has been out of the question, and such governments fall into a state of hopeless default which deprives them of any further foreign credit.

"Honduras and Nicaragua alike occupy a central position stretching from the Caribbean to the Pacific and separating the other Central American republics. In Central America there are many rivalries as between the heads of the five republics, but there has seldom been an open breach between them which has resulted in an international war. Rather than seek a direct means of redressing their grievances it has been found far more effective and less dangerous than open hostility for the president seeking to injure his neighbour to institute and set on foot a revolution of political malcontents against the government. For years the revolutions and internal commotions of several of these republics have been caused by their neighbours who have taken advantage of their position to harbour political refugees from their neighbours and aid or permit them to foster a hostile movement against their native republic, which is fomented in security without the borders of the country at whose government it is aimed, and which is then permitted to cross the international line at some convenient location, thence to contend for supremacy.

"Honduras, because it borders on three of the other republics, Guatemala, Salvador, and Nicaragua, has for years been the hotbed of most of the internal disturbances of its neighbours, and in fact has been the cockpit of Central America. So great has been the abuse of the undefended central position occupied by Honduras that as long ago as 1907 all the republics of Central America joined in a peace conference and signed at Washington, under our auspices, a convention one article of which had for an object the neutralisation of the territory of that republic so as to prevent its further use as a centre of disturbance.

"Under such conditions the Republics of Honduras and Nicaragua came to seek the counsel and assistance of the United States.

"Provided the enormous waste on military establishments could be checked, the customs revenues of both these countries, properly administered, should be ample to meet the interest and sinking-fund on their just national obligations, and it is in order to establish a system for the accomplishment of this end that the present conventions have been framed.

"It may be asked, What are the provisions of the two practically identical treaties as drawn for the purpose of curing the evils of the situation as already set forth?

The preambles of the two conventions point to the recognised and urgent necessity, in each case, of laying the foundation for more effective helpfulness on the part of the United States in assisting the Republics of Nicaragua and Honduras to the rehabilitation of their respective finances and in thus making possible the maintenance of peace and prosperity in the two countries, and they recite the fact that the active aid of this Government has been requested to this end. Then follow the four articles of the conventions. These include some eight points and I shall try briefly to epitomise them, roughly indicating the objects of the different provisions.

"In order to avoid the danger of further embarrassment with foreign creditors, the conventions provide (first) that a loan shall be placed in the United States; in order to provide that the bankers' contracts, which it will be necessary to negotiate to work out the details of their financial problems, may be equitable and just, and also that they may be properly executed, it is provided (second) that the Signatory Governments shall take due note of the terms and shall consult in case of any difficulties. That the loan may be properly secured, the conventions stipulate (third) that the customs duties shall be pledged; that this security may be adequate and may not be interfered with, it is agreed (fourth) that the customs duties shall not be changed without the consent of the Government of the United States. To assure the proper collection and administration of the customs by a competent person, it is provided (fifth) that a receiver-general of customs shall be ap

pointed by the government of the country concerned from a list of names prepared by the fiscal agent of the contemplated loan and approved by the President of the United States. To insure the proper discharge of the duties of the receiver-general of customs, it is agreed (sixth) that he shall be under obligation to report annually, and upon request, to both parties to the conventions. In order that he may effectively, conscientiously, and independently perform his functions, and to prevent customs-houses continuing to be the goal of revolutionists, it is stipulated (seventh) that the government of the country concerned will protect him, and (eighth) that the Government of the United States shall afford him such protection as it may deem requisite, there being thus obtained just so much assurance of stable conditions and proper customs collections as will enable Nicaragua and Honduras to borrow the money necessary to rehabilitate their national finances at anything like a reasonable rate of interest.

"I wish to call especial attention to the fact that in the Dominican Republic just this potential safeguard, unexercised and without any undue interference on the part of the United States, has cured almost century-old evils, and to ask you to judge these conventions in the light of the plain facts.

"There has been a good deal of confusion of ideas in regard to the relation of the conventions to banking arrangements for the rehabilitation of Honduran and Nicaraguan finances. The conventions themselves are quite separate from any bankers' contracts. They may be ratified and put in force as between the governments concerned, but they remain purely potential unless and until bankers' contracts are negotiated which are deemed acceptable by both governments, and, in the case of the governments of Nicaragua and Honduras, which would be direct parties to the contracts, approved by their legislative assemblies. The sole desire of the Department of State has been that Nicaragua and Honduras make the best contracts that are possible under the conditions and it is gratifying that American bankers have been able to undertake the business.

"The government of Nicaragua has already approved the convention and, to relieve its urgent and pressing necessities, has placed a preliminary loan in the United States and engaged American citizens-one as financial adviser, two as claims commissioners, one as collector-general of customs, and one as assistant collector-general of customs-and in this way has laid a foundation for its financial regeneration. This, however, is merely a temporary expedient, and what has been done must be lost and the bright prospect destroyed unless the convention, upon which the future important and permanent improvements depend, is ratified by the United States.

"If these conventions are put into operation what has happened in the Dominican Republic will be repeated in the Republics of Nicaragua and Honduras, which are the key to the peace of the whole of Central America, and within a few years the revolutions which keep these countries in a state of constant unrest will be eliminated; the neutrality of Honduras and Nicaragua in Central American affairs will become an accomplished fact; and the peace of the rest of Central America will be immensely strengthened.

"These conventions, as I have said, are not a new experiment; in principle they have been tried and it has been found that they produce results beneficial to the debtor and creditor alike. Instead of producing foreign entanglements they have precisely the opposite effect because they do away with the present discontent and clamour of foreign creditors, because they insure prosperity, and because they make for peace.

"Alone, these countries find it impossible to extricate themselves from the thraldom of civil strife, and they quite naturally look to their more prosperous and powerful neighbour for aid and guidance. Shall we refuse it any more than we refused to heed the cry of Cuba or that of the Dominican Republic?

"With the Monroe Doctrine as a tenet of our national faith can we refuse to these republics that measure of assistance which will render their governments stable and keep them from foreign interference?"

APPENDIX D

VENEZUELA

[Area, 593,943 square miles, after deducting the 60,000 square miles awarded to Great Britain by the arbitration proceedings in 1899; population in 1903 estimated at 2,633,671.]

THE total commerce of Venezuela during the fiscal year ended June, 1906, was $24,306,000, of which $8,676,000 were imports and $15,630,000 exports. Of the imports, 30.2 per cent. was from the United States, and of the exports 31.1 per cent. was sent to the United States. The official figures of the United States with reference to its trade with Venezuela show that the imports from that country declined from $10,966,765 in 1890 to $5,500,019 in 1900, and increased to $7,852,214 in 1907, and the exports thereto declined from $4,028,583 in 1890 to $2,452,757 in 1900, and increased to $3,024,629 in 1907, these being fiscal-year figures in all cases.

Taking the three latest years for which data are available, we find that both the imports and exports are still much smaller than they were fifteen or twenty years ago, the imports oscillating between 8 and 11 million dollars and being smaller in 1906 than they had been in 1904, while the exports are nearly double the imports and yet 10 million dollars less than in 1891. The commercial conditions of Venezuela are especially important for the reason that both in imports and exports the United States occupies the first place, according to the data of the latest two years.

Caracas, the capital, is a city of about 75,000 people. Racially, the people of the country are a mixture. The native Indian population exceeds 300,000. Foreigners are estimated at a little less than 50,000, about one-quarter Spaniards, onefifth Colombians, one-eighth British, with 2,500 to 4,000 each of Dutch, Italians, and French. This misgoverned medley of white, brown, black, and Indian occupies one of the richest areas of the earth's surface. It is a land of fertile soil, vast