To the Senate and House of Representatives:

No nation has greater resources than ours, and I think it can be
truthfully said that the citizens of no nation possess greater energy
and industrial ability. In no nation are the fundamental business
conditions sounder than in ours at this very moment; and it is foolish,
when such is the case, for people to hoard money instead of keeping it
in sound banks; for it is such hoarding that is the immediate occasion
of money stringency. Moreover, as a rule, the business of our people is
conducted with honesty and probity, and this applies alike to farms and
factories, to railroads and banks, to all our legitimate commercial
enterprises.

In any large body of men, however, there are certain to be some who are
dishonest, and if the conditions are such that these men prosper or
commit their misdeeds with impunity, their example is a very evil thing
for the community. Where these men are business men of great sagacity
and of temperament both unscrupulous and reckless, and where the
conditions are such that they act without supervision or control and at
first without effective check from public opinion, they delude many
innocent people into making investments or embarking in kinds of
business that are really unsound. When the misdeeds of these
successfully dishonest men are discovered, suffering comes not only
upon them, but upon the innocent men whom they have misled. It is a
painful awakening, whenever it occurs; and, naturally, when it does
occur those who suffer are apt to forget that the longer it was
deferred the more painful it would be. In the effort to punish the
guilty it is both wise and proper to endeavor so far as possible to
minimize the distress of those who have been misled by the guilty. Yet
it is not possible to refrain because of such distress from striving to
put an end to the misdeeds that are the ultimate causes of the
suffering, and, as a means to this end, where possible to punish those
responsible for them. There may be honest differences of opinion as to
many governmental policies; but surely there can be no such differences
as to the need of unflinching perseverance in the war against
successful dishonesty.

In my Message to the Congress on December 5, 1905, I said:

"If the folly of man mars the general well-being, then those who are
innocent of the folly will have to pay part of the penalty incurred by
those who are guilty of the folly. A panic brought on by the
speculative folly of part of the business community would hurt the
whole business community; but such stoppage of welfare, though it might
be severe, would not be lasting. In the long run, the one vital factor
in the permanent prosperity of the country is the high individual
character of the average American worker, the average American citizen,
no matter whether his work be mental or manual, whether he be farmer or
wage-worker, business man or professional man.

"In our industrial and social system the interests of all men are so
closely intertwined that in the immense majority of cases a
straight-dealing man, who by his efficiency, by his ingenuity and
industry, benefits himself, must also benefit others. Normally, the man
of great productive capacity who becomes rich by guiding the labor of
many other men does so by enabling them to produce more than they could
produce without his guidance; and both he and they share in the
benefit, which comes also to the public at large. The superficial fact
that the sharing may be unequal must never blind us to the underlying
fact that there is this sharing, and that the benefit comes in some
degree to each man concerned.. Normally, the wageworker, the man of
small means, and the average consumer, as well as the average producer,
are all alike helped by making conditions such that the man of
exceptional business ability receives an exceptional reward for his
ability Something can be done by legislation to help the general
prosperity; but no such help of a permanently beneficial character can
be given to the less able and less fortunate save as the results of a
policy which shall inure to the advantage of all industrious and
efficient people who act decently; and this is only another way of
saying that any benefit which comes to the less able and less fortunate
must of necessity come even more to the more able and more fortunate.
If, therefore, the less fortunate man is moved by envy of his more
fortunate brother to strike at the conditions under which they have
both, though unequally, prospered, the result will assuredly be that
while damage may come to the one struck at, it will visit with an even
heavier load the one who strikes the blow. Taken as a whole, we must
all go up or go down together.

"Yet, while not merely admitting, but insisting upon this, it is also
true that where there is no governmental restraint or supervision some
of the exceptional men use their energies, not in ways that are for the
common good, but in ways which tell against this common good. The
fortunes amassed through corporate organization are now so large, and
vest such power in those that wield them, as to make it a matter of
necessity to give to the sovereign--that is, to the Government, which
represents the people as a whole--some effective power of supervision
over their corporate use. In order to insure a healthy social and
industrial life, every big corporation should be held responsible by,
and be accountable to, some sovereign strong enough to control its
conduct. I am in no sense hostile to corporations. This is an age of
combination, and any effort to prevent all combination will be not only
useless, but in the end vicious, because of the contempt for law which
the failure to enforce law inevitably produces. We should, moreover,
recognize in cordial and ample fashion the immense good effected by
corporate agencies in a country such as ours, and the wealth of
intellect, energy, and fidelity devoted to their service, and therefore
normally to the service of the public, by their officers and directors.
The corporation has come to stay, just as the trade union has come to
stay. Each can do and has done great good. Each should be favored so
long as it does good. But each should be sharply checked where it acts
against law and justice.

"The makers of our National Constitution provided especially that the
regulation of interstate commerce should come within the sphere of the
General Government. The arguments in favor of their taking this stand
were even then overwhelming. But they are far stronger to-day, in view
of the enormous development of great business agencies, usually
corporate in form. Experience has shown conclusively that it is useless
to try to get any adequate regulation and supervision of these great
corporations by State action. Such regulation and supervision can only
be effectively exercised by a sovereign whose jurisdiction is
coextensive with the field of work of the corporations--that is, by the
National Government. I believe that this regulation and supervision can
be obtained by the enactment of law by the Congress. Our steady aim
should be by legislation, cautiously and carefully undertaken, but
resolutely persevered in, to assert the sovereignty of the National
Government by affirmative action.

"This is only in form an innovation. In substance it is merely a
restoration; for from the earliest time such regulation of industrial
activities has been recognized in the action of the lawmaking bodies;
and all that I propose is to meet the changed conditions in such manner
as will prevent the Commonwealth abdicating the power it has always
possessed, not only in this country, but also in England before and
since this country became a separate nation.

"It has been a misfortune that the National laws on this subject have
hitherto been of a negative or prohibitive rather than an affirmative
kind, and still more that they have in part sought to prohibit what
could not be effectively prohibited, and have in part in their
prohibitions confounded what should be allowed and what should not be
allowed. It is generally useless to try to prohibit all restraint on
competition, whether this restraint be reasonable or unreasonable; and
where it is not useless it is generally hurtful. The successful
prosecution of one device to evade the law immediately develops another
device to accomplish the same purpose. What is needed is not sweeping
prohibition of every arrangement, good or bad, which may tend to
restrict competition, but such adequate supervision and regulation as
will prevent any restriction of competition from being to the detriment
of the public, as well as such supervision and regulation as will
prevent other abuses in no way connected with restriction of
competition."

I have called your attention in these quotations to what I have already
said because I am satisfied that it is the duty of the National
Government to embody in action the principles thus expressed.

No small part of the trouble that we have comes from carrying to an
extreme the national virtue of self-reliance, of independence in
initiative and action. It is wise to conserve this virtue and to
provide for its fullest exercise, compatible with seeing that liberty
does not become a liberty to wrong others. Unfortunately, this is the
kind of liberty that the lack of all effective regulation inevitably
breeds. The founders of the Constitution provided that the National
Government should have complete and sole control of interstate
commerce. There was then practically no interstate business save such
as was conducted by water, and this the National Government at once
proceeded to regulate in thoroughgoing and effective fashion.
Conditions have now so wholly changed that the interstate commerce by
water is insignificant compared with the amount that goes by land, and
almost all big business concerns are now engaged in interstate
commerce. As a result, it can be but partially and imperfectly
controlled or regulated by the action of any one of the several States;
such action inevitably tending to be either too drastic or else too
lax, and in either case ineffective for purposes of justice. Only the
National Government can in thoroughgoing fashion exercise the needed
control. This does not mean that there should be any extension of
Federal authority, for such authority already exists under the
Constitution in amplest and most far-reaching form; but it does mean
that there should be an extension of Federal activity. This is not
advocating centralization. It is merely looking facts in the face, and
realizing that centralization in business has already come and can not
be avoided or undone, and that the public at large can only protect
itself from certain evil effects of this business centralization by
providing better methods for the exercise of control through the
authority already centralized in the National Government by the
Constitution itself. There must be no ball in the healthy constructive
course of action which this Nation has elected to pursue, and has
steadily pursued, during the last six years, as shown both in the
legislation of the Congress and the administration of the law by the
Department of Justice. The most vital need is in connection with the
railroads. As to these, in my judgment there should now be either a
national incorporation act or a law licensing railway companies to
engage in interstate commerce upon certain conditions. The law should
be so framed as to give to the Interstate Commerce Commission power to
pass upon the future issue of securities, while ample means should be
provided to enable the Commission, whenever in its judgment it is
necessary, to make a physical valuation of any railroad. As I stated in
my Message to the Congress a year ago, railroads should be given power
to enter into agreements, subject to these agreements being made public
in minute detail and to the consent of the Interstate Commerce
Commission being first obtained. Until the National Government assumes
proper control of interstate commerce, in the exercise of the authority
it already possesses, it will be impossible either to give to or to get
from the railroads full justice. The railroads and all other great
corporations will do well to recognize that this control must come; the
only question is as to what governmental body can most wisely exercise
it. The courts will determine the limits within which the Federal
authority can exercise it, and there will still remain ample work
within each State for the railway commission of that State; and the
National Interstate Commerce Commission will work in harmony with the
several State commissions, each within its own province, to achieve the
desired end.

Moreover, in my judgment there should be additional legislation looking
to the proper control of the great business concerns engaged in
interstate business, this control to be exercised for their own benefit
and prosperity no less than for the protection of investors and of the
general public. As I have repeatedly said in Messages to the Congress
and elsewhere, experience has definitely shown not merely the unwisdom
but the futility of endeavoring to put a stop to all business
combinations. Modern industrial conditions are such that combination is
not only necessary but inevitable. It is so in the world of business
just as it is so in the world of labor, and it is as idle to desire to
put an end to all corporations, to all big combinations of capital, as
to desire to put an end to combinations of labor. Corporation and labor
union alike have come to stay. Each if properly managed is a source of
good and not evil. Whenever in either there is evil, it should be
promptly held to account; but it should receive hearty encouragement so
long as it is properly managed. It is profoundly immoral to put or keep
on the statute books a law, nominally in the interest of public
morality that really puts a premium upon public immorality, by
undertaking to forbid honest men from doing what must be done under
modern business conditions, so that the law itself provides that its
own infraction must be the condition precedent upon business success.
To aim at the accomplishment of too much usually means the
accomplishment of too little, and often the doing of positive damage.
In my Message to the Congress a year ago, in speaking of the antitrust
laws, I said:

"The actual working of our laws has shown that the effort to prohibit
all combination, good or bad, is noxious where it is not ineffective.
Combination of capital, like combination of labor, is a necessary
element in our present industrial system. It is not possible completely
to prevent it; and if it were possible, such complete prevention would
do damage to the body politic. What we need is not vainly to try to
prevent all combination, but to secure such rigorous and adequate
control and supervision of the combinations as to prevent their
injuring the public, or existing in such forms as inevitably to
threaten injury. It is unfortunate that our present laws should forbid
all combinations instead of sharply discriminating between those
combinations which do evil. Often railroads would like to combine for
the purpose of preventing a big shipper from maintaining improper
advantages at the expense of small shippers and of the general public.
Such a combination, instead of being forbidden by law, should be
favored. It is a public evil to have on the statute books a law
incapable of full enforcement, because both judges and juries realize
that its full enforcement would destroy the business of the country;
for the result is to make decent men violators of the law against their
will, and to put a premium on the behavior of the willful wrongdoers.
Such a result in turn tends to throw the decent man and the willful
wrongdoer into close association, and in the end to drag down the
former to the latter's level; for the man who becomes a lawbreaker in
one way unhappily tends to lose all respect for law and to be willing
to break it in many ways. No more scathing condemnation could be
visited upon a law than is contained in the words of the Interstate
Commerce Commission when, in commenting upon the fact that the numerous
joint traffic associations do technically violate the law, they say:
The decision of the United States Supreme Court in the Trans-Missouri
case and the Joint Traffic Association case has produced no practical
effect upon the railway operations of the country. Such associations,
in fact, exist now as they did before these decisions, and with the
same general effect. In justice to all parties, we ought probably to
add that it is difficult to see how our interstate railways could be
operated with due regard to the interest of the shipper and the railway
without concerted action of the kind afforded through these
associations.

"This means that the law as construed by the Supreme Court is such that
the business of the country can not be conducted without breaking it."

As I have elsewhere said:

"All this is substantially what I have said over and over again. Surely
it ought not to be necessary to say that it in no shape or way
represents any hostility to corporations as such. On the contrary, it
means a frank recognition of the fact that combinations of capital,
like combinations of labor, are a natural result of modern conditions
and of our National development. As far as in my ability lies my
endeavor is and will be to prevent abuse of power by either and to
favor both so long as they do well. The aim of the National Government
is quite as much to favor and protect honest corporations, honest
business men of wealth, as to bring to justice those individuals and
corporations representing dishonest methods. Most certainly there will
be no relaxation by the Government authorities in the effort to get at
any great railroad wrecker--any man who by clever swindling devices
robs investors, oppresses wage-workers, and does injustice to the
general public. But any such move as this is in the interest of honest
railway operators, of honest corporations, and of those who, when they
invest their small savings in stocks and bonds, wish to be assured that
these will represent money honestly expended for legitimate business
purposes. To confer upon the National Government the power for which I
ask would be a check upon overcapitalization and upon the clever
gamblers who benefit by overcapitalization. But it alone would mean an
increase in the value, an increase in the safety of the stocks and
bonds of law-abiding, honestly managed railroads, and would render it
far easier to market their securities. I believe in proper publicity.
There has been complaint of some of the investigations recently carried
on, but those who complain should put the blame where it belongs--upon
the misdeeds which are done in darkness and not upon the investigations
which brought them to light. The Administration is responsible for
turning on the light, but it is not responsible for what the light
showed. I ask for full power to be given the Federal Government,
because no single State can by legislation effectually cope with these
powerful corporations engaged in interstate commerce, and, while doing
them full justice, exact from them in return full justice to others.
The conditions of railroad activity, the conditions of our immense
interstate commerce, are such as to make the Central Government alone
competent to exercise full supervision and control.

"The grave abuses in individual cases of railroad management in the
past represent wrongs not merely to the general public, but, above all,
wrongs to fair-dealing and honest corporations and men of wealth,
because they excite a popular anger and distrust which from the very
nature of the case tends to include in the sweep of its resentment good
and bad alike. From the standpoint of the public I can not too
earnestly say that as soon as the natural and proper resentment aroused
by these abuses becomes indiscriminate and unthinking, it also becomes
not merely unwise and unfair, but calculated to defeat the very ends
which those feeling it have in view. There has been plenty of dishonest
work by corporations in the past. There will not be the slightest
let-up in the effort to hunt down and punish every dishonest man. But
the bulk of our business is honestly done. In the natural indignation
the people feel over the dishonesty, it is essential that they should
not lose their heads and get drawn into an indiscriminate raid upon all
corporations, all people of wealth, whether they do well or ill. Out of
any such wild movement good will not come, can not come, and never has
come. On the contrary, the surest way to invite reaction is to follow
the lead of either demagogue or visionary in a sweeping assault upon
property values and upon public confidence, which would work
incalculable damage in the business world and would produce such
distrust of the agitators that in the revulsion the distrust would
extend to honest men who, in sincere and same fashion, are trying to
remedy the evils."

The antitrust law should not be repealed; but it should be made both
more efficient and more in harmony with actual conditions. It should be
so amended as to forbid only the kind of combination which does harm to
the general public, such amendment to be accompanied by, or to be an
incident of, a grant of supervisory power to the Government over these
big concerns engaged in interstate business. This should be accompanied
by provision for the compulsory publication of accounts and the
subjection of books and papers to the inspection of the Government
officials. A beginning has already been made for such supervision by
the establishment of the Bureau of Corporations.

The antitrust law should not prohibit combinations that do no injustice
to the public, still less those the existence of which is on the whole
of benefit to the public. But even if this feature of the law were
abolished, there would remain as an equally objectionable feature the
difficulty and delay now incident to its enforcement. The Government
must now submit to irksome and repeated delay before obtaining a final
decision of the courts upon proceedings instituted, and even a
favorable decree may mean an empty victory. Moreover, to attempt to
control these corporations by lawsuits means to impose upon both the
Department of Justice and the courts an impossible burden; it is not
feasible to carry on more than a limited number of such suits. Such a
law to be really effective must of course be administered by an
executive body, and not merely by means of lawsuits. The design should
be to prevent the abuses incident to the creation of unhealthy and
improper combinations, instead of waiting until they are in existence
and then attempting to destroy them by civil or criminal proceedings.

A combination should not be tolerated if it abuse the power acquired by
combination to the public detriment. No corporation or association of
any kind should be permitted to engage in foreign or interstate
commerce that is formed for the purpose of, or whose operations create,
a monopoly or general control of the production, sale, or distribution
of any one or more of the prime necessities of life or articles of
general use and necessity. Such combinations are against public policy;
they violate the common law; the doors of the courts are closed to
those who are parties to them, and I believe the Congress can close the
channels of interstate commerce against them for its protection. The
law should make its prohibitions and permissions as clear and definite
as possible, leaving the least possible room for arbitrary action, or
allegation of such action, on the part of the Executive, or of
divergent interpretations by the courts. Among the points to be aimed
at should be the prohibition of unhealthy competition, such as by
rendering service at an actual loss for the purpose of crushing out
competition, the prevention of inflation of capital, and the
prohibition of a corporation's making exclusive trade with itself a
condition of having any trade with itself. Reasonable agreements
between, or combinations of, corporations should be permitted, provided
they are submitted to and approved by some appropriate Government body.

The Congress has the power to charter corporations to engage in
interstate and foreign commerce, and a general law can be enacted under
the provisions of which existing corporations could take out Federal
charters and new Federal corporations could be created. An essential
provision of such a law should be a method of predetermining by some
Federal board or commission whether the applicant for a Federal charter
was an association or combination within the restrictions of the
Federal law. Provision should also be made for complete publicity in
all matters affecting the public and complete protection to the
investing public and the shareholders in the matter of issuing
corporate securities. If an incorporation law is not deemed advisable,
a license act for big interstate corporations might be enacted; or a
combination of the two might be tried. The supervision established
might be analogous to that now exercised over national banks. At least,
the antitrust act should be supplemented by specific prohibitions of
the methods which experience has shown have been of most service in
enabling monopolistic combinations to crush out competition. The real
owners of a corporation should be compelled to do business in their own
name. The right to hold stock in other corporations should hereafter be
denied to interstate corporations, unless on approval by the Government
officials, and a prerequisite to such approval should be the listing
with the Government of all owners and stockholders, both by the
corporation owning such stock and by the corporation in which such
stock is owned.

To confer upon the National Government, in connection with the
amendment I advocate in the antitrust law, power of supervision over
big business concerns engaged in interstate commerce, would benefit
them as it has benefited the national banks. In the recent business
crisis it is noteworthy that the institutions which failed were
institutions which were not under the supervision and control of the
National Government. Those which were under National control stood the
test.

National control of the kind above advocated would be to the benefit of
every well-managed railway. From the standpoint of the public there is
need for additional tracks, additional terminals, and improvements in
the actual handling of the railroads, and all this as rapidly as
possible. Ample, safe, and speedy transportation facilities are even
more necessary than cheap transportation. Therefore, there is need for
the investment of money which will provide for all these things while
at the same time securing as far as is possible better wages and
shorter hours for their employees. Therefore, while there must be just
and reasonable regulation of rates, we should be the first to protest
against any arbitrary and unthinking movement to cut them down without
the fullest and most careful consideration of all interests concerned
and of the actual needs of the situation. Only a special body of men
acting for the National Government under authority conferred upon it by
the Congress is competent to pass judgment on such a matter.

Those who fear, from any reason, the extension of Federal activity will
do well to study the history not only of the national banking act but
of the pure-food law, and notably the meat inspection law recently
enacted. The pure-food law was opposed so violently that its passage
was delayed for a decade; yet it has worked unmixed and immediate good.
The meat inspection law was even more violently assailed; and the same
men who now denounce the attitude of the National Government in seeking
to oversee and control the workings of interstate common carriers and
business concerns, then asserted that we were "discrediting and ruining
a great American industry." Two years have not elapsed, and already it
has become evident that the great benefit the law confers upon the
public is accompanied by an equal benefit to the reputable packing
establishments. The latter are better off under the law than they were
without it. The benefit to interstate common carriers and business
concerns from the legislation I advocate would be equally marked.

Incidentally, in the passage of the pure-food law the action of the
various State food and dairy commissioners showed in striking fashion
how much good for the whole people results from the hearty cooperation
of the Federal and State officials in securing a given reform. It is
primarily to the action of these State commissioners that we owe the
enactment of this law; for they aroused the people, first to demand the
enactment and enforcement of State laws on the subject, and then the
enactment of the Federal law, without which the State laws were largely
ineffective. There must be the closest cooperation between the National
and State governments in administering these laws.

In my Message to the Congress a year ago I spoke as follows of the
currency:

"I especially call your attention to the condition of our currency
laws. The national-bank act has ably served a great purpose in aiding
the enormous business development of the country, and within ten years
there has been an increase in circulation per capita from $21.41 to
$33.08. For several years evidence has been accumulating that
additional legislation is needed. The recurrence of each crop season
emphasizes the defects of the present laws. There must soon be a
revision of them, because to leave them as they are means to incur
liability of business disaster. Since your body adjourned there has
been a fluctuation in the interest on call money from 2 per cent to 30
percent, and the fluctuation was even greater during the preceding six
months. The Secretary of the Treasury had to step in and by wise action
put a stop to the most violent period of oscillation. Even worse than
such fluctuation is the advance in commercial rates and the uncertainty
felt in the sufficiency of credit even at high rates. All commercial
interests suffer during each crop period. Excessive rates for call
money in New York attract money from the interior banks into the
speculative field. This depletes the fund that would otherwise be
available for commercial uses, and commercial borrowers are forced to
pay abnormal rates, so that each fall a tax, in the shape of increased
interest charges, is placed on the whole commerce of the country.

"The mere statement of these facts shows that our present system is
seriously defective. There is need of a change. Unfortunately, however,
many of the proposed changes must be ruled from consideration because
they are complicated, are not easy of comprehension, and tend to
disturb existing rights and interests. We must also rule out any plan
which would materially impair the value of the United States 2 per cent
bonds now pledged to secure circulation, the issue of which was made
under conditions peculiarly creditable to the Treasury. I do not press
any especial plan. Various plans have recently been proposed by expert
committees of bankers. Among the plans which are possibly feasible and
which certainly should receive your consideration is that repeatedly
brought to your attention by the present Secretary of the Treasury, the
essential features of which have been approved by many prominent
bankers and business men. According to this plan national banks should
be permitted to issue a specified proportion of their capital in notes
of a given kind, the issue to be taxed at so high a rate as to drive
the notes back when not wanted in legitimate trade. This plan would not
permit the issue of currency to give banks additional profits, but to
meet the emergency presented by times of stringency.

"I do not say that this is the right system. I only advance it to
emphasize my belief that there is need for the adoption of some system
which shall be automatic and open to all sound banks, so as to avoid
all possibility of discrimination and favoritism. Such a plan would
tend to prevent the spasms of high money and speculation which now
obtain in the New York market; for at present there is too much
currency at certain seasons of the year, and its accumulation at New
York tempts bankers to lend it at low rates for speculative purposes;
whereas at other times when the crops are being moved there is urgent
need for a large but temporary increase in the currency supply. It must
never be forgotten that this question concerns business men generally
quite as much as bankers; especially is this true of stockmen, farmers,
and business men in the West; for at present at certain seasons of the
year the difference in interest rates between the East and the West is
from 6 to 10 per cent, whereas in Canada the corresponding difference
is but 2 per cent. Any plan must, of course, guard the interests of
western and southern bankers as carefully as it guards the interests of
New York or Chicago bankers, and must be drawn from the standpoints of
the farmer and the merchant no less than from the standpoints of the
city banker and the country banker."

I again urge on the Congress the need of immediate attention to this
matter. We need a greater elasticity in our currency; provided, of
course, that we recognize the even greater need of a safe and secure
currency. There must always be the most rigid examination by the
National authorities. Provision should be made for an emergency
currency. The emergency issue should, of course, be made with an
effective guaranty, and upon conditions carefully prescribed by the
Government. Such emergency issue must be based on adequate securities
approved by the Government, and must be issued under a heavy tax. This
would permit currency being issued when the demand for it was urgent,
while securing its requirement as the demand fell off. It is worth
investigating to determine whether officers and directors of national
banks should ever be allowed to loan to themselves. Trust companies
should be subject to the same supervision as banks; legislation to this
effect should be enacted for the District of Columbia and the
Territories.

Yet we must also remember that even the wisest legislation on the
subject can only accomplish a certain amount. No legislation can by any
possibility guarantee the business community against the results of
speculative folly any more than it can guarantee an individual against
the results of his extravagance. When an individual mortgages his house
to buy an automobile he invites disaster; and when wealthy men, or men
who pose as such, or are unscrupulously or foolishly eager to become
such, indulge in reckless speculation--especially if it is accompanied
by dishonesty--they jeopardize not only their own future but the future
of all their innocent fellow-citizens, for the expose the whole
business community to panic and distress.

The income account of the Nation is in a most satisfactory condition.
For the six fiscal years ending with the 1st of July last, the total
expenditures and revenues of the National Government, exclusive of the
postal revenues and expenditures, were, in round numbers, revenues,
$3,465,000,0000, and expenditures, $3,275,000,000. The net excess of
income over expenditures, including in the latter the fifty millions
expended for the Panama Canal, was one hundred and ninety million
dollars for the six years, an average of about thirty-one millions a
year. This represents an approximation between income and outgo which
it would be hard to improve. The satisfactory working of the present
tariff law has been chiefly responsible for this excellent showing.
Nevertheless, there is an evident and constantly growing feeling among
our people that the time is rapidly approaching when our system of
revenue legislation must be revised.

This country is definitely committed to the protective system and any
effort to uproot it could not but cause widespread industrial disaster.
In other words, the principle of the present tariff law could not with
wisdom be changed. But in a country of such phenomenal growth as ours
it is probably well that every dozen years or so the tariff laws should
be carefully scrutinized so as to see that no excessive or improper
benefits are conferred thereby, that proper revenue is provided, and
that our foreign trade is encouraged. There must always be as a minimum
a tariff which will not only allow for the collection of an ample
revenue but which will at least make good the difference in cost of
production here and abroad; that is, the difference in the labor cost
here and abroad, for the well-being of the wage-worker must ever be a
cardinal point of American policy. The question should be approached
purely from a business standpoint; both the time and the manner of the
change being such as to arouse the minimum of agitation and disturbance
in the business world, and to give the least play for selfish and
factional motives. The sole consideration should be to see that the sum
total of changes represents the public good. This means that the
subject can not with wisdom be dealt with in the year preceding a
Presidential election, because as a matter of fact experience has
conclusively shown that at such a time it is impossible to get men to
treat it from the standpoint of the public good. In my judgment the
wise time to deal with the matter is immediately after such election.

When our tax laws are revised the question of an income tax and an
inheritance tax should receive the careful attention of our
legislators. In my judgment both of these taxes should be part of our
system of Federal taxation. I speak diffidently about the income tax
because one scheme for an income tax was declared unconstitutional by
the Supreme Court; while in addition it is a difficult tax to
administer in its practical working, and great care would have to be
exercised to see that it was not evaded by the very men whom it was
most desirable to have taxed, for if so evaded it would, of course, be
worse than no tax at all; as the least desirable of all taxes is the
tax which bears heavily upon the honest as compared with the dishonest
man. Nevertheless, a graduated income tax of the proper type would be a
desirable feature of Federal taxation, and it is to be hoped that one
may be devised which the Supreme Court will declare constitutional. The
inheritance tax, however, is both a far better method of taxation, and
far more important for the purpose of having the fortunes of the
country bear in proportion to their increase in size a corresponding
increase and burden of taxation. The Government has the absolute right
to decide as to the terms upon which a man shall receive a bequest or
devise from another, and this point in the devolution of property is
especially appropriate for the imposition of a tax. Laws imposing such
taxes have repeatedly been placed upon the National statute books and
as repeatedly declared constitutional by the courts; and these laws
contained the progressive principle, that is, after a certain amount is
reached the bequest or gift, in life or death, is increasingly burdened
and the rate of taxation is increased in proportion to the remoteness
of blood of the man receiving the bequest. These principles are
recognized already in the leading civilized nations of the world. In
Great Britain all the estates worth $5,000 or less are practically
exempt from death duties, while the increase is such that when an
estate exceeds five millions of dollars in value and passes to a
distant kinsman or stranger in blood the Government receives all told
an amount equivalent to nearly a fifth of the whole estate. In France
so much of an inheritance as exceeds $10,000,000 pays over a fifth to
the State if it passes to a distant relative. The German law is
especially interesting to us because it makes the inheritance tax an
imperial measure while allotting to the individual States of the Empire
a portion of the proceeds and permitting them to impose taxes in
addition to those imposed by the Imperial Government. Small
inheritances are exempt, but the tax is so sharply progressive that
when the inheritance is still not very large, provided it is not an
agricultural or a forest land, it is taxed at the rate of 25 per cent
if it goes to distant relatives. There is no reason why in the United
States the National Government should not impose inheritance taxes in
addition to those imposed by the States, and when we last had an
inheritance tax about one-half of the States levied such taxes
concurrently with the National Government, making a combined maximum
rate, in some cases as high as 25 per cent. The French law has one
feature which is to be heartily commended. The progressive principle is
so applied that each higher rate is imposed only on the excess above
the amount subject to the next lower rate; so that each increase of
rate will apply only to a certain amount above a certain maximum. The
tax should if possible be made to bear more heavily upon those residing
without the country than within it. A heavy progressive tax upon a very
large fortune is in no way such a tax upon thrift or industry as a like
would be on a small fortune. No advantage comes either to the country
as a whole or to the individuals inheriting the money by permitting the
transmission in their entirety of the enormous fortunes which would be
affected by such a tax; and as an incident to its function of revenue
raising, such a tax would help to preserve a measurable equality of
opportunity for the people of the generations growing to manhood. We
have not the slightest sympathy with that socialistic idea which would
try to put laziness, thriftlessness and inefficiency on a par with
industry, thrift and efficiency; which would strive to break up not
merely private property, but what is far more important, the home, the
chief prop upon which our whole civilization stands. Such a theory, if
ever adopted, would mean the ruin of the entire country--a ruin which
would bear heaviest upon the weakest, upon those least able to shift
for themselves. But proposals for legislation such as this herein
advocated are directly opposed to this class of socialistic theories.
Our aim is to recognize what Lincoln pointed out: The fact that there
are some respects in which men are obviously not equal; but also to
insist that there should be an equality of self-respect and of mutual
respect, an equality of rights before the law, and at least an
approximate equality in the conditions under which each man obtains the
chance to show the stuff that is in him when compared to his fellows.

A few years ago there was loud complaint that the law could not be
invoked against wealthy offenders. There is no such complaint now. The
course of the Department of Justice during the last few years has been
such as to make it evident that no man stands above the law, that no
corporation is so wealthy that it can not be held to account. The
Department of Justice has been as prompt to proceed against the
wealthiest malefactor whose crime was one of greed and cunning as to
proceed against the agitator who incites to brutal violence. Everything
that can be done under the existing law, and with the existing state of
public opinion, which so profoundly influences both the courts and
juries, has been done. But the laws themselves need strengthening in
more than one important point; they should be made more definite, so
that no honest man can be led unwittingly to break them, and so that
the real wrongdoer can be readily punished.

Moreover, there must be the public opinion back of the laws or the laws
themselves will be of no avail. At present, while the average juryman
undoubtedly wishes to see trusts broken up, and is quite ready to fine
the corporation itself, he is very reluctant to find the facts proven
beyond a reasonable doubt when it comes to sending to jail a member of
the business community for indulging in practices which are profoundly
unhealthy, but which, unfortunately, the business community has grown
to recognize as well-nigh normal. Both the present condition of the law
and the present temper of juries render it a task of extreme difficulty
to get at the real wrongdoer in any such case, especially by
imprisonment. Yet it is from every standpoint far preferable to punish
the prime offender by imprisonment rather than to fine the corporation,
with the attendant damage to stockholders.

The two great evils in the execution of our criminal laws to-day are
sentimentality and technicality. For the latter the remedy must come
from the hands of the legislatures, the courts, and the lawyers. The
other must depend for its cure upon the gradual growth of a sound
public opinion which shall insist that regard for the law and the
demands of reason shall control all other influences and emotions in
the jury box. Both of these evils must be removed or public discontent
with the criminal law will continue.

Instances of abuse in the granting of injunctions in labor disputes
continue to occur, and the resentment in the minds of those who feel
that their rights are being invaded and their liberty of action and of
speech unwarrantably restrained continues likewise to grow. Much of the
attack on the use of the process of injunction is wholly without
warrant; but I am constrained to express the belief that for some of it
there is warrant. This question is becoming more and more one of prime
importance, and unless the courts will themselves deal with it in
effective manner, it is certain ultimately to demand some form of
legislative action. It would be most unfortunate for our social welfare
if we should permit many honest and law-abiding citizens to feel that
they had just cause for regarding our courts with hostility. I
earnestly commend to the attention of the Congress this matter, so that
some way may be devised which will limit the abuse of injunctions and
protect those rights which from time to time it unwarrantably invades.
Moreover, discontent is often expressed with the use of the process of
injunction by the courts, not only in labor disputes, but where State
laws are concerned. I refrain from discussion of this question as I am
informed that it will soon receive the consideration of the Supreme
Court.

The Federal courts must of course decide ultimately what are the
respective spheres of State and Nation in connection with any law,
State or National, and they must decide definitely and finally in
matters affecting individual citizens, not only as to the rights and
wrongs of labor but as to the rights and wrongs of capital; and the
National Government must always see that the decision of the court is
put into effect. The process of injunction is an essential adjunct of
the court's doing its work well; and as preventive measures are always
better than remedial, the wise use of this process is from every
standpoint commendable. But where it is recklessly or unnecessarily
used, the abuse should he censured, above all by the very men who are
properly anxious to prevent any effort to shear the courts of this
necessary power. The court's decision must be final; the protest is
only against the conduct of individual judges in needlessly
anticipating such final decision, or in the tyrannical use of what is
nominally a temporary injunction to accomplish what is in fact a
permanent decision.

The loss of life and limb from railroad accidents in this country has
become appalling. It is a subject of which the National Government
should take supervision. It might be well to begin by providing for a
Federal inspection of interstate railroads somewhat along the lines of
Federal inspection of steamboats, although not going so far; perhaps at
first all that it would be necessary to have would be some officer
whose duty would be to investigate all accidents on interstate
railroads and report in detail the causes thereof. Such an officer
should make it his business to get into close touch with railroad
operating men so as to become thoroughly familiar with every side of
the question, the idea being to work along the lines of the present
steamboat inspection law.

The National Government should be a model employer. It should demand
the highest quality of service from each of its employees and it should
care for all of them properly in return. Congress should adopt
legislation providing limited but definite compensation for accidents
to all workmen within the scope of the Federal power, including
employees of navy yards and arsenals. In other words, a model
employers' liability act, far-reaching and thoroughgoing, should be
enacted which should apply to all positions, public and private, over
which the National Government has jurisdiction. The number of accidents
to wage-workers, including those that are preventable and those that
are not, has become appalling in the mechanical, manufacturing, and
transportation operations of the day. It works grim hardship to the
ordinary wage-worker and his family to have the effect of such an
accident fall solely upon him; and, on the other hand, there are whole
classes of attorneys who exist only by inciting men who may or may not
have been wronged to undertake suits for negligence. As a matter of
fact a suit for negligence is generally an inadequate remedy for the
person injured, while it often causes altogether disproportionate
annoyance to the employer. The law should be made such that the payment
for accidents by the employer would be automatic instead of being a
matter for lawsuits. Workmen should receive certain and definite
compensation for all accidents in industry irrespective of negligence.
The employer is the agent of the public and on his own responsibility
and for his own profit he serves the public. When he starts in motion
agencies which create risks for others, he should take all the ordinary
and extraordinary risks involved; and the risk he thus at the moment
assumes will ultimately be assumed, as it ought to be, by the general
public. Only in this way can the shock of the accident be diffused,
instead of falling upon the man or woman least able to bear it, as is
now the case. The community at large should share the burdens as well
as the benefits of industry. By the proposed law, employers would gain
a desirable certainty of obligation and get rid of litigation to
determine it, while the workman and his family would be relieved from a
crushing load. With such a policy would come increased care, and
accidents would be reduced in number. The National laws providing for
employers' liability on railroads engaged in interstate commerce and
for safety appliances, as well as for diminishing the hours any
employee of a railroad should be permitted to work, should all be
strengthened wherever in actual practice they have shown weakness; they
should be kept on the statute books in thoroughgoing form.

The constitutionality of the employers' liability act passed by the
preceding Congress has been carried before the courts. In two
jurisdictions the law has been declared unconstitutional, and in three
jurisdictions its constitutionality has been affirmed. The question has
been carried to the Supreme Court, the case has been heard by that
tribunal, and a decision is expected at an early date. In the event
that the court should affirm the constitutionality of the act, I urge
further legislation along the lines advocated in my Message to the
preceding Congress. The practice of putting the entire burden of loss
to life or limb upon the victim or the victim's family is a form of
social injustice in which the United States stands in unenviable
prominence. In both our Federal and State legislation we have, with few
exceptions, scarcely gone farther than the repeal of the fellow-servant
principle of the old law of liability, and in some of our States even
this slight modification of a completely outgrown principle has not yet
been secured. The legislation of the rest of the industrial world
stands out in striking contrast to our backwardness in this respect.
Since 1895 practically every country of Europe, together with Great
Britain, New Zealand, Australia, British Columbia, and the Cape of Good
Hope has enacted legislation embodying in one form or another the
complete recognition of the principle which places upon the employer
the entire trade risk in the various lines of industry. I urge upon the
Congress the enactment of a law which will at the same time bring
Federal legislation up to the standard already established by all the
European countries, and which will serve as a stimulus to the various
States to perfect their legislation in this regard.

The Congress should consider the extension of the eight-hour law. The
constitutionality of the present law has recently been called into
question, and the Supreme Court has decided that the existing
legislation is unquestionably within the powers of the Congress. The
principle of the eight-hour day should as rapidly and as far as
practicable be extended to the entire work carried on by the
Government; and the present law should be amended to embrace contracts
on those public works which the present wording of the act has been
construed to exclude. The general introduction of the eight-hour day
should be the goal toward which we should steadily tend, and the
Government should set the example in this respect.

Strikes and lockouts, with their attendant loss and suffering, continue
to increase. For the five years ending December 31, 1905, the number of
strikes was greater than those in any previous ten years and was double
the number in the preceding five years. These figures indicate the
increasing need of providing some machinery to deal with this class of
disturbance in the interest alike of the employer, the employee, and
the general public. I renew my previous recommendation that the
Congress favorably consider the matter of creating the machinery for
compulsory investigation of such industrial controversies as are of
sufficient magnitude and of sufficient concern to the people of the
country as a whole to warrant the Federal Government in taking action.

The need for some provision for such investigation was forcibly
illustrated during the past summer. A strike of telegraph operators
seriously interfered with telegraphic communication, causing great
damage to business interests and serious inconvenience to the general
public. Appeals were made to me from many parts of the country, from
city councils, from boards of trade, from chambers of commerce, and
from labor organizations, urging that steps be taken to terminate the
strike. Everything that could with any propriety be done by a
representative of the Government was done, without avail, and for weeks
the public stood by and suffered without recourse of any kind. Had the
machinery existed and had there been authority for compulsory
investigation of the dispute, the public would have been placed in
possession of the merits of the controversy, and public opinion would
probably have brought about a prompt adjustment.

Each successive step creating machinery for the adjustment of labor
difficulties must be taken with caution, but we should endeavor to make
progress in this direction.

The provisions of the act of 1898 creating the chairman of the
Interstate Commerce Commission and the Commissioner of Labor a board of
mediation in controversies between interstate railroads and their
employees has, for the first time, been subjected to serious tests
within the past year, and the wisdom of the experiment has been fully
demonstrated. The creation of a board for compulsory investigation in
cases where mediation fails and arbitration is rejected is the next
logical step in a progressive program.

It is certain that for some time to come there will be a constant
increase absolutely, and perhaps relatively, of those among our
citizens who dwell in cities or towns of some size and who work for
wages. This means that there will be an ever-increasing need to
consider the problems inseparable from a great industrial civilization.
Where an immense and complex business, especially in those branches
relating to manufacture and transportation, is transacted by a large
number of capitalists who employ a very much larger number of
wage-earners, the former tend more and more to combine into
corporations and the latter into unions. The relations of the
capitalist and wage-worker to one another, and of each to the general
public, are not always easy to adjust; and to put them and keep them on
a satisfactory basis is one of the most important and one of the most
delicate tasks before our whole civilization. Much of the work for the
accomplishment of this end must be done by the individuals concerned
themselves, whether singly or in combination; and the one fundamental
fact that must never be lost track of is that the character of the
average man, whether he be a man of means or a man who works with his
hands, is the most important factor in solving the problem aright. But
it is almost equally important to remember that without good laws it is
also impossible to reach the proper solution. It is idle to hold that
without good laws evils such as child labor, as the over-working of
women, as the failure to protect employees from loss of life or limb,
can be effectively reached, any more than the evils of rebates and
stock-watering can be reached without good laws. To fail to stop these
practices by legislation means to force honest men into them, because
otherwise the dishonest who surely will take advantage of them will
have everything their own way. If the States will correct these evils,
well and good; but the Nation must stand ready to aid them.

No question growing out of our rapid and complex industrial development
is more important than that of the employment of women and children.
The presence of women in industry reacts with extreme directness upon
the character of the home and upon family life, and the conditions
surrounding the employment of children bear a vital relation to our
future citizenship. Our legislation in those areas under the control of
the Congress is very much behind the legislation of our more
progressive States. A thorough and comprehensive measure should be
adopted at this session of the Congress relating to the employment of
women and children in the District of Columbia and the Territories. The
investigation into the condition of women and children wage-earners
recently authorized and directed by the Congress is now being carried
on in the various States, and I recommend that the appropriation made
last year for beginning this work be renewed, in order that we may have
the thorough and comprehensive investigation which the subject demands.
The National Government has as an ultimate resort for control of child
labor the use of the interstate commerce clause to prevent the products
of child labor from entering into interstate commerce. But before using
this it ought certainly to enact model laws on the subject for the
Territories under its own immediate control.

There is one fundamental proposition which can be laid down as regards
all these matters, namely: While honesty by itself will not solve the
problem, yet the insistence upon honesty--not merely technical honesty,
but honesty in purpose and spirit--is an essential element in arriving
at a right conclusion. Vice in its cruder and more archaic forms shocks
everybody; but there is very urgent need that public opinion should be
just as severe in condemnation of the vice which hides itself behind
class or professional loyalty, or which denies that it is vice if it
can escape conviction in the courts. The public and the representatives
of the public, the high officials, whether on the bench or in executive
or legislative positions, need to remember that often the most
dangerous criminals, so far as the life of the Nation is concerned, are
not those who commit the crimes known to and condemned by the popular
conscience for centuries, but those who commit crimes only rendered
possible by the complex conditions of our modern industrial life. It
makes not a particle of difference whether these crimes are committed
by a capitalist or by a laborer, by a leading banker or manufacturer or
railroad man, or by a leading representative of a labor union.
Swindling in stocks, corrupting legislatures, making fortunes by the
inflation of securities, by wrecking railroads, by destroying
competitors through rebates--these forms of wrongdoing in the
capitalist, are far more infamous than any ordinary form of
embezzlement or forgery; yet it is a matter of extreme difficulty to
secure the punishment of the man most guilty of them, most responsible
for them. The business man who condones such conduct stands on a level
with the labor man who deliberately supports a corrupt demagogue and
agitator, whether head of a union or head of some municipality, because
he is said to have "stood by the union." The members of the business
community, the educators, or clergymen, who condone and encourage the
first kind of wrongdoing, are no more dangerous to the community, but
are morally even worse, than the labor men who are guilty of the second
type of wrongdoing, because less is to be pardoned those who have no
such excuse as is furnished either by ignorance or by dire need.  When
the Department of Agriculture was founded there was much sneering as to
its usefulness. No Department of the Government, however, has more
emphatically vindicated its usefulness, and none save the Post-Office
Department comes so continually and intimately into touch with the
people. The two citizens whose welfare is in the aggregate most vital
to the welfare of the Nation, and therefore to the welfare of all other
citizens, are the wage-worker who does manual labor and the tiller of
the soil, the farmer. There are, of course, kinds of labor where the
work must be purely mental, and there are other kinds of labor where,
under existing conditions, very little demand indeed is made upon the
mind, though I am glad to say that the proportion of men engaged in
this kind of work is diminishing. But in any community with the solid,
healthy qualities which make up a really great nation the bulk of the
people should do work which calls for the exercise of both body and
mind. Progress can not permanently exist in the abandonment of physical
labor, but in the development of physical labor, so that it shall
represent more and more the work of the trained mind in the trained
body. Our school system is gravely defective in so far as it puts a
premium upon mere literary training and tends therefore to train the
boy away from the farm and the workshop. Nothing is more needed than
the best type of industrial school, the school for mechanical
industries in the city, the school for practically teaching agriculture
in the country. The calling of the skilled tiller of the soil, the
calling of the skilled mechanic, should alike be recognized as
professions, just as emphatically as the callings of lawyer, doctor,
merchant, or clerk. The schools recognize this fact and it should
equally be recognized in popular opinion. The young man who has the
farsightedness and courage to recognize it and to get over the idea
that it makes a difference whether what he earns is called salary or
wages, and who refuses to enter the crowded field of the so-called
professions, and takes to constructive industry instead, is reasonably
sure of an ample reward in earnings, in health, in opportunity to marry
early, and to establish a home with a fair amount of freedom from
worry. It should be one of our prime objects to put both the farmer and
the mechanic on a higher plane of efficiency and reward, so as to
increase their effectiveness in the economic world, and therefore the
dignity, the remuneration, and the power of their positions in the
social world.

No growth of cities, no growth of wealth, can make up for any loss in
either the number or the character of the farming population. We of the
United States should realize this above almost all other peoples. We
began our existence as a nation of farmers, and in every great crisis
of the past a peculiar dependence has had to be placed upon the farming
population; and this dependence has hitherto been justified. But it can
not be justified in the future if agriculture is permitted to sink in
the scale as compared with other employments. We can not afford to lose
that preeminently typical American, the farmer who owns his own
medium-sized farm. To have his place taken by either a class of small
peasant proprietors, or by a class of great landlords with
tenant-farmed estates would be a veritable calamity. The growth of our
cities is a good thing but only in so far as it does not mean a growth
at the expense of the country farmer. We must welcome the rise of
physical sciences in their application to agricultural practices, and
we must do all we can to render country conditions more easy and
pleasant. There are forces which now tend to bring about both these
results, but they are, as yet, in their infancy. The National
Government through the Department of Agriculture should do all it can
by joining with the State governments and with independent associations
of farmers to encourage the growth in the open farming country of such
institutional and social movements as will meet the demand of the best
type of farmers, both for the improvement of their farms and for the
betterment of the life itself. The Department of Agriculture has in
many places, perhaps especially in certain districts of the South,
accomplished an extraordinary amount by cooperating with and teaching
the farmers through their associations, on their own soil, how to
increase their income by managing their farms better than they were
hitherto managed. The farmer must not lose his independence, his
initiative, his rugged self-reliance, yet he must learn to work in the
heartiest cooperation with his fellows, exactly as the business man has
learned to work; and he must prepare to use to constantly better
advantage the knowledge that can be obtained from agricultural
colleges, while he must insist upon a practical curriculum in the
schools in which his children are taught. The Department of Agriculture
and the Department of Commerce and Labor both deal with the fundamental
needs of our people in the production of raw material and its
manufacture and distribution, and, therefore, with the welfare of those
who produce it in the raw state, and of those who manufacture and
distribute it. The Department of Commerce and Labor has but recently
been founded but has already justified its existence; while the
Department of Agriculture yields to no other in the Government in the
practical benefits which it produces in proportion to the public money
expended. It must continue in the future to deal with growing crops as
it has dealt in the past, but it must still further extend its field of
usefulness hereafter by dealing with live men, through a far-reaching
study and treatment of the problems of farm life alike from the
industrial and economic and social standpoint. Farmers must cooperate
with one another and with the Government, and the Government can best
give its aid through associations of farmers, so as to deliver to the
farmer the large body of agricultural knowledge which has been
accumulated by the National and State governments and by the
agricultural colleges and schools.

The grain producing industry of the country, one of the most important
in the United States, deserves special consideration at the hands of
the Congress. Our grain is sold almost exclusively by grades. To secure
satisfactory results in our home markets and to facilitate our trade
abroad, these grades should approximate the highest degree of
uniformity and certainty. The present diverse methods of inspection and
grading throughout the country under different laws and boards, result
in confusion and lack of uniformity, destroying that confidence which
is necessary for healthful trade. Complaints against the present
methods have continued for years and they are growing in volume and
intensity, not only in this country but abroad. I therefore suggest to
the Congress the advisability of a National system of inspection and
grading of grain entering into interstate and foreign commerce as a
remedy for the present evils.

The conservation of our natural resources and their proper use
constitute the fundamental problem which underlies almost every other
problem of our National life. We must maintain for our civilization the
adequate material basis without which that civilization can not exist.
We must show foresight, we must look ahead. As a nation we not only
enjoy a wonderful measure of present prosperity but if this prosperity
is used aright it is an earnest of future success such as no other
nation will have. The reward of foresight for this Nation is great and
easily foretold. But there must be the look ahead, there must be a
realization of the fact that to waste, to destroy, our natural
resources, to skin and exhaust the land instead of using it so as to
increase its usefulness, will result in undermining in the days of our
children the very prosperity which we ought by right to hand down to
them amplified and developed. For the last few years, through several
agencies, the Government has been endeavoring to get our people to look
ahead and to substitute a planned and orderly development of our
resources in place of a haphazard striving for immediate profit. Our
great river systems should be developed as National water highways, the
Mississippi, with its tributaries, standing first in importance, and
the Columbia second, although there are many others of importance on
the Pacific, the Atlantic and the Gulf slopes. The National Government
should undertake this work, and I hope a beginning will be made in the
present Congress; and the greatest of all our rivers, the Mississippi,
should receive especial attention. From the Great Lakes to the mouth of
the Mississippi there should be a deep waterway, with deep waterways
leading from it to the East and the West. Such a waterway would
practically mean the extension of our coast line into the very heart of
our country. It would be of incalculable benefit to our people. If
begun at once it can be carried through in time appreciably to relieve
the congestion of our great freight-carrying lines of railroads. The
work should be systematically and continuously carried forward in
accordance with some well-conceived plan. The main streams should be
improved to the highest point of efficiency before the improvement of
the branches is attempted; and the work should be kept free from every
faint of recklessness or jobbery. The inland waterways which lie just
back of the whole eastern and southern coasts should likewise be
developed. Moreover, the development of our waterways involves many
other important water problems, all of which should be considered as
part of the same general scheme. The Government dams should be used to
produce hundreds of thousands of horsepower as an incident to improving
navigation; for the annual value of the unused water-power of the
United States perhaps exceeds the annual value of the products of all
our mines. As an incident to creating the deep waterways down the
Mississippi, the Government should build along its whole lower length
levees which taken together with the control of the headwaters, will at
once and forever put a complete stop to all threat of floods in the
immensely fertile Delta region. The territory lying adjacent to the
Mississippi along its lower course will thereby become one of the most
prosperous and populous, as it already is one of the most fertile,
farming regions in all the world. I have appointed an Inland Waterways
Commission to study and outline a comprehensive scheme of development
along all the lines indicated. Later I shall lay its report before the
Congress.

Irrigation should be far more extensively developed than at present,
not only in the States of the Great Plains and the Rocky Mountains, but
in many others, as, for instance, in large portions of the South
Atlantic and Gulf States, where it should go hand in hand with the
reclamation of swamp land. The Federal Government should seriously
devote itself to this task, realizing that utilization of waterways and
water-power, forestry, irrigation, and the reclamation of lands
threatened with overflow, are all interdependent parts of the same
problem. The work of the Reclamation Service in developing the larger
opportunities of the western half of our country for irrigation is more
important than almost any other movement. The constant purpose of the
Government in connection with the Reclamation Service has been to use
the water resources of the public lands for the ultimate greatest good
of the greatest number; in other words, to put upon the land permanent
home-makers, to use and develop it for themselves and for their
children and children's children. There has been, of course, opposition
to this work; opposition from some interested men who desire to exhaust
the land for their own immediate profit without regard to the welfare
of the next generation, and opposition from honest and well-meaning men
who did not fully understand the subject or who did not look far enough
ahead. This opposition is, I think, dying away, and our people are
understanding that it would be utterly wrong to allow a few individuals
to exhaust for their own temporary personal profit the resources which
ought to be developed through use so as to be conserved for the
permanent common advantage of the people as a whole.

The effort of the Government to deal with the public land has been
based upon the same principle as that of the Reclamation Service. The
land law system which was designed to meet the needs of the fertile and
well-watered regions of the Middle West has largely broken down when
applied to the dryer regions of the Great Plains, the mountains, and
much of the Pacific slope, where a farm of 160 acres is inadequate for
self-support. In these regions the system lent itself to fraud, and
much land passed out of the hands of the Government without passing
into the hands of the home-maker. The Department of the Interior and
the Department of Justice joined in prosecuting the offenders against
the law; and they have accomplished much, while where the
administration of the law has been defective it has been changed. But
the laws themselves are defective. Three years ago a public lands
commission was appointed to scrutinize the law, and defects, and
recommend a remedy. Their examination specifically showed the existence
of great fraud upon the public domain, and their recommendations for
changes in the law were made with the design of conserving the natural
resources of every part of the public lands by putting it to its best
use. Especial attention was called to the prevention of settlement by
the passage of great areas of public land into the hands of a few men,
and to the enormous waste caused by unrestricted grazing upon the open
range. The recommendations of the Public Lands Commission are sound,
for they are especially in the interest of the actual homemaker; and
where the small home-maker can not at present utilize the land they
provide that the Government shall keep control of it so that it may not
be monopolized by a few men. The Congress has not yet acted upon these
recommendations; but they are so just and proper, so essential to our
National welfare, that I feel confident, if the Congress will take time
to consider them, that they will ultimately be adopted.

Some such legislation as that proposed is essential in order to
preserve the great stretches of public grazing land which are unfit for
cultivation under present methods and are valuable only for the forage
which they supply. These stretches amount in all to some 300,000,000
acres, and are open to the free grazing of cattle, sheep, horses and
goats, without restriction. Such a system, or lack of system, means
that the range is not so much used as wasted by abuse. As the West
settles the range becomes more and more over-grazed. Much of it can not
be used to advantage unless it is fenced, for fencing is the only way
by which to keep in check the owners of nomad flocks which roam hither
and thither, utterly destroying the pastures and leaving a waste behind
so that their presence is incompatible with the presence of
home-makers. The existing fences are all illegal. Some of them
represent the improper exclusion of actual settlers, actual
home-makers, from territory which is usurped by great cattle companies.
Some of them represent what is in itself a proper effort to use the
range for those upon the land, and to prevent its use by nomadic
outsiders. All these fences, those that are hurtful and those that are
beneficial, are alike illegal and must come down. But it is an outrage
that the law should necessitate such action on the part of the
Administration. The unlawful fencing of public lands for private
grazing must be stopped, but the necessity which occasioned it must be
provided for. The Federal Government should have control of the range,
whether by permit or lease, as local necessities may determine. Such
control could secure the great benefit of legitimate fencing, while at
the same time securing and promoting the settlement of the country. In
some places it may be that the tracts of range adjacent to the
homesteads of actual settlers should be allotted to them severally or
in common for the summer grazing of their stock. Elsewhere it may be
that a lease system would serve the purpose; the leases to be temporary
and subject to the rights of settlement, and the amount charged being
large enough merely to permit of the efficient and beneficial control
of the range by the Government, and of the payment to the county of the
equivalent of what it would otherwise receive in taxes. The destruction
of the public range will continue until some such laws as these are
enacted. Fully to prevent the fraud in the public lands which, through
the joint action of the Interior Department and the Department of
Justice, we have been endeavoring to prevent, there must be further
legislation, and especially a sufficient appropriation to permit the
Department of the Interior to examine certain classes of entries on the
ground before they pass into private ownership. The Government should
part with its title only to the actual home-maker, not to the
profit-maker who does not care to make a home. Our prime object is to
secure the rights and guard the interests of the small ranchman, the
man who plows and pitches hay for himself. It is this small ranchman,
this actual settler and homemaker, who in the long run is most hurt by
permitting thefts of the public land in whatever form.

Optimism is a good characteristic, but if carried to an excess it
becomes foolishness. We are prone to speak of the resources of this
country as inexhaustible; this is not so. The mineral wealth of the
country, the coal, iron, oil, gas, and the like, does not reproduce
itself, and therefore is certain to be exhausted ultimately; and
wastefulness in dealing with it to-day means that our descendants will
feel the exhaustion a generation or two before they otherwise would.
But there are certain other forms of waste which could be entirely
stopped--the waste of soil by washing, for instance, which is among the
most dangerous of all wastes now in progress in the United States, is
easily preventable, so that this present enormous loss of fertility is
entirely unnecessary. The preservation or replacement of the forests is
one of the most important means of preventing this loss. We have made a
beginning in forest preservation, but it is only a beginning. At
present lumbering is the fourth greatest industry in the United States;
and yet, so rapid has been the rate of exhaustion of timber in the
United States in the past, and so rapidly is the remainder being
exhausted, that the country is unquestionably on the verge of a timber
famine which will be felt in every household in the land. There has
already been a rise in the price of lumber, but there is certain to be
a more rapid and heavier rise in the future. The present annual
consumption of lumber is certainly three times as great as the annual
growth; and if the consumption and growth continue unchanged,
practically all our lumber will be exhausted in another generation,
while long before the limit to complete exhaustion is reached the
growing scarcity will make itself felt in many blighting ways upon our
National welfare. About 20 per cent of our forested territory is now
reserved in National forests; but these do not include the most
valuable timber lauds, and in any event the proportion is too small to
expect that the reserves can accomplish more than a mitigation of the
trouble which is ahead for the nation. Far more drastic action is
needed. Forests can be lumbered so as to give to the public the full
use of their mercantile timber without the slightest detriment to the
forest, any more than it is a detriment to a farm to furnish a harvest;
so that there is no parallel between forests and mines, which can only
be completely used by exhaustion. But forests, if used as all our
forests have been used in the past and as most of them are still used,
will be either wholly destroyed, or so damaged that many decades have
to pass before effective use can be made of them again. All these facts
are so obvious that it is extraordinary that it should be necessary to
repeat them. Every business man in the land, every writer in the
newspapers, every man or woman of an ordinary school education, ought
to be able to see that immense quantities of timber are used in the
country, that the forests which supply this timber are rapidly being
exhausted, and that, if no change takes place, exhaustion will come
comparatively soon, and that the effects of it will be felt severely in
the every-day life of our people. Surely, when these facts are so
obvious, there should be no delay in taking preventive measures. Yet we
seem as a nation to be willing to proceed in this matter with
happy-go-lucky indifference even to the immediate future. It is this
attitude which permits the self-interest of a very few persons to weigh
for more than the ultimate interest of all our people. There are
persons who find it to their immense pecuniary benefit to destroy the
forests by lumbering. They are to be blamed for thus sacrificing the
future of the Nation as a whole to their own self-interest of the
moment; but heavier blame attaches to the people at large for
permitting such action, whether in the White Mountains, in the southern
Alleghenies, or in the Rockies and Sierras. A big lumbering company,
impatient for immediate returns and not caring to look far enough
ahead, will often deliberately destroy all the good timber in a region,
hoping afterwards to move on to some new country. The shiftless man of
small means, who does not care to become an actual home-maker but would
like immediate profit, will find it to his advantage to take up timber
land simply to turn it over to such a big company, and leave it
valueless for future settlers. A big mine owner, anxious only to
develop his mine at the moment, will care only to cut all the timber
that he wishes without regard to the future--probably net looking ahead
to the condition of the country when the forests are exhausted, any
more than he does to the condition when the mine is worked out. I do
not blame these men nearly as much as I blame the supine public
opinion, the indifferent public opinion, which permits their action to
go unchecked. Of course to check the waste of timber means that there
must be on the part of the public the acceptance of a temporary
restriction in the lavish use of the timber, in order to prevent the
total loss of this use in the future. There are plenty of men in public
and private life who actually advocate the continuance of the present
system of unchecked and wasteful extravagance, using as an argument the
fact that to check it will of course mean interference with the ease
and comfort of certain people who now get lumber at less cost than they
ought to pay, at the expense of the future generations. Some of these
persons actually demand that the present forest reserves be thrown open
to destruction, because, forsooth, they think that thereby the price of
lumber could be put down again for two or three or more years. Their
attitude is precisely like that of an agitator protesting against the
outlay of money by farmers on manure and in taking care of their farms
generally. Undoubtedly, if the average farmer were content absolutely
to ruin his farm, he could for two or three years avoid spending any
money on it, and yet make a good deal of money out of it. But only a
savage would, in his private affairs, show such reckless disregard of
the future; yet it is precisely this reckless disregard of the future
which the opponents of the forestry system are now endeavoring to get
the people of the United States to show. The only trouble with the
movement for the preservation of our forests is that it has not gone
nearly far enough, and was not begun soon enough. It is a most
fortunate thing, however, that we began it when we did. We should
acquire in the Appalachian and White Mountain regions all the forest
lands that it is possible to acquire for the use of the Nation. These
lands, because they form a National asset, are as emphatically national
as the rivers which they feed, and which flow through so many States
before they reach the ocean.

There should be no tariff on any forest product grown in this country;
and, in especial, there should be no tariff on wood pulp; due notice of
the change being of course given to those engaged in the business so as
to enable them to adjust themselves to the new conditions. The repeal
of the duty on wood pulp should if possible be accompanied by an
agreement with Canada that there shall be no export duty on Canadian
pulp wood.

In the eastern United States the mineral fuels have already passed into
the hands of large private owners, and those of the West are rapidly
following. It is obvious that these fuels should be conserved and not
wasted, and it would be well to protect the people against unjust and
extortionate prices, so far as that can still be done. What has been
accomplished in the great oil fields of the Indian Territory by the
action of the Administration, offers a striking example of the good
results of such a policy. In my judgment the Government should have the
right to keep the fee of the coal, oil, and gas fields in its own
possession and to lease the rights to develop them under proper
regulations; or else, if the Congress will not adopt this method, the
coal deposits should be sold under limitations, to conserve them as
public utilities, the right to mine coal being separated from the title
to the soil. The regulations should permit coal lands to be worked in
sufficient quantity by the several corporations. The present
limitations have been absurd, excessive, and serve no useful purpose,
and often render it necessary that there should be either fraud or
close abandonment of the work of getting out the coal.

Work on the Panama Canal is proceeding in a highly satisfactory manner.
In March last, John F. Stevens, chairman of the Commission and chief
engineer, resigned, and the Commission was reorganized and constituted
as follows: Lieut. Col. George W. Goethals, Corps. of Engineers, U. S.
Army, chairman and chief engineer; Maj. D. D. Gall-lard, Corps of
Engineers, U. S. Army; Maj. William L. Sibert, Corps of Engineers, U.
S. Army; Civil Engineer H. H. Rousseau, U. S. Navy; Mr. J. C. S.
Blackburn; Col. W. C. Gorgas, U. S. Army, and Mr. Jackson Smith,
Commissioners. This change of authority and direction went into effect
on April 1, without causing a perceptible check to the progress of the
work. In March the total excavation in the Culebra Cut, where effort
was chiefly concentrated, was 815,270 cubic yards. In April this was
increased to 879,527 cubic yards. There was a considerable decrease in
the output for May and June owing partly to the advent of the rainy
season and partly to temporary trouble with the steam shovel men over
the question of wages. This trouble was settled satisfactorily to all
parties and in July the total excavation advanced materially and in
August the grand total from all points in the canal prism by steam
shovels and dredges exceeded all previous United States records,
reaching 1,274,404 cubic yards. In September this record was eclipsed
and a total of 1,517,412 cubic yards was removed. Of this amount
1,481,307 cubic yards were from the canal prism and 36,105 cubic yards
were from accessory works. These results were achieved in the rainy
season with a rainfall in August of 11.89 inches and in September of
11.65 inches. Finally, in October, the record was again eclipsed, the
total excavation being 1,868,729 cubic yards; a truly extraordinary
record, especially in view of the heavy rainfall, which was 17.1
inches. In fact, experience during the last two rainy seasons
demonstrates that the rains are a less serious obstacle to progress
than has hitherto been supposed.

Work on the locks and dams at Gatun, which began actively in March
last, has advanced so far that it is thought that masonry work on the
locks can be begun within fifteen months. In order to remove all doubt
as to the satisfactory character of the foundations for the locks of
the Canal, the Secretary of War requested three eminent civil
engineers, of special experience in such construction, Alfred Noble,
Frederic P. Stearns and John R. Freeman, to visit the Isthmus and make
thorough personal investigations of the sites. These gentlemen went to
the Isthmus in April and by means of test pits which had been dug for
the purpose, they inspected the proposed foundations, and also examined
the borings that had been made. In their report to the Secretary of
War, under date of May 2, 1907, they said: "We found that all of the
locks, of the dimensions now proposed, will rest upon rock of such
character that it will furnish a safe and stable foundation."
Subsequent new borings, conducted by the present Commission, have fully
confirmed this verdict. They show that the locks will rest on rock for
their entire length. The cross section of the dam and method of
construction will be such as to insure against any slip or sloughing
off. Similar examination of the foundations of the locks and dams on
the Pacific side are in progress. I believe that the locks should be
made of a width of 120 feet.

Last winter bids were requested and received for doing the work of
canal construction by contract. None of them was found to be
satisfactory and all were rejected. It is the unanimous opinion of the
present Commission that the work can be done better, more cheaply, and
more quickly by the Government than by private contractors. Fully 80
per cent of the entire plant needed for construction has been purchased
or contracted for; machine shops have been erected and equipped for
making all needed repairs to the plant; many thousands of employees
have been secured; an effective organization has been perfected; a
recruiting system is in operation which is capable of furnishing more
labor than can be used advantageously; employees are well sheltered and
well fed; salaries paid are satisfactory, and the work is not only
going forward smoothly, but it is producing results far in advance of
the most sanguine anticipations. Under these favorable conditions, a
change in the method of prosecuting the work would be unwise and
unjustifiable, for it would inevitably disorganize existing conditions,
check progress, and increase the cost and lengthen the time of
completing the Canal.

The chief engineer and all his professional associates are firmly
convinced that the 85 feet level lock canal which they are constructing
is the best that could be desired. Some of them had doubts on this
point when they went to the Isthmus. As the plans have developed under
their direction their doubts have been dispelled. While they may decide
upon changes in detail as construction advances they are in hearty
accord in approving the general plan. They believe that it provides a
canal not only adequate to all demands that will be made upon it but
superior in every way to a sea level canal. I concur in this belief.

I commend to the favorable consideration of the Congress a postal
savings bank system, as recommended by the Postmaster-General. The
primary object is to encourage among our people economy and thrift and
by the use of postal savings banks to give them an opportunity to
husband their resources, particularly those who have not the facilities
at hand for depositing their money in savings banks. Viewed, however,
from the experience of the past few weeks, it is evident that the
advantages of such an institution are till more far-reaching. Timid
depositors have withdrawn their savings for the time being from
national banks, trust companies, and savings banks; individuals have
hoarded their cash and the workingmen their earnings; all of which
money has been withheld and kept in hiding or in safe deposit box to
the detriment of prosperity. Through the agency of the postal savings
banks such money would be restored to the channels of trade, to the
mutual benefit of capital and labor.

I further commend to the Congress the consideration of the
Postmaster-General's recommendation for an extension of the parcel
post, especially on the rural routes. There are now 38,215 rural
routes, serving nearly 15,000,000 people who do not have the advantages
of the inhabitants of cities in obtaining their supplies. These
recommendations have been drawn up to benefit the farmer and the
country storekeeper; otherwise, I should not favor them, for I believe
that it is good policy for our Government to do everything possible to
aid the small town and the country district. It is desirable that the
country merchant should not be crushed out.

The fourth-class postmasters' convention has passed a very strong
resolution in favor of placing the fourth-class postmasters under the
civil-service law. The Administration has already put into effect the
policy of refusing to remove any fourth-class postmasters save for
reasons connected with the good of the service; and it is endeavoring
so far as possible to remove them from the domain of partisan politics.
It would be a most desirable thing to put the fourth-class postmasters
in the classified service. It is possible that this might be done
without Congressional action, but, as the matter is debatable, I
earnestly recommend that the Congress enact a law providing that they
be included under the civil-service law and put in the classified
service.

Oklahoma has become a State, standing on a full equality with her elder
sisters, and her future is assured by her great natural resources. The
duty of the National Government to guard the personal and property
rights of the Indians within her borders remains of course unchanged.

I reiterate my recommendations of last year as regards Alaska. Some
form of local self-government should be provided, as simple and
inexpensive as possible; it is impossible for the Congress to devote
the necessary time to all the little details of necessary Alaskan
legislation. Road building and railway building should be encouraged.
The Governor of Alaska should be given an ample appropriation wherewith
to organize a force to preserve the public peace. Whisky selling to the
natives should be made a felony. The coal land laws should be changed
so as to meet the peculiar needs of the Territory. This should be
attended to at once; for the present laws permit individuals to locate
large areas of the public domain for speculative purposes; and cause an
immense amount of trouble, fraud, and litigation. There should be
another judicial division established. As early as possible lighthouses
and buoys should be established as aids to navigation, especially in
and about Prince William Sound, and the survey of the coast completed.
There is need of liberal appropriations for lighting and buoying the
southern coast and improving the aids to navigation in southeastern
Alaska. One of the great industries of Alaska, as of Puget Sound and
the Columbia, is salmon fishing. Gradually, by reason of lack of proper
laws, this industry is being ruined; it should now be taken in charge,
and effectively protected, by the United States Government.

The courage and enterprise of the citizens of the far north-west in
their projected Alaskan-Yukon-Pacific Exposition, to be held in 1909,
should receive liberal encouragement. This exposition is not
sentimental in its conception, but seeks to exploit the natural
resources of Alaska and to promote the commerce, trade, and industry of
the Pacific States with their neighboring States and with our insular
possessions and the neighboring countries of the Pacific. The
exposition asks no loan from the Congress but seeks appropriations for
National exhibits and exhibits of the western dependencies of the
General Government. The State of Washington and the city of Seattle
have shown the characteristic western enterprise in large donations for
the conduct of this exposition in which other States are lending
generous assistance.

The unfortunate failure of the shipping bill at the last session of the
last Congress was followed by the taking off of certain Pacific
steamships, which has greatly hampered the movement of passengers
between Hawaii and the mainland. Unless the Congress is prepared by
positive encouragement to secure proper facilities in the way of
shipping between Hawaii and the mainland, then the coastwise shipping
laws should be so far relaxed as to prevent Hawaii suffering as it is
now suffering. I again call your attention to the capital importance
from every standpoint of making Pearl Harbor available for the largest
deep water vessels, and of suitably fortifying the island.

The Secretary of War has gone to the Philippines. On his return I shall
submit to you his report on the islands.

I again recommend that the rights of citizenship be conferred upon the
people of Porto Rico.

A bureau of mines should be created under the control and direction of
the Secretary of the Interior; the bureau to have power to collect
statistics and make investigations in all matters pertaining to mining
and particularly to the accidents and dangers of the industry. If this
can not now be done, at least additional appropriations should be given
the Interior Department to be used for the study of mining conditions,
for the prevention of fraudulent mining schemes, for carrying on the
work of mapping the mining districts, for studying methods for
minimizing the accidents and dangers in the industry; in short, to aid
in all proper ways the development of the mining industry.

I strongly recommend to the Congress to provide funds for keeping up
the Hermitage, the home of Andrew Jackson; these funds to be used
through the existing Hermitage Association for the preservation of a
historic building which should ever be dear to Americans.

I further recommend that a naval monument be established in the
Vicksburg National Park. This national park gives a unique opportunity
for commemorating the deeds of those gallant men who fought on water,
no less than of those who fought on land, in the great civil War.

Legislation should be enacted at the present session of the Congress
for the Thirteenth Census. The establishment of the permanent Census
Bureau affords the opportunity for a better census than we have ever
had, but in order to realize the full advantage of the permanent
organization, ample time must be given for preparation.

There is a constantly growing interest in this country in the question
of the public health. At last the public mind is awake to the fact that
many diseases, notably tuberculosis, are National scourges. The work of
the State and city boards of health should be supplemented by a
constantly increasing interest on the part of the National Government.
The Congress has already provided a bureau of public health and has
provided for a hygienic laboratory. There are other valuable laws
relating to the public health connected with the various departments.
This whole branch of the Government should be strengthened and aided in
every way.

I call attention to two Government commissions which I have appointed
and which have already done excellent work. The first of these has to
do with the organization of the scientific work of the Government,
which has grown up wholly without plan and is in consequence so
unwisely distributed among the Executive Departments that much of its
effect is lost for the lack of proper coordination. This commission's
chief object is to introduce a planned and orderly development and
operation in the place of the ill-assorted and often ineffective
grouping and methods of work which have prevailed. This can not be done
without legislation, nor would it be feasible to deal in detail with so
complex an administrative problem by specific provisions of law. I
recommend that the President be given authority to concentrate related
lines of work and reduce duplication by Executive order through
transfer and consolidation of lines of work.

The second committee, that on Department methods, was instructed to
investigate and report upon the changes needed to place the conduct of
the executive force of the Government on the most economical and
effective basis in the light of the best modern business practice. The
committee has made very satisfactory progress. Antiquated practices and
bureaucratic ways have been abolished, and a general renovation of
departmental methods has been inaugurated. All that can be done by
Executive order has already been accomplished or will be put into
effect in the near future. The work of the main committee and its
several assistant committees has produced a wholesome awakening on the
part of the great body of officers and employees engaged in Government
work. In nearly every Department and office there has been a careful
self-inspection for the purpose of remedying any defects before they
could be made the subject of adverse criticism. This has led
individuals to a wider study of the work on which they were engaged,
and this study has resulted in increasing their efficiency in their
respective lines of work. There are recommendations of special
importance from the committee on the subject of personnel and the
classification of salaries which will require legislative action before
they can be put into effect. It is my intention to submit to the
Congress in the near future a special message on those subjects.

Under our form of government voting is not merely a right but a duty,
and, moreover, a fundamental and necessary duty if a man is to be a
good citizen. It is well to provide that corporations shall not
contribute to Presidential or National campaigns, and furthermore to
provide for the publication of both contributions and expenditures.
There is, however, always danger in laws of this kind, which from their
very nature are difficult of enforcement; the danger being lest they be
obeyed only by the honest, and disobeyed by the unscrupulous, so as to
act only as a penalty upon honest men. Moreover, no such law would
hamper an unscrupulous man of unlimited means from buying his own way
into office. There is a very radical measure which would, I believe,
work a substantial improvement in our system of conducting a campaign,
although I am well aware that it will take some time for people so to
familiarize themselves with such a proposal as to be willing to
consider its adoption. The need for collecting large campaign funds
would vanish if Congress provided an appropriation for the proper and
legitimate expenses of each of the great national parties, an
appropriation ample enough to meet the necessity for thorough
organization and machinery, which requires a large expenditure of
money. Then the stipulation should be made that no party receiving
campaign funds from the Treasury should accept more than a fixed amount
from any individual subscriber or donor; and the necessary publicity
for receipts and expenditures could without difficulty be provided.

There should be a National gallery of art established in the capital
city of this country. This is important not merely to the artistic but
to the material welfare of the country; and the people are to be
congratulated on the fact that the movement to establish such a gallery
is taking definite form under the guidance of the Smithsonian
Institution. So far from there being a tariff on works of art brought
into the country, their importation should be encouraged in every way.
There have been no sufficient collections of objects of art by the
Government, and what collections have been acquired are scattered and
are generally placed in unsuitable and imperfectly lighted galleries.

The Biological Survey is quietly working for the good of our
agricultural interests, and is an excellent example of a Government
bureau which conducts original scientific research the findings of
which are of much practical utility. For more than twenty years it has
studied the food habits of birds and mammals that are injurious or
beneficial to agriculture, horticulture, and forestry; has distributed
illustrated bulletins on the subject, and has labored to secure
legislative protection for the beneficial species. The cotton
boll-weevil, which has recently overspread the cotton belt of Texas and
is steadily extending its range, is said to cause an annual loss of
about $3,000,000. The Biological Survey has ascertained and gives wide
publicity to the fact that at least 43 kinds of birds prey upon this
destructive insect. It has discovered that 57 species of birds feed
upon scale-insects--dreaded enemies of the fruit grower. It has shown
that woodpeckers as a class, by destroying the larvae of wood-boring
insects, are so essential to tree life that it is doubtful if our
forests could exist without them. It has shown that cuckoos and orioles
are the natural enemies of the leaf-eating caterpillars that destroy
our shade and fruit trees; that our quails and sparrows consume
annually hundreds of tons of seeds of noxious weeds; that hawks and
owls as a class (excepting the few that kill poultry and game birds)
are markedly beneficial, spending their lives in catching grasshoppers,
mice, and other pests that prey upon the products of husbandry. It has
conducted field experiments for the purpose of devising and perfecting
simple methods for holding in check the hordes of destructive
rodents--rats, mice, rabbits, gophers, prairie dogs, and ground
squirrels--which annually destroy crops worth many millions of dollars;
and it has published practical directions for the destruction of wolves
and coyotes on the stock ranges of the West, resulting during the past
year in an estimated saving of cattle and sheep valued at upwards of a
million dollars.

It has inaugurated a system of inspection at the principal ports of
entry on both Atlantic and Pacific coasts by means of which the
introduction of noxious mammals and birds is prevented, thus keeping
out the mongoose and certain birds which are as much to be dreaded as
the previously introduced English sparrow and the house rats and mice.

In the interest of game protection it has cooperated with local
officials in every State in the Union, has striven to promote uniform
legislation in the several States, has rendered important service in
enforcing the Federal law regulating interstate traffic in game, and
has shown how game protection may be made to yield a large revenue to
the State--a revenue amounting in the case of Illinois to $128,000 in a
single year.

The Biological Survey has explored the faunas and floras of America
with reference to the distribution of animals and plants; it has
defined and mapped the natural life areas--areas in which, by reason of
prevailing climatic conditions, certain kinds of animals and plants
occur--and has pointed out the adaptability of these areas to the
cultivation of particular crops. The results of these investigations
are not only of high educational value but are worth each year to the
progressive farmers of the country many times the cost of maintaining
the Survey, which, it may be added, is exceedingly small. I recommend
to Congress that this bureau, whose usefulness is seriously handicapped
by lack of funds, be granted an appropriation in some degree
commensurate with the importance of the work it is doing.

I call your especial attention to the unsatisfactory condition of our
foreign mail service, which, because of the lack of American steamship
lines is now largely done through foreign lines, and which,
particularly so far as South and Central America are concerned, is done
in a manner which constitutes a serious barrier to the extension of our
commerce.

The time has come, in my judgment, to set to work seriously to make our
ocean mail service correspond more closely with our recent commercial
and political development. A beginning was made by the ocean mail act
of March 3, 1891, but even at that time the act was known to be
inadequate in various particulars. Since that time events have moved
rapidly in our history. We have acquired Hawaii, the Philippines, and
lesser islands in the Pacific. We are steadily prosecuting the great
work of uniting at the Isthmus the waters of the Atlantic and the
Pacific. To a greater extent than seemed probable even a dozen years
ago, we may look to an American future on the sea worthy of the
traditions of our past. As the first step in that direction, and the
step most feasible at the present time, I recommend the extension of
the ocean mail act of 1891. This act has stood for some years free from
successful criticism of its principle and purpose. It was based on
theories of the obligations of a great maritime nation, undisputed in
our own land and followed by other nations since the beginning of steam
navigation. Briefly those theories are, that it is the duty of a
first-class Power so far as practicable to carry its ocean mails under
its own flag; that the fast ocean steamships and their crews, required
for such mail service, are valuable auxiliaries to the sea power of a
nation. Furthermore, the construction of such steamships insures the
maintenance in an efficient condition of the shipyards in which our
battleships must be built.

The expenditure of public money for the Performance of such necessary
functions of government is certainly warranted, nor is it necessary to
dwell upon the incidental benefits to our foreign commerce, to the
shipbuilding industry, and to ship owning and navigation which will
accompany the discharge of these urgent public duties, though they,
too, should have weight.

The only serious question is whether at this time we can afford to
improve our ocean mail service as it should be improved. All doubt on
this subject is removed by the reports of the Post-Office Department.
For the fiscal year ended June 30, 1907, that Department estimates that
the postage collected on the articles exchanged with foreign countries
other than Canada and Mexico amounted to $6,579,043.48, or
$3,637,226.81 more than the net cost of the service exclusive of the
cost of transporting the articles between the United States exchange
post-offices and the United States post-offices at which they were
mailed or delivered. In other words, the Government of the United
States, having assumed a monopoly of carrying the mails for the people,
making a profit of over $3,600,000 by rendering a cheap and inefficient
service. That profit I believe should be devoted to strengthening
maritime power in those directions where it will best promote our
prestige. The country is familiar with the facts of our maritime
impotence in the harbors of the great and friendly Republics of South
America. Following the failure of the shipbuilding bill we lost our
only American line of steamers to Australasia, and that loss on the
Pacific has become a serious embarrassment to the people of Hawaii, and
has wholly cut off the Samoan islands from regular communication with
the Pacific coast. Puget Sound, in the year, has lost over half (four
out of seven) of its American steamers trading with the Orient.

We now pay under the act of 1891 $4 a statute mile outward to 20-knot
American mail steamships, built according to naval plans, available as
cruisers, and manned by Americans. Steamships of that speed are
confined exclusively to trans-Atlantic trade with New York. To
steamships of 16 knots or over only $2 a mile can be paid, and it is
steamships of this speed and type which are needed to meet the
requirements of mail service to South America, Asia (including the
Philippines), and Australia. I strongly recommend, therefore, a simple
amendment to the ocean mail act of 1891 which shall authorize the
Postmaster-General in his discretion to enter into contracts for the
transportation of mails to the Republics of South America, to Asia, the
Philippines, and Australia at a rate not to exceed $4 a mile for
steamships of 16 knots speed or upwards, subject to the restrictions
and obligations of the act of 1891. The profit of $3,600,000 which has
been mentioned will fully cover the maximum annual expenditure involved
in this recommendation, and it is believed will in time establish the
lines so urgently needed. The proposition involves no new principle,
but permits the efficient discharge of public functions now
inadequately performed or not performed at all.

Not only there is not now, but there never has been, any other nation
in the world so wholly free from the evils of militarism as is ours.
There never has been any other large nation, not even China, which for
so long a period has had relatively to its numbers so small a regular
army as has ours. Never at any time in our history has this Nation
suffered from militarism or been in the remotest danger of suffering
from militarism. Never at any time of our history has the Regular Army
been of a size which caused the slightest appreciable tax upon the
tax-paying citizens of the Nation. Almost always it has been too small
in size and underpaid. Never in our entire history has the Nation
suffered in the least particular because too much care has been given
to the Army, too much prominence given it, too much money spent upon
it, or because it has been too large. But again and again we have
suffered because enough care has not been given to it, because it has
been too small, because there has not been sufficient preparation in
advance for possible war. Every foreign war in which we have engaged
has cost us many times the amount which, if wisely expended during the
preceding years of peace on the Regular Army, would have insured the
war ending in but a fraction of the time and but for a fraction of the
cost that was actually the case. As a Nation we have always been
shortsighted in providing for the efficiency of the Army in time of
peace. It is nobody's especial interest to make such provision and no
one looks ahead to war at any period, no matter how remote, as being a
serious possibility; while an improper economy, or rather
niggardliness, can be practiced at the expense of the Army with the
certainty that those practicing it will not be called to account
therefor, but that the price will be paid by the unfortunate persons
who happen to be in office when a war does actually come.

I think it is only lack of foresight that troubles us, not any
hostility to the Army. There are, of course, foolish people who
denounce any care of the Army or Navy as "militarism," but I do not
think that these people are numerous. This country has to contend now,
and has had to contend in the past, with many evils, and there is ample
scope for all who would work for reform. But there is not one evil that
now exists, or that ever has existed in this country, which is, or ever
has been, owing in the smallest part to militarism. Declamation against
militarism has no more serious place in an earnest and intelligent
movement for righteousness in this country than declamation against the
worship of Baal or Astaroth. It is declamation against a non-existent
evil, one which never has existed in this country, and which has not
the slightest chance of appearing here. We are glad to help in any
movement for international peace, but this is because we sincerely
believe that it is our duty to help all such movements provided they
are sane and rational, and not because there is any tendency toward
militarism on our part which needs to be cured. The evils we have to
fight are those in connection with industrialism, not militarism.
Industry is always necessary, just as war is sometimes necessary. Each
has its price, and industry in the United States now exacts, and has
always exacted, a far heavier toll of death than all our wars put
together. The statistics of the railroads of this country for the year
ended June 30, 1906, the last contained in the annual statistical
report of the Interstate Commerce Commission, show in that one year a
total of 108,324 casualties to persons, of which 10,618 represent the
number of persons killed. In that wonderful hive of human activity,
Pittsburg, the deaths due to industrial accidents in 1906 were 919, all
the result of accidents in mills, mines or on railroads. For the entire
country, therefore, it is safe to say that the deaths due to industrial
accidents aggregate in the neighborhood of twenty thousand a year. Such
a record makes the death rate in all our foreign wars utterly trivial
by comparison. The number of deaths in battle in all the foreign wars
put together, for the last century and a quarter, aggregate
considerably less than one year's death record for our industries. A
mere glance at these figures is sufficient to show the absurdity of the
outcry against militarism.

But again and again in the past our little Regular Army has rendered
service literally vital to the country, and it may at any time have to
do so in the future. Its standard of efficiency and instruction is
higher now than ever in the past. But it is too small. There are not
enough officers; and it is impossible to secure enough enlisted men. We
should maintain in peace a fairly complete skeleton of a large army. A
great and long-continued war would have to be fought by volunteers. But
months would pass before any large body of efficient volunteers could
be put in the field, and our Regular Army should be large enough to
meet any immediate need. In particular it is essential that we should
possess a number of extra officers trained in peace to perform
efficiently the duties urgently required upon the breaking out of war.

The Medical Corps should be much larger than the needs of our Regular
Army in war. Yet at present it is smaller than the needs of the service
demand even in peace. The Spanish war occurred less than ten years ago.
The chief loss we suffered in it was by disease among the regiments
which never left the country. At the moment the Nation seemed deeply
impressed by this fact; yet seemingly it has already been forgotten,
for not the slightest effort has been made to prepare a medical corps
of sufficient size to prevent the repetition of the same disaster on a
much larger scale if we should ever be engaged in a serious conflict.
The trouble in the Spanish war was not with the then existing officials
of the War Department; it was with the representatives of the people as
a whole who, for the preceding thirty years, had declined to make the
necessary provision for the Army. Unless ample provision is now made by
Congress to put the Medical Corps where it should be put disaster in
the next war is inevitable, and the responsibility will not lie with
those then in charge of the War Department, but with those who now
decline to make the necessary provision. A well organized medical
corps, thoroughly trained before the advent of war in all the important
administrative duties of a military sanitary corps, is essential to the
efficiency of any large army, and especially of a large volunteer army.
Such knowledge of medicine and surgery as is possessed by the medical
profession generally will not alone suffice to make an efficient
military surgeon. He must have, in addition, knowledge of the
administration and sanitation of large field hospitals and camps, in
order to safeguard the health and lives of men intrusted in great
numbers to his care. A bill has long been pending before the Congress
for the reorganization of the Medical Corps; its passage is urgently
needed.

But the Medical Department is not the only department for which
increased provision should be made. The rate of pay for the officers
should be greatly increased; there is no higher type of citizen than
the American regular officer, and he should have a fair reward for his
admirable work. There should be a relatively even greater increase in
the pay for the enlisted men. In especial provision should be made for
establishing grades equivalent to those of warrant officers in the Navy
which should be open to the enlisted men who serve sufficiently long
and who do their work well. Inducements should be offered sufficient to
encourage really good men to make the Army a life occupation. The prime
needs of our present Army is to secure and retain competent
noncommissioned officers. This difficulty rests fundamentally on the
question of pay. The noncommissioned officer does not correspond with
an unskilled laborer; he corresponds to the best type of skilled
workman or to the subordinate official in civil institutions. Wages
have greatly increased in outside occupations in the last forty years
and the pay of the soldier, like the pay of the officers, should be
proportionately increased. The first sergeant of a company, if a good
man, must be one of such executive and administrative ability, and such
knowledge of his trade, as to be worth far more than we at present pay
him. The same is true of the regimental sergeant major. These men
should be men who had fully resolved to make the Army a life occupation
and they should be able to look forward to ample reward; while only men
properly qualified should be given a chance to secure these final
rewards. The increase over the present pay need not be great in the
lower grades for the first one or two enlistments, but the increase
should be marked for the noncommissioned officers of the upper grades
who serve long enough to make it evident that they intend to stay
permanently in the Army, while additional pay should be given for high
qualifications in target practice. The position of warrant officer
should be established and there should be not only an increase of pay,
but an increase of privileges and allowances and dignity, so as to make
the grade open to noncommissioned officers capable of filling them
desirably from every standpoint. The rate of desertion in our Army now
in time of peace is alarming. The deserter should be treated by public
opinion as a man guilty of the greatest crime; while on the other hand
the man who serves steadily in the Army should be treated as what he
is, that is, as preeminently one of the best citizens of this Republic.
After twelve years' service in the Army, my own belief is that the man
should be given a preference according to his ability for certain types
of office over all civilian applicants without examination. This should
also apply, of course, to the men who have served twelve years in the
Navy. A special corps should be provided to do the manual labor now
necessarily demanded of the privates themselves.

Among the officers there should be severe examinations to weed out the
unfit up to the grade of major. From that position on appointments
should be solely by selection and it should be understood that a man of
merely average capacity could never get beyond the position of major,
while every man who serves in any grade a certain length of time prior
to promotion to the next grade without getting the promotion to the
next grade should be forthwith retired. The practice marches and field
maneuvers of the last two or three years have been invaluable to the
Army. They should be continued and extended. A rigid and not a
perfunctory examination of physical capacity has been provided for the
higher grade officers. This will work well. Unless an officer has a
good physique, unless he can stand hardship, ride well, and walk
fairly, he is not fit for any position, even after he has become a
colonel. Before he has become a colonel the need for physical fitness
in the officers is almost as great as in the enlisted man. I hope
speedily to see introduced into the Army a far more rigid and
thoroughgoing test of horsemanship for all field officers than at
present. There should be a Chief of Cavalry just as there is a Chief of
Artillery.

Perhaps the most important of all legislation needed for the benefit of
the Army is a law to equalize and increase the pay of officers and
enlisted men of the Army, Navy, Marine Corps, and Revenue-Cutter
Service. Such a bill has been prepared, which it is hoped will meet
with your favorable consideration. The next most essential measure is
to authorize a number of extra officers as mentioned above. To make the
Army more attractive to enlisted men, it is absolutely essential to
create a service corps, such as exists in nearly every modern army in
the world, to do the skilled and unskilled labor, inseparably connected
with military administration, which is now exacted, without just
compensation, of enlisted men who voluntarily entered the Army to do
service of an altogether different kind. There are a number of other
laws necessary to so organize the Army as to promote its efficiency and
facilitate its rapid expansion in time of war; but the above are the
most important.

It was hoped The Hague Conference might deal with the question of the
limitation of armaments. But even before it had assembled informal
inquiries had developed that as regards naval armaments, the only ones
in which this country had any interest, it was hopeless to try to
devise any plan for which there was the slightest possibility of
securing the assent of the nations gathered at The Hague. No plan was
even proposed which would have had the assent of more than one first
class Power outside of the United States. The only plan that seemed at
all feasible, that of limiting the size of battleships, met with no
favor at all. It is evident, therefore, that it is folly for this
Nation to base any hope of securing peace on any international
agreement as to the limitations of armaments. Such being the fact it
would be most unwise for us to stop the upbuilding of our Navy. To
build one battleship of the best and most advanced type a year would
barely keep our fleet up to its present force. This is not enough. In
my judgment, we should this year provide for four battleships. But it
is idle to build battleships unless in addition to providing the men,
and the means for thorough training, we provide the auxiliaries for
them, unless we provide docks, the coaling stations, the colliers and
supply ships that they need. We are extremely deficient in coaling
stations and docks on the Pacific, and this deficiency should not
longer be permitted to exist. Plenty of torpedo boats and destroyers
should be built. Both on the Atlantic and Pacific coasts,
fortifications of the best type should be provided for all our greatest
harbors.

We need always to remember that in time of war the Navy is not to be
used to defend harbors and sea-coast cities; we should perfect our
system of coast fortifications. The only efficient use for the Navy is
for offense. The only way in which it can efficiently protect our own
coast against the possible action of a foreign navy is by destroying
that foreign navy. For defense against a hostile fleet which actually
attacks them, the coast cities must depend upon their forts, mines,
torpedoes, submarines, and torpedo boats and destroyers. All of these
together are efficient for defensive purposes, but they in no way
supply the place of a thoroughly efficient navy capable of acting on
the offensive; for parrying never yet won a fight. It can only be won
by hard hitting, and an aggressive sea-going navy alone can do this
hard hitting of the offensive type. But the forts and the like are
necessary so that the Navy may be footloose. In time of war there is
sure to be demand, under pressure, of fright, for the ships to be
scattered so as to defend all kind of ports. Under penalty of terrible
disaster, this demand must be refused. The ships must be kept together,
and their objective made the enemies' fleet. If fortifications are
sufficiently strong, no modern navy will venture to attack them, so
long as the foe has in existence a hostile navy of anything like the
same size or efficiency. But unless there exists such a navy then the
fortifications are powerless by themselves to secure the victory. For
of course the mere deficiency means that any resolute enemy can at his
leisure combine all his forces upon one point with the certainty that
he can take it.

Until our battle fleet is much larger than at present it should never
be split into detachments so far apart that they could not in event of
emergency be speedily united. Our coast line is on the Pacific just as
much as on the Atlantic. The interests of California, Oregon, and
Washington are as emphatically the interests of the whole Union as
those of Maine and New York, of Louisiana and Texas. The battle fleet
should now and then be moved to the Pacific, just as at other times it
should be kept in the Atlantic. When the Isthmian Canal is built the
transit of the battle fleet from one ocean to the other will be
comparatively easy. Until it is built I earnestly hope that the battle
fleet will be thus shifted between the two oceans every year or two.
The marksmanship on all our ships has improved phenomenally during the
last five years. Until within the last two or three years it was not
possible to train a battle fleet in squadron maneuvers under service
conditions, and it is only during these last two or three years that
the training under these conditions has become really effective.
Another and most necessary stride in advance is now being taken. The
battle fleet is about starting by the Straits of Magellan to visit the
Pacific coast.. Sixteen battleships are going under the command of
Rear-Admiral Evans, while eight armored cruisers and two other
battleships will meet him at San Francisco, whither certain torpedo
destroyers are also going. No fleet of such size has ever made such a
voyage, and it will be of very great educational use to all engaged in
it. The only way by which to teach officers and men how to handle the
fleet so as to meet every possible strain and emergency in time of war
is to have them practice under similar conditions in time of peace.
Moreover, the only way to find out our actual needs is to perform in
time of peace whatever maneuvers might be necessary in time of war.
After war is declared it is too late to find out the needs; that means
to invite disaster. This trip to the Pacific will show what some of our
needs are and will enable us to provide for them. The proper place for
an officer to learn his duty is at sea, and the only way in which a
navy can ever be made efficient is by practice at sea, under all the
conditions which would have to be met if war existed.

I bespeak the most liberal treatment for the officers and enlisted men
of the Navy. It is true of them, as likewise of the officers and
enlisted men of the Army, that they form a body whose interests should
be close to the heart of every good American. In return the most rigid
performance of duty should be exacted from them. The reward should be
ample when they do their best; and nothing less than their best should
be tolerated. It is idle to hope for the best results when the men in
the senior grades come to those grades late in life and serve too short
a time in them. Up to the rank of lieutenant-commander promotion in the
Navy should be as now, by seniority, subject, however, to such
rigid tests as would eliminate the unfit. After the grade of
lieutenant-commander, that is, when we come to the grade of command
rank, the unfit should be eliminated in such manner that only the
conspicuously fit would remain, and sea service should be a principal
test of fitness. Those who are passed by should, after a certain length
of service in their respective grades, be retired. Of a given number of
men it may well be that almost all would make good lieutenants and most
of them good lieutenant-commanders, while only a minority be fit to be
captains, and but three or four to be admirals. Those who object to
promotion otherwise than by mere seniority should reflect upon the
elementary fact that no business in private life could be successfully
managed if those who enter at the lowest rungs of the ladder should
each in turn, if he lived, become the head of the firm, its active
director, and retire after he had held the position a few months. On
its face such a scheme is an absurdity. Chances for improper favoritism
can be minimized by a properly formed board; such as the board of last
June, which did such conscientious and excellent work in elimination.

If all that ought to be done can not now be done, at least let a
beginning be made. In my last three annual Messages, and in a special
Message to the last Congress, the necessity for legislation that will
cause officers of the line of the Navy to reach the grades of captain
and rear-admiral at less advanced ages and which will cause them to
have more sea training and experience in the highly responsible duties
of those grades, so that they may become thoroughly skillful in
handling battleships, divisions, squadrons, and fleets in action, has
been fully explained and urgently recommended. Upon this subject the
Secretary of the Navy has submitted detailed and definite
recommendations which have received my approval, and which, if enacted
into law, will accomplish what is immediately necessary, and will, as
compared with existing law, make a saving of more than five millions of
dollars during the next seven years. The navy personnel act of 1899 has
accomplished all that was expected of it in providing satisfactory
periods of service in the several subordinate grades, from the grade of
ensign to the grade of lieutenant-commander, but the law is inadequate
in the upper grades and will continue to be inadequate on account of
the expansion of the personnel since its enactment. Your attention is
invited to the following quotations from the report of the personnel
board of 1906, of which the Assistant Secretary of the Navy was
president:

"Congress has authorized a considerable increase in the number of
midshipmen at the Naval Academy, and these midshipmen upon graduation
are promoted to ensign and lieutenant (junior-grade). But no provision
has been made for a corresponding increase in the upper grades, the
result being that the lower grades will become so congested that a
midshipman now in one of the lowest classes at Annapolis may possibly
not be promoted to lieutenant until he is between 45 and 50 years of
age. So it will continue under the present law, congesting at the top
and congesting at the bottom. The country fails to get from the
officers of the service the best that is in them by not providing
opportunity for their normal development and training. The board
believes that this works a serious detriment to the efficiency of the
Navy and is a real menace to the public safety."

As stated in my special Message to the last Congress: "I am firmly of
the opinion that unless the present conditions of the higher
commissioned personnel is rectified by judicious legislation the future
of our Navy will be gravely compromised." It is also urgently necessary
to increase the efficiency of the Medical Corps of the Navy. Special
legislation to this end has already been proposed; and I trust it may
be enacted without delay.

It must be remembered that everything done in the Navy to fit it to do
well in time of war must be done in time of peace. Modern wars are
short; they do not last the length of time requisite to build a
battleship; and it takes longer to train the officers and men to do
well on a battleship than it takes to build it. Nothing effective can
be done for the Navy once war has begun, and the result of the war, if
the combatants are otherwise equally matched, will depend upon which
power has prepared best in time of peace. The United States Navy is the
best guaranty the Nation has that its honor and interest will not be
neglected; and in addition it offers by far the best insurance for
peace that can by human ingenuity be devised.

I call attention to the report of the official Board of Visitors to the
Naval Academy at Annapolis which has been forwarded to the Congress.
The report contains this paragraph:

"Such revision should be made of the courses of study and methods of
conducting and marking examinations as will develop and bring out the
average all-round ability of the midshipman rather than to give him
prominence in any one particular study. The fact should be kept in mind
that the Naval Academy is not a university but a school, the primary
object of which is to educate boys to be efficient naval officers.
Changes in curriculum, therefore, should be in the direction of making
the course of instruction less theoretical and more practical. No
portion of any future class should be graduated in advance of the full
four years' course, and under no circumstances should the standard of
instruction be lowered. The Academy in almost all of its departments is
now magnificently equipped, and it would be very unwise to make the
course of instruction less exacting than it is to-day."

Acting upon this suggestion I designated three seagoing officers, Capt.
Richard Wainwright, Commander Robert S. Griffin, and Lieut. Commander
Albert L. Key, all graduates of the Academy, to investigate conditions
and to recommend to me the best method of carrying into effect this
general recommendation. These officers performed the duty promptly and
intelligently, and, under the personal direction of Capt. Charles J.
Badger, Superintendent of the Academy, such of the proposed changes as
were deemed to be at present advisable were put into effect at the
beginning of the academic year, October 1, last. The results, I am
confident, will be most beneficial to the Academy, to the midshipmen,
and to the Navy.

In foreign affairs this country's steady policy is to behave toward
other nations as a strong and self-respecting man should behave toward
the other men with whom he is brought into contact. In other words, our
aim is disinterestedly to help other nations where such help can be
wisely given without the appearance of meddling with what does not
concern us; to be careful to act as a good neighbor; and at the same
time, in good-natured fashion, to make it evident that we do not intend
to be imposed upon.

The Second International Peace Conference was convened at The Hague on
the 15th of June last and remained in session until the 18th of
October. For the first time the representatives of practically all the
civilized countries of the world united in a temperate and kindly
discussion of the methods by which the causes of war might be narrowed
and its injurious effects reduced.

Although the agreements reached in the Conference did not in any
direction go to the length hoped for by the more sanguine, yet in many
directions important steps were taken, and upon every subject on the
programme there was such full and considerate discussion as to justify
the belief that substantial progress has been made toward further
agreements in the future. Thirteen conventions were agreed upon
embodying the definite conclusions which had been reached, and
resolutions were adopted marking the progress made in matters upon
which agreement was not yet sufficiently complete to make conventions
practicable.

The delegates of the United States were instructed to favor an
agreement for obligatory arbitration, the establishment of a permanent
court of arbitration to proceed judicially in the hearing and decision
of international causes, the prohibition of force for the collection of
contract debts alleged to be due from governments to citizens of other
countries until after arbitration as to the justice and amount of the
debt and the time and manner of payment, the immunity of private
property at sea, the better definition of the rights of neutrals, and,
in case any measure to that end should be introduced, the limitation of
armaments.

In the field of peaceful disposal of international differences several
important advances were made. First, as to obligatory arbitration.
Although the Conference failed to secure a unanimous agreement upon the
details of a convention for obligatory arbitration, it did resolve as
follows;

"It is unanimous: (1) In accepting the principle for obligatory
arbitration; (2) In declaring that certain differences, and notably
those relating to the interpretation and application of international
conventional stipulations are susceptible of being submitted to
obligatory arbitration without any restriction."

In view of the fact that as a result of the discussion the vote upon
the definite treaty of obligatory arbitration, which was proposed,
stood 32 in favor to 9 against the adoption of the treaty, there can be
little doubt that the great majority of the countries of the world have
reached a point where they are now ready to apply practically the
principles thus unanimously agreed upon by the Conference.

The second advance, and a very great one, is the agreement which
relates to the use of force for the collection of contract debts. Your
attention is invited to the paragraphs upon this subject in my Message
of December, 1906, and to the resolution of the Third American
Conference at Rio in the summer of 1906. The convention upon this
subject adopted by the Conference substantially as proposed by the
American delegates is as follows:

"In order to avoid between nations armed conflicts of a purely
pecuniary origin arising from contractual debts claimed of the
government of one country by the government of another country to be
due to its nationals, the signatory Powers agree not to have recourse
to armed force for the collection of such contractual debts.

"However, this stipulation shall not be applicable when the debtor
State refuses or leaves unanswered an offer to arbitrate, or, in case
of acceptance, makes it impossible to formulate the terms of
submission, or, after arbitration, fails to comply with the award
rendered.

"It is further agreed that arbitration here contemplated shall be in
conformity, as to procedure, with Chapter III of the Convention for the
Pacific Settlement of International Disputes adopted at The Hague, and
that it shall determine, in so far as there shall be no agreement
between the parties, the justice and the amount of the debt, the time
and mode of payment thereof."

Such a provision would have prevented much injustice and extortion in
the past, and I cannot doubt that its effect in the future will be most
salutary.

A third advance has been made in amending and perfecting the convention
of 1899 for the voluntary settlement of international disputes, and
particularly the extension of those parts of that convention which
relate to commissions of inquiry. The existence of those provisions
enabled the Governments of Great Britain and Russia to avoid war,
notwithstanding great public excitement, at the time of the Dogger Bank
incident, and the new convention agreed upon by the Conference gives
practical effect to the experience gained in that inquiry.

Substantial progress was also made towards the creation of a permanent
judicial tribunal for the determination of international causes. There
was very full discussion of the proposal for such a court and a general
agreement was finally reached in favor of its creation. The Conference
recommended to the signatory Powers the adoption of a draft upon which
it agreed for the organization of the court, leaving to be determined
only the method by which the judges should be selected. This remaining
unsettled question is plainly one which time and good temper will
solve.

A further agreement of the first importance was that for the creation
of an international prize court. The constitution, organization and
procedure of such a tribunal were provided for in detail. Anyone who
recalls the injustices under which this country suffered as a neutral
power during the early part of the last century can not fail to see in
this provision for an international prize court the great advance which
the world is making towards the substitution of the rule of reason and
justice in place of simple force. Not only will the international prize
court be the means of protecting the interests of neutrals, but it is
in itself a step towards the creation of the more general court for the
hearing of international controversies to which reference has just been
made. The organization and action of such a prize court can not fail to
accustom the different countries to the submission of international
questions to the decision of an international tribunal, and we may
confidently expect the results of such submission to bring about a
general agreement upon the enlargement of the practice.

Numerous provisions were adopted for reducing the evil effects of war
and for defining the rights and duties of neutrals.

The Conference also provided for the holding of a third Conference
within a period similar to that which elapsed between the First and
Second Conferences.

The delegates of the United States worthily represented the spirit of
the American people and maintained with fidelity and ability the policy
of our Government upon all the great questions discussed in the
Conference.

The report of the delegation, together with authenticated copies of the
conventions signed, when received, will be laid before the Senate for
its consideration.

When we remember how difficult it is for one of our own legislative
bodies, composed of citizens of the same country, speaking the same
language, living under the same laws, and having the same customs, to
reach an agreement, or even to secure a majority upon any difficult and
important subject which is proposed for legislation, it becomes plain
that the representatives of forty-five different countries, speaking
many different languages, accustomed to different methods of procedure,
with widely diverse interests, who discussed so many different subjects
and reached agreements upon so many, are entitled to grateful
appreciation for the wisdom, patience, and moderation with which they
have discharged their duty. The example of this temperate discussion,
and the agreements and the efforts to agree, among representatives of
all the nations of the earth, acting with universal recognition of the
supreme obligation to promote peace, can not fail to be a powerful
influence for good in future international relations.

A year ago in consequence of a revolutionary movement in Cuba which
threatened the immediate return to chaos of the island, the United
States intervened, sending down an army and establishing a provisional
government under Governor Magoon. Absolute quiet and prosperity have
returned to the island because of this action. We are now taking steps
to provide for elections in the island and our expectation is within
the coming year to be able to turn the island over again to government
chosen by the people thereof. Cuba is at our doors. It is not possible
that this Nation should permit Cuba again to sink into the condition
from which we rescued it. All that we ask of the Cuban people is that
they be prosperous, that they govern themselves so as to bring content,
order and progress to their island, the Queen of the Antilles; and our
only interference has been and will be to help them achieve these
results.

An invitation has been extended by Japan to the Government and people
of the United States to participate in a great national exposition to
be held at Tokyo from April 1 to October 31, 1912, and in which the
principal countries of the world are to be invited to take part. This
is an occasion of special interest to all the nations of the world, and
peculiarly so to us; for it is the first instance in which such a great
national exposition has been held by a great power dwelling on the
Pacific; and all the nations of Europe and America will, I trust, join
in helping to success this first great exposition ever held by a great
nation of Asia. The geographical relations of Japan and the United
States as the possessors of such large portions of the coasts of the
Pacific, the intimate trade relations already existing between the two
countries, the warm friendship which has been maintained between them
without break since the opening of Japan to intercourse with the
western nations, and her increasing wealth and production, which we
regard with hearty goodwill and wish to make the occasion of mutually
beneficial commerce, all unite in making it eminently desirable that
this invitation should be accepted. I heartily recommend such
legislation as will provide in generous fashion for the representation
of this Government and its people in the proposed exposition. Action
should be taken now. We are apt to underestimate the time necessary for
preparation in such cases. The invitation to the French Exposition of
1900 was brought to the attention of the Congress by President
Cleveland in December, 1895; and so many are the delays necessary to
such proceedings that the period of font years and a half which then
intervened before the exposition proved none too long for the proper
preparation of the exhibits.

The adoption of a new tariff by Germany, accompanied by conventions for
reciprocal tariff concessions between that country and most of the
other countries of continental Europe, led the German Government to
give the notice necessary to terminate the reciprocal commercial
agreement with this country proclaimed July 13, 1900. The notice was to
take effect on the 1st of March, 1906, and in default of some other
arrangements this would have left the exports from the United States to
Germany subject to the general German tariff duties, from 25 to 50 per
cent higher than the conventional duties imposed upon the goods of most
of our competitors for German trade.

Under a special agreement made between the two Governments in February,
1906, the German Government postponed the operation of their notice
until the 30th of June, 1907. In the meantime, deeming it to be my duty
to make every possible effort to prevent a tariff war between the
United States and Germany arising from misunderstanding by either
country of the conditions existing in the other, and acting upon the
invitation of the German Government, I sent to Berlin a commission
composed of competent experts in the operation and administration of
the customs tariff, from the Departments of the Treasury and Commerce
and Labor. This commission was engaged for several mouths in conference
with a similar commission appointed by the German Government, under
instructions, so far as practicable, to reach a common understanding as
to all the facts regarding the tariffs of the United States and Germany
material and relevant to the trade relations between the two countries.
The commission reported, and upon the basis of the report, a further
temporary commercial agreement was entered into by the two countries,
pursuant to which, in the exercise of the authority conferred upon the
President by the third section of the tariff act of July 24, 1897, I
extended the reduced tariff rates provided for in that section to
champagne and all other sparkling wines, and pursuant to which the
German conventional or minimum tariff rates were extended to about 96
1/2 per cent of all the exports from the United States to Germany. This
agreement is to remain in force until the 30th of June, 1908, and until
six months after notice by either party to terminate it.

The agreement and the report of the commission on which it is based
will be laid before the Congress for its information.

This careful examination into the tariff relations between the United
States and Germany involved an inquiry into certain of our methods of
administration which had been the cause of much complaint on the part
of German exporters. In this inquiry I became satisfied that certain
vicious and unjustifiable practices had grown up in our customs
administration, notably the practice of determining values of imports
upon detective reports never disclosed to the persons whose interests
were affected. The use of detectives, though often necessary, tends
towards abuse, and should be carefully guarded. Under our practice as I
found it to exist in this case, the abuse had become gross and
discreditable. Under it, instead of seeking information as to the
market value of merchandise from the well-known and respected members
of the commercial community in the country of its production, secret
statements were obtained from informers and discharged employees and
business rivals, and upon this kind of secret evidence the values of
imported goods were frequently raised and heavy penalties were
frequently imposed upon importers who were never permitted to know what
the evidence was and who never had an opportunity to meet it. It is
quite probable that this system tended towards an increase of the
duties collected upon imported goods, but I conceive it to be a
violation of law to exact more duties than the law provides, just as it
is a violation to admit goods upon the payment of less than the legal
rate of duty. This practice was repugnant to the spirit of American law
and to American sense of justice. In the judgment of the most competent
experts of the Treasury Department and the Department of Commerce and
Labor it was wholly unnecessary for the due collection of the customs
revenues, and the attempt to defend it merely illustrates the
demoralization which naturally follows from a long continued course of
reliance upon such methods. I accordingly caused the regulations
governing this branch of the customs service to be modified so that
values are determined upon a hearing in which all the parties
interested have an opportunity to be heard and to know the evidence
against them. Moreover our Treasury agents are accredited to the
government of the country in which they seek information, and in
Germany receive the assistance of the quasi-official chambers of
commerce in determining the actual market value of goods, in accordance
with what I am advised to be the true construction of the law.

These changes of regulations were adapted to the removal of such
manifest abuses that I have not felt that they ought to be confined to
our relations with Germany; and I have extended their operation to all
other countries which have expressed a desire to enter into similar
administrative relations.

I ask for authority to reform the agreement with China under which the
indemnity of 1900 was fixed, by remitting and cancelling the obligation
of China for the payment of all that part of the stipulated indemnity
which is in excess of the sum of eleven million, six hundred and
fifty-five thousand, four hundred and ninety-two dollars and sixty-nine
cents, and interest at four per cent. After the rescue of the foreign
legations in Peking during the Boxer troubles in 1900 the Powers
required from China the payment of equitable indemnities to the several
nations, and the final protocol under which the troops were withdrawn,
signed at Peking, September 7, 1901, fixed the amount of this indemnity
allotted to the United States at over $20,000,000, and China paid, up
to and including the 1st day of June last, a little over $6,000,000. It
was the first intention of this Government at the proper time, when all
claims had been presented and all expenses ascertained as fully as
possible, to revise the estimates and account, and as a proof of
sincere friendship for China voluntarily to release that country from
its legal liability for all payments in excess of the sum which should
prove to be necessary for actual indemnity to the United States and its
citizens.

This Nation should help in every practicable way in the education of
the Chinese people, so that the vast and populous Empire of China may
gradually adapt itself to modern conditions. One way of doing this is
by promoting the coming of Chinese students to this country and making
it attractive to them to take courses at our universities and higher
educational institutions. Our educators should, so far as possible,
take concerted action toward this end.

On the courteous invitation of the President of Mexico, the Secretary
of State visited that country in September and October and was received
everywhere with the greatest kindness and hospitality.

He carried from the Government of the United States to our southern
neighbor a message of respect and good will and of desire for better
acquaintance and increasing friendship. The response from the
Government and the people of Mexico was hearty and sincere. No pains
were spared to manifest the most friendly attitude and feeling toward
the United States.

In view of the close neighborhood of the two countries the relations
which exist between Mexico and the United States are just cause for
gratification. We have a common boundary of over 1,500 miles from the
Gulf of Mexico to the Pacific. Much of it is marked only by the
shifting waters of the Rio Grande. Many thousands of Mexicans are
residing upon our side of the line and it is estimated that over 40,000
Americans are resident in Mexican territory and that American
investments in Mexico amount to over seven hundred million dollars. The
extraordinary industrial and commercial prosperity of Mexico has been
greatly promoted by American enterprise, and Americans are sharing
largely in its results. The foreign trade of the Republic already
exceeds $240,000,000 per annum, and of this two-thirds both of exports
and imports are exchanged with the United States. Under these
circumstances numerous questions necessarily arise between the two
countries. These questions are always approached and disposed of in a
spirit of mutual courtesy and fair dealing. Americans carrying on
business in Mexico testify uniformly to the kindness and consideration
with which they are treated and their sense of the security of their
property and enterprises under the wise administration of the great
statesman who has so long held the office of Chief Magistrate of that
Republic.

The two Governments have been uniting their efforts for a considerable
time past to aid Central America in attaining the degree of peace and
order which have made possible the prosperity of the northern ports of
the Continent. After the peace between Guatemala, Honduras, and
Salvador, celebrated under the circumstances described in my last
Message, a new war broke out between the Republics of Nicaragua,
Honduras, and Salvador. The effort to compose this new difficulty has
resulted in the acceptance of the joint suggestion of the Presidents of
Mexico and of the United States for a general peace conference between
all the countries of Central America. On the 17th day of September last
a protocol was signed between the representatives of the five Central
American countries accredited to this Government agreeing upon a
conference to be held in the City of Washington "in order to devise the
means of preserving the good relations among said Republics and
bringing about permanent peace in those countries." The protocol
includes the expression of a wish that the Presidents of the United
States and Mexico should appoint "representatives to lend their good
and impartial offices in a purely friendly way toward the realization
of the objects of the conference." The conference is now in session and
will have our best wishes and, where it is practicable, our friendly
assistance.

One of the results of the Pan American Conference at Rio Janeiro in the
summer of 1906 has been a great increase in the activity and usefulness
of the International Bureau of American Republics. That institution,
which includes all the American Republics in its membership and brings
all their representatives together, is doing a really valuable work in
informing the people of the United States about the other Republics and
in making the United States known to them. Its action is now limited by
appropriations determined when it was doing a work on a much smaller
scale and rendering much less valuable service. I recommend that the
contribution of this Government to the expenses of the Bureau be made
commensurate with its increased work.