of the
United States to interfere in the smallest degree with the political
relations of Canada. That question is wholly with her own people. It
is time for us, however, to consider whether, if the present state of
things and trend of things is to continue, our interchanges upon lines
of land transportation should not be put upon a different basis and our
entire independence of Canadian canals and of the St. Lawrence as an
outlet to the sea secured by the construction of an American canal
around the Falls of Niagara and the opening of ship communication
between the Great Lakes and one of our own seaports. We should not
hesitate to avail ourselves of our great natural trade advantages.
We should withdraw the support which is given to the railroads and
steamship lines of Canada by a traffic that properly belongs to us and
no longer furnish the earnings which lighten the otherwise crushing
weight of the enormous public subsidies that have been given to them.
The subject of the power of the Treasury to deal with this matter
without further legislation has been under consideration, but
circumstances have postponed a conclusion. It is probable that a
consideration of the propriety of a modification or abrogation of the
article of the treaty of Washington relating to the transit of goods
in bond is involved in any complete solution of the question.

Congress at the last session was kept advised of the progress of the
serious and for a time threatening difference between the United States
and Chile. It gives me now great gratification to report that the
Chilean Government in a most friendly and honorable spirit has tendered
and paid as an indemnity to the families of the sailors of the
_Baltimore_ who were killed and to those who were injured in the
outbreak in the city of Valparaiso the sum of $75,000. This has been
accepted not only as an indemnity for a wrong done, but as a most
gratifying evidence that the Government of Chile rightly appreciates the
disposition of this Government to act in a spirit of the most absolute
fairness and friendliness in our intercourse with that brave people.
A further and conclusive evidence of the mutual respect and confidence
now existing is furnished by the fact that a convention submitting to
arbitration the mutual claims of the citizens of the respective
Governments has been agreed upon. Some of these claims have been pending
for many years and have been the occasion of much unsatisfactory