Thirteenth Census for a sum of money no greater than that actually expended upon the Twelfth, notwithstanding that there has been an increase of 20 per cent in the population to be enumerated, a much greater increase in the growth of agriculture and manufactures, while the island of Porto Rico and perhaps other insular possessions must now be included.

The Director bases his expectations upon several considerations, the most important of which is the existence of the permanent Office and the enormous saving that will result in the cost of preparation. The other considerations are the omission of the vital statistics schedule; the omission of the canvass of the hand, household, and neighborhood industries in the manufacturing census; the application of the pieceprice method in payment for machine work in connection with the tabulation, and, finally, the fact that the Bureau will build and own the necessary tabulating apparatus instead of renting it as heretofore. Whether or not the sum of money asked will prove sufficient, the Director should be afforded every facility to carry out his plan. If the work can be done for the money he asks, it will be the first time in the history of the country that the cost of a decennial census has not greatly exceeded the cost of the prior census. It will be the direct result of the establishment of a permanent Census Office, and only one of many proofs that the legislation accomplishing this was not only wise but in the interest of economy.

HOUSING OF TEMPORARY EMPLOYEES.

The Director calls especial attention in his report to the fact that if the Bureau is to complete the census for the money asked it must be given quarters in which to do the work. Suitable provision for housing the temporary clerical force during the three-year decennial census period was urged upon Congress in my last annual report. Nothing, however, was done at the last session. The building now temporarily occupied by the Census was only half large enough to accommodate the force required to compile the Twelfth Census. The accumulation of records, the installation of the machine shop, and the taking over from the Department of the Interior of all the accumulation of prior census reports have so far reduced the available space in this building that not more than one-third of the clerical force can now be provided for within its walls. To scatter the remainder of the force throughout the city in such separate and unsuitable buildings as can now be rented will add enormously to the cost and the difficulties of the work. I again ask the attention of Congress to the plan suggested in my last annual report for meeting this emergency situation by the purchase of the present building and the construction of a suitable annex. If prompt action is taken, it will be possible to complete the proposed annex by the time it will be needed.

BUREAU OF NAVIGATION.

The output of our shipyards during the fiscal year ended June 30, 1908, was the largest in American history. The vessels built and documented numbered 1,457, of 614,216 gross tons. For an annual product approaching this we must go back to the year 1855, hitherto the record year, when the tonnage built and documented in the United States aggregated 583,450 gross tons. The figures, however, do not indicate an early return to the rank we held on the ocean in the generation before the outbreak of the civil war; they serve rather to suggest the considerable changes in the shipbuilding industry and in navigation since that time. Then our square-rigged ships and barks were built to sail every sea; last year, of all the vessels built, probably not one will ever engage entirely in the foreign trade, and very few will ever serve otherwise than as parts of our domestic transportation system.

With the nearly complete substitution of steel for wood as the principal material of construction, the centers of the shipbuilding trade have shifted and its industrial organization has changed. Fifty years ago a large number of relatively small yards on the Atlantic seaboard. built most of our vessels; last year more than half of our merchant tonnage was built by a few large corporations on the Great Lakes.

Unfortunately the record product of the past fiscal year can not be taken as an index of conditions in the near future. On the contrary, it is apparently the culmination of nearly a decade of exceptional activity in shipbuilding, both at home and abroad. At home this activity has been part of the remarkable development of all our industries during that period, and in part it has been due to the anticipation of favorable legislation which thus far has not been realized. The domestic shipbuilding industry is as essentially a part of our resources for national defense as are battle ships and batteries. For reasons of national policy as well as of industrial welfare it is to be regretted that the outlook for shipbuilding during the current fiscal year is less favorable than at any corresponding time in late years. The conditions, however, may serve to impress upon the country the desirability of legislation in the line of national policies which incidentally will strengthen the industry.

On July 30, 1908, the total documented merchant shipping of the United States comprised 25,425 vessels, aggregating 7,365,445 gross tons. This tonnage, of course, is the largest in our history, and the increase over the previous fiscal year is the largest annual increase recorded. Nearly three-fourths of the increase has been on the Great

Lakes, and Pacific-coast shipping, both relatively and absolutely, has increased more than the shipping of the Atlantic and Gulf seaboards.

I renew the recommendation of my last annual report in favor of a measure that shall insure us superior mail communication with the Republics of South America, with Australasia, by way of our insular territories in the mid-Pacific, and with the Philippines, by way of China and Japan. A bill which in its essentials accords with that recommendation has passed the Senate and now awaits action by the House of Representatives.

The Department of Commerce and Labor has a threefold interest in the improvement of our ocean-mail service. It is concerned in the development of American ocean-mail steamship lines, especially to South America and on the Pacific, because such steamships afford the opportunities for buyers and sellers to travel to and from this country, for the speedy and regular transmission of mail orders, and for the transportation of classes of manufactured goods for which especially we seek markets. Under modern conditions of international competition such opportunities must be made satisfactory, if our producers, both capitalists and laboring men, are to have a fair chance with those of other nations in the relatively new markets of the world. That such opportunities are not now satisfactory is shown by an unbroken line of undisputed testimony of competent witnesses.

It is not now possible to travel with satisfactory speed and comfort from the United States to many South American countries or to Australasia unless the voyage is made by way of European or Canadian ports. Perhaps in time foreign steamship lines may find it to their profit to improve present conditions, but our reliance upon such foreign lines is already so great as to impair that independence on the sea which ought to be the aim of a country holding the present rank of the United States among nations. Since the adjournment of Congress the American battle-ship fleet has sailed nearly around the world on a mission of peace. The attending fleet of foreign colliers has been evidence to all the world that this voyage would have been well-nigh impossible in time of war, and that during hostilities the radius of action of our battle ships will be practically restricted to their limited coal-carrying capacity so long as our merchant marine on the sea remains dwarfed.

An ocean-mail act will not, of course, lead directly to the construction of colliers. In the development of modern shipping corporations, however, the cargo steamer has usually followed the faster ocean-mail steamer. Such has been our own experience under the ocean-mail act of 1891, in so far as its rates of compensation have sufficed to produce results, and such doubtless will be the effect of a satisfactory amendment to that act. The construction of such cargo

steamers will still further increase our ocean-transportation facilities for the benefit of the interior productive fields of the United States. Again, the cost of construction of ships is the initial, though not the sole, obstacle in the way of the development of the American merchant marine in over-sea trade. Our extensive programme of naval construction and our coastwise-trade law have created our modern shipyards on the seaboard, but it is not to be expected that they will always suffice to maintain them. The transportation of ocean mails is as legitimate a function of government as the transportation of domestic mails. As such the ocean-mail service seems to me to be entitled to the support of the entire Congress, regardless of the general economic theories which may be held by individual members. If such support shall involve indirectly the increase of our fleet of cargo-carrying ocean steamers and the upbuilding of domestic shipyards, then the gain to the whole country is the greater. Congress in 1891 appreciated the importance of an American oceanmail service. The act of that year has since stood free from successful criticism of its principle and purpose. It has produced results in certain directions and it has failed in other directions, where failure was foreseen by its advocates. We stopped with that act, while other nations have advanced. We should bring that legislation abreast of the day. In my report last year I stated:

For many years it was entirely true that the energies of the country were so absorbed in its internal development that there was no surplus to devote to expansion of national trade and influence outside our coast lines. It is equally true that such is no longer the fact. The acquisition of insular territory, the construction of a powerful navy, and the investment of American capital abroad are all tokens of a tendency in national growth which will compel our country to become again a sea power, as it was when the Republic was only a fringe of States along the Atlantic seaboard.

Even under favorable conditions at least two years and possibly three years must elapse before American ocean-mail lines to South America south of the Caribbean can be established and a line to Australasia reestablished. Accordingly, I earnestly recommend the passage by the House of Representatives of the ocean-mail bill which has already passed the Senate.

We ought to provide better facilities for passengers between Hawaii and the mainland of the United States. It would be preferable to use American steamships for the purpose, and the passage of the ocean-mail bill recommended would bring about that result. Pending the establishment of such American mail lines our coasting laws in this particular could very properly be modified as proposed in a bill which has passed the House and is now on the Senate Calendar.

Tonnage duties during the fiscal year amounted to $1,076,571.69, the largest sum received since the method of collection was changed, in 1884. In 1884 the revenue from this source was $1,295,772, which,

during the year following, upon the change in the law, dropped to $390,875. The rates of tonnage tax imposed in the United States are substantially the same as the rates for light dues imposed in the United Kingdom, and are materially less than corresponding charges on shipping imposed by other countries. Barring occasional slight technical difficulties, the tax is readily collected and at a small cost to the Government.

Little can be said in favor of the law providing for reciprocal tonnage-tax exemptions under sections 11 and 12 of the act of June 19, 1886. That law provides in substance that if vessels of the United States in any foreign port are exempt from tonnage taxes, light dues, or corresponding charges, then foreign vessels from such port entering a port of the United States shall be exempt from our tonnage taxes. Under existing conditions there is almost no possibility of an equal exchange of favors under these sections. The bulk of our tonnage taxes is derived from vessels on the long voyages from Europe, Africa, Asia, Australia, and South America. Of $901,758.36 received from these sources, American vessels contributed only $37,130.22. Were all tonnage taxes abolished in the ports of these continents, compelling a corresponding abolition of tonnage taxes in American ports, the direct gain to foreign vessels would be about twenty-five times greater than to American vessels.

Congress in the near future will consider a revision of the tariff, having in mind the principles of reciprocity and of maximum and minimum schedules, and exemptions from tonnage taxes may be granted in return for other trade favors. As an independent proposition under existing law, reciprocal tonnage-tax exemption is the offer by the United States of an unprofitable bargain.

Shipping commissioners at 20 seaports have shipped, reshipped, or discharged 307,299 seamen on American vessels during the past fiscal year, an increase of 47,729 over the previous year. The principal duties of shipping commissioners are to supervise contracts for labor at sea and to settle disputes outside of the courts. The growth of the business, accordingly, seems to indicate the popularity of Federal supervision of labor contracts of this special nature, as in most instances the shipment before commissioners is optional. Of 163.192 men shipped or reshipped, 52,065 were native Americans and 28,713 were naturalized citizens, so that about 50 per cent of those shipped were aliens. These figures do not include Chinese shipped for the round voyage before American consuls at Hongkong and elsewhere in the East on trans-Pacific steamships.

The reconstruction of the barge-office annex at New York will render it necessary for the Department to rent quarters for the shipping commissioner at that port, and an appropriation for that purpose is recommended.