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CAUSES OF THE PRESENT FINAN
CIAL CONDITIONS IS MADE THE CHIEF TOPIC. SUGGESTS REMEDIES FOR ILLS CONTROL OF CORPORATIONS AND RAILROADS TO PREVENT OVERCAPITALIZATION. Believes This Would Solve the Prob« lem Together with Provfslon for More Elastio Currency—Recom mends Postal Banks and Asks for Legislation Along Many Lines. Washington, Deo. 3. President Jtoosevelt's annual message to congress is a voluminous document of nearly 20,000 words, by far the longest mes page he has ever submitted to congress. The opening subject of the message is •the financial condition of the country, and for which the president lays much of the blame upon unscrupulous stock speculators, and says: "In any large body of men, however, there are certain to be some who are dishonest, and if the conditions are such that these men prosper or com mit their misdeeds with Impunity, their example is a very evil thing for tht community. Where these men are busi ness men of great sagacity and of tem perament both unscrupulous and reck less, and where the conditions are such that they act without supervision or control and at first without effective check from public opinion, they delude many innocent people into making in vestments or embarking in kinds of business that are really unsound. "When the misdeeds of these successful ly dishonest men are discovered, suf fering comes i%ot only upon them, but upon the innocent men whom they have misled. It is a painful awakening, whenever it occurs and, naturally, when it does occur those who suffer are apt to forget that the longer it was deferred the more painful it would be. In the effort to punish the guilty it is both wise and proper to endeavor so far as possible to minimize the dis tress of those who have been misled by the guii-ty. Yet it is not possible to refrain because of such distress from striving to put an end to the misdeeds that are the ultimate causes of the suf fering, and, as a means to this end, where possible to punish those re sponsible for them. There may be hon est diff%rences of opinion as to many governmental policies but surely there can be no such differences as to the need of unflinching perseverance in the war against successful dishonesty." He quotes at length from his mes sage of last year in which he advo cated federal control of corporations doing interstate business, and believes that in such control would be found the remedy, for overcapitalization and stock speculation which he believes have brought about the present finan cial conditions. He says: "Our steady aim should be by legis lation, cautiously and carefully under taken, but resolutely persevered in, to assert the sovereignty of the national government by affirmative action. "This is only in form an innovation. In substance it is merely a restoration for from the earliest time such regula tion of industrial activities has been recognized in the action of the law making bodies and all that I propose is to meet the changed conditions in such manner as will prevent the com monwealth abdicating the power it has always possessed, not only in this coun try, but also in England before and since this country became a separate nation. Federal Control of Railroads Is Favored. "No small part of the trouble that we have comes from carrying to an ex treme the national virtue of self-re liance, of independence in initiative and action. It is wise to conserve this virtue and to provide for its fullest ex •roise, compatible with seeing that lib erty does not become a liberty to wrong others. Unfortunately, this is the kind of liberty that the lack of all effective regulation inevitably breeds. The founders of the constitution pro vided that the national government should have complete and sole control of interstate commerce. There was then practically no interstate business save such as was conducted by water, and this the national government at once proceeded to regulate in thorough going and effective fashion. Condi tions have now so wholly cbange'd that the interstate commerce by water is in significant compared with the amount that goes by land, and-almost all big business concerns are now engaged in interstate commerce. As a result, it can be but partially and imperfectly controlled or regulated by the action of any one of the several states such ac tion inevitably tending to be either too drastic or else too lax, and in either ease ineffective for purposes of justice. Only the national government can in thoroughgoing fashion exercise the needed control. This does notj mean that there should be any exten/ion of federal authority, for such authority already exists under the constitution in amplest and most far-reaching form but it does mean that there should be an extension of federal activity. This is not advocating centralizcition. It is merely looking facts in the face, and realizing that centralization in business has already come and can not be avoid ed or undone, and that the public at large can only protect itself from cer tain evil effects of this business cen tralization by providing better methods for the exercise of control through the authority already centralized in the national government by the constitu tion itself. There must be no halt in the healthy constructive course of ac tion which this nation has elected to pursue,' and has steadily* pursued, dur-: ing the last six years, as shown bQth In the legislation of the congress.and the administration of the law by the de partment of justice. The most vital need is in connection with the railroads. As to these, in my judgment there should now be eithera national incor poration act or a law licensing railway companies to engage in interstate com merce upon certain conditions. The law should be so framed as to give to the Interstate commerce commission power to pass upon,the future issue of securi ties, while ample means should be. pro- Tided to enable the commission, when ever in its judgment it is necessary, to make a physical valuation of any rail road. As I stated in my message totthe congress a year ago, railroads, should be glv^n power to enter into agree ments.subject to these agreements be ing madepublic in minute detail and to ths consent of the Interstate commerce commission being first obtained. Until the national government assumes proper control of Interstate commerce, in the exercise of the authority it al ready possesses, it will be impossible either to give to or to get from the railroads full justice. The railroads and all other great corporations will do well to recognize that this control must come the only question is as to what- governmental body can most wisely exercise it. The courts will de termine the limits within -frhich the federal authority can exercise it, and there will still remain ample work within each state for the railway com- by the government, and must be issued mission of that state and the national interstate commerce commission will work in harmony with the several state commissions, each within its own prov ince, to achieve the desired end. Control of Interstate Business Concerns Urged. "Moreover, in my Judgment there should be additional legislation looking to the proper control of the great business con cerns engaged in interstate business, this control to be exercised for their own benefit and prosperity no less than for the protection of investors and of the general public. As I have repeatedly said in messages to congress and else where, experience has definitely shown not merely the unwisdom but the futility of endeavoring to put a stop to all busi ness combinations. Modern industrial conditions are such that combination is not only necessary but inevitable. It is wealthy men, or men who pose as such so' the world of business just as "it is so in the world of labor, and it is as-idle .to desire to. put an end to all corpora tions, to all big combinations of capital, as to desire to put an end to combinar tions of labor. Corporation and labor union alike have come to stay.- Each if properly managed is a source of good and not evil. Whenever in either there is evil, it should be promptly held to ac count but it should receive hearty en couragement so long as it is properly managed. It is profoundly immoral to put or keep on the statute books a law, nominally in the interest of public moral ity, that really puts a premium upon public immorality, by undertaking to forbid honest men from doing what must be done under modern business condi tions, so that the law itself provides that its own infraction must be the condition precedent upon business success. To aim at the accomplishment of too much usu ally means the accomplishment of too lit tle, and often the doing of positive dam age. "The antitrust law should net be re pealed but it should be made both more efficient and more in harmony with act ual conditions. It should be so amended as to forbid only the kind of combination which does harm to the general public, such amendment to be accompanied by, or to be an incident of, a grant of su pervisory power to the government over these big corporations engaged in inter state business. This should be accom panied by provision for the compulsory publication of accounts and the subjec tion of bookstand papers to the inspec tion of the government officials. A be ginning has already been made for such supervision by the establishment of the bureau of corporations. "The antitrust law sliould not prohibit combinations that do ne injustice to the public, still less those the existence of which is on the whole of benefit to the public. But even if this feature of the law were abolished, there would remain as an equally objectionable feature the difficulty and delay now incident to its enforcement. The government must now submit to irksome and repeated delays before obtaining a- final decision of the courts upon proceedings instituted, and even a favorable decree may mean an empty victory. Moreover, to attempt to control these corporations by~-lawsuits means to impose upon both the depart ment of justice and the courts an im possible burden it is not feasible to carry on more than a limited number ot such suits. Such a law to be really effective must of course be administered by an executive body, and not merely by means of lawsuits. The design should be to prevent the abuses incident to the crea tion of unhealthy and improper combina tions, instead of waiting until they are in existence and then attempting to de stroy them by civil or criminal proceed ings. Investing Public Should Be Amply Safeguarded. "The congress has the power to charter corporations to engage in interstate and foreign commerce, and a general law can be enacted under the provisions of which existing corporations could take out fed eral charters and new federal' corpora tions could be created. An essential pro vision of such a law should be a method of predetermining by some federal board or commission whether the applicant for a federal charter was an association or combination within the restrictions of the federal law. Provision should also be made for complete publicity in. all matters affecting the public and complete protec tion to the investing public and the share holders in the matter of issuing corporate securities. If an incorporation law is not deemed advisable, a license act for big interstate corporations' might be enacted or a combination of the two might lie tried. The supervision established might be analogous to. that now exercised over national banks. At least, the antitrust act should be supplemented by specific prohibitions of the methods which ex perience has shown have been' of most service in enabling monopolistic combina tions to crush out competition. The re%l owners of a corporation should be com pelled to do business in their own name. The right to hold stock in other corpora tions should heareafter be denied to inter state corporations, unless on approval by the proper government officials, and a prerequisite to such approval should be the listing with the government of all owners and stockholders, both by the corporation owning such stock and by the corporations in which such stock is owned. "To confer upon the national govern ment, in connection with the amendment I advocate in the antitrust law, power of supervision over big business concerns engaged in interstate commerce, would benefit them as it has benefited the na tional banks. In the recenta business crisis it is noteworthy that the institu tions which failed were institutions which were not under the supervision and control of the national government. Those which were under national con trol stood the test. "National control Of the kind above ad vocated would be to the benefit of every well-managed railway. From the stand point of the public there is need for ad ditional tracks, aditional terminals, and improvements in the' actual- handling of the railroads, and all this as rapidly as possible. Ample, safe, and speedy trans portation facilities are even more neces sary th$n cheap transportation. There- 1 fire, there is need 'for the investment "'of money which will provide for all these things, white' at the same, time securing as fas as is possible better wages and shorter hours for their employes. There fore, while.ther^ bust be just and rea sonable regulation of rates, we should be the first to .protest ..against any -arbitrary and unthinking movement to cut them down without the fullest and most care ful consideration qf all interests con cerned and of the actual needs of the situation. Only a special body of men acting for this national government un der authority Conferred upon it by th« congress is competent to pass judgment. on such a matter. Greater Elasticity In Current*?- IN Urged. The president quotes extensively from his last message In dealing with the 41* rect subject of currency legislation, and says: "I again urge on the congress the need of immediate attention to this matter. We need a greater elasticity ,in our cur rency provided, of course, that we recog nize the even greater need of a safe and secure currency. There must always be the most rigid examination by the na tional authorities. Provision should be made for an emergency currency. The emergency issue should, of course, be made with an effective guaranty, and up on conditions carefully prescribed by the government. Such emergency issue must be based on adequate securities approved under a heavy tax. This would permit currency being issued when the demand for it was urgent, while securing its re tirement as the demand fell off. It is worth investigating to .^determine whether officers and directors of national banks should ever be allowed to loan to them selves. Trust companies should be sub ject to the same supervision as banks legislation to this effect should be en acted for the District of Columbia and the territories. "Yet we must also remember that even the wisest legislation on the subject can only accomplish a certain amount. No legislation can by any possibility guar antee the business community against the results of speculative folly any more than it can guarantee an individual against the results of his extravagance. When an in dividual mortgages his house to buy an automobile he invites disaster and when I or are unscrupulously or foolishly eager to become such, indulge in reckless spec: uteition^especially if it is accompanied by' dishonesty—they jeopardize not only their own future but the future o€ all their in nocent fellow-citizens, for they expose the whole business community to panic and distress." He advises against any general tariff legislation this session of congress, and says: "In a country of such phenomenal growth as ours it is probably well that every dozen years or so the tariff laws should be carefully scrutinized so as to see that no excessive or improper bene fits are conferred thereby, that proper revenue is provided, and that our foreign trade is encouraged. There must always be as a minimum a tariff which will not only al low for the collection of an ample rev enue but which will at least make good the difference in cost of production here and abroad that is, the difference in the labor cost here and abroad, for the well-beie% of the wage-worker must ever be a cardinal point of American policy. The question should be approached pure ly from a business standpoint both the time and the manner of the change being such as to arouse the minimum of agi tation and disturbance in the business world, and to give the least play for selfish and factional motives. The sole consideration should be to see that the sum total of changes represent the pub lic nood. This means that the subject cannot with wisdom be dealt, with in the year preceding a presidential election, be cause as a matter of fact experience has conclusively shown that at such a time it is impossible to get men to treat it from the standpoint of the public good. In sny judgment the wise time to deal with the matter is immediately after such elec tion." He asks for the repeal of the tariff on paper an'l wood pulp. He reviews and enlarges upon his pre vious recommendations for the enact ment- of federal inheritance and income tax laws. .Attention is called to the prosecution of wealthy offenders against the national laws, and in this connection he asks that the laws under which these prosecutions are brought ..be strengthened and made more definite. The I'so and the Abuse of Injunctions. "Instances of abuse in the granting of injunctions'in labor disputes continue to oiciir, and the resentment in the minds of those who feel that their rights are being invaded and their liberty of action and of speech unwarrantably restrained continues to grow. Much of the attack on the use of the process of injunction is wholly without warrant but I am con strained to express the belief that for some of it there is warrant. This ques tion is becoming more and more of prime importance, and unless the courts will themselves deal with it in effective man ner. it is certain ultimately to demand some form of legislative action. It would be most unfortunate for our social wel fare if we should permit many honest and law-abiding citizens £o feel that they had just cause for regarding our courts with hostility. I earnestly com mend to the attention of the congress this matter, so that some way may be devised which will limit the abuse of in junctions and protect those rights which from time to time it unwarrantably in vades. Moreover, discontent is often ex pressed with the use of the process of injunction by the courts, not only in la bor disputes, but where state laws are concerned. I refrain from discussion of this question as I am informed that it will soon receive the consideration of the supreme court." Of other legislation in the interest of labor he favors federal inspection of rail roads providing limited but definite com pensation for accidents to all workmen employed in any way by the government, and says: "The constitutionality of the employers' liability act passed by the preceding con gress hsfti been carried before the courts. In two jurisdictions the law has been de clared unconstitutional, and in three juris dictions its constitutionality has been af firmed. The question has been carried to t..e supreme court, the case has been heard by that tribunal, and a decision is exp'ected at an early date. In the event that the court should affirm the consti tutionality of the act, I urge further leg islation along the lines advocated in my message to the preceding congress. The practice of putting the entire burden of loss of life or limb upon the victim or tne victim's family is a form of social in justice in which the United States stands in unenviable prominence. In both our federal and our state legislation we have, with few exceptions, scarcely gone farther than the repeal of the fellow servant principle of the old law of liabil ity, and in some of our states even this slight modification of a complete out grown principle has not yet been se cured." He favors the extension of the eight hour law to all departments of the gov ernment, and to all work carried on by tile government. He urges legislation for the compulsory investigation of in dustrial disputes, and says: "The need for some provision, for such Investigation was forcibly illustrated during the past summeV. A strike of telegraph operators seriously interfered with telegraphic communication, caus-, ing great damage to business interests and serious inconvenience to the gen eral public. Appeals were made to me from many parts of the country, from city councils, from boards of trade, from chambers of commerce, and from labor organizations, urging that steps be taken- to terminate the strike. Everything that could with any pro priety be done by a representative of the government was done without avail, and for weeks the public stood by and suffered without recourse of any kind. Had the machinery existed and had there been authority for compulsory investigat'on of the dispute, the public would ha,ve. J»een. placed in possession of the riierits of the controversy, and pufcif.c opinion would probably have brought about prompt adjustment. .. "It is idle to hold that without good lawa evils such as child'-labor, as the over-working of women, as the fail-. ure to protect employes from loss of life or limb, can be effectively reached, any more than the evils of rebates and stock-watering can be reached without good laws. To fail to stop these prac tices by legislation means to force honest men into them, because other wise the dishonest who surely will take advantage of them will have I everything their own way. If the states will correct these evils, well and good but the nation must stand ready to aid I them. Inland Waterway Systems Should Be Deevloped. "The conservation of our national re sources and their proper use constitute the fundamental problem which under lies almost every other problem of our national life. We must maintain for our civilization the adequate material basis without which that civilization cannot exist. We must show foresight, we must look ahead. As a nation we not only enjoy a wonderful measure of present prosperity but if this prosper ity is used aright it is an earnest of future success such as no other nation will have. The reward of foresight foi this nation is great and easily foretold. But there must be the look ahead, there must be a realization of the fact that to waste, to destroy, our natural resources, to skin and exhaust the land instead of using it sd as to increase its usefulness, will result in undermining in the days of our children the very prosperity which we ought by right to hand down to them amplified and devel oped. For the last few years, through' several agencies, the government has been endeavoring to get our people to look ahead and to substitute a planned and orderly development of our re sources in place of a haphazard striv ing for immediate' profit. Our great river systems should be developed as national water highways the Missis sippi, with its tributaries, standing first in importance, and the Columbia sec ond, although there are many others of importance on the Pacific and Atlantic and the gulf slopes. The national gov ernment should undertake this work, and I hope a beginning will be made in the present congress and the great est of all our rivers, the Mississippi, should receive especial attention. From the Great Lakes to the mouth of the Mississippi there should be a deep wa terway, with deep waterways leading from it to the east and the west. Such a waterway would practically mean the extension of our coast line into the very heart of our country. It would be of incalculable benefit to our people. If begun at once it can be carried through in time appreciably to relieve the con gestion of our great freight-carrying lines of railroads. The work should be systematically and continuously carried forward in accordance with some well conceived plan. The main streams should be improved to the highest point of efficiency before the improve ment of the branches is attempted and the work should be kept free from every taint of recklessness or jobbery." Attention is called to the work of ir rigation and reclamation of govern ment lands. In the same connection he asks for a revision of the public land laws along the lines proposed by the public lands commission. Believes the government should increase its efforts to conserve our forests and should in crease by purchase the existing forest preserves. On the subject of the natural resources of the nation he says: "In the eastern United States the mineral fuels have already passed into the hands of large private owners, and those of the west are rapidly following. It is obvious that these fuels should be conserved and not wasted, and it would be well to protect the people against unjust and extortionate prices, so far as that can still be done. What has been accomplished in the great oil fields of the Indian Territory by the action of the administration .offers a striking example of the good results of such a policy. In my judgment the government should have the right to keep the fee of the coal, oil and gas fields in its own possession and to lease the rights to develop them under proper regulations or else, if the con gress will not adopt this method, the coal deposits should be sold under lim itations, to conserve them as public utilities, the right to mine coal being separated from the title to the soil. The regulations should permit coal lands to be worked in sufficient quan tity by the several corporations. The present limitations have been absurd, excessive, and serve no useful purpose, and often render it necessary that there should be either fraud or else abandonment of the work of getting out the coal." Progress of the 'Work On the Panama Canal. "Work on the Panama canal Is pro ceeding in a highly satisfactory man ner. In March the total excavation in the Culebra Cut, where effort was chiefly concentrated, was 815,270 cubic yards. In April this was increased to 879.527 cubic yards. There was a con siderable decrease in the output for May and June owing partly to the ad vent of the rainy season and partly to temporary trouble with the steam shovel men over the question of wages. This trouble was settled satisfactorily to all parties and in July the total ex cavation advanced materially and in August the grand total from all points in the canal prism by steam shovels and dredges exceeded all previous L'nited States records, reaching 1*274, 404 cubic yards. In September this rec ord was eclipsed and a total of 1,517, 412 cubic yards wag removed. Of this amount 1,481,307 cubic yards were from the canal prism and 36,105 cubic yards were from accessory works. These re sults were achieved in the rainy sea son with a rainfall in August of 11.89 inches and in September of 11.65 inches. Finally, in October, the record was again eclipsed, the total excavation be ing 1,868,729 cubic yards a truly ex traordinary record, especially in view of the heavy rainfall, which was 17.1 inches. In fact, experience during the last two rainy seasons demonstrates that the rains are a less serious ob stacle to progress than has hitherto been supposed. "Work on the locks and dams at Gatun, which began actively in March last, .has advanced so far that it is thought that masonry work on the locks can be begun within 15 months. "Last winter bids were requested and received for doing the work of canal construction by contract. None of them was found to be satisfactory and all were rejected. It is the unanimous opinion of the present commission thait the work can be done better, more cheaply, and more quickly by the gov ernment than by private contractors. Fully 80 per cent, of the entire plant needed for construction has been pur chased or contracted- for machine shops have been erected and equipped for making all needed repairs to the plant many thousands of employes have been secured aa effective organi zation has been perfected a recruiting system is in operation which is capable of furnishing more labor than can1be used advantageously employes ara well sheltered and well fed salaries paid are satisfactory, and the work is not only gOfiig forward smoothly, but It is producing results far in advance of the most sanguine anticipations. Under these favorable conditions, & change in the method of prosecuting the work would be unwise and unjusti fiable, for it would inevitable disorgam* lie existing conditions, check progress, arid'lncreasethe oost and lengthen the time of completing the canal. President Recommends Postal Savings Banks. "I commend to the favorable consid eration of the congress a postal sav ings bank system, as recommended by the postmaster general. The primary object is to encourage among our peo ple economy and thrift and by the use of postal savings banks to give them an opportunity to husband their re sources, particularly those who have not the facilities at hand for depositing their money in savings banks. Viewed, however, from the experience of the past few weeks, it is evident that the advantages of such an institution are still more far-reaching. Timid depos itors have withdrawn their savings for the time being from national banks in dividuals have hoarded their cash /and the workingmen their earnings all of which money has been withdrawn and kept in hiding or in the safe de posit box to the detriment of pros- perity. Through the agency of the pos tal savings banks such money would be restored to the channels of trade, to the mutual benefit of capital and labor. "I further commend to the congress the considerations, of the postmaster general's recommendation for. an ex tension of the parcel post, especially on the rural routes. There are now 38, 215 rural routes, serving nearly 15,000,-. 000 people who do not have the ad vantages of the inhabitants of cities' in obtaining their supplies. These recom mendati.ons. have, been-.^rawn up. to, benefit the farmer and the country storekeeper otherwise, I should'not favor them, for I believe that it is good! policy for our government to do every thing possible to aid the small town and the country district. It is desirable that the country merchant should not be crushed out. "The fourth-class postmasters' con vention has passed a very strong reso lution in favor of placing the fourth class postmasters under the civil-serv ice law. The administration has al ready put into effect the policy of re fusing to remove any fourth-class post masters save for reasons connected with the good of the service and it is endeavoring so far as possible to re move them from the domain of partisan polities. It would be a most desirable thing to put the fourth-class postmas ters in the classified service." He renews his recommendations of last year in regard to Alaska calls at tention to the admission of Oklahoma as a state urges the importance of pro viding shipping relief for Hawaii asks for citizenship for Porto Ricans, and promises submission of Secretary Taft's .report on Philippines when that official returns. He asks for the creation of a bureau of mines recommends the providing of funds for preserving The Hermitage, the home of Andrew Jackson and the erection of a naval monument at Vicksburg. Corporation Contributions to Compnign Expenses. "Under our form of government voting is not merely a right but a duty, and, moreover, a fundamental and necessary duty if a man is to be a good citizen. It is well to provide that corporations shall not contribute to presidential or national campaigns, and furthermore io provide for the publication of both con tributions and expenditures. There is, however, always danger in laws of this kind, which from their very nature are difficult of enforcement the danger being lest they be obeyed only by the honest, and disobeyed by the unscrupulous, so as to act only as a penalty upon honest men. Moreover, no such law would ham per an unscrupulous man of unlimited means from buying his own way into of fice. There is a very radical measure which would, I believe, work a substan tial improvement in our system of co:i ducting a campaign, although' I am well aware that it will take some time for I people to so familiarize themselves with such a proposal as to be willing to con sider its adoption. The need for collect ing large campaign funds would vnr«f it congress provided an appropriation i'or the proper and legitimate expenses of each of the great national parties, an ap propriation ample enough to meet the necessity for thorough organization and machinery, which requires a large ex penditure of money. Then the stipula tion should be made that no party re ceiving campaign funds from the treasury should accept more than a fixed amount from any individual subscriber or donor and the necessary publicity for receipts and expenditures could without difficulty be provided." Wants Improvement In the Ocean Mall Service. "I call your especial attention to the un satisfactory condition of'our foreign mail service, which, because, of the lack of American steamship lines," is now largely done through foreign lines, and which, particularly so far as South and Central America are concerned, is done in a man ner which constitutes a serious barrier to the extensions of our commerce. "The time has come, in my judgment, to set to work seriously to make our ocean mail service correspond more closely with our recent commercial and political development. A beginning was made by the ocean mail act of March 3, 1891, but even at that time the act was known to be inadequate in various par ticulars. Since that time events have moved rapidly in our history. We have acquired Hawaii, the Philippines, and lesser islands in the Pacific. We are steadily prosecuting the great work of uniting at the Isthmus the waters of the Atlantic and the Pacific. To a greater extent than seemed probably even a dozen years ago we may look to an American future on the sea worthy of the tradition of our past. As the first step in that direction, and the step most feasible at the present time, I recommend the extension of the ocean mail act of 1891. That act has stood for some years free from successful criticism of its prin ciple and purpose. It was based on theo ries of the obligations of a great mari time nation, undisputed in our own land and followed by other nations since the beginning of steam navigation. Briefly those theories are, that it is the duty of a flrst-,class power so far as practicable to carry its ocean- mails under its 'own flag that the fast ocean steamships and their crews, required for such mail serv ice, are valuable auxiliaries to the sea power of a nation. Furthermore, the construction of such steamships insures the maintenance in an efficient condition of the shipyards in which our battleships must be built. "The expenditure of public money for the performance of such necessary func tions' of government is certainly war ranted, nor is it necessary to dwell upon the incidental benefits to .our foreign commerce, to the shipbuilding industry, and to ship owning and navigation which will accompany" the discharge of these urgent public duties, though they, too, should have weight." Asks Increase In Par for Army Officers and Men. Tact yet seemingly it has already beeiv forgotten, for not the slightest effort has been made to prepare a medical corps of sufficient size to prevent the repetition of the same disaster on a much larger scale if we should ever be engaged in a serious conflict. "But the medical department is not the only department for which increased pro vision should be made. The rate of pay for the officers should be greatly in creased there is no higher type of citizen than the American regular officer, and he should have a fair reward for his ad mirable work. There should be a rela tively even greater increase in the pay for the enlisted men. An especial provision should be made for establishing grades equivalent to those of warrant officers in the navy, which should be open to the enlisted men who serve sufficiently long and who do their work well. Inducements should be offered sufficient to encourage really good men to make the army a life occupation. The prime needs of our pres ent army is to secure and retain compe tent noncommissioned officers. This diffi culty rests fundamentally on the ques tion of pay. The noncommissioned officer does not correspond with an unskilled' la borer he corresponds to the best type of skilled workman or to the subordinate official in civil institutions. Wages have greatly1 increased in' outside occupations in the last 40 years and the pay of the soldier, like the..-pay of the officers, should be proportionately increased. The first sergeant of & company-, if a :good man, must be,one pf such- executive, .and ^ad ministrative ability, and such knowledge of his trade, as to'be worth far more than We at present, pay -him. The. same is. true of the regimental sergeant major. These men should' be men who had fdlly re% solved to make the iarmy a life, occupa tion and they should be able, to look for ward to ample reward while only men properly qualified should be given a chance to secure these final rewards. The increase over the present pay need not be great in the lower grades for the first one or two enlistments, but the increase should be marked for the noncommis sioned officers of the upper grades who serve long enough to make it evident that they intend to stay permanently in the army, while additional pay should be given for high qualifications in target practice. "Among the officers there should be severe examinations to weed out the unfit up to the grade of major. From that position on appointments should be solely by selection and it should be understood that a man of merely av erage capacity could never get beyond the position of major, while every man who serves in any grade a certain length of time prior to promotion td the next grade without getting the promotion to the next grade should be forthwith retired." 1 The president devotes much space to the flairs of the army, and strongly urges that our regular military organi sation be kept up to the highest possible standard of efficiency, and says: "The medical corps should be much greater than the needs of our regular army in war. Yet at present it is small er than the needs of tlwf service demand even in peace. The Spanish war: oc currod' less than ten years ago. The chief loss we', suffered in it was by dis ease among the regiments -which never left the country. At ths moment the rttften MMfted deeply Impressed bjr this President Sees Need of Largely Increased Navy. The president asks for a continuous increase in the navy,- and asks present congress for appropriations for foue new battleships, and says: "We need always to remember that in time of war the navy is not to be used to defend harbors and sea-coast cities we should perfect our system ot coast fortifications. The only efficient use for the navy is for offense. The only way in which it can efficiently pro tect our own coa.^t against the possiblg action of a foreign navy is by destroy ing that foreign navy. For defense against a hostile fleet which actually attacks them, the coast cities must de pend upon their forts, mines, torpedoes, submarines and tnroedo boats and de stroyers. All of these together are ef ficient for defensive purposes, but they in no way supply the place of a thor oughly efficient navy capable of acting on the offensive for parrying never yet won a fisrht. It ean only be won by hard hiting. and an aggressive sea-go in.? navy alone can do this hard hitting of the offensive type. But the forta and the like are necessary so that the navy may be footloose. In time of war there is sure to be demand, under pres sure of fright, for the ships to be scat tered so as to defend all kind of ports. Under penalty of terrible disaster, thig demand must be refused. The ships must be kept together, and their ob jective made the enemies' fleet. IJ fortifications are sufficiently strong, no modern navy will venture to attack them, so long as the foe has in exist ence a hostile navy of anything like the same size or efficiency. But unless there exists such a navy then the forti fications are powerless by themselves to secure the victory. For of course the mere deficiency means that any resolute enemy can at his leisure com bine all his forces upon one point with the certainty that he can take it. Gives Reasons for Despatch Of Fleet to the Pacific. "Until our battle fleet is much large# than at present it should never be split into detachments so far apart that they could not in event of emergency be speedily united. Our coast line is on the Pacific just as much as on the At lantic. The interests of California, Oregon and Washington are -as em phatically the interests of the whole uniOn as those of Maine and New York, of Louisiana and Texas. The battle fleet should now and then be moved to the Pacific, just as at other times it should be kept in the Atlantic. When the Isthmian canal is built the transit of the battle fleet from one ocean to the other will be comparatively easy, Until it is built I earnestly hope that the battle fleet will be thus shifted be tween the two oceans every year or two. The marksmanship on all our ships has improved phenomenally dur ing the last five years. Until within trie last two or three years it was not possible to train a battle fleet in squad ron maneuvers under service conditions, and it is only during these last two OP I three years that the training under these conditions has become really eN fective. Another and most necessary stride in advance is now being taken. The battle fleet is about starting by the Straits of Magellan to visit the Pacific coast. Sixteen battleships are going under the command of Rear Ad miral Evans, while eight armored cruisers and two other battleships wili meet him at San Francisco, whither certain torpedo destroyers are also go ing. No fleet of such size has ever made such a voyage, and it will be of very great educational use to all en gaged in it. The only way by which to teach officers and men how to handle the fleet so as to meet every possible strain and emergency in time of war is to, have them practice under similar conditions in time of peace. Moreover, the only way to find out our actual needs is to perform in time of peace whatever maneuvers might be neces sary in time of war. After war is de clared it is too late to find out the needs that means to invite disaster. The trip to the Pacific will show what some of our needs are and will enable us to provide for them. The proper place for an officer to learn his duty is at sea, and the only way in which a navy can ever be made efficient is by practice at sea, under all the condi tions which would have to be met if war existed." He reviews the work accomplished by the second peace conference at The Hague notes the improvement of af fairs in Cuba, and the preparations be ing made to reestablish the govern ment of the island republic asks per mission to cancel the remainder of China's indemnity obligation to us, and review? the effect of Secretary Root's visit to Mexico. THEODORB ROOSEVELT. Ths White House. a fitfittfeK JIW.