To the Senate and House of Representatives:

We still continue in a period of unbounded prosperity. This prosperity
is not the creature of law, but undoubtedly the laws under which we
work have been instrumental in creating the conditions which made it
possible, and by unwise legislation it would be easy enough to destroy
it. There will undoubtedly be periods of depression. The wave will
recede; but the tide will advance. This Nation is seated on a continent
flanked by two great oceans. It is composed of men the descendants of
pioneers, or, in a sense, pioneers themselves; of men winnowed out from
among the nations of the Old World by the energy, boldness, and love of
adventure found in their own eager hearts. Such a Nation, so placed,
will surely wrest success from fortune.

As a people we have played a large part in the world, and we are bent
upon making our future even larger than the past. In particular, the
events of the last four years have definitely decided that, for woe or
for weal, our place must be great among the nations. We may either fall
greatly or succeed greatly; but we can not avoid the endeavor from
which either great failure or great success must come. Even if we
would, we can not play a small part. If we should try, all that would
follow would be that we should play a large part ignobly and
shamefully.

But our people, the sons of the men of the Civil War, the sons of the
men who had iron in their blood, rejoice in the present and face the
future high of heart and resolute of will. Ours is not the creed of the
weakling and the coward; ours is the gospel of hope and of triumphant
endeavor. We do not shrink from the struggle before us. There are many
problems for us to face at the outset of the twentieth century--grave
problems abroad and still graver at home; but we know that we can solve
them and solve them well, provided only that we bring to the solution
the qualities of head and heart which were shown by the men who, in the
days of Washington, rounded this Government, and, in the days of
Lincoln, preserved it.

No country has ever occupied a higher plane of material well-being than
ours at the present moment. This well-being is due to no sudden or
accidental causes, but to the play of the economic forces in this
country for over a century; to our laws, our sustained and continuous
policies; above all, to the high individual average of our citizenship.
Great fortunes have been won by those who have taken the lead in this
phenomenal industrial development, and most of these fortunes have been
won not by doing evil, but as an incident to action which has benefited
the community as a whole. Never before has material well-being been so
widely diffused among our people. Great fortunes have been accumulated,
and yet in the aggregate these fortunes are small Indeed when compared
to the wealth of the people as a whole. The plain people are better off
than they have ever been before. The insurance companies, which are
practically mutual benefit societies--especially helpful to men of
moderate means--represent accumulations of capital which are among the
largest in this country. There are more deposits in the savings banks,
more owners of farms, more well-paid wage-workers in this country now
than ever before in our history. Of course, when the conditions have
favored the growth of so much that was good, they have also favored
somewhat the growth of what was evil. It is eminently necessary that we
should endeavor to cut out this evil, but let us keep a due sense of
proportion; let us not in fixing our gaze upon the lesser evil forget
the greater good. The evils are real and some of them are menacing, but
they are the outgrowth, not of misery or decadence, but of
prosperity--of the progress of our gigantic industrial development.
This industrial development must not be checked, but side by side with
it should go such progressive regulation as will diminish the evils. We
should fail in our duty if we did not try to remedy the evils, but we
shall succeed only if we proceed patiently, with practical common sense
as well as resolution, separating the good from the bad and holding on
to the former while endeavoring to get rid of the latter.

In my Message to the present Congress at its first session I discussed
at length the question of the regulation of those big corporations
commonly doing an interstate business, often with some tendency to
monopoly, which are popularly known as trusts. The experience of the
past year has emphasized, in my opinion, the desirability of the steps
I then proposed. A fundamental requisite of social efficiency is a high
standard of individual energy and excellence; but this is in no wise
inconsistent with power to act in combination for aims which can not so
well be achieved by the individual acting alone. A fundamental base of
civilization is the inviolability of property; but this is in no wise
inconsistent with the right of society to regulate the exercise of the
artificial powers which it confers upon the owners of property, under
the name of corporate franchises, in such a way as to prevent the
misuse of these powers. Corporations, and especially combinations of
corporations, should be managed under public regulation. Experience has
shown that under our system of government the necessary supervision can
not be obtained by State action. It must therefore be achieved by
national action. Our aim is not to do away with corporations; on the
contrary, these big aggregations are an inevitable development of
modern industrialism, and the effort to destroy them would be futile
unless accomplished in ways that would work the utmost mischief to the
entire body politic. We can do nothing of good in the way of regulating
and supervising these corporations until we fix clearly in our minds
that we are not attacking the corporations, but endeavoring to do away
with any evil in them. We are not hostile to them; we are merely
determined that they shall be so handled as to subserve the public
good. We draw the line against misconduct, not against wealth. The
capitalist who, alone or in conjunction with his fellows, performs some
great industrial feat by which he wins money is a welldoer, not a
wrongdoer, provided only he works in proper and legitimate lines. We
wish to favor such a man when he does well. We wish to supervise and
control his actions only to prevent him from doing ill. Publicity can
do no harm to the honest corporation; and we need not be over tender
about sparing the dishonest corporation.  In curbing and regulating the
combinations of capital which are, or may become, injurious to the
public we must be careful not to stop the great enterprises which have
legitimately reduced the cost of production, not to abandon the place
which our country has won in the leadership of the international
industrial world, not to strike down wealth with the result of closing
factories and mines, of turning the wage-worker idle in the streets and
leaving the farmer without a market for what he grows. Insistence upon
the impossible means delay in achieving the possible, exactly as, on
the other hand, the stubborn defense alike of what is good and what is
bad in the existing system, the resolute effort to obstruct any attempt
at betterment, betrays blindness to the historic truth that wise
evolution is the sure safeguard against revolution.

No more important subject can come before the Congress than this of the
regulation of interstate business. This country can not afford to sit
supine on the plea that under our peculiar system of government we are
helpless in the presence of the new conditions, and unable to grapple
with them or to cut out whatever of evil has arisen in connection with
them. The power of the Congress to regulate interstate commerce is an
absolute and unqualified grant, and without limitations other than
those prescribed by the Constitution. The Congress has constitutional
authority to make all laws necessary and proper for executing this
power, and I am satisfied that this power has not been exhausted by any
legislation now on the statute books. It is evident, therefore, that
evils restrictive of commercial freedom and entailing restraint upon
national commerce fall within the regulative power of the Congress, and
that a wise and reasonable law would be a necessary and proper exercise
of Congressional authority to the end that such evils should be
eradicated.

I believe that monopolies, unjust discriminations, which prevent or
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 antitrust 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, every 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 short-sighted 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 behoves 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.

On July 4 last, on the one hundred and twenty-sixth anniversary of the
declaration of our independence, peace and amnesty were promulgated in
the Philippine Islands. Some trouble has since from time to time
threatened with the Mohammedan Moros, but with the late insurrectionary
Filipinos the war has entirely ceased. Civil government has now been
introduced. Not only does each Filipino enjoy such rights to life,
liberty, and the pursuit of happiness as he has never before known
during the recorded history of the islands, but the people taken as a
whole now enjoy a measure of self-government greater than that granted
to any other Orientals by any foreign power and greater than that
enjoyed by any other Orientals under their own governments, save the
Japanese alone. We have not gone too far in granting these rights of
liberty and self-government; but we have certainly gone to the limit
that in the interests of the Philippine people themselves it was wise
or just to go. To hurry matters, to go faster than we are now going,
would entail calamity on the people of the islands. No policy ever
entered into by the American people has vindicated itself in more
signal manner than the policy of holding the Philippines. The triumph
of our arms, above all the triumph of our laws and principles, has come
sooner than we had any right to expect. Too much praise can not be
given to the Army for what it has done in the Philippines both in
warfare and from an administrative standpoint in preparing the way for
civil government; and similar credit belongs to the civil authorities
for the way in which they have planted the seeds of self-government in
the ground thus made ready for them. The courage, the unflinching
endurance, the high soldierly efficiency; and the general
kind-heartedness and humanity of our troops have been strikingly
manifested. There now remain only some fifteen thousand troops in the
islands. All told, over one hundred thousand have been sent there. Of
course, there have been individual instances of wrongdoing among them.
They warred under fearful difficulties of climate and surroundings; and
under the strain of the terrible provocations which they continually
received from their foes, occasional instances of cruel retaliation
occurred. Every effort has been made to prevent such cruelties, and
finally these efforts have been completely successful. Every effort has
also been made to detect and punish the wrongdoers. After making all
allowance for these misdeeds, it remains true that few indeed have been
the instances in which war has been waged by a civilized power against
semicivilized or barbarous forces where there has been so little
wrongdoing by the victors as in the Philippine Islands. On the other
hand, the amount of difficult, important, and beneficent work which has
been done is well-nigh incalculable.

Taking the work of the Army and the civil authorities together, it may
be questioned whether anywhere else in modern times the world has seen
a better example of real constructive statesmanship than our people
have given in the Philippine Islands. High praise should also be given
those Filipinos, in the aggregate very numerous, who have accepted the
new conditions and joined with our representatives to work with hearty
good will for the welfare of the islands.

The Army has been reduced to the minimum allowed by law. It is very
small for the size of the Nation, and most certainly should be kept at
the highest point of efficiency. The senior officers are given scant
chance under ordinary conditions to exercise commands commensurate with
their rank, under circumstances which would fit them to do their duty
in time of actual war. A system of maneuvering our Army in bodies of
some little size has been begun and should be steadily continued.
Without such maneuvers it is folly to expect that in the event of
hostilities with any serious foe even a small army corps could be
handled to advantage. Both our officers and enlisted men are such that
we can take hearty pride in them. No better material can be found. But
they must be thoroughly trained, both as individuals and in the mass.
The marksmanship of the men must receive special attention. In the
circumstances of modern warfare the man must act far more on his own
individual responsibility than ever before, and the high individual
efficiency of the unit is of the utmost importance. Formerly this unit
was the regiment; it is now not the regiment, not even the troop or
company; it is the individual soldier. Every effort must be made to
develop every workmanlike and soldierly quality in both the officer and
the enlisted man.

I urgently call your attention to the need of passing a bill providing
for a general staff and for the reorganization of the supply
departments on the lines of the bill proposed by the Secretary of War
last year. When the young officers enter the Army from West Point they
probably stand above their compeers in any other military service.
Every effort should be made, by training, by reward of merit, by
scrutiny into their careers and capacity, to keep them of the same high
relative excellence throughout their careers.

The measure providing for the reorganization of the militia system and
for securing the highest efficiency in the National Guard, which has
already passed the House, should receive prompt attention and action.
It is of great importance that the relation of the National Guard to
the militia and volunteer forces of the United States should be
defined, and that in place of our present obsolete laws a practical and
efficient system should be adopted.

Provision should be made to enable the Secretary of War to keep cavalry
and artillery horses, worn-out in long performance of duty. Such horses
fetch but a trifle when sold; and rather than turn them out to the
misery awaiting them when thus disposed of, it would be better to
employ them at light work around the posts, and when necessary to put
them painlessly to death.

For the first time in our history naval maneuvers on a large scale are
being held under the immediate command of the Admiral of the Navy.
Constantly increasing attention is being paid to the gunnery of the
Navy, but it is yet far from what it should be. I earnestly urge that
the increase asked for by the Secretary of the Navy in the
appropriation for improving the markmanship be granted. In battle the
only shots that count are the shots that hit. It is necessary to
provide ample funds for practice with the great guns in time of peace.
These funds must provide not only for the purchase of projectiles, but
for allowances for prizes to encourage the gun crews, and especially
the gun pointers, and for perfecting an intelligent system under which
alone it is possible to get good practice.

There should be no halt in the work of building up the Navy, providing
every year additional fighting craft. We are a very rich country, vast
in extent of territory and great in population; a country, moreover,
which has an Army diminutive indeed when compared with that of any
other first-class power. We have deliberately made our own certain
foreign policies which demand the possession of a first-class navy. The
isthmian canal will greatly increase the efficiency of our Navy if the
Navy is of sufficient size; but if we have an inadequate navy, then the
building of the canal would be merely giving a hostage to any power of
superior strength. The Monroe Doctrine should be treated as the
cardinal feature of American foreign policy; but it would be worse than
idle to assert it unless we intended to back it up, and it can be
backed up only by a thoroughly good navy. A good navy is not a
provocative of war. It is the surest guaranty of peace.

Each individual unit of our Navy should be the most efficient of its
kind as regards both material and personnel that is to be found in the
world. I call your special attention to the need of providing for the
manning of the ships. Serious trouble threatens us if we can not do
better than we are now doing as regards securing the services of a
sufficient number of the highest type of sailormen, of sea mechanics.
The veteran seamen of our war ships are of as high a type as can be
found in any navy which rides the waters of the world; they are
unsurpassed in daring, in resolution, in readiness, in thorough
knowledge of their profession. They deserve every consideration that
can be shown them. But there are not enough of them. It is no more
possible to improvise a crew than it is possible to improvise a war
ship. To build the finest ship, with the deadliest battery, and to send
it afloat with a raw crew, no matter how brave they were individually,
would be to insure disaster if a foe of average capacity were
encountered. Neither ships nor men can be improvised when war has
begun.

We need a thousand additional officers in order to properly man the
ships now provided for and under construction. The classes at the Naval
School at Annapolis should be greatly enlarged. At the same time that
we thus add the officers where we need them, we should facilitate the
retirement of those at the head of the list whose usefulness has become
impaired. Promotion must be fostered if the service is to be kept
efficient.

The lamentable scarcity of officers, and the large number of recruits
and of unskilled men necessarily put aboard the new vessels as they
have been commissioned, has thrown upon our officers, and especially on
the lieutenants and junior grades, unusual labor and fatigue and has
gravely strained their powers of endurance. Nor is there sign of any
immediate let-up in this strain. It must continue for some time longer,
until more officers are graduated from Annapolis, and until the
recruits become trained and skillful in their duties. In these
difficulties incident upon the development of our war fleet the conduct
of all our officers has been creditable to the service, and the
lieutenants and junior grades in particular have displayed an ability
and a steadfast cheerfulness which entitles them to the ungrudging
thanks of all who realize the disheartening trials and fatigues to
which they are of necessity subjected.

There is not a cloud on the horizon at present. There seems not the
slightest chance of trouble with a foreign power. We most earnestly
hope that this state of things may continue; and the way to insure its
continuance is to provide for a thoroughly efficient navy. The refusal
to maintain such a navy would invite trouble, and if trouble came would
insure disaster. Fatuous self-complacency or vanity, or
short-sightedness in refusing to prepare for danger, is both foolish
and wicked in such a nation as ours; and past experience has shown that
such fatuity in refusing to recognize or prepare for any crisis in
advance is usually succeeded by a mad panic of hysterical fear once the
crisis has actually arrived.

The striking increase in the revenues of the Post-Office Department
shows clearly the prosperity of our people and the increasing activity
of the business of the country.

The receipts of the Post-Office Department for the fiscal year ending
June 30 last amounted to $121,848,047.26, an increase of $10,216,853.87
over the preceding year, the largest increase known in the history of
the postal service. The magnitude of this increase will best appear
from the fact that the entire postal receipts for the year 1860
amounted to but $8,518,067.

Rural free-delivery service is no longer in the experimental stage; it
has become a fixed policy. The results following its introduction have
fully justified the Congress in the large appropriations made for its
establishment and extension. The average yearly increase in post-office
receipts in the rural districts of the country is about two per cent.
We are now able, by actual results, to show that where rural
free-delivery service has been established to such an extent as to
enable us to make comparisons the yearly increase has been upward of
ten per cent.

On November 1, 1902, 11,650 rural free-delivery routes had been
established and were in operation, covering about one-third of the
territory of the United States available for rural free-delivery
service. There are now awaiting the action of the Department petitions
and applications for the establishment of 10,748 additional routes.
This shows conclusively the want which the establishment of the service
has met and the need of further extending it as rapidly as possible. It
is justified both by the financial results and by the practical
benefits to our rural population; it brings the men who live on the
soil into close relations with the active business world; it keeps the
farmer in daily touch with the markets; it is a potential educational
force; it enhances the value of farm property, makes farm life far
pleasanter and less isolated, and will do much to check the undesirable
current from country to city.

It is to be hoped that the Congress will make liberal appropriations
for the continuance of the service already established and for its
further extension.

Few subjects of more importance have been taken up by the Congress in
recent years than the inauguration of the system of nationally-aided
irrigation for the arid regions of the far West. A good beginning
therein has been made. Now that this policy of national irrigation has
been adopted, the need of thorough and scientific forest protection
will grow more rapidly than ever throughout the public-land States.

Legislation should be provided for the protection of the game, and the
wild creatures generally, on the forest reserves. The senseless
slaughter of game, which can by judicious protection be permanently
preserved on our national reserves for the people as a whole, should be
stopped at once. It is, for instance, a serious count against our
national good sense to permit the present practice of butchering off
such a stately and beautiful creature as the elk for its antlers or
tusks.

So far as they are available for agriculture, and to whatever extent
they may be reclaimed under the national irrigation law, the remaining
public lands should be held rigidly for the home builder, the settler
who lives on his land, and for no one else. In their actual use the
desert-land law, the timber and stone law, and the commutation clause
of the homestead law have been so perverted from the intention with
which they were enacted as to permit the acquisition of large areas of
the public domain for other than actual settlers and the consequent
prevention of settlement. Moreover, the approaching exhaustion of the
public ranges has of late led to much discussion as to the best manner
of using these public lands in the West which are suitable chiefly or
only for grazing. The sound and steady development of the West depends
upon the building up of homes therein. Much of our prosperity as a
nation has been due to the operation of the homestead law. On the other
hand, we should recognize the fact that in the grazing region the man
who corresponds to the homesteader may be unable to settle permanently
if only allowed to use the same amount of pasture land that his
brother, the homesteader, is allowed to use of arable land. One hundred
and sixty acres of fairly rich and well-watered soil, or a much smaller
amount of irrigated land, may keep a family in plenty, whereas no one
could get a living from one hundred and sixty acres of dry pasture land
capable of supporting at the outside only one head of cattle to every
ten acres. In the past great tracts of the public domain have been
fenced in by persons having no title thereto, in direct defiance of the
law forbidding the maintenance or construction of any such unlawful
inclosure of public land. For various reasons there has been little
interference with such inclosures in the past, but ample notice has now
been given the trespassers, and all the resources at the command of the
Government will hereafter be used to put a stop to such trespassing.

In view of the capital importance of these matters, I commend them to
the earnest consideration of the Congress, and if the Congress finds
difficulty in dealing with them from lack of thorough knowledge of the
subject, I recommend that provision be made for a commission of experts
specially to investigate and report upon the complicated questions
involved.

I especially urge upon the Congress the need of wise legislation for
Alaska. It is not to our credit as a nation that Alaska, which has been
ours for thirty-five years, should still have as poor a system Of laws
as is the case. No country has a more valuable possession--in mineral
wealth, in fisheries, furs, forests, and also in land available for
certain kinds of farming and stockgrowing. It is a territory of great
size and varied resources, well fitted to support a large permanent
population. Alaska needs a good land law and such provisions for
homesteads and pre-emptions as will encourage permanent settlement. We
should shape legislation with a view not to the exploiting and
abandoning of the territory, but to the building up of homes therein.
The land laws should be liberal in type, so as to hold out inducements
to the actual settler whom we most desire to see take possession of the
country. The forests of Alaska should be protected, and, as a secondary
but still important matter, the game also, and at the same time it is
imperative that the settlers should be allowed to cut timber, under
proper regulations, for their own use. Laws should be enacted to
protect the Alaskan salmon fisheries against the greed which would
destroy them. They should be preserved as a permanent industry and food
supply. Their management and control should be turned over to the
Commission of Fish and Fisheries. Alaska should have a Delegate in the
Congress. It would be well if a Congressional committee could visit
Alaska and investigate its needs on the ground.

In dealing with the Indians our aim should be their ultimate absorption
into the body of our people. But in many cases this absorption must and
should be very slow. In portions of the Indian Territory the mixture of
blood has gone on at the same time with progress in wealth and
education, so that there are plenty of men with varying degrees of
purity of Indian blood who are absolutely indistinguishable in point of
social, political, and economic ability from their white associates.
There are other tribes which have as yet made no perceptible advance
toward such equality. To try to force such tribes too fast is to
prevent their going forward at all. Moreover, the tribes live under
widely different conditions. Where a tribe has made considerable
advance and lives on fertile farming soil it is possible to allot the
members lands in severalty much as is the case with white settlers.
There are other tribes where such a course is not desirable. On the
arid prairie lands the effort should be to induce the Indians to lead
pastoral rather than agricultural lives, and to permit them to settle
in villages rather than to force them into isolation.

The large Indian schools situated remote from any Indian reservation do
a special and peculiar work of great importance. But, excellent though
these are, an immense amount of additional work must be done on the
reservations themselves among the old, and above all among the young,
Indians.

The first and most important step toward the absorption of the Indian
is to teach him to earn his living; yet it is not necessarily to be
assumed that in each community all Indians must become either tillers
of the soil or stock raisers. Their industries may properly be
diversified, and those who show special desire or adaptability for
industrial or even commercial pursuits should be encouraged so far as
practicable to follow out each his own bent.

Every effort should be made to develop the Indian along the lines of
natural aptitude, and to encourage the existing native industries
peculiar to certain tribes, such as the various kinds of basket
weaving, canoe building, smith work, and blanket work. Above all, the
Indian boys and girls should be given confident command of colloquial
English, and should ordinarily be prepared for a vigorous struggle with
the conditions under which their people live, rather than for immediate
absorption into some more highly developed community.

The officials who represent the Government in dealing with the Indians
work under hard conditions, and also under conditions which render it
easy to do wrong and very difficult to detect wrong. Consequently they
should be amply paid on the one hand, and on the other hand a
particularly high standard of conduct should be demanded from them, and
where misconduct can be proved the punishment should be exemplary.

In no department of governmental work in recent years has there been
greater success than in that of giving scientific aid to the farming
population, thereby showing them how most efficiently to help
themselves. There is no need of insisting upon its importance, for the
welfare of the farmer is fundamentally necessary to the welfare of the
Republic as a whole. In addition to such work as quarantine against
animal and vegetable plagues, and warring against them when here
introduced, much efficient help has been rendered to the farmer by the
introduction of new plants specially fitted for cultivation under the
peculiar conditions existing in different portions of the country. New
cereals have been established in the semi-arid West. For instance, the
practicability of producing the best types of macaroni wheats in
regions of an annual rainfall of only ten inches or thereabouts has
been conclusively demonstrated. Through the introduction of new rices
in Louisiana and Texas the production of rice in this country has been
made to about equal the home demand. In the South-west the possibility
of regrassing overstocked range lands has been demonstrated; in the
North many new forage crops have been introduced, while in the East it
has been shown that some of our choicest fruits can be stored and
shipped in such a way as to find a profitable market abroad.

I again recommend to the favorable consideration of the Congress the
plans of the Smithsonian Institution for making the Museum under its
charge worthy of the Nation, and for preserving at the National Capital
not only records of the vanishing races of men but of the animals of
this continent which, like the buffalo, will soon become extinct unless
specimens from which their representatives may be renewed are sought in
their native regions and maintained there in safety.

The District of Columbia is the only part of our territory in which the
National Government exercises local or municipal functions, and where
in consequence the Government has a free hand in reference to certain
types of social and economic legislation which must be essentially
local or municipal in their character. The Government should see to it,
for instance, that the hygienic and sanitary legislation affecting
Washington is of a high character. The evils of slum dwellings, whether
in the shape of crowded and congested tenement-house districts or of
the back-alley type, should never be permitted to grow up in
Washington. The city should be a model in every respect for all the
cities of the country. The charitable and correctional systems of the
District should receive consideration at the hands of the Congress to
the end that they may embody the results of the most advanced thought
in these fields. Moreover, while Washington is not a great industrial
city, there is some industrialism here, and our labor legislation,
while it would not be important in itself, might be made a model for
the rest of the Nation. We should pass, for instance, a wise
employer's-liability act for the District of Columbia, and we need such
an act in our navy-yards. Railroad companies in the District ought to
be required by law to block their frogs.

The safety-appliance law, for the better protection of the lives and
limbs of railway employees, which was passed in 1893, went into full
effect on August 1, 1901. It has resulted in averting thousands of
casualties. Experience shows, however, the necessity of additional
legislation to perfect this law. A bill to provide for this passed the
Senate at the last session. It is to be hoped that some such measure
may now be enacted into law.

There is a growing tendency to provide for the publication of masses of
documents for which there is no public demand and for the printing of
which there is no real necessity. Large numbers of volumes are turned
out by the Government printing presses for which there is no
justification. Nothing should be printed by any of the Departments
unless it contains something of permanent value, and the Congress could
with advantage cut down very materially on all the printing which it
has now become customary to provide. The excessive cost of Government
printing is a strong argument against the position of those who are
inclined on abstract grounds to advocate the Government's doing any
work which can with propriety be left in private hands.

Gratifying progress has been made during the year in the extension of
the merit system of making appointments in the Government service. It
should be extended by law to the District of Columbia. It is much to be
desired that our consular system be established by law on a basis
providing for appointment and promotion only in consequence of proved
fitness.

Through a wise provision of the Congress at its last session the White
House, which had become disfigured by incongruous additions and
changes, has now been restored to what it was planned to be by
Washington. In making the restorations the utmost care has been
exercised to come as near as possible to the early plans and to
supplement these plans by a careful study of such buildings as that of
the University of Virginia, which was built by Jefferson. The White
House is the property of the Nation, and so far as is compatible with
living therein it should be kept as it originally was, for the same
reasons that we keep Mount Vernon as it originally was. The stately
simplicity of its architecture is an expression of the character of the
period in which it was built, and is in accord with the purposes it was
designed to serve. It is a good thing to preserve such buildings as
historic monuments which keep alive our sense of continuity with the
Nation's past.

The reports of the several Executive Departments are submitted to the
Congress with this communication.