Senators and Deputies:

[Inclosure. From the Standard, May 9, 1902.]

Extracts from the President's message.

I come to open your ordinary session under the sorrowful impression caused by the unexpected death of Dr. Amancio Alcorta, minister of foreign affairs, whose disappearance from among us has profoundly afflicted the whole country, which loses in him one of its noblest, most constant, and most disinterested servants.

The Republic is at peace with all sovereign states. The boundary questions have been already settled, or are in the way of being so, in the regular course established for the purpose in the respective conventions.

In order to draw closer our relations with the civilized world, and especially with the countries of America, we have celebrated several arbitration treaties which will, in due course, be submitted to you for consideration; and we have assisted at the second international congress, held in Mexico, all the States of the continent being there represented, and where the delegates of this country faithfully represented our international policy.

We have, in fact, a foreign policy sanctioned by a long tradition, in accordance with which we have invariably sought, either by direct agreement or by arbitration, a friendly settlement of all our differences and this policy has never been altered, even by the extreme exigencies of war or victory.

This invariable course of conduct should also have its influence in the pacific termination of all other differences, although they may arise from incidents or compli cations which, by arousing national sentiment and awakening natural distrust, force us to increase our military strength, as has happened on several occasions, putting the patriotism and vigor of the country to the test. No state has a right to consider this course in the light of hostility or offense, as it is simply dictated by selfdefense, considering the precedents on record, our respect for the independence of others, and the sentiments of justice and international fraternity which we have always endeavored to diffuse in this part of America.

We can thus consider at an end the last boundary question which we had with Chile, which was submitted by both sides to His Britannic Majesty for arbitration. A distinguished expert sent by him is now surveying the territory in dispute, and his report will precede the award on this last territorial question bequeathed to us by the colonial régime.

The just expectations of the two peoples directly interested in this long boundary dispute and those of the nations that have large commercial interests at stake in them will be sorely defrauded if, once the award is given, all distrust and uncertainty do not vanish, and we can not have full enjoyment of the benefits of peace, thus reestablishing between the two countries the cordial and frank relations that should never be interrupted.

FINANCE.

The financial situation at the beginning of the presidential period toward the end of 1898 was difficult and complicated. At that time Congress passed a law authorizing the Executive to contract a loan of $30,000,000 gold, guaranteed by the proceeds of the alcohol tax and without specified limits of interest and amortization, voting a lump sum of $4,000,000 gold per annum to cover the service. The product of the loan was to cancel the floating debt.

The loan, however, was not carried through because the proposals did not satisfy the Government. Meantime, as it was indispensable to meet heavy obligations, a plan of unification of the public debt was laid before Congress, but I deemed it advisable to withdraw it, even after the sanction of the Senate had been obtained, in view of the opposition on the part of the public.

This plan having been replaced by the projects submitted to and approved of by you in the same year, the Executive has availed itself discreetly of the resources which accrued, thereby vanquishing the difficulties and attending to obligations which had their origin either in the past or proceeded from extraordinary circumstances. In order to appreciate with exactitude the actual situation it is necessary to consider the difficulties with which it was surrounded.

The revenue has been greater than in other years and greater than the estimates. The latter, according to the budget, were calculated at $62,300,000 paper and $37,991,718 gold, whereas the revenue returns were $62,341,306 paper and $38,244,638 gold, giving a surplus of $600,000 paper over the estimates and of $850,000 paper over the revenue of 1900.

The gold revenue for years past has shown almost a constant increase, but the paper revenue has fluctuated. The latter in 1897 stood at $61,000,000, dropped to

$50,000,000 in 1898, only to expand again to $61,420,000 in 1899, which figure has been exceeded in the last two years.

The budget fixed the expenditure for 1901 at $92,466,605 paper and $26,025,175 gold, and the expenditure effected was $23,835,847 gold and $91,160,225 paper. The surplus of gold revenue over the gold expenditure was sufficient to cover the deficit in paper and leave a net surplus revenue of about $4,000,000 paper.

By decrees of the Executive $380,327 paper was spent on post-office and telegraph service and on the Sociedad de Beneficencía de la Capital.

In the finance report you will find other data relating to sums paid in virtue of special laws.

The home consolidated debt on December 31, 1901, stood at $89,610,983 paper and $17,863,000 gold. But in the paper debt is included $8,200,000, served by the National Bank ($7,000,000) and by the province of Tucuman ($1,200,000). The gold debt is almost purely nominal, comprising $12,698,400 of the free banks law, which, held by the Banco Nacional, return neither interest nor amortization. As the Banco Nacional in liquidation is debtor of the National Government to a much larger amount, the Government can withdraw and burn these bonds, and it is advisable that this be done. In the gold debt also figures $1,514,500, served by the National Mortgage Bank.

It is shown, therefore, that the home debt of the nation really amounts to $81,410,983 paper and $3,268,000 gold.

The amortization effected during the year amounted to $7,689,500 paper and $74,500 gold, but as some bonds were emitted corresponding to withdrawal of national-bank shares and consolidation of floating debt, the reduction really on the year only amounts to $3,853,000 paper and $74,500 gold.

The foreign debt apparently on December 31, 1901, stood at $386,451,295 gold. In reality it is much smaller. In the above sum is included $46,487,468 gold, of which the service is paid by the provinces of Buenos Ayres and Santa Fe and by the Banco Nacional. Furthermore there is included $29,858,371 gold in bonds, the property of the nation. Besides this the provinces of Cordoba and Entre Rios contribute with the amounts specified by the budget to the service of their debts.

Discarding, therefore, these partial amounts which do not properly constitute a debt or national burden, it can be said that the total foreign debt of the nation is in round figures $300,000,000, which will be constantly reduced by regular amortization. The Executive has spared no effort to prepare and assure better credit for the nation, neglecting no economy which could be conciliated with proper administration and the exigencies of military organization. The service of our public debt has been most punctually attended to and will be continued as one of the most sacred compromises of the country. There are certain extraordinary items of expenditure which will require extraordinary appropriations, and the minister of finance will in due course lay before you the projects which have been prepared to this end. Every plan in this respect must be based upon the reduction, to utmost possible extent, of our ordinary expenditure. Our rule should be to suppress what is not necessary, to reduce even what is useful, and postpone what is not urgent and indispensable until the pressing difficulties of the moment pass.

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COMMERCE.

Every day sees our commercial and industrial action extending, in spite of various calamities. Our production in all its branches is increasing considerably and the sources of public wealth are intact. The balance of our commercial and industrial movement is always favorable. Our imports and exports in 1900 totaled $268,000,000 gold, and in 1901 they were $281,675,000 gold-say a round increase of $14,000,000 gold. In 1900 our exports were $41,000,000 more than our imports, and last year the difference was $53,700,000. Our exports in 1900 amounted to $154,600,000. Last year they were $167,700,000, an increase of $13,000,000.

In the $167,700,000 are included our estancia products, more than $90,000,000— that is, $20,000,000 more than in the preceding year. And this increase is all the more remarkable since the exportation of live stock was necessarily reduced in consequence of the closing of British ports. On the other hand, frozen and preserved meat exports rose and the export of wool shows an increase of $16,675,000 gold over the figures of the preceding year.

The decrease in agricultural products is insignificant when compared with these figures. It is only $5,800,000.

If our wheat exports show a considerable falling off, the exportation of other grain shows an increase that almost makes up for the falling off in question. Our total agricultural exports were $71,596,000.

FR 1902, PT 1

The returns for the first quarter of this year are not less favorable. Our exports and imports total $84,296,000, our exports being $29,000,000 more than our imports. In 1901 the surplus for the same period was not more than $17,000,000. It is noticeable, in this first period of the year, that our cattle products more than make up for the passing falling off in our agricultural products, and principally wheat, owing to the bad harvests in Cordoba, Santa Fe, and Entre Rios. Notwithstanding, there has been a very perceptible improvement in the value of other agricultural products, particularly linseed.

Our inland, fluvial, and coasting trade shows a healthy increase. In 1900 it was $50,221,000 gold. Last year this figure was $64,621,000 gold. The increase of our trade with the South is deserving of special notice, for this trade was in 1901 $4,160,000; that is, double the figures of the preceding year.

All these figures go to prove that the country possesses in its sources of expansion and development ample means to overcome those unavoidable crises to which young nations are exposed owing to their overconfidence in the vigor of their force and natural riches.

Of late years the Republic has been put to the severest tests in economic and financial matters and in affairs of an international character, and it has dominated them all or is doing so with prudence and energy.

The nation now rests on firm foundations and is easily recovering from the profound crises through which it passed, having acquired in them painful but useful experience for the future, for there is no evil nor public misfortune that does not teach an advantageous lesson. It was thought that the Argentine people had given itself up exclusively to commercial speculation, to the desire of lucre and gain, and that it had become enervated in those noble moral faculties that constitute the soul of a nation, but the threat or suspicion of a danger from abroad was sufficient to rouse it and to make it reveal all the energy and military strength which it is capable of displaying.

The economy of the country has not suffered from the great efforts made to acquire the armaments demanded by the circumstances.

Happily, it appears that a better and more cordial understanding will be established in our relations with the Chilean Republic, negotiations having been opened in Santiago through the friendly mediation of the British Government for the rational limitation of the armaments which are pressing on both countries with great prejudice to their credit and well-being.

The vigor of a people can be best appreciated in difficult moments, and as we have never weakened or retroceded in adverse circumstances, we ought to have more confidence than ever in the future destinies of the Republic.

With this conviction, and invoking the favors of Divine Providence for your deliberations, I declare open the legislative period of 1902.

JULIO A. ROCA.

ADJUSTMENT OF DIFFICULTY BETWEEN ARGENTINE REPUBLIC AND CHILE.

Mr. Lord to Mr. Hay.

No. 191.]

LEGATION OF THE UNITED STATES,
Buenos Aires, June 3, 1902.

SIR: I have the honor to inclose herewith, in copy and translation, the texts of the peace agreements entered into and signed at Santiago on the 28th ultimo by the representatives of Chile and the Argentine Republic. These documents are four in number, namely:

1. A political convention declaring the international policy of the two Republics;

2. A treaty of general arbitration;

3. An agreement for the reduction of naval forces; and

4. An arrangement for having the boundary line between the two

countries, when determined by the arbitrator, carried into effect by engineers appointed by him.

The treaty of general arbitration is an agreement to submit to arbitration every dispute of whatever nature and from whatever cause that may arise, provided they do not affect the precept of the Constitution and can not be settled by direct negotiation. The agreement also includes the appointment of His Britannic Majesty as arbitrator, whose award is to be final, its execution being confided to the honor of the two Republics. The terms of this agreement are wide and comprehensive, and would appear to include all controversies that can possibly arise between the two Republics.

The reduction of the naval forces contemplated by the agreement will relieve both countries from a heavy outlay of expense which each was about to make in the acquisition of new iron-clads. It is also agreed in substance that a diminution of their respective fleets shall be effected within a year, and that neither Government is to increase them during the term of five years without giving notice eighteen months previously.

The agreement with reference to the boundary line between the two countries secures the execution of the award without the risk which might arise from differences of opinion between Chilean and Argentine experts.

Concerning international questions affecting Pacific coast matters the declarations of policy of the respective representatives of the two Governments in the preamble or convention was made an integral part of the agreement.

These agreements seem to give general satisfaction to the people here, and they will doubtless be ratified by the Argentine Congress. It is stated that the President will not present them to the Senate for their consideration for a few days, owing to the necessity of having to wait until the messenger arrives with them and the papers connected therewith from Santiago.

I have, etc.,

WM. P. LORD.

[Inclosure.-Translation.]

The Chilean minister of foreign relations, Señor Don José Francisco Vergara Donoso, and the envoy extraordinary and minister plenipotentiary of the Argentine Republic, Señor Don José Antonio Terry, having met in conference in the Chilean ministry of foreign relations for the purpose of agreeing upon the rules to which shall be submitted such disputes of whatsoever nature as may disturb the friendly relations which exist between the two countries and of thus rendering permanent the peace so far preserved, notwithstanding the periodic alarms that have arisen from the protracted question of boundaries, the minister of the Argentine Republic declared:

That the intention of his Government, in conformity with international policy which it had always observed, was to endeavor in every instance to settle questions with other nations in a friendly manner; that the Government of the Argentine Republic had carried out this policy successfully, adhering to its own rights and respecting to the fullest extent the sovereignty of other nations without concerning itself in their internal affairs or their foreign questions; that, in consequence, it was incapable of entertaining thoughts of territorial expansion; that it would continue in this policy, and that he made these declarations, now that the moment had arrived for Chile and the Argentine Republic to remove all causes of disturbance in their international relations, with the belief that he was giving expression to the public sentiment of his country.

The minister of foreign relations declared, in return, that his Government had held and now holds the same high principles that the minister of the Argentine

Republic had just given expression to in the name of his Government; that Chile had given numerous proofs of the sincerity of its aspirations by incorporating in its international agreements the principle of arbitration as a means of settling questions with friendly nations; that, respecting the independence and integrity of other States, it, too, entertains no thoughts of territorial expansion except such as may result from the carrying out of treaties now in force or hereafter to be negotiated; that it would continue in this policy; that, happily, the question of boundaries between Chile and the Argentine Republic had ceased to be a menace to peace now that both countries were awaiting the speedy decision of His Britannic Majesty; that, in consequence, in the belief that he interpreted the public sentiment of Chile, he made these declarations, thinking, as did the Argentine minister, that the moment had arrived for removing all cause of disturbance in the relations between the two countries.

In view of this uniformity of principles, it has been agreed:

First. To draw up a general arbitration treaty which shall guarantee the fulfillment of the declarations cited.

Second. To include in the protocol the present conference, the import of which shall be considered an integral part of the arbitration treaty itself.

In witness whereof they have signed two copies of this document, the 28th day of May, 1902.

J. A. TERRY.
J. F. VERGARA DONOSO.

The Governments of the Argentine Republic and of the Republic of Chile, animated by the common desire of settling by friendly means any question that may arise between the two countries, have resolved to draw up a general treaty of arbitration, to which end they have constituted ministers plenipotentiary, viz:

His Excellency the President of the Republic of Chile, Señor Don José Francisco Vergara Donoso, minister of state in the department of foreign relations;

His Excellency the President of the Argentine Republic, Señor Don José Antonio Terry, envoy extraordinary and minister plenipotentiary of that country:

Who, having communicated their respective plenary powers, which they have found to be full and sufficient and executed in due form, have agreed to the stipulations contained in the following articles:

ARTICLE 1. The high contracting parties bind themselves to submit to arbitration every difficulty or question of whatever nature that may arise between them, provided such questions do not affect the precepts of the respective constitutions of the two countries and that they can not be solved through direct negotiation.

ART. 2. This treaty does not embrace those questions that have given rise to definite agreements between the two parties. In such cases the arbitration shall be limited exclusively to questions of validity, interpretation, or fulfillment of these agreements. ART. 3. The high contracting parties designate as arbitrator the Government of His Britannic Majesty or, in the event of either of the powers having broken off relations with the British Government, the Swiss Government.

Within sixty days from the exchange of ratifications the British Government and the Swiss Government shall be asked to accept the charge of arbitrators.

ART. 4. The points of controversy, questions or divergencies shall be specified by the high contracting parties, who may determine the powers of the arbitrator or any other circumstance connected with the procedure.

ART. 5. In the case of divergence of opinion, either party may solicit the intervention of the arbitrator, who will determine the circumstances of procedure, the contracting parties placing every means of information at the service of the arbitrator.

ART. 6. Either party is at liberty to name one or more commissioners near the arbitrator.

ART. 7. The arbitrator is qualified to decide upon the validity of the obligation and its interpretation, as well as upon questions as to what difficulties come within the sphere of the arbitration.

ART. 8. The arbitrator shall decide in accordance with international law, unless the obligation involves the application of special rules or he have been authorized to act as friendly mediator.

ART. 9. The award shall definitely decide each point of controversy.

ART. 10. The award shall be drawn up in two copies.

ART. 11. The award legally delivered shall decide within the limits of its scope the question between the two parties.