has been pursued without dissent, because the country realizes that free navigation promotes commerce and that our commerce is as essential to the country's welfare as the great productive industries of agriculture, manufacture, and mining. Pursuant to that policy, since 1884 Congress has appropriated $527,065,707.94 for river and harbor improvements, compared with an estimated cost of the Panama Canal to the day of opening of $375,000,000.

Great and expensive as the undertaking has been, the Panama Canal would not call for any change in our policy of untaxed navigation under the act of 1884 if it did not in two respects differ from all our other improvements in navigation. Other improvements have been for the benefit of American commerce originating at American terminals. Even where millions have been expended at ports where foreign navigation serves our commerce-as, for illustration, at Galveston-the benefit to foreign ships from the improvements has been shared by American producers who furnish their cargoes. Again, in all other improvements we have consulted solely our own interest, because our outlay has been made within our exclusive jurisdiction.

It is expected that the Panama Canal will solve some of our great problems of domestic transportation. It will, of course, bring our States on the Atlantic and Pacific much closer together and will offer new opportunities to the States of the Gulf, but it will also give the grain and lumber of British Columbia and the Canadian Northwest an all-water route shorter to European markets by 5,000 miles than they now possess. To the west coast of South America it will mean closer business relations with the Old World. In many of the foreign commercial results to be wrought by the canal the United States will have no immediate share. Indeed, it is possible that some of them may be in a measure to our commercial disadvantage, in that other nations will reap profits from our great investment at the Isthmus. Nevertheless, we may look with satisfaction upon our contribution to such development, because in some form advantage must come to us.

The Panama Canal will, of course, greatly increase the efficiency of our Navy and no doubt will prove to be the greatest single improvement in American commerce and navigation ever provided by Congress. If these were the only considerations, it should remain under the act of 1884, but that act was properly amended on March 3, 1909, so as to exclude the Panama Canal, because we can not be expected to maintain an untaxed waterway for the navies and merchantmen of other countries.

Before entering upon the undertaking we assumed certain obligations to other nations, recited in the first section of Article III of

the Hay-Pauncefote Treaty of 1901 and reiterated in Article XVIII of our convention of 1903 with Panama, as follows:

1. The canal shall be free and open to the vessels of commerce and of war of all nations observing these Rules, on terms of entire equality, so that there shall be no discrimination against any such nation, or its citizens or subjects, in respect of the conditions or charges of traffic, or otherwise. Such conditions and charges of traffic shall be just and equitable.

The treaties provide that every nation shall contribute with "no discrimination" to the support of the canal in proportion to the use it makes of the canal. That principle will of course be observed. At the same time the purpose of section 4 of the river and harbor act of July 5, 1884, may be preserved in the most important engineering work that we have ever undertaken. This may be accomplished by the enactment of a law which shall provide that all tolls and transit charges which may be imposed on public vessels of the United States and on merchant vessels of the United States for passing through the Panama Canal shall be paid from any money in the Treasury not otherwise appropriated, and that there shall be appropriated annually, out of any money in the Treasury not otherwise appropriated, such sums as may be necessary for the purpose, and that such appropriations shall be deemed permanent annual appropriations.

About 25 per cent of the Suez Canal tolls on foreign merchant vessels are now paid in some form from the treasuries of the nations whose flags those vessels fly, and we may assume that like provision, in at least some instances, will be made for the payment of the tolls that we shall assess on foreign merchant vessels. Foreign precedents, however, are merely illustrative. Every State in the Union with navigable waters crossing its boundaries furnishes precedents of congressional appropriations for the establishment and maintenance of improvements at the continuing expense of the Federal Treasury and without a dollar's help from the vessels which enjoy the advantages of such improvements. Where the future of American shipping is at stake, and the domestic commerce of both seaboards and the Gulf is involved, there is no apparent reason to depart from a principle which has been so constantly invoked.

The subject of Panama Canal tolls has been considered at some length because it is vital to the future of American merchant shipping. Our opportunity immediately after the war with Spain to adopt reasonable measures to secure creditable maritime rank was neglected. The Panama Canal is being built in the belief that it will benefit all sections of the country and nearly every form of American industry. Our merchant ships and shipyards are as essential to the Nation as our battleships. They have at least a claim to equal consideration in canal legislation and appropriations with other American industries. Every argument to tax the American merchant ship

which uses the canal would apply with equal force to a tax directly on American cotton, lumber, fruit, coal, grain, and other cargo carried by the ship through the canal. It is feasible to use the canal for the promotion of American navigation in a manner consistent with treaty obligations, with precedent at home and abroad, and with our fixed policy of untaxed navigation on improved waterways.

FREE SHIPS.

The importance of a merchant marine owned by citizens of the United States and sailing in foreign trade under our flag can not, in my judgment, be overstated. It appears to me to be an essential factor in the development of foreign trade. It would be accepted by all countries as the final proof of the determination to enlarge and to maintain our trade abroad, and it would place our country in a position to be consulted in the fixing of competitive rates by maritime carriers.

While it would, of course, be desirable to have the benefit of such a merchant marine and at the same time to have the ships for foreign trade built in our yards, experience seems to teach that, for the present at least, the accomplishment of both objects is out of the question. Ocean steamships for the foreign trade are not built in our yards, and have not been built for some years, except under the provisions of the ocean mail act of 1891 or in anticipation of the probable passage of legislation to extend the principle of that act after the war with Spain.

That legislation failed. While I have recommended the readjustment of the ocean mail act of 1891 to the present requirements of our commerce, and desire here to renew that recommendation, I see no reason to hope that at the present time it will be adopted. The registry law alone gives no protection to the industry of shipbuilding for the foreign trade, and from the nature of modern navigation it can not do so. The policy of discriminating duties, which was always a declaration of commercial warfare, has been abandoned for generations by all maritime countries as worse than impotent. In the meantime we are postponing the creation of the merchant marine which we need. I have no hesitation, therefore, in recommending the passage of a bill for the admission of foreign-built ocean steamships to American registry to engage solely in the foreign trade.

The enactment of such a measure would deprive us of nothing, and it may help to provide us with a great commercial aid. It would surely increase the shipping under our flag in trade with Central America, the West Indies, and some parts of South America, for the American owners of a number of foreign steamships have already asked Congress to grant them American registers for those

trades. Even if the law suggested should fall short of the moderate expectations I entertain of its results, it would, in any event, serve to point out what else it is necessary to do in order that we may secure under our own control an adequate merchant marine.

Although the facilities for passenger transportation between Hawaii and the mainland should be improved, it must be borne in mind that under the protection of law fleets of excellent ocean steamers for trade with Hawaii and Porto Rico have already been built in the United States and are entitled to consideration in any legislation that may be had.

SHIPBUILDING MATERIALS.

By the act of June 6, 1872, lumber, timber, hemp, manila, iron and steel rods, spikes, nails, bolts, and copper for shipbuilding were admitted free of duty. In the McKinley tariff of 1890 the list of free articles was extended to include wire rope, plates, angles, and beams. The Wilson tariff of 1894 included "all materials of foreign production which may be necessary for the construction of vessels," and that provision was repeated in the Dingley tariff of 1897. All these tariff acts restricted the privilege of duty-free materials to vessels which engage in the coastwise trade not more than two months in the year. The Payne tariff of 1909 extended the privilege to vessels which engage in the coastwise trade not more than six months in the year. The repeal of the limitation of six months is recommended, to remove the last restriction upon free materials for shipbuilding.

WIRELESS SHIP ACT.

Preparations for the enforcement of the wireless ship act of June 24, 1910, were so far completed that when the act took effect on July 1, 1911, only one ocean passenger steamship subject to its provisions had failed to comply with the law. In these preparations the Department had the benefit of the willing assistance and advice of the Navy Department. The chain of naval wireless shore stations, which now girds our coasts from Maine to the Canal Zone and thence to Unalaska, has been at this Department's disposal to receive test messages from merchant ships; these naval stations in fact made the law possible, for they prevent the creation of monopoly, and apart from their strategic value are a commercial asset of the Government. Officers stationed at the navy yards and naval stations have also conducted examinations to test the skill of wireless ship operators, to 507 of whom thus far certificates of competency have been issued. Through the courtesy of the Navy Department these arrangements will continue during the current fiscal year, and the War Department has also consented to hold examinations of wireless oper

ators at its Signal Corps station at Fort Omaha. The wireless ship act has met with general approbation, and in its enforcement the Department has had, with rare exceptions, the cordial cooperation of the steamship companies concerned and of the wireless telegraph companies. Austria has passed a similar law, effective January 1, 1912, and doubtless other nations will follow our example if our administration of the act shall prove successful. At present 488 ocean passenger steamships are regularly subject to the provisions of the law, and others on occasional voyages come within its requirements. In addition 142 vessels, including 15 yachts, not subject to the law, have been voluntarily equipped in the United States.

During July, the first month of the operation of the act, there were 1,163 departures of steamships subject to the act, and the number during the year will exceed 10,000. Congress appropriated only $7,000 for the enforcement of the law, and with this amount it was possible to select only three competent inspectors—one for New York and New England, one for the rest of the Atlantic and Gulf coasts, and one for the Pacific coast. Several months' work has shown that constant inspections are needed to give full effect to this useful law, and I renew the recommendation for an appropriation of $10,000, which will allow an inspector exclusively for Gulf ports and Porto Rico. Trade of these ports is increasing even in advance of the opening of the Panama Canal. The mutual usefulness of wireless apparatus to two or more steamships or to a shore station affords a special reason for Government inspection. Supervision of the equipment of ocean passenger steamships with wireless apparatus has already taken its place and at relatively small cost among the several services which Congress has created for the safety of life and property at sea.

While the Congress of the United States was the first legislative body to recognize by statute the protection to life and property at sea afforded by radiocommunication, we are backward in the necessary regulation of the use of wireless apparatus. A bill for this purpose, prepared by this Department in conjunction with the Treasury Department, the War Department, and the Navy Department, passed the Senate unanimously on June 16, 1910, and a similar bill was unanimously reported to the House on April 1, 1910, but was not reached. The passage of this measure is again recommended. It avoids difficulties which have thus far delayed ratification of the Berlin Radiotelegraphic Convention of 1906, adopted by practically all other maritime nations. The international radiotelegraphic conference will meet again in June, 1912, and it is hoped that Congress will provide for the participation of the United States in its deliberations.