Within the last three years the United States has set an example in disarmament where disarmament was proper. By law our Army is fixed at a maximum of 100,000 and a minimum of 60,000 men. When there was insurrection in the Philippines we kept the Army at the maximum. Peace came in the Philippines, and now our Army has been reduced to the minimum at which it is possible to keep it with due regard to its efficiency. The guns now mounted require 28,000 men, if the coast fortifications are to be adequately manned. Relatively to the nation, it is not now so large as the police force of New York or Chicago relatively to the population of either city.

In the Philippine Islands there has been during the past year a continuation of the steady progress which has obtained ever since our troops definitely got the upper hand of the insurgents. The Philippine people, or, to speak more accurately, the many tribes, and even races, sundered from one another more or less sharply, who go to make up the people of the Philippine Islands, contain many elements of good and some elements which we have a right to hope stand for progress. At present they are utterly incapable of existing in independence at all or of building up a civilization of their own. I firmly believe that we can help them to rise higher and higher in the scale of civilization and of capacity for self-government, and I most earnestly hope that in the end they will be able to stand, if not entirely alone, yet in some such relation to the United States as Cuba now stands. This end is not yet in sight, and it may be indefinitely postponed if our people are foolish enough to turn the attention of the Filipinos away from the problems of achieving moral and material prosperity, of working for a stable, orderly, and just government, and toward foolish and dangerous intrigues for a complete independence for which they are as yet totally unfit.

On the other hand our people must keep steadily before their minds the fact that the justification for our stay in the Philippines must ultimately rest chiefly upon the good we are able to do in the islands. I do not overlook the fact that in the development of our interests in the Pacific Ocean and along its coasts, the Philippines have played and will play an important part, and that our interests have been served in more than one way by the possession of the islands. But our chief reason for continuing to hold them must be that we ought in good faith to try to do our share of the world's work, and this particular piece of work has been imposed upon us by the results of the war with Spain.

Every measure taken concerning the islands should be taken primarily with a view to their advantage. We should certainly give

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them lower tariff rates on their exports to the United States; if this is not done it will be a wrong to extend our shipping laws to them. I earnestly hope for the immediate enactment into law of the legislation now pending to encourage American capital to seek investment in the islands in railroads, in factories, in plantations, and in lumbering and mining.

COMMERCIAL INTERCOURSE WITH MEXICO.

The recent announcement of a proposed new form of currency for Mexico lends especial interest to some figures just compiled by the Department of Commerce and Labor through its Bureau of Statistics regarding the commerce between the United States and Mexico. These figures show that the exports from the United States to Mexico have grown from $13,000,000 in 1890 to $46,000,000 in 1904, speaking in round terms, and that the imports into the United States from Mexico have grown from $23,000,000 in 1890 to $14,000,000 in 1904. Thus our exports to Mexico in 1904 were three and one-half times as great as in 1890, and our imports from Mexico practically as great as in that year.

An even more interesting fact is found in a comparison of the figures of Mexican trade with the United States with the total trade of Mexico. These show that of the imports into Mexico in the latest year for which information is available the United States supplied 59 per cent of the total imports, and that of the exports from Mexico 76 per cent was sent to the United States. Mexico takes from the United States a larger share of her total imports than any other country in the world except Canada, which takes 60 per cent of her imports from the United States, and Mexico sends to the United States also a larger share of her exports than any other country of the world except Cuba. of whose exports during the fiscal year 1904 80.6 per cent went to the United States, as against the 76 per cent of the total exports of Mexico sent to this country.

While figures showing the percentage of Mexican imports supplied by the United States and the percentage of Mexico's exports sent to the United States are not available for earlier years, it is well known that the United States has rapidly increased the share which she supplies of the imports into Mexico and the share which she takes of the exports from Mexico. This increase has been especially marked since the construction of railroads entering Mexico from the United States. Prior to the construction of railroads between the United States and Mexico the share of Mexico's imports supplied by the United States ranged from 20 to 30 per cent, against the 59 per cent at the present time, as above noted, while the share of Mexico's exports sent to the United States was about in the same proportion. The effect of direct rail communication between the United States and Mexico is also illus

trated by the fact that the Central American States, which can be reached only by water, as was the case with Mexico prior to the construction of railways connecting the two countries, now take 43 per cent of their imports from the United States, as against the 59 per cent which Mexico takes of her imports from us.

Earlier figures of the commerce between the United States and Mexico are, of course, available, but are somewhat misleading during the earlier period of the operations of the railway, since no law existed prior to 1892 by which statements of merchandise passing out of the United States by rail destined for Mexico were required.

The principal classes of merchandise forming our exports to Mexico are iron and steel manufactures, coal, unmanufactured cotton, lumber, unmanufactured wood, cars and carriages, breadstuffs, wood manufactures, chemicals, drugs, and dyes, copper and manufactures thereof, mineral oils, provisions, and leather and manufactures thereof.

The principal articles imported into the United States from Mexico are fibers, mostly sisal grass, copper pigs, bars, and ingots, lead in ore and base bullion, hides and skins, coffee, and cattle.

The table which follows shows the principal articles exported from the United States to Mexico during the fiscal years 1894 and 1904:

The table which follows shows the principal articles imported into the United States from Mexico during the fiscal years 1894 and 1994:

According to the Department of Commerce and Labor, there were exported from the United States to Mexico last year $77,476 worth of corn, $205,640 of wheat flour, and $1,141,832 of other breadstuffs. Cycles sent to Mexico in that year were valued at $1,548,218. Exports of anthracite coal were $2,242,518, and of bituminous, $1,075,267. Cotton worth $3,189,570 was sent in the raw state. Gunpowder and other explosives sent to Mexico amounted to $1,254,977. United States iron and steel manufacturers received $490,238 for sewing machines, $1,692,622 for steam engines, and a grand total of $10,125,685 for other devices, and Mexico paid them $1,144,276 for paints and pigments, $1,403,168 for boards and planks, and $1,238,827 for manufactures of lumber. United States exports of wool to Mexico amounted to $41,068,491. The following table shows the steady increase of the trade of the United States with Mexico:

The annual report of the Secretary of Agriculture of the United States for 1904 enumerates some of the more important features of the year's work. Among them are extensive cooperation with agricultural stations, the taking of preliminary steps to conduct feeding and breeding experiments, the war waged against the cotton boll weevil and against cattle mange, plans for education of engineers in road building, the production of a hardy orange, a hybrid of the Florida orange and the Japanese trifoliata, valuable research in successful shipping of fruit abroad, the value of nitrogen-fixing bacteria, successful introduction of plants suited to light rainfall areas, establishment of pure food standards, the extension of agricultural education in primary and secondary schools, the extension of instruction to our island possessions to enable them to supply the country with $200,000,000 worth of domestic products now imported from abroad.

The report then discusses the place of agriculture in the country's industrial life. The corn crop of 1904 yields a farm value greater than ever before. The farmers could from the proceeds of this single crop pay the national debt, the interest thereon for one year, and still have enough left to pay a considerable portion of the Government's yearly expenses. The cotton crop, valued for lint and seed at $600,000,000, comes second, while hay and wheat contend for the third

place. Combined, these two crops will about equal in value the corn crop.

Notwithstanding that the wheat crop shows a lower production than any year since 1900, the farm value is the highest since 1881. Potatoes and barley reached their highest production in 1904. Save in 1902 the oat crop was never so large by 60,000,000 bushels. The present crop of rice promises a yield of 900,000,000 pounds, 300,000,000 more than ever before.

Horses and mules reach the highest point this year, with an aggregate value exceeding $1,354,000,000. On the other hand, cattle,

sheep, and hogs all show a slight decline.

The steady advance in poultry leads to some astonishing figures. The farmers' hens now produce one and two-thirds billions of dozens of eggs, and at the high average price of the year the hens during their busy season lay enough eggs in a single month to pay the year's interest on the national debt.

After a careful estimate of the value of the products of the farm during 1904, made within the census scope, it is safe to place the amount at $4,900,000,000 after excluding the value of farm crops fed to live stock in order to avoid duplication of values. This is 9.65 per cent above the product of 1903, and 31.28 per cent above that of the census year 1899.

Some comparisons are necessary to the realization of such an unthinkable value, aggregating nearly $5,000,000,000. The farmers of this country have in two years produced wealth exceeding the output of all the gold mines of the entire world since Columbus discovered America. This year's product is more than six times the amount of the capital stock of all national banks; it lacks but three-fourths of a billion dollars of the value of the manufactures of 1900, less the cost of materials used; it is three times the gross earnings from the operations of the railways, and four times the value of all minerals produced in this country.

The year 1904 keeps well up to the average of exports of farm products during the five years 1899-1903, amounting to more than $859,000,000, while the average for the five years was nearly $865,000,000. During the last fifteen years the balance of trade in favor of this country, all articles considered, exceeded $4,384,000,000, but taking farm products alone these showed a balance in our favor of more than $5,300,000,000.

Reviewing the increase in farm capital, the Secretary estimates it conservatively at $2,000,000,000 within four years—this without recognizing the marked increase in the value of land during the last two years. The most startling figures shown as illustrating the farmers' prosperity are those presented by deposits in banks in typical agricul