authority which the withdrawn agents of the belligerents had exercised, was promptly corrected. Although the war between China and Japan endangers no policy of the United States it deserves our gravest consideration, by reason of its disturbance of our growing commercial interests in the two countries and the increased dangers which may result to our citizens domiciled or sojourning in the interior of China.

Acting under a stipulation in our treaty with Korea (the first concluded with a western power) I felt constrained at the beginning of the controversy to tender our good offices to induce an amicable arrangement of the initial difficulty growing out of the Japanese demands for administrative reforms in Korea; but the unhappy precipitation of actual hostilities defeated this kindly purpose.

Deploring the destructive war between the two most powerful of the eastern nations and anxious that our commercial interests in those countries may be preserved and that the safety of our citizens there shall not be jeopardized, I would not hesitate to heed any intimation that our friendly aid for the honorable termination of hostilities would be acceptable to both belligerents.

A convention has been finally concluded for the settlement by arbitration of the prolonged dispute with Ecuador growing out of the proceedings against Emilio Santos, a naturalized citizen of the United States.

Our relations with the Republic of France continue to be such as should exist between nations so long bound together by friendly sympathy and similarity in their form of government.

The recent cruel assassination of the President of this sister Republic called forth such universal expressions of sorrow and condolence from our people and Government as to leave no doubt of the depth and sincerity of our attachment. The resolutions passed by the Senate and House of Representatives on the occasion have been communicated to the widow of President Carnot.

Acting upon the reported discovery of Texas fever in cargoes of American cattle, the German prohibition against importations of live stock and fresh meats from this country has been revived. is hoped that Germany will soon become convinced that the inhibition is as needless as it is harmful to mutual interests.

It

The German Government has protested against that provision of the customs tariff act which imposes a discriminating duty of onetenth of one cent a pound on sugars coming from countries paying an export bounty thereon, claiming that the exaction of such duty

is in contravention of articles five and nine of the treaty of 1828 with Prussia.

In the interests of the commerce of both countries and to avoid even the accusation of treaty violation, I recommend the repeal of so much of the statute as imposes that duty, and I invite attention to the accompanying report of the Secretary of State containing a discussion of the questions raised by the German protests.

Early in the present year an agreement was reached with Great Britain concerning instructions to be given to the naval commanders of the two governments in Behring Sea and the contiguous North Pacific Ocean, for their guidance in the execution of the award of the Paris Tribunal of Arbitration and the enforcement of the regulations therein prescribed, for the protection of seal life in the waters mentioned. An understanding has also been reached for the payment by the United States of $425,000, in full satisfaction of all claims which may be made by Great Britain for damages growing out of the controversy as to fur seals in Behring Sea, or the seizure of British vessels engaged in taking seal in those waters. The award and findings of the Paris Tribunal to a great extent determined the facts and principles upon which these claims should be adjusted, and they have been subjected by both governments to a thorough examination upon the principles as well as the facts which they involve. I am convinced that a settlement upon the terms mentioned would be an equitable and advantageous one and I recommend that provision be made for the prompt payment of the stated

sum.

Thus far, only France and Portugal have signified their willingness to adhere to the regulations established under the award of the Paris Tribunal of Arbitration.

Preliminary surveys of the Alaskan boundary and a preparatory examination of the question of protection of food-fish in the contiguous waters of the United States and the Dominion of Canada are in progress.

The boundary of British Guiana still remains in dispute between Great Britain and Venezuela. Believing that its early settlement, on some just basis alike honorable to both parties, is in the line of our established policy to remove from this hemisphere all causes of difference with powers beyond the sea, I shall renew the efforts heretofore made to bring about a restoration of diplomatic relations between the disputants and to induce a reference to arbitration, a resort which Great Britain so conspicuously favors in principle and respects in practice and which is earnestly sought by her weaker adversary.

Since communicating the voluminous correspondence in regard to Hawaii and the action taken by the Senate and House of Representatives on certain questions submitted to the judgment and wider discretion of Congress, the organization of a government in place of the provisional arrangement which followed the deposition of the Queen has been announced with evidence of its effective operation. The recognition usual in such cases has been accorded the new Government.

Under our present treaties of extradition with Italy miscarriages of justice have occurred owing to the refusal of that Government to surrender its own subjects. Thus far our efforts to negotiate an amended convention obviating this difficulty have been unavailing.

Apart from the war in which the Island Empire is engaged Japan attracts increasing attention in this country by her evident desire to cultivate more liberal intercourse with us and to seek our kindly aid in furtherance of her laudable desire for complete autonomy in her domestic affairs and full equality in the family of nations. The Japanese Empire of to-day is no longer the Japan of the past, and our relations with this progressive nation should not be less broad and liberal than those with other powers.

Good will fostered by many interests in common has marked our relations with our nearest southern neighbor. Peace being restored along her northern frontier, Mexico has asked the punishment of the late disturbers of her tranquillity. There ought to be a new treaty of commerce and navigation with that country to take the place of the one which terminated thirteen years ago. The friendliness of the intercourse between the two countries is attested by the fact that during this long period the commerce of each has steadily increased under the rule of mutual consideration, being neither stimulated by conventional arrangements nor retarded by jealous rivalries or selfish distrust.

An indemnity tendered by Mexico, as a gracious act, for the murder in 1887 of Leon Baldwin, an American citizen, by a band of marauders in Durango, has been accepted and is being paid in installments.

The problem of the storage and use of the waters of the Rio Grande for irrigation should be solved by appropriate concurrent action of the two interested countries. Rising in the Colorado heights, the stream flows intermittently, yielding little water during the dry months to the irrigating channels already constructed along its course. This scarcity is often severely felt in the regions where the river forms a common boundary. Moreover the frequent changes

in its course through level sands often raise embarrassing questions of territorial jurisdiction.

Prominent among the questions of the year was the Bluefields incident, in what is known as the Mosquito Indian Strip, bordering on the Atlantic Ocean and within the jurisdiction of Nicaragua, By the treaty of 1860 between Great Britain and Nicaragua the former Government expressly recognized the sovereignty of the latter over the Strip, and a limited form of self-government was guaranteed to the Mosquito Indians, to be exercised according to their customs, for themselves and other dwellers within its limits. The so-called native government, which grew to be largely made up of aliens, for many years disputed the sovereignty of Nicaragua over the Strip and claimed the right to maintain therein a practically independent municipal government. Early in the past year efforts of Nicarauga to maintain sovereignty over the Mosquito territory led to serious disturbances culminating in the suppression of the native government and the attempted substitution of an impracticable composite administration, in which Nicaragua and alien residents were to participate. Failure was followed by an insurrection which for a time subverted Nicaraguan rule, expelling her officers and restoring the old organization. This, in turn, gave place to the existing local government established and upheld by Nicaragua.

Although the alien interests arrayed against Nicaragua in these transactions have been largely American, and the commerce of that region for some time has been and still is chiefly controlled by our citizens, we can not for that reason challenge the rightful sovereignty of Nicaragua over this important part of her domain.

For some months one, and during part of the time two, of our naval ships have been stationed at Bluefields for the protection of all legitimate interests of our citizens. In September last the Government at Managua expelled from its territory twelve or more foreigners, including two Americans, for alleged participation in the seditious or revolutionary movements against the Republic at Bluefields already mentioned; but through the earnest remonstrance of this Government the two Americans have been permitted to return to the peaceful management of their business. Our naval commanders at the scene of these disturbances, by their constant exhibition of firmness and good judgment, contributed largely to the prevention of more serious consequences and to the restoration of quiet and order. I regret that in the midst of these occurrences there happened a most grave and irritating failure of Nicaraguan justice. An American citizen named Wilson, residing at Rama, in

the Mosquito territory, was murdered by one Argüello, the acting governor of the town. After some delay the murderer was arrested, but so insecurely confined or guarded that he escaped, and notwithstanding our repeated demands it is claimed that his recapture has been impossible by reason of his flight beyond Nicaraguan jurisdiction.

The Nicaraguan authorities having given notice of forfeiture of their concession to the canal company on grounds purely technical and not embraced in the contract, have receded from that position.

Peru, I regret to say, shows symptoms of domestic disturbance, due probably to the slowness of her recuperation from the distresses of the war of 1881. Weakened in resources, her difficulties in facing international obligations invite our kindly sympathy and justify our forbearance in pressing long pending claims. I have felt constrained to testify this sympathy in connection with certain demands urgently preferred by other powers.

The recent death of the Czar of Russia called forth appropriate expressions of sorrow and sympathy on the part of our Government with his bereaved family and the Russian people. As a further demonstration of respect and friendship our minister at St. Petersburg was directed to represent our Government at the funeral ceremonies.

The sealing interests of Russia in Behring Sea are second only to our own. A modus vivendi has therefore been concluded with the Imperial Government restrictive of poaching on the Russian rookeries and of sealing in waters which were not comprehended in the protected area defined in the Paris award.

Occasion has been found to urge upon the Russian Government equality of treatment for our great life-insurance companies whose operations have been extended throughout Europe. Admitting, as we do, foreign corporations to transact business in the United States, we naturally expect no less tolerance for our own in the ample fields of competition abroad.

But few cases of interference with naturalized citizens returning to Russia have been reported during the current year. One Krzeminski was arrested last summer in a Polish province, on a reported charge of unpermitted renunciation of Russian allegiance, but it transpired that the proceedings originated in alleged malfeasance committed by Krzeminski while an Imperial official a number of years ago. Efforts for his release, which promised to be successful, were in progress when his death was reported.