present session to refrain from new appropriations for immediate outlay, or if such are absolutely required to provide for them by new revenue; otherwise, we shall reach the end of the year with the unthinkable result of an unbalanced budget.  For the first time during my term of office we face that contingency.  I am certain that the Congress would not pass and I should not feel warranted in approving legislation which would involve us in that financial disgrace.

On the whole the finances of the Government are most satisfactory.  Last year the national debt was reduced about $906,000,000.  The refunding and retirement of the second and third Liberty loans have just been brought to a successful conclusion, which will save about $75,000,000 a year in interest.  The unpaid balance has been arranged in maturities convenient for carrying out our permanent debt-paying Program.

The enormous savings made have not been at the expense of any legitimate public need.  The Government plant has been kept up and many improvements are tinder way, while its service is fully manned and the general efficiency of operation has increased.  We have been enabled to undertake many new enterprises.  Among these are the adjusted compensation of the veterans of the World War, which is costing us $112,000,000 a year; amortizing our liability to the civil service retirement funds, $20,000,000; increase of expenditures for rivers and harbors including flood control, $43,000,000; public buildings, $47,000,000.  In 1928 we spent $50,000,000 in the adjustment of war claims and alien property.  These are examples of a large list of items.

FOREIGN RELATIONS

When we turn from our domestic affairs to our foreign relations, we likewise perceive peace and progress.  The Sixth International Conference of American States was held at Habana last winter.  It contributed to a better understanding and cooperation among the nations’.  Eleven important conventions were signed and 71 resolutions passed.  Pursuant to the plan then adopted, this Government has invited the other 20 nations of this hemisphere to it conference on conciliation and arbitration, which meets in Washington on December 10.  All the nations have accepted and the expectation is justified that important progress will be made in methods for resolving international differences by means of arbitration.

During the year we have signed 11 new arbitration treaties, and 22 more are tinder negotiation.

NICARAGUA

When a destructive and bloody revolution lately broke out in Nicaragua, at the earnest and repeated entreaties of its Government I dispatched our Marine forces there to protect the lives and interests of our citizens.  To compose the contending parties, I sent there Col.  Henry L. Stimson, former Secretary of War and now Governor General of the Philippine Islands, who secured an agreement that warfare should cease, a national election should be held and peace should be restored.  Both parties conscientiously carried out this agreement, with the exception of a few bandits who later mostly surrendered or left the country.  President Diaz appointed Brig.  Gen. Frank R. McCoy, United States Army, president of the election board, which included also one member of each political party.