he possibility of increasing this trade in the
Orient, in the Philippines, and in South America are known to everyone
who has given the matter attention. The direct effect of free trade
between this country and the Philippines will be marked upon our sales
of cottons, agricultural machinery, and other manufactures. The
necessity of the establishment of direct lines of steamers between North
and South America has been brought to the attention of Congress by my
predecessor and by Mr. Root before and after his noteworthy visit to
that continent, and I sincerely hope that Congress may be induced to see
the wisdom of a tentative effort to establish such lines by the use of
mail subsidies.

The importance of the part which the Departments of Agriculture and of
Commerce and Labor may play in ridding the markets of Europe of
prohibitions and discriminations against the importation of our products
is fully understood, and it is hoped that the use of the maximum and
minimum feature of our tariff law to be soon passed will be effective to
remove many of those restrictions.

The Panama Canal will have a most important bearing upon the trade
between the eastern and far western sections of our country, and will
greatly increase the facilities for transportation between the eastern
and the western seaboard, and may possibly revolutionize the
transcontinental rates with respect to bulky merchandise. It will also
have a most beneficial effect to increase the trade between the eastern
seaboard of the United States and the western coast of South America,
and, indeed, with some of the important ports on the east coast of South
America reached by rail from the west coast.

The work on the canal is making most satisfactory progress. The type of
the canal as a lock canal was fixed by Congress after a full
consideration of the conflicting reports of the majority and minority of
the consulting board, and after the recommendation of the War Department
and the Executive upon those reports. Recent suggestion that something
had occurred on the Isthmus to make the lock type of the canal less
feasible than it was supposed to be when the reports were made and the
policy determined on led to a visit to the Isthmus of a board of
competent engineers to examine the Gatun dam and locks, which are the
key of the lock type. The report of that board shows nothing has
occurred in the nature of newly revealed evidence which should change
the views once forme