cripple competition, fraudulent overcapitalization, and other evils in
trust organizations and practices which injuriously affect interstate
trade can be prevented under the power of the Congress to “regulate
commerce with foreign nations and among the several States” through
regulations and requirements operating directly upon such commerce,
the instrumentalities thereof, and those engaged therein.
I earnestly recommend this subject to the consideration of the
Congress with a view to the passage of a law reasonable in its
provisions and effective in its operations, upon which the questions
can be finally adjudicated that now raise doubts as to the necessity
of constitutional amendment. If it prove impossible to accomplish the
purposes above set forth by such a law, then, assuredly, we should
not shrink from amending the Constitution so as to secure beyond
peradventure the power sought.
The Congress has not heretofore made any appropriation for the better
enforcement of the anti-trust law as it now stands. Very much has been
done by the Department of Justice in securing the enforcement of this
law, but much more could be done if the Congress would make a special
appropriation for this purpose, to be expended under the direction of
the Attorney-General.
One proposition advocated has been the reduction of the tariff
as a means of reaching the evils of the trusts which fall within
the category I have described. Not merely would this be wholly
ineffective, but the diversion of our efforts in such a direction
would mean the abandonment of all intelligent attempt to do away with
these evils. Many of the largest corporations, many of those which
should certainly be included in any proper scheme of regulation,
would not be affected in the slightest degree by a change in the
tariff, save as such change interfered with the general prosperity
of the country. The only relation of the tariff to big corporations
as a whole is that the tariff makes manufactures profitable, and
the tariff remedy proposed would be in effect simply to make
manufactures unprofitable. To remove the tariff as a punitive
measure directed against trusts would inevitably result in ruin to
the weaker competitors who are struggling against them. Our aim
should be not by unwise tariff changes to give foreign products the
advantage over domestic products, but by proper regulation to give
domestic competition a fair chance; and this end can not be reached
by any tariff changes which would affect unfavorably all domestic
competitors, good and bad alike. The question of regulation of the
trusts stands apart from the question of tariff revision.
Stability of economic policy must always be the prime economic need of
this country. This stability should not be fossilization. The country
has acquiesced in the wisdom of the protective tariff principle. It
is exceedingly undesirable that this system should be destroyed or
that there should be violent and radical changes therein. Our past
experience shows that great prosperity in this country has always come
under a protective tariff and that the country can not prosper under
fitful tariff changes at short intervals. Moreover, if the tariff laws
as a whole work well, and if business has prospered under them and is
prospering, it is better to endure for a time slight inconveniences
and inequalities in some schedules than to upset business by too quick
and too radical changes. It is most earnestly to be wished that we
could treat the tariff from the standpoint solely of our business
needs. It is, perhaps, too much to hope that partisanship may be
entirely excluded from consideration of the subject, but at least it
can be made secondary to the business interests of the country—that
is, to the interests of our people as a whole. Unquestionably these
business interests will best be served if together with fixity of
principle as regards the tariff we combine a system which will permit
us from time to time to make the necessary reapplication of the
principle to the shifting national needs. We must take scrupulous care
that the reapplication shall be made in such a way that it will not
amount to a dislocation of our system, the mere threat of which (not
to speak of the performance) would produce paralysis in the business
energies of the community. The first consideration in making these
changes would, of course, be to preserve the principle which underlies
our whole tariff system—that is, the principle of putting American
business interests at least on a full equality with interests abroad,
and of always allowing a sufficient rate of duty to more than cover
the difference between the labor cost here and abroad. The well-being
of the wage-worker, like the well-being of the tiller of the soil,
should be treated as an essential in shaping our whole economic
policy. There must never be any change which will jeopardize the
standard of comfort, the standard of wages of the American wage-worker.
One way in which the readjustment sought can be reached is by
reciprocity treaties. It is greatly to be desired that such treaties
may be adopted. They can be used to widen our markets and to give a
greater field for the activities of our producers on the one hand, and
on the other hand to secure in practical shape the lowering of duties
when they are no longer needed for protection among our own people,
or when the minimum of damage done may be disregarded for the sake of
the maximum of good accomplished. If it prove impossible to ratify the
pending treaties, and if there seem to be no warrant for the endeavor
to execute others, or to amend the pending treaties so that they can
be ratified, then the same end—to secure reciprocity—should be met by
direct legislation.
Wherever the tariff conditions are such that a needed change can not
with advantage be made by the application of the reciprocity idea,
then it can be made outright by a lowering of duties on a given
product. If possible, such change should be made only after the
fullest consideration by practical experts, who should approach the
subject from a business standpoint, having in view both the particular
interests affected and the commercial well-being of the people as a
whole. The machinery for providing such careful investigation can
readily be supplied. The executive department has already at its
disposal methods of collecting facts and figures; and if the Congress
desires additional consideration to that which will be given the
subject by its own committees, then a commission of business experts
can be appointed whose duty it should be to recommend action by the
Congress after a deliberate and scientific examination of the various
schedules as they are affected by the changed and changing conditions.
The unhurried and unbiased report of this commission would show what
changes should be made in the various schedules, and how far these
changes could go without also changing the great prosperity which this
country is now enjoying, or upsetting its fixed economic policy.
The cases in which the tariff can produce a monopoly are so few as to
constitute an inconsiderable factor in the question; but of course
if in any case it be found that a given rate of duty does promote
a monopoly which works ill, no protectionist would object to such
reduction of the duty as would equalize competition.
In my judgment, the tariff on anthracite coal should be removed, and
anthracite put actually, where it now is nominally, on the free list.
This would have no effect at all save in crises; but in crises it
might be of service to the people.
* * * * *
Interest rates are a potent factor in business activity, and in
order that these rates may be equalized to meet the varying needs
of the seasons and of widely separated communities, and to prevent
the recurrence of financial stringencies which injuriously affect
legitimate business, it is necessary that there should be an element
of elasticity in our monetary system. Banks are the natural servants
of commerce, and upon them should be placed, as far as practicable,
the burden of furnishing and maintaining a circulation adequate to
supply the needs of our diversified industries and of our domestic
and foreign commerce; and the issue of this should be so regulated
that a sufficient supply should be always available for the business
interests of the country.
It would be both unwise and unnecessary at this time to attempt to
reconstruct our financial system, which has been the growth of a
century; but some additional legislation is, I think, desirable.
The mere outline of any plan sufficiently comprehensive to meet
these requirements would transgress the appropriate limits of this
communication. It is suggested, however, that all future legislation
on the subject should be with the view of encouraging the use of such
instrumentalities as will automatically supply every legitimate demand
of productive industries and of commerce, not only in the amount,
but in the character of circulation; and of making all kinds of money
interchangeable, and, at the will of the holder, convertible into the
established gold standard.
* * * * *
I again call your attention to the need of passing a proper
immigration law, covering the points outlined in my Message to you at
the first session of the present Congress; substantially such a bill
has already passed the House.
* * * * *
How to secure fair treatment alike for labor and for capital, how to
hold in check the unscrupulous man, whether employer or employee,
without weakening individual initiative, without hampering and
cramping the industrial development of the country, is a problem
fraught with great difficulties and one which it is of the highest
importance to solve on lines of sanity and far-sighted common-sense
as well as of devotion to the right. This is an era of federation
and combination. Exactly as business men find they must often work
through corporations, and as it is a constant tendency of these
corporations to grow larger, so it is often necessary for laboring
men to work in federations, and these have become important factors
of modern industrial life. Both kinds of federation, capitalistic and
labor, can do much good, and as a necessary corollary they can both do
evil. Opposition to each kind of organization should take the form of
opposition to whatever is bad in the conduct of any given corporation
or union—not of attacks upon corporations as such nor upon unions as
such; for some of the most far-reaching beneficent work for our people
has been accomplished through both corporations and unions. Each must
refrain from arbitrary or tyrannous interference with the rights of
others. Organized capital and organized labor alike should remember
that in the long run the interest of each must be brought into harmony
with the interest of the general public; and the conduct of each
must conform to the fundamental rules of obedience to the law, of
individual freedom, and of justice and fair dealing toward all. Each
should remember that in addition to power it must strive after the
realization of healthy, lofty, and generous ideals. Every employer,
ever wage-worker, must be guaranteed his liberty and his right to do
as he likes with his property or his labor so long as he does not
infringe upon the rights of others. It is of the highest importance
that employer and employee alike should endeavor to appreciate each
the viewpoint of the other and the sure disaster that will come upon
both in the long run if either grows to take as habitual an attitude
of sour hostility and distrust toward the other. Few people deserve
better of the country than those representatives both of capital and
labor—and there are many such—who work continually to bring about a
good understanding of this kind, based upon wisdom and upon broad
and kindly sympathy between employers and employed. Above all, we
need to remember that any kind of class animosity in the political
world is, if possible, even more wicked, even more destructive to
national welfare, than sectional, race, or religious animosity. We
can get good government only upon condition that we keep true to the
principles upon which this Nation was founded, and judge each man not
as a part of a class, but upon his individual merits. All that we
have a right to ask of any man, rich or poor, whatever his creed, his
occupation, his birthplace, or his residence, is that he shall act
well and honorably by his neighbor and by his country. We are neither
for the rich man as such nor for the poor man as such; we are for the
upright man, rich or poor. So far as the constitutional powers of the
National Government touch these matters of general and vital moment to
the Nation, they should be exercised in conformity with the principles
above set forth.
* * * * *
It is earnestly hoped that a secretary of commerce may be created,
with a seat in the Cabinet. The rapid multiplication of questions
affecting labor and capital, the growth and complexity of the
organizations through which both labor and capital now find
expression, the steady tendency toward the employment of capital in
huge corporations, and the wonderful strides of this country toward
leadership in the international business world justify an urgent
demand for the creation of such a position. Substantially all the
leading commercial bodies in this country have united in requesting
its creation. It is desirable that some such measure as that which
has already passed the Senate be enacted into law. The creation
of such a department would in itself be an advance toward dealing
with and exercising supervision over the whole subject of the great
corporations doing an interstate business; and with this end in view,
the Congress should endow the department with large powers, which
could be increased as experience might show the need.
* * * * *
I hope soon to submit to the Senate a reciprocity treaty with Cuba.
On May 20 last the United States kept its promise to the island by
formally vacating Cuban soil and turning Cuba over to those whom her
own people had chosen as the first officials of the new republic.
Cuba lies at our doors, and whatever affects her for good or for ill
affects us also. So much have our people felt this that in the Platt
Amendment we definitely took the ground that Cuba must hereafter have
closer political relations with us than with any other power. Thus in
a sense Cuba has become a part of our international political system.
This makes it necessary that in return she should be given some of the
benefits of becoming part of our economic system. It is, from our own
standpoint, a shortsighted and mischievous policy to fail to recognize
this need. Moreover, it is unworthy of a mighty and generous nation,
itself the greatest and most successful republic in history, to refuse
to stretch out a helping hand to a young and weak sister republic just
entering upon its career of independence. We should always fearlessly
insist upon our rights in the face of the strong, and we should with
ungrudging hand do our generous duty by the weak. I urge the adoption
of reciprocity with Cuba not only because it is eminently for our own
interests to control the Cuban market and by every means to foster
our supremacy in the tropical lands and waters south of us, but also
because we, of the giant republic of the north, should make all our
sister nations of the American Continent feel that whenever they will
permit it we desire to show ourselves disinterestedly and effectively
their friend.
* * * * *
A convention with Great Britain has been concluded, which will be at
once laid before the Senate for ratification, providing for reciprocal
trade arrangements between the United States and Newfoundland on
substantially the lines of the convention formerly negotiated by the
Secretary of State, Mr. Blaine. I believe reciprocal trade relations
will be greatly to the advantage of both countries.
* * * * *
As civilization grows warfare becomes less and less the normal
condition of foreign relations. The last century has seen a marked
diminution of wars between civilized powers; wars with uncivilized
powers are largely mere matters of international police duty,
essential for the welfare of the world. Wherever possible, arbitration
or some similar method should be employed in lieu of war to settle
difficulties between civilized nations, although as yet the world
has not progressed sufficiently to render it possible, or necessarily
desirable, to invoke arbitration in every case. The formation of the
international tribunal which sits at The Hague is an event of good
omen from which great consequences for the welfare of all mankind may
flow. It is far better, where possible, to invoke such a permanent
tribunal than to create special arbitrators for a given purpose.
It is a matter of sincere congratulation to our country that the
United States and Mexico should have been the first to use the good
offices of The Hague Court. This was done last summer with most
satisfactory results in the case of a claim at issue between us and
our sister republic. It is earnestly to be hoped that this first case
will serve as a precedent for others, in which not only the United
States but foreign nations may take advantage of the machinery already
in existence at The Hague.
* * * * *
I commend to the favorable consideration of the Congress the Hawaiian
fire claims, which were the subject of careful investigation during
the last session.
* * * * *
The Congress has wisely provided that we shall build at once an
Isthmian Canal, if possible at Panama. The Attorney-General reports
that we can undoubtedly acquire good title from the French Panama
Canal Company. Negotiations are now pending with Colombia to secure
her assent to our building the canal. This canal will be one of
the greatest engineering feats of the twentieth century; a greater
engineering feat than has yet been accomplished during the history
of mankind. The work should be carried out as a continuing policy
without regard to change of Administration; and it should be begun
under circumstances which will make it a matter of pride for all
Administrations to continue the policy.
The canal will be of great benefit to America, and of importance to
all the world. It will be of advantage to us industrially and also
as improving our military position. It will be of advantage to the
countries of tropical America. It is earnestly to be hoped that all
of these countries will do as some of them have already done with
signal success, and will invite to their shores commerce and improve
their material conditions by recognizing that stability and order are
the prerequisites of successful development. No independent nation in
America need have the slightest fear of aggression from the United
States. It behooves each one to maintain order within its own borders
and to discharge its just obligations to foreigners. When this is done
they can rest assured that, be they strong or weak, they have nothing
to dread from outside interference. More and more the increasing
interdependence and complexity of international, political, and
economic relations render it incumbent on all civilized and orderly
powers to insist on the proper policing of the world.
During the fall of 1901 a communication was addressed to the Secretary
of State, asking whether permission would be granted by the President
to a corporation to lay a cable from a point on the California coast
to the Philippine Islands by way of Hawaii. A statement of conditions
or terms upon which such corporation would undertake to lay and
operate a cable was volunteered.
Inasmuch as the Congress was shortly to convene, and Pacific cable
legislation had been the subject of consideration by the Congress
for several years, it seemed to me wise to defer action upon the
application until the Congress had first an opportunity to act. The
Congress adjourned without taking any action, leaving the matter
in exactly the same condition in which it stood when the Congress
convened.
Meanwhile it appears that the Commercial Pacific Cable Company had
promptly proceeded with preparations for laying its cable. It also
made application to the President for access to and use of soundings
taken by the U. S. S. _Nero_, for the purpose of discovering a
practicable route for a trans-Pacific cable, the company urging that
with access to these soundings it could complete its cable much sooner
than if it were required to take soundings upon its own account.
Pending consideration of this subject, it appeared important and
desirable to attach certain conditions to the permission to examine
and use the soundings, if it should be granted.
In consequence of this solicitation of the cable company, certain
conditions were formulated, upon which the President was willing to
allow access to these soundings and to consent to the landing and
laying of the cable, subject to any alterations or additions thereto
imposed by the Congress. This was deemed proper, especially as it
was clear that a cable connection of some kind with China, a foreign
country, was a part of the company’s plan. This course was, moreover,
in accordance with a line of precedents, including President Grant’s
action in the case of the first French cable, explained to the
Congress in his Annual Message of December, 1875, and the instance
occurring in 1879 of the second French cable from Brest to St. Pierre,
with a branch to Cape Cod.
These conditions prescribed, among other things, a maximum rate for
commercial messages and that the company should construct a line from
the Philippine Islands to China, there being at present, as is well
known, a British line from Manila to Hongkong.
The representatives of the cable company kept these conditions long
under consideration, continuing, in the meantime, to prepare for
laying the cable. They have, however, at length acceded to them, and
an all-American line between our Pacific coast and the Chinese Empire,
by way of Honolulu and the Philippine Islands, is thus provided for,
and is expected within a few months to be ready for business.
Among the conditions is one reserving the power of the Congress to
modify or repeal any or all of them. A copy of the conditions is
herewith transmitted.
* * * * *
Of Porto Rico it is only necessary to say that the prosperity of the
island and the wisdom with which it has been governed have been such
as to make it serve as an example of all that is best in insular
administration.
* * * * *