Richmond Palladium (Daily), Volume 36, Number 27, 6 December 1910 — Page 6

TAFT MAKES DEFENSE OF TARIFF LAW

President, However, States He Will Probably Send Another Message Asking j for Further Revisions. ii FORTIFY THE CANAL J HE URGES CONGRESS He Deals With Various Phases of the Conservation, Question, but Opposes Water Power Monopoly. 1 FAVORS PARCELS POST Indorses Ship Subsidy Plan in Unqualified Language j Suggests Way of Manag-j Ing the Canal. Washington, Dee. 6. President Taft tent hi annual message to congress today. It la as follows: To the Senate and House of Representatives: Daring the past year the foreign relations of the United State have continued upon basis of friendship and good understanding. The year baa been notable as witnessing the pacific settlement of two Important International controversies before the permanent court of The Hague. The arbitration of the fisheries dlsputo between the United States and flreat Britain, which haa leu the source of nearly continuous diplomatic correspondence since the fisheries convention of 1818, has given an award which Is satisfactory to both parties. This arbitration Is particularly noteworthy not only because of the eminently Just results secured, but also because It Is the first arbitration held tinder the general arbitration treaty of April 4, 1908, between the United States and Orent Britain and disposes of a controversy the settlement of which for nearly ninety yenrs has been the cause of friction between two countries whose common Interest lies In maintaining the most friendly and cordial relations with each other. The United States wns ably represented liefore the tribunal. The complicated history of the questions arising made the Issue depend more than ordinarily In such cases upon the care nwl skill with which our case was presented, and I should tie wanting In proer recognition of a great patriotic service If I did not refer to tho lucid historical analysis of the facts and the signal ability and force of argumentsix days In length presented to the rourt In support of our case by Mr. I'.lihu Hoot. As secretary of state Mr. Root bad given close study to the Intricate facts bearing on the controversy and by diplomatic correspoud'ence bad helped to frame the Issues. At the solicitation of the secretary of state and myself Mr. Root, though burdened by his duties as senaSor from 'New York, undertook the preparation of the case as leading counsel, with the condition Imposed by himself that In view of his position as senator he should not receive any compensation. The tribnnal constituted at The Hague by the governments of the United States and Venezuela, has completed Its deliberations and has rendered an ward In the case of the Orinoco Steamship company against Venezuela. The award may be regarded as satisfactory since It has, pursuant to the contentions of the United States, recognised a number of Important principles , making for a Judicial attltnde In the determining of International disputes. Id view of grave doubts which bad been raised as to the constitutionality of The Hague convention for the establishment of an international prize court, now before the senate for ratification, because of that provision of the convention which provides that there may be an appeal to the proposed court from the decisions of national courts, this government proposed In an Identic circular note addressed to those powers which had taken part In the London maritime conference that the powers signatory to the convention, if confronted with such difficulty, might insert a reservation to the effect that appeals to the International prize court In respect to decisions of Its national tribunals should take the form of a dl- , rect claim for compensation, that the proceedings thereupon to be taken should be In the form of a trial de novo and that Judgment of the court should consist of compensation for the Illegal capture Irrespective of the decision of the national court whose Judgment had thus been Internationally Involved. As the result of an Informal discission It was decided to provide such procedure by means of a separate protocol which should be ratified at the same time as the prize court convention Itself. Accordingly the government of the Netherlands at the request of this government proposed under date of May 24, 1010, to the powers signatory to . The Hague convention the negotiation of a supplemental protocol embodying stipulations providing for this alternative procedure. It is gratifying to observe that this additional protocol is lielng slgued without objection by the powers signatory to the original conveutlou and that there Is every reason ., to believe tliut the International prize court will be soon established. Tho Identic circular note also nro- ; posed that the International prize court , when established should be endowed Yl,n fne functions of an arbitral court ofJnsttce under and pursuant to the . recommendation adopted by the last Hague conference. The replies received from the various powers to this proposal InsDlrVtbe hop that this also

may be accomplished within the reasonably near future. It U hollered that the establishment rf these two tribunals will go a long way toward securing the arbitration of ninny questions which have heretofore threatened and at times destroyed the peace of uatlons.

TO APPOINT PEACE COMMISSIONERS. President It Waiting Tor Expressions From Foreign Powers. Appreciating these enlightened tendencies of modern times, the congress nt it lnt session passed a law providing for the appointment of a coinnils-vio-ji of five members "to be appointed y the president of the United States consider the expediency of utilizing existing International agencies for the purpose of limiting the armaments of the nations of the world by International agreement and of constituting the combined navies of the world an International force for the preservation of universal ince and to consider and report upon anv other means to diminish the expenditures of govern-! m in. 1 Al mpiu iir miiiiury jun",!,,"s aim iu lesson the probabilities of war." I have not as yet made appointments to this commission because I have invited and nm awaiting the expressions of foreign governments as to their willingness to co-operate with us in the appointment of similar commissions or representatives who would meet with our commissioners and by Joint action seek to make their work effective. Europe, Canada, Etc. Several important treaties have been negotiated with Great Britain in the past twelve months. A preliminary diplomatic agreement has leen reached regarding the arbitration of pecuniary claims which each government has arslnst the other. This agreement, with the schedules of claims annexed, will, as soon as the schedules are arranged, be submitted to the senate for approval. An agreement between the United States and Great Britain with regard to the location of the international boundary line letween the United States and Canada In Passamaquoddy lay and to the middle of Grand Maban channel was reached In a treaty concluded May 21, 1010, which has been ratified by both governments and proclaimed, thus making unnecessary the arbitration provided for In tho previous treaty of April 11, 1008. The convention concluded Jan. 11, 190. between the United States and Great Britain providing for the settlement of international differences between the United States and Canada, Including the apportionment between the two countries of certain of the boundary waters and the appointment of commissioners to adjust certain other questions, has been ratified by both governments and proclaimed. The work of the International fishery commission appointed In 1008, under tho treaty of April 11. 1008, be tween Grent Britain and the United States has resulted In the formulation and recommendation of uniform regulations governing the fisheries of the boundary wpters of Canada and the United States for the purpose of protecting and increasing the supply of food fish In such waters. In completion of this work the regulations agreed upon require congressional legislation to make them effective and for their enforcement in fulfillment of the treaty stipulations. OVERTHROW OF KING MANUEL United States Recognized Portugal Provisional Republic. In October last the monarchy in Portugal was overthrown, a provisional republic was proclaimed, and there was set up a de facto government which was promptly recognized by the government of the United States for purposes of ordinary intercourse pending formal recognition by this and other powers of the governmental entity to be duly established by the national sovereignty. Liberia. A disturbance among the native tribes of Liberia in a portion of the republic during the early part of this year resulted In the sending under the treaty of 1862 of an American vessel of war to tho disaffected district, and the Llberian authorities, assisted by the good offices of the American naval officers, were able to restore order. The negotiations which have been undertaken for the amelioration of the conditions found In Liberia by the American commission, whose report I transmitted to congress on March 25 last, are being brought to conclusion, and It is thought that within a short time practical measures of relief may be put Into effect through the good offices of this government and the cordial co-operation of other governments Interested In Liberia's welfare. The Near East -Turkey. To return the visit of the special embassy sent to announce the accession of his majesty Mehemet V emperor of the Ottomans. I sent to Constantinople a special ambassador, who, in addition to this mission of ceremony, was charged with the duty of expressing to the Ottoman government the value attached by the government of the United States to increased and more Important relations between the countries and the desire of the United States to contribute to the larger economic and commercial development due to the new regime In Turkey. The rapid development now beginning In that ancient empire and the marked progress and Increased commercial Importance of Bulgaria, Roumania and Servta make It particularly opportune that the possibilities of American commerce in the near east should receive due attention. Mentsnsgre. The national skoupchtina having expressed Its will that the principality of Montenegro be raised to the rank of kingdom, the Prince of Montenegro on Aug. 13 last assumed the title of king of Montenegro. It gave me pleasure to accord to the new kingdom the recognition of tho United States. The Far East. The center of interest In far eastern

affairs during the past year has again been China. It is gratifying to note that the negotiations for a loan to the Chinese government for the construction of the trunk railway lines from Hankow southward to Canton and westward through the Yangtze valley, known as the Ilukuang loan, were concluded by the representatives of the various financial groups in May last and the results approved , by their respective governments. The agreement, already Initialed by the Chinese government, is now awaiting formal ratification. The lwsis of the settlement of the terms of this loan was one of exact equality between America, Great Britain. France and Germany In respect to financing the loan and supplying materials for the proposed railways and their future

branches. The application of the principle underlying the policy of the United States in regard to the Hukuang loan vU. that- of the internationalization of the foreign interest in such of the railways of China as may be financed by foreign countries was suggested on a broader scale by the secretary of state in a proposal for internationalization and commercial neutralization of all the railways of Manchuria. While the principle which led to the proposal of this government was generally admitted by the powers to whom it was addressed, the governments of Russia and Japan apprehended practical difficulties in the execution of the larger plan which prevented their ready adherence. The question of constructing the Chlnchow-Aigun railway by means of an international loan to China Is. however, still the subject of friendly discussion by the Interested parties. The policy of this government In these matters has been directed by a desire to make the use of American capital in the development of China an Instrument in the promotion of China's welfare and material prosperity without prejudice to her legitimate rights as an independent political power. This policy has recently found further exemplification in the. assists nee given by this government to the negotiations between China and a group of American bankers for a loan of $50,0)0,000 to be employed chiefly In currency reform. The confusion which has from ancient times existed in the monetary usages of the Chinese has been one of the principal obstacles to commercial Intercourse with that people. The United States In its treaty of 1003 with China obtained a pledge from the latter to Introduce a uniform national coinage, and the following year, at the request of China, this government sent to Peking a member of the international exchange commission to discuss with the Chinese government the best methods of introducing the reform. In 1008 China sent a com missioner to the United States to consult with American financiers as to the possibility of securing a large loan with which to inaugurate the new currency system, but the death of their majesties the empress dowager and the emperor of China interrupted the negotiations, which were not resumed until n few months ago, when this government was asked to communicate to the bankers concerned the request of China for a loan of $50,000,000 for the purpose under review. A preliminary agreement between the American group and China has been made covering the loan. For the success of this loan and the contemplated reforms which are of the greatest importance to the commercial interests of the United States and the civilized world at large It is realized that an expert will be necessary, and this government has received assurances from China that such an adviser, who shall be an American, will be engaged. It Is a matter of Interest to Americans to note the success which is attending the efforts of China to establish gradually a system of representative government. The provincial assemblies were opened In October, 1000, and In October of the present year a consultative body, the nucleus of the future national parliament, held its first session at Peking. The year has further been marked by two Important international agreements relating to far eastern affairs. In the Russo-Japanese agreement relating to Manchuria, signed July 4, 1910. this government was gratified to kote an assurance of continued peaceful conditions in that region and the reaffirmation of the policies with respect to China to which the United States together with all other interested powers are alike solemnly committed. The treaty annexing Korea to the empire of Japan, promulgated Aug. 20. 1910, marks the final step in a process of control of the ancient empire by her powerful neighbor that has been in progress for several years past. In communicating the fact of annexation the Japanese government gave to the government of the United States assurances of the full protection of the rights of American citizens in Korea under the changed conditions. Friendly visits of many distinguished persons from the far east have been made during the year. Chief among these were their imperial highnesses Princes Tsai-tao and Tsai-Hsun of China and his imperial highness Prince Higashl Fushimi and Prince Tokugawa, president of the house of peers of Japan. The secretary of war has recently visited Japan and China In connection with his tour to the Philippines, and a large delegation of American business men are at present traveling in China. This exchange of friendly visits has had the happy effect of even further strengthening our friendly international relations. TROUBLES OF IATKI AMERICA. We Are at Peace, but War Bothers Southern Republics. During the past year several of our southern sister republics celebrated the one hundredth anniversary of their independence. In honor of these events special embassies were sent from this country to Argentina, Chile and Mexico, where the gracious reception and splendid hospitality extended them manifested the cordial relations and friendship existing between those countries and the United States, relations which I am happy to believe have never before been upon

so high a plane and so solid a basis as at present. The congressional commission appointed under a concurrent resolution to attend the festivities celebrating the centennial anniversary of Mexican Independence, together with a special ambassador, were received with the highest honors and with the greatest cordiality and returned with the report of the bounteous hospitality and warm reception of President Diaz and the Mexican people, which left uo doubt of the desire of the Immediately neighboring republic to continue the mutually beneficial and intimate relations which I feel sure the two governments will ever cherish. At the fourth pau-Amerlcan conference, which met In Buenos Aires during Ju?7 aud August last, after seven

weeks of harmonious deliberation three conventions were signed providing for the regulation of trademarks. patents and copyrights, which, when ratified by the different governments, will go far toward furnishing to American authors, patentees and owners of trademarks the protection needed in localities where heretofore it has been either lacking or inadequate. Further, a convention for the arbitration of pecuniary claims was signed and a number of Important resolutions passed. The conventions will in due course be transmitted to the senate, and the report of the delegation of the United States will be communicated to the congress for its Information. The special cordiality between representative men from all parts of America which was shown at this conference cannot fail to react upon and draw still closer the relations between the countries which took part in it. The international bureau of American republics is doing a broad and useful work for pan-American commerce and comity. Its duties were much enlarged by the international conference of American states at Buenos Aires, and its name was shortened to the more practical and expressive term of pan-American union. Located now in its new building, which was specially dedicated Vpril 2G of this year to the development of friendship, trade and peace among the American nations, it has improved instrumentalities to serve the twenty-two republics of this hemisphere. I am glad to say that the action of the United States in its desire to remove imminent danger of war between Teru and Ecuador growing out of a boundary dispute, with the co-operation of Brazil and the Argentine Re public as Joint mediators with this gov ernment, has already resulted success fully In preventing war. The government of Chile, while not one of the mediators, lent effective aid in furtherance of a preliminary agreement likely to lead on to an amicable settlement. and It Is not doubted that the good offices of the mediating powers and the conciliatory co-operation of the governments directly interested will finally lead to a removal of this perennial cause of friction between Ecuador and Peru. The inestimable value of cordial co-operation between the sister republics of America for the maintenance of peace In this hemisphere has never been more clearly shown than in this mediation, by which three American governments have given to this hemisphere the honor of first invoking the most farreaching provisions of The Hague convention for the pacific settlement of International disputes. There has been signed by the representatives of the United States and Mexico a protocol submitting to the United States-Mexican boundary commission (whose membership for the purpose of this case is to be increased by the addition of a citizen of Canada) the question of sovereignty over the Chamizal tract, which lies within the present physical boundaries of the city of El Paso, Tex. The determination of this question will remove a source of no little annoyance to the two governments. The republic of Honduras has for many years been burdened with a heavy bonded debt held in Europe, the interest on which long ago fell in arrears. Finally conditions were such that it became imperative to refund the debt and place the finances of the republic upon a sound basis. Last year a group of American bankers undertook to do this and to advance funds for railway and other Improvements contributing directly to the country's prosperity and commerce an arrangement which has long been desired by this government. Negotiations to this end have been under way for more than a year, and it is now confidently believed that a short time will suffice to conclude an arrangement which will be satisfactory to the foreign creditors, eminently advantageous to Honduras and highly creditable to the Judgment and foresight of the Honduranean government. This Is much to be desired since, as recognized by the Washington conventions, a strong Honduras would tend immensely to the progress and prosperity of Central America. During the past year the republic of Nicaragua has been the scene of internecine struggle. General Zelaya, for seventeen years the absolute ruler o Nicaragua, was throughout his ca reer Jie disturber of Central America and opposed every plan for the promotion of peace and friendly relations between the five republics. When the people of Nicaragua were finally driven into rebellion by his lawless exactions he violated the laws of war by the unwarranted execution of two American citizens who had regularly enlisted in the ranks of the revolutionists. This and other offenses made it the duty of the American government to take measures with a view to ultimate reparation and for the safeguarding of its interests. This involved the breaking off o: all diplomatic relations with the Zelaya government for the reasons laid down in a communication from the secretary of state, which also notified the contending factious in Nicaragua that this government would hold each to strict accountability for outrages on the rights of American citizens. American forces were sent to both coasts of Nicaragua to be in readiness should occasion arise to protect Americans and their Interests and remained there until the war was over and peace had returned to that unfortunate country. These events, together with Zelaya's continued exactions, brought him so clearly to the bar of public opinion that he was forced to resign and to take refuge abroad.

In the above mentioned communication of the secretary of state to the charge d'affaires of the Zelaya government the opinion was expressed that

.the revolution represented the wishes of the majority of the Niearaguan people. This has now been proved beyond

doubt by the fact that since the com- eign market, are certain soon to bepSete overthrow of the Madrlz govern- i dependent otf it. Therefore, now ment and the occupation of the capital I h "me to secure a strong position bv the forces of the revolutlou all fao- j ln tnls field. tions have united to maintain public or-! 1 cannot leave this subject without der. and as a result of discussion with an ; emphasizing the uecessity of such leg;1Wnr t this iftirernmenr sent to Ma-! Nation as will make iosslble and con-

nagiia at the request of the provisional government comprehensive p'ans are being made for the future welfare of Nicaragua, including the rehabilitation ofj public credit. The moderation and conciliatory spirit shown by the various factious give ground for the confident hope that Nicaragua will soon t.ike its rightful place among the law abiding aud progressive countries of I the world. It gratifies me exceedingly to an- j noun. e that the Argentine Republic , some mouth, ago placed with American ; manufacturers a contract for the con- i pu in nun ill i I? uii i in-rui' uijvi tri mill additional naval equipment. The extent of this work and its importance to the Argentine Republic make the plac ing of the bid an earnest of friendly feeling toward the United States. Tariff Negotiation. The new tariff law in section 2 respecting the maximum and minimum j tariffs of the United States, which provisions came into effect on April 1, 1010, Imposed upon the president the responsibility of determining prior to that date whether or not any undue discrimination existed against the United States and its products in any country of the world with which we sustained commercial relations. In the case of several countries Instances of apparent uudue discrimination against American commerce were found to exist. These discriminations were removed by negotiation. Trior to April 1, 1010, when the maximum tariff was to come into operation with respec t to importations from all those countries in whose favor no proclama tion applying the minimum tariff should be issued by the president, 134 such proclamations were issued. This series of proclamations embraced the entire commercial world, and hence the minimum tariff of the United States has been given universal application, thus testifying to the satisfactory character of our trade relations with foreign countries. Marked advantages to the commerce of the United States were obtained through these tariff settlements. Foreign nations are fully cognizant of the fact that under section 2 of the tariff act the president is required, whenever he is satisfied that the treatment accorded by them to the products of the United States is not such as to entitle them to the benefits of the minimum tariff of the United States, to withdraw those benefits by proclamation, giving ninety days notice, after which the maximum tariff will apply to their dutiable products entering the United States. In its general operation this section of the tariff law has thus far proved a guaranty of continued commercial peace, although there are, however, unfortunately instances where foreign governments deal arbitrarily with American interests within their Jurisdiction in a manner injurious and inequitable. The policy of broader and closer trade relations with the Dominion of Canada which was initiated In the adjustment of the maximum and minimum provisions of the tariff act of August. 1009, has proved mutually beneficial. It justifies further efforts for the readjustment of the commercial relations of the two countries so that their commerce may follow the channels natural to contiguous countries and be commensurate with the steady expansion of trade and industry on both sides of the boundary line. The reciprocation on the part of the Dominion government of the sentiment which was expressed by this government was followed in October by the suggestion that It would be glad to have the negotiations which had been temporarily suspended during the summer resumed. In accordance with this suggestion fhe secretary of state by my direction dispatched two representatives of the department of state as special commissioners to Ottawa to confer with representatives of the Dominion government. They were au(norzed to take such steps for formulating a reciprocal trade agreement as might be necessary and to receive and consider any propositions which the Dominion government might care to submit. Pursuant to the Instructions issued conferences were held by these commissioners with officials of the Dominion government at Ottawa in the early part of November. The negotiations were conducted on both sides in a spirit of mutual accommodation. The discussion of the common commercial Interests of the two countries had for Its object a satisfactory basis for a trade arrangement which offers the prospect of a freer interchange for the products of the Unit ed States and of Canada. The conferences were adjourned to be resumed in Washington In January, w-hen it is hoped that the aspiration of both governments for a mutually advantageous measure of reciprocity will be realized. THE DEPARTMENT OF STATE Foreign Trade Is Improving Merchant Marine Development. All these tariff negotiations, so vital to our commerce and Industry, and the duty of jealousy guarding the equitable and Just treatment of our products, capil and industry abroad devolve upon the department of state. The Argentine battleship contracts, like the subsequent important one for Argentine railway equipment and those for. Cuban government vessels, were seetrred for our manufacturers largely ffcrbtrgh the good offices of the department of state. The efforts of that department to secure for citizens of the United States equal opportunities in the markets of the world and to expand American commerce have been most successful. The volume of business obtained in new fields of competition and upon new lines Is already very great, and congress is urged to continue to sup-

port the department of state In Its endeavors for further trade expansion. Our foreign trade merits the best support of the government and the most earnest endeavor of our manufacturers aud merchants, who. If they do not alreadv In all cases need a for-

venlent the establishment of American banks and branches of American banks in foreign countries. Only by such means can our foreign trade be favorably financed, necessary credits be arranged and proper avail be made of commercial opiortunItles in foreign countries, and most especially lu Latlu America. Another instrumentality Indispensa1 ble to the unhampered and natural deniert.,lant mjirille. AU marlt,me and comlnert.inl nfltkms r.wanize tne lm m.t? of tuis factor Tne greate8t v,mniD ,lt ., r MmM,,, Jealously foster their merchant mai rino. Perhaps nowhere Is the need for rapid and direct mail, passenger and freight communication quite so urgent as between the United States and Latin America. Wo can secure in uo other quarter of the world such immediate benefits in friendship and coiunierce as would flow from the estab lishment of direct lines or communicotion with the countries of Latin America adequate to meet the requirements of a rapidly increasing appreciation of the reciprocal dependence of the coun tries of the western hemisphere upon each other's products, sympathies and assistance. I alluded to this most important subject in my last annual message. It has often been before you, and I need not recapitulate the reasons for Its recommendation. Unless prompt action be taken the completion of the Panama canal will find this the only great commercial nation unable to avail In International maritime business of this ' grettt contribution to the means of the world's commercial Intercourse. Quite aside from the commercial aspect, unless we create a merchant marine where can we find the seafaring population necessary as a natural naval reserve and where could we find, in case of war, the transports and subsidiary vessels without which a naval fleet Is arms without a body? For many reasons I cannot too strongly urge upon the congress the passage of a measure by mail subsidy or other subvention adequate to guarantee the establishment and rapid development of an American merchant marine, the restoration of the American flag to Its ancient place upon the seas. With our Increasing international intercourse It becomes incumbent upon me to repeat more emphatically than ever the recommendation which I made in my inaugural address that congress shall at once give to the courts of the United States jurisdic tion to punish as a crime the violation of the rights of aliens secured by treaty with the United States in order that the general government of the United States shall be able when cslled upon by a friendly nation to redeem Its solemn promise" by treaty to secure to the citizens or subjects of that nation resident in the United States freedom from violence and due process of law ln respect to their life, liberty and property. I also and for the same general reasons strongly commend to the favorable action of the congress the enactment of a law applying to the diplomatic and consular service the principles embodied in section 1753 of the Revised Statutes of the United States, in the civil service act of Jan. 1C, 1883, and the executive orders of June 17, 1000, and of Nov. 26, 1900. The excellent results which have attended the partial application of civil service principles to the diplomatic and consular services are an earnest of the benefit to be wrought to both branches of the foreign service. The marked Improvement in the consular service during the four years since the prin ciples of the civil service act were applied to that service in a limited way and the good results already noticeable from a similar application of civil service principles to the diplomatic service a year ago convince me that the enactment into law of the general principles of the existing executive regulations could not fail to effect further improvement of both branches of the foreign service, offering as It would by its assurance of permanency of tenure and promotion on merit an inducement for the entry of capable young men Into the service and an Incentive to those already in to put forth their best efforts to attain and maintain that degree of efficiency which the interests of our international relations and commerce demand. During many years past appeals have been made from time to time to congress ln favor of government ownership of embassy and legation premises abroad. The arguments in favor of such ownership have been many and oft repeated and are well known to the congress. The acquisition by the government of suitable residences and offices for its diplomatic officers, especially in the capitals of the Latin American states and of Europe, is so Important and necessary to an Improved diplomatic service that I have no hesitation In urging upon the congress the passage of some measure similar to that favorably reported by the house committee on foreign affairs on Feb. 14. 1010 (report No. 438). that would authorize the gradual and annual acquisition of premises for diplomatic use. The work of the diplomatic service Is devoid of partisanship. Its importance should appeal to every American citizen and should receive the generous consideration of the congress. TREASURY DEPARTMENT. Estimates For Next Year's Expenses. Where Savings Have Been Made. Every effort has been made by each department chief to reduce the estimated cost of his department for the ensuing fiscal year ending June 30. 1912. I say this ln order that congress may understand that these est! ma tea thus made present the smallest ram which will maintain the departments.

bureaus and offices of the government

and meet Its other obligations under existing law and that a cut of these estimates would result la embarrassing the executive branch of the government in the performance of Its duties. This remark does not apply to the river and harbor estimates, except to those for expenses of maintenance and the meeting of obligations under authorized contracts, nor does it apply to the public building bill nor to the navy building program. Of course as to these congress could withhold any part or al! of the estimates for them without interfering with the discharge of the ordiuary obligations of the government or the performance of the functions of Us departments, bureaus and offices. The final estimates for the year ending June 30, 1912, as they have been sent to the treasury on Nov. 29 of this year for the ordinary expenses of the government. Including those for public buildings, rivers and harbors and the navy building program, amount to $630,494.013.12. This is $32,064,87.30 less than the appropriations for the fiscal year ending June 30, 1911. It is $16.883.153.44 less than the total estimates. Including supplemental estimates submitted to congress by the treasury for the year 1911, and Is $5,574,659.30 less than the original estimates submitted by the treasury for 1911. These figures do not Include the appropriations for the Panama canal, the policy in respect to which ought to be and is to spend as much each year as can be economically and effectively expended in order to complete the ca nal as promptly as possible, and therefore the ordinary , motive for cutting down the expense of the government does not apply to appropriations for this purpose. It will be noted that tho' estimates for the Panama canal for the ensuing year are more than $5tt, 000,000. an increase of 120.000,000 over the amount appropriated for this year. a difference due to the fact that the estimates for 1912 include something over 59,000,000 for. the fortification of the canal. Against the estimates of expenditures, $030,404,013.12. we have estimated receipts for next year $680,000.000, making a probable surplus of ordinary receipts over ordinary expenditures of about $50,000,000, or, taking into account the estimates for the Panoma canal, which are $50,920,847.00 and which will ultimately be paid In bonds. It will leave a deficit for the next year of about $7,000,000 if congress shall conclude to fortify the canal. The cost of the fortifications is about $10,000,000. Should there be no appropriations this year for fortifications, then there would be, even Including the Panama canal appropriation, a surplus of about $12,000,000. The treasury department Is one of the original departments of the government With the changes in the monetary system made from time to time and with the creation of national banks, It was thought necessary to organize new bureaus and divisions, which were added in a somewhat haphazard way and resulted In duplication of duties which might well now be ended. This lack of system" and economic co-ordination has attracted the attention of the head of that department. who has been giving his time for the last two years, with the aid of experts and by consulting his ? bureau chiefs, to Its reformation, and at the risk of being tedious, but merely to Illustrate the character of the reforms that are possible, I shall comment on a number of changes that are being made or ought to be made by legislative aid. The auditing system ln vogue Is as old as the government, and ttfe methods used are antiquated. There are six auditors and seven assistant auditors for the nine departments, and under the present system the only function which the auditor of a department exercises Is to determine, on accounts presented by disbursing officers, that the object of the expenditure was within the law and the appropriation made by congress for the purpose on its face and that the calculations ln the accounts are correct. He does not examine the merits of the transaction or determine the reasonableness of the price paid for the articles purchased, nor does he furnish any substantial check upon disbursing officers and the heads of departments or bureaus with sufficient promptness to enable the government to recoup Itself In full measure for unlawful expenditure. A careful plan Is being devised and will be presented to congress with the recommendation that the force of auditors and employees under them be greatly reduced, thereby effecting substantial economy. - But this economy will be small compared with the larger economy that can be effected by consolidation and change of methods. The possibilities in this regard have been shown in the reduction of expenses and the Importance of methods and efficiency In the office of the auditor for the postofflce department, who, without in the slightest degree Impairing the comprehensiveness and efficiency of his work, has cut down the expenses of his office $120,000 a yesr. Again, in the collection of the revenues, especially the customs revenues, a very great Improvement has been effected, and further Improvements are contemplated. By the detection of frauds ln weighing sugar upward of $3,400,000 have been recovered from the beneficiaries, of the fraud, and an entirely new system free from the possibilties of such abuse has been devised. The department has perfected the method of collecting duties at the port of New York so as to save the government upward of ten or eleven million dollars, and the same spirit of change and reform has been Infused into the other customs offices of the country. 1 " , The methods used at many places are archaic There would seem to be no reason at all why the surveyor of the port, who really acts for the collector, should not be a subordinate of the collector at a less salary and directly under his control, and there is but little reason for the existence of the naval officer, who Is a kind of local auditor. His work Is mainly an examination of accounts which Is conducted again In Washington and which results ln no greater security to the government; The naval officers In the various ports are presidential appointees, many of them drawing good salaries, and thos offices should