Speech Transcript:

 To the Senate and House of Representatives:

The foreign relations of the United States actually and potentially
affect the state of the Union to a degree not widely realized and
hardly surpassed by any other factor in the welfare of the whole
Nation. The position of the United States in the moral, intellectual,
and material relations of the family of nations should be a matter of
vital interest to every patriotic citizen. The national prosperity
and power impose upon us duties which we can not shirk if we are to
be true to our ideals. The tremendous growth of the export trade of
the United States has already made that trade a very real factor in
the industrial and commercial prosperity of the country. With the
development of our industries the foreign commerce of the United
States must rapidly become a still more essential factor in its
economic welfare. Whether we have a farseeing and wise diplomacy and
are not recklessly plunged into unnecessary wars, and whether our
foreign policies are based upon an intelligent grasp of present-day
world conditions and a clear view of the potentialities of the
future, or are governed by a temporary and timid expediency or by
narrow views befitting an infant nation, are questions in the
alternative consideration of which must convince any thoughtful
citizen that no department of national polity offers greater
opportunity for promoting the interests of the whole people on the
one hand, or greater chance on the other of permanent national
injury, than that which deals with the foreign relations of the
United States.

The fundamental foreign policies of the United States should be
raised high above the conflict of partisanship and wholly dissociated
from differences as to domestic policy. In its foreign affairs the
United States should present to the world a united front. The
intellectual, financial, and industrial interests of the country and
the publicist, the wage earner, the farmer, and citizen of whatever
occupation must cooperate in a spirit of high patriotism to promote
that national solidarity which is indispensable to national
efficiency and to the attainment of national ideals.

The relations of the United States with all foreign powers remain
upon a sound basis of peace, harmony, and friendship. A greater
insistence upon justice to American citizens or interests wherever it
may have been denied and a stronger emphasis of the need of mutuality
in commercial and other relations have only served to strengthen our
friendships with foreign countries by placing those friendships upon
a firm foundation of realities as well as aspirations.

Before briefly reviewing the more important events of the last year
in our foreign relations, which it is my duty to do as charged with
their conduct and because diplomatic affairs are not of a nature to
make it appropriate that the Secretary of State make a formal annual
report, I desire to touch upon some of the essentials to the safe
management of the foreign relations of the United States and to
endeavor, also, to define clearly certain concrete policies which are
the logical modern corollaries of the undisputed and traditional
fundamentals of the foreign policy of the United States.

REORGANIZATION OF THE STATE DEPARTMENT

At the beginning of the present administration the United States,
having fully entered upon its position as a world power, with the
responsibilities thrust upon it by the results of the
Spanish-American War, and already engaged in laying the groundwork of
a vast foreign trade upon which it should one day become more and more
dependent, found itself without the machinery for giving thorough
attention to, and taking effective action upon, a mass of intricate
business vital to American interests in every country in the world.

The Department of State was an archaic and inadequate machine lacking
most of the attributes of the foreign office of any great modern
power. With an appropriation made upon my recommendation by the
Congress on August 5, 1909, the Department of State was completely
reorganized. There were created Divisions of Latin American Affairs
and of Far Eastern, Near Eastern, and Western European Affairs. To
these divisions were called from the foreign service diplomatic and
consular officers possessing experience and knowledge gained by
actual service in different parts of the world and thus familiar with
political and commercial conditions in the regions concerned. The work
was highly specialized. The result is that where previously this
Government from time to time would emphasize in its foreign relations
one or another policy, now American interests in every quarter of the
globe are being cultivated with equal assiduity. This principle of
politico-geographical division possesses also the good feature of
making possible rotation between the officers of the departmental,
the diplomatic, and the consular branches of the foreign service, and
thus keeps the whole diplomatic and consular establishments tinder the
Department of State in close touch and equally inspired with the aims
and policy of the Government. Through the newly created Division of
Information the foreign service is kept fully informed of what
transpires from day to day in the international relations of the
country, and contemporary foreign comment affecting American
interests is promptly brought to the attention of the department. The
law offices of the department were greatly strengthened. There were
added foreign trade advisers to cooperate with the diplomatic and
consular bureaus and the politico-geographical divisions in the
innumerable matters where commercial diplomacy or consular work calls
for such special knowledge. The same officers, together with the rest
of the new organization, are able at all times to give to American
citizens accurate information as to conditions in foreign countries
with which they have business and likewise to cooperate more
effectively with the Congress and also with the other executive
departments.

MERIT SYSTEM IN CONSULAR AND DIPLOMATIC CORPS

Expert knowledge and professional training must evidently be the
essence of this reorganization. Without a trained foreign service
there would not be men available for the work in the reorganized
Department of State. President Cleveland had taken the first step
toward introducing the merit system in the foreign service. That had
been followed by the application of the merit principle, with
excellent results, to the entire consular branch. Almost nothing,
however, had been done in this direction with regard to the
Diplomatic Service. In this age of commercial diplomacy it was
evidently of the first importance to train an adequate personnel in
that branch of the service. Therefore, on November 26, 1909, by an
Executive order I placed the Diplomatic Service up to the grade of
secretary of embassy, inclusive, upon exactly the same strict
nonpartisan basis of the merit system, rigid examination for
appointment and promotion only for efficiency, as had been maintained
without exception in the Consular Service.

STATISTICS AS TO MERIT AND NONPARTISAN CHARACTER OF APPOINTMENTS

How faithful to the merit system and how nonpartisan has been the
conduct of the Diplomatic and Consular Services in the last four
years may be judged from the following: Three ambassadors now serving
held their present rank at the beginning of my administration. Of the
ten ambassadors whom I have appointed, five were by promotion from
the rank of minister. Nine ministers now serving held their present
rank at the beginning of my administration. Of the thirty ministers
whom I have appointed, eleven were promoted from the lower grades of
the foreign service or from the Department of State. Of the nineteen
missions in Latin America, where our relations are close and our
interest is great, fifteen chiefs of mission are service men, three
having entered the service during this administration. Thirty-seven
secretaries of embassy or legation who have received their initial
appointments after passing successfully the required examination were
chosen for ascertained fitness, without regard to political
affiliations. A dearth of candidates from Southern and Western States
has alone made it impossible thus far completely to equalize all the
States' representations in the foreign service. In the effort to
equalize the representation of the various States in the Consular
Service I have made sixteen of the twenty-nine new appointments as
consul which have occurred during my administration from the Southern
States. This is 55 per cent. Every other consular appointment made,
including the promotion of eleven young men from the consular
assistant and student interpreter corps, has been by promotion or
transfer, based solely upon efficiency shown in the service.

In order to assure to the business and other interests of the United
States a continuance of the resulting benefits of this reform, I
earnestly renew my previous recommendations of legislation making it
permanent along some such lines as those of the measure now Pending
in Congress.

LARGER PROVISION FOR EMBASSIES AND LEGATIONS AND FOR OTHER EXPENSES
OF OUR FOREIGN REPRESENTATIVES RECOMMENDED

In connection with legislation for the amelioration of the foreign
service, I wish to invite attention to the advisability of placing
the salary appropriations upon a better basis. I believe that the
best results would be obtained by a moderate scale of salaries, with
adequate funds for the expense of proper representation, based in
each case upon the scale and cost of living at each post, controlled
by a system of accounting, and under the general direction of the
Department of State.

In line with the object which I have sought of placing our foreign
service on a basis of permanency, I have at various times advocated
provision by Congress for the acquisition of Government-owned
buildings for the residence and offices of our diplomatic officers,
so as to place them more nearly on an equality with similar officers
of other nations and to do away with the discrimination which
otherwise must necessarily be made, in some cases, in favor of men
having large private fortunes. The act of Congress which I approved
on February 17, 1911, was a right step in this direction. The
Secretary of State has already made the limited recommendations
permitted by the act for any one year, and it is my hope that the
bill introduced in the House of Representatives to carry out these
recommendations will be favorably acted on by the Congress during its
present session.

In some Latin-American countries the expense of government-owned
legations will be less than elsewhere, and it is certainly very
urgent that in such countries as some of the Republics of Central
America and the Caribbean, where it is peculiarly difficult to rent
suitable quarters, the representatives of the United States should be
justly and adequately provided with dignified and suitable official
residences. Indeed, it is high time that the dignity and power of
this great Nation should be fittingly signalized by proper buildings
for the occupancy of the Nation's representatives everywhere abroad.

DIPLOMACY A HAND MAID OF COMMERCIAL INTERCOURSE AND PEACE

The diplomacy of the present administration has sought to respond to
modern ideas of commercial intercourse. This policy has been
characterized as substituting dollars for bullets. It is one that
appeals alike to idealistic humanitarian sentiments, to the dictates
of sound policy and strategy, and to legitimate commercial aims. It I
is an effort frankly directed to the increase of American trade upon
the axiomatic principle that the Government of the United States
shall extend all proper support to every legitimate and beneficial
American enterprise abroad. How great have been the results of this
diplomacy, coupled with the maximum and minimum provision of the
tariff law, will be seen by some consideration of the wonderful
increase in the export trade of the United States. Because modern
diplomacy is commercial, there has been a disposition in some
quarters to attribute to it none but materialistic aims. How
strikingly erroneous is such an impression may be seen from a study
of the results by which the diplomacy of the United States can be
judged.

SUCCESSFUL EFFORTS IN PROMOTION OF PEACE

In the field of work toward the ideals of peace this Government
negotiated, but to my regret was unable to consummate, two
arbitration treaties which set the highest mark of the aspiration of
nations toward the substitution of arbitration and reason for war in
the settlement of international disputes. Through the efforts of
American diplomacy several wars have been prevented or ended. I refer
to the successful tripartite mediation of the Argentine Republic,
Brazil, and the United States between Peru and Ecuador; the bringing
of the boundary dispute between Panama and Costa Rica to peaceful
arbitration; the staying of warlike preparations when Haiti and the
Dominican Republic were on the verge of hostilities; the stopping of
a war in Nicaragua; the halting of internecine strife in Honduras.
The Government of the United States was thanked for its influence
toward the restoration of amicable relations between the Argentine
Republic and Bolivia. The diplomacy of the United States is active in
seeking to assuage the remaining ill-feeling between this country and
the Republic of Colombia. In the recent civil war in China the United
States successfully joined with the other interested powers in urging
an early cessation of hostilities. An agreement has been reached
between the Governments of Chile and Peru whereby the celebrated
Tacna-Arica dispute, which has so long embittered international
relations on the west coast of South America, has at last been
adjusted. Simultaneously came the news that the boundary dispute
between Peru and Ecuador had entered upon a stage of amicable
settlement. The position of the United States in reference to the
Tacna-Arica dispute between Chile and Peru has been one of
nonintervention, but one of friendly influence and pacific counsel
throughout the period during which the dispute in question has been
the subject of interchange of views between this Government and the
two Governments immediately concerned. In the general easing of
international tension on the west coast of South America the
tripartite mediation, to which I have referred, has been a most
potent and beneficent factor.

CHINA

In China the policy of encouraging financial investment to enable
that country to help itself has had the result of giving new life and
practical application to the open-door policy. The consistent purpose
of the present administration has been to encourage the use of
American capital in the development of China by the promotion of
those essential reforms to which China is pledged by treaties with
the United States and other powers. The hypothecation to foreign
bankers in connection with certain industrial enterprises, such as
the Hukuang railways, of the national revenues upon which these
reforms depended, led the Department of State early in the
administration to demand for American citizens participation in such
enterprises, in order that the United States might have equal rights
and an equal voice in all questions pertaining to the disposition of
the public revenues concerned. The same policy of promoting
international accord among the powers having similar treaty rights as
ourselves in the matters of reform, which could not be put into
practical effect without the common consent of all, was likewise
adopted in the case of the loan desired by China for the reform of
its currency. The principle of international cooperation in matters
of common interest upon which our policy had already been based in
all of the above instances has admittedly been a great factor in that
concert of the powers which has been so happily conspicuous during the
perilous period of transition through which the great Chinese nation
has been passing.

CENTRAL AMERICA NEEDS OUR HELP IN DEBT ADJUSTMENT

In Central America the aim has been to help such countries as
Nicaragua and Honduras to help themselves. They are the immediate
beneficiaries. The national benefit to the United States is twofold.
First, it is obvious that the Monroe doctrine is more vital in the
neighborhood of the Panama Canal and the zone of the Caribbean than
anywhere else. There, too, the maintenance of that doctrine falls
most heavily upon the United States. It is therefore essential that
the countries within that sphere shall be removed from the jeopardy
involved by heavy foreign debt and chaotic national finances and from
the ever-present danger of international complications due to disorder
at home. Hence the United States has been glad to encourage and
support American bankers who were willing to lend a helping hand to
the financial rehabilitation of such countries because this financial
rehabilitation and the protection of their customhouses from being the
prey of would be dictators would remove at one stroke the menace of
foreign creditors and the menace of revolutionary disorder.

The second advantage of the United States is one affecting chiefly
all the southern and Gulf ports and the business and industry of the
South. The Republics of Central America and the Caribbean possess
great natural wealth. They need only a measure of stability and the
means of financial regeneration to enter upon an era of peace and
prosperity, bringing profit and happiness to themselves and at the
same time creating conditions sure to lead to a flourishing
interchange of trade with this country.

I wish to call your especial attention to the recent occurrences in
Nicaragua, for I believe the terrible events recorded there during
the revolution of the past summer-the useless loss of life, the
devastation of property, the bombardment of defenseless cities, the
killing and wounding of women and children, the torturing of
noncombatants to exact contributions, and the suffering of thousands
of human beings-might have been averted had the Department of State,
through approval of the loan convention by the Senate, been permitted
to carry out its now well-developed policy of encouraging the
extending of financial aid to weak Central American States with the
primary objects of avoiding just such revolutions by assisting those
Republics to rehabilitate their finances, to establish their currency
on a stable basis, to remove the customhouses from the danger of
revolutions by arranging for their secure administration, and to
establish reliable banks.

During this last revolution in Nicaragua, the Government of that
Republic having admitted its inability to protect American life and
property against acts of sheer lawlessness on the part of the
malcontents, and having requested this Government to assume that
office, it became necessary to land over 2,000 marines and
bluejackets in Nicaragua. Owing to their presence the constituted
Government of Nicaragua was free to devote its attention wholly to
its internal troubles, and was thus enabled to stamp out the
rebellion in a short space of time. When the Red Cross supplies sent
to Granada had been exhausted, 8,000 persons having been given food
in one day upon the arrival of the American forces, our men supplied
other unfortunate, needy Nicaraguans from their own haversacks. I
wish to congratulate the officers and men of the United States navy
and Marine Corps who took part in reestablishing order in Nicaragua
upon their splendid conduct, and to record with sorrow the death of
seven American marines and bluejackets. Since the reestablishment of
peace and order, elections have been held amid conditions of quiet
and tranquility. Nearly all the American marines have now been
withdrawn. The country should soon be on the road to recovery. The
only apparent danger now threatening Nicaragua arises from the
shortage of funds. Although American bankers have already rendered
assistance, they may naturally be loath to advance a loan adequate to
set the country upon its feet without the support of some such
convention as that of June, 1911, upon which the Senate has not yet
acted.

ENFORCEMENT OF NEUTRALITY LAWS

In the general effort to contribute to the enjoyment of peace by
those Republics which are near neighbors of the United States, the
administration has enforced the so-called neutrality statutes with a
new vigor, and those statutes were greatly strengthened in
restricting the exportation of arms and munitions by the joint
resolution of last March. It is still a regrettable fact that certain
American ports are made the rendezvous of professional revolutionists
and others engaged in intrigue against the peace of those Republics.
It must be admitted that occasionally a revolution in this region is
justified as a real popular movement to throw off the shackles of a
vicious and tyrannical government. Such was the Nicaraguan revolution
against the Zelaya regime. A nation enjoying our liberal institutions
can not escape sympathy with a true popular movement, and one so well
justified. In very many cases, however, revolutions in the Republics
in question have no basis in principle, but are due merely to the
machinations of conscienceless and ambitious men, and have no effect
but to bring new suffering and fresh burdens to an already oppressed
people. The question whether the use of American ports as foci of
revolutionary intrigue can be best dealt with by a further amendment
to the neutrality statutes or whether it would be safer to deal with
special cases by special laws is one worthy of the careful
consideration of the Congress.

VISIT OF SECRETARY KNOX TO CENTRAL AMERICA AND THE CARIBBEAN

Impressed with the particular importance of the relations between the
United States and the Republics of Central America and the Caribbean
region, which of necessity must become still more intimate by reason
of the mutual advantages which will be presented by the opening of
the Panama Canal, I directed the Secretary of State last February to
visit these Republics for the purpose of giving evidence of the
sincere friendship and good will which the Government and people of
the United States bear toward them. Ten Republics were visited.
Everywhere he was received with a cordiality of welcome and a
generosity of hospitality such as to impress me deeply and to merit
our warmest thanks. The appreciation of the Governments and people of
the countries visited, which has been appropriately shown in various
ways, leaves me no doubt that his visit will conduce to that closer
union and better understanding between the United States and those
Republics which I have had it much at heart to promote.

OUR MEXICAN POLICY

For two years revolution and counter-revolution has distraught the
neighboring Republic of Mexico. Brigandage has involved a great deal
of depredation upon foreign interests. There have constantly recurred
questions of extreme delicacy. On several occasions very difficult
situations have arisen on our frontier. Throughout this trying
period, the policy of the United States has been one of patient
nonintervention, steadfast recognition of constituted authority in
the neighboring nation, and the exertion of every effort to care for
American interests. I profoundly hope that the Mexican nation may
soon resume the path of order, prosperity, and progress. To that
nation in its sore troubles, the sympathetic friendship of the United
States has been demonstrated to a high degree. There were in Mexico at
the beginning of the revolution some thirty or forty thousand American
citizens engaged in enterprises contributing greatly to the prosperity
of that Republic and also benefiting the important trade between the
two countries. The investment of American capital in Mexico has been
estimated at $1,000,000,000. The responsibility of endeavoring to
safeguard those interests and the dangers inseparable from
propinquity to so turbulent a situation have been great, but I am
happy to have been able to adhere to the policy above outlined-a
policy which I hope may be soon justified by the complete success of
the Mexican people in regaining the blessings of peace and good
order.

AGRICULTURAL CREDITS

A most important work, accomplished in the past year by the American
diplomatic officers in Europe, is the investigation of the
agricultural credit system in the European countries. Both as a means
to afford relief to the consumers of this country through a more
thorough development of agricultural resources and as a means of more
sufficiently maintaining the agricultural population, the project to
establish credit facilities for the farmers is a concern of vital
importance to this Nation. No evidence of prosperity among
well-established farmers should blind us to the fact that lack of
capital is preventing a development of the Nation's agricultural
resources and an adequate increase of the land under cultivation;
that agricultural production is fast falling behind the increase in
population; and that, in fact, although these well-established
farmers are maintained in increasing prosperity because of the
natural increase in population, we are not developing the industry of
agriculture. We are not breeding in proportionate numbers a race of
independent and independence-loving landowners, for a lack of which
no growth of cities can compensate. Our farmers have been our
mainstay in times of crisis, and in future it must still largely be
upon their stability and common sense that this democracy must rely
to conserve its principles of self-government.

The need of capital which American farmers feel to-day had been
experienced by the farmers of Europe, with their centuries-old farms,
many years ago. The problem had been successfully solved in the Old
World and it was evident that the farmers of this country might
profit by a study of their systems. I therefore ordered, through the
Department of State, an investigation to be made by the diplomatic
officers in Europe, and I have laid the results of this investigation
before the governors of the various States with the hope that they
will be used to advantage in their forthcoming meeting.

INCREASE OF FOREIGN TRADE

In my last annual message I said that the fiscal year ended June 30,
1911, was noteworthy as marking the highest record of exports of
American products to foreign countries. The fiscal year 1912 shows
that this rate of advance has been maintained, the total domestic
exports having a valuation approximately Of $2,200,000,000, as
compared with a fraction over $2,000,000,000 the previous year. It is
also significant that manufactured and partly manufactured articles
continue to be the chief commodities forming the volume of our
augmented exports, the demands of our own people for consumption
requiring that an increasing proportion of our abundant agricultural
products be kept at home. In the fiscal year 1911 the exports of
articles in the various stages of manufacture, not including
foodstuffs partly or wholly manufactured, amounted approximately to
$907,500,000. In the fiscal year 1912 the total was nearly
$1,022,000,000, a gain Of $114,000,000.

ADVANTAGE OF MAXIMUM AND MINIMUM TARIFF PROVISION

The importance which our manufactures have assumed in the commerce of
the world in competition with the manufactures of other countries
again draws attention to the duty of this Government to use its
utmost endeavors to secure impartial treatment for American products
in all markets. Healthy commercial rivalry in international
intercourse is best assured by the possession of proper means for
protecting and promoting our foreign trade. It is natural that
competitive countries should view with some concern this steady
expansion of our commerce. If in some instance the measures taken by
them to meet it are not entirely equitable, a remedy should be found.
In former messages I have described the negotiations of the Department
of State with foreign Governments for the adjustment of the maximum
and minimum tariff as provided in section 2 of the tariff law of
1909. The advantages secured by the adjustment of our trade relations
under this law have continued during the last year, and some
additional cases of discriminatory treatment of which we had reason
to complain have been removed. The Department of State has for the
first time in the history of this country obtained substantial
most-favored-nation treatment from all the countries of the world.
There are, however, other instances which, while apparently not
constituting undue discrimination in the sense of section 2, are
nevertheless exceptions to the complete equity of tariff treatment
for American products that the Department of State consistently has
sought to obtain for American commerce abroad.

NECESSITY FOR SUPPLEMENTARY LEGISLATION

These developments confirm the opinion conveyed to you in my annual
message of 1911, that while the maximum and minimum provision of the
tariff law of 1909 has been fully justified by the success achieved
in removing previously existing undue discriminations against
American products, yet experience has shown that this feature of the
law should be amended in such way as to provide a fully effective
means of meeting the varying degrees of discriminatory treatment of
American commerce in foreign countries still encountered, as well as
to protect against injurious treatment on the part of foreign
Governments, through either legislative or administrative measures,
the financial interests abroad of American citizens whose enterprises
enlarge the market for American commodities.

I can not too strongly recommend to the Congress the passage of some
such enabling measure as the bill which was recommended by the
Secretary of State in his letter of December 13, 1911. The object of
the proposed legislation is, in brief, to enable the Executive to
apply, as the case may require, to any or all commodities, whether or
not on the free list from a country which discriminates against the
United States, a graduated scale of duties up to the maximum Of 25
per cent ad valorem provided in the present law. Flat tariffs are out
of date. Nations no longer accord equal tariff treatment to all other
nations irrespective of the treatment from them received. Such a
flexible power at the command of the Executive would serve to
moderate any unfavorable tendencies on the part of those countries
from which the importations into the United States are substantially
confined to articles on the free list as well as of the countries
which find a lucrative market in the United States for their products
under existing customs rates. It is very necessary that the American
Government should be equipped with weapons of negotiation adapted to
modern economic conditions, in order that we may at all times be in a
position to gain not only technically just but actually equitable
treatment for our trade, and also for American enterprise and vested
interests abroad.

BUSINESS SECURED TO OUR COUNTRY BY DIRECT OFFICIAL EFFORT

As illustrating the commercial benefits of the Nation derived from
the new diplomacy and its effectiveness upon the material as well as
the more ideal side, it may be remarked that through direct official
efforts alone there have been obtained in the course of this
administration, contracts from foreign Governments involving an
expenditure of $50,000,000 in the factories of the United States.
Consideration of this fact and some reflection upon the necessary
effects of a scientific tariff system and a foreign service alert and
equipped to cooperate with the business men of America carry the
conviction that the gratifying increase in the export trade of this
country is, in substantial amount, due to our improved governmental
methods of protecting and stimulating it. It is germane to these
observations to remark that in the two years that have elapsed since
the successful negotiation of our new treaty with Japan, which at the
time seemed to present so many practical difficulties, our export
trade to that country has increased at the rate of over $1,000,000 a
month. Our exports to Japan for the year ended June 30, 1910, were
$21,959,310, while for the year ended June 30, 1912, the exports were
$53,478,046, a net increase in the sale of American products of nearly
150 per cent.

SPECIAL CLAIMS ARBITRATION WITH GREAT BRITAIN

Under the special agreement entered into between the United States
and Great Britain on August 18, 1910, for the arbitration of
outstanding pecuniary claims, a schedule of claims and the terms of
submission have been agreed upon by the two Governments, and together
with the special agreement were approved by the Senate on July 19,
1911, but in accordance with the terms of the agreement they did not
go into effect until confirmed by the two Governments by an exchange
of notes, which was done on April 26 last. Negotiations, are still in
progress for a supplemental schedule of claims to be submitted to
arbitration under this agreement, and meanwhile the necessary
preparations for the arbitration of the claims included in the first
schedule have been undertaken and are being carried on under the
authority of an appropriation made for that purpose at the last
session of Congress. It is anticipated that the two Governments will
be prepared to call upon the arbitration tribunal, established under
this agreement, to meet at Washington early next year to proceed with
this arbitration.

FUR SEAL TREATY AND NEED FOR AMENDMENT OF OUR STATUTE

The act adopted at the last session of Congress to give effect to the
fur-seal convention Of July 7, 1911, between Great Britain, Japan,
Russia, and the United States provided for the suspension of all land
killing of seals on the Pribilof Islands for a period of five years,
and an objection has now been presented to this provision by the
other parties in interest, which raises the issue as to whether or
not this prohibition of land killing is inconsistent with the spirit,
if not the letter, of the treaty stipulations. The justification of
establishing this close season depends, under the terms of the
convention, upon how far, if at all, it is necessary for protecting
and preserving the American fur-seal herd and for increasing its
number. This is a question requiring examination of the present
condition of the herd and the treatment which it needs in the light
of actual experience and scientific investigation. A careful
examination of the subject is now being made, and this Government
will soon be in possession of a considerable amount of new
information about the American seal herd, which has been secured
during the past season and will be of great value in determining this
question; and if it should appear that there is any uncertainty as to
the real necessity for imposing a close season at this time I shall
take an early opportunity to address a special message to Congress on
this subject, in the belief that this Government should yield on this
point rather than give the slightest ground for the charge that we
have been in any way remiss in observing our treaty obligations.

FINAL SETTLEMENT OF NORTH ATLANTIC FISHERIES DISPUTE

On the 20th of July last an agreement was concluded between the
United States and Great Britain adopting, with certain modifications,
the rules and method of procedure recommended in the award rendered by
the North Atlantic Coast Fisheries Arbitration Tribunal on September
7, 1910, for the settlement hereafter, in accordance with the
principles laid down in the award, of questions arising with
reference to the exercise of the American fishing liberties under
Article I of the treaty of October 20, 1818, between the United
States and Great Britain. This agreement received the approval of the
Senate on August I and was formally ratified by the two Governments on
November 15 last. The rules and a method of procedure embodied in the
award provided for determining by an impartial tribunal the
reasonableness of any new fishery regulations on the treaty coasts of
Newfoundland and Canada before such regulations could be enforced
against American fishermen exercising their treaty liberties on those
coasts, and also for determining the delimitation of bays on such
coasts more than 10 miles wide, in accordance with the definition
adopted by the tribunal of the meaning of the word "bays" as used in
the treaty. In the subsequent negotiations between the two
Governments, undertaken for the purpose of giving practical effect to
these rules and methods of procedure, it was found that certain
modifications therein were desirable from the point of view of both
Governments, and these negotiations have finally resulted in the
agreement above mentioned by which the award recommendations as
modified by mutual consent of the two Governments are finally adopted
and made effective, thus bringing this century-old controversy to a
final conclusion, which is equally beneficial and satisfactory to
both Governments.

IMPERIAL VALLEY AND MEXICO

In order to make possible the more effective performance of the work
necessary for the confinement in their present channel of the waters
of the lower Colorado River, and thus to protect the people of the
Imperial Valley, as well as in order to reach with the Government of
Mexico an understanding regarding the distribution of the waters of
the Colorado River, in which both Governments are much interested,
negotiations are going forward with a view to the establishment of a
preliminary Colorado River commission, which shall have the powers
necessary to enable it to do the needful work and with authority to
study the question of the equitable distribution of the waters. There
is every reason to believe that an understanding upon this point will
be reached and that an agreement will be signed in the near future.

CHAMIZAL DISPUTE

In the interest of the people and city of El Paso this Government has
been assiduous in its efforts to bring to an early settlement the
long-standing Chamizal dispute with Mexico. Much has been
accomplished, and while the final solution of the dispute is not
immediate, the favorable attitude lately assumed by the Mexican
Government encourages the hope that this troublesome question will be
satisfactorily and definitively settled at an early day.

INTERNATIONAL COMMISSION OF JURISTS

In pursuance of the convention of August 23, 1906, signed at the
Third Pan American Conference, held at Rio de Janeiro, the
International Commission of jurists met at that capital during the
month of last June. At this meeting 16 American Republics were
represented, including the United States, and comprehensive plans for
the future work of the commission were adopted. At the next meeting
fixed for June, 1914, committees already appointed are instructed to
I report regarding topics assigned to them.

OPIUM CONFERENCE-UNFORTUNATE FAILURE OF OUR GOVERNMENT TO ENACT
RECOMMENDED LEGISLATION

In my message on foreign relations communicated to the two Houses of
Congress December 7, 1911, I called especial attention to the
assembling of the Opium Conference at The Hague, to the fact that
that conference was to review all pertinent municipal laws relating
to the opium and allied evils, and certainly all international rules
regarding these evils, and to the -fact that it seemed to me most
essential that the Congress should take immediate action on the
anti-narcotic legislation before the Congress, to which I had
previously called attention by a special message.

The international convention adopted by the conference conforms
almost entirely to the principles contained in the proposed
anti-narcotic legislation which has been before the last two
Congresses. It was most unfortunate that this Government, having
taken the initiative in the international action which eventuated in
the important international opium convention, failed to do its share
in the great work by neglecting to pass the necessary legislation to
correct the deplorable narcotic evils in the United States as well as
to redeem international pledges upon which it entered by virtue of the
above-mentioned convention. The Congress at its present session should
enact into law those bills now before it which have been so carefully
drawn up in collaboration between the Department of State and the
other executive departments, and which have behind them not only the
moral sentiment of the country, but the practical support of all the
legitimate trade interests likely to be affected. Since the
international convention was signed, adherence to it has been made by
several European States not represented at the conference at The Hague
and also by seventeen Latin-American Republics.

EUROPE AND THE NEAR EAST

The war between Italy and Turkey came to a close in October last by
the signature of a treaty of peace, subsequently to which the Ottoman
Empire renounced sovereignty over Cyrenaica and Tripolitania in favor
of Italy. During the past year the Near East has unfortunately been
the theater of constant hostilities. Almost simultaneously with the
conclusion of peace between Italy and Turkey and their arrival at an
adjustment of the complex questions at issue between them, war broke
out between Turkey on the one hand and Bulgaria, Greece, Montenegro,
and Servia on the other. The United States has happily been involved
neither directly nor indirectly with the causes or questions incident
to any of these hostilities and has maintained in regard to them an
attitude of absolute neutrality and of complete political
disinterestedness. In the second war in which the Ottoman Empire has
been engaged the loss of life and the consequent distress on both
sides have been appalling, and the United States has found occasion,
in the interest of humanity, to carry out the charitable desires of
the American people, to extend a measure of relief to the sufferers
on either side through the impartial medium of the Red Cross. Beyond
this the chief care of the Government of the United States has been
to make due provision for the protection of its national resident in
belligerent territory. In the exercise of my duty in this matter I
have dispatched to Turkish waters a special-service squadron,
consisting of two armored cruisers, in order that this Government may
if need be bear its part in such measures as it may be necessary for
the interested nations to adopt for the safeguarding of foreign lives
and property in the Ottoman Empire in the event that a dangerous
situation should develop. In the meanwhile the several interested
European powers have promised to extend to American citizens the
benefit of such precautionary or protective measures as they might
adopt, in the same manner in which it has been the practice of this
Government to extend its protection to all foreign residents in those
countries of the Western Hemisphere in which it has from time to time
been the task of the United States to act in the interest of peace
and good order. The early appearance of a large fleet of European
warships in the Bosphorus apparently assured the protection of
foreigners in that quarter, where the presence of the American
stationnaire the U. S. S. Scorpion sufficed, tinder the
circumstances, to represent the United States. Our cruisers were thus
left free to act if need be along the Mediterranean coasts should any
unexpected contingency arise affecting the numerous American
interests in the neighborhood of Smyrna and Beirut.

SPITZBERGEN

The great preponderance of American material interests in the
sub-arctic island of Spitzbergen, which has always been regarded
politically as "no man's land," impels this Government to a continued
and lively interest in the international dispositions to be made for
the political governance and administration of that region. The
conflict of certain claims of American citizens and others is in a
fair way to adjustment, while the settlement of matters of
administration, whether by international conference of the interested
powers or otherwise, continues to be the subject of exchange of views
between the Governments concerned.

LIBERIA

As a result of the efforts of this Government to place the Government
of Liberia in position to pay its outstanding indebtedness and to
maintain a stable and efficient government, negotiations for a loan
of $1,700,000 have been successfully concluded, and it is anticipated
that the payment of the old loan and the issuance of the bonds of the
1912 loan for the rehabilitation of the finances of Liberia will
follow at an early date, when the new receivership will go into
active operation. The new receivership will consist of a general
receiver of customs designated by the Government of the United States
and three receivers of customs designated by the Governments of
Germany, France, and Great Britain, which countries have commercial
interests in the Republic of Liberia.

In carrying out the understanding between the Government of Liberia
and that of the United States, and in fulfilling the terms of the
agreement between the former Government and the American bankers,
three competent ex-army officers are now effectively employed by the
Liberian Government in reorganizing the police force of the Republic,
not only to keep in order the native tribes in the hinterland but to
serve as a necessary police force along the frontier. It is hoped
that these measures will assure not only the continued existence but
the prosperity and welfare of the Republic of Liberia. Liberia
possesses fertility of soil and natural resources, which should
insure to its people a reasonable prosperity. It was the duty of the
United States to assist the Republic of Liberia in accordance with
our historical interest and moral guardianship of a community founded
by American citizens, as it was also the duty of the American
Government to attempt to assure permanence to a country of much
sentimental and perhaps future real interest to a large body of our
citizens.

MOROCCO

The legation at Tangier is now in charge of our consul general, who
is acting as charge d'affaires, as well as caring for our commercial
interests in that country. In view of the fact that many of the
foreign powers are now represented by charges d'affaires it has not
been deemed necessary to appoint at the present time a minister to
fill a vacancy occurring in that post.

THE FAR EAST

The political disturbances in China in the autumn and winter of
1911-12 resulted in the abdication of the Manchu rulers on February
12, followed by the formation of a provisional republican government
empowered to conduct the affairs of the nation until a permanent
government might be regularly established. The natural sympathy of
the American people with the assumption of republican principles by
the Chinese people was appropriately expressed in a concurrent
resolution of Congress on April 17, 1912. A constituent assembly,
composed of representatives duly chosen by the people of China in the
elections that are now being held, has been called to meet in January
next to adopt a permanent constitution and organize the Government of
the nascent Republic. During the formative constitutional stage and
pending definite action by the assembly, as expressive of the popular
will, and the hoped-for establishment of a stable republican form of
government, capable of fulfilling its international obligations, the
United States is, according to precedent, maintaining full and
friendly de facto relations with the provisional Government.

The new condition of affairs thus created has presented many serious
and complicated problems, both of internal rehabilitation and of
international relations, whose solution it was realized would
necessarily require much time and patience. From the beginning of the
upheaval last autumn it was felt by the United States, in common with
the other powers having large interests in China, that independent
action by the foreign Governments in their own individual interests
would add further confusion to a situation already complicated. A
policy of international cooperation was accordingly adopted in an
understanding, reached early in the disturbances, to act together for
the protection of the lives and property of foreigners if menaced, to
maintain an attitude of strict impartiality as between the contending
factions, and to abstain from any endeavor to influence the Chinese in
their organization of a new form of government. In view of the
seriousness of the disturbances and their general character, the
American minister at Peking was instructed at his discretion to
advise our nationals in the affected districts to concentrate at such
centers as were easily accessible to foreign troops or men of war.
Nineteen of our naval vessels were stationed at various Chinese
ports, and other measures were promptly taken for the adequate
protection of American interests.

It was further mutually agreed, in the hope of hastening an end to
hostilities, that none of the interested powers would approve the
making of loans by its nationals to either side. As soon, however, as
a united provisional Government of China was assured, the United
States joined in a favorable consideration of that Government's
request for advances needed for immediate administrative necessities
and later for a loan to effect a permanent national reorganization.
The interested Governments had already, by common consent, adopted,
in respect to the purposes, expenditure, and security of any loans to
China made by their nationals, certain conditions which were held to
be essential, not only to secure reasonable protection for the
foreign investors, but also to safeguard and strengthen China's
credit by discouraging indiscriminate borrowing and by insuring the
application of the funds toward the establishment of the stable and
effective government necessary to China's welfare. In June last
representative banking groups of the United States, France, Germany,
Great Britain, Japan, and Russia formulated, with the general
sanction of their respective Governments, the guaranties that would
be expected in relation to the expenditure and security of the large
reorganization loan desired by China, which, however, have thus far
proved unacceptable to the provisional Government.

SPECIAL MISSION OF CONDOLENCE TO JAPAN

In August last I accredited the Secretary of State as special
ambassador to Japan, charged with the mission of bearing to the
imperial family, the Government, and the people of that Empire the
sympathetic message of the American Commonwealth oil the sad occasion
of the death of His Majesty the Emperor Mutsuhito, whose long and
benevolent reign was the greater part of Japan's modern history. The
kindly reception everywhere accorded to Secretary Knox showed that
his mission was deeply appreciated by the Japanese nation and
emphasized strongly the friendly relations that have for so many
years existed between the two peoples.

SOUTH AMERICA

Our relations with the Argentine Republic are most friendly and
cordial. So, also, are our relations with Brazil, whose Government
has accepted the invitation of the United States to send two army
officers to study at the Coast Artillery School at Fort Monroe. The
long-standing Alsop claim, which had been the only hindrance to the
healthy growth of the most friendly relations between the United
States and Chile, having been eliminated through the submission of
the question to His Britannic Majesty King George V as "amiable
compositeur," it is a cause of much gratification to me that our
relations with Chile are now established upon a firm basis of growing
friendship. The Chilean Government has placed an officer of the United
States Coast Artillery in charge of the Chilean Coast Artillery
School, and has shown appreciation of American methods by confiding
to an American firm important work for the Chilean coast defenses.

Last year a revolution against the established Government of Ecuador
broke out at the principal port of that Republic. Previous to this
occurrence the chief American interest in Ecuador, represented by the
Guayaquil & Quito Railway Co., incorporated in the United States, had
rendered extensive transportation and other services on account to
the Ecuadorian Government, the amount of which ran into a sum which
was steadily increasing and which the Ecuadorian Government had made
no provision to pay, thereby threatening to crush out the very
existence of this American enterprise. When tranquillity had been
restored to Ecuador as a result of the triumphant progress of the
Government forces from Quito, this Government interposed its good
offices to the end that the American interests in Ecuador might be
saved from complete extinction. As a part of the arrangement which
was reached between the parties, and at the request of the Government
of Ecuador, I have consented to name an arbitrator, who, acting under
the terms of the railroad contract, with an arbitrator named by the
Ecuadorian Government, will pass upon the claims that have arisen
since the arrangement reached through the action of a similar
arbitral tribunal in 1908.

In pursuance of a request made some time ago by the Ecuadorian
Government, the Department of State has given much attention to the
problem of the proper sanitation of Guayaquil. As a result a detail
of officers of the Canal Zone will be sent to Guayaquil to recommend
measures that will lead to the complete permanent sanitation of this
plague and fever infected region of that Republic, which has for so
long constituted a menace to health conditions on the Canal Zone. It
is hoped that the report which this mission will furnish will point
out a way whereby the modicum of assistance which the United States
may properly lend the Ecuadorian Government may be made effective in
ridding the west coast of South America of a focus of contagion to
the future commercial current passing through the Panama Canal.

In the matter of the claim of John Celestine Landreau against the
Government of Peru, which claim arises out of certain contracts and
transactions in connection with the discovery and exploitation of
guano, and which has been under discussion between the two
Governments since 1874, I am glad to report that as the result of
prolonged negotiations, which have been characterized by the utmost
friendliness and good will on both sides, the Department of State has
succeeded in securing the consent of Peru to the arbitration of the
claim, and that the negotiations attending the drafting and signature
of a protocol submitting the claim to an arbitral tribunal are
proceeding with due celerity.

An officer of the American Public Health Service and an American
sanitary engineer are now on the way to Iquitos, in the employ of the
Peruvian Government, to take charge of the sanitation of that river
port. Peru is building a number of submarines in this country, and
continues to show every desire to have American capital invested in
the Republic.

In July the United States sent undergraduate delegates to the Third
International Students Congress held at Lima, American students
having been for the first time invited to one of these meetings.

The Republic of Uruguay has shown its appreciation of American
agricultural and other methods by sending a large commission to this
country and by employing many American experts to assist in building
up agricultural and allied industries in Uruguay.

Venezuela is paying off the last of the claims the settlement of
which was provided for by the Washington protocols, including those
of American citizens. Our relations with Venezuela are most cordial,
and the trade of that Republic with the United States is now greater
than with any other country.

CENTRAL AMERICA AND THE CARIBBEAN

During the past summer the revolution against the administration
which followed the assassination of President Caceres a year ago last
November brought the Dominican Republic to the verge of administrative
chaos, without offering any guaranties of eventual stability in the
ultimate success of either party. In pursuance of the treaty
relations of the United States with the Dominican Republic, which
were threatened by the necessity of suspending the operation under
American administration of the customhouses on the Haitian frontier,
it was found necessary to dispatch special commissioners to the
island to reestablish the customhouses and with a guard sufficient to
insure needed protection to the customs administration. The efforts
which have been made appear to have resulted in the restoration of
normal conditions throughout the Republic. The good offices which the
commissioners were able to exercise were instrumental in bringing the
contending parties together and in furnishing a basis of adjustment
which it is hoped will result in permanent benefit to the Dominican
people.

Mindful of its treaty relations, and owing to the position of the
Government of the United States as mediator between the Dominican
Republic and Haiti in their boundary dispute, and because of the
further fact that the revolutionary activities on the
Haitian-Dominican frontier had become so active as practically to
obliterate the line of demarcation that had been heretofore
recognized pending the definitive settlement of the boundary in
controversy, it was found necessary to indicate to the two island
Governments a provisional de facto boundary line. This was done
without prejudice to the rights or obligations of either country in a
final settlement to be reached by arbitration. The tentative line
chosen was one which, under the circumstances brought to the
knowledge of this Government, seemed to conform to the best interests
of the disputants. The border patrol which it had been found necessary
to reestablish for customs purposes between the two countries was
instructed provisionally to observe this line.

The Republic of Cuba last May was in the throes of a lawless uprising
that for a time threatened the destruction of a great deal of valuable
property-much of it owned by Americans and other foreigners-as well as
the existence of the Government itself. The armed forces of Cuba being
inadequate to guard property from attack and at the same time properly
to operate against the rebels, a force of American marines was
dispatched from our naval station at Guantanamo into the Province of
Oriente for the protection of American and other foreign life and
property. The Cuban Government was thus able to use all its forces in
putting down the outbreak, which it succeeded in doing in a period of
six weeks. The presence of two American warships in the harbor of
Habana during the most critical period of this disturbance
contributed in great measure to allay the fears of the inhabitants,
including a large foreign colony.

There has been under discussion with the Government of Cuba for some
time the question of the release by this Government of its leasehold
rights at Bahia Honda, on the northern coast of Cuba, and the
enlargement, in exchange therefor, of the naval station which has
been established at Guantanamo Bay, on the south. As the result of
the negotiations thus carried on an agreement has been reached
between the two Governments providing for the suitable enlargement of
the Guantanamo Bay station upon terms which are entirely fair and
equitable to all parties concerned.

At the request alike of the Government and both political parties in
Panama, an American commission undertook supervision of the recent
presidential election in that Republic, where our treaty relations,
and, indeed, every geographical consideration, make the maintenance
of order and satisfactory conditions of peculiar interest to the
Government of the United States. The elections passed without
disorder, and the new administration has entered upon its functions.

The Government of Great Britain has asked the support of the United
States for the protection of the interests of British holders of the
foreign bonded debt of Guatemala. While this Government is hopeful of
an arrangement equitable to the British bondholders, it is naturally
unable to view the question apart from its relation to the broad
subject of financial stability in Central America, in which the
policy of the United States does not permit it to escape a vital
interest. Through a renewal of negotiations between the Government of
Guatemala and American bankers, the aim of which is a loan for the
rehabilitation of Guatemalan finances, a way appears to be open by
which the Government of Guatemala could promptly satisfy any
equitable and just British claims, and at the same time so improve
its whole financial position as to contribute greatly to the
increased prosperity of the Republic and to redound to the benefit of
foreign investments and foreign trade with that country. Failing such
an arrangement, it may become impossible for the Government of the
United States to escape its obligations in connection with such
measures as may become necessary to exact justice to legitimate
foreign claims.

In the recent revolution in Nicaragua, which, it was generally
admitted, might well have resulted in a general Central American
conflict but for the intervention of the United States, the
Government of Honduras was especially menaced; but fortunately
peaceful conditions were maintained within the borders of that
Republic. The financial condition of that country remains unchanged,
no means having been found for the final adjustment of pressing
outstanding foreign claims. This makes it the more regrettable that
the financial convention between the United States and Honduras has
thus far failed of ratification. The Government of the United States
continues to hold itself ready to cooperate with the Government of
Honduras, which it is believed, can not much longer delay the meeting
of its foreign obligations, and it is hoped at the proper time
American bankers will be willing to cooperate for this purpose.

NECESSITY FOR GREATER GOVERNMENTAL EFFORT IN RETENTION AND EXPANSION
OF OUR FOREIGN TRADE

It is not possible to make to the Congress a communication upon the
present foreign relations of the United States so detailed as to
convey an adequate impression of the enormous increase in the
importance and activities of those relations. If this Government is
really to preserve to the American people that free opportunity in
foreign markets which will soon be indispensable to our prosperity,
even greater efforts must be made. Otherwise the American merchant,
manufacturer, and exporter will find many a field in which American
trade should logically predominate preempted through the more
energetic efforts of other governments and other commercial nations.

There are many ways in which through hearty cooperation the
legislative and executive branches of this Government can do much.
The absolute essential is the spirit of united effort and singleness
of purpose. I will allude only to a very few specific examples of
action which ought then to result. America can not take its proper
place in the most important fields for its commercial activity and
enterprise unless we have a merchant marine. American commerce and
enterprise can not be effectively fostered in those fields unless we
have good American banks in the countries referred to. We need
American newspapers in those countries and proper means for public
information about them. We need to assure the permanency of a trained
foreign service. We need legislation enabling the members of the
foreign service to be systematically brought in direct contact with
the industrial, manufacturing, and exporting interests of this
country in order that American business men may enter the foreign
field with a clear perception of the exact conditions to be dealt
with and the officers themselves may prosecute their work with a
clear idea of what American industrial and manufacturing interests
require.

CONCLUSION

Congress should fully realize the conditions which obtain in the
world as we find ourselves at the threshold of our middle age as a
Nation. We have emerged full grown as a peer in the great concourse
of nations. We have passed through various formative periods. We have
been self-centered in the struggle to develop our domestic resources
and deal with our domestic questions. The Nation is now too matured
to continue in its foreign relations those temporary expedients
natural to a people to whom domestic affairs are the sole concern. In
the past our diplomacy has often consisted, in normal times, in a mere
assertion of the right to international existence. We are now in a
larger relation with broader rights of our own and obligations to
others than ourselves. A number of great guiding principles were laid
down early in the history of this Government. The recent task of our
diplomacy has been to adjust those principles to the conditions of
to-day, to develop their corollaries, to find practical applications
of the old principles expanded to meet new situations. Thus are being
evolved bases upon which can rest the superstructure of policies which
must grow with the destined progress of this Nation. The