Message to Congress Regarding Railway Transportation Through Canada

To the Senate and House of Representatives:

On the 23d of July last the following resolution of the House of Representatives was communicated to me:

Resolved, That the President be requested to inform the House, if not incompatible with the public interests, what regulations are now in force concerning the transportation of imported merchandise in bond or duty paid, and products or manufactures of the United States, from one port in the United States, over Canadian territory, to another port therein, under the provisions of section 3006 of the Revised Statutes; whether further legislation thereon is necessary or advisable, and especially whether a careful inspection of such merchandise should not be had at the frontiers of the United States upon the departure and arrival of such merchandise, and whether the interests of the United States do not require that each car containing such merchandise while in Canadian territory be in the custody and under the surveillance of an inspector of the customs department, the cost of such surveillance to be paid by the foreign carrier transporting such merchandise.

The resolution is limited in its scope to the subject of the transit of merchandise from one port in the United States, through Canadian territory, to another port in the United States, under the provisions of section 3006 of the Revised Statutes; but I have concluded that a review of our treaty obligations, if any, and of our legislation upon the whole subject of the transit of goods from, to, or through Canada is desirable, and therefore address this message to the Congress.

It should be known before new legislation is proposed whether the United States is under any treaty obligations which affect this subject growing out of the provisions of Article XXIX of the treaty of Washington. That article is as follows:

It is agreed that for the term of years mentioned in Article XXXIII of this treaty goods, wares, or merchandise arriving at the ports of New York, Boston, and Portland, and any other ports in the United States which have been or may from time to time be specially designated by the President of the United States, and destined for Her Britannic Majesty's possessions in North America, may be entered at the proper custom-house and conveyed in transit, without the payment of duties, through the territory of the United States, under such rules, regulations, and conditions for the protection of the revenue as the Government of the United States may from time to time prescribe; and under like rules, regulations, and conditions goods, wares, or merchandise may be conveyed in transit, without the payment of duties, from such possessions through the territory of the United States for export from the said ports of the United States.

It is further agreed that for the like period goods, wares, or merchandise arriving at any of the ports of Her Britannic Majesty's possessions in North America and destined for the United States may be entered at the proper custom-house and conveyed in transit, without the payment of duties, through the said possessions under such rules and regulations and conditions for the protection of the revenue as the governments of the said possessions may from time to time prescribe; and under like rules, regulations, and conditions goods, wares, or merchandise may be conveyed in transit, without payment of duties, from the United States through the said possessions to other places in the United States, or for export from ports in the said possessions.

It will be noticed that provision is here made--

First. For the transit in bond, without the payment of duties, of goods arriving at specified ports of the United States, and at others to be designated by the President, destined for Canada.

Second. For the transit from Canada to ports of the United States, without the payment of duties, of merchandise for export.

Third. For the transit of merchandise arriving at Canadian ports, destined for the United States, through Canadian territory to the United States, without the payment of duties to the Dominion government.

Fourth. For the transit of merchandise from the United States to Canadian ports for export without the payment of duties.

Fifth. For the transit of merchandise, without the payment of duties, from the United States, through Canada, to other places in the United States.

The first and second of these provisions were concessions by the United States and were made subject to "such rules, regulations, and conditions for the protection of the revenue as the Government of the United States may from time to time prescribe." The third, fourth, and fifth provisions of the articles are concessions on the part of the Dominion of Canada and are made subject to "such rules and regulations and conditions for the protection of the revenue as the governments of the said possessions may from time to time prescribe." The first and second and the third and fourth of these provisions are reciprocal in their nature. The fifth, which provides for the transit of merchandise from one point in the United States, through Canada, to another point in the United States, is not met by a reciprocal provision for the passage of Canadian goods from one point in Canada to another point in Canada through the United States. If this article of the treaty is in force, the obligations assumed by the United States should be fully and honorably observed until such time as this Government shall free itself from them by methods provided in the treaty or recognized by international law. It is, however, no part of the obligation resting upon the United States under the treaty that it will use the concessions made to it by Canada. This Government would undoubtedly meet its full duty by yielding in an ample manner the concessions made by it to Canada. There could be no just cause of complaint by Great Britain or Canada if the compensating concession to the United States should not be exercised. We have not stipulated in the treaty that we will permit merchandise to be moved through Canadian territory from one point of the United States to another at the will of the shipper. The stipulation is on the part of Canada that it will permit such merchandise to enter its territory from the United States, to pass through it, and to return to the United States without the exaction of duties and without other burdens than such as may be necessary to protect its revenues.

The questions whether we shall continue to allow merchandise to pass from one point in the United States, through Canadian territory, to another point in the United States, and, if so, to what exactions and examinations it shall be subjected on reentering our territory, are wholly within the power of Congress without reference to the question whether Article XXIX is or is not in force.

The treaty of Washington embraced a number of absolutely independent subjects. Its purpose, as recited, was "to provide for an amicable settlement of all causes of difference between the two countries." It provided for four distinct arbitrations of unsettled questions, including the Alabama claims, for a temporary settlement of the questions growing out of the fisheries, and for various arrangements affecting commerce and intercourse between the United States and the British North American possessions. Some of its provisions were made terminable by methods pointed out in the treaty. Articles I to XVII, inclusive, provide for the settlement of the Alabama claims and of the claims of British subjects against the United States, and have been fully executed. Articles XVIII to XXV, inclusive, relate to the subject of the fisheries, and provide for a joint commission to determine what indemnity should be paid to Great Britain for the fishing privileges conceded. These articles have been terminated by the notice provided for in the treaty.

Article XXVI provides for the free navigation of the St. Lawrence, Yukon, Porcupine, and Stikine rivers. Article XXVII provides for the equal use of certain frontier canals and waterways, and contains no provision for termination upon notice. Article XXVIII opens Lake Michigan to the commerce of British subjects under proper regulations, and contains a provision for its abrogation, to which reference will presently be made. Article XXX provides for certain privileges of transshipment on the Lakes and northern waterways, and contains the same provision as Article XXIX as to the method by which it may be terminated. Article XXXI provides for the nonimposition of a Canadian export duty on lumber cut in certain districts in Maine and floated to the sea by the St. Johns River, and contains no limitation as to time and no provision for its abrogation. Article XXXII extended to Newfoundland in the event of proper legislation by that Province the fishery provisions of Articles XVIII to XXV, and was of course abrogated with those articles. Article XXXIII, which provides a method for the abrogation of certain articles of the treaty, I will presently quote at length. The remaining articles of the treaty, namely XXXV to XLII, provide for the arbitration of the dispute as to the Vancouver Island and De Haro Channel boundary, and have been fully executed. Articles XVIII, XIX, XXI, XXVIII, XXIX, and XXX each contains a provision limiting their life to "the term of years mentioned in Article XXXIII of this treaty." The articles between XVIII and XXX, inclusive, which do not contain this provision, are those that provide for an arbitration of the fishery question, which were of course terminable by the completion of the arbitration; Article XXVI, relating to the navigation of the St. Lawrence and other rivers, and Article XXVII, relating to the use of the canals. The question whether Article XXIX is still in force depends, so far as the construction of the treaty goes, upon the meaning of the words "the term of years mentioned in Article XXXIII." That article is as follows:

The foregoing Articles XVIII to XXV, inclusive, and Article XXX of this treaty shall take effect as soon as the laws required to carry them into operation shall have been passed by the Imperial Parliament of Great Britain, by the parliament of Canada, and by the legislature of Prince Edwards Island on the one hand and by the Congress of the United States on the other. Such assent having been given, the said articles shall remain in force for the period of ten years from the date at which they may come into operation, and, further, until the expiration of two years after either of the high contracting parties shall have given notice to the other of its wish to terminate the same; each of the high contracting parties being at liberty to give such notice to the other at the end of the said period of ten years or at any time afterwards.

The question of construction here presented is whether the reference to "the term of years mentioned in Article XXXIII" is to be construed as limiting the continuance of Article XXIX to the duration of Articles XVIII to XXV and XXX in such a way that the abrogation of those articles necessarily carried with it the other articles of the treaty which contained the reference to Article XXXIII already quoted, or whether the reference to this "term of years" in Articles XXVIII and XXIX was intended to provide a method of abrogation after ten years from the time of their taking effect, viz, a notice of two years of an intention to abrogate. The language of the treaty, considered alone, might support the conclusion that Article XXXIII was intended to provide a uniform method of abrogation for certain other articles. It will be noticed that the treaty does not expressly call for legislation to put Article XXIX into operation. Senator Edmunds, in the discussion in the Senate of the joint resolution terminating the fisheries article, took the view that no legislation was necessary. It seems to me, however, that such legislation was necessary, and Congress acted upon this view in the law of 1873, to which reference will presently be made. An examination of the discussion between the plenipotentiaries who framed the treaty furnishes this entry, which President Cleveland thought to be conclusive of the intention of the plenipotentiaries, viz:

The transit question was discussed, and it was agreed that any settlement that might be made should include a reciprocal arrangement in that respect for the period for which the fishery articles should be in force.

On March 1, 1873, Congress passed an act entitled "An act to carry into effect the provisions of the treaty between the United States and Great Britain signed in the city of Washington the 8th day of May, 1871, relating to the fisheries." The act consisted of five sections, the first and second of which provided for carrying into effect the provisions of the treaty "relating to the fisheries." The fourth section provided for carrying into effect section 30 of the treaty. These three sections furnished the legislation contemplated by Article XXXIII of the treaty to carry into effect Articles XVIII to XXV and XXX. The act, however, went further, as will be seen by an examination of section 3, which is as follows:

That from the date of the President's proclamation authorized by the first section of this act, and so long as the Articles XVIII to XXV, inclusive, and Article XXX of said treaty shall remain in force, according to the terms and conditions of Article XXXIII of said treaty, all goods, wares, or merchandise arriving at the ports of New York, Boston, and Portland, and any other ports in the United States which have been or may from time to time be specially designated by the President of the United States, and destined for Her Britannic Majesty's possessions in North America, may be entered at the proper custom-house and conveyed in transit, without the payment of duties, through the territory of the United States, under such rules, regulations, and conditions for the protection of the revenue as the Secretary of the Treasury may from time to time prescribe; and under like rules, regulations, and conditions goods, wares, or merchandise may be conveyed in transit, without the payment of duties, from such possessions through the territory of the United States, for export from the said ports of the United States.

It will be noticed that provision is here made for carrying into effect the two provisions of Article XXIX which I have already characterized as the concessions on the part of the United States, namely, the passage duty free from certain designated ports of the United States to Canada of imported goods, and the passage duty free to ports of the United States of Canadian goods for export. Section 3 of the law of 1873, which I have quoted, however, contains a legislative construction of Article XXIX of the treaty in the limitation that the provisions therein contained as to the transit of goods should continue in force only so long as Articles XVIII to XXV, inclusive, and XXX of the treaty should remain in force.

On March 3, 1883, Congress passed a joint resolution entitled as follows: "Joint resolution providing for the termination of articles numbered XVIII to XXV, inclusive, and article numbered XXX of the treaty between the United States of America and Her Britannic Majesty concluded at Washington May 8, 1871."

The resolution provided for the giving of notice of the abrogation of the articles of the treaty named in the title, and of no others. Section 3 contained the following provision:

And the act of Congress approved March 1, A. D. 1873, entitled * * * so far as it relates to the articles of said treaty so to be terminated, shall be and stand repealed and be of no force on and after the time of the expiration of said two years.

An examination of the debates at the time of the passage of this joint resolution very clearly shows that Congress made an attempt to save Article XXIX of the treaty and section 3 of the act of 1873. In the Senate on the 21st of February, 1883, the resolution being under consideration, several Senators, including Mr. Edmunds, the chairman of the Judiciary Committee, expressed the opinion that Article XXIX would not be affected by the abrogation of Articles XVIII to XXV and XXX, and an amendment was made to the resolution with a view to leave section 3 of the act of 1873 in force. The same view was taken in the debates in the House.

The subject again came before Congress in connection with the consideration of a bill (S. 3173) to "authorize the President of the United States to protect and defend the rights of American fishing vessels, American fishermen, American trading and other vessels in certain cases, and for other purposes."

In the course of the debate upon the bill in the Senate January 24, 1887, and in the House February 23 following, the prevailing opinion was, though not without some dissent, that Article XXIX was still in force.

On the 6th of July, 1887, in response to an inquiry by the Secretary of the Treasury, Mr. Bayard wrote a letter, a copy of which accompanies this message, in which he expresses the opinion that Article XXIX of the treaty was unaffected by the abrogation of the fisheries articles and was still in force. In August, 1888, however, Mr. Cleveland, in a message to Congress, expresses his opinion of the question in the following language:

In any event, and whether the law of 1873 construes the treaty or governs it, section 29 of such treaty, I have no doubt, terminated with the proceedings taken by our Government to terminate Articles XVIII to XXV, inclusive, and Article XXX of the treaty. * * *

If by any language used in the joint resolution it was intended to relieve section 3 of the act of 1873, embodying Article XXIX of the treaty, from its own limitations, or to save the article itself, I am entirely satisfied that the intention miscarried.

I have asked the opinion of the Attorney-General upon this question, and his answer accompanies this message. He is of the opinion that Article XXIX has been abrogated.

It should be added that the United States has continuously, through the Treasury Department, conducted our trade intercourse with Canada as if Article XXIX of the treaty and section 3 of the act of 1873 remained in force, and that Canada has continued to yield in practice the concessions made by her in that article. No change in our Treasury methods was made following Mr. Cleveland's message from which I have quoted. I am inclined to think that, using the aids which the protocol and the nearly contemporaneous legislation by Congress in the act of 1873 furnish in construing the treaty, the better opinion is that Article XXIX of the treaty is no longer operative. The enactment of section 3 of the act of 1873 was a clear declaration that legislation was necessary to put Article XXIX of the treaty into operation, and that under the treaty our obligation to provide such legislation terminated whenever Articles XVIII to XXV and XXX should be abrogated. This legislation was accepted by Great Britain as a compliance with our obligations under the treaty. No objection was made that our statute treated Article XXIX as having force only so long as the other articles named were in force.

But the question whether Article XXIX is in force has less practical importance than has been supposed, for it does not, if in force, place any restraints upon the United States as to the method of dealing with imported merchandise destined for the United States arriving at a Canadian port for transportation to the United States, or of merchandise passing through Canadian territory from one place in the United States to another. It would be no infraction either of the letter or of the spirit of the treaty if we should stop, unload, and carefully inspect every vehicle arriving at our border with such merchandise; nor, on the other hand, would Canada violate her obligations under the treaty by a like treatment of merchandise imported through the port of New York on its arrival in Canada. Neither Government has placed itself under any restraint as to merchandise intended for the use of its own people when such merchandise comes within its own territory. The question, therefore, as to how we shall deal with merchandise imported by our own people through a Canadian port and with merchandise passing from one place in the United States to another through Canadian territory is wholly one of domestic policy and law.

I turn now to consider the legislation of Congress upon this subject, upon which, as it seems to me, the duties of the Treasury and the rights of our people as to those phases of the transportation question to which I have just alluded wholly depend. Sections 3005 and 3006 of the Revised Statutes, which are taken from the act of July 28, 1866, entitled "An act to protect the revenue, and for other purposes" (14 U. S. Statutes at Large, p. 328), are as follows:

SEC. 3005. All merchandise arriving at the ports of New York, Boston, Portland in Maine, or any other port specially designated by the Secretary of the Treasury, and destined for places in the adjacent British Provinces, or arriving at the port of ( Point Isabel ) (Brownsville) in Texas, or any other port specially designated by the Secretary of the Treasury, and destined for places in the Republic of Mexico, may be entered at the custom-house and conveyed in transit through the territory of the United States without the payment of duties, under such regulations as the Secretary of the Treasury may prescribe.

SEC. 3006. Imported merchandise in bond, or duty paid, and products or manufactures of the United States, may, with the consent of the proper authorities of the British Provinces or Republic of Mexico, be transported from one port in the United States to another port therein, over the territory of such Provinces or Republic, by such routes and under such rules, regulations, and conditions as the Secretary of the Treasury may prescribe; and the merchandise so transported shall, upon arrival in the United States from such Provinces or Republic, be treated in regard to the liability to or exemption from duty or tax as if the transportation had taken place entirely within the limits of the United States.

Section 3102 of the Revised Statutes is also related to this subject, and is as follows:

To avoid the inspection at the first port of arrival, the owner, agent, master, or conductor of any such vessel, car, or other vehicle, or owner, agent, or other person having charge of any such merchandise, baggage, effects, or other articles, may apply to any officer of the United States duly authorized to act in the premises to seal or close the same, under and according to the regulations hereinafter authorized, previous to their importation into the United States, which officer shall seal or close the same accordingly; whereupon the same may proceed to their port of destination without further inspection. Every such vessel, car, or other vehicle shall proceed without unnecessary delay to the port of its destination, as named in the manifest of its cargo, freight, or contents, and be there inspected. Nothing contained in this section shall be construed to exempt such vessel, car, or vehicle, or its contents, from such examination as may be necessary and proper to prevent frauds upon the revenue and violations of this title.

It will be noticed that section 3005 does not provide for the transit of merchandise through our territory from Canada to ports of the United States for export, nor have I been able to find any other law now in force that does provide for such transit. It would seem, therefore, that as to this concession made by the United States in Article XXIX of the treaty, legislation to put it into force was necessary, and that there is no such legislation unless section 3 of the act of 1873 was saved by the amendment to the joint resolution abrogating the fisheries articles and Article XXX, limiting the repeal to so much of said act as "relates to the articles of said treaty so to be terminated." The joint resolution certainly did not repeal section 3, and if that section has ceased to be operative it is by virtue of the limitation contained in the section itself. I think it did expire by its own express limitation.

The question has presented itself whether section 3 of the act of 1873 (U. S. Revised Statutes, sec. 2866) repealed by implication that section of the act of July, 1866, which is now section 3005 of the Revised Statutes; but I am of the opinion that the last-named section was not repealed. Section 3 of the act of 1873 was expressly intended to carry into effect a treaty obligation and was limited as to time. It contained no express repeal of the act of 1866, and while its provisions were broader than the last-named act, they were not inconsistent, save in the provision that while the act of 1873 was in force the additional ports in the United States at which Canadian goods might be received were to be designated by the President, whereas under the act of 1866 the designation was by the Secretary of the Treasury. The last-named act related also to inter-course with Mexico, and I think was unaffected by the act of 1873.

It will be seen that the law permits merchandise arriving at the ports of New York, Boston, Portland in Maine, and at other ports specially designated by the Secretary of the Treasury, for places in the adjacent British Provinces, to be entered at the custom-house of the port where it is landed and conveyed through the territory of the United States without the payment of duty, under regulations to be prescribed by the Secretary of the Treasury. As these goods come immediately and fully under the inspection of our customs officers at the principal ports, are entered there and remain until they cross our border into Canada fully under our supervision, there is little or no danger involved to our revenue. The regulations prescribed by the Treasury for conducting this traffic seem to me to be adequate.

As to merchandise imported into the United States from a contiguous foreign country, it is provided by section 3102 that the inspection at the first port of arrival in the United States may be avoided if the vehicle in which the same arrives has been sealed or closed by some officer of the United States duly authorized at some point in the contiguous country. When the act of closing or sealing conformably to the regulations of the Treasury has been effected, the car or other vehicle may proceed without unnecessary delay to the port of its destination, as named in the manifest of its cargo, freight, or contents, and be there inspected. This privilege, however, is subject to such examination at the point of entry to the United States as may be necessary to prevent fraud. It is important to be noticed that the merchandise to which this section refers is described in section 3100 as merchandise, etc., "imported into the United States from any contiguous foreign country."

A practice has grown up, and a traffic of considerable dimensions under it, of allowing merchandise from China and Japan, purchased and imported from those countries by our own citizens and landed at ports in the Dominion of Canada, to be there loaded into cars, which, being sealed by an officer of the United States or some one supposed to represent him, are forwarded through the territory of Canada, across the entire continent, and allowed to cross our frontier without other inspection than an examination of the seals. The real fact is that the American consul can not and does not either compare the manifest with the contents of the cars or attach the seals. The agents of the transportation companies are furnished by the consul with the seals and place them upon the cars. The practice of sealing such merchandise, notwithstanding it has been allowed by the Treasury for some years, I think is unauthorized. Such merchandise is not imported from a "contiguous country," but from China and Japan.

It has never become subject to the Canadian revenue laws as an importation from Japan to Canada, but by force of the treaty or by the courtesy of that government has been treated as subject to the revenue laws of the United States from the time of landing at the Canadian port. Our Treasury seal has been placed upon it; Canada only gives it passage. It is no more an importation from Canada than is a train load of wheat that starts from Detroit and is transported through Canada to another port of the United States. Section 3102 was enacted in 1864, two years before sections 3005 and 3006, and could not have had reference to the later methods of importing merchandise through one country to the other.

The practice to which I have referred not only equalizes the advantages of Canadian seaports with our own in the importation of goods for our domestic consumption, but makes the Canadian ports favored ports of entry. The detentions under this system at the Canadian ports are less than when the merchandise is landed at a port of the United States to be forwarded in bond to another port therein. Full effect should be given to section 3102 as to merchandise imported into the United States from Canada, so far as the appropriations enable the Treasury to provide the officers to do the work of closing and sealing. It will, however, be required that all this kind of work be done, and carefully done, by an officer of the United States, and that the duty shall in no case be delegated to the employees of the transportation companies. The considerations that it is quite doubtful whether a fraud committed in Canada by one of our agents upon our revenue would be punishable in our courts, and that such a fraud committed by anyone else certainly would not be, and that even if such acts are made penal by our statutes the criminal would be secure against extradition, seem to me to be conclusive against the policy of attempting to maintain such revenue agents in Canadian territory.

I come now to discuss another element of this international traffic, namely, the transportation of merchandise from one "port" in the United States to another "port" therein over the territory of Canada. This traffic is enormous in its dimensions, and very great interests have grown up in the United States in connection with it. Section 3006 authorizes this traffic, subject to "such rules, regulations, and conditions as the Secretary of the Treasury may prescribe;" but the important limitation is from "port" to "port." Section 3007 of the Revised Statutes, which exempts sealed cars from certain fees, preserves the terms of the preceding section--from "port" to "port." It seems to me that sections 3006 and 3007 contemplate the delivery of the sealed cars at a "port" of the United States, there to be examined by a revenue officer and their contents verified; but in practice the car, if the seal is found at the border to be intact, is passed to places not "ports" and is opened and unloaded by the consignee, no officer being present. The bill or manifest accompanying the merchandise and the unbroken seal on the car may furnish prima facie evidence that the amount and kind of merchandise named in the manifest and said to be contained in the car came from a port in the United States, but certainly it was not intended that the merchandise should go to the owner without an official ascertainment of the correspondence between the bill and the actual contents of the car.

I pass at this point any discussion of the question whether as a national policy this traffic should be promoted. It is enough to say that as the law stands it is authorized between "ports" of the United States, and that the rules, regulations, and conditions to be prescribed by the Secretary of the Treasury must not, in view of this declaration of the legislative will, be further restrictive of the traffic than may reasonably be necessary to protect the revenues of the United States. In determining whether further regulations are reasonably necessary to prevent frauds against our revenue it is not conclusive, at least, to say that frauds against the revenue under the existing system have not been discovered. The question is, Are the regulations such as to provide proper safeguards against fraud, or are they such as to make fraud easy to those who have the disposition to commit it? If all cars carrying this merchandise are carefully and honestly inspected at the point of lading and are securely closed during the transit, the revenue would be secure, for the proper lading of these cars is not subject to duty. Frauds can only be perpetrated by introducing products not subject to free entry. In practice the seals and locks provided by the Treasury Department do not give security that these cars, in the long transit in which they are free from observation by officers of the revenue, may not be opened and dutiable merchandise added.

The duplication of the seals used, composed of wire and lead, is easy, and the opening of locks scarcely less so. If, however, the cars, when they arrive in the United States, either at the point where our boundary is crossed or at some other port of the United States, were subject to the inspection of a revenue officer before the delivery to the consignee or owner, the manifest could be verified. The inspection, however, is now limited to an examination of the lock or seal. The car is not weighed or opened to verify its contents. I do not think this is an adequate protection against the surreptitious introduction into the cars, while on foreign territory, of dutiable articles. It will be seen by the letter of the Secretary of the Treasury that grain the product of the United States is now largely transported in American vessels to Canadian lake ports, and after being there placed in elevators is sent east in cars sealed by agents of the Treasury.

No observation is taken of this grain until its arrival in Canada, where only the amount and grade are noted by a Treasury agent, and a like amount in grade and quantity (though it may be not the identical grain) is by such agent billed and sealed in ears for carriage to the United States. I do not find any statute authorizing this practice. Section 3006, which authorizes this interstate trade through Canada, is limited to merchandise passing from "port" to "port" of the United States, and plainly means that such merchandise shall be taken up by our revenue officers at a "port" of the United States as a starting point.

The following are the conclusions at which I have arrived:

First. That Article XXIX of the treaty of Washington has been abrogated.

Second. That even if this article were in force there is no law in force to execute it.

Third. That when in force the treaty imposed no obligation upon the United States to use the concessions as to transit made by Canada, and no limitation upon the powers of the United States in dealing with merchandise imported for the use of our citizens through Canadian ports or passing from one place in the United States to another through Canada, upon the arrival of such merchandise at our border.

Fourth. That therefore, treaty or no treaty, the question of sealing cars containing such merchandise and the treatment of such sealed cars when they cross our border is and always has been one to be settled by our laws, according to our convenience and our interests as we may see them.

Fifth. That the law authorizing the sealing of cars in Canada containing foreign merchandise imported from a contiguous country does not apply to merchandise imported by our own people from countries not contiguous and carried through Canada for delivery to such owners.

Sixth. That the law did not contemplate the passing of sealed cars to any place not a "port," nor the delivery of such cars to the owner or consignee, to be opened by him without the supervision of a revenue officer.

Seventh. That such a practice is inconsistent with the safety of the revenue.

The statutes relating to the transportation of merchandise between the United States and the British possessions should be the subject of revision. The Treasury regulations have given to these laws a construction and a scope that I do not think was contemplated by Congress. A policy adapted to the new conditions, growing in part out of the construction of the Canadian Pacific Railroad, should be declared, and the business placed upon a basis more just to our people and to our transportation companies.

If we continue the policy of supervising rates and requiring that they shall be equal and reasonable upon the railroads of the United States, we can not in fairness at the same time give these unusual facilities for competition to Canadian roads that are free to pursue the practices as to cut rates and favored rates that we condemn and punish if practiced by our own railroads.

I regret that circumstances prevented an earlier examination by me of these questions, but submit now these views in the hope that they may lead to a revision of the laws upon a safer and juster basis.

I transmit herewith the correspondence between the Secretary of the Treasury and the Attorney-General upon some phases of this question.

BENJ. HARRISON