganization of bureaus and departments and in

the avoidance of duplication, but also in the treatment of the individual

employee.

Under the present system it constantly happens that two employees receive

the same salary when the work of one is far more difficult and important

and exacting than that of the other. Superior ability is not rewarded or

encouraged. As the classification is now entirely by salary, an employee

often rises to the highest class while doing the easiest work, for which

alone he may be fitted. An investigation ordered by my predecessor resulted

in the recommendation that the civil service he reclassified according to

the kind of work, so that the work requiring most application and knowledge

and ability shall receive most compensation. I believe such a change would

be fairer to the whole force and would permanently improve the personnel of

the service.

More than this, every reform directed toward the improvement in the average

efficiency of government employees must depend on the ability of the

Executive to eliminate from the government service those who are

inefficient from any cause, and as the degree of efficiency in all the

Departments is much lessened by the retention of old employees who have

outlived their energy and usefulness, it is indispensable to any proper

system of economy that provision be made so that their separation from the

service shall be easy and inevitable. It is impossible to make such

provision unless there is adopted a plan of civil pensions. Most of the

great industrial organizations, and many of the well-conducted railways of

this country, are coming to the conclusion that a system of pensions for

old employees, and the substitution therefor of younger and more energetic

servants, promotes both economy and efficiency of administration.

I am aware that there is a strong feeling in both Houses of Congress, and

possibly in the country, against the establishment of civil pensions, and

that this has naturally grown out of the heavy burden of military pensions,

which it has always been the policy of our Government to assume; but I am

strongly convinced that no other practical solution of the difficulties

presented by the superannuation of civil servants can be found than that of

a system of civil pensions.

The business and expenditures of the Government have expanded enormously

since the Spanish war, but as the revenues have increased in nearly the

same proportion as the expenditures until recently, the attention of the

public, and of those responsible for the Government, has not been fastened

upon the question of reducing the cost of administration. We can not, in

view of the advancing prices of living, hope to save money by a reduction

in the standard of salaries paid. Indeed, if any change is made in that

regard, an increase rather than a decrease will be necessary; and the only

means of economy will be in reducing the number of employees and in

obtaining a greater average of efficiency from those retained in the

service.

Close investigation and study needed to make definite recommendations in

this regard will consume at least two years. I note with much satisfaction

the organization in the Senate of a Committee on Public Expenditures,

charged with the duty of conducting such an investigation, and I tender to

that committee all the assistance which the executive branch of the

Government can possibly render.

FRAUDS IN THE COLLECTION OF CUSTOMS.

I regret to refer to the fact of the discovery of extensive frauds in the

collections of the customs revenue at New York City, in which a number of

the subordinate employees in the weighing and other departments were

directly concerned, and in which the beneficiaries were the American Sugar

Refining Company and others. The frauds consisted in the payment of duty on

underweights of sugar. The Government has recovered from the American Sugar

Refining Company all that it is shown to have been defrauded of. The sum

was received in full of the amount due, which might have been recovered by

civil suit against the beneficiary of the fraud, but there was an express

reservation in the contract of settlement by which the settlement should

not interfere with, or prevent the criminal prosecution of everyone who was

found to be subject to the same.

Criminal prosecutions are now proceeding against a number of the Government

officers. The Treasury Department and the Department of Justice are

exerting every effort to discover all the wrongdoers, including the

officers and employees of the companies who may have been privy to the

fraud. It would seem to me that an investigation of the frauds by Congress

at present, pending the probing by the Treasury Department and the

Department of Justice, as proposed, might by giving immunity and otherwise

prove an embarrassment in securing conviction of the guilty parties.

MAXIMUM AND MINIMUM CLAUSE IN TARIFF ACT.

Two features of the new tariff act call for special reference. By virtue of

the clause known as the "Maximum and Minimum" clause, it is the duty of the

Executive to consider the laws and practices of other countries with

reference to the importation into those countries of the products and

merchandise of the United States, and if the Executive finds such laws and

practices not to be unduly discriminatory against the United States, the

minimum duties provided in the bill are to go into force.

Unless the President makes such a finding, then the maximum duties provided

in the bill, that is, an increase of twenty-five per cent. ad valorem over

the minimum duties, are to be in force. Fear has been expressed that this

power conferred and duty imposed on the Executive is likely to lead to a

tariff war. I beg to express the hope and belief that no such result need

be anticipated.

The discretion granted to the Executive by the terms "unduly

discriminatory" is wide. In order that the maximum duty shall be charged

against the imports from a country, it is necessary that he shall find on

the part of that country not only discriminations in its laws or the

practice under them against the trade of the United States, but that the

discriminations found shall be undue; that is, without good and fair

reason. I conceive that this power was reposed in the President with the

hope that the maximum duties might never be applied in any case, but that

the power to apply them would enable the President and the State Department

through friendly negotiation to secure the elimination from the laws and

the practice under them of any foreign country of that which is unduly

discriminatory. No one is seeking a tariff war or a condition in which the

spirit of retaliation shall be aroused.

USES OF THE NEW TARIFF BOARD.

The new tariff law enables me to appoint a tariff board to assist me in

connection with the Department of State in the administration of the

minimum and maximum clause of the act and also to assist officers of the

Government in the administration of the entire law. An examination of the

law and an understanding of the nature of the facts which should be

considered in discharging the functions imposed upon the Executive show

that I have the power to direct the tariff board to make a comprehensive

glossary and encyclopedia of the terms used and articles embraced in the

tariff law, and to secure information as to the cost of production of such

goods in this country and the cost of their production in foreign

countries. I have therefore appointed a tariff board consisting of three

members and have directed them to perform all the duties above described.

This work will perhaps take two or three years, and I ask from Congress a

continuing annual appropriation equal to that already made for its

prosecution. I believe that the work of this board will be of prime utility

and importance whenever Congress shall deem it wise again to readjust the

customs duties. If the facts secured by the tariff board are of such a

character as to show generally that the rates of duties imposed by the

present tariff law are excessive under the principles of protection as

described in the platform of the successful party at the late election, I

shall not hesitate to invite the attention of Congress to this fact and to

the necessity for action predicated thereon. Nothing, however, halts

business and interferes with the course of prosperity so much as the

threatened revision of the tariff, and until the facts are at hand, after

careful and deliberate investigation, upon which such revision can properly

be undertaken, it seems to me unwise to attempt it. The amount of

misinformation that creeps into arguments pro and con in respect to tariff

rates is such as to require the kind of investigation that I have directed

the tariff board to make, an investigation undertaken by it wholly without

respect to the effect which the facts may have in calling for a

readjustment of the rates of duty.

WAR DEPARTMENT.

In the interest of immediate economy and because of the prospect of a

deficit, I have required a reduction in the estimates of the War Department

for the coming fiscal year, which brings the total estimates down to an

amount forty-five millions less than the corresponding estimates for last

year. This could only be accomplished by cutting off new projects and

suspending for the period of one year all progress in military matters. For

the same reason I have directed that the Army shall not be recruited up to

its present authorized strength. These measures can hardly be more than

temporary--to last until our revenues are in better condition and until the

whole question of the expediency of adopting a definite military policy can

be submitted to Congress, for I am sure that the interests of the military

establishment are seriously in need of careful consideration by Congress.

The laws regulating the organization of our armed forces in the event of

war need to be revised in order that the organization can be modified so as

to produce a force which would be more consistently apportioned throughout

its numerous branches. To explain the circumstances upon which this opinion

is based would necessitate a lengthy discussion, and I postpone it until

the first convenient opportunity shall arise to send to Congress a special

message upon this subject.

The Secretary of War calls attention to a number of needed changes in the

Army in all of which I concur, but the point upon which I place most

emphasis is the need for an elimination bill providing a method by which

the merits of officers shall have some effect upon their advancement and by

which the advancement of all may be accelerated by the effective

elimination of a definite proportion of the least efficient. There are in

every army, and certainly in ours, a number of officers who do not violate

their duty in any such way as to give reason for a court-martial or

dismissal, but who do not show such aptitude and skill and character for

high command as to justify their remaining in the active service to be

Promoted. Provision should be made by which they may be retired on a

certain proportion of their pay, increasing with their length of service at

the time of retirement. There is now a personnel law for the Navy which

itself needs amendment and to which I shall make further reference. Such a

law is needed quite as much for the Army.

The coast defenses of the United States proper are generally all that could

be desired, and in some respects they are rather more elaborate than under

present conditions are needed to stop an enemy's fleet from entering the

harbors defended. There is, however, one place where additional defense is

badly needed, and that is at the mouth of Chesapeake Bay, where it is

proposed to make an artificial island for a fort which shall prevent an

enemy's fleet from entering this most important strategical base of

operations on the whole Atlantic and Gulf coasts. I hope that appropriate

legislation will be adopted to secure the construction of this defense.

The military and naval joint board have unanimously agreed that it would be

unwise to make the large expenditures which at one time were contemplated

in the establishment of a naval base and station in the Philippine Islands,

and have expressed their judgment, in which I fully concur, in favor of

making an extensive naval base at Pearl Harbor, near Honolulu, and not in

the Philippines. This does not dispense with the necessity for the

comparatively small appropriations required to finish the proper coast

defenses in the Philippines now under construction on the island of

Corregidor and elsewhere or to complete a suitable repair station and

coaling supply station at Olongapo, where is the floating dock "Dewey." I

hope that this recommendation of the joint board will end the discussion as

to the comparative merits of Manila Bay and Olongapo as naval stations, and

will lead to prompt measures for the proper equipment and defense of Pearl

Harbor.

THE NAVY.

The return of the battle-ship fleet from its voyage around the world, in

more efficient condition than when it started, was a noteworthy event of

interest alike to our citizens and the naval authorities of the world.

Besides the beneficial and far-reaching effect on our personal and

diplomatic relations in the countries which the fleet visited, the marked

success of the ships in steaming around the world in all weathers on

schedule time has increased respect for our Navy and has added to our

national prestige.

Our enlisted personnel recruited from all sections of the country is young

and energetic and representative of the national spirit. It is, moreover,

owing to its intelligence, capable of quick training into the modern

man-of-warsman. Our officers are earnest and zealous in their profession,

but it is a regrettable fact that the higher officers are old for the

responsibilities of the modern navy, and the admirals do not arrive at flag

rank young enough to obtain adequate training in their duties as flag

officers. This need for reform in the Navy has been ably and earnestly

presented to Congress by my predecessor, and I also urgently recommend the

subject for consideration.

Early in the coming session a comprehensive plan for the reorganization of

the officers of all corps of the Navy will be presented to Congress, and I

hope it will meet with action suited to its urgency.

Owing to the necessity for economy in expenditures, I have directed the

curtailment of recommendations for naval appropriations so that they are

thirty-eight millions less than the corresponding estimates of last year,

and the request for new naval construction is limited to two first-class

battle ships and one repair vessel.

The use of a navy is for military purposes, and there has been found need

in the Department of a military branch dealing directly with the military

use of the fleet. The Secretary of the Navy has also felt the lack of

responsible advisers to aid him in reaching conclusions and deciding

important matters between coordinate branches of the Department. To secure

these results he has inaugurated a tentative plan involving certain changes

in the organization of the Navy Department, including the navy-yards, all

of which have been found by the Attorney-General to be in accordance with

law. I have approved the execution of the plan proposed because of the

greater efficiency and economy it promises.

The generosity of Congress has provided in the present Naval Observatory

the most magnificent and expensive astronomical establishment in the world.

It is being used for certain naval purposes which might easily and

adequately be subserved by a small division connected with the Naval

Department at only a fraction of the cost of the present Naval Observatory.

The official Board of Visitors established by Congress and appointed in

1901 expressed its conclusion that the official head of the observatory

should be an eminent astronomer appointed by the President by and with the

advice and consent of the Senate, holding his place by a tenure at least as

permanent as that of the Superintendent of the Coast Survey or the head of

the Geological Survey, and not merely by a detail of two or three years'

duration. I fully concur in this judgment, and urge a provision by law for

the appointment of such a director.

It may not be necessary to take the observatory out of the Navy Department

and put it into another department in which opportunity for scientific

research afforded by the observatory would seem to be more appropriate,

though I believe such a transfer in the long run is the best policy. I am

sure, however, I express the desire of the astronomers and those learned in

the kindred sciences when I urge upon Congress that the Naval Observatory

be now dedicated to science under control of a man of science who can, if

need be, render all the service to the Navy Department which this

observatory now renders, and still furnish to the world the discoveries in

astronomy that a great astronomer using such a plant would be likely to

make.

DEPARTMENT OF JUSTICE EXPEDITION IN LEGAL PROCEDURE

The deplorable delays in the administration of civil and criminal law have

received the attention of committees of the American Bar Association and of

many State Bar Associations, as well as the considered thought of judges

and jurists. In my judgment, a change in judicial procedure, with a view to

reducing its expense to private litigants in civil cases and facilitating

the dispatch of business and final decision in both civil and criminal

cases, constitutes the greatest need in our American institutions. I do not

doubt for one moment that much of the lawless violence and cruelty

exhibited in lynchings is directly due to the uncertainties and injustice

growing out of the delays in trials, judgments, and the executions thereof

by our courts. Of course these remarks apply quite as well to the

administration of justice in State courts as to that in Federal courts, and

without making invidious distinction it is perhaps not too much to say

that, speaking generally, the defects are less in the Federal courts than

in the State courts. But they are very great in the Federal courts. The

expedition with which business is disposed of both on the civil and the

criminal side of English courts under modern rules of procedure makes the

delays in our courts seem archaic and barbarous. The procedure in the

Federal courts should furnish an example for the State courts. I presume it

is impossible, without an amendment to the Constitution, to unite under one

form of action the proceedings at common law and proceedings in equity in

the Federal courts, but it is certainly not impossible by a statute to

simplify and make short and direct the procedure both at law and in equity

in those courts. It is not impossible to cut down still more than it is cut

down, the jurisdiction of the Supreme Court so as to confine it almost

wholly to statutory and constitutional questions. Under the present

statutes the equity and admiralty procedure in the Federal courts is under

the control of the Supreme Court, but in the pressure of business to which

that court is subjected, it is impossible to hope that a radical and proper

reform of the Federal equity procedure can be brought about. I therefore

recommend legislation providing for the appointment by the President of a

commission with authority to examine the law and equity procedure of the

Federal courts of first instance, the law of appeals from those courts to

the courts of appeals and to the Supreme Court, and the costs imposed in

such procedure upon the private litigants and upon the public treasury and

make recommendation with a view to simplifying and expediting the procedure

as far as possible and making it as inexpensive as may be to the litigant

of little means.

INJUNCTIONS WITHOUT NOTICE.

The platform of the successful party in the last election contained the

following: "The Republican party will uphold at all times the authority and

integrity of the courts, State and Federal, and will ever insist that their

powers to enforce their process and to protect life, liberty, and property

shall be preserved inviolate. We believe, however, that the rules of

procedure in the Federal courts with respect to the issuance of the writ of

injunction should be more accurately defined by statute, and that no

injunction or temporary restraining order should be issued without notice,

except where irreparable injury would result from delay, in which case a

speedy hearing thereafter should be granted." I recommend that in

compliance with the promise thus made, appropriate legislation be adopted.

The ends of justice will best be met and the chief cause of complaint

against ill-considered injunctions without notice will be removed by the

enactment of a statute forbidding hereafter the issuing of any injunction

or restraining order, whether temporary or permanent, by any Federal court,

without previous notice and a reasonable opportunity to be heard on behalf

of the parties to be enjoined; unless it shall appear to the satisfaction

of the court that the delay necessary to give such notice and hearing would

result in irreparable injury to the complainant and unless also the court

shall from the evidence make a written finding, which shall be spread upon

the court minutes, that immediate and irreparable injury is likely to ensue

to the complainant, and shall define the injury, state why it is

irreparable, and shall also endorse on the order issued the date and the

hour of the issuance of the order. Moreover, every such injunction or

restraining order issued without previous notice and opportunity by the

defendant to be heard should by force of the statute expire and be of no

effect after seven days from the issuance thereof or within any time less

than that period which the court may fix, unless within such seven days or

such less period, the injunction or order is extended or renewed after

previous notice and opportunity to be heard.

My judgment is that the passage of such an act which really embodies the

best practice in equity and is very like the rule now in force in some

courts will prevent the issuing of ill-advised orders of injunction without

notice and will render such orders when issued much less objectionable by

the short time in which they may remain effective.

ANTI-TRUST AND INTERSTATE COMMERCE LAWS.

The jurisdiction of the General Government over interstate commerce has led

to the passage of the so-called "Sherman Anti-trust Law" and the

"Interstate Commerce Law" and its amendments. The developments in the

operation of those laws, as shown by indictments, trials, judicial

decisions, and other sources of information, call for a discussion and some

suggestions as to amendments. These I prefer to embody in a special message

instead of including them in the present communication, and I shall avail

myself of the first convenient opportunity to bring these subjects to the

attention of Congress.

JAIL OF THE DISTRICT OF COLUMBIA.

My predecessor transmitted to the Congress a special message on January 11,

1909, accompanying the report of Commissioners theretofore appointed to

investigate the jail, workhouse, etc., in the District of Columbia, in

which he directed attention to the report as setting forth vividly, "the

really outrageous conditions in the workhouse and jail."

The Congress has taken action in pursuance of the recommendations of that

report and of the President, to the extent of appropriating funds and

enacting the necessary legislation for the establishment of a workhouse and

reformatory. No action, however, has been taken by the Congress with

respect to the jail, the conditions of which are still antiquated and

insanitary. I earnestly recommend the passage of a sufficient appropriation

to enable a thorough remodeling of that institution to be made without

delay. It is a reproach to the National Government that almost under the

shadow of the Capitol Dome prisoners should be confined in a building

destitute of the ordinary decent appliances requisite to cleanliness and

sanitary conditions.

POST-OFFICE DEPARTMENT. SECOND-CLASS MAIL MATTER.

The deficit every year in the Post-Office Department is largely caused by

the low rate of postage of 1 cent a pound charged on second-class mail

matter, which includes not only newspapers, but magazines and miscellaneous

periodicals. The actual loss growing out of the transmission of this

second-class mail matter at 1 cent a pound amounts to about $63,000,000 a

year. The average cost of the transportation of this matter is more than 9

cents a pound.

It appears that the average distance over which newspapers are delivered to

their customers is 291 miles, while the average haul of magazines is 1,049,

and of miscellaneous periodicals 1,128 miles. Thus, the average haul of the

magazine is three and one-half times and that of the miscellaneous

periodical nearly four times the haul of the daily newspaper, yet all of

them pay the same postage rate of 1 cent a pound. The statistics of 1907

show that second-class mail matter constituted 63.91 per cent. of the

weight of all the mail, and yielded only 5.19 per cent. of the revenue.

The figures given are startling, and show the payment by the Government of

an enormous subsidy to the newspapers, magazines, and periodicals, and

Congress may well consider whether radical steps should not be taken to

reduce the deficit in the Post-Office Department caused by this discrepancy

between the actual cost of transportation and the compensation exacted

therefor.

A great saving might be made, amounting to much more than half of the loss,

by imposing upon magazines and periodicals a higher rate of postage. They

are much heavier than newspapers, and contain a much higher proportion of

advertising to reading matter, and the average distance of their

transportation is three and a half times as great.

The total deficit for the last fiscal year in the Post-Office Department

amounted to $17,500,000. The branches of its business which it did at a

loss were the second-class mail service, in which the loss, as already

said, was $63,000,000, and the free rural delivery, in which the loss was

$28,000,000. These losses were in part offset by the profits of the letter

postage and other sources of income. It would seem wise to reduce the loss

upon second-class mail matter, at least to the extent of preventing a

deficit in the total operations of the Post-Office.

I commend the whole subject to Congress, not unmindful of the spread of

intelligence which a low charge for carrying newspapers and periodicals

assists. I very much doubt, however, the wisdom of a policy which

constitutes so large a subsidy and requires additional taxation to meet

it.

POSTAL SAVINGS BANKS.

The second subject worthy of mention in the Post-Office Department is the

real necessity and entire practicability of establishing postal savings

banks. The successful party at the last election declared in favor of

postal savings banks, and although the proposition finds opponents in many

parts of the country, I am convinced that the people desire such banks, and

am sure that when the banks are furnished they will be productive of the

utmost good. The postal savings banks are not constituted for the purpose

of creating competition with other banks. The rate of interest upon

deposits to which they would be limited would be so small as to prevent

their drawing deposits away from other banks.

I believe them to be necessary in order to offer a proper inducement to

thrift and saving to a great many people of small means who do not now have

banking facilities, and to whom such a system would offer an opportunity

for the accumulation of capital. They will furnish a satisfactory

substitute, based on sound principle and actual successful trial in nearly

all the countries of the world, for the system of government guaranty of

deposits now being adopted in several western States, which with deference

to those who advocate it seems to me to have in it the seeds of

demoralization to conservative banking and certain financial disaster. The

question of how the money deposited in postal savings banks shall be

invested is not free from difficulty, but I believe that a satisfactory

provision for this purpose was inserted as an amendment to the bill

considered by the Senate at its last session. It has been proposed to delay

the consideration of legislation establishing a postal savings bank until

after the report of the Monetary Commission. This report is likely to be

delayed, and properly so, cause of the necessity for careful deliberation

and close investigation. I do not see why the one should be tied up with

the other. It is understood that the Monetary Commission have looked into

the systems of banking which now prevail abroad, and have found that by a

control there exercised in respect to reserves and the rates of exchange by

some central authority panics are avoided. It is not apparent that a system

of postal savings banks would in any way interfere with a change to such a

system here. Certainly in most of the countries of Europe where control is

thus exercised by a central authority, postal savings banks exist and are

not thought to be inconsistent with a proper financial and banking system.

SHIP SUBSIDY.

Following the course of my distinguished predecessor, I earnestly recommend

to Congress the consideration and passage of a ship subsidy bill, looking

to the establishment of lines between our Atlantic seaboard and the eastern

coast of South America, as well as lines from the west coast of the United

States to South America. China, Japan, and the Philippines. The profits on

foreign mails are perhaps a sufficient measure of the expenditures which

might first be tentatively applied to this method of inducing American

capital to undertake the establishment of American lines of steamships in

those directions in which we now feel it most important that we should have

means of transportation controlled in the interest of the expansion of our

trade. A bill of this character has once passed the House and more than

once passed the Senate, and I hope that at this session a bill framed on

the same lines and with the same purposes may become a law.

INTERIOR DEPARTMENT. NEW MEXICO AND ARIZONA.

The successful party in the last election in its national platform declared

in favor of the admission as separate States of New Mexico and Arizona, and

I recommend that legislation appropriate to this end be adopted. I urge,

however, that care be exercised in the preparation of the legislation

affecting each Territory to secure deliberation in the selection of persons

as members of the convention to draft a constitution for the incoming

State, and I earnestly advise that such constitution after adoption by the

convention shall be submitted to the people of the Territory for their

approval at an election in which the sole issue shall be the merits of the

proposed constitution, and if the constitution is defeated by popular vote

means shall be provided in the enabling act for a new convention and the

drafting of a new constitution. I think it vital that the issue as to the

merits of the constitution should not be mixed up with the selection of

State officers, and that no election of State officers should be had until

after the constitution has been fully approved and finally settled upon.

ALASKA.

With respect to the Territory of Alaska, I recommend legislation which

shall provide for the appointment by the President of a governor and also

of an executive council, the members of which shall during their term of

office reside in the Territory, and which shall have legislative powers

sufficient to enable it to give to the Territory local laws adapted to its

present growth. I strongly deprecate legislation looking to the election of

a Territorial legislature in that vast district. The lack of permanence of

residence of a large part of the present population and the small number of

the people who either permanently or temporarily reside in the district as

compared with its vast expanse and the variety of the interests that have

to be subserved, make it altogether unfitting in my judgment to provide for

a popular election of a legislative body. The present system is not

adequate and does not furnish the character of local control that ought to

be there. The only compromise it seems to me which may give needed local

legislation and secure a conservative government is the one I propose.

CONSERVATION OF NATIONAL RESOURCES.

In several Departments there is presented the necessity for legislation

looking to the further conservation of our national resources, and the

subject is one of such importance as to require a more detailed and

extended discussion than can be entered upon in this communication. For

that reason I shall take an early opportunity to send a special message to

Congress on the subject of the improvement of our waterways, upon the

reclamation and irrigation of arid, semiarid, and swamp lands; upon the

preservation of our forests and the reforesting of suitable areas; upon the

reclassification of the public domain with a view of separating from

agricultural settlement mineral, coal, and phosphate lands and sites

belonging to the Government bordering on streams suitable for the

utilization of water power.

DEPARTMENT OF AGRICULTURE.

I commend to your careful consideration the report of the Secretary of

Agriculture as showing the immense sphere of usefulness which that

Department now fills and the wonderful addition to the wealth of the nation

made by the farmers of this country in the crops of the current year.

DEPARTMENT OF COMMERCE AND LABOR. THE LIGHT-HOUSE BOARD.

The Light-House Board now discharges its duties under the Department of

Commerce and Labor. For upwards of forty years this Board has been

constituted of military and naval officers and two or three men of science,

with such an absence of a duly constituted executive head that it is

marvelous what work has been accomplished. In the period of construction

the energy and enthusiasm of all the members prevented the inherent defects

of the system from interfering greatly with the beneficial work of the

Board, but now that the work is chiefly confined to maintenance and repair,

for which purpose the country is divided into sixteen districts, to which

are assigned an engineer officer of the Army and an inspector of the Navy,

each with a light-house tender and the needed plant for his work, it has

become apparent by the frequent friction that arises, due to the absence of

any central independent authority, that there must be a complete

reorganization of the Board. I concede the advantage of keeping in the

system the rigidity of discipline that the presence of naval and military

officers in charge insures, but unless the presence of such officers in the

Board can be made consistent with a responsible executive head that shall

have proper authority, I recommend the transfer of control over the

light-houses to a suitable civilian bureau. This is in accordance with the

judgment of competent persons who are familiar with the workings of the

present system. I am confident that a reorganization can be effected which

shall avoid the recurrence of friction between members, instances of which

have been officially brought to my attention, and that by such

reorganization greater efficiency and a substantial reduction in the

expense of operation can be brought about.

CONSOLIDATION OF BUREAUS.

I request Congressional authority to enable the Secretary of Commerce and

Labor to unite the Bureaus of Manufactures and Statistics. This was

recommended by a competent committee appointed in the previous

administration for the purpose of suggesting changes in the interest of

economy and efficiency, and is requested by the Secretary.

THE WHITE SLAVE TRADE.

I greatly regret to have to say that the investigations made in the Bureau

of Immigration and other sources of information lead to the view that there

is urgent necessity for additional legislation and greater executive

activity to suppress the recruiting of the ranks of prostitutes from the

streams of immigration into this country--an evil which, for want of a

better name, has been called "The White Slave Trade." I believe it to be

constitutional to forbid, under penalty, the transportation of persons for

purposes of prostitution across national and state lines; and by

appropriating a fund of $50,000 to be used by the Secretary of Commerce and

Labor for the employment of special inspectors it will be possible to bring

those responsible for this trade to indictment and conviction under a

federal law.

BUREAU OF HEALTH

For a very considerable period a movement has been gathering strength,

especially among the members of the medical profession, in favor of a

concentration of the instruments of the National Government which have to

do with the promotion of public health. In the nature of things, the

Medical Department of the Army and the Medical Department of the Navy must

be kept separate. But there seems to be no reason why all the other bureaus

and offices in the General Government which have to do with the public

health or subjects akin thereto should not be united in a bureau to be

called the "Bureau of Public Health." This would necessitate the transfer

of the Marine-Hospital Service to such a bureau. I am aware that there is

wide field in respect to the public health committed to the States in which

the Federal Government can not exercise jurisdiction, but we have seen in

the Agricultural Department the expansion into widest usefulness of a

department giving attention to agriculture when that subject is plainly one

over which the States properly exercise direct jurisdiction. The

opportunities offered for useful research and the spread of useful

information in regard to the cultivation of the soil and the breeding of

stock and the solution of many of the intricate problems in progressive

agriculture have demonstrated the wisdom of establishing that department.

Similar reasons, of equal force, can be given for the establishment of a

bureau of health that shall not only exercise the police jurisdiction of

the Federal Government respecting quarantine, but which shall also afford

an opportunity for investigation and research by competent experts into

questions of health affecting the whole country, or important sections

thereof, questions which, in the absence of Federal governmental work, are

not likely to be promptly solved.

CIVIL SERVICE COMMISSION.

The work of the United States Civil Service Commission has been performed

to the general satisfaction of the executive officers with whom the

Commission has been brought into official communication. The volume of that

work and its variety and extent have under new laws, such as the Census

Act, and new Executive orders, greatly increased. The activities of the

Commission required by the statutes have reached to every portion of the

public domain.

The accommodations of the Commission are most inadequate for its needs. I

call your attention to its request for increase in those accommodations as

will appear from the annual report for this year.

POLITICAL CONTRIBUTIONS.

I urgently recommend to Congress that a law be passed requiring that

candidates in elections of Members of the House of Representatives, and

committees in charge of their candidacy and campaign, file in a proper

office of the United States Government a statement of the contributions

received and of the expenditures incurred in the campaign for such

elections and that similar legislation be enacted in respect to all other

elections which are constitutionally within the control of Congress.

FREEDMAN'S SAVINGS AND TRUST COMPANY.

Recommendations have been made by my predecessors that Congress appropriate

a sufficient sum to pay the balance--about 38 per cent.--of the amounts due

depositors in the Freedman's Savings and Trust Company. I renew this

recommendation, and advise also that a proper limitation be prescribed

fixing a period within which the claims may be presented, that assigned

claims be not recognized, and that a limit be imposed on the amount of fees

collectible for services in presenting such claims.

SEMI-CENTENNIAL OF NEGRO FREEDOM.

The year 1913 will mark the fiftieth anniversary of the issuance of the

Emancipation Proclamation granting freedom to the negroes. It seems fitting

that this event should be properly celebrated. Already a movement has been

started by prominent Negroes, encouraged by prominent white people and the

press. The South especially is manifesting its interest in this movement.

It is suggested that a proper form of celebration would be an exposition to

show the progress the Negroes have made, not only during their period of

freedom, but also from the time of their coming to this country.

I heartily indorse this proposal, and request that the Executive be

authorized to appoint a preliminary commission of not more than seven

persons to consider carefully whether or not it is wise to hold such an

exposition, and if so, to outline a plan for the enterprise. I further

recommend that such preliminary commission serve without salary, except as

to their actual expenses, and that an appropriation be made to meet such

expenses. CONCLUSION.

I have thus, in a message compressed as much as the subjects will permit,

referred to many of the legislative needs of the country, with the

exceptions already noted. Speaking generally, the country is in a high

state of prosperity. There is every reason to believe that we are on the

eve of a substantial business expansion, and we have just garnered a

harvest unexampled in the market value of our agricultural products. The

high prices which such products bring mean great prosperity for the farming

community, but on the other hand they mean a very considerably increased

burden upon those classes in the community whose yearly compensation does

not expand with the improvement in business and the general prosperity.

Various reasons are given for the high prices. The proportionate increase

in the output of gold, which to-day is the chief medium of exchange and is

in some respects a measure of value, furnishes a substantial explanation of

at least a part of the increase in prices. The increase in population and

the more expensive mode of living of the people, which have not been

accompanied by a proportionate increase in acreage production, may furnish

a further reason. It is well to note that the increase in the cost of

living is not confined to this country, but prevails the world over, and

that those who would charge increases in prices to the existing protective

tariff must meet the fact that the rise in prices has taken place almost

wholly in those products of the factory and farm in respect to which there

has been either no increase in the tariff or in many instances a very

considerable reduction.

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