recent task of our diplomacy has been to adjust those principles to the conditions of to-day, to develop their corollaries, to find practical applications of the old principles expanded to meet new situations.  Thus are being evolved bases upon which can rest the superstructure of policies which must grow with the destined progress of this Nation.  The successful conduct of our foreign relations demands a broad and a modern view.  We can not meet new questions nor build for the future if we confine ourselves to outworn dogmas of the past and to the perspective appropriate at our emergence from colonial times and conditions.  The opening of the Panama Canal will mark a new era in our international life and create new and worldwide conditions which, with their vast correlations and consequences, will obtain for hundreds of years to come.  We must not wait for events to overtake us unawares.  With continuity of purpose we must deal with the problems of our external relations by a diplomacy modern, resourceful, magnanimous, and fittingly expressive of the high ideals of a great nation.

Part II.[On Fiscal, judicial, Military and Insular Affairs.] The white house, December 6, 1912.  To the Senate and House of Representatives: 

On the 3d of December I sent a message to the Congress, which was confined to our foreign relations.  The Secretary of State makes no report to the President or to Congress, and a review of the history of the transactions of the State Department in one year must therefore be included by the President in his annual message or Congress will not be fully informed of them.  A full discussion of all the transactions of the Government, with a view to informing the Congress of the important events of the year and recommending new legislation, requires more space than one message of reasonable length affords.  I have therefore adopted the course of sending three or four messages during the first ten days of the session, so as to include reference to the more important matters that should be brought to the attention of the Congress.

BUSINESS CONDITIONS

The condition of the country with reference to business could hardly be better.  While the four years of the administration now drawing to a close have not developed great speculative expansion or a wide field of new investment, the recovery and progress made from the depressing conditions following the panic of 1907 have been steady and the improvement has been clear and easily traced in the statistics.  The business of the country is now on a solid basis.  Credits are not unduly extended, and every phase of the situation seems in a state of preparedness for a period of unexampled prosperity.  Manufacturing concerns are running at their full capacity and the demand for labor was never so constant and growing.  The foreign trade of the country for this year will exceed $4,000,000,000, while the balance in our favor-that