connected and supplemented as may be justified by future development. One of these lines should connect the valley of the Yukon and its tributary, the Tanana, with tidewater; and the other should be devoted to the development and needs of the Kuskokwim and the Susitna.

The best available route for the first railway system is that which leads from Cordova by way of Chitina to Fairbanks; and the best available route for the second is that which leads from Seward around Cook Inlet to the Iditarod. The first should be connected with the Bering coal field and the second with the Matanuska coal field. Other routes and terminals are discussed, but are found not to have the importance or availability for the development of the Territory possessed by the two mentioned. Thus, the route extending inland from Haines, in southeastern Alaska, has value for local development, though chiefly on the Canadian side of the boundary, but the distance to Fairbanks is found to be too great to permit of its being used as a trunk line to the Yukon waters. The route from Iliamna Bay also has value for local use, but is too far to the southwest to permit of its use as a trunk line into the interior. The proposed terminals at Katalla and Controller Bay are found to be very expensive both as to construction and maintenance, besides furnishing very inferior harbors. The route inland from Valdez is at a disadvantage because it would not serve any of the coal fields, although as hereafter noted Valdez is regarded by the commission as an important alternative terminal in the possible future development of the Chitina-Fairbanks route.

The investigations of the commission indicate that the route from Cordova by way of Chitina to Fairbanks would furnish the best trunk line to the Yukon and Tanana waters: (1) Because Cordova has distinct advantages as a harbor; (2) because this route requires the shortest actual amount of construction, but chiefly (3) because the better grades possible on this route should give the lowest freight rates into the Tanana Valley. The Copper River & Northwestern Railroad is now constructed from Cordova to Chitina and thence up the Chitina River. The commission recommends the building of a railway from Chitina to Fairbanks, 313 miles, estimated to cost $13,971,000, with the provision that if this railway is built by other interests than those controlling the Copper River & Northwestern Railroad, and if an equitable traffic arrangement can not be made with it, connection should be made with Valdez by the Thompson Pass route, 101 miles, estimated to cost. $6,101,479.

The commission finds that Cordova offers the best present ocean terminal for the Bering River coal. The commission also points out that it would not be economical to haul the Matanuska coal to either Valdez or Cordova, and that therefore the logical outlet for that field is Seward. If commercial development of these two fields should dis

close that the quality of the coal is the same in both, the Bering River field would have the advantage of greater proximity to open tidewater. A branch line from the Copper River Railway to the Bering River field, a distance of 38 miles, at an estimated cost of $2,054,000, is recommended to afford an outlet for the coal on Prince William Sound and into the Copper River Valley and the region where there is at present the largest market for Alaska coal.

The commission finds that a railway from Chitina to Fairbanks will not solve the transportation problem of Alaska, because it will not give access to the Matanuska coal field, the fertile lands and mineral wealth of the lower Susitna, or the great Kuskokwim basin. This province properly belongs to an independent railway system based on the harbor at Seward. The commission recommends a railway from Kern Creek, the present inland terminal of the Alaska Northern Railway, to the Susitna River (distance, 115 miles; estimated cost, $5,209,000), with a branch line to the Matanuska coal field (distance, 38 miles; estimated cost, $1,618,000); and an extension of the main. line through the Alaska Range to the Kuskokwim River (distance, 229 miles; estimated cost, $12,760,000).

The entire railways thus recommended will constitute two independent systems involving 733 miles of new construction at a cost of $35,000,000. Eventually these systems will be tied together and there will be earlier demands for branch and local lines as the country develops. One of these systems will find an outlet to the coast over the Copper River & Northwestern Railroad; the other over the Alaska Northern. If these new lines are constructed by others than those financially interested in these two railroads respectively, satisfactory traffic arrangements would have to be made with them. If the new railways recommended should be constructed by the Government, the question is necessarily presented as to whether the Government should acquire the whole or any part of the existing lines, or either of them, or should endeavor to make appropriate traffic agreements. Much would depend upon whether the Government would operate its own railroads or would make operating agreements with those operating existing lines. The commission has not discussed these questions for the reason pointed out in its report that the act of Congress omits questions of this sort from those upon which the commission was instructed to report:

The report of the commission contains the following statement:

Its instructions from Congress do not contemplate that any recommendation should be made as to how railroads in Alaska should be constructed, i. e., by private corporate ownership or by one of the many forms in use whereby Government assistance is rendered. The commission disavows any intention of making such recommendations, believing that Congress, in its wisdom, desired

to reserve to itself the solution of that problem; but it has been impossible to form any estimates of costs of operation without some assumption as to the interest rate on the capital required for construction. This interest rate would obviously differ in two cases-construction by Government or bond guaranty, and construction by private capital. Moreover, were construction carried on by private capital unassisted, the necessity of earning sufficient income to pay operating expenses and interest on bonded indebtedness might make it the duty of the directors of the corporation to impose rates on traffic that would seriously retard the development which the Territory so greatly needs.

The commission has therefore been forced to base its studies upon two hypotheses, viz.: That the capital necessary for construction is obtained at 6 per cent interest, assumed as possible if construction is carried out by private corporate ownership unassisted; and that capital is obtained at 3 per cent interest, assumed as possible if the construction is done either by the Government itself or by private capital with bonded indebtedness guaranteed both as to principal and interest.

On similar grounds the commission did not feel justified in discussing the use of the Panama Canal machinery and equipment or in including in its estimates the effect of such use; but a list of the machinery and equipment available at Panama is given in an appendix.

Upon the assumption that the railroad from Chitina to Fairbanks is built by private capital, eliminating promotion profit, but assuming the necessity of earning 6 per cent on the capital invested, it is the judgment of the commission that on estimated available traffic the road could be operated from Cordova to Fairbanks without loss at a passenger rate of 7 cents per mile and an average freight rate of 8 cents per ton-mile. This would mean a through freight rate of $36.94 per ton from Cordova to Fairbanks and a through passenger rate of $31.15. It is the opinion of the commission that—

an average freight rate exceeding 5 cents per ton-mile and passenger rate in excess of 6 cents per mile would defeat the immediate object of the railroad, namely, the expeditious development of the interior of Alaska, and, furthermore, would introduce the question as to whether or not the Seattle-CordovaFairbanks freight route would be able to compete with the present all-water route via the Yukon River system, except on shipments in which the time element is of such importance as to warrant the payment of a higher freight

rate.

To meet the requirements of expeditious development and water competition the estimate of the commission involves a through freight rate from Cordova to Fairbanks at $22.25 per ton, and a through passenger rate of $26.70. The report further says:

Were the road to be constructed by the Government, or by private corporate ownership with a Government guaranty of principal and interest on bonded indebtedness, the capital required should be obtained at a much lower rate of interest, thus materiallly reducing the annual expenditures.

Using 3 per cent on the investment as fixed charges, and omitting mileage tax of $100, on the assumption that this tax would not be

levied in the case of a Government owned or aided road, the commission estimates that the road would pay on the basis of a passenger rate of 6 cents per mile, and a freight rate of 5.49 cents per ton-mile, making the average through freight rate from Cordova to Fairbanks $24.43 per ton and the through passenger rate $26.70. I give these figures as illustrations. The report contains similar estimates of freight and passenger rates and traffic for the road recommended from Seward to the Kuskokwim.

After recommending the construction of the two principal systems and their extensions already mentioned, the commission states, in conclusion that it—

is unanimously of the opinion that this development should be undertaken at once, and prosecuted with vigor; that it can not be accomplished without providing the railroads herein recommended under some system which will insure low transportation charges and the consequent rapid settlement of this new land and the utilization of its great resources.

The necessary inference from the entire report is that in the judgment of the commission its recommendations can certainly be carried out only if the Government builds or guarantees the construction costs of the railroads recommended. If the Government is to guarantee the principal and interest of the construction bonds, it seems clear that it should own the roads, the cost of which it really pays. This is true whether the Government itself should operate the roads or should provide for their operation by lease or operating agreement. I am very much opposed to Government operation, but I believe that Government ownership with private operation under lease is the proper solution of the difficulties here presented.

I urge the prompt and earnest consideration of this report and its recommendations.

WM. H. TAFT.

t be

VETO MESSAGE.

[Transmitting, without approval, "An Act to Regulate the Immigration of Aliens to and the Residence of Aliens in the United States."]

To the Senate:

THE WHITE HOUSE, Washington, February 14, 1913.

I return herewith, without my approval, Senate Bill No. 3175.

I do this with great reluctance. The bill contains many valuable amendments to the present immigration law which will insure greater certainty in excluding undesirable immigrants.

The bill received strong support in both Houses and was recommended by an able commission after an extended investigation and carefully drawn conclusions.

But I can not make up my mind to sign a bill which in its chief provision violates a principle that ought, in my opinion, to be upheld in dealing with our immigration. I refer to the literacy test. For the reasons stated in Secretary Nagel's letter to me, I can not approve that test. The Secretary's letter accompanies this.

66

WM. H. TAFT.

DEPARTMENT OF COMMERCE AND LABOR,
Washington, February 12, 1913.

MY DEAR MR. PRESIDENT: On the 4th instant Mr. Hilles, by your direction, sent me Senate bill 3175, An act to regulate the immigration of aliens to and the residence of aliens in the United States," with the request that I inform you at my earliest convenience if I know of any objection to its approval. I now return the bill with my comments. The following are some of the objections that have been raised:

First. No exception has been made in behalf of Hawaii.

Second. The provision that persons shall be excluded who can not become eligible under existing law to become citizens of the United States by naturalization is obscure, because it leaves unsettled the question as to who are to be regarded as white persons. But this is merely a perpetuation of the uncertainty which is now to be found in the naturalization law.

Third. The provision that the Secretary may determine in advance upo application whether it is necessary to import skilled labor in any particular instance, that this decision shall be held in abeyance for 30 days, and that in the meantime anyone objecting may appeal to the district court to try de novo such question of necessity is unsatisfactory. The provision for the appeal to the courts is probably unconstitutional, but even if the entire provision proves ineffective the law will be left substantially where it is, and so this does not constitute a grave objection to the bill.

Fourth. The provision that the Secretary may detail immigrant inspectors and matrons for duty on vessels carrying immigrants or immigrant passengers is objected to by foreign countries, but inasmuch as this is left to the discretion of the Secretary, and it is understood, for illustration, that Italy insists upon such practice with respect to all steamship companies taking immigrants from her shores, it does not seem to me that this is a controlling objection.

Fifth. The provision in section 7, with respect to the soliciting of immigration by steamship companies, vests the Secretary with somewhat drastic authority by way of imposing fines and denying the right of a steamship company to land alien immigrant passengers. Again, this is not mandatory, and therefore does not go to the heart of the bill.

It appears to me that all these and similar objections might well have been considered in committee and may become the subject of future consideration by Congress, but, fairly considered, they are of incidental importance only and furnish no sufficient reason for disapproving this bill.

With respect to the literacy test I feel compelled to state a different conclusion. In my opinion, this is a provision of controlling importance, not only because of the immediate effect which it may have upon immigration and the embarrassment and cost it may impose upon the service, but because it in