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State of the Union Addresses of William H. Taft
The addresses are separated by three asterisks: ***
Dates of addresses by William H. Taft in this eBook:
December 7, 1909
December 6, 1910
December 5, 1911
December 3, 1912
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State of the Union Address
William H. Taft
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.
***
State of the Union Address
William H. Taft
December 6, 1910
To the Senate and House of Representatives:
During the past year the foreign relations of the United States have
continued upon a basis of friendship and good understanding.
ARBITRATION.
The year has been notable as witnessing the pacific settlement of two
important international controversies before the Permanent Court of The
Hague.
The arbitration of the Fisheries dispute between the United States and
Great Britain, which has been the source of nearly continuous diplomatic
correspondence since the Fisheries Convention of 1818, has given an award
which is satisfactory to both parties. This arbitration is particularly
noteworthy not only because of the eminently just results secured, but also
because it is the first arbitration held under the general arbitration
treaty of April 4, 1908, between the United States and Great Britain, and
disposes of a controversy the settlement of which has resisted every other
resource of diplomacy, and which for nearly ninety years has been the cause
of friction between two countries whose common interest lies in maintaining
the most friendly and cordial relations with each other.
The United States was ably represented before the tribunal. The complicated
history of the questions arising made the issue depend, more than
ordinarily in such cases, upon the care and skill with which our case was
presented, and I should be wanting in proper recognition of a great
patriotic service if I did not refer to the lucid historical analysis of
the facts and the signal ability and force of the argument--six days in
length--presented to the Court in support of our case by Mr. Elihu Root. As
Secretary of State, Mr. Root had given close study to the intricate facts
bearing on the controversy, and by diplomatic correspondence had helped to
frame the issues. At the solicitation of the Secretary of State and myself,
Mr. Root, though burdened by his duties as Senator from New York, undertook
the preparation of the case as leading counsel, with the condition imposed
by himself that, in view of his position as Senator, he should not receive
any compensation.
The Tribunal constituted at The Hague by the Governments of the United
States and Venezuela has completed its deliberations and has rendered an
award in the case of the Orinoco Steamship Company against Venezuela. The
award may be regarded as satisfactory since it has, pursuant to the
contentions of the United States, recognized a number of important
principles making for a judicial attitude in the determining of
international disputes.
In view of grave doubts which had been raised as to the constitutionality
of The Hague Convention for the establishment of an International Prize
Court, now before the Senate for ratification, because of that provision of
the Convention which provides that there may be an appeal to the proposed
Court from the decisions of national courts, this government proposed in an
Identic Circular Note addressed to those Powers who had taken part in the
London Maritime Conference, that the powers signatory to the Convention, if
confronted with such difficulty, might insert a reservation to the effect
that appeals to the International Prize Court in respect to decisions of
its national tribunals, should take the form of a direct claim for
compensation; that the proceedings thereupon to be taken should be in the
form of a trial de novo, and that judgment of the Court should consist of
compensation for the illegal capture, irrespective of the decision of the
national court whose judgment had thus been internationally involved. As
the result of an informal discussion it was decided to provide such
procedure by means of a separate protocol which should be ratified at the
same time as the Prize Court Convention itself.
Accordingly, the Government of the Netherlands, at the request of this
Government, proposed under date of May 24, 1910, to the powers signatory to
The Hague Convention, the negotiation of a supplemental protocol embodying
stipulations providing for this alternative procedure. It is gratifying to
observe that this additional protocol is being signed without objection, by
the powers signatory to the original convention, and there is every reason
to believe that the International Prize Court will be soon established.
The Identic Circular Note also proposed that the International Prize Court
when established should be endowed with the functions of an Arbitral Court
of Justice under and pursuant to the recommendation adopted by the last
Hague Conference. The replies received from the various powers to this
proposal inspire the hope that this also may be accomplished within the
reasonably near future.
It is believed that the establishment of these two tribunals will go a long
way toward securing the arbitration of many questions which have heretofore
threatened and, at times, destroyed the peace of nations.
PEACE COMMISSION.
Appreciating these enlightened tendencies of modern times, the Congress at
its last session passed a law providing for the appointment of a commission
of five members "to be appointed by the President of the United States to
consider the expediency of utilizing existing international agencies for
the purpose of limiting the armaments of the nations of the world by
international agreement, and of constituting the combined navies of the
world an international force for the preservation of universal peace, and
to consider and report upon any other means to diminish the expenditures of
government for military purposes and to lessen the probabilities of war."
I have not as yet made appointments to this Commission because I have
invited and am awaiting the expressions of foreign governments as to their
willingness to cooperate with us in the appointment of similar commissions
or representatives who would meet with our commissioners and by joint
action seek to make their work effective.
GREAT BRITAIN AND CANADA.
Several important treaties have been negotiated with Great Britain in the
past twelve months. A preliminary diplomatic agreement has been reached
regarding the arbitration of pecuniary claims which each Government has
against the other. This agreement, with the schedules of claims annexed,
will, as soon as the schedules are arranged, be submitted to the Senate for
approval.
An agreement between the United States and Great Britain with regard to the
location of the international boundary line between the United States and
Canada in Passamaquoddy Bay and to the middle of Grand Manan Channel was
reached in a Treaty concluded May 21, 1910, which has been ratified by both
Governments and proclaimed, thus making unnecessary the arbitration
provided for in the previous treaty of April 11, 1908.
The Convention concluded January 11, 1909, between the United States and
Great Britain 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 has been ratified by both
Governments and proclaimed.
The work of the International Fisheries Commission appointed in 1908, under
the treaty of April 11, 1908, between Great Britain and the United States,
has resulted in the formulation and recommendation of uniform regulations
governing the fisheries of the boundary waters of Canada and the United
States for the purpose of protecting and increasing the supply of food fish
in such waters. In completion of this work, the regulations agreed upon
require congressional legislation to make them effective and for their
enforcement in fulfillment of the treaty stipulations. PORTUGAL.
In October last the monarchy in Portugal was overthrown, a provisional
Republic was proclaimed, and there was set up a de facto Government which
was promptly recognized by the Government of the United States for purposes
of ordinary intercourse pending formal recognition by this and other Powers
of the Governmental entity to be duly established by the national
sovereignty. LIBERIA.
A disturbance among the native tribes of Liberia in a portion of the
Republic during the early part of this year resulted in the sending, under
the Treaty of 1862, of an American vessel of war to the disaffected
district, and the Liberian authorities, assisted by the good offices of the
American Naval Officers, were able to restore order. The negotiations which
have been undertaken for the amelioration of the conditions found in
Liberia by the American Commission, whose report I transmitted to Congress
on March 25 last, are being brought to conclusion, and it is thought that
within a short time practical measures of relief may be put into effect
through the good offices of this Government and the cordial cooperation of
other governments interested in Liberia's welfare.
THE NEAR EAST. TURKEY.
To return the visit of the Special Embassy announcing the accession of His
Majesty Mehemet V, Emperor of the Ottomans, I sent to Constantinople a
Special Ambassador who, in addition to this mission of ceremony, was
charged with the duty of expressing to the Ottoman Government the value
attached by the Government of the United States to increased and more
important relations between the countries and the desire of the United
States to contribute to the larger economic and commercial development due
to the new regime in Turkey.
The rapid development now beginning in that ancient empire and the marked
progress and increased commercial importance of Bulgaria, Roumania, and
Servia make it particularly opportune that the possibilities of American
commerce in the Near East should receive due attention. MONTENEGRO.
The National Skoupchtina having expressed its will that the Principality of
Montenegro be raised to the rank of Kingdom, the Prince of Montenegro on
August 15 last assumed the title of King of Montenegro. It gave me pleasure
to accord to the new kingdom the recognition of the United States.
THE FAR EAST.
The center of interest in Far Eastern affairs during the past year has
again been China.
It is gratifying to note that the negotiations for a loan to the Chinese
Government for the construction of the trunk railway lines from Hankow
southward to Canton and westward through the Yangtse Valley, known as the
Hukuang Loan, were concluded by the representatives of the various
financial groups in May last and the results approved by their respective
governments. The agreement, already initialed by the Chinese Government, is
now awaiting formal ratification. The basis of the settlement of the terms
of this loan was one of exact equality between America, Great Britain,
France, and Germany in respect to financing the loan and supplying
materials for the proposed railways and their future branches.
The application of the principle underlying the policy of the United States
in regard to the Hukuang Loan, viz., that of the internationalization of
the foreign interest in such of the railways of China as may be financed by
foreign countries, was suggested on a broader scale by the Secretary of
State in a proposal for internationalization and commercial neutralization
of all the railways of Manchuria. While the principle which led to the
proposal of this Government was generally admitted by the powers to whom it
was addressed, the Governments of Russia and Japan apprehended practical
difficulties in the execution of the larger plan which prevented their
ready adherence. The question of constructing the Chinchow-Aigun railway by
means of an international loan to China is, however, still the subject of
friendly discussion by the interested parties.
The policy of this Government in these matters has been directed by a
desire to make the use of American capital in the development of China an
instrument in the promotion of China's welfare and material prosperity
without prejudice to her legitimate rights as an independent political
power.
This policy has recently found further exemplification in the assistance
given by this Government to the negotiations between China and a group of
American bankers for a loan of $50,000,000 to be employed chiefly in
currency reform. The confusion which has from ancient times existed in the
monetary usages of the Chinese has been one of the principal obstacles to
commercial intercourse with that people. The United States in its Treaty of
1903 with China obtained a pledge from the latter to introduce a uniform
national coinage, and the following year, at the request of China, this
Government sent to Peking a member of the International Exchange
Commission, to discuss with the Chinese Government the best methods of
introducing the reform. In 1908 China sent a Commissioner to the United
States to consult with American financiers as to the possibility of
securing a large loan with which to inaugurate the new currency system, but
the death of Their Majesties, the Empress Dowager and the Emperor of China,
interrupted the negotiations, which were not resumed until a few months
ago, when this Government was asked to communicate to the bankers concerned
the request of China for a loan of $50,000,000 for the purpose under
review. A preliminary agreement between the American group and China has
been made covering the loan.
For the success of this loan and the contemplated reforms which are of the
greatest importance to the commercial interests of the United States and
the civilized world at large, it is realized that an expert will be
necessary, and this Government has received assurances from China that such
an adviser, who shall be an American, will be engaged.
It is a matter of interest to Americans to note the success which is
attending the efforts of China to establish gradually a system of
representative government. The provincial assemblies were opened in
October, 1909, and in October of the present year a consultative body, the
nucleus of the future national parliament, held its first session at
Peking.
The year has further been marked by two important international agreements
relating to Far Eastern affairs. In the Russo-Japanese Agreement relating
to Manchuria, signed July 4, 1910, this Government was gratified to note an
assurance of continued peaceful conditions in that region and the
reaffirmation of the policies with respect to China to which the United
States together with all other interested powers are alike solemnly
committed.
The treaty annexing Korea to the Empire of Japan, promulgated August 29,
1910, marks the final step in a process of control of the ancient empire by
her powerful neighbor that has been in progress for several years past. In
communicating the fact of annexation the Japanese Government gave to the
Government of the United States assurances of the full protection of the
rights of American citizens in Korea under the changed conditions.
Friendly visits of many distinguished persons from the Far East have been
made during the year. Chief among these were Their Imperial Highnesses
Princes Tsai-tao and Tsai-Hsun of China; and His Imperial Highness Prince
Higashi Fushimi, and Prince Tokugawa, President of the House of Peers of
Japan. The Secretary of War has recently visited Japan and China in
connection with his tour to the Philippines, and a large delegation of
American business men are at present traveling in China. This exchange of
friendly visits has had the happy effect of even further strengthening our
friendly international relations.
LATIN AMERICA.
During the past year several of our southern sister Republics celebrated
the one hundredth anniversary of their independence. In honor of these
events, special embassies were sent from this country to Argentina, Chile,
and Mexico, where the gracious reception and splendid hospitality extended
them manifested the cordial relations and friendship existing between those
countries and the United States, relations which I am happy to believe have
never before been upon so high a plane and so solid a basis as at present.
The Congressional commission appointed under a concurrent resolution to
attend the festivities celebrating the centennial anniversary of Mexican
independence, together with a special ambassador, were received with the
highest honors and with the greatest cordiality, and returned with the
report of the bounteous hospitality and warm reception of President Diaz
and the Mexican people, which left no doubt of the desire of the
immediately neighboring Republic to continue the mutually beneficial and
intimate relations which I feel sure the two governments will ever
cherish.
At the Fourth Pan-American Conference which met in Buenos Aires during July
and August last, after seven weeks of harmonious deliberation, three
conventions were signed providing for the regulation of trade-marks,
patents, and copyrights, which when ratified by the different Governments,
will go far toward furnishing to American authors, patentees, and owners of
trade-marks the protection needed in localities where heretofore it has
been either lacking or inadequate. Further, a convention for the
arbitration of pecuniary claims was signed and a number of important
resolutions passed. The Conventions will in due course be transmitted to
the Senate, and the report of the Delegation of the United States will be
communicated to the Congress for its information. The special cordiality
between representative men from all parts of America which was shown at
this Conference cannot fail to react upon and draw still closer the
relations between the countries which took part in it.
The International Bureau of American Republics is doing a broad and useful
work for Pan American commerce and comity. Its duties were much enlarged by
the International Conference of American States at Buenos Aires and its
name was shortened to the more practical and expressive term of Pan
American Union. Located now in its new building, which was specially
dedicated April 26 of this year to the development of friendship, trade and
peace among the American nations, it has improved instrumentalities to
serve the twenty-two republics of this hemisphere.
I am glad to say that the action of the United States in its desire to
remove imminent danger of war between Peru and Ecuador growing out of a
boundary dispute, with the cooperation of Brazil and the Argentine Republic
as joint mediators with this Government, has already resulted successfully
in preventing war. The Government of Chile, while not one of the mediators,
lent effective aid in furtherance of a preliminary agreement likely to lead
on to an amicable settlement, and it is not doubted that the good offices
of the mediating Powers and the conciliatory cooperation of the Governments
directly interested will finally lead to a removal of this perennial cause
of friction between Ecuador and Peru. The inestimable value of cordial
cooperation between the sister republics of America for the maintenance of
peace in this hemisphere has never been more clearly shown than in this
mediation, by which three American Governments have given to this
hemisphere the honor of first invoking the most far-reaching provisions of
The Hague Convention for the pacific settlement of international disputes.
There has been signed by the representatives of the United States and
Mexico a protocol submitting to the United States-Mexican Boundary
Commission (whose membership for the purpose of this case is to be
increased by the addition of a citizen of Canada) the question of
sovereignty over the Chamizal Tract which lies within the present physical
boundaries of the city of E1 Paso, Tex. The determination of this question
will remove a source of no little annoyance to the two Governments.
The Republic of Honduras has for many years been burdened with a heavy
bonded debt held in Europe, the interest on which long ago fell in arrears.
Finally conditions were such that it became imperative to refund the debt
and place the finances of the Republic upon a sound basis. Last year a
group of American bankers undertook to do this and to advance funds for
railway and other improvements contributing directly to the country's
prosperity and commerce--an arrangement which has long been desired by this
Government. Negotiations to this end have been under way for more than a
year and it is now confidently believed that a short time will suffice to
conclude an arrangement which will be satisfactory to the foreign
creditors, eminently advantageous to Honduras, and highly creditable to the
judgment and foresight of the Honduranean Government. This is much to be
desired since, as recognized by the Washington Conventions, a strong
Honduras would tend immensely to the progress and prosperity of Central
America.
During the past year the Republic of Nicaragua has been the scene of
internecine struggle. General Zelaya, for seventeen years the absolute
ruler of Nicaragua, was throughout his career the disturber of Central
America and opposed every plan for the promotion of peace and friendly
relations between the five republics. When the people of Nicaragua were
finally driven into rebellion by his lawless exactions, he violated the
laws of war by the unwarranted execution of two American citizens who had
regularly enlisted in the ranks of the revolutionists. This and other
offenses made it the duty of the American Government to take measures with
a view to ultimate reparation and for the safeguarding of its interests.
This involved the breaking off of all diplomatic relations with the Zelaya
Government for the reasons laid down in a communication from the Secretary
of State, which also notified the contending factions in Nicaragua that
this Government would hold each to strict accountability for outrages on
the rights of American citizens. American forces were sent to both coasts
of Nicaragua to be in readiness should occasion arise to protect Americans
and their interests, and remained there until the war was over and peace
had returned to that unfortunate country. These events, together with
Zelaya's continued exactions, brought him so clearly to the bar of public
opinion that he was forced to resign and to take refuge abroad.
In the above-mentioned communication of the Secretary of State to the
Charge d'Affaires of the Zelaya Government, the opinion was expressed that
the revolution represented the wishes of the majority of the Nicaraguan
people. This has now been proved beyond doubt by the fact that since the
complete overthrow of the Madriz Government and the occupation of the
capital by the forces of the revolution, all factions have united to
maintain public order and as a result of discussion with an Agent of this
Government, sent to Managua at the request of the Provisional Government,
comprehensive plans are being made for the future welfare of Nicaragua,
including the rehabilitation of public credit. The moderation and
conciliatory spirit shown by the various factions give ground for the
confident hope that Nicaragua will soon take its rightful place among the
law-abiding and progressive countries of the world.
It gratifies me exceedingly to announce that the Argentine Republic some
months ago placed with American manufacturers a contract for the
construction of two battle-ships and certain additional naval equipment.
The extent of this work and its importance to the Argentine Republic make
the placing of the bid an earnest of friendly feeling toward the United
States.
TARIFF NEGOTIATIONS.
The new tariff law, in section 2, respecting the maximum and minimum
tariffs of the United States, which provisions came into effect on April 1,
1910, imposed upon the President the responsibility of determining prior to
that date whether or not any undue discrimination existed against the
United States and its products in any country of the world with which we
sustained commercial relations.
In the case of several countries instances of apparent undue discrimination
against American commerce were found to exist. These discriminations were
removed by negotiation. Prior to April 1, 1910, when the maximum tariff was
to come into operation with respect to importations from all those
countries in whose favor no proclamation applying the minimum tariff should
be issued by the President, one hundred and thirty-four such proclamations
were issued. This series of proclamations embraced the entire commercial
world, and hence the minimum tariff of the United States has been given
universal application, thus testifying to the satisfactory character of our
trade relations with foreign countries.
Marked advantages to the commerce of the United States were obtained
through these tariff settlements. Foreign nations are fully cognizant of
the fact that under section 2 of the tariff act the President is required,
whenever he is satisfied that the treatment accorded by them to the
products of the United States is not such as to entitle them to the
benefits of the minimum tariff of the United States, to withdraw those
benefits by proclamation giving ninety days' notice, after which the
maximum tariff will apply to their dutiable products entering the United
States. In its general operation this section of the tariff law has thus
far proved a guaranty of continued commercial peace, although there are
unfortunately instances where foreign governments deal arbitrarily with
American interests within their jurisdiction in a manner injurious and
inequitable.
The policy of broader and closer trade relations with the Dominion of
Canada which was initiated in the adjustment of the maximum and minimum
provisions of the Tariff Act of August, 1909, has proved mutually
beneficial. It justifies further efforts for the readjustment of the
commercial relations of the two countries so that their commerce may follow
the channels natural to contiguous countries and be commensurate with the
steady expansion of trade and industry on both sides of the boundary line.
The reciprocation on the part of the Dominion Government of the sentiment
which was expressed by this Government was followed in October by the
suggestion that it would be glad to have the negotiations, which had been
temporarily suspended during the summer, resumed. In accordance with this
suggestion the Secretary of State, by my direction, dispatched two
representatives of the Department of State as special commissioners to
Ottawa to confer with representatives of the Dominion Government. They were
authorized to take such steps for formulating a reciprocal trade agreement
as might be necessary and to receive and consider any propositions which
the Dominion Government might care to submit.
Pursuant to the instructions issued conferences were held by these
commissioners with officials of the Dominion Government at Ottawa in the
early part of November.
The negotiations were conducted on both sides in a spirit of mutual
accommodation. The discussion of the common commercial interests of the two
countries had for its object a satisfactory basis for a trade arrangement
which offers the prospect of a freer interchange for the products of the
United States and of Canada. The conferences were adjourned to be resumed
in Washington in January, when it is hoped that the aspiration of both
Governments for a mutually advantageous measure of reciprocity will be
realized.
FOSTERING FOREIGN TRADE.
All these tariff negotiations, so vital to our commerce and industry, and
the duty of jealously guarding the equitable and just treatment of our
products, capital, and industry abroad devolve upon the Department of
State.
The Argentine battle-ship contracts, like the subsequent important one for
Argentine railway equipment, and those for Cuban Government vessels, were
secured for our manufacturers largely through the good offices of the
Department of State.
The efforts of that Department to secure for citizens of the United States
equal opportunities in the markets of the world and to expand American
commerce have been most successful. The volume of business obtained in new
fields of competition and upon new lines is already very great and Congress
is urged to continue to support the Department of State in its endeavors
for further trade expansion.
Our foreign trade merits the best support of the Government and the most
earnest endeavor of our manufacturers and merchants, who, if they do not
already in all cases need a foreign market, are certain soon to become
dependent on it. Therefore, now is the time to secure a strong position in
this field.
AMERICAN BRANCH BANKS ABROAD.
I cannot leave this subject without emphasizing the necessity of such
legislation as will make possible and convenient the establishment of
American banks and branches of American banks in foreign countries. Only by
such means can our foreign trade be favorably financed, necessary credits
be arranged, and proper avail be made of commercial opportunities in
foreign countries, and most especially in Latin America.
AID TO OUR FOREIGN MERCHANT MARINE.
Another instrumentality indispensable to the unhampered and natural
development of American commerce is merchant marine. All maritime and
commercial nations recognize the importance of this factor. The greatest
commercial nations, our competitors, jealously foster their merchant
marine. Perhaps nowhere is the need for rapid and direct mail, passenger
and freight communication quite so urgent as between the United States and
Latin America. We can secure in no other quarter of the world such
immediate benefits in friendship and commerce as would flow from the
establishment of direct lines Of communication with the countries of Latin
America adequate to meet the requirements of a rapidly increasing
appreciation of the reciprocal dependence of the countries of the Western
Hemisphere upon each other's products, sympathies and assistance.
I alluded to this most important subject in my last annual message; it has
often been before you and I need not recapitulate the reasons for its
recommendation. Unless prompt action be taken the completion of the Panama
Canal will find this the only great commercial nation unable to avail in
international maritime business of this great improvement in the means of
the world's commercial intercourse.
Quite aside from the commercial aspect, unless we create a merchant marine,
where can we find the seafaring population necessary as a natural naval
reserve and where could we find, in case of war, the transports and
subsidiary vessels without which a naval fleet is arms without a body? For
many reasons I cannot too strongly urge upon the Congress the passage of a
measure by mail subsidy or other subvention adequate to guarantee the
establishment and rapid development of an American merchant marine, and the
restoration of the American flag to its ancient place upon the seas.
Of course such aid ought only to be given under conditions of publicity of
each beneficiary's business and accounts which would show that the aid
received was needed to maintain the trade and was properly used for that
purpose.
FEDERAL PROTECTION TO ALIENS.
With our increasing international intercourse, it becomes incumbent upon me
to repeat more emphatically than ever the recommendation which I made in my
Inaugural Address that Congress shall at once give to the Courts of the
United States jurisdiction to punish as a crime the violation of the rights
of aliens secured by treaty with the United States, in order that the
general government of the United States shall be able, when called upon by
a friendly nation, to redeem its solemn promise by treaty to secure to the
citizens or subjects of that nation resident in the United States, freedom
from violence and due process of law in respect to their life, liberty and
property.
MERIT SYSTEM FOR DIPLOMATIC AND CONSULAR SERVICE.
I also strongly commend to the favorable action of the Congress the
enactment of a law applying to the diplomatic and consular service the
principles embodied in Section 1753 of the Revised Statutes of the United
States, in the Civil Service Act of January 16, 1883, and the Executive
Orders of June 27, 1906, and of November 26, 1909. The excellent results
which have attended the partial application of Civil Service principles to
the diplomatic and consular services are an earnest of the benefit to be
wrought by a wider and more permanent extension of those principles to both
branches of the foreign service. The marked improvement in the consular
service during the four years since the principles of the Civil Service Act
were applied to that service in a limited way, and the good results already
noticeable from a similar application of civil service principles to the
diplomatic service a year ago, convince me that the enactment into law of
the general principles of the existing executive regulations could not fail
to effect further improvement of both branches of the foreign service,
offering as it would by its assurance of permanency of tenure and promotion
on merit, an inducement for the entry of capable young men into the service
and an incentive to those already in to put forth their best efforts to
attain and maintain that degree of efficiency which the interests of our
international relations and commerce demand.
GOVERNMENT OWNERSHIP OF OUR EMBASSY AND LEGATION PREMISES.
During many years past appeals have been made from time to time to Congress
in favor of Government ownership of embassy and legation premises abroad.
The arguments in favor of such ownership have been many and oft repeated
and are well known to the Congress. The acquisition by the Government of
suitable residences and offices for its diplomatic officers, especially in
the capitals of the Latin-American States and of Europe, is so important
and necessary to an improved diplomatic service that I have no hesitation
in urging upon the Congress the passage of some measure similar to that
favorably reported by the House Committee on Foreign Affairs on February
14, 1910 (Report No. 438), that would authorize the gradual and annual
acquisition of premises for diplomatic use.
The work of the Diplomatic Service is devoid of partisanship; its
importance should appeal to every American citizen and should receive the
generous consideration of the Congress.
TREASURY DEPARTMENT.
ESTIMATES FOR NEXT YEAR'S EXPENSES.
Every effort has been made by each department chief to reduce the estimated
cost of his department for the ensuing fiscal year ending June 30, 1912. I
say this in order that Congress may understand that these estimates thus
made present the smallest sum which will maintain the departments, bureaus,
and offices of the Government and meet its other obligations under existing
law, and that a cut of these estimates would result in embarrassing the
executive branch of the Government in the performance of its duties. This
remark does not apply to the river and harbor estimates, except to those
for expenses of maintenance and the meeting of obligations under authorized
contracts, nor does it apply to the public building bill nor to the navy
building program. Of course, as to these Congress could withhold any part
or all of the estimates for them without interfering with the discharge of
the ordinary obligations of the Government or the performance of the
functions of its departments, bureaus, and offices.
A FIFTY-TWO MILLION CUT.
The final estimates for the year ending June 30, 1912, as they have been
sent to the Treasury, on November 29 of this year, for the ordinary
expenses of the Government, including those for public buildings, rivers
and harbors, and the navy building program, amount to $630,494,013.12. This
is $52,964,887.36 less than the appropriations for the fiscal year ending
June 30, 1911. It is $16,883,153.44 less than the total estimates,
including supplemental estimates submitted to Congress by the Treasury for
the year 1911, and is $5,574,659.39 less than the original estimates
submitted by the Treasury for 1911.
These figures do not include the appropriations for the Panama Canal, the
policy in respect to which ought to be, and is, to spend as much each year
as can be economically and effectively expended in order to complete the
Canal as promptly as possible, and, therefore, the ordinary motive for
cutting down the expense of the Government does not apply to appropriations
for this purpose. It will be noted that the estimates for the Panama Canal
for the ensuing year are more than fifty-six millions of dollars, an
increase of twenty millions over the amount appropriated for this year--a
difference due to the fact that the estimates for 1912 include something
over nineteen millions for the fortification of the Canal. Against the
estimated expenditures of $630,494,013.12, the Treasury has estimated
receipts for next year $680,000,000, making a probable surplus of ordinary
receipts over ordinary expenditures of about $50,000,000.
A table showing in detail the estimates and the comparisons referred to
follows.
TYPICAL ECONOMIES.
The Treasury Department is one of the original departments of the
Government. With the changes in the monetary system made from time to time
and with the creation of national banks, it was thought necessary to
organize new bureaus and divisions which were added in a somewhat haphazard
way and resulted in a duplication of duties which might well now be ended.
This lack of system and economic coordination has attracted the attention
of the head of that Department who has been giving his time for the last
two years, with the aid of experts and by consulting his bureau chiefs, to
its reformation. He has abolished four hundred places in the civil service
without at all injuring its efficiency. Merely to illustrate the character
of the reforms that are possible, I shall comment on some of the specific
changes that are being made, or ought to be made by legislative aid.
AUDITING SYSTEM.
The auditing system in vogue is as old as the Government and the methods
used are antiquated. There are six Auditors and seven Assistant Auditors
for the nine departments, and under the present system the only function
which the Auditor of a department exercises is to determine, on accounts
presented by disbursing officers, that the object of the expenditure was
within the law and the appropriation made by Congress for the purpose on
its face, and that the calculations in the accounts are correct. He does
not examine the merits of the transaction or determine the reasonableness
of the price paid for the articles purchased, nor does he furnish any
substantial check upon disbursing officers and the heads of departments or
bureaus with sufficient promptness to enable the Government to recoup
itself in full measure for unlawful expenditure. A careful plan is being
devised and will be presented to Congress with the recommendation that the
force of auditors and employees under them be greatly reduced, thereby
effecting substantial economy. But this economy will be small compared with
the larger economy that can be effected by consolidation and change of
methods. The possibilities in this regard have been shown in the reduction
of expenses and the importance of methods and efficiency in the office of
the Auditor for the Post Office Department, who, without in the slightest
degree impairing the comprehensiveness and efficiency of his work, has cut
down the expenses of his office $120,000 a year.
Statement of estimates of appropriations for the fiscal years 1912 and
1911, and of appropriations for 1911, showing increases and decreases. -
Final Estimates for 1912 as of November 29 - Original Estimates submitted
by the Treasury for 1911 - Total Estimates for 1911 including supplementals
- Appropriations for 1911 - Increase (+) and decrease (-), 1912 estimates
against 1911 total estimates - Increase (+) and decrease (-), 1912
estimates against 1911 total appropriations - Increase (+) and decrease
(-), 1911 estimates against 1911 total appropriations
Legislature - $13,426,805.73 - $13,169,679.70 - $13,169,679.70 -
$12,938,048.00 - + $257,126.03 - + $488,757.73 - + $231,631.70
Executive - 998,170.00 - 472,270.00 - 722,270.00 - 870,750.00 - +
275,900.00 - + 127,420.00 - - 148,480.00
State Department: - 4,875,576.41 - 4,875,301.41 - 4,749,801.41 -
5,046,701.41 - + 125,775.00 - - 171,125.00 - - 296,900.00
TREASURY DEPARTMENT: Treasury Department proper - 68,735,451.00 -
69,865,240.00 - 70,393,543.75 - 69,973,434.61 - - 1,658,092.75 - -
1,237,983.61 - + 420,109.14
Public buildings and works - 11,864,545.60 - 6,198,365.60 - 7,101,465.60 -
5,565,164.00 - + 4,763,080.00 - + 6,299,381.60 - + 1,536,301.60
Territorial governments - 202,150.00 - 287,350.00 - 292,350.00 - 282,600.00
- - 90,200.00 - - 80,450.00 - + 9,750.00
Independent offices - 2,638,695.12 - 2,400,695.12 - 2,492,695.12 -
2,128,695.12 - + 146,000.00 - + 510,000.00 - + 364,000.00
District of Columbia - 13,602,785.90 - 11,884,928.49 - 12,108,878.49 -
11,440,346.99 - + 1,492,907.41 - + 2,162,439.91 - + 668,532.50
WAR DEPARTMENT: War Department proper - 120,104,260.12 - 124,165,656.28 -
125,717,204.77 - 122,322,178.12 - - 5,612,944.65 - - 2,217,918.00 - +
3,395,026.65
Rivers and harbors - 28,232,438.00 - 28,232,465.00 - 28,232,465.00 -
49,390,541.50 - - 27.00 - -21,158,103.50 - -21,158,076.50
NAVY DEPARTMENT: Navy Department proper - 116,101,730.24 - 117,029,914.38 -
119,768,860.83 - 119,596,870.46 - - 3,667,130.59 - - 3,495,140.22 - +
171,990.37
New navy building program - 12,840,428.00 - 12,844,122.00 - 12,844,122.00 -
14,790,122.00 - - 3,694.00 - - 1,949,694.00 - - 1,946,000.00
Interior Department - 189,151,875.00 - 191,224,182.90 - 193,948,582.02 -
214,754,278.00 - - 4,796,707.02 - -25,602,403.00 - -20,805,698.98
Post-Office Department proper - 1,697,490.00 - 1,695,690.00 - 1,695,690.00
- 2,085,005.33 - + 1,800.00 - - 387,515.33 - - 389,315.33
Deficiency in postal revenues - --------------- - 10,634,122.63 -
10,634,122.63 - 10,634,122.63 - -10,634,122.65 - -10,634,122.63 -
-----------------
Department of Agriculture - 19,681,066.00 - 17,681,136.00 - 17,753,931.24 -
17,821,836.00 - + 1,927,134.76 - + 1,859,230.00 - - 67,904.76
Department of Commerce and
Labor - 16,276,970.00 - 14,187,913.00 - 15,789,271.00 - 14,169,969.32 - +
487,699.00 - + 2,107,000.68 - + 1,619,301.68
Department of Justice - 10,063,576.00 - 9,518,640.00 - 9,962,233.00 -
9,648,237.99 - + 101,343.00 - + 415,338.01 - + 313,995.01 -
***
State of the Union Address
William H. Taft
December 5, 1911
Jump to Part II | Part III | Part IV
This message is the first of several which I shall send to Congress during
the interval between the opening of its regular session and its adjournment
for the Christmas holidays. The amount of information to be communicated as
to the operations of the Government, the number of important subjects
calling for comment by the Executive, and the transmission to Congress of
exhaustive reports of special commissions, make it impossible to include in
one message of a reasonable length a discussion of the topics that ought to
be brought to the attention of the National Legislature at its first
regular session.
THE ANTI-TRUST LAW-THE SUPREME COURT DECISIONS.
In May last the Supreme Court handed down decisions in the suits in equity
brought by the United States to enjoin the further maintenance of the
Standard Oil Trust and of the American Tobacco Trust, and to secure their
dissolution. The decisions are epoch-making and serve to advise the
business world authoritatively of the scope and operation of the anti-trust
act of 1890. The decisions do not depart in any substantial way from the
previous decisions of the court in construing and applying this important
statute, but they clarify those decisions by further defining the already
admitted exceptions to the literal construction of the act. By the decrees,
they furnish a useful precedent as to the proper method of dealing with the
capital and property of illegal trusts. These decisions suggest the need
and wisdom of additional or supplemental legislation to make it easier for
the entire business community to square with the rule of action and
legality thus finally established and to preserve the benefit, freedom, and
spur of reasonable competition without loss of real efficiency or
progress.
NO CHANGE IN THE RULE OF DECISION-MERELY IN ITS FORM OF EXPRESSION.
The statute in its first section declares to be illegal "every contract,
combination in the form of trust or otherwise, or conspiracy, in restraint
of trade or commerce among the several States or with foreign nations," and
in the second, declares guilty of a misdemeanor "every person who shall
monopolize or attempt to monopolize or combine or conspire with any other
person to monopolize any part of the trade or commerce of the several
States or with foreign nations."
In two early cases, where the statute was invoked to enjoin a
transportation rate agreement between interstate railroad companies, it was
held that it was no defense to show that the agreement as to rates
complained of was reasonable at common law, because it was said that the
statute was directed against all contracts and combinations in restraint of
trade whether reasonable at common law or not. It was plain from the
record, however, that the contracts complained of in those cases would not
have been deemed reasonable at common law. In subsequent cases the court
said that the statute should be given a reasonable construction and refused
to include within its inhibition, certain contractual restraints of trade
which it denominated as incidental or as indirect.
These cases of restraint of trade that the court excepted from the
operation of the statute were instances which, at common law, would have
been called reasonable. In the Standard Oil and Tobacco cases, therefore,
the court merely adopted the tests of the common law, and in defining
exceptions to the literal application of the statute, only substituted for
the test of being incidental or indirect, that of being reasonable, and
this, without varying in the slightest the actual scope and effect of the
statute. In other words, all the cases under the statute which have now
been decided would have been decided the same way if the court had
originally accepted in its construction the rule at common law.
It has been said that the court, by introducing into the construction of
the statute common-law distinctions, has emasculated it. This is obviously
untrue. By its judgment every contract and combination in restraint of
interstate trade made with the purpose or necessary effect of controlling
prices by stifling competition, or of establishing in whole or in part a
monopoly of such trade, is condemned by the statute. The most extreme
critics can not instance a case that ought to be condemned under the
statute which is not brought within its terms as thus construed.
The suggestion is also made that the Supreme Court by its decision in the
last two cases has committed to the court the undefined and unlimited
discretion to determine whether a case of restraint of trade is within the
terms of the statute. This is wholly untrue. A reasonable restraint of
trade at common law is well understood and is clearly defined. It does not
rest in the discretion of the court. It must be limited to accomplish the
purpose of a lawful main contract to which, in order that it shall be
enforceable at all, it must be incidental. If it exceed the needs of that
contract, it is void.
The test of reasonableness was never applied by the court at common law to
contracts or combinations or conspiracies in restraint of trade whose
purpose was or whose necessary effect would be to stifle competition, to
control prices, or establish monopolies. The courts never assumed power to
say that such contracts or combinations or conspiracies might be lawful if
the parties to them were only moderate in the use of the power thus secured
and did not exact from the public too great and exorbitant prices. It is
true that many theorists, and others engaged in business violating the
statute, have hoped that some such line could be drawn by courts; but no
court of authority has ever attempted it. Certainly there is nothing in the
decisions of the latest two cases from which such a dangerous theory of
judicial discretion in enforcing this statute can derive the slightest
sanction.
FORCE AND EFFECTIVENESS OF STATUTE A MATTER OF GROWTH.
We have been twenty-one years making this statute effective for the
purposes for which it was enacted. The Knight case was discouraging and
seemed to remit to the States the whole available power to attack and
suppress the evils of the trusts. Slowly, however, the error of that
judgment was corrected, and only in the last three or four years has the
heavy hand of the law been laid upon the great illegal combinations that
have exercised such an absolute dominion over many of our industries.
Criminal prosecutions have been brought and a number are pending, but
juries have felt averse to convicting for jail sentences, and judges have
been most reluctant to impose such sentences on men of respectable standing
in society whose offense has been regarded as merely statutory. Still, as
the offense becomes better understood and the committing of it partakes
more of studied and deliberate defiance of the law, we can be confident
that juries will convict individuals and that jail sentences will be
imposed.
THE REMEDY IN EQUITY BY DISSOLUTION.
In the Standard Oil case the Supreme and Circuit Courts found the
combination to be a monopoly of the interstate business of refining,
transporting, and marketing petroleum and its products, effected and
maintained through thirty-seven different corporations, the stock of which
was held by a New Jersey company. It in effect commanded the dissolution of
this combination, directed the transfer and pro rata distribution by the
New Jersey company of the stock held by it in the thirty-seven corporations
to and among its stockholders; and the corporations and individual
defendants were enjoined from conspiring or combining to restore such
monopoly; and all agreements between the subsidiary corporations tending to
produce or bring about further violations of the act were enjoined.
In the Tobacco case, the court found that the individual defendants,
twenty-nine in number, had been engaged in a successful effort to acquire
complete dominion over the manufacture, sale, and distribution of tobacco
in this country and abroad, and that this had been done by combinations
made with a purpose and effect to stifle competition, control prices, and
establish a monopoly, not only in the manufacture of tobacco, but also of
tin-foil and licorice used in its manufacture and of its products of
cigars, cigarettes, and snuffs. The tobacco suit presented a far more
complicated and difficult case than the Standard Oil suit for a decree
which would effectuate the will of the court and end the violation of the
statute. There was here no single holding company as in the case of the
Standard Oil Trust. The main company was the American Tobacco Company, a
manufacturing, selling, and holding company. The plan adopted to destroy
the combination and restore competition involved the redivision of the
capital and plants of the whole trust between some of the companies
constituting the trust and new companies organized for the purposes of the
decree and made parties to it, and numbering, new and old, fourteen.
SITUATION AFTER READJUSTMENT.
The American Tobacco Company (old), readjusted capital, $92, 000,000; the
Liggett & Meyers Tobacco Company (new), capital, $67,000,000; the P.
Lorillard Company (new), capital, $47,000,000; and the R. J. Reynolds
Tobacco Company (old), capital, $7,525,000, are chiefly engaged in the
manufacture and sale of chewing and smoking tobacco and cigars. The former
one tinfoil company is divided into two, one of $825,000 capital and the
other of $400,000. The one snuff company is divided into three companies,
one with a capital Of $15,000,000, another with a capital of $8,000,000,
and a third with a capital of $8,000,000. The licorice companies are two
one with a capital Of $5,758,300 and another with a capital of $200,000.
There is, also, the British-American Tobacco Company, a British
corporation, doing business abroad with a capital Of $26,000,000, the Porto
Rican Tobacco Company, with a capital of $1,800,000, and the corporation of
United Cigar Stores, with a capital of $9,000,000.
Under this arrangement, each of the different kinds of business will be
distributed between two or more companies with a division of the prominent
brands in the same tobacco products, so as to make competition not only
possible but necessary. Thus the smoking-tobacco business of the country is
divided so that the present independent companies have 21-39 per cent,
while the American Tobacco Company will have 33-08 per cent, the Liggett &
Meyers 20.05 per cent, the Lorillard Company 22.82 per cent, and the
Reynolds Company 2.66 per cent. The stock of the other thirteen companies,
both preferred and common, has been taken from the defendant American
Tobacco Company and has been distributed among its stockholders. All
covenants restricting competition have been declared null and further
performance of them has been enjoined. The preferred stock of the different
companies has now been given voting power which was denied it under the old
organization. The ratio of the preferred stock to the common was as 78 to
40. This constitutes a very decided change in the character of the
ownership and control of each company.
In the original suit there were twenty-nine defendants who were charged
with being the conspirators through whom the illegal combination acquired
and exercised its unlawful dominion. Under the decree these defendants.
will hold amounts of stock in the various distributee companies ranging
from 41 per cent as a maximum to 28.5 per cent as a minimum, except in the
case of one small company, the Porto Rican Tobacco Company, in which they
will hold 45 per cent. The twenty-nine individual defendants are enjoined
for three years from buying any stock except from each other, and the group
is thus prevented from extending its control during that period. All
parties to the suit, and the new companies who are made parties are
enjoined perpetually from in any way effecting any combination between any
of the companies in violation of the statute by way of resumption of the
old trust. Each of the fourteen companies is enjoined from acquiring stock
in any of the others. All these companies are enjoined from having common
directors or officers, or common buying or selling agents, or common
offices, or lending money to each other.
SIZE OF NEW COMPANIES.
Objection was made by certain independent tobacco companies that this
settlement was unjust because it left companies with very large capital in
active business, and that the settlement that would be effective to put all
on an equality would be a division of the capital and plant of the trust
into small fractions in amount more nearly equal to that of each of the
independent companies. This contention results from a misunderstanding of
the anti-trust law and its purpose. It is not intended thereby to prevent
the accumulation of large capital in business enterprises in which such a
combination can secure reduced cost of production, sale, and distribution.
It is directed against such an aggregation of capital only when its purpose
is that of stifling competition, enhancing or controlling prices, and
establishing a monopoly. If we shall have by the decree defeated these
purposes and restored competition between the large units into which the
capital and plant have been divided, we shall have accomplished the useful
purpose of the statute.
CONFISCATION NOT THE PURPOSE OF THE STATUTE.
It is not the purpose of the statute to confiscate the property and capital
of the offending trusts. Methods of punishment by fine or imprisonment of
the individual offenders, by fine of the corporation or by forfeiture of
its goods in transportation, are provided, but the proceeding in equity is
a specific remedy to stop the operation of the trust by injunction and
prevent the future use of the plant and capital in violation of the
statute.
EFFECTIVENESS OF DECREE.
I venture to say that not in the history of American law has a decree more
effective for such a purpose been entered by a court than that against the
Tobacco Trust. As Circuit judge Noyes said in his judgment approving the
decree:
"The extent to which it has been necessary to tear apart this combination
and force it into new forms with the attendant burdens ought to demonstrate
that the Federal anti-trust statute is a drastic statute which accomplishes
effective results; which so long as it stands on the statute books must be
obeyed, and which can not be disobeyed without incurring far-reaching
penalties. And, on the other hand, the successful reconstruction of this
organization should teach that the effect of enforcing this statute is not
to destroy, but to reconstruct; not to demolish, but to re-create in
accordance with the conditions which the Congress has declared shall exist
among the people of the United States."
COMMON STOCK OWNERSHIP.
It has been assumed that the present pro rata and common ownership in all
these companies by former stockholders of the trust would insure a
continuance of the same old single control of all the companies into which
the trust has by decree been disintegrated. This is erroneous and is based
upon the assumed inefficacy and innocuousness of judicial injunctions. The
companies are enjoined from cooperation or combination; they have different
managers, directors, purchasing and sales agents. If all or many of the
numerous stockholders, reaching into the thousands, attempt to secure
concerted action of the companies with a view to the control of the market,
their number is so large that such an attempt could not well be concealed,
and its prime movers and all its participants would be at once subject to
contempt proceedings and imprisonment of a summary character. The immediate
result of the present situation will necessarily be activity by all the
companies under different managers, and then competition must follow, or
there will be activity by one company and stagnation by another. Only a
short time will inevitably lead to a change in ownership of the stock, as
all opportunity for continued cooperation must disappear. Those critics who
speak of this disintegration in the trust as a mere change of garments have
not given consideration to the inevitable working of the decree and
understand little the personal danger of attempting to evade or set at
naught the solemn injunction of a court whose object is made plain by the
decree and whose inhibitions are set forth with a detail and
comprehensiveness.
VOLUNTARY REORGANIZATIONS OF OTHER TRUSTS AT HAND.
The effect of these two decisions has led to decrees dissolving the
combination of manufacturers of electric lamps, a southern wholesale
grocers' association, an interlocutory decree against the Powder Trust with
directions by the circuit court compelling dissolution, and other
combinations of a similar history are now negotiating with the Department
of justice looking to a disintegration by decree and reorganization in
accordance with law. It seems possible to bring about these reorganizations
without general business disturbance.
MOVEMENT FOR REPEAL OF THE ANTI-TRUST LAW.
But now that the anti-trust act is seen to be effective for the
accomplishment of the purpose of its enactment, we are met by a cry from
many different quarters for its repeal. It is said to be obstructive of
business progress to be an attempt to restore old-fashioned methods of
destructive competition between small units, and to make impossible those
useful combinations of capital and the reduction of the cost of production
that are essential to continued prosperity and normal growth.
In the recent decisions the Supreme Court makes clear that there is nothing
in the statute which condemns combinations of capital or mere bigness of
plant organized to secure economy in production and a reduction of its
cost. It is only when the purpose or necessary effect of the organization
and maintenance of the combination or the aggregation of immense size are
the stifling of competition, actual and potential, and the enhancing of
prices and establishing a monopoly, that the statute is violated. Mere size
is no sin against the law. The merging of two or more business plants
necessarily eliminates competition between the units thus combined, but
this elimination is in contravention of the statute only when the
combination is made for purpose of ending this particular competition in
order to secure control of, and enhance, prices and create a monopoly.
LACK OF DEFINITENESS IN THE STATUTE.
The complaint is made of the statute that it is not sufficiently definite
in its description of that which is forbidden, to enable business men to
avoid its violation. The suggestion is, that we may have a combination of
two corporations, which may run on for years, and that subsequently the
Attorney General may conclude that it was a violation of the statute, and
that which was supposed by the combiners to be innocent then turns out to
be a combination in violation of the statute. The answer to this
hypothetical case is that when men attempt to amass such stupendous capital
as will enable them to suppress competition, control prices and establish a
monopoly, they know the purpose of their acts. Men do not do such a thing
without having it clearly in mind. If what they do is merely for the
purpose of reducing the cost of production, without the thought of
suppressing competition by use of the bigness of the plant they are
creating, then they can not be convicted at the time the union is made, nor
can they be convicted later, unless it happen that later on they conclude
to suppress competition and take the usual methods for doing so, and thus
establish for themselves a monopoly. They can, in such a case, hardly
complain if the motive which subsequently is disclosed is attributed by the
court to the original combination.
NEW REMEDIES SUGGESTED.
Much is said of the repeal of this statute and of constructive legislation
intended to accomplish the purpose and blaze a clear path for honest
merchants and business men to follow. It may be that such a plan will be
evolved, but I submit that the discussions which have been brought out in
recent days by the fear of the continued execution of the anti-trust law
have produced nothing but glittering generalities and have offered no line
of distinction or rule of action as definite and as clear as that which the
Supreme Court itself lays down in enforcing the statute.
SUPPLEMENTAL LEGISLATION NEEDED--NOT REPEAL OR AMENDMENT.
I see no objection-and indeed I can see decided advantages-in the enactment
of a law which shall describe and denounce methods of competition which are
unfair and are badges of the unlawful purpose denounced in the anti-trust
law. The attempt and purpose to suppress a competitor by underselling him
at a price so unprofitable as to drive him out of business, or the making
of exclusive contracts with customers under which they are required to give
up association with other manufacturers, and numerous kindred methods for
stifling competition and effecting monopoly, should be described with
sufficient accuracy in a criminal statute on the one hand to enable the
Government to shorten its task by prosecuting single misdemeanors instead
of an entire conspiracy, and, on the other hand, to serve the purpose of
pointing out more in detail to the business community what must be
avoided.
FEDERAL INCORPORATION RECOMMENDED.
In a special message to Congress on January 7, 1910, I ventured to point
out the disturbance to business that would probably attend the dissolution
of these offending trusts. I said:
"But such an investigation and possible prosecution of corporations whose
prosperity or destruction affects the comfort not only of stockholders but
of millions of wage earners, employees, and associated tradesmen must
necessarily tend to disturb the confidence of the business community, to
dry up the now flowing sources of capital from its places of hoarding, and
produce a halt in our present prosperity that will cause suffering and
strained circumstances among the innocent many for the faults of the guilty
few. The question which I wish in this message to bring clearly to the
consideration and discussion of Congress is whether, in order to avoid such
a possible business danger, something can not be done by which these
business combinations may be offered a means, without great financial
disturbance, of changing the character, organization, and extent of their
business into one within the lines of the law under Federal control and
supervision, securing compliance with the anti-trust statute.
"Generally, in the industrial combinations called 'trusts,' the principal
business is the sale of goods in many States and in foreign markets; in
other words, the interstate and foreign business far exceeds the business
done in any one State. This fact will justify the Federal Government in
granting a Federal charter to such a combination to make and sell in
interstate and foreign commerce the products of useful manufacture under
such limitations as will secure a compliance with the anti-trust law. It is
possible so to frame a statute that while it offers protection to a Federal
company against harmful, vexatious, and unnecessary invasion by the States,
it shall subject it to reasonable taxation and control by the States with
respect to its purely local business. * * *
"Corporations organized under this act should be prohibited from acquiring
and holding stock in other corporations (except for special reasons, upon
approval by the proper Federal authority), thus avoiding the creation under
national auspices of the holding company with subordinate corporations in
different States, which has been such an effective agency in the creation
of the great trusts and monopolies.
"If the prohibition of the anti-trust act against combinations in restraint
of trade is to be effectively enforced, it is essential that the National
Government shall provide for the creation of national corporations to carry
on a legitimate business throughout the United States. The conflicting laws
of the different States of the Union with respect to foreign corporations
make it difficult, if not impossible, for one corporation to comply with
their requirements so as to carry on business in a number of different
States."
I renew the recommendation of the enactment of a general law providing for
the voluntary formation of corporations to engage in trade and commerce
among the States and with foreign nations. Every argument which was then
advanced for such a law, and every explanation which was at that time
offered to possible objections, have been confirmed by our experience since
the enforcement of the antitrust, statute has resulted in the actual
dissolution of active commercial organizations.
It is even more manifest now than it was then that the denunciation of
conspiracies in restraint of trade should not and does not mean the denial
of organizations large enough to be intrusted with our interstate and
foreign trade. It has been made more clear now than it was then that a
purely negative statute like the anti-trust law may well be supplemented by
specific provisions for the building up and regulation of legitimate
national and foreign commerce.
GOVERNMENT ADMINISTRATIVE EXPERTS NEEDED TO AID COURTS IN TRUST
DISSOLUTIONS.
The drafting of the decrees in the dissolution of the present trusts, with
a view to their reorganization into legitimate corporations, has made it
especially apparent that the courts are not provided with the
administrative machinery to make the necessary inquiries preparatory to
reorganization, or to pursue such inquiries, and they should be empowered
to invoke the aid of the Bureau of Corporations in determining the suitable
reorganization of the disintegrated parts. The circuit court and the
Attorney General were greatly aided in framing the decree in the Tobacco
Trust dissolution by an expert from the Bureau of Corporations.
FEDERAL CORPORATION COMMISSION PROPOSED.
I do not set forth in detail the terms and sections of a statute which
might supply the constructive legislation permitting and aiding the
formation of combinations of capital into Federal corporations. They should
be subject to rigid rules as to their organization and procedure, including
effective publicity, and to the closest supervision as to the issue of
stock and bonds by an executive bureau or commission in the Department of
Commerce and Labor, to which in times of doubt they might well submit their
proposed plans for future business. It must be distinctly understood that
incorporation under Federal law could not exempt the company thus formed
and its incorporators and managers from prosecution under the anti-trust
law for subsequent illegal conduct, but the publicity of its procedure and
the opportunity for frequent consultation with the bureau or commission in
charge of the incorporation as to the legitimate purpose of its
transactions would offer it as great security against successful
prosecutions for violations of the law as would be practical or wise.
Such a bureau or commission might well be invested also with the duty
already referred to, of aiding courts in the dissolution and recreation of
trusts within the law. It should be an executive tribunal of the dignity
and power of the Comptroller of the Currency or the Interstate Commerce
Commission, which now exercise supervisory power over important classes of
corporations under Federal regulation.
The drafting of such a Federal incorporation law would offer ample
opportunity to prevent many manifest evils in corporate management to-day,
including irresponsibility of control in the hands of the few who are not
the real owners.
INCORPORATION VOLUNTARY.
I recommend that the Federal charters thus to be granted shall be
voluntary, at least until experience justifies mandatory provisions. The
benefit to be derived from the operation of great businesses under the
protection of such a charter would attract all who are anxious to keep
within the lines of the law. Other large combinations that fail to take
advantage of the Federal incorporation will not have a right to complain if
their failure is ascribed to unwillingness to submit their transactions to
the careful official scrutiny, competent supervision, and publicity
attendant upon the enjoyment of such a charter.
ONLY SUPPLEMENTAL LEGISLATION NEEDED.
The opportunity thus suggested for Federal incorporation, it seems tome, is
suitable constructive legislation needed to facilitate the squaring Of
great industrial enterprises to the rule of action laid down by the
anti-trust law. This statute as construed by the Supreme Court must
continue to be the line of distinction for legitimate business. It must be
enforced, unless we are to banish individualism from all business and
reduce it to one common system of regulation or control of prices like that
which now prevails with respect to public utilities, and which when applied
to all business would be a long step toward State socialism.
IMPORTANCE OF THE ANTI-TRUST ACT.
The anti-trust act is the expression of the effort of a freedom-loving
people to preserve equality of opportunity. It is the result of the
confident determination of such a people to maintain their future growth by
preserving uncontrolled and unrestricted the enterprise of the individual,
his industry, his ingenuity, his intelligence, and his independent
courage.
For twenty years or more this statute has been upon the statute book. All
knew its general purpose and approved. Many of its violators were cynical
over its assumed impotence. It seemed impossible of enforcement. Slowly the
mills of the courts ground, and only gradually did the majesty of the law
assert itself. Many of its statesmen-authors died before it became a living
force, and they and others saw the evil grow which they had hoped to
destroy. Now its efficacy is seen; now its power is heavy; now its object
is near achievement. Now we hear the call for its repeal on the plea that
it interferes with business prosperity, and we are advised in most general
terms, how by some other statute and in some other way the evil we are just
stamping out can be cured, if we only abandon this work of twenty years and
try another experiment for another term of years.
It is said that the act has not done good. Can this be said in the face of
the effect of the Northern Securities decree? That decree was in no way so
drastic or inhibitive in detail as either the Standard Oil decree or the
Tobacco decree; but did it not stop for all time the then powerful movement
toward the control of all the railroads of the country in a single hand?
Such a one-man power could not have been a healthful influence in the
Republic, even though exercised under the general supervision of an
interstate commission.
Do we desire to make such ruthless combinations and monopolies lawful? When
all energies are directed, not toward the reduction of the cost of
production for the public benefit by a healthful competition, but toward
new ways and means for making permanent in a few hands the absolute control
of the conditions and prices prevailing in the whole field of industry,
then individual enterprise and effort will be paralyzed and the spirit of
commercial freedom will be dead.
PART II.
The relations of the United States with other countries have continued
during the past twelve months upon a basis of the usual good will and
friendly intercourse. ARBITRATION.
The year just passed marks an important general movement on the part of the
Powers for broader arbitration. In the recognition of the manifold benefits
to mankind in the extension of the policy of the settlement of
international disputes by arbitration rather than by war, and in response
to a widespread demand for an advance in that direction on the part of the
people of the United States and of Great Britain and of France, new
arbitration treaties were negotiated last spring with Great Britain and
France, the terms of which were de signed, as expressed in the preamble of
these treaties, to extend the scope and obligations of the policy of
arbitration adopted in our present treaties with those Governments To pave
the way for this treat with the United States, Great Britain negotiated an
important modification in its alliance with Japan, and the French
Government also expedited the negotiations with signal good will. The new
treaties have been submitted to the Senate and are awaiting its advice and
consent to their ratification. All the essentials of these important
treaties have long been known, and it is my earnest hope that they will
receive prompt and favorable action.
CLAIM OF ALSOP & CO. SETTLED.
I am glad to report that on July 5 last the American claim of Alsop & Co.
against the Government of Chile was finally disposed of by the decision of
His Britannic Majesty George V, to whom, as amiable compositeur, the matter
had been referred for determination. His Majesty made an award of nearly
$1,000,000 to the claimants, which was promptly paid by Chile. The
settlement of this controversy has happily eliminated from the relations
between the Republic of Chile and the United States the only question which
for two decades had given the two foreign offices any serious concern and
makes possible the unobstructed development of the relations of friendship
which it has been the aim of this Government in every possible way to
further and cultivate.
ARBITRATIONS--PANAMA AND COSTA RICA--COLOMBIA AND HAITI.
In further illustration of the practical and beneficent application of the
principle of arbitration and the underlying broad spirit of conciliation, I
am happy to advert to the part of the United States in facilitating
amicable settlement of disputes which menaced the peace between Panama and
Costa Rica and between Haiti and the Dominican Republic.
Since the date of their independence, Colombia and Costa Rica had been
seeking a solution of a boundary dispute, which came as an heritage from
Colombia to the new Republic of Panama, upon its beginning life as an
independent nation. Although the disputants had submitted this question for
decision to the President of France under the terms of an arbitration
treaty, the exact interpretation of the provisions of the award rendered
had been a matter of serious disagreement between the two countries, both
contending for widely different lines even under the terms of the decision.
Subsequently and since 1903 this boundary question had been the subject of
fruitless diplomatic negotiations between the parties. In January, 1910, at
the request of both Governments the agents representing them met in
conference at the Department of State and subsequently concluded a protocol
submitting this long-pending controversy to the arbitral judgment of the
Chief justice of the United States, who consented to act in this capacity.
A boundary commission, according to the international agreement, has now
been appointed, and it is expected that the arguments will shortly proceed
and that this long-standing dispute will be honorably and satisfactorily
terminated.
Again, a few months ago it appeared that the Dominican Republic and Haiti
were about to enter upon hostilities because of complications growing out
of an acrimonious boundary dispute which the efforts of many years had
failed to solve. The Government of the United States, by a friendly
interposition of good offices, succeeded in prevailing upon the parties to
place their reliance upon some form of pacific settlement. Accordingly, on
the friendly suggestion of this Government, the two Governments empowered
commissioners to meet at Washington in conference at the State Department
in order to arrange the terms of submission to arbitration of the boundary
controversy.
CHAMIZAL ARBITRATION NOT SATISFACTORY.
Our arbitration of the Chamizal boundary question with Mexico was
unfortunately abortive, but with the earnest efforts on the part of both
Governments which its importance commands, it is felt that an early
practical adjustment should prove possible.
LATIN AMERICA. VENEZUELA.
During the past year the Republic of Venezuela celebrated the one hundredth
anniversary of its independence. The United States sent, in honor of this
event, a special embassy to Caracas, where the cordial reception and
generous hospitality shown it were most gratifying as a further proof of
the good relations and friendship existing between that country and the
United States. MEXICO.
The recent political events in Mexico received attention from this
Government because of the exceedingly delicate and difficult situation
created along our southern border and the necessity for taking measures
properly to safeguard American interests. The Government of the United
States, in its desire to secure a proper observance and enforcement of the
so-called neutrality statutes of the Federal Government, issued directions
to the appropriate officers to exercise a diligent and vigilant regard for
the requirements of such rules and laws. Although a condition of actual
armed conflict existed, there was no official recognition of belligerency
involving the technical neutrality obligations of international law.
On the 6th of March last, in the absence of the Secretary of State, I had a
personal interview with Mr. Wilson, the ambassador of the United States to
Mexico, in which he reported to me that the conditions in Mexico were much
more critical than the press dispatches disclosed; that President Diaz was
on a volcano of popular uprising; that the small outbreaks which had
occurred were only symptomatic of the whole condition; that a very large
per cent of the people were in sympathy with the insurrection; that a
general explosion was probable at any time, in which case he feared that
the 40,000 or more American residents in Mexico might be assailed, and that
the very large American investments might be injured or destroyed.
After a conference with the Secretary of War and the Secretary of the Navy,
I thought it wise to assemble an Army division of full strength at San
Antonio, Tex., a brigade of three regiments at Galveston, a brigade of
Infantry in the Los Angeles district of southern California, together with
a squadron of battleships and cruisers and transports at Galveston, and a
small squadron of ships at San Diego. At the same time, through our
representative at the City of Mexico, I expressed to President Diaz the
hope that no apprehensions might result from unfounded conjectures as to
these military maneuvers, and assured him that they had no significance
which should cause concern to his Government.
The mobilization was effected with great promptness, and on the 15th of
March, through the Secretary of War and the Secretary of the Navy, in a
letter addressed to the Chief of Staff, I issued the following
instructions: It seems my duty as Commander in Chief to place troops in
sufficient number where, if Congress shall direct that they enter Mexico to
save American lives and property, an effective movement may be promptly
made. Meantime, the movement of the troops to Texas and elsewhere near the
boundary, accompanied with sincere assurances of the utmost goodwill toward
the present Mexican Government and with larger and more frequent patrols
along the border to prevent insurrectionary expeditions from American soil,
will hold up the hands of the existing Government and will have a healthy
moral effect to prevent attacks upon Americans and their property in any
subsequent general internecine strife. Again, the sudden mobilization of a
division of troops has been a great test of our Army and full of useful
instruction, while the maneuvers that are thus made possible can occupy the
troops and their officers to great advantage.
The assumption by the press that I contemplate intervention on Mexican soil
to protect American lives or property is of course gratuitous, because I
seriously doubt whether I have such authority under any circumstances, and
if I had I would not exercise it without express congressional approval.
Indeed, as you know, I have already declined, without Mexican consent, to
order a troop of Cavalry to protect the breakwater we are constructing just
across the border in Mexico at the mouth of the Colorado River to save the
Imperial Valley, although the insurrectos had scattered the Mexican troops
and were taking our horses and supplies and frightening our workmen away.
My determined purpose, however, is to be in a position so that when danger
to American lives and property in Mexico threatens and the existing
Government is rendered helpless by the insurrection, I can promptly execute
congressional orders to protect them, with effect.
Meantime, I send you this letter, through the Secretary, to call your
attention to some things in connection with the presence of the division in
the Southwest which have doubtless occurred to you, but which I wish to
emphasize.
In the first place, I want to make the mobilization a first-class training
for the Army, and I wish you would give your time and that of the War
College to advising and carrying out maneuvers of a useful character, and
plan to continue to do this during the next three months. By that time we
may expect that either Ambassador Wilson's fears will have been realized
and chaos and its consequences have ensued, or that the present Government
of Mexico will have so readjusted matters as to secure tranquillity-a
result devoutly to be wished. The troops can then be returned to their
posts. I understood from you in Washington that Gen. Aleshire said that you
could probably meet all the additional expense of this whole movement out
of the present appropriations if the troops continue in Texas for three
months. I sincerely hope this is so. I observe from the newspapers that you
have no blank cartridges, but I presume that this is an error, or that it
will be easy to procure those for use as soon as your maneuvers begin.
Second. Texas is a State ordinarily peaceful, but you can not put 20,000
troops into it without running some risk of a collision between the people
of that State, and especially the Mexicans who live in Texas near the
border and who sympathize with the insurrectos, and the Federal soldiers.
For that reason I beg you to be as careful as you can to prevent friction
of any kind. We were able in Cuba, with the army of pacification there of
something more than 5,000 troops, to maintain them for a year without any
trouble, and I hope you can do the same thing in Texas. Please give your
attention to this, and advise all the officers in command of the necessity
for very great circumspection in this regard.
Third. One of the great troubles in the concentration of troops is the
danger of disease, and I suppose that you have adopted the most modern
methods for preventing and, if necessary, for stamping out epidemics. That
is so much a part of a campaign that it hardly seems necessary for me to
call attention to it.
Finally, I wish you to examine the question of the patrol of the border and
put as many troops on that work as is practicable, and more than are now
engaged in it, in order to prevent the use of our borderland for the
carrying out of the insurrection. I have given assurances to the Mexican
ambassador on this point.
I sincerely hope that this experience will always be remembered by the Army
and Navy as a useful means of education, and I should be greatly
disappointed if it resulted in any injury or disaster to our forces from
any cause. I have taken a good deal of responsibility in ordering this
mobilization, but I am ready to answer for it if only you and those under
you use the utmost care to avoid the difficulties which I have pointed
out.
You may have a copy of this letter made and left with Gen. Carter and such
other generals in command as you may think wise and necessary to guide them
in their course, but to be regarded as confidential. I am more than happy
to here record the fact that all apprehensions as to the effect of the
presence of so large a military force in Texas proved groundless; no
disturbances occurred; the conduct of the troops was exemplary and the
public reception and treatment of them was all that could have been
desired, and this notwithstanding the presence of a large number of Mexican
refugees in the border territory.
From time to time communications were received from Ambassador Wilson, who
had returned to Mexico, confirming the view that the massing of American
troops in the neighborhood had had good effect. By dispatch of April 3,
1911, the ambassador said: The continuing gravity of the situation here and
the chaos that would ensue should the constitutional authorities be
eventually overthrown, thus greatly increasing the danger to which American
lives and property are already subject, confirm the wisdom of the President
in taking those military precautions which, making every allowance for the
dignity and the sovereignty of a friendly state, are due to our nationals
abroad.
Charged as I am with the responsibility of safeguarding these lives and
property, I am bound to say to the department that our military
dispositions on the frontier have produced an effective impression on the
Mexican mind and may, at any moment, prove to be the only guaranties for
the safety of our nationals and their property. If it should eventuate that
conditions here require more active measures by the President and Congress,
sporadic attacks might be made upon the lives and property of our
nationals, but the ultimate result would be order and adequate protection.
The insurrection continued and resulted In engagements between the regular
Mexican troops and the insurgents, and this along the border, so that in
several instances bullets from the contending forces struck American
citizens engaged in their lawful occupations on American soil.
Proper protests were made against these invasions of American rights to the
Mexican authorities. On April 17, 1911, I received the following telegram
from the governor of Arizona: As a result of to-day's fighting across the
international line, but within gunshot range of the heart of Douglas, five
Americans wounded on this side of the line. Everything points to repetition
of these casualties on to-morrow, and while the Federals seem disposed to
keep their agreement not to fire into Douglas, the position of the
insurrectionists is such that when fighting occurs on the east and
southeast of the intrenchments people living in Douglas are put in danger
of their lives. In my judgment radical measures are needed to protect our
innocent people, and if anything can be done to stop the fighting at Agua
Prieta the situation calls for such action. It is impossible to safeguard
the people of Douglas unless the town be vacated. Can anything be done to
relieve situation, now acute? After a conference with the Secretary of
State, the following telegram was sent to Governor Sloan, on April IS, 1911
9 11, and made public: Your dispatch received. Have made urgent demand upon
Mexican Government to issue instructions to prevent firing across border by
Mexican federal troops, and am waiting reply. Meantime I have sent direct
warning to the Mexican and insurgent forces near Douglas. I infer from your
dispatch that both parties attempt to heed the warning, but that in the
strain and exigency of the contest wild bullets still find their way into
Douglas. The situation might justify me in ordering our troops to cross the
border and attempt to stop the fighting, or to fire upon both combatants
from the American side. But if I take this step, I must face the
possibility of resistance and greater bloodshed, and also the danger of
having our motives misconstrued and misrepresented, and of thus inflaming
Mexican popular indignation against many thousand Americans now in Mexico
and jeopardizing their lives and property. The pressure for general
intervention under such conditions it might not be practicable to resist.
It is impossible to foresee or reckon the consequences of such a course,
and we must use the greatest self-restraint to avoid it. Pending my urgent
representation to the Mexican Government, I can not therefore order the
troops at Douglas to cross the border, but I must ask you and the local
authorities, in case the same danger recurs, to direct the people of
Douglas to place themselves where bullets can not reach them and thus avoid
casualty. I am loath to endanger Americans in Mexico, where they are
necessarily exposed, by taking a radical step to prevent injury to
Americans on our side of the border who can avoid it by a temporary
inconvenience. I am glad to say that no further invasion of American rights
of any substantial character occurred.
The presence of a large military and naval force available for prompt
action, near the Mexican border, proved to be most fortunate under the
somewhat trying conditions presented by this invasion of American rights
Had no movement theretofore taken place, and because of these events it had
been necessary then to bring about the mobilization, it must have had
sinister significance. On the other hand, the presence of the troops before
and at the time of the unfortunate killing and wounding of American
citizens at Douglas, made clear that the restraint exercised by our
Government in regard to this Occurrence was not due to lack of force or
power to deal with it promptly and aggressively, but was due to a real
desire to use every means possible to avoid direct intervention in the
affairs of our neighbor whose friendship we valued and were most anxious to
retain.
The policy and action of this Government were based upon an earnest
friendliness for the Mexican people as a whole, and it is a matter of
gratification to note that this attitude of strict impartiality as to all
factions in Mexico and of sincere friendship for the neighboring nation,
without regard for party allegiance, has been generally recognized and has
resulted in an even closer and more sympathetic understanding between the
two Republics and a warmer regard one for the other. Action to suppress
violence and restore tranquillity throughout the Mexican Republic was of
peculiar interest to this Government, in that it concerned the safeguarding
of American life and property in that country. The Government of the United
States had occasion to accord permission for the passage of a body of
Mexican rurales through Douglas, Arizona, to Tia Juana, Mexico, for the
suppression of general lawlessness which had for some time existed in the
region of northern Lower California. On May 25, 1911, President Diaz
resigned, Senor de la Barra was chosen provisional President. Elections for
President and Vice President were thereafter held throughout the Republic,
and Senor Francisco I. Madero was formally declared elected on October 15
to the chief magistracy. On November 6 President Madero entered upon the
duties of his office.
Since the inauguration of President Madero a plot has been unearthed
against the present Government, to begin a new insurrection. Pursuing the
same consistent policy which this administration has adopted from the
beginning, it directed an investigation into the conspiracy charged, and
this investigation has resulted in the indictment of Gen. Bernardo Reyes
and others and the seizure of a number of officers and men and horses and
accoutrements assembled upon the soil of Texas for the purpose of invading
Mexico. Similar proceedings had been taken during the insurrection against
the Diaz Government resulting in the indictments and prosecution of persons
found to be engaged in violating the neutrality laws of the United States
in aid of that uprising.
The record of this Government in respect of the recognition of constituted
authority in Mexico therefore is clear.
CENTRAL AMERICA-HONDURAS AND NICARAGUA TREATIES PROPOSED.
As to the situation in Central America, I have taken occasion in the past
to emphasize most strongly the importance that should be attributed to the
consummation of the conventions between the Republics of Nicaragua and of
Honduras and this country, and I again earnestly recommend that the
necessary advice and consent of the Senate be accorded to these treaties,
which will make it possible for these Central American Republics to enter
upon an era of genuine economic national development. The Government of
Nicaragua which has already taken favorable action on the convention, has
found it necessary, pending the exchange of final ratifications, to enter
into negotiations with American bankers for the purpose of securing a
temporary loan to relieve the present financial tension. III connection
with this temporary loan and in the hope of consummating, through the
ultimate operation of the convention, a complete and lasting economic
regeneration, the Government of Nicaragua has also decided to engage an
American citizen as collector general of customs. The claims commission on
which the services of two American citizens have been sought, and the work
of the American financial adviser should accomplish a lasting good of
inestimable benefit to the prosperity, commerce, and peace of the Republic.
In considering the ratification of the conventions with Nicaragua and
Honduras, there rests with the United States the heavy responsibility of
the fact that their rejection here might destroy the progress made and
consign the Republics concerned to still deeper submergence in bankruptcy,
revolution, and national jeopardy. PANAMA.
Our relations with the Republic of Panama, peculiarly important, due to
mutual obligations and the vast interests created by the canal, have
continued in the usual friendly manner, and we have been glad to make
appropriate expression of our attitude of sympathetic interest in the
endeavors of our neighbor in undertaking the development of the rich
resources of the country. With reference to the internal political affairs
of the Republic, our obvious concern is in the maintenance of public peace
and constitutional order, and the fostering of the general interests
created by the actual relations of the two countries, without the
manifestation of any preference for the success of either of the political
parties.
THE PAN AMERICAN UNION.
The Pan American Union, formerly known as the Bureau of American Republics,
maintained by the joint contributions of all the American nations, has
during the past year enlarged its practical work as an international
organization, and continues to prove its usefulness as an agency for the
mutual development of commerce, better acquaintance, and closer intercourse
between the United States and her sister American republics.
THE FAR EAST.
THE CHINESE LOANS.
The past year has been marked in our relations with China by the conclusion
of two important international loans, one for the construction of the
Hukuang railways, the other for carrying out of the currency reform to
which China was pledged by treaties with the United States, Great Britain,
and Japan, of which mention was made in my last annual message.
It will be remembered that early in 1909 an agreement was consummated among
British, French, and German financial groups whereby they proposed to lend
the Chinese Government funds for the construction of railways in the
Provinces of Hunan and Hupeh, reserving for their nationals the privilege
of engineering the construction of the lines and of furnishing the
materials required for the work. After negotiations with the Governments
and groups concerned an agreement was reached whereby American, British,
French, and German nationals should participate upon equal terms in this
important and useful undertaking. Thereupon the financial groups, supported
by their respective Governments, began negotiations with the Chinese
Government which terminated in a loan to China Of $30,000,000, with the
privilege of increasing the amount to $50,000,000. The cooperative
construction of these trunk lines should be of immense advantage,
materially and otherwise, to China and should greatly facilitate the
development of the bountiful resources of the Empire. On the other hand, a
large portion of these funds is to be expended for materials, American
products having equal preference with those of the other three lending
nations, and as the contract provides for branches and extensions
subsequently to be built on the same terms the opportunities for American
materials will reach considerable proportions.
Knowing the interest of the United States in the reform of Chinese
currency, the Chinese Government, in the autumn of 1910 sought the
assistance of the American Government to procure funds with which to
accomplish that all-important reform. In the course of the subsequent
negotiations there was combined with the proposed currency loan one for
certain industrial developments in Manchuria, the two loans aggregating the
sum Of $50,000,000. While this was originally to be solely an American
enterprise, the American Government, consistently with its desire to secure
a sympathetic and practical cooperation of the great powers toward
maintaining the principle of equality of opportunity and the administrative
integrity of China, urged the Chinese Government to admit to participation
in the currency loan the associates of the American group in the Hukuang
loan. While of immense importance in itself, the reform contemplated in
making this loan is but preliminary to other and more comprehensive fiscal
reforms which will be of incalculable benefit to China and foreign
interests alike, since they will strengthen the Chinese Empire and promote
the rapid development of international trade.
NEUTRAL FINANCIAL ADVISER.
When these negotiations were begun, it was understood that a financial
adviser was to be employed by China in connection with the reform, and in
order that absolute equality in all respects among the lending nations
might be scrupulously observed, the American Government proposed the
nomination of a neutral adviser, which was agreed to by China and the other
Governments concerned. On September 28, 1911, Dr. Vissering, president of
the Dutch Java Bank and a financier of wide experience in the Orient, was
recommended to the Chinese Government for the post of monetary adviser.
Especially important at the present, when the ancient Chinese Empire is
shaken by civil war incidental to its awakening to the many influences and
activities of modernization, are the cooperative policy of good
understanding which has been fostered by the international projects
referred to above and the general sympathy of view among all the Powers
interested in the Far East. While safeguarding the interests of our
nationals, this Government is using its best efforts in continuance of its
traditional policy of sympathy and friendship toward the Chinese Empire and
its people, with the confident hope for their economic and administrative
development, and with the constant disposition to contribute to their
welfare in all proper ways consistent with an attitude of strict
impartiality as between contending factions.
For the first time in the history of the two countries, a Chinese cruiser,
the Haichi, under the command of Admiral Ching, recently visited New York,
where the officers and men were given a cordial welcome.
NEW JAPANESE TREATY.
The treaty of commerce and navigation between the United States and Japan,
signed in 1894, would by a strict interpretation of its provisions have
terminated on July 17, 1912. Japan's general treaties with the other
powers, however, terminated in 1911, and the Japanese Government expressed
an earnest desire to conduct the negotiations for a new treaty with the
United States simultaneously with its negotiations with the other powers.
There were a number of important questions involved in the treaty,
including the immigration of laborers, revision of the customs tariff, and
the right of Americans to hold real estate in Japan. The United States
consented to waive all technicalities and to enter at once upon
negotiations for a new treaty on the understanding that there should be a
continuance throughout the, life of the treaty of the same effective
measures for the restriction of immigration of laborers to American
territory which had been in operation with entire satisfaction to both
Governments since 1908. The Japanese Government accepted this basis of
negotiation, and a new treaty was quickly concluded, resulting in a highly
satisfactory settlement of the other questions referred to.
A satisfactory adjustment has also been effected of the questions growing
out of the annexation of Korea by Japan.
The recent visit of Admiral Count Togo to the United States as the Nation's
guest afforded a welcome opportunity to demonstrate the friendly feeling so
happily existing between the two countries. SIAM.
There has been a change of sovereigns in Siam and the American minister at
Bangkok was accredited in a special capacity to represent the United States
at the coronation ceremony of the new King.
EUROPE AND THE NEAR EAST.
In Europe and the Near East, during the past twelve-month, there has been
at times considerable political unrest. The Moroccan question, which for
some months was the cause of great anxiety, happily appears to have reached
a stage at which it need no longer be regarded with concern. The Ottoman
Empire was occupied for a period by strife in Albania and is now at war
with Italy. In Greece and the Balkan countries the disquieting
potentialities of this situation have been more or less felt. Persia has
been the scene of a long internal struggle. These conditions have been the
cause of uneasiness in European diplomacy, but thus far without direct
political concern to the United States.
In the war which unhappily exists between Italy and Turkey this Government
has no direct political interest, and I took occasion at the suitable time
to issue a proclamation of neutrality in that conflict. At the same time
all necessary steps have been taken to safeguard the personal interests of
American citizens and organizations in so far as affected by the war.
COMMERCE WITH THE NEAR EAST.
In spite of the attendant economic uncertainties and detriments to
commerce, the United States has gained markedly in its commercial standing
with certain of the nations of the Near East. Turkey, especially, is
beginning to come into closer relations with the United States through the
new interest of American manufacturers and exporters in the possibilities
of those regions, and it is hoped that foundations are being laid for a
large and mutually beneficial exchange of commodities between the two
countries. This new interest of Turkey in American goods is indicated by
the fact that a party of prominent merchants from a large city in Turkey
recently visited the United States to study conditions of manufacture and
export here, and to get into personal touch with American merchants, with a
view to cooperating more intelligently in opening up the markets of Turkey
and the adjacent countries to our manufactures. Another indication of this
new interest of America in the commerce of the Near East is the recent
visit of a large party of American merchants and manufacturers to central
and eastern Europe, where they were entertained by prominent officials and
organizations of the large cities, and new bonds of friendship and
understanding were established which can not but lead to closer and greater
commercial interchange.
CORONATION OF KING GEORGE V.
The 22d of June of the present year marked the coronation of His Britannic
Majesty King George V. In honor of this auspicious occasion I sent a
special embassy to London. The courteous and cordial welcome extended to
this Government's representatives by His Majesty and the people of Great
Britain has further emphasized the strong bonds of friendship happily
existing between the two nations.
SETTLEMENT OF LONG-STANDING DIFFERENCES WITH GREAT BRITAIN.
As the result of a determined effort on the part of both Great Britain and
the United States to settle all of their outstanding differences a number
of treaties have been entered into between the two countries in recent
years, by which nearly all of the unsettled questions between them of any
importance have either been adjusted by agreement or arrangements made for
their settlement by arbitration. A number of the unsettled questions
referred to consist of pecuniary claims presented by each country against
the other, and in order that as many of these claims as possible should be
settled by arbitration a special agreement for that purpose was entered
into between the two Governments on the 18th day of August, 1910, in
accordance with Article 11 of the general arbitration treaty with Great
Britain of April 4, 19o8. Pursuant to the provisions of this special
agreement a schedule of claims has already been agreed upon, and the
special agreement, together with this schedule, received the approval of
the Senate when submitted to it for that purpose at the last session of
Congress. Negotiations between the two Governments for the preparation of
an additional schedule of claims are already well advanced, and it is my
intention to submit such schedule as soon as it is agreed upon to the
Senate for its approval, in order that the arbitration proceedings may be
undertaken at an early date. In this connection the attention of Congress
is particularly called to the necessity for an appropriation
to cover the expense incurred in submitting these claims to arbitration.
PRESENTATION TO GERMANY OF REPLICA OF VON STEUBEN STATUE.
In pursuance of the act of Congress, approved June 23, 1910, the Secretary
of State and the joint Committee on the Library entered into a contract
with the sculptor, Albert Jaegers, for the execution of a bronze replica of
the statue of Gen. von Steuben erected in Washington, for presentation to
His Majesty the German Emperor and the German nation in recognition of the
gift of the statue of Frederick the Great made by the Emperor to the people
of the United States.
The presentation was made on September 2 last by representatives whom I
commissioned as the special mission of this Government for the purpose.
The German Emperor has conveyed to me by telegraph, on his own behalf and
that of the German people, an expression of appreciative thanks for this
action of Congress. RUSSIA.
By direction of the State Department, our ambassador to Russia has recently
been having a series of conferences with the minister of foreign affairs of
Russia, with a view to securing a clearer understanding and construction of
the treaty of 1832 between Russia and the United States and the
modification of any existing Russian regulations which may be found to
interfere in any way with the full recognition of the rights of American
citizens under this treaty. I believe that the Government of Russia is
addressing itself seriously to the need of changing the present practice
under the treaty and that sufficient progress has been made to warrant the
continuance of these conferences in the hope that there may soon be removed
any justification of the complaints of treaty violation now prevalent in
this country.
I expect that immediately after the Christmas recess I shall be able to
make a further communication to Congress on this subject. LIBERIA.
Negotiations for the amelioration of conditions found to exist in Liberia
by the American commission, undertaken through the Department of State,
have been concluded and it is only necessary for certain formalities to be
arranged in securing the loan which it is hoped will place that republic on
a practical financial and economic footing.
RECOGNITION OF PORTUGUESE REPUBLIC.
The National Constituent Assembly, regularly elected by the vote of the
Portuguese people, having on June 19 last unanimously proclaimed a
republican form of government, the official recognition of the Government
of the United States was given to the new Republic in the afternoon of the
same day.
SPITZBERGEN ISLANDS.
Negotiations for the betterment of conditions existing in the Spitzbergen
Islands and the adjustment of conflicting claims of American citizens and
Norwegian subjects to lands in that archipelago are still in progress.
INTERNATIONAL CONVENTIONS AND CONFERENCES.
INTERNATIONAL PRIZE COURT.
The supplementary protocol to The he Hague convention for the establishment
of an international prize court, mentioned in my last annual message,
embodying stipulations providing for an alternative procedure which would
remove the constitutional objection to that part of The Hague convention
which provides that there may be an appeal to the proposed court from the
decisions of national courts, has received the signature of the governments
parties to the original convention and has been ratified by the Government
of the United States, together with the prize court convention.
The deposit of the ratifications with the Government of the Netherlands
awaits action by the powers on the declaration, signed at London on
February 26, 1909 of the rules of international law to be recognized within
the meaning of article 7 of The Hague convention for the establishment of
an International Prize Court.
FUR-SEAL TREATY.
The fur-seal controversy, which for nearly twenty-five years has been the
source of serious friction between the United States and the powers
bordering upon the north Pacific Ocean, whose subjects have been permitted
to engage in pelagic sealing against the fur-seal herds having their
breeding grounds within the jurisdiction of the United States, has at last
been satisfactorily adjusted by the conclusion of the north Pacific sealing
convention entered into between the United States, Great Britain, Japan,
and Russia on the 7th of July last. This convention is a conservation
measure of very great importance, and if it is carried out in the spirit of
reciprocal concession and advantage upon which it is based, there is every
reason to believe that not only will it result in preserving the fur-seal
herds of the north Pacific Ocean and restoring them to their former value
for the purposes of commerce, but also that it will afford a permanently
satisfactory settlement of a question the only other solution of which
seemed to be the total destruction of the fur seals. In another aspect,
also, this convention is of importance in that it furnishes an illustration
of the feasibility of securing a general international game law for the
protection of other mammals of the sea, the preservation of which is of
importance to all the nations of the world.
LEGISLATION NECESSARY.
The attention of Congress is especially called to the necessity for
legislation on the part of the United States for the purpose of fulfilling
the obligations assumed under this convention, to which the Senate gave its
advice and consent on the 24th day of July last.
PROTECTION OF INDUSTRIAL PROPERTY UNION.
The conference of the International Union for the Protection of Industrial
Property, which, under the authority of Congress, convened at Washington on
May 16, 1911, closed its labors on June 2, 1911, by the signature of three
acts, as follows:
(I) A convention revising the Paris convention of March 20, 1883, for the
protection of industrial property, as modified by the additional act signed
at Brussels on December 14, 1900;
(2) An arrangement to replace the arrangement signed at Madrid on April 14,
1891 for the international registration of trade-marks, and the additional
act with regard thereto signed at Brussels on December 14, 1900; and
(3) An arrangement to replace the arrangement signed at Madrid on April 14,
1891, relating to the repression of false indication of production of
merchandise.
The United States is a signatory of the first convention only, and this
will be promptly submitted to the Senate.
INTERNATIONAL OPIUM COMMISSION.
In a special message transmitted to the Congress on the 11th of January,
1911, in which I concurred in the recommendations made by the Secretary of
State in regard to certain needful legislation for the control of our
interstate and foreign traffic in opium and other menacing drugs, I quoted
from my annual message of December 7, 1909, in which I announced that the
results of the International Opium Commission held at Shanghai in February,
1909, at the invitation of the United States, had been laid before this
Government; that the report of that commission showed that China was making
remarkable progress and admirable efforts toward the eradication of the
opium evil; that the interested governments had not permitted their
commercial interests to prevent their cooperation in this reform; and, as a
result of collateral investigations of the opium question in this country,
I recommended that the manufacture, sale, and use of opium in the United
States should be more rigorously controlled by legislation.
Prior to that time and in continuation of the policy of this Government to
secure the cooperation of the interested nations, the United States
proposed an international opium conference with full powers for the purpose
of clothing with the force of international law the resolutions adopted by
the above-mentioned commission, together with their essential corollaries.
The other powers concerned cordially responded to the proposal of this
Government, and, I am glad to be able to announce, representatives of all
the powers assembled in conference at The Hague on the first of this
month.
Since the passage of the opium-exclusion act, more than twenty States have
been animated to modify their pharmacy laws and bring them in accord with
the spirit of that act, thus stamping out, to a measure, the intrastate
traffic in opium and other habit-forming drugs. But, although I have urged
on the Congress the passage of certain measures for Federal control of the
interstate and foreign traffic in these drugs, no action has yet been
taken. In view of the fact that there is now sitting at The Hague so
important a conference, which has under review the municipal laws of the
different nations for the mitigation of their opium and other allied evils,
a conference which will certainly deal with the international aspects of
these evils, it seems to me most essential that the Congress should take
immediate action on the anti-narcotic legislation to which I have already
called attention by a special message.
BUENOS AIRES CONVENTIONS.
The four important conventions signed at the Fourth Pan American Conference
at Buenos Aires, providing for the regulation of trademarks, patents, and
copyrights, and for the arbitration of pecuniary claims, have, with the
advice and consent of the Senate, been ratified on the part of the United
States and the ratifications have been deposited with the Government of the
Argentine Republic in accordance with the requirements of the conventions.
I am not advised that similar action has been taken by any other of the
signatory governments.
INTERNATIONAL ARRANGEMENT TO SUPPRESS OBSCENE PUBLICATIONS.
One of the notable advances in international morality accomplished in
recent years was an arrangement entered into on April 13th of the present
year between the United States and other powers for the repression of the
circulation of obscene publications.
FOREIGN TRADE RELATIONS OF THE UNITED STATES.
In my last annual message I referred to the tariff negotiations of the
Department of State with foreign countries in connection with the
application, by a series of proclamations, of the minimum tariff of the
United States to importations from the several countries, and I stated
that, in its general operation, section 2 of the new tariff law had proved
a guaranty of continued commercial peace, although there were,
unfortunately, instances where foreign governments dealt arbitrarily with
American interests within their jurisdiction in a manner injurious and
inequitable. During the past year some instances of discriminatory
treatment have been removed, but I regret to say that there remain a few
cases of differential treatment adverse to the commerce of the United
States. While none of these instances now appears to amount to undue
discrimination in the sense of section 2 Of the tariff law of August 5,
1909, they are all exceptions to that complete degree of equality of tariff
treatment that the Department of State has consistently sought to obtain
for American commerce abroad.
While the double tariff feature of the tariff law of 1909 has been amply
justified by the results achieved in removing former and preventing new,
undue discriminations against American commerce it is believed that the
time has come for the amendment of this feature of the law in such way as
to provide a graduated means of meeting varying degrees of discriminatory
treatment of American commerce in foreign countries as well as to protect
the financial interests abroad of American citizens against arbitrary and
injurious treatment on the part of foreign governments through either
legislative or administrative measures.
It would seem desirable that the maximum tariff of the United States should
embrace within its purview the free list, which is not the case at the
present time, in order that it might have reasonable significance to the
governments of those countries from which the importations into the United
States are confined virtually to articles on the free list.
RECORD OF HIGHEST AMOUNT OF FOREIGN TRADE.
The fiscal year ended June 30, 1911, shows great progress in the
development of American trade. It was noteworthy as marking the highest
record of exports of American products to foreign countries, the valuation
being in excess of $2,000,000,000. These exports showed a gain over the
preceding year of more than $300,000,000.
FACILITIES FOR FOREIGN TRADE FURNISHED BY JOINT ACTION OF DEPARTMENT OF
STATE AND OF COMMERCE AND LABOR.
There is widespread appreciation expressed by the business interests of the
country as regards the practical value of the facilities now offered by the
Department of State and the Department of Commerce and Labor for the
furtherance of American commerce. Conferences with their officers at
Washington who have an expert knowledge of trade conditions in foreign
countries and with consular officers and commercial agents of the
Department of Commerce and Labor who, while on leave of absence, visit the
principal industrial centers of the United States, have been found of great
value. These trade conferences are regarded as a particularly promising
method of governmental aid in foreign trade promotion. The Department of
Commerce and Labor has arranged to give publicity to the expected arrival
and the itinerary of consular officers and commercial agents while on leave
in the United States, in order that trade organizations may arrange for
conferences with them.
As I have indicated, it is increasingly clear that to obtain and maintain
that equity and substantial equality of treatment essential to the
flourishing foreign trade, which becomes year by year more important to the
industrial and commercial welfare of the United States, we should have a
flexibility of tariff sufficient for the give and take of negotiation by
the Department of State on behalf of our commerce and industry.
CRYING NEED FOR AMERICAN MERCHANT MARINE.
I need hardly reiterate the conviction that there should speedily be built
up an American merchant marine. This is necessary to assure favorable
transportation facilities to our great ocean-borne commerce as well as to
supplement the Navy with an adequate reserve of ships and men It would have
the economic advantage of keeping at home part of the vast sums now paid
foreign shipping for carrying American goods. All the great commercial
nations pay heavy subsidies to their merchant marine so that it is obvious
that without some wise aid from the Congress the United States must lag
behind in the matter of merchant marine in its present anomalous position.
EXTENSION OF AMERICAN BANKING TO FOREIGN COUNTRIES.
Legislation to facilitate the extension of American banks to foreign
countries is another matter in which our foreign trade needs assistance.
CHAMBERS OF FOREIGN COMMERCE SUGGESTED.
The interests of our foreign commerce are nonpartisan, and as a factor in
prosperity are as broad as the land. In the dissemination of useful
information and in the coordination of effort certain unofficial
associations have done good work toward the promotion of foreign commerce.
It is cause for regret, however, that the great number of such associations
and the comparative lack of cooperation between them fails to secure an
efficiency commensurate with the public interest. Through the agency of the
Department of Commerce and Labor, and in some cases directly, the
Department of State transmits to reputable business interests information
of commercial opportunities, supplementing the regular published consular
reports. Some central organization in touch with associations and chambers
of commerce throughout the country and able to keep purely American
interests in closer touch with different phases of commercial affairs
would, I believe, be of great value. Such organization might be managed by
a committee composed of a small number of those now actively carrying on
the work of some of the larger associations, and there might be added to
the committee, as members ex officio, one or two officials of the
Department of State and one or two officials from the Department of
Commerce and Labor and representatives of the appropriate committees of
Congress. The authority and success of such an organization would evidently
be enhanced if the Congress should see fit to prescribe its scope and
organization through legislation which would give to it some such official
standing as that, for example, of the National Red Cross.
With these factors and the continuance of the foreign-service establishment
(departmental, diplomatic, and consular) upon the high plane where it has
been placed by the recent reorganization this Government would be abreast
of the times in fostering the interests of its foreign trade, and the rest
must be left to the energy and enterprise of our business men.
IMPROVEMENT OF THE FOREIGN SERVICE.
The entire foreign-service organization is being improved and developed
with especial regard to the requirements of the commercial interests of the
country. The rapid growth of our foreign trade makes it of the utmost
importance that governmental agencies through which that trade is to be
aided and protected should possess a high degree of efficiency. Not only
should the foreign representatives be maintained upon a generous scale in
so far as salaries and establishments are concerned, but the selection and
advancement of officers should be definitely and permanently regulated by
law so that the service shall not fail to attract men of high character and
ability. The experience of the past few years with a partial application of
civil-service rules to the Diplomatic and Consular Service leaves no doubt
in my mind of the wisdom of a wider and more permanent extension of those
principles to both branches of the foreign service. The men selected for
appointment by means of the existing executive regulations have been of a
far higher average of intelligence and ability than the men appointed
before the regulations were promulgated. Moreover, the feeling that under
the existing rules there is reasonable hope for permanence of tenure during
good behavior and for promotion for meritorious service has served to bring
about a zealous activity in the interests of the country, which never
before existed or could exist. It is my earnest conviction that the
enactment into law of the general principles of the existing regulations
can not fail to effect further improvement in both branches of the foreign
service by providing greater inducement for young men of character and
ability to seek a career abroad in the service of the Government, and an
incentive to those already in the service to put forth greater efforts to
attain the high standards which the successful conduct of our international
relations and commerce requires.
I therefore again commend to the favorable action of the Congress the
enactment of a law applying to the diplomatic and consular service the
principles embodied in section 1753 of the Revised Statutes of the United
States, in the civil-service act of January 16, 1883, and the Executive
orders of June 27, 1906, and of November 26, 1909. In its consideration of
this important subject I desire to recall to the attention of the Congress
the very favorable report made on the Lowden bill for the improvement of
the foreign service by the Foreign Affairs Committee of the House of
Representatives. Available statistics show the strictness with which the
merit system has been applied to the foreign service during recent years
and the absolute nonpartisan selection of consuls and diplomatic-service
secretaries who, indeed, far from being selected with any view to political
consideration, have actually been chosen to a disproportionate extent from
States which would have been unrepresented in the foreign service under the
system which it is to be hoped is now permanently obsolete. Some
legislation for the perpetuation of the present system of examinations and
promotions upon merit and efficiency would be of greatest value to our
commercial and international interests.