There is no disposition on the part of the people or Government 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 diplomatic correspondence.

I have endeavored in every way to assure our sister Republics of Central and South America that the United States Government and its people have only the most friendly disposition toward them all.  We do not covet their territory.  We have no disposition to be oppressive or exacting in our dealings with any of them, even the weakest.  Our interests and our hopes for them all lie in the direction of stable governments by their people and of the largest development of their great commercial resources.  The mutual benefits of enlarged commercial exchanges and of a more familiar and friendly intercourse between our peoples we do desire, and in this have sought their friendly cooperation.