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Title: State of the Union Addresses

Author: Grover Cleveland

Release date: February 1, 2004 [eBook #5029]
                Most recently updated: November 30, 2014

Language: English

Credits: Produced by James Linden.  HTML version by Al Haines.


*** START OF THE PROJECT GUTENBERG EBOOK STATE OF THE UNION ADDRESSES ***




Produced by James Linden.  HTML version by Al Haines.








State of the Union Addresses of Grover Cleveland



The addresses are separated by three asterisks: ***

Dates of addresses by Grover Cleveland in this eBook:

  December 8, 1885
  December 6, 1886
  December 6, 1887
  December 3, 1888

  December 4, 1893
  December 3, 1894
  December 2, 1895
  December 7, 1896


***

State of the Union Address
Grover Cleveland
December 8, 1885

To the Congress of the United States:

Your assembling is clouded by a sense of public bereavement, caused by the
recent and sudden death of Thomas A. Hendricks, Vice-President of the
United States. His distinguished public services, his complete integrity
and devotion to every duty, and his personal virtues will find honorable
record in his country's history.

Ample and repeated proofs of the esteem and confidence in which he was held
by his fellow-countrymen were manifested by his election to offices of the
most important trust and highest dignity; and at length, full of years and
honors, he has been laid at rest amid universal sorrow and benediction.

The Constitution, which requires those chosen to legislate for the people
to annually meet in the discharge of their solemn trust, also requires the
President to give to Congress information of the state of the Union and
recommend to their consideration such measures as he shall deem necessary
and expedient. At the threshold of a compliance with these constitutional
directions it is well for us to bear in mind that our usefulness to the
people's interests will be promoted by a constant appreciation of the scope
and character of our respective duties as they relate to Federal
legislation. While the Executive may recommend such measures as he shall
deem expedient, the responsibility for legislative action must and should
rest upon those selected by the people to make their laws.

Contemplation of the grave and responsible functions assigned to the
respective branches of the Government under the Constitution will disclose
the partitions of power between our respective departments and their
necessary independence, and also the need for the exercise of all the power
intrusted to each in that spirit of comity and cooperation which is
essential to the proper fulfillment of the patriotic obligations which rest
upon us as faithful servants of the people.

The jealous watchfulness of our constituencies, great and small,
supplements their suffrages, and before the tribunal they establish every
public servant should be judged.

It is gratifying to announce that the relations of the United States with
all foreign powers continue to be friendly. Our position after nearly a
century of successful constitutional government, maintenance of good faith
in all our engagements, the avoidance of complications with other nations,
and our consistent and amicable attitude toward the strong and weak alike
furnish proof of a political disposition which renders professions of good
will unnecessary. There are no questions of difficulty pending with any
foreign government.

The Argentine Government has revived the long dormant question of the
Falkland Islands by claiming from the United States indemnity for their
loss, attributed to the action of the commander of the sloop of war
Lexington in breaking up a piratical colony on those islands in 1831, and
their subsequent occupation by Great Britain. In view of the ample
justification for the act of the Lexington and the derelict condition of
the islands before and after their alleged occupation by Argentine
colonists, this Government considers the claim as wholly groundless.

Question has arisen with the Government of Austria-Hungary touching the
representation of the United States at Vienna. Having under my
constitutional prerogative appointed an estimable citizen of unimpeached
probity and competence as minister at that court, the Government of
Austria-Hungary invited this Government to take cognizance of certain
exceptions, based upon allegations against the personal acceptability of
Mr. Keiley, the appointed envoy, asking that in view thereof the
appointment should be withdrawn. The reasons advanced were such as could
not be acquiesced in without violation of my oath of office and the
precepts of the Constitution, since they necessarily involved a limitation
in favor of a foreign government upon the right of selection by the
Executive and required such an application of a religious test as a
qualification for office under the United States as would have resulted in
the practical disfranchisement of a large class of our citizens and the
abandonment of a vital principle in our Government. The Austro-Hungarian
Government finally decided not to receive Mr. Keiley as the envoy of the
United States, and that gentleman has since resigned his commission,
leaving the post vacant. I have made no new nomination, and the interests
of this Government at Vienna are now in the care of the secretary of
legation, acting as charge d'affaires ad interim.

Early in March last war broke out in Central America, caused by the attempt
of Guatemala to consolidate the several States into a single government. In
these contests between our neighboring States the United States forebore to
interfere actively, but lent the aid of their friendly offices in
deprecation of war and to promote peace and concord among the belligerents,
and by such counsel contributed importantly to the restoration of
tranquillity in that locality.

Emergencies growing out of civil war in the United States of Colombia
demanded of the Government at the beginning of this Administration the
employment of armed forces to fulfill its guaranties under the thirty-fifth
article of the treaty of 1846, in order to keep the transit open across the
Isthmus of Panama. Desirous of exercising only the powers expressly
reserved to us by the treaty, and mindful of the rights of Colombia, the
forces sent to the Isthmus were instructed to confine their action to
"positively and efficaciously" preventing the transit and its accessories
from being "interrupted or embarrassed."

The execution of this delicate and responsible task necessarily involved
police control where the local authority was temporarily powerless, but
always in aid of the sovereignty of Colombia.

The prompt and successful fulfillment of its duty by this Government was
highly appreciated by the Government of Colombia, and has been followed by
expressions of its satisfaction.

High praise is due to the officers and men engaged in this service. The
restoration of peace on the Isthmus by the reestablishment of the
constituted Government there being thus accomplished, the forces of the
United States were withdrawn.

Pending these occurrences a question of much importance was presented by
decrees of the Colombian Government proclaiming the closure of certain
ports then in the hands of insurgents and declaring vessels held by the
revolutionists to be piratical and liable to capture by any power. To
neither of these propositions could the United States assent. An effective
closure of ports not in the possession of the Government, but held by
hostile partisans, could not be recognized; neither could the vessels of
insurgents against the legitimate sovereignty be deemed hostes humani
generis within the precepts of international law, whatever might be the
definition and penalty of their acts under the municipal law of the State
against whose authority they were in revolt. The denial by this Government
of the Colombian propositions did not, however, imply the admission of a
belligerent status on the part of the insurgents.

The Colombian Government has expressed its willingness to negotiate
conventions for the adjustment by arbitration of claims by foreign citizens
arising out of the destruction of the city of Aspinwall by the
insurrectionary forces.

The interest of the United States in a practicable transit for ships across
the strip of land separating the Atlantic from the Pacific has been
repeatedly manifested during the last half century.

My immediate predecessor caused to be negotiated with Nicaragua a treaty
for the construction, by and at the sole cost of the United States, of a
canal through Nicaraguan territory, and laid it before the Senate. Pending
the action of that body thereon, I withdrew the treaty for reexamination.
Attentive consideration of its provisions leads me to withhold it from
resubmission to the Senate.

Maintaining, as I do, the tenets of a line of precedents from Washington's
day, which proscribe entangling alliances with foreign states, I do not
favor a policy of acquisition of new and distant territory or the
incorporation of remote interests with our own.

The laws of progress are vital and organic, and we must be conscious of
that irresistible tide of commercial expansion which, as the concomitant of
our active civilization, day by day is being urged onward by those
increasing facilities of production, transportation, and communication to
which steam and electricity have given birth; but our duty in the present
instructs us to address ourselves mainly to the development of the vast
resources of the great area committed to our charge and to the cultivation
of the arts of peace within our own borders, though jealously alert in
preventing the American hemisphere from being involved in the political
problems and complications of distant governments. Therefore I am unable to
recommend propositions involving paramount privileges of ownership or
right outside of our own territory, when coupled with absolute and
unlimited engagements to defend the territorial integrity of the state
where such interests lie. While the general project of connecting the two
oceans by means of a canal is to be encouraged, I am of opinion that any
scheme to that end to be considered with favor should be free from the
features alluded to.

The Tehuantepec route is declared by engineers of the highest repute and by
competent scientists to afford an entirely practicable transit for vessels
and cargoes, by means of a ship railway, from the Atlantic to the Pacific.
The obvious advantages of such a route, if feasible, over others more
remote from the axial lines of traffic between Europe and the pacific, and
particularly between the Valley of the Mississippi and the western coast of
North and South America, are deserving of consideration.

Whatever highway may be constructed across the barrier dividing the two
greatest maritime areas of the world must be for the world's benefit--a
trust for mankind, to be removed from the chance of domination by any
single power, nor become a point of invitation for hostilities or a prize
for warlike ambition. An engagement combining the construction, ownership,
and operation of such a work by this Government, with an offensive and
defensive alliance for its protection, with the foreign state whose
responsibilities and rights we would share is, in my judgment, inconsistent
with such dedication to universal and neutral use, and would, moreover,
entail measures for its realization beyond the scope of our national polity
or present means.

The lapse of years has abundantly confirmed the wisdom and foresight of
those earlier Administrations which, long before the conditions of maritime
intercourse were changed and enlarged by the progress of the age,
proclaimed the vital need of interoceanic transit across the American
Isthmus and consecrated it in advance to the common use of mankind by their
positive declarations and through the formal obligation of treaties. Toward
such realization the efforts of my Administration will be applied, ever
bearing in mind the principles on which it must rest, and which were
declared in no uncertain tones by Mr. Cass, who, while Secretary of State,
in 1858, announced that "what the United States want in Central America,
next to the happiness of its people, is the security and neutrality of the
interoceanic routes which lead through it."

The construction of three transcontinental lines of railway, all in
successful operation, wholly within our territory, and uniting the Atlantic
and the Pacific oceans, has been accompanied by results of a most
interesting and impressive nature, and has created new conditions, not in
the routes of commerce only, but in political geography, which powerfully
affect our relations toward and necessarily increase our interests in any
transisthmian route which may be opened and employed for the ends of peace
and traffic, or, in other contingencies, for uses inimical to both.

Transportation is a factor in the cost of commodities scarcely second to
that of their production, and weighs as heavily upon the consumer.

Our experience already has proven the great importance of having the
competition between land carriage and water carriage fully developed, each
acting as a protection to the public against the tendencies to monopoly
which are inherent in the consolidation of wealth and power in the hands of
vast corporations.

These suggestions may serve to emphasize what I have already said on the
score of the necessity of a neutralization of any interoceanic transit; and
this can only be accomplished by making the uses of the route open to all
nations and subject to the ambitions and warlike necessities of none.

The drawings and report of a recent survey of the Nicaragua Canal route,
made by Chief Engineer Menocal, will be communicated for your information.

The claims of citizens of the United States for losses by reason of the
late military operations of Chile in Peru and Bolivia are the subject of
negotiation for a claims convention with Chile, providing for their
submission to arbitration.

The harmony of our relations with China is fully sustained.

In the application of the acts lately passed to execute the treaty of 1880,
restrictive of the immigration of Chinese laborers into the United States,
individual cases of hardship have occurred beyond the power of the
Executive to remedy, and calling for judicial determination.

The condition of the Chinese question in the Western States and Territories
is, despite this restrictive legislation, far from being satisfactory. The
recent outbreak in Wyoming Territory, where numbers of unoffending
Chinamen, indisputably within the protection of the treaties and the law,
were murdered by a mob, and the still more recent threatened outbreak of
the same character in Washington Territory, are fresh in the minds of all,
and there is apprehension lest the bitterness of feeling against the
Mongolian race on the Pacific Slope may find vent in similar lawless
demonstrations. All the power of this Government should be exerted to
maintain the amplest good faith toward China in the treatment of these men,
and the inflexible sternness of the law in bringing the wrongdoers to
justice should be insisted upon.

Every effort has been made by this Government to prevent these violent
outbreaks and to aid the representatives of China in their investigation of
these outrages; and it is but just to say that they are traceable to the
lawlessness of men not citizens of the United States engaged in competition
with Chinese laborers.

Race prejudice is the chief factor in originating these disturbances, and
it exists in a large part of our domain, jeopardizing our domestic peace
and the good relationship we strive to maintain with China.

The admitted right of a government to prevent the influx of elements
hostile to its internal peace and security may not be questioned, even
where there is no treaty stipulation on the subject. That the exclusion of
Chinese labor is demanded in other countries where like conditions prevail
is strongly evidenced in the Dominion of Canada, where Chinese immigration
is now regulated by laws more exclusive than our own. If existing laws are
inadequate to compass the end in view, I shall be prepared to give earnest
consideration to any further remedial measures, within the treaty limits,
which the wisdom of Congress may devise.

The independent State of the Kongo has been organized as a government under
the sovereignty of His Majesty the King of the Belgians, who assumes its
chief magistracy in his personal character only, without making the new
State a dependency of Belgium. It is fortunate that a benighted region,
owing all it has of quickening civilization to the beneficence and
philanthropic spirit of this monarch, should have the advantage and
security of his benevolent supervision.

The action taken by this Government last year in being the first to
recognize the flag of the International Association of the Kongo has been
followed by formal recognition of the new nationality which succeeds to its
sovereign powers.

A conference of delegates of the principal commercial nations was held at
Berlin last winter to discuss methods whereby the Kongo basin might be kept
open to the world's trade. Delegates attended on behalf of the United
States on the understanding that their part should be merely deliberative,
without imparting to the results any binding character so far as the United
States were concerned. This reserve was due to the indisposition of this
Government to share in any disposal by an international congress of
jurisdictional questions in remote foreign territories. The results of the
conference were embodied in a formal act of the nature of an international
convention, which laid down certain obligations purporting to be binding on
the signatories, subject to ratification within one year. Notwithstanding
the reservation under which the delegates of the United States attended,
their signatures were attached to the general act in the same manner as
those of the plenipotentiaries of other governments, thus making the United
States appear, without reserve or qualification, as signatories to a joint
international engagement imposing on the signers the conservation of the
territorial integrity of distant regions where we have no established
interests or control.

This Government does not, however, regard its reservation of liberty of
action in the premises as at all impaired; and holding that an engagement
to share in the obligation of enforcing neutrality in the remote valley of
the Kongo would be an alliance whose responsibilities we are not in a
position to assume, I abstain from asking the sanction of the Senate to
that general act.

The correspondence will be laid before you, and the instructive and
interesting report of the agent sent by this Government to the Kongo
country and his recommendations for the establishment of commercial
agencies on the African coast are also submitted for your consideration.

The commission appointed by my predecessor last winter to visit the Central
and South American countries and report on the methods of enlarging the
commercial relations of the United States therewith has submitted reports,
which will be laid before you.

No opportunity has been omitted to testify the friendliness of this
Government toward Korea, whose entrance into the family of treaty powers
the United States were the first to recognize. I regard with favor the
application made by the Korean Government to be allowed to employ American
officers as military instructors, to which the assent of Congress becomes
necessary, and I am happy to say this request has the concurrent sanction
of China and Japan.

The arrest and imprisonment of Julio R. Santos, a citizen of the United
States, by the authorities of Ecuador gave rise to a contention with that
Government, in which his right to be released or to have a speedy and
impartial trial on announced charges and with all guaranties of defense
stipulated by treaty was insisted upon by us. After an elaborate
correspondence and repeated and earnest representations on our part Mr.
Santos was, after an alleged trial and conviction, eventually included in a
general decree of amnesty and pardoned by the Ecuadorian Executive and
released, leaving the question of his American citizenship denied by the
Ecuadorian Government, but insisted upon by our own.

The amount adjudged by the late French and American Claims Commission to be
due from the United States to French claimants on account of injuries
suffered by them during the War of Secession, having been appropriated by
the last Congress, has been duly paid to the French Government.

The act of February 25, 1885, provided for a preliminary search of the
records of French prize courts for evidence bearing on the claims of
American citizens against France for spoliations committed prior to 1801.
The duty has been performed, and the report of the agent will be laid
before you.

I regret to say that the restrictions upon the importation of our pork into
France continue, notwithstanding the abundant demonstration of the absence
of sanitary danger in its use; but I entertain strong hopes that with a
better understanding of the matter this vexatious prohibition will be
removed. It would be pleasing to be able to say as much with respect to
Germany, Austria, and other countries, where such food products are
absolutely excluded, without present prospect of reasonable change.

The interpretation of our existing treaties of naturalization by Germany
during the past year has attracted attention by reason of an apparent
tendency on the part of the Imperial Government to extend the scope of the
residential restrictions to which returning naturalized citizens of German
origin are asserted to be liable under the laws of the Empire. The
temperate and just attitude taken by this Government with regard to this
class of questions will doubtless lead to a satisfactory understanding.

The dispute of Germany and Spain relative to the domination of the Caroline
Islands has attracted the attention of this Government by reason of
extensive interests of American citizens having grown up in those parts
during the past thirty years, and because the question of ownership
involves jurisdiction of matters affecting the status of our citizens under
civil and criminal law. While standing wholly aloof from the proprietary
issues raised between powers to both of which the United States are
friendly, this Government expects that nothing in the present contention
shall unfavorably affect our citizens carrying on a peaceful commerce or
there domiciled, and has so informed the Governments of Spain and Germany.

The marked good will between the United States and Great Britain has been
maintained during the past year.

The termination of the fishing clauses of the treaty of Washington, in
pursuance of the joint resolution of March 3, 1883, must have resulted in
the abrupt cessation on the 1st of July of this year, in the midst of their
ventures, of the operations of citizens of the United States engaged in
fishing in British American waters but for a diplomatic understanding
reached with Her Majesty's Government in June last, whereby assurance was
obtained that no interruption of those operations should take place during
the current fishing season.

In the interest of good neighborhood and of the commercial intercourse of
adjacent communities, the question of the North American fisheries is one
of much importance. Following out the intimation given by me when the
extensory arrangement above described was negotiated, I recommend that the
Congress provide for the appointment of a commission in which the
Governments of the United States and Great Britain shall be respectively
represented, charged with the consideration and settlement, upon a just,
equitable, and honorable basis, of the entire question of the fishing
rights of the two Governments and their respective citizens on the coasts
of the United States and British North America. The fishing interests being
intimately related to other general questions dependent upon contiguity and
intercourse, consideration thereof in all their equities might also
properly come within the purview of such a commission, and the fullest
latitude of expression on both sides should be permitted.

The correspondence in relation to the fishing rights will be submitted. The
arctic exploring steamer Alert, which was generously given by Her Majesty's
Government to aid in the relief of the Greely expedition, was, after the
successful attainment of that humane purpose, returned to Great Britain, in
pursuance of the authority conferred by the act of March 3, 1885.

The inadequacy of the existing engagements for extradition between the
United States and Great Britain has been long apparent. The tenth article
of the treaty of 1842, one of the earliest compacts in this regard entered
into by us, stipulated for surrender in respect of a limited number of
offenses. Other crimes no less inimical to the social welfare should be
embraced and the procedure of extradition brought in harmony with present
international practice. Negotiations with Her Majesty's Government for an
enlarged treaty of extradition have been pending since 1870, and I
entertain strong hopes that a satisfactory result may be soon attained.

The frontier line between Alaska and British Columbia, as defined by the
treaty of cession with Russia, follows the demarcation assigned in a prior
treaty between Great Britain and Russia. Modern exploration discloses that
this ancient boundary is impracticable as a geographical fact. In the
unsettled condition of that region the question has lacked importance, but
the discovery of mineral wealth in the territory the line is supposed to
traverse admonishes that the time has come when an accurate knowledge of
the boundary is needful to avert jurisdictional complications. I recommend,
therefore, that provision be made for a preliminary reconnoissance by
officers of the United States, to the end of acquiring more precise
information on the subject. I have invited Her Majesty's Government to
consider with us the adoption of a more convenient line, to be established
by meridian observations or by known geographical features without the
necessity of an expensive survey of the whole.

The late insurrectionary movements in Hayti having been quelled, the
Government of that Republic has made prompt provision for adjudicating the
losses suffered by foreigners because of hostilities there, and the claims
of certain citizens of the United States will be in this manner
determined.

The long-pending claims of two citizens of the United States, Pelletier and
Lazare, have been disposed of by arbitration, and an award in favor of each
claimant has been made, which by the terms of the engagement is final. It
remains for Congress to provide for the payment of the stipulated moiety of
the expenses.

A question arose with Hayti during the past year by reason of the
exceptional treatment of an American citizen, Mr. Van Bokkelen, a resident
of Port-au-Prince, who, on suit by creditors residing in the United States,
was sentenced to imprisonment, and, under the operation of a Haytian
statute, was denied relief secured to a native Haytian. This Government
asserted his treaty right to equal treatment with natives of Hayti in all
suits at law. Our contention was denied by the Haytian Government, which,
however, while still professing to maintain the ground taken against Mr.
Van Bokkelen's right, terminated the controversy by setting him at liberty
without explanation.

An international conference to consider the means of arresting the spread
of cholera and other epidemic diseases was held at Rome in May last, and
adjourned to meet again on further notice. An expert delegate on behalf of
the United States has attended its sessions and will submit a report.

Our relations with Mexico continue to be most cordial, as befits those of
neighbors between whom the strongest ties of friendship and commercial
intimacy exist, as the natural and growing consequence of our similarity of
institutions and geographical propinquity.

The relocation of the boundary line between the United States and Mexico
westward of the Rio Grande, under the convention of July 29, 1882, has been
unavoidably delayed, but I apprehend no difficulty in securing a
prolongation of the period for its accomplishment.

The lately concluded commercial treaty with Mexico still awaits the
stipulated legislation to carry its provisions into effect, for which one
year's additional time has been secured by a supplementary article signed
in February last and since ratified on both sides.

As this convention, so important to the commercial welfare of the two
adjoining countries, has been constitutionally confirmed by the treaty-
making branch, I express the hope that legislation needed to make it
effective may not be long delayed.

The large influx of capital and enterprise to Mexico from the United States
continues to aid in the development of the resources and in augmenting the
material well-being of our sister Republic. Lines of railway, penetrating
to the heart and capital of the country, bring the two peoples into
mutually beneficial intercourse, and enlarged facilities of transit add to
profitable commerce, create new markets, and furnish avenues to otherwise
isolated communities.

I have already adverted to the suggested construction of a ship railway
across the narrow formation of the territory of Mexico at Tehuantepec.

With the gradual recovery of Peru from the effects of her late disastrous
conflict with Chile, and with the restoration of civil authority in that
distracted country, it is hoped that pending war claims of our citizens
will be adjusted.

In conformity with notification given by the Government of Peru, the
existing treaties of commerce and extradition between the United States and
that country will terminate March 31, 1886.

Our good relationship with Russia continues.

An officer of the Navy, detailed for the purpose, is now on his way to
Siberia bearing the testimonials voted by Congress to those who generously
succored the survivors of the unfortunate Jeannette expedition.

It is gratifying to advert to the cordiality of our intercourse with
Spain.

The long-pending claim of the owners of the ship Masonic for loss suffered
through the admitted dereliction of the Spanish authorities in the
Philippine Islands has been adjusted by arbitration and an indemnity
awarded. The principle of arbitration in such cases, to which the United
States have long and consistently adhered, thus receives a fresh and
gratifying confirmation.

Other questions with Spain have been disposed of or are under diplomatic
consideration with a view to just and honorable settlement.

The operation of the commercial agreement with Spain of January 2--February
13, 1884, has been found inadequate to the commercial needs of the United
States and the Spanish Antilies, and the terms of the agreement are
subjected to conflicting interpretations in those islands.

Negotiations have been instituted at Madrid for a full treaty not open to
these objections and in the line of the general policy touching the
neighborly intercourse of proximate communities, to which I elsewhere
advert, and aiming, moreover, at the removal of existing burdens and
annoying restrictions; and although a satisfactory termination is promised,
I am compelled to delay its announcement.

An international copyright conference was held at Berne in September, on
the invitation of the Swiss Government. The envoy of the United States
attended as a delegate, but refrained from committing this Government to
the results, even by signing the recommendatory protocol adopted. The
interesting and important subject of international copyright has been
before you for several years. Action is certainly desirable to effect the
object in view; and while there may be question as to the relative
advantage of treating it by legislation or by specific treaty, the matured
views of the Berne conference can not fail to aid your consideration of the
subject.

The termination of the commercial treaty of 1862 between the United States
and Turkey has been sought by that Government. While there is question as
to the sufficiency of the notice of termination given, yet as the
commercial rights of our citizens in Turkey come under the favored-nation
guaranties of the prior treaty of 1830, and as equal treatment is admitted
by the Porte, no inconvenience can result from the assent of this
Government to the revision of the Ottoman tariffs, in which the treaty
powers have been invited to join.

Questions concerning our citizens in Turkey may be affected by the Porte's
nonacquiescence in the right of expatriation and by the imposition of
religious tests as a condition of residence, in which this Government can
not concur. The United States must hold in their intercourse with every
power that the status of their citizens is to be respected and equal civil
privileges accorded to them without regard to creed, and affected by no
considerations save those growing out of domiciliary return to the land of
original allegiance or of unfulfilled personal obligations which may
survive, under municipal laws, after such voluntary return.

The negotiation with Venezuela relative to the rehearing of the awards of
the mixed commission constituted under the treaty of 1866 was resumed in
view of the recent acquiescence of the Venezuelan envoy in the principal
point advanced by this Government, that the effects of the old treaty could
only be set aside by the operation of a new convention. A result in
substantial accord with the advisory suggestions contained in the joint
resolution of March 3, 1883, has been agreed upon and will shortly be
submitted to the Senate for ratification.

Under section 3659 of the Revised Statutes all funds held in trust by the
United States and the annual interest accruing thereon, when not otherwise
required by treaty, are to be invested in stocks of the United States
bearing a rate of interest not less than 5 per cent per annum. There being
now no procurable stocks paying so high a rate of interest, the letter of
the statute is at present inapplicable, but its spirit is subserved by
continuing to make investments of this nature in current stocks bearing the
highest interest now paid. The statute, however, makes no provision for the
disposal of such accretions. It being contrary to the general rule of this
Government to allow interest on claims, I recommend the repeal of the
provision in question and the disposition, under a uniform rule, of the
present accumulations from investment of trust funds.

The inadequacy of existing legislation touching citizenship and
naturalization demands your consideration.

While recognizing the right of expatriation, no statutory provision exists
providing means for renouncing citizenship by an American citizen, native
born or naturalized, nor for terminating and vacating an improper
acquisition of citizenship. Even a fraudulent decree of naturalization can
not now be canceled. The privilege and franchise of American citizenship
should be granted with care, and extended to those only who intend in good
faith to assume its duties and responsibilities when attaining its
privileges and benefits. It should be withheld from those who merely go
through the forms of naturalization with the intent of escaping the duties
of their original allegiance without taking upon themselves those of their
new status, or who may acquire the rights of American citizenship for no
other than a hostile purpose toward their original governments. These evils
have had many flagrant illustrations.

I regard with favor the suggestion put forth by one of my predecessors that
provision be made for a central bureau of record of the decrees of
naturalization granted by the various courts throughout the United States
now invested with that power.

The rights which spring from domicile in the United States, especially when
coupled with a declaration of intention to become a citizen, are worthy of
definition by statute. The stranger coming hither with intent to remain,
establishing his residence in our midst, contributing to the general
welfare, and by his voluntary act declaring his purpose to assume the
responsibilities of citizenship, thereby gains an inchoate status which
legislation may properly define. The laws of certain States and Territories
admit a domiciled alien to the local franchise, conferring on him the
rights of citizenship to a degree which places him in the anomalous
position of being a citizen of a State and yet not of the United States
within the purview of Federal and international law.

It is important within the scope of national legislation to define this
right of alien domicile as distinguished from Federal naturalization.

The commercial relations of the United States with their immediate
neighbors and with important areas of traffic near our shores suggest
especially liberal intercourse between them and us.

Following the treaty of 1883 with Mexico, which rested on the basis of a
reciprocal exemption from customs duties, other similar treaties were
initiated by my predecessor.

Recognizing the need of less obstructed traffic with Cuba and Puerto Rico,
and met by the desire of Spain to succor languishing interests in the
Antilles, steps were taken to attain those ends by a treaty of commerce. A
similar treaty was afterwards signed by the Dominican Republic.
Subsequently overtures were made by Her Britannic Majesty's Government for
a like mutual extension of commercial intercourse with the British West
Indian and South American dependencies, but without result.

On taking office I withdrew for reexamination the treaties signed with
Spain and Santo Domingo, then pending before the Senate. The result has
been to satisfy me of the inexpediency of entering into engagements of this
character not covering the entire traffic.

These treaties contemplated the surrender by the United States of large
revenues for inadequate considerations. Upon sugar alone duties were
surrendered to an amount far exceeding all the advantages offered in
exchange. Even were it intended to relieve our consumers, it was evident
that so long as the exemption but partially covered our importation such
relief would be illusory. To relinquish a revenue so essential seemed
highly improvident at a time when new and large drains upon the Treasury
were contemplated. Moreover, embarrassing questions would have arisen under
the favored-nation clauses of treaties with other nations.

As a further objection, it is evident that tariff regulation by treaty
diminishes that independent control over its own revenues which is
essential for the safety and welfare of any government. Emergency calling
for an increase of taxation may at any time arise, and no engagement with a
foreign power should exist to hamper the action of the Government.

By the fourteenth section of the shipping act approved June 26, 1884,
certain reductions and contingent exemptions from tonnage dues were made as
to vessels entering ports of the United States from any foreign port in
North and Central America, the West India Islands, the Bahamas and
Bermudas, Mexico, and the Isthmus as far as Aspinwall and Panama. The
Governments of Belgium, Denmark, Germany, Portugal, and Sweden and Norway
have asserted, under the favored-nation clause in their treaties with the
United States, a claim to like treatment in respect of vessels coming to
the United States from their home ports. This Government, however, holds
that the privileges granted by the act are purely geographical, inuring to
any vessel of any foreign power that may choose to engage in traffic
between this country and any port within the defined zone, and no warrant
exists under the most-favored-nation clause for the extension of the
privileges in question to vessels sailing to this country from ports
outside the limitation of the act.

Undoubtedly the relations of commerce with our near neighbors, whose
territories form so long a frontier line difficult to be guarded, and who
find in our country, and equally offer to us, natural markets, demand
special and considerate treatment. It rests with Congress to consider what
legislative action may increase facilities of intercourse which contiguity
makes natural and desirable.

I earnestly urge that Congress recast the appropriations for the
maintenance of the diplomatic and consular service on a footing
commensurate with the importance of our national interests. At every post
where a representative is necessary the salary should be so graded as to
permit him to live with comfort. With the assignment of adequate salaries
the so-called notarial extra official fees, which our officers abroad are
now permitted to treat as personal perquisites, should be done away with.
Every act requiring the certification and seal of the officer should be
taxable at schedule rates and the fee therefor returned to the Treasury. By
restoring these revenues to the public use the consular service would be
self-supporting, even with a liberal increase of the present low salaries.

In further prevention of abuses a system of consular inspection should be
instituted.

The appointment of a limited number of secretaries of legation at large, to
be assigned to duty wherever necessary, and in particular for temporary
service at missions which for any cause may be without a head, should also
be authorized.

I favor also authorization for the detail of officers of the regular
service as military or naval attaches at legations.

Some foreign governments do not recognize the union of consular with
diplomatic functions. Italy and Venezuela will only receive the appointee
in one of his two capacities, but this does not prevent the requirement of
a bond and submission to the responsibilities of an office whose duties he
can not discharge. The superadded title of consul-general should be
abandoned at all missions.

I deem it expedient that a well-devised measure for the reorganization of
the extraterritorial courts in Oriental countries should replace the
present system, which labors under the disadvantage of combining judicial
and executive functions in the same office.

In several Oriental countries generous offers have been made of premises
for housing the legations of the United States. A grant of land for that
purpose was made some years since by Japan, and has been referred to in the
annual messages of my predecessor. The Siamese Government has made a gift
to the United States of commodious quarters in Bangkok. In Korea the late
minister was permitted to purchase a building from the Government for
legation use. In China the premises rented for the legation are favored as
to local charges. At Tangier the house occupied by our representative has
been for many years the property; this Government, having been given for
that purpose in 1822 by the Sultan of Morocco. I approve the suggestion
heretofore made, that, view of the conditions of life and administration in
the Eastern countries, the legation buildings in China, Japan, Korea, Siam,
and perhaps Persia, should be owned and furnished by the Government with a
view to permanency and security. To this end I recommend that authority be
given to accept the gifts adverted to in Japan and Siam, and to purchase in
the other countries named, with provision for furniture and repairs. A
considerable saving in rentals would result.

The World's Industrial Exposition, held at New Orleans last winter, with
the assistance of the Federal Government, attracted a large number of
foreign exhibits, and proved of great value in spreading among the
concourse of visitors from Mexico and Central and South America a wider
knowledge of the varied manufactures and productions of this country and
their availability in exchange for the productions of those regions.

Past Congresses have had under consideration the advisability of abolishing
the discrimination made by the tariff laws in favor of the works of
American artists. The odium of the policy which subjects to a high rate of
duty the paintings of foreign artists and exempts the productions of
American artists residing abroad, and who receive gratuitously advantages
and instruction, is visited upon our citizens engaged in art culture in
Europe, and has caused them with practical unanimity to favor the abolition
of such an ungracious distinction; and in their interest, and for other
obvious reasons, I strongly recommend it.

The report of the Secretary of the Treasury fully exhibits the condition of
the public finances and of the several branches of the Government connected
with his Department. The suggestions of the Secretary relating to the
practical operations of this important Department, and his recommendations
in the direction of simplification and economy, particularly in the work of
collecting customs duties, are especially urged upon the attention of
Congress.

The ordinary receipts from all sources for the fiscal year ended June 30,
1885, were $322,690,706.38. Of this sum $181,471,939.34 was received from
customs and $112,498,725.54 from internal revenue. The total receipts, as
given above, were $24,829,163.54 less than those for the year ended June
30, 1884. This diminution embraces a falling off of $13,595,550.42 in the
receipts from customs and $9,687,346.97 in the receipts from internal
revenue.

The total ordinary expenditures of the Government for the fiscal year were
$260,226,935.50, leaving a surplus in the Treasury at the close of the year
of $63,463,771.27. This is $40,929,854.32 less than the surplus reported at
the close of the previous year.

The expenditures are classified as follows:

The amount paid on the public debt during the fiscal year ended June 30,
1885, was $45,993,235.43, and there has been paid since that date and up to
November 1, 1885, the sum of $369,828, leaving the amount of the debt at
the last-named date $1,514,475,860.47. There was however, at that time in
the Treasury, applicable to the general purposes of the Government, the sum
of $66,818,292.38.

The total receipts for the current fiscal year ending June 30, 1886,
ascertained to October 1, 1885, and estimated for the remainder of the
year, are $315,000,000. The expenditures ascertained and estimated for the
same time are $245,000,000, leaving a surplus at the close of the year
estimated at $70,000,000.

The value of the exports from the United States to foreign countries during
the last fiscal year was as follows:

Some of the principal exports, with their values and the percentage they
respectively bear to the total exportation, are given as follows:

Our imports during the year were as follows:

The following are given as prominent articles of import during the year,
with their values and the percentage they bear to the total importation:

Of the entire amount of duties collected 70 per cent was collected from the
following articles of import:

The fact that our revenues are in excess of the actual needs of all
economical administration of the Government justifies a reduction in the
amount exacted from the people for its support. Our Government is but the
means established by the will of a free people by which certain principles
are applied which they have adopted for their benefit and protection; and
it is never better administered and its true spirit is never better
observed than when the people's taxation for its support is scrupulously
limited to the actual necessity of expenditure and distributed according to
a just and equitable plan.

The proposition with which we have to deal is the reduction of the revenue
received by the Government, and indirectly paid by the people, from customs
duties. The question of free trade is not involved, nor is there now any
occasion for the general discussion of the wisdom or expediency of a
protective system.

Justice and fairness dictate that in any modification of our present laws
relating to revenue the industries and interests which have been encouraged
by such laws, and in which our citizens have large investments, should not
be ruthlessly injured or destroyed. We should also deal with the subject in
such manner as to protect the interests of American labor, which is the
capital of our workingmen. Its stability and proper remuneration furnish
the most justifiable pretext for a protective policy.

Within these limitations a certain reduction should be made in our customs
revenue. The amount of such reduction having been determined, the inquiry
follows, Where can it best be remitted and what articles can best be
released from duty in the interest of our citizens?

I think the reduction should be made in the revenue derived from a tax upon
the imported necessaries of life. We thus directly lessen the cost of
living in every family of the land and release to the people in every
humble home a larger measure of the rewards of frugal industry.

During the year ended November 1, 1885, 145 national banks were organized,
with an aggregate capital of $16,938,000, and circulating notes have been
issued to them amounting to $4,274,910. The whole number of these banks in
existence on the day above mentioned was 2,727.

The very limited amount of circulating notes issued by our national banks,
compared with the amount the law permits them to issue upon a deposit of
bonds for their redemption, indicates that the volume of our circulating
medium may be largely increased through this instrumentality.

Nothing more important than the present condition of our currency and
coinage can claim your attention.

Since February, 1878, the Government has, under the compulsory provisions
of law, purchased silver bullion and coined the same at the rate of more
than $2,000,000 every month. By this process up to the present date
215,759,431 silver dollars have been coined.

A reasonable appreciation of a delegation of power to the General
Government would limit its exercise, without express restrictive words, to
the people's needs and the requirements of the public welfare.

Upon this theory the authority to "coin money" given to Congress by the
Constitution, if it permits the purchase by the Government of bullion for
coinage in any event, does not justify such purchase and coinage to an
extent beyond the amount needed for a sufficient circulating medium.

The desire to utilize the silver product of the country should not lead to
a misuse or the perversion of this power.

The necessity for such an addition to the silver currency of the nation as
is compelled by the silver-coinage act is negatived by the fact that up to
the present time only about 50,000,000 of the silver dollars so coined have
actually found their way into circulation, leaving more than 165,000,000 in
the possession of the Government, the custody of which has entailed a
considerable expense for the construction of vaults for it deposit. Against
this latter amount there are outstanding silver certificates amounting to
about $93,000,000.

Every month two millions of gold in the public Treasury are paid our for
two millions or more of silver dollars, to be added to the idle mass
already accumulated.

If continued long enough, this operation will result in the substitution of
silver for all the gold the Government owns applicable to its general
purposes. It will not do to rely upon the customs receipts of the
Government to make good this drain of gold, because the silver thus coined
having been made legal tender for all debts and dues, public and private,
at times during the last six months 58 per cent of the receipts for duties
has been in silver or silver certificates, while the average within that
period has been 20 per cent. The proportion of silver and its certificates
received by the Government will probably increase as time goes on, for the
reason that the nearer the period approaches when it will be obliged to
offer silver in payment of its obligations the greater inducement there
will be to hoard gold against depreciation in the value of silver or for
the purpose of speculating.

This hoarding of gold has already begun.

When the time comes that gold has been withdrawn from circulation, then
will be apparent the difference between the real value of the silver dollar
and a dollar in gold, and the two coins will part company. Gold, still the
standard of value and necessary in our dealings with other countries, will
be at a premium over silver; banks which have substituted gold for the
deposits of their customers may pay them with silver bought with such gold,
thus making a handsome profit; rich speculators will sell their hoarded
gold to their neighbors who need it to liquidate their foreign debts, at a
ruinous premium over silver, and the laboring men and women of the land,
most defenseless of all, will find that the dollar received for the wage of
their toil has sadly shrunk in its purchasing power. It may be said that
the latter result will be but temporary, and that ultimately the price of
labor will be adjusted to the change; but even if this takes place the
wage-worker can not possibly gain, but must inevitably lose, since the
price he is compelled to pay for his living will not only be measured in a
coin heavily depreciated and fluctuating and uncertain in its value, but
this uncertainty in the value of the purchasing medium will be made the
pretext for an advance in prices beyond that justified by actual
depreciation.

The words uttered in 1834 by Daniel Webster in the Senate of the United
States are true to-day: The very man of all others who has the deepest
interest in a sound currency, and who suffers most by mischievous
legislation in money matters, is the man who earns his daily bread by his
daily toil. The most distinguished advocate of bimetallism, discussing our
silver coinage, has lately written: No American citizen's hand has yet felt
the sensation of cheapness, either in receiving or expending the silver-act
dollars. And those who live by labor or legitimate trade never will feel
that sensation of cheapness. However plenty silver dollars may become, they
will not be distributed as gifts among the people; and if the laboring man
should receive four depreciated dollars where he now receives but two, he
will pay in the depreciated coin more than double the price he now pays for
all the necessaries and comforts of life.

Those who do not fear any disastrous consequences arising from the
continued compulsory coinage of silver as now directed by law, and who
suppose that the addition to the currency of the country intended as its
result will be a public benefit, are reminded that history demonstrates
that the point is easily reached in the attempt to float at the same time
two sorts of money of different excellence when the better will cease to be
in general circulation. The hoarding of gold which has already taken place
indicates that we shall not escape the usual experience in such cases. So
if this silver coinage be continued we may reasonably expect that gold and
its equivalent will abandon the field of circulation to silver alone. This
of course must produce a severe contraction of our circulating medium,
instead of adding to it.

It will not be disputed that any attempt on the part of the Government to
cause the circulation of silver dollars worth 80 cents side by side with
gold dollars worth 100 cents, even within the limit that legislation does
not run counter to the laws of trade, to be successful must be seconded by
the confidence of the people that both coins will retain the same
purchasing power and be interchangeable at will. A special effort has been
made by the Secretary of the Treasury to increase the amount of our silver
coin in circulation; but the fact that a large share of the limited amount
thus put out has soon returned to the public Treasury in payment of duties
leads to the belief that the people do not now desire to keep it in hand,
and this, with the evident disposition to hoard gold, gives rise to the
suspicion that there already exists a lack of confidence among the people
touching our financial processes. There is certainly not enough silver now
in circulation to cause uneasiness, and the whole amount coined and now on
hand might after a time be absorbed by the people without apprehension; but
it is the ceaseless stream that threatens to overflow the land which causes
fear and uncertainty.

What has been thus far submitted upon this subject relates almost entirely
to considerations of a home nature, unconnected with the bearing which the
policies of other nations have upon the question. But it is perfectly
apparent that a line of action in regard to our currency can not wisely be
settled upon or persisted in without considering the attitude on the
subject of other countries with whom we maintain intercourse through
commerce, trade, and travel. An acknowledgment of this fact is found in the
act by virtue of which our silver is compulsorily coined. It provides
that--The President shall invite the governments of the countries
composing the Latin Union, so called, and of such other European nations as
he may deem advisable, to join the United States in a conference to adopt a
common ratio between gold and silver for the purpose of establishing
internationally the use of bimetallic money and securing fixity of relative
value between those metals. This conference absolutely failed, and a
similar fate has awaited all subsequent efforts in the same direction. And
still we continue our coinage of silver at a ratio different from that of
any other nation. The most vital part of the silver-coinage act remains
inoperative and unexecuted, and without an ally or friend we battle upon
the silver field in an illogical and losing contest.

To give full effect to the design of Congress on this subject I have made
careful and earnest endeavor since the adjournment of the last Congress.

To this end I delegated a gentleman well instructed in fiscal science to
proceed to the financial centers of Europe and, in conjunction with our
ministers to England, France, and Germany, to obtain a full knowledge of
the attitude and intent of those governments in respect of the
establishment of such an international ratio as would procure free coinage
of both metals at the mints of those countries and our own. By my direction
our consul-general at Paris has given close attention to the proceedings of
the congress of the Latin Union, in order to indicate our interest in its
objects and report its action.

It may be said in brief, as the result of these efforts, that the attitude
of the leading powers remains substantially unchanged since the monetary
conference of 1881, nor is it to be questioned that the views of these
governments are in each instance supported by the weight of public
opinion.

The steps thus taken have therefore only more fully demonstrated the
uselessness of further attempts at present to arrive at any agreement on
the subject with other nations.

In the meantime we are accumulating silver coin, based upon our own
peculiar ratio, to such an extent, and assuming so heavy a burden to be
provided for in any international negotiations, as will render us an
undesirable party to any future monetary conference of nations.

It is a significant fact that four of the five countries composing the
Latin Union mentioned in our coinage act, embarrassed with their silver
currency, have just completed an agreement among themselves that no more
silver shall be coined by their respective Governments and that such as has
been already coined and in circulation shall be redeemed in gold by the
country of its coinage. The resort to this expedient by these countries may
well arrest the attention of those who suppose that we can succeed without
shock or injury in the attempt to circulate upon its merits all the silver
we may coin under the provisions of our silver-coinage act.

The condition in which our Treasury may be placed by a persistence in our
present course is a matter of concern to every patriotic citizen who does
not desire his Government to pay in silver such of its obligations as
should be paid in gold. Nor should our condition be such as to oblige us,
in a prudent management of our affairs, to discontinue the calling in and
payment of interest-bearing obligations which we have the right now to
discharge, and thus avoid the payment of further interest thereon.

The so-called debtor class, for whose benefit the continued compulsory
coinage of silver is insisted upon, are not dishonest because they are in
debt, and they should not be suspected of a desire to jeopardize the
financial safety of the country in order that they may cancel their present
debts by paying the same in depreciated dollars. Nor should it be forgotten
that it is not the rich nor the money lender alone that must submit to such
a readjustment, enforced by the Government and their debtors. The pittance
of the widow and the orphan and the incomes of helpless beneficiaries of
all kinds would be disastrously reduced. The depositors in savings banks
and in other institutions which hold in trust the savings of the poor, when
their little accumulations are scaled down to meet the new order of things,
would in their distress painfully realize the delusion of the promise made
to them that plentiful money would improve their condition.

We have now on hand all the silver dollars necessary to supply the present
needs of the people and to satisfy those who from sentiment wish to see
them in circulation, and if their coinage is suspended they can be readily
obtained by all who desire them. If the need of more is at anytime
apparent, their coinage may be renewed.

That disaster has not already overtaken us furnishes no proof that danger
does not wait upon a continuation of the present silver coinage. We have
been saved by the most careful management and unusual expedients, by a
combination of fortunate conditions, and by a confident expectation that
the course of the Government in regard to silver coinage would be speedily
changed by the action of Congress.

Prosperity hesitates upon our threshold because of the dangers and
uncertainties surrounding this question. Capital timidly shrinks from
trade, and investors are unwilling to take the chance of the questionable
shape in which their money will be returned to them, while enterprise halts
at a risk against which care and sagacious management do not protect.

As a necessary consequence, labor lacks employment and suffering and
distress are visited upon a portion of our fellow-citizens especially
entitled to the careful consideration of those charged with the duties of
legislation. No interest appeals to us so strongly for a safe and stable
currency as the vast army of the unemployed.

I recommend the suspension of the compulsory coinage of silver dollars,
directed by the law passed in February, 1878.

The Steamboat-Inspection Service on the 30th day of June, 1885, was
composed of 140 persons, including officers, clerks, and messengers. The
expenses of the service over the receipts were $138,822.22 during the
fiscal year. The special inspection of foreign steam vessels, organized
under a law passed in 1882, was maintained during the year at an expense of
$36,641.63. Since the close of the fiscal year reductions have been made in
the force employed which will result in a saving during the current year of
$17,000 without affecting the efficiency of the service.

The Supervising Surgeon-General reports that during the fiscal year 41,714
patients have received relief through the Marine-Hospital Service, of whom
12,803 were treated in hospitals and 28,911 at the dispensaries.

Active and effective efforts have been made through the medium of this
service to protect the country against an invasion of cholera, which has
prevailed in Spain and France, and the smallpox, which recently broke out
in Canada.

The most gratifying results have attended the operations of the Life Saving
Service during the last fiscal year. The observance of the provision of law
requiring the appointment of the force employed in this service to be made
"solely with reference to their fitness, and without reference to their
political or party affiliation," has secured the result which may
confidently be expected in any branch of public employment where such a
rule is applied. As a consequence, this service is composed of men well
qualified for the performance of their dangerous and exceptionally
important duties.

The number of stations in commission at the close of the year was 203. The
number of disasters to vessels and craft of all kinds within their field of
action was 371. The number of persons endangered in such disasters was
2,439, of whom 2,428 were saved and only 11 lost. Other lives which were
imperiled, though not by disasters to shipping, were also rescued, and a
large amount of property was saved through the aid of this service. The
cost of its maintenance during the year was $828,474.43.

The work of the Coast and Geodetic Survey was during the last fiscal year
carried on within the boundaries and off the coasts of thirty-two States,
two Territories, and the District of Columbia. In July last certain
irregularities were found to exist in the management of this Bureau, which
led to a prompt investigation of its methods. The abuses which were brought
to light by this examination and the reckless disregard of duty and the
interests of the Government developed on the part of some of those
connected with the service made a change of superintendency and a few of
its other officers necessary. Since the Bureau has been in new hands an
introduction of economies and the application of business methods have
produced an important saving to the Government and a promise of more useful
results.

This service has never been regulated by anything but the most indefinite
legal enactments and the most unsatisfactory rules. It was many years ago
sanctioned apparently for a purpose regarded as temporary and related to a
survey of our coast. Having gained a place in the appropriations made by
Congress, it has gradually taken to itself powers and objects not
contemplated in its creation and extended its operations until it sadly
needs legislative attention.

So far as a further survey of our coast is concerned, there seems to be a
propriety in transferring that work to the Navy Department. The other
duties now in charge of this establishment, if they can not be profitably
attached to some existing Department or other bureau, should be prosecuted
under a law exactly defining their scope and purpose, and with a careful
discrimination between the scientific inquiries which may properly be
assumed by the Government and those which should be undertaken by State
authority or by individual enterprise.

It is hoped that the report of the Congressional committee heretofore
appointed to investigate this and other like matters will aid in the
accomplishment of proper legislation on this subject.

The report of the Secretary of War is herewith submitted. The attention of
Congress is invited to the detailed account which it contains of the
administration of his Department, and his recommendations and suggestions
for the improvement of the service.

The Army consisted, at the date of the last consolidated returns, of 2,154
officers and 24,705 enlisted men.

The expenses of the Departments for the fiscal year ended June, 30, 1885,
including $13,164,394.60 for public works and river and harbor
improvements, were $45,850,999.54.

Besides the troops which were dispatched in pursuit of the small band of
Indians who left their reservation in Arizona and committed murders and
outrages, two regiments of cavalry and one of infantry were sent last July
to the Indian Territory to prevent an outbreak which seemed imminent. They
remained to aid, if necessary, in the expulsion of intruders upon the
reservation, who seemed to have caused the discontent among the Indians,
but the Executive proclamation warning them to remove was complied with
without their interference.

Troops were also sent to Rock Springs, in Wyoming Territory, after the
massacre of Chinese there, to prevent further disturbance, and afterwards
to Seattle, in Washington Territory, to avert a threatened attack upon
Chinese laborers and domestic violence there. In both cases the mere
presence of the troops had the desired effect.

It appears that the number of desertions has diminished, but that during
the last fiscal year they numbered 2,927; and one instance is given by the
Lieutenant-General of six desertions by the same recruit. I am convinced
that this number of desertions can be much diminished by better discipline
and treatment; but the punishment should be increased for repeated
offenses.

These desertions might also be reduced by lessening the term of first
enlistments, thus allowing a discontented recruit to contemplate a nearer
discharge and the Army a profitable riddance. After one term of service a
reenlistment would be quite apt to secure a contented recruit and a good
soldier.

The Acting Judge-Advocate-General reports that the number of trials by
general courts-martial during the year was 2,328, and that 11,851 trials
took place before garrison and regimental courts-martial. The suggestion
that probably more than half the Army have been tried for offenses, great
and small, in one year may well arrest attention. Of course many of these
trials before garrison and regimental courts-martial were for offenses
almost frivolous, and there should, I think, be a way devised to dispose of
these in a more summary and less inconvenient manner than by
court-martial.

If some of the proceedings of courts-martial which I have had occasion to
examine present the ideas of justice which generally prevail in these
tribunals, I am satisfied that they should be much reformed if the honor
and the honesty of the Army and Navy are by their instrumentality to be
vindicated and protected.

The Board on Fortifications or other defenses, appointed in pursuance of
the provisions of the act of Congress approved March 3, 1885, will in a
short time present their report, and it is hoped that this may greatly aid
the legislation so necessary to remedy the present defenseless condition of
our seacoasts.

The work of the Signal Service has been prosecuted during the last year
with results of increasing benefit to the country. The field of instruction
has been enlarged with a view of adding to its usefulness. The number of
stations in operation June 30, 1885, was 489. Telegraphic reports are
received daily from 160 stations. Reports are also received from 25
Canadian stations, 375 volunteer observers, 52 army surgeons at military
posts, and 333 foreign stations. The expense of the service during the
fiscal year, after deducting receipts from military telegraph lines, was
$792,592.97. In view of the fact referred to by the Secretary of War, that
the work of this service ordinarily is of a scientific nature, and the
further fact that it is assuming larger proportions constantly and becoming
more and more unsuited to the fixed rules which must govern the Army, I am
inclined to agree with him in the opinion that it should be separately
established. If this is done, the scope and extent of its operations
should, as nearly as possible, be definitely prescribed by law and always
capable of exact ascertainment.

The Military Academy at West Point is reported as being in a high state of
efficiency and well equipped for the satisfactory accomplishment of the
purposes of its maintenance.

The fact that the class which graduates next year is an unusually large one
has constrained me to decline to make appointments to second lieutenancies
in the Army from civil life, so that such vacancies as exist in these
places may be reserved for such graduates; and yet it is not probable that
there will be enough vacancies to provide positions for them all when they
leave the military school. Under the prevailing law and usage those not
thus assigned to duty never actively enter the military service. It is
suggested that the law on this subject be changed so that such of these
young men as are not at once assigned to duty after graduation may be
retained as second lieutenants in the Army if they desire it, subject to
assignment when opportunity occurs, and under proper rules as to priority
of selection.

The expenditures on account of the Military Academy for the last fiscal
year, exclusive of the sum taken for its purposes from appropriations for
the support of the Army, were $290,712.07.

The act approved March 3, 1885, designed to compensate officers and
enlisted men for loss of private property while in the service of the
United States, is so indefinite in its terms and apparently admits so many
claims the adjustment of which could not have been contemplated that if it
is to remain upon the statute book it needs amendment.

There should be a general law of Congress prohibiting the construction of
bridges over navigable waters in such manner as to obstruct navigation,
with provisions for preventing the same. It seems that under existing
statutes the Government can not intervene to prevent such a construction
when entered upon without its consent, though when such consent is asked
and granted upon condition the authority to insist upon such condition is
clear. Thus it is represented that while the officers of the Government are
with great care guarding against the obstruction of navigation by a bridge
across the Mississippi River at St. Paul a large pier for a bridge has been
built just below this place directly in the navigable channel of the river.
If such things are to be permitted, a strong argument is presented against
the appropriation of large sums of money to improve the navigation of this
and other important highways of commerce.

The report of the Secretary of the Navy gives a history of the operations
of his Department and the present condition of the work committed to his
charge.

He details in full the course pursued by him to protect the rights of the
Government in respect of certain vessels unfinished at the time of his
accession to office, and also concerning the dispatch boat Dolphin, claimed
to be completed and awaiting the acceptance of the Department. No one can
fail to see from recitals contained in this report that only the
application of business principles has been insisted upon in the treatment
of these subjects, and that whatever controversy has arisen was caused by
the exaction on the part of the Department of contract obligations as they
were legally construed. In the case of the Dolphin, with entire justice to
the contractor, an agreement has been entered into providing for the
ascertainment by a judicial inquiry of the complete or partial compliance
with the contract in her construction, and further providing for the
assessment of any damages to which the Government may be entitled on
account of a partial failure to perform such contract, or the payment of
the sum still remaining unpaid upon her price in case a full performance is
adjudged.

The contractor, by reason of his failure in business, being unable to
complete the other three vessels, they were taken possession of by the
Government in their unfinished state under a clause in the contract
permitting such a course, and are now in process of completion in the yard
of the contractor, but under the supervision of the Navy Department.

Congress at its last session authorized the construction of two additional
new cruisers and two gunboats, at a cost not exceeding in the aggregate
$2,995,000. The appropriation for this purpose having become available on
the 1st day of July last, steps were at once taken for the procurement of
such plans for the construction of these vessels as would be likely to
insure their usefulness when completed. These are of the utmost importance,
considering the constant advance in the art of building vessels of this
character, and the time is not lost which is spent in their careful
consideration and selection.

All must admit the importance of an effective navy to a nation like ours,
having such an extended seacoast to protect; and yet we have not a single
vessel of war that could keep the seas against a first-class vessel of any
important power. Such a condition ought not longer to continue. The nation
that can not resist aggression is constantly exposed to it. Its foreign
policy is of necessity weak and its negotiations are conducted with
disadvantage because it is not in condition to enforce the terms dictated
by its sense of right and justice.

Inspired, as I am, by the hope, shared by all patriotic citizens, that the
day is not very far distant when our Navy will be such as befits our
standing among the nations of the earth, and rejoiced at every step that
leads in the direction of such a consummation, I deem it my duty to
especially direct the attention of Congress to the close of the report of
the Secretary of the Navy, in which the humiliating weakness of the present
organization of his Department is exhibited and the startling abuses and
waste of its present methods are exposed. The conviction is forced upon us
with the certainty of mathematical demonstration that before we proceed
further in the restoration of a Navy we need a thoroughly reorganized Navy
Department. The fact that within seventeen years more than $75,000,000 have
been spent in the construction, repair, equipment, and armament of vessels,
and the further fact that instead of an effective and creditable fleet we
have only the discontent and apprehension of a nation undefended by war
vessels, added to the disclosures now made, do not permit us to doubt that
every attempt to revive our Navy has thus far for the most part been
misdirected, and all our efforts in that direction have been little better
than blind gropings and expensive, aimless follies.

Unquestionably if we are content with the maintenance of a Navy Department
simply as a shabby ornament to the Government, a constant watchfulness may
prevent some of the scandal and abuse which have found their way into our
present organization, and its incurable waste may be reduced to the
minimum. But if we desire to build ships for present usefulness instead of
naval reminders of the days that are past, we must have a Department
organized for the work, supplied with all the talent and ingenuity our
country affords, prepared to take advantage of the experience of other
nations, systematized so that all effort shall unite and lead in one
direction, and fully imbued with the conviction that war vessels, though
new, are useless unless they combine all that the ingenuity of man has up
to this day brought forth relating to their construction.

I earnestly commend the portion of the Secretary's report devoted to this
subject to the attention of Congress, in the hope that his suggestions
touching the reorganization of his Department may be adopted as the first
step toward the reconstruction of our Navy.

The affairs of the postal service are exhibited by the report of the
Postmaster-General, which will be laid before you.

The postal revenue, whose ratio of gain upon the rising prosperity of 1882
and 1883 outstripped the increasing expenses of our growing service, was
checked by the reduction in the rate of letter postage which took effect
with the beginning of October in the latter year, and it diminished during
the two past fiscal years $2,790,000, in about the proportion of $2,270,000
in 1884 to $520,000 in 1885. Natural growth and development have meantime
increased expenditure, resulting in a deficiency in the revenue to meet the
expenses of the Department of five and a quarter million dollars for the
year 1884 and eight and a third million in the last fiscal year. The
anticipated and natural revival of the revenue has been oppressed and
retarded by the unfavorable business condition of the country, of which the
postal service is a faithful indicator. The gratifying fact is shown,
however, by the report that our returning prosperity is marked by a gain of
$380,000 in the revenue of the latter half of the last year over the
corresponding period of the preceding year.

The change in the weight of first-class matter which may be carried for a
single rate of postage from a half ounce to an ounce, and the reduction by
one-half of the rate of newspaper postage, which, under recent legislation,
began with the current year, will operate to restrain the augmentation of
receipts which otherwise might have been expected to such a degree that the
scale of expense may gain upon the revenue and cause an increased
deficiency to be shown at its close. Yet, after no long period of
reawakened prosperity, by proper economy it is confidently anticipated that
even the present low rates, now as favorable as any country affords, will
be adequate to sustain the cost of the service.

The operation of the Post-Office Department is for the convenience and
benefit of the people, and the method by which they pay the charges of this
useful arm of their public service, so that it be just and impartial, is of
less importance to them than the economical expenditure of the means they
provide for its maintenance and the due improvement of its agencies, so
that they may enjoy its highest usefulness.

A proper attention has been directed to the prevention of waste or
extravagance, and good results appear from the report to have already been
accomplished.

I approve the recommendation of the Postmaster-General to reduce the
charges on domestic money orders of $5 and less from 8 to 5 cents. This
change will materially aid those of our people who most of all avail
themselves of this instrumentality, but to whom the element of cheapness is
of the greatest importance. With this reduction the system would still
remain self-supporting.

The free-delivery system has been extended to 19 additional cities during
the year, and 178 now enjoy its conveniences. Experience has commended it
to those who enjoy its benefits, and further enlargement of its facilities
is due to other communities to which it is adapted. In the cities where it
has been established, taken together the local postage exceeds its
maintenance by nearly $1,300,000. The limit to which this system is now
confined by law has been nearly reached, and the reasons given justify its
extension, which is proposed.

It was decided, with my approbation, after a sufficient examination, to be
inexpedient for the Post-Office Department to contract for carrying our
foreign mails under the additional authority given by the last Congress.
The amount limited was inadequate to pay all within the purview of the law
the full rate of 50 cents per mile, and it would have been unjust and
unwise to have given it to some and denied it to others. Nor could
contracts have been let under the law to all at a rate to have brought the
aggregate within the appropriation without such practical prearrangement of
terms as would have violated it.

The rate of sea and inland postage which was proffered under another
statute clearly appears to be a fair compensation for the desired service,
being three times the price necessary to secure transportation by other
vessels upon any route, and much beyond the charges made to private persons
for services not less burdensome.

Some of the steamship companies, upon the refusal of the Postmaster-General
to attempt, by the means provided, the distribution of the sum appropriated
as an extra compensation, withdrew the services of their vessels and
thereby occasioned slight inconvenience, though no considerable injury, the
mails having been dispatched by other means.

Whatever may be thought of the policy of subsidizing any line of public
conveyance or travel, I am satisfied that it should not be done under cover
of an expenditure incident to the administration of a Department, nor
should there be any uncertainty as to the recipients of the subsidy or any
discretion left to an executive officer as to its distribution. If such
gifts of the public money are to be made for the purpose of aiding any
enterprise in the supposed interest of the public, I can not but think that
the amount to be paid and the beneficiary might better be determined by
Congress than in any other way.

The international congress of delegates from the Postal Union countries
convened at Lisbon, in Portugal, in February last, and after a session of
some weeks the delegates signed a convention amendatory of the present
postal-union convention in some particulars designed to advance its
purposes. This additional act has had my approval and will be laid before
you with the departmental report.

I approve the recommendation of the postmaster-General that another
assistant be provided for his Department. I invite your consideration to
the several other recommendations contained in his report.

The report of the Attorney-General contains a history of the conduct of the
Department of Justice during the last year and a number of valuable
suggestions as to needed legislation, and I invite your careful attention
to the same.

The condition of business in the courts of the United States is such that
there seems to be an imperative necessity for remedial legislation on the
subject. Some of these courts are so overburdened with pending causes that
the delays in determining litigation amount often to a denial of justice.
Among the plans suggested for relief is one submitted by the
Attorney-General. Its main features are: The transfer of all the original
jurisdiction of the circuit courts to the district courts and an increase
of judges for the latter where necessary; an addition of judges to the
circuit courts, and constituting them exclusively courts of appeal, and
reasonably limiting appeals thereto; further restrictions of the right to
remove causes from the State to Federal courts; permitting appeals to the
Supreme Court from the courts of the District of Columbia and the
Territories only in the same cases as they are allowed from State courts,
and guarding against an unnecessary number of appeals from the circuit
courts.

I approve the plan thus outlined, and recommend the legislation necessary
for its application to our judicial system.

The present mode of compensating United States marshals and district
attorneys should, in my opinion, be changed. They are allowed to charge
against the Government certain fees for services, their income being
measured by the amount of such fees within a fixed limit as to their annual
aggregate. This is a direct inducement for them to make their fees in
criminal cases as large as possible in an effort to reach the maximum sum
permitted. As an entirely natural consequence, unscrupulous marshals are
found encouraging frivolous prosecutions, arresting people on petty charges
of crime and transporting them to distant places for examination and trial,
for the purpose of earning mileage and other fees; and district attorneys
uselessly attend criminal examinations far from their places of residence
for the express purpose of swelling their accounts against the Government.
The actual expenses incurred in these transactions are also charged against
the Government.

Thus the rights and freedom of our citizens are outraged and public
expenditures increased for the purpose of furnishing public officers
pretexts for increasing the measure of their compensation.

I think marshals and district attorneys should be paid salaries, adjusted
by a rule which will make them commensurate with services fairly rendered.

In connection with this subject I desire to suggest the advisability, if it
be found not obnoxious to constitutional objection, of investing United
States commissioners with the power to try and determine certain violations
of law within the grade of misdemeanors. Such trials might be made to
depend upon the option of the accused. The multiplication of small and
technical offenses, especially under the provisions of our internal-revenue
law, render some change in our present system very desirable in the
interests of humanity as well as economy. The district courts are now
crowded with petty prosecutions, involving a punishment in case of
conviction, of only a slight fine, while the parties accused are harassed
by an enforced attendance upon courts held hundreds of miles from their
homes. If poor and friendless, they are obliged to remain in jail during
months, perhaps, that elapse before a session of the court is held, and are
finally brought to trial surrounded by strangers and with but little real
opportunity for defense. In the meantime frequently the marshal has charged
against the Government his fees for an arrest, the transportation of the
accused and the expense of the same, and for summoning witnesses before a
commissioner, a grand jury, and a court; the witnesses have been paid from
the public funds large fees and traveling expenses, and the commissioner
and district attorney have also made their charges against the Government.

This abuse in the administration of our criminal law should be remedied;
and if the plan above suggested is not practicable, some other should be
devised.

The report of the Secretary of the Interior, containing an account of the
operations of this important Department and much interesting information,
will be submitted for your consideration.

The most intricate and difficult subject in charge of this Department is
the treatment and management of the Indians. I am satisfied that some
progress may be noted in their condition as a result of a prudent
administration of the present laws and regulations for their control.

But it is submitted that there is lack of a fixed purpose or policy on this
subject, which should be supplied. It is useless to dilate upon the wrongs
of the Indians, and as useless to indulge in the heartless belief that
because their wrongs are revenged in their own atrocious manner, therefore
they should be exterminated.

They are within the care of our Government, and their rights are, or should
be, protected from invasion by the most solemn obligations. They are
properly enough called the wards of the Government; and it should be borne
in mind that this guardianship involves on our part efforts for the
improvement of their condition and the enforcement of their rights. There
seems to be general concurrence in the proposition that the ultimate object
of their treatment should be their civilization and citizenship. Fitted by
these to keep pace in the march of progress with the advanced civilization
about them, they will readily assimilate with the mass of our population,
assuming the responsibilities and receiving the protection incident to this
condition.

The difficulty appears to be in the selection of the means to be at present
employed toward the attainment of this result.

Our Indian population, exclusive of those in Alaska, is reported as
numbering 260,000, nearly all being located on lands set apart for their
use and occupation, aggregating over 134,000,000 acres. These lands are
included in the boundaries of 171 reservations of different dimensions,
scattered in 21 States and Territories, presenting great variations in
climate and in the kind and quality of their soils. Among the Indians upon
these several reservations there exist the most marked differences in
natural traits and disposition and in their progress toward civilization.
While some are lazy, vicious, and stupid, others are industrious, peaceful,
and intelligent; while a portion of them are self-supporting and
independent, and have so far advanced in civilization that they make their
own laws, administered through officers of their own choice, and educate
their children in schools of their own establishment and maintenance,
others still retain, in squalor and dependence, almost the savagery of
their natural state.

In dealing with this question the desires manifested by the Indians should
not be ignored. Here again we find a great diversity. With some the tribal
relation is cherished with the utmost tenacity, while its hold upon others
is considerably relaxed; the love of home is strong with all, and yet there
are those whose attachment to a particular locality is by no means
unyielding; the ownership of their lands in severalty is much desired by
some, while by others, and sometimes among the most civilized, such a
distribution would be bitterly opposed.

The variation of their wants, growing out of and connected with the
character of their several locations, should be regarded. Some are upon
reservations most fit for grazing, but without flocks or herds; and some on
arable land, have no agricultural implements. While some of the
reservations are double the size necessary to maintain the number of
Indians now upon them, in a few cases, perhaps, they should be enlarged.

Add to all this the difference in the administration of the agencies. While
the same duties are devolved upon all, the disposition of the agents and
the manner of their contact with the Indians have much to do with their
condition and welfare. The agent who perfunctorily performs his duty and
slothfully neglects all opportunity to advance their moral and physical
improvement and fails to inspire them with a desire for better things will
accomplish nothing in the direction of their civilization, while he who
feels the burden of an important trust and has an interest in his work
will, by consistent example, firm yet considerate treatment, and
well-directed aid and encouragement, constantly lead those under his charge
toward the light of their enfranchisement.

The history of all the progress which has been made in the civilization of
the Indian I think will disclose the fact that the beginning has been
religious teaching, followed by or accompanying secular education. While
the self-sacrificing and pious men and women who have aided in this good
work by their independent endeavor have for their reward the beneficent
results of their labor and the consciousness of Christian duty well
performed, their valuable services should be fully acknowledged by all who
under the law are charged with the control and management of our Indian
wards.

What has been said indicates that in the present condition of the Indians
no attempt should be made to apply a fixed and unyielding plan of action to
their varied and varying needs and circumstances.

The Indian Bureau, burdened as it is with their general oversight and with
the details of the establishment, can hardly possess itself of the minute
phases of the particular cases needing treatment; and thus the propriety of
creating an instrumentality auxiliary to those already established for the
care of the Indians suggests itself.

I recommend the passage of a law authorizing the appointment of six
commissioners, three of whom shall be detailed from the Army, to be charged
with the duty of a careful inspection from time to time of all the Indians
upon our reservations or subject to the care and control of the Government,
with a view of discovering their exact condition and needs and determining
what steps shall be taken on behalf of the Government to improve their
situation in the direction of their self-support and complete civilization;
that they ascertain from such inspection what, if any, of the reservations
may be reduced in area, and in such cases what part not needed for Indian
occupation may be purchased by the Government from the Indians and disposed
of for their benefit; what, if any, Indians may, with their consent, be
removed to other reservations, with a view of their concentration and the
sale on their behalf of their abandoned reservations; what Indian lands now
held in common should be allotted in severalty; in what manner and to what
extent the Indians upon the reservations can be placed under the protection
of our laws and subjected to their penalties, and which, if any, Indians
should be invested with the right of citizenship. The powers and functions
of the commissioners in regard to these subjects should be clearly defined,
though they should, in conjunction with the Secretary of the Interior, be
given all the authority to deal definitely with the questions presented
deemed safe and consistent.

They should be also charged with the duty of ascertaining the Indians who
might properly be furnished with implements of agriculture, and of what
kind; in what cases the support of the Government should be withdrawn;
where the present plan of distributing Indian supplies should be changed;
where schools may be established and where discontinued; the conduct,
methods, and fitness of agents in charge of reservations; the extent to
which such reservations are occupied or intruded upon by unauthorized
persons, and generally all matters related to the welfare and improvement
of the Indian.

They should advise with the Secretary of the Interior concerning these
matters of detail in management, and he should be given power to deal with
them fully, if he is not now invested with such power.

This plan contemplates the selection of persons for commissioners who are
interested in the Indian question and who have practical ideas upon the
subject of their treatment.

The expense of the Indian Bureau during the last fiscal year was more than
six and a halt million dollars. I believe much of this expenditure might be
saved under the plan proposed; that its economical effects would be
increased with its continuance; that the safety of our frontier settlers
would be subserved under its operation, and that the nation would be saved
through its results from the imputation of inhumanity, injustice, and
mismanagement.

In order to carry out the policy of allotment of Indian lands in severalty,
when deemed expedient, it will be necessary to have surveys completed of
the reservations, and, I hope that provision will be made for the
prosecution of this work.

In May of the present year a small portion of the Chiricahua Apaches on the
White Mountain Reservation, in Arizona, left the reservation and committed
a number of murders and depredations upon settlers in that neighborhood.
Though prompt and energetic action was taken by the military, the renegades
eluded capture and escaped into Mexico. The formation of the country
through which these Indians passed, their thorough acquaintance with the
same, the speed of their escape, and the manner in which they scattered and
concealed themselves among the mountains near the scene of their outrages
put our soldiers at a great disadvantage in their efforts to capture them,
though the expectation is still entertained that they will be ultimately
taken and punished for their crimes.

The threatening and disorderly conduct of the Cheyennes in the Indian
Territory early last summer caused considerable alarm and uneasiness.
Investigation proved that their threatening attitude was due in a great
measure to the occupation of the land of their reservation by immense herds
of cattle, which their owners claimed were rightfully there under certain
leases made by the Indians. Such occupation appearing upon examination to
be unlawful notwithstanding these leases, the intruders were ordered to
remove with their cattle from the lands of the Indians by Executive
proclamation. The enforcement of this proclamation had the effect of
restoring peace and order among the Indians, and they are now quiet and
well behaved.

By an Executive order issued on February 27, 1885, by my predecessor, a
portion of the tract of country in the territory known as the Old Winnebago
and Crow Creek reservations was directed to be restored to the public
domain and opened to settlement under the land laws of the United States,
and a large number of persons entered upon those lands. This action alarmed
the Sioux Indians, who claimed the territory as belonging to their
reservation under the treaty of 1868. This claim was determined, after
careful investigation, to be well rounded, and consequently the Executive
order referred to was by proclamation of April 17, 1885, declared to be
inoperative and of no effect, and all persons upon the land were warned to
leave. This warning has been substantially complied with.

The public domain had its origin in cessions of land by the States to the
General Government. The first cession was made by the State of New York,
and the largest, which in area exceeded all the others, by the State of
Virginia. The territory the proprietorship of which became thus vested in
the General Government extended from the western line of Pennsylvania to
the Mississippi River. These patriotic donations of the States were
encumbered with no condition except that they should the held and used "for
the common benefit of the United States." By purchase with the common fund
of all the people additions were made to this domain until it extended to
the northern line of Mexico, the Pacific Ocean, and the Polar Sea. The
original trust, "for the common benefit of the United States," attached to
all. In the execution of that trust the policy of many homes, rather than
large estates, was adopted by the Government. That these might be easily
obtained, and be the abode of security and contentment, the laws for their
acquisition were few, easily understood, and general in their character.
But the pressure of local interests, combined with a speculative spirit,
have in many instances procured the passage of laws which marred the
harmony of the general plan and encumbered the system with a multitude of
general and special enactments which render the land laws complicated,
subject the titles to uncertainty, and the purchasers often to oppression
and wrong. Laws which were intended for the "common benefit" have been
perverted so that large quantities of land are vesting in single
ownerships. From the multitude and character of the laws, this consequence
seems incapable of correction by mere administration.

It is not for the "common benefit of the United States" that a large area
of the public lands should be acquired, directly or through fraud, in the
hands of a single individual. The nation's strength is in the people. The
nation's prosperity is in their prosperity. The nation's glory is in the
equality of her justice. The nation's perpetuity is in the patriotism of
all her people. Hence, as far as practicable, the plan adopted in the
disposal of the public lands should have in view the original policy, which
encouraged many purchases of these lands for homes and discouraged the
massing of large areas. Exclusive of Alaska, about three-fifths of the
national domain has been sold or subjected to contract or grant. Of the
remaining two-fifths a considerable portion is either mountain or desert. A
rapidly increasing population creates a growing demand for homes, and the
accumulation of wealth inspires an eager competition to obtain the public
land for speculative purposes. In the future this collision of interests
will be more marked than in the past, and the execution of the nation's
trust in behalf of our settlers will be more difficult. I therefore commend
to your attention the recommendations contained in the report of the
Secretary of the Interior with reference to the repeal and modification of
certain of our land laws.

The nation has made princely grants and subsidies to a system of railroads
projected as great national highways to connect the Pacific States with the
East. It has been charged that these donations from the people have been
diverted to private gain and corrupt uses, and thus public indignation has
been aroused and suspicion engendered. Our great nation does not begrudge
its generosity, but it abhors speculation and fraud; and the favorable
regard of our people for the great corporations to which these grants were
made can only be revived by a restoration of confidence, to be secured by
their constant, unequivocal, and clearly manifested integrity. A faithful
application of the undiminished proceeds of the grants to the construction
and perfecting of their roads, an honest discharge of their obligations,
and entire justice to all the people in the enjoyment of their rights on
these highways of travel are all the public asks, and it will be content
with no less. To secure these things should be the common purpose of the
officers of the Government, as well as of the corporations. With this
accomplishment prosperity would be permanently secured to the roads, and
national pride would take the place of national complaint.

It appears from the report of the Commissioner of Pensions that there were
on the 1st day of July, 1885, 345,125 persons borne upon the pension rolls,
who were classified as follows: Army invalids, 241,456; widows, minor
children, and dependent relatives of deceased soldiers, 78,841; navy
invalids, 2,745; navy widows, minor children, and dependents, 1,926;
survivors of the War of 1812, 2,945; and widows of those who served in that
war, 17,212. About one man in ten of all those who enlisted in the late war
are reported as receiving pensions, exclusive of the dependents of deceased
soldiers. On the 1st of July, 1875, the number of pensioners was 234,821,
and the increase within the ten years next thereafter was 110,304.

While there is no expenditure of the public funds which the people more
cheerfully approve than that made in recognition of the services of our
soldiers living and dead, the sentiment underlying the subject should not
be vitiated by the introduction of any fraudulent practices. Therefore it
is fully as important that the rolls should be cleansed of all those who by
fraud have secured a place thereon as that meritorious claims should be
speedily examined and adjusted. The reforms in the methods of doing the
business of this Bureau which have lately been inaugurated promise better
results in both these directions.

The operations of the Patent Office demonstrate the activity of the
inventive genius of the country. For the year ended June 30, 1885, the
applications for patents, including reissues, and for the registration of
trade-marks and labels, numbered 35,688. During the same period there were
22,928 patents granted and reissued and 1,429 trade-marks and labels
registered. The number of patents issued in the year 1875 was 14,387. The
receipts during the last fiscal year were $ 1,074,974.35, and the total
expenditures, not including contingent expenses, $934,123.11.

There were 9,788 applications for patents pending on the 1st day of July,
1884, and 5,786 on the same date in the year 1885. There has been
considerable improvement made in the prompt determination of applications
and a consequent relief to expectant inventors.

A number of suggestions and recommendations are contained in the report of
the Commissioner of patents which are well entitled to the consideration of
Congress.

In the Territory of Utah the law of the United States passed for the
Suppression of polygamy has been energetically and faithfully executed
during the past year, with measurably good results. A number of convictions
have been secured for unlawful cohabitation, and in some cases pleas of
guilty have been entered and a slight punishment imposed, upon a promise by
the accused that they would not again offend against the law, nor advise,
counsel, aid, or abet in any way its violation by others.

The Utah commissioners express the opinion, based upon such information as
they are able to obtain, that but few polygamous marriages have taken place
in the Territory during the last year. They further report that while there
can not be found upon the registration lists of voters the name of a man
actually guilty of polygamy, and while none of that class are holding
office, yet at the last election in the Territory all the officers elected,
except in one county, were men who, though not actually living in the
practice of polygamy, subscribe to the doctrine of polygamous marriages as
a divine revelation and a law unto all higher and more binding upon the
conscience than any human law, local or national. Thus is the strange
spectacle presented of a community protected by a republican form of
government, to which they owe allegiance, sustaining by their suffrages a
principle and a belief which set at naught that obligation of absolute
obedience to the law of the land which lies at the foundation of republican
institutions.

The strength, the perpetuity, and the destiny of the nation rest upon our
homes, established by the law of God, guarded by parental care, regulated
by parental authority, and sanctified by parental love.

These are not the homes of polygamy.

The mothers of our land, who rule the nation as they mold the characters
and guide the actions of their sons, live according to God's holy
ordinances, and each, secure and happy in the exclusive love of the father
of her children, sheds the warm light of true womanhood, unperverted and
unpolluted, upon all within her pure and wholesome family circle.

These are not the cheerless, crushed, and unwomanly mothers of polygamy.

The fathers of our families are the best citizens of the Republic. Wife and
children are the sources of patriotism, and conjugal and parental affection
beget devotion to the country. The man who, undefiled with plural marriage,
is surrounded in his single home with his wife and children has a stake in
the country which inspires him with respect for its laws and courage for
its defense.

These are not the fathers of polygamous families.

There is no feature of this practice or the system which sanctions it which
is not opposed to all that is of value in our institutions.

There should be no relaxation in the firm but just execution of the law now
in operation, and I should be glad to approve such further discreet
legislation as will rid the country of this blot upon its fair fame.

Since the people upholding polygamy in our Territories are reenforced by
immigration from other lands, I recommend that a law be passed to prevent
the importation of Mormons into the country.

The agricultural interest of the country demands just recognition and
liberal encouragement. It sustains with certainty and unfailing strength
our nation's prosperity by the products of its steady toil, and bears its
full share of the burden of taxation without complaint. Our agriculturists
have but slight personal representation in the councils of the nation, and
are generally content with the humbler duties of citizenship and willing to
trust to the bounty of nature for a reward of their labor. But the
magnitude and value of this industry are appreciated when the statement is
made that of our total annual exports more than three-fourths are the
products of agriculture, and of our total population nearly one-half are
exclusively engaged in that occupation.

The Department of Agriculture was created for the purpose of acquiring and
diffusing among the people useful information respecting the subjects it
has in charge, and aiding in the cause of intelligent and progressive
farming, by the collection of statistics, by testing the value and
usefulness of new seeds and plants, and distributing such as are found
desirable among agriculturists. This and other powers and duties with which
this Department is invested are of the utmost importance, and if wisely
exercised must be of great benefit to the country. The aim of our
beneficent Government is the improvement of the people in every station and
the amelioration of their condition. Surely our agriculturists should not
be neglected. The instrumentality established in aid of the farmers of the
land should not only be well equipped for the accomplishment of its
purpose, but those for whose benefit it has been adopted should be
encouraged to avail themselves fully of its advantages.

The prohibition of the importation into several countries of certain of our
animals and their products, based upon the suspicion that health is
endangered in their use and consumption, suggests the importance of such
precautions for the protection of our stock of all kinds against disease as
will disarm suspicion of danger and cause the removal of such an injurious
prohibition.

If the laws now in operation are insufficient to accomplish this
protection, I recommend their amendment to meet the necessities of the
situation; and I commend to the consideration of Congress the suggestions
contained in the report of the Commissioner of Agriculture calculated to
increase the value and efficiency of this Department.

The report of the Civil Service Commission, which will be submitted,
contains an account of the manner in which the civil-service law has been
executed during the last year and much valuable information on this
important subject.

I am inclined to think that there is no sentiment more general in the minds
of the people of our country than a conviction of the correctness of the
principle upon which the law enforcing civil-service reform is based. In
its present condition the law regulates only a part of the subordinate
public positions throughout the country. It applies the test of fitness to
applicants for these places by means of a competitive examination, and
gives large discretion to the Commissioners as to the character of the
examination and many other matters connected with its execution. Thus the
rules and regulations adopted by the Commission have much to do with the
practical usefulness of the statute and with the results of its
application.

The people may well trust the Commission to execute the law with perfect
fairness and with as little irritation as is possible. But of course no
relaxation of the principle which underlies it and no weakening of the
safeguards which surround it can be expected. Experience in its
administration will probably suggest amendment of the methods of its
execution, but I venture to hope that we shall never again be remitted to
the system which distributes public positions purely as rewards for
partisan service. Doubts may well be entertained whether our Government
could survive the strain of a continuance of this system, which upon every
change of Administration inspires an immense army of claimants for office
to lay siege to the patronage of Government, engrossing the time of public
officers with their importunities, spreading abroad the contagion of their
disappointment, and filling the air with the tumult of their discontent.

The allurements of an immense number of offices and places exhibited to the
voters of the land, and the promise of their bestowal in recognition of
partisan activity; debauch the suffrage and rob political action of its
thoughtful and deliberative character. The evil would increase with the
multiplication of offices consequent upon our extension, and the mania for
office holding, growing from its indulgence, would pervade our population
so generally that patriotic purpose, the support of principle, the desire
for the public good, and solicitude for the nation's welfare would be
nearly banished from the activity of our party contests and cause them to
degenerate into ignoble, selfish, and disgraceful struggles for the
possession of office and public place.

Civil-service reform enforced by law came none too soon to check the
progress of demoralization.

One of its effects, not enough regarded, is the freedom it brings to the
political action of those conservative and sober men who, in fear of the
confusion and risk attending an arbitrary and sudden change in all the
public offices with a change of party rule, cast their ballots against such
a chance.

Parties seem to be necessary, and will long continue to exist; nor can it
be now denied that there are legitimate advantages, not disconnected with
office holding, which follow party supremacy. While partisanship continues
bitter and pronounced and supplies so much of motive to sentiment and
action, it is not fair to hold public officials in charge of important
trusts responsible for the best results in the performance of their duties,
and yet insist that they shall rely in confidential and important places
upon the work of those not only opposed to them in political affiliation,
but so steeped in partisan prejudice and rancor that they have no loyalty
to their chiefs and no desire for their success. Civil-service reform does
not exact this, nor does it require that those in subordinate positions who
fail in yielding their best service or who are incompetent should be
retained simply because they are in place. The whining of a clerk
discharged for indolence or incompetency, who, though he gained his place
by the worst possible operation of the spoils system, suddenly discovers
that he is entitled to protection under the sanction of civil-service
reform, represents an idea no less absurd than the clamor of the applicant
who claims the vacant position as his compensation for the most
questionable party work.

The civil-service law does not prevent the discharge of the indolent or
incompetent clerk, but it does prevent supplying his place with the unfit
party worker. Thus in both these phases is seen benefit to the public
service. And the people who desire good government, having secured this
statute, will not relinquish its benefits without protest. Nor are they
unmindful of the fact that its full advantages can only be gained through
the complete good faith of those having its execution in charge. And this
they will insist upon.

I recommend that the salaries of the Civil Service Commissioners be
increased to a sum more nearly commensurate to their important duties.

It is a source of considerable and not unnatural discontent that no
adequate provision has yet been made for accommodating the principal
library of the Government. Of the vast collection of books and pamphlets
gathered at the Capitol, numbering some 700,000, exclusive of manuscripts,
maps, and the products of the graphic arts, also of great volume and value,
only about 300,000 volumes, or less than half the collection, are provided
with shelf room. The others, which are increasing at the rate of from
twenty-five to thirty thousand volumes a year, are not only inaccessible to
the public, but are subject to serious damage and deterioration from other
causes in their present situation.

A consideration of the facts that the library of the Capitol has twice been
destroyed or damaged by fire, its daily increasing value, and its
importance as a place of deposit of books under the law relating to
copyright makes manifest the necessity of prompt action to insure its
proper accommodation and protection.

My attention has been called to a controversy which has arisen from the
condition of the law relating to railroad facilities in the city of
Washington, which has involved the Commissioners of the District in much
annoyance and trouble. I hope this difficulty will be promptly settled by
appropriate legislation.

The Commissioners represent that enough of the revenues of the District are
now on deposit in the Treasury of the United States to repay the sum
advanced by the Government for sewer improvements under the act of June 30,
1884. They desire now an advance of the share which ultimately should be
borne by the District of the cost of extensive improvements to the streets
of the city. The total expense of these contemplated improvements is
estimated at $1,000,000, and they are of the opinion that a considerable
sum could be saved if they had all the money in hand, so that contracts for
the whole work could be made at the same time. They express confidence that
if the advance asked for should be made the Government would be reimbursed
the same within a reasonable time. I have no doubt that these improvements
could be made much cheaper if undertaken together and prosecuted according
to a general plan.

The license law now in force within the District is deficient and uncertain
in some of its provisions and ought to be amended. The Commissioners urge,
with good reason, the necessity of providing a building for the use of the
District government which shall better secure the safety and preservation
of its valuable books and records.

The present condition of the law relating to the succession to the
Presidency in the event of the death, disability, or removal of both the
President and Vice-President is such as to require immediate amendment.
This subject has repeatedly been considered by Congress, but no result has
been reached. The recent lamentable death of the Vice-President, and
vacancies at the same time in all other offices the incumbents of which
might immediately exercise the functions of the presidential office, has
caused public anxiety and a just demand that a recurrence of such a
condition of affairs should not be permitted.

In conclusion I commend to the wise care and thoughtful attention of
Congress the needs, the welfare, and the aspirations of an intelligent and
generous nation. To subordinate these to the narrow advantages of
partisanship or the accomplishment of selfish aims is to violate the
people's trust and betray the people's interests; but an individual sense
of responsibility on the part of each of us and a stern determination to
perform our duty well must give us place among those who have added in
their day and generation to the glory and prosperity of our beloved land.

***

State of the Union Address
Grover Cleveland
December 6, 1886

To the Congress of the United States:

In discharge of a constitutional duty, and following a well-established
precedent in the Executive office, I herewith transmit to the Congress at
its reassembling certain information concerning the state of the Union,
together with such recommendations for legislative consideration as appear
necessary and expedient.

Our Government has consistently maintained its relations of friendship
toward all other powers and of neighborly interest toward those whose
possessions are contiguous to our own. Few questions have arisen during the
past year with other governments, and none of those are beyond the reach of
settlement in friendly counsel.

We are as yet without provision for the settlement of claims of citizens of
the United States against Chile for injustice during the late war with Peru
and Bolivia. The mixed commissions organized under claims conventions
concluded by the Chilean Government with certain European States have
developed an amount of friction which we trust can be avoided in the
convention which our representative at Santiago is authorized to
negotiate.

The cruel treatment of inoffensive Chinese has, I regret to say, been
repeated in some of the far Western States and Territories, and acts of
violence against those people, beyond the power of the local constituted
authorities to prevent and difficult to punish, are reported even in
distant Alaska. Much of this violence can be traced to race prejudice and
competition of labor, which can not, however, justify the oppression of
strangers whose safety is guaranteed by our treaty with China equally with
the most favored nations.

In opening our vast domain to alien elements the purpose of our lawgivers
was to invite assimilation, and not to provide an arena for endless
antagonism. The paramount duty of maintaining public order and defending
the interests of our own people may require the adoption of measures of
restriction, but they should not tolerate the oppression of individuals of
a special race. I am not without assurance that the Government of China,
whose friendly disposition toward us I am most happy to recognize, will
meet us halfway in devising a comprehensive remedy by which an effective
limitation of Chinese emigration, joined to protection of those Chinese
subjects who remain in this country, may be secured.

Legislation is needed to execute the provisions of our Chinese convention
of 1880 touching the opium traffic.

While the good will of the Colombian Government toward our country is
manifest, the situation of American interests on the Isthmus of Panama has
at times excited concern and invited friendly action looking to the
performance of the engagements of the two nations concerning the territory
embraced in the interoceanic transit. With the subsidence of the Isthmian
disturbances and the erection of the State of Panama into a federal
district under the direct government of the constitutional administration
at Bogota, a new order of things has been inaugurated, which, although as
yet somewhat experimental and affording scope for arbitrary exercise of
power by the delegates of the national authority, promises much
improvement.

The sympathy between the people of the United States and France, born
during our colonial struggle for independence and continuing today, has
received a fresh impulse in the successful completion and dedication of the
colossal statue of "Liberty Enlightening the World" in New York Harbor--the
gift of Frenchmen to Americans.

A convention between the United States and certain other powers for the
protection of submarine cables was signed at Paris on March 14, 1884, and
has been duly ratified and proclaimed by this Government. By agreement
between the high contracting parties this convention is to go into effect
on the 1st of January next, but the legislation required for its execution
in the United States has not yet been adopted. I earnestly recommend its
enactment.

Cases have continued to occur in Germany giving rise to much correspondence
in relation to the privilege of sojourn of our naturalized citizens of
German origin revisiting the land of their birth, yet I am happy to state
that our relations with that country have lost none of their accustomed
cordiality.

The claims for interest upon the amount of tonnage dues illegally exacted
from certain German steamship lines were favorably reported in both Houses
of Congress at the last session, and I trust will receive final and
favorable action at an early day.

The recommendations contained in my last annual message in relation to a
mode of settlement of the fishery rights in the waters of British North
America, so long a subject of anxious difference between the United States
and Great Britain, was met by an adverse vote of the Senate on April 13
last, and thereupon negotiations were instituted to obtain an agreement
with Her Britannic Majesty's Government for the promulgation of such joint
interpretation and definition of the article of the convention of 1818
relating to the territorial waters and inshore fisheries of the British
Provinces as should secure the Canadian rights from encroachment by the
United States fishermen and at the same time insure the enjoyment by the
latter of the privileges guaranteed to them by such convention.

The questions involved are of long standing, of grave consequence, and from
time to time for nearly three-quarters of a century have given rise to
earnest international discussions, not unaccompanied by irritation.

Temporary arrangements by treaties have served to allay friction, which,
however, has revived as each treaty was terminated. The last arrangement,
under the treaty of 1871, was abrogated after due notice by the United
States on June 30, 1885, but I was enabled to obtain for our fishermen for
the remainder of that season enjoyment of the full privileges accorded by
the terminated treaty.

The joint high commission by whom the treaty had been negotiated, although
invested with plenary power to make a permanent settlement, were content
with a temporary arrangement, after the termination of which the question
was relegated to the stipulations of the treaty of 1818, as to the first
article of which no construction satisfactory to both countries has ever
been agreed upon.

The progress of civilization and growth of population in the British
Provinces to which the fisheries in question are contiguous and the
expansion of commercial intercourse between them and the United States
present to-day a condition of affairs scarcely realizable at the date of
the negotiations of 1818.

New and vast interests have been brought into existence; modes of
intercourse between the respective countries have been invented and
multiplied; the methods of conducting the fisheries have been wholly
changed; and all this is necessarily entitled to candid and careful
consideration in the adjustment of the terms and conditions of intercourse
and commerce between the United States and their neighbors along a frontier
of over 3,500 miles.

This propinquity, community of language and occupation, and similarity of
political and social institutions indicate the practicability and obvious
wisdom of maintaining mutually beneficial and friendly relations.

Whilst I am unfeignedly desirous that such relations should exist between
us and the inhabitants of Canada, yet the action of their officials during
the past season toward our fishermen has been such as to seriously threaten
their continuance.

Although disappointed in my efforts to secure a satisfactory settlement of
the fishery question, negotiations are still pending, with reasonable hope
that before the close of the present session of Congress announcement may
be made that an acceptable conclusion has been reached.

As at an early day there may be laid before Congress the correspondence of
the Department of State in relation to this important subject, so that the
history of the past fishing season may be fully disclosed and the action
and the attitude of the Administration clearly comprehended, a more
extended reference is not deemed necessary in this communication.

The recommendation submitted last year that provision be made for a
preliminary reconnoissance of the conventional boundary line between Alaska
and British Columbia is renewed.

I express my unhesitating conviction that the intimacy of our relations
with Hawaii should be emphasized. As a result of the reciprocity treaty of
1875, those islands, on the highway of Oriental and Australasian traffic,
are virtually an outpost of American commerce and a stepping-stone to the
growing trade of the Pacific. The Polynesian Island groups have been so
absorbed by other and more powerful governments that the Hawaiian Islands
are left almost alone in the enjoyment of their autonomy, which it is
important for us should be preserved. Our treaty is now terminable on one
year's notice, but propositions to abrogate it would be, in my judgment,
most ill advised. The paramount influence we have there acquired, once
relinquished, could only with difficulty be regained, and a valuable ground
of vantage for ourselves might be converted into a stronghold for our
commercial competitors. I earnestly recommend that the existing treaty
stipulations be extended for a further term of seven years. A recently
signed treaty to this end is now before the Senate.

The importance of telegraphic communication between those islands and the
United States should not be overlooked.

The question of a general revision of the treaties of Japan is again under
discussion at Tokyo. As the first to open relations with that Empire, and
as the nation in most direct commercial relations with Japan, the United
States have lost no opportunity to testify their consistent friendship by
supporting the just claims of Japan to autonomy and independence among
nations.

A treaty of extradition between the United States and Japan, the first
concluded by that Empire, has been lately proclaimed.

The weakness of Liberia and the difficulty of maintaining effective
sovereignty over its outlying districts have exposed that Republic to
encroachment. It can not be forgotten that this distant community is an
offshoot of our own system, owing its origin to the associated benevolence
of American citizens, whose praiseworthy efforts to create a nucleus of
civilization in the Dark Continent have commanded respect and sympathy
everywhere, especially in this country. Although a formal protectorate over
Liberia is contrary to our traditional policy, the moral right and duty of
the United States to assist in all proper ways in the maintenance of its
integrity is obvious, and has been consistently announced during nearly
half a century. I recommend that in the reorganization of our Navy a small
vessel, no longer found adequate to our needs, be presented to Liberia, to
be employed by it in the protection of its coastwise revenues.

The encouraging development of beneficial and intimate relations between
the United States and Mexico, which has been so marked within the past few
years, is at once the occasion of congratulation and of friendly
solicitude. I urgently renew my former representation of the need or speedy
legislation by Congress to carry into effect the reciprocity commercial
convention of January 20, 1883.

Our commercial treaty of 1831 with Mexico was terminated, according to its
provisions, in 1881, upon notification given by Mexico in pursuance of her
announced policy of recasting all her commercial treaties. Mexico has since
concluded with several foreign governments new treaties of commerce and
navigation, defining alien rights of trade, property, and residence,
treatment of shipping, consular privileges, and the like. Our yet
unexecuted reciprocity convention of 1883 covers none of these points, the
settlement of which is so necessary to good relationship. I propose to
initiate with Mexico negotiations for a new and enlarged treaty of commerce
and navigation.

In compliance with a resolution of the Senate, I communicated to that body
on August 2 last, and also to the House of Representatives, the
correspondence in the case of A. K. Cutting, an American citizen, then
imprisoned in Mexico, charged with the commission of a penal offense in
Texas, of which a Mexican citizen was the object.

After demand had been made for his release the charge against him was
amended so as to include a violation of Mexican law within Mexican
territory.

This joinder of alleged offenses, one within and the other exterior to
Mexico, induced me to order a special investigation of the case, pending
which Mr. Cutting was released.

The incident has, however, disclosed a claim of jurisdiction by Mexico
novel in our history, whereby any offense committed anywhere by a
foreigner, penal in the place of its commission, and of which a Mexican is
the object, may, if the offender be found in Mexico, be there tried and
punished in conformity with Mexican laws.

This jurisdiction was sustained by the courts of Mexico in the Cutting
case, and approved by the executive branch of that Government, upon the
authority of a Mexican statute. The appellate court in releasing Mr.
Cutting decided that the abandonment of the complaint by the Mexican
citizen aggrieved by the alleged crime (a libelous publication) removed the
basis of further prosecution, and also declared justice to have been
satisfied by the enforcement of a small part of the original sentence.

The admission of such a pretension would be attended with serious results,
invasive of the jurisdiction of this Government and highly dangerous to our
citizens in foreign lands. Therefore I have denied it and protested against
its attempted exercise as unwarranted by the principles of law and
international usages.

A sovereign has jurisdiction of offenses which take effect within his
territory, although concocted or commenced outside of it; but the right is
denied of any foreign sovereign to punish a citizen of the United States
for an offense consummated on our soil in violation of our laws, even
though the offense be against a subject or citizen of such sovereign. The
Mexican statute in question makes the claim broadly, and the principle, if
conceded, would create a dual responsibility in the citizen and lead to
inextricable confusion, destructive of that certainty in the law which is
an essential of liberty.

When citizens of the United States voluntarily go into a foreign country,
they must abide by the laws there in force, and will not be protected by
their own Government from the consequences of an offense against those laws
committed in such foreign country; but watchful care and interest of this
Government over its citizens are not relinquished because they have gone
abroad, and if charged with crime committed in the foreign land a fair and
open trial, conducted with decent regard for justice and humanity, will be
demanded for them. With less than that this Government will not be content
when the life or liberty of its citizens is at stake.

Whatever the degree to which extraterritorial criminal jurisdiction may
have been formerly allowed by consent and reciprocal agreement among
certain of the European States, no such doctrine or practice was ever known
to the laws of this country or of that from which our institutions have
mainly been derived.

In the case of Mexico there are reasons especially strong for perfect
harmony in the mutual exercise of jurisdiction. Nature has made us
irrevocably neighbors, and wisdom and kind feeling should make us friends.

The overflow of capital and enterprise from the United States is a potent
factor in assisting the development of the resources of Mexico and in
building up the prosperity of both countries.

To assist this good work all grounds of apprehension for the security of
person and property should be removed; and I trust that in the interests of
good neighborhood the statute referred to will be so modified as to
eliminate the present possibilities of danger to the peace of the two
countries.

The Government of the Netherlands has exhibited concern in relation to
certain features of our tariff laws, which are supposed by them to be aimed
at a class of tobacco produced in the Dutch East Indies. Comment would seem
unnecessary upon the unwisdom of legislation appearing to have a special
national discrimination for its object, which, although unintentional, may
give rise to injurious retaliation.

The establishment, less than four years ago, of a legation at Teheran is
bearing fruit in the interest exhibited by the Shah's Government in the
industrial activity of the United States and the opportunities of
beneficial interchanges.

Stable government is now happily restored in Peru by the election of a
constitutional president, and a period of rehabilitation is entered upon;
but the recovery is necessarily slow from the exhaustion caused by the late
war and civil disturbances. A convention to adjust by arbitration claims of
our citizens has been proposed and is under consideration.

The naval officer who bore to Siberia the testimonials bestowed by Congress
in recognition of the aid given to the Jeannette survivors has successfully
accomplished his mission. His interesting report will be submitted. It is
pleasant to know that this mark of appreciation has been welcomed by the
Russian Government and people as befits the traditional friendship of the
two countries.

Civil perturbations in the Samoan Islands have during the past few years
been a source of considerable embarrassment to the three
Governments-Germany, Great Britain, and the United States--whose relations
and extraterritorial rights in that important group are guaranteed by
treaties. The weakness of the native administration and the conflict of
opposing interests in the islands have led King Malietoa to seek alliance
or protection in some one quarter, regardless of the distinct engagements
whereby no one of the three treaty powers may acquire any paramount or
exclusive interest. In May last Malietoa offered to place Samoa under the
protection of the United States, and the late consul, without authority,
assumed to grant it. The proceeding was promptly disavowed and the
overzealous official recalled. Special agents of the three Governments have
been deputed to examine the situation in the islands. With a change in the
representation of all three powers and a harmonious understanding between
them, the peace, prosperity, autonomous administration, and neutrality of
Samoa can hardly fail to be secured.

It appearing that the Government of Spain did not extend to the flag of the
United States in the Antilles the full measure of reciprocity requisite
under our statute for the continuance of the suspension of discriminations
against the Spanish flag in our ports, I was constrained in October last to
rescind my predecessor's proclamation of February 14, 1884, permitting such
suspension. An arrangement was, however, speedily reached, and upon
notification from the Government of Spain that all differential treatment
of our vessels and their cargoes, from the United States or from any
foreign country, had been completely and absolutely relinquished, I availed
myself of the discretion conferred by law and issued on the 27th of October
my proclamation declaring reciprocal suspension in the United States. It is
most gratifying to bear testimony to the earnest spirit in which the
Government of the Queen Regent has met our efforts to avert the initiation
of commercial discriminations and reprisals, which are ever disastrous to
the material interests and the political good will of the countries they
may affect.

The profitable development of the large commercial exchanges between the
United States and the Spanish Antilles is naturally an object of
solicitude. Lying close at our doors, and finding here their main markets
of supply and demand, the welfare of Cuba and Puerto Rico and their
production and trade are scarcely less important to us than to Spain. Their
commercial and financial movements are so naturally a part of our system
that no obstacle to fuller and freer intercourse should be permitted to
exist. The standing instructions of our representatives at Madrid and
Havana have for years been to leave no effort unessayed to further these
ends, and at no time has the equal good desire of Spain been more hopefully
manifested than now.

The Government of Spain, by removing the consular tonnage fees on cargoes
shipped to the Antilles and by reducing passport fees, has shown its
recognition of the needs of less trammeled intercourse.

An effort has been made during the past year to remove the hindrances to
the proclamation of the treaty of naturalization with the Sublime Porte,
signed in 1874, which has remained inoperative owing to a disagreement of
interpretation of the clauses relative to the effects of the return to and
sojourn of a naturalized citizen in the land of origin. I trust soon to be
able to announce a favorable settlement of the differences as to this
interpretation.

It has been highly satisfactory to note the improved treatment of American
missionaries in Turkey, as has been attested by their acknowledgments to
our late minister to that Government of his successful exertions in their
behalf.

The exchange of ratifications of the convention of December 5, 1885, with
Venezuela, for the reopening of the awards of the Caracas Commission under
the claims convention of 1866, has not yet been effected, owing to the
delay of the Executive of that Republic in ratifying the measure. I trust
that this postponement will be brief; but should it much longer continue,
the delay may well be regarded as a rescission of the compact and a failure
on the part of Venezuela to complete an arrangement so persistently sought
by her during many years and assented to by this Government in a spirit of
international fairness, although to the detriment of holders of bona fide
awards of the impugned commission.

I renew the recommendation of my last annual message that existing
legislation concerning citizenship and naturalization be revised. We have
treaties with many states providing for the renunciation of citizenship by
naturalized aliens, but no statute is found to give effect to such
engagements, nor any which provides a needed central bureau for the
registration of naturalized citizens.

Experience suggests that our statutes regulating extradition might be
advantageously amended by a provision for the transit across our territory,
now a convenient thoroughfare of travel from one foreign country to
another, of fugitives surrendered by a foreign government to a third state.
Such provisions are not unusual in the legislation of other countries, and
tend to prevent the miscarriage of justice. It is also desirable, in order
to remove present uncertainties, that authority should be conferred on the
Secretary of State to issue a certificate, in case of an arrest for the
purpose of extradition, to the officer before whom the proceeding is
pending, showing that a requisition for the surrender of the person charged
has been duly made. Such a certificate, if required to be received before
the prisoner's examination, would prevent a long and expensive judicial
inquiry into a charge which the foreign government might not desire to
press. I also recommend that express provision be made for the immediate
discharge from custody of persons committed for extradition where the
President is of opinion that surrender should not be made.

The drift of sentiment in civilized communities toward full recognition of
the rights of property in the creations of the human intellect has brought
about the adoption by many important nations of an international copyright
convention, which was signed at Berne on the 18th of September, 1885.

Inasmuch as the Constitution gives to the Congress the power "to promote
the progress of science and useful arts by securing for limited times to
authors and inventors the exclusive right to their respective writings and
discoveries," this Government did not feel warranted in becoming a
signatory pending the action of Congress upon measures of international
copyright now before it; but the right of adhesion to the Berne convention
hereafter has been reserved. I trust the subject will receive at your hands
the attention it deserves, and that the just claims of authors, so urgently
pressed, will be duly heeded.

Representations continue to be made to me of the injurious effect upon
American artists studying abroad and having free access to the art
collections of foreign countries of maintaining a discriminating duty
against the introduction of the works of their brother artists of other
countries, and I am induced to repeat my recommendation for the abolition
of that tax.

Pursuant to a provision of the diplomatic and consular appropriation act
approved July 1, 1886, the estimates submitted by the Secretary of State
for the maintenance of the consular service have been recast on the basis
of salaries for all officers to whom such allowance is deemed advisable.
Advantage has been taken of this to redistribute the salaries of the
offices now appropriated for, in accordance with the work performed, the
importance of the representative duties of the incumbent, and the cost of
living at each post. The last consideration has been too often lost sight
of in the allowances heretofore made. The compensation which may suffice
for the decent maintenance of a worthy and capable officer in a position of
onerous and representative trust at a post readily accessible, and where
the necessaries of life are abundant and cheap, may prove an inadequate
pittance in distant lands, where the better part of a year's pay is
consumed in reaching the post of duty, and where the comforts of ordinary
civilized existence can only be obtained with difficulty and at exorbitant
cost. I trust that in considering the submitted schedules no mistaken
theory of economy will perpetuate a system which in the past has virtually
closed to deserving talent many offices where capacity and attainments of a
high order are indispensable, and in not a few instances has brought
discredit on our national character and entailed embarrassment and even
suffering on those deputed to uphold our dignity and interests abroad.

In connection with this subject I earnestly reiterate the practical
necessity of supplying some mode of trustworthy inspection and report of
the manner in which the consulates are conducted. In the absence of such
reliable information efficiency can scarcely be rewarded or its opposite
corrected.

Increasing competition in trade has directed attention to the value of the
consular reports printed by the Department of State, and the efforts of the
Government to extend the practical usefulness of these reports have created
a wider demand for them at home and a spirit of emulation abroad.
Constituting a record at the changes occurring in trade and of the progress
of the arts and invention in foreign countries, they are much sought for by
all interested in the subjects which they embrace.

The report of the Secretary of the Treasury exhibits in detail the
condition of the public finances and of the several branches of the
Government related to his Department. I especially direct the attention of
the Congress to the recommendations contained in this and the last
preceding report of the Secretary touching the simplification and amendment
of the laws relating to the collection of our revenues, and in the interest
of economy and justice to the Government I hope they may be adopted by
appropriate legislation.

The ordinary receipts of the Government for the fiscal year ended June 30,
1886, were $336,439,727.06. Of this amount $192,905,023.41 was received
from customs and $116,805,936.48 from internal revenue. The total receipts,
as here stated, were $13,749,020.68 greater than for the previous year, but
the increase from customs was $11,434,084.10 and from internal revenue
$4,407,210.94, making a gain in these items for the last year of
$15,841,295.04, a falling off in other resources reducing the total
increase to the smaller amount mentioned.

The expense at the different custom-houses of collecting this increased
customs revenue was less than the expense attending the collection of such
revenue for the preceding year by $490,608, and the increased receipts of
internal revenue were collected at a cost to the Internal-Revenue Bureau
$155,944.99 less than the expense of such collection for the previous
year.

The total ordinary expenses of the Government for the fiscal year ended
June 30, 1886, were $242,483,138.50, being less by $17,788,797 than such
expenditures for the year preceding, and leaving a surplus in the Treasury
at the close of the last fiscal year of $93,956,588.56, as against
$63,463,771.27 at the close of the previous year, being an increase in such
surplus of $30,492,817.29.

The expenditures are compared with those of the preceding fiscal year and
classified as follows:

For the current year to end June 30, 1887, the ascertained receipts up to
October 1, 1886, with such receipts estimated for the remainder of the
year, amount to $356,000,000.

The expenditures ascertained and estimated for the same period are
$266,000,000, indicating an anticipated surplus at the close of the year of
$90,000,000.

The total value of the exports from the United States to foreign countries
during the fiscal year is stated and compared with the preceding year as
follows:

The value of some of our leading exports during the last fiscal year, as
compared with the value of the same for the year immediately preceding, is
here given, and furnishes information both interesting and suggestive:

Our imports during the last fiscal year, as compared with the previous
year, were as follows:

In my last annual message to the Congress attention was directed to the
fact that the revenues of the Government exceeded its actual needs, and it
was suggested that legislative action should be taken to relieve the people
from the unnecessary burden of taxation thus made apparent.

In view of the pressing importance of the subject I deem it my duty to
again urge its consideration.

The income of the Government, by its increased volume and through economies
in its collection, is now more than ever in excess of public necessities.
The application of the surplus to the payment of such portion of the public
debt as is now at our option subject to extinguishment, if continued at the
rate which has lately prevailed, would retire that class of indebtedness
within less than one year from this date. Thus a continuation of our
present revenue system would soon result in the receipt of an annual income
much greater than necessary to meet Government expenses, with no
indebtedness upon which it could be applied. We should then be confronted
with a vast quantity of money, the circulating medium of the people,
hoarded in the Treasury when it should be in their hands, or we should be
drawn into wasteful public extravagance, with all the corrupting national
demoralization which follows in its train.

But it is not the simple existence of this surplus and its threatened
attendant evils which furnish the strongest argument against our present
scale of Federal taxation. Its worst phase is the exaction of such a
surplus through a perversion of the relations between the people and their
Government and a dangerous departure from the rules which limit the right
of Federal taxation.

Good government, and especially the government of which every American
citizen boasts, has for its objects the protection of every person within
its care in the greatest liberty consistent with the good order of society
and his perfect security in the enjoyment of his earnings with the least
possible diminution for public needs. When more of the people's substance
is exacted through the form of taxation than is necessary to meet the just
obligations of the Government and the expense of its economical
administration, such exaction becomes ruthless extortion and a violation of
the fundamental principles of a free government.

The indirect manner in which these exactions are made has a tendency to
conceal their true character and their extent. But we have arrived at a
stage of superfluous revenue which has aroused the people to a realization
of the fact that the amount raised professedly for the support of the
Government is paid by them as absolutely if added to the price of the
things which supply their daily wants as if it was paid at fixed periods
into the hand of the tax gatherer.

Those who toil for daily wages are beginning to understand that capital,
though sometimes vaunting its importance and clamoring for the protection
and favor of the Government, is dull and sluggish till, touched by the
magical hand of labor, it springs into activity, furnishing an occasion for
Federal taxation and gaining the value which enables it to bear its burden.
And the laboring man is thoughtfully inquiring whether in these
circumstances, and considering the tribute he constantly pays into the
public Treasury as he supplies his daily wants, he receives his fair share
of advantages.

There is also a suspicion abroad that the surplus of our revenues indicates
abnormal and exceptional business profits, which, under the system which
produces such surplus, increase without corresponding benefit to the people
at large the vast accumulations of a few among our citizens, whose
fortunes, rivaling the wealth of the most favored in antidemocratic
nations, are not the natural growth of a steady, plain, and industrious
republic.

Our farmers, too, and those engaged directly and indirectly in supplying
the products of agriculture, see that day by day, and as often as the daily
wants of their households recur, they are forced to pay excessive and
needless taxation, while their products struggle in foreign markets with
the competition of nations, which, by allowing a freer exchange of
productions than we permit, enable their people to sell for prices which
distress the American farmer.

As every patriotic citizen rejoices in the constantly increasing pride of
our people in American citizenship and in the glory of our national
achievements and progress, a sentiment prevails that the leading strings
useful to a nation in its infancy may well be to a great extent discarded
in the present stage of American ingenuity, courage, and fearless
self-reliance; and for the privilege of indulging this sentiment with true
American enthusiasm our citizens are quite willing to forego an idle
surplus in the public Treasury.

And all the people know that the average rate of Federal taxation upon
imports is to-day, in time of peace, but little less, while upon some
articles of necessary consumption it is actually more, than was imposed by
the grievous burden willingly borne at a time when the Government needed
millions to maintain by war the safety and integrity of the Union.

It has been the policy of the Government to collect the principal part of
its revenues by a tax upon imports, and no change in this policy is
desirable. But the present condition of affairs constrains our people to
demand that by a revision of our revenue laws the receipts of the
Government shall be reduced to the necessary expense of its economical
administration; and this demand should be recognized and obeyed by the
people's representatives in the legislative branch of the Government.

In readjusting the burdens of Federal taxation a sound public policy
requires that such of our citizens as have built up large and important
industries under present conditions should not be suddenly and to their
injury deprived of advantages to which they have adapted their business;
but if the public good requires it they should be content with such
consideration as shall deal fairly and cautiously with their interests,
while the just demand of the people for relief from needless taxation is
honestly answered.

A reasonable and timely submission to such a demand should certainly be
possible without disastrous shock to any interest; and a cheerful
concession sometimes averts abrupt and heedless action, often the outgrowth
of impatience and delayed justice.

Due regard should be also accorded in any proposed readjustment to the
interests of American labor so far as they are involved. We congratulate
ourselves that there is among us no laboring class fixed within unyielding
bounds and doomed under all conditions to the inexorable fate of daily
toil. We recognize in labor a chief factor in the wealth of the Republic,
and we treat those who have it in their keeping as citizens entitled to the
most careful regard and thoughtful attention. This regard and attention
should be awarded them, not only because labor is the capital of our
workingmen, justly entitled to its share of Government favor, but for the
further and not less important reason that the laboring man, surrounded by
his family in his humble home, as a consumer is vitally interested in all
that cheapens the cost of living and enables him to bring within his
domestic circle additional comforts and advantages.

This relation of the workingman to the revenue laws of the country and the
manner in which it palpably influences the question of wages should not be
forgotten in the justifiable prominence given to the proper maintenance of
the supply and protection of well-paid labor. And these considerations
suggest such an arrangement of Government revenues as shall reduce the
expense of living, while it does not curtail the opportunity for work nor
reduce the compensation of American labor and injuriously affect its
condition and the dignified place it holds in the estimation of our
people.

But our farmers and agriculturists--those who from the soil produce the
things consumed by all--are perhaps more directly and plainly concerned
than any other of our citizens in a just and careful system of Federal
taxation. Those actually engaged in and more remotely connected with this
kind of work number nearly one-half of our population. None labor harder or
more continuously than they. No enactments limit their hours of toil and no
interposition of the Government enhances to any great extent the value of
their products. And yet for many of the necessaries and comforts of life,
which the most scrupulous economy enables them to bring into their homes,
and for their implements of husbandry, they are obliged to pay a price
largely increased by an unnatural profit, which by the action of the
Government is given to the more favored manufacturer.

I recommend that, keeping in view all these considerations, the increasing
and unnecessary surplus of national income annually accumulating be
released to the people by an amendment to our revenue laws which shall
cheapen the price of the necessaries of life and give freer entrance to
such imported materials as by American labor may be manufactured into
marketable commodities.

Nothing can be accomplished, however, in the direction of this much-needed
reform unless the subject is approached in a patriotic spirit of devotion
to the interests of the entire country and with a willingness to yield
something for the public good.

The sum paid upon the public debt during the fiscal year ended June 30,
1886, was $44,551,043.36.

During the twelve months ended October 31,1886, 3 per cent bonds were
called for redemption amounting to $127,283,100, of which $80,643,200 was
so called to answer the requirements of the law relating to the sinking
fund and $46,639,900 for the purpose of reducing the public debt by
application of a part of the surplus in the Treasury to that object. Of the
bonds thus called $102,269,450 became subject under such calls to
redemption prior to November 1, 1886. The remainder, amounting
to $25,013,650, matured under the calls after that date.

In addition to the amount subject to payment and cancellation prior to
November 1, there were also paid before that day certain of these bonds,
with the interest thereon, amounting to $5,072,350, which were anticipated
as to their maturity, of which $2,664,850 had not been called, Thus
$107,341,800 had been actually applied prior to the 1st of November, 1886,
to the extinguishment of our bonded and interest-bearing debt, leaving on
that day still outstanding the sum of $1,153,443,112. Of this amount
$86,848,700 were still represented by 3 per cent bonds. They however, have
been since November 1, or will at once be, further reduced by $22,606,150,
being bonds which have been called, as already stated, but not redeemed and
canceled before the latter date.

During the fiscal year ended June 30, 1886, there were coined, under the
compulsory silver-coinage act of 1878,29,838,905 silver dollars, and the
cost of the silver used in such coinage was $23,448,960.01. There had been
coined up to the close of the previous fiscal year under the provisions of
the law 203,882,554 silver dollars, and on the 1st day of December, 1886,
the total amount of such coinage was $247,131,549.

The Director of the Mint reports that at the time of the passage of the law
of 1878 directing this coinage the intrinsic value of the dollars thus
coined was 94 1/4 cents each, and that on the 31st day of July, 1886, the
price of silver reached the lowest stage ever known, so that the intrinsic
or bullion price of our standard silver dollar at that date was less than
72 cents. The price of silver on the 30th day of November last was such as
to make these dollars intrinsically worth 78 cents each.

These differences in value of the coins represent the fluctuations in the
price of silver, and they certainly do not indicate that compulsory coinage
by the Government enhances the price of that commodity or secures
uniformity in its value.

Every fair and legal effort has been made by the Treasury Department to
distribute this currency among the people. The withdrawal of United States
Treasury notes of small denominations and the issuing of small silver
certificates have been resorted to in the endeavor to accomplish this
result, in obedience to the will and sentiments of the representatives of
the people in the Congress. On the 27th day of November, 1886, the people
held of these coins, or certificates representing them, the nominal sum of
$166,873,041, and we still had $79,464,345 in the Treasury as against about
$142,894,055 so in the hands of the people and $72,865,376 remaining in the
Treasury one year ago. The Director of the Mint again urges the necessity
of more vault room for the purpose of storing these silver dollars which
are not needed for circulation by the people.

I have seen no reason to change the views expressed in my last annual
message on the subject of this compulsory coinage, and I again urge its
suspension on all the grounds contained in my former recommendation,
reenforced by the significant increase of our gold exportations during the
last year, as appears by the comparative statement herewith presented, and
for the further reasons that the more this currency is distributed among
the people the greater becomes our duty to protect it from disaster, that
we now have abundance for all our needs, and that there seems but little
propriety in building vaults to store such currency when the only pretense
for its coinage is the necessity of its use by the people as a circulating
medium.

The great number of suits now pending in the United States courts for the
southern district of New York growing out of the collection of customs
revenue at the port of New York and the number of such suits that are
almost daily instituted are certainly worthy the attention of the Congress.
These legal controversies, based upon conflicting views by importers and
the collector as to the interpretation of our present complex and
indefinite revenue laws, might be largely obviated by an amendment of those
laws.

But pending such amendment the present condition of this litigation should
be relieved. There are now pending about 2,500 of these suits. More than
1,100 have been commenced within the past eighteen months, and many of the
others have been at issue for more than twenty-five years. These delays
subject the Government to loss of evidence and prevent the preparation
necessary to defeat unjust and fictitious claims, while constantly accruing
interest threatens to double the demands involved.

In the present condition of the dockets of the courts, well filled with
private suits, and of the force allowed the district attorney, no greater
than is necessary for the ordinary and current business of his office,
these revenue litigations can not be considered.

In default of the adoption by the Congress of a plan for the general
reorganization of the Federal courts, as has been heretofore recommended, I
urge the propriety of passing a law permitting the appointment of an
additional Federal judge in the district where these Government suits have
accumulated, so that by continuous sessions of the courts devoted to the
trial of these cases they may be determined.

It is entirely plain that a great saving to the Government would be
accomplished by such a remedy, and the suitors who have honest claims would
not be denied justice through delay.

The report of the Secretary of War gives a detailed account of the
administration of his Department and contains sundry recommendations for
the improvement of the service, which I fully approve.

The Army consisted at the date of the last consolidated return of 2,103
officers and 24,946 enlisted men.

The expenses of the Department for the last fiscal year were
$36,990,903.38, including $6,294,305.43 for public works and river and
harbor improvements.

I especially direct the attention of the Congress to the recommendation
that officers be required to submit to an examination as a preliminary to
their promotion. I see no objection, but many advantages, in adopting this
feature, which has operated so beneficially in our Navy Department, as well
as in some branches of the Army.

The subject of coast defenses and fortifications has been fully and
carefully treated by the Board on Fortifications, whose report was
submitted at the last session of Congress; but no construction work of the
kind recommended by the board has been possible during the last year from
the lack of appropriations for such purpose.

The defenseless condition of our seacoast and lake frontier is perfectly
palpable. The examinations made must convince us all that certain of our
cities named in the report of the board should be fortified and that work
on the most important of these fortifications should be commenced at once.
The work has been thoroughly considered and laid out, the Secretary of War
reports, but all is delayed in default of Congressional action.

The absolute necessity, judged by all standards of prudence and foresight,
of our preparation for an effectual resistance against the armored ships
and steel guns and mortars of modern construction which may threaten the
cities on our coasts is so apparent that I hope effective steps will be
taken in that direction immediately.

The valuable and suggestive treatment of this question by the Secretary of
War is earnestly commended to the consideration of the Congress.

In September and October last the hostile Apaches who, under the leadership
of Geronimo, had for eighteen months been on the war path, and during that
time had committed many murders and been the cause of constant terror to
the settlers of Arizona, surrendered to General Miles, the military
commander who succeeded General Crook in the management and direction of
their pursuit.

Under the terms of their surrender as then reported, and in view of the
understanding which these murderous savages seemed to entertain of the
assurances given them, it was considered best to imprison them in such
manner as to prevent their ever engaging in such outrages again, instead of
trying them for murder. Fort Pickens having been selected as a safe place
of confinement, all the adult males were sent thither and will be closely
guarded as prisoners. In the meantime the residue of the band, who, though
still remaining upon the reservation, were regarded as unsafe and suspected
of furnishing aid to those on the war path, had been removed to Fort
Marion. The women and larger children of the hostiles were also taken
there, and arrangements have been made for putting the children of proper
age in Indian schools.

The report of the Secretary of the Navy contains a detailed exhibit of the
condition of his Department, with such a statement of the action needed to
improve the same as should challenge the earnest attention of the
Congress.

The present Navy of the United States, aside from the ships in course of
construction, consists of--

First. Fourteen single-turreted monitors, none of which are in commission
nor at the present time serviceable. The batteries of these ships are
obsolete, and they can only be relied upon as auxiliary ships in harbor
defense, and then after such an expenditure upon them as might not be
deemed justifiable.

Second. Five fourth-rate vessels of small tonnage, only one of which was
designed as a war vessel, and all of which are auxiliary merely.

Third. Twenty-seven cruising ships, three of which are built of iron, of
small tonnage, and twenty-four of wood. Of these wooden vessels it is
estimated by the Chief Constructor of the Navy that only three will be
serviceable beyond a period of six years, at which time it may be said that
of the present naval force nothing worthy the name will remain.

All the vessels heretofore authorized are under contract or in course of
construction except the armored ships, the torpedo and dynamite boats, and
one cruiser. As to the last of these, the bids were in excess of the limit
fixed by Congress. The production in the United States of armor and gun
steel is a question which it seems necessary to settle at an early day if
the armored war vessels are to be completed with those materials of home
manufacture. This has been the subject of investigation by two boards and
by two special committees of Congress within the last three years. The
report of the Gun Foundry Board in 1884, of the Board on Fortifications
made in January last, and the reports of the select committees of the two
Houses made at the last session of Congress have entirely exhausted the
subject, so far as preliminary investigation is involved, and in their
recommendations they are substantially agreed.

In the event that the present invitation of the Department for bids to
furnish such of this material as is now authorized shall fail to induce
domestic manufacturers to undertake the large expenditures required to
prepare for this new manufacture, and no other steps are taken by Congress
at its coming session, the Secretary contemplates with dissatisfaction the
necessity of obtaining abroad the armor and the gun steel for the
authorized ships. It would seem desirable that the wants of the Army and
the Navy in this regard should be reasonably met, and that by uniting their
contracts such inducement might be offered as would result in securing the
domestication of these important interests.

The affairs of the postal service show marked and gratifying improvement
during the past year. A particular account of its transactions and
condition is given in the report of the Postmaster-General, which will be
laid before you.

The reduction of the rate of letter postage in 1883, rendering the postal
revenues inadequate to sustain the expenditures, and business depression
also contributing, resulted in an excess of cost for the fiscal year ended
June 30, 1885, of eight and one-third millions of dollars. An additional
check upon receipts by doubling the measure of weight in rating sealed
correspondence and diminishing one-half the charge for newspaper carriage
was imposed by legislation which took effect with the beginning of the past
fiscal year, while the constant demand of our territorial development and
growing population for the extension and increase of mail facilities and
machinery necessitates steady annual advance in outlay, and the careful
estimate of a year ago upon the rates of expenditure then existing
contemplated the unavoidable augmentation of the deficiency in the last
fiscal year by nearly $2,000,000. The anticipated revenue for the last year
failed of realization by about $64,000, but proper measures of economy have
so satisfactorily limited the growth of expenditure that the total
deficiency in fact fell below that of 1885, and at this time the increase
of revenue is in a gaining ratio over the increase of cost, demonstrating
the sufficiency of the present rates of postage ultimately to sustain the
service. This is the more pleasing because our people enjoy now both
cheaper postage proportionably to distances and a vaster and more costly
service than any other upon the globe.

Retrenchment has been effected in the cost of supplies, some expenditures
unwarranted by law have ceased, and the outlays for mail carriage have been
subjected to beneficial scrutiny. At the close of the last fiscal year the
expense of transportation on star routes stood at an annual rate of cost
less by over $560,000 than at the close of the previous year and steamboat
and mail-messenger service at nearly $200,000 less.

The service has been in the meantime enlarged and extended by the
establishment of new offices, increase of routes of carriage, expansion of
carrier-delivery conveniences, and additions to the railway mail
facilities, in accordance with the growing exigencies of the country and
the long-established policy of the Government.

The Postmaster-General calls attention to the existing law for compensating
railroads and expresses the opinion that a method may be devised which will
prove more just to the carriers and beneficial to the Government; and the
subject appears worthy of your early consideration.

The differences which arose during the year with certain of the ocean
steamship companies have terminated by the acquiescence of all in the
policy of the Government approved by the Congress in the postal
appropriation at its last session, and the Department now enjoys the utmost
service afforded by all vessels which sail from our ports upon either
ocean--a service generally adequate to the needs of our intercourse.
Petitions have, however, been presented to the Department by numerous
merchants and manufacturers for the establishment of a direct service to
the Argentine Republic and for semimonthly dispatches to the Empire of
Brazil, and the subject is commended to your consideration. It is an
obvious duty to provide the means of postal communication which our
commerce requires, and with prudent forecast of results the wise extension
of it may lead to stimulating intercourse and become the harbinger of a
profitable traffic which will open new avenues for the disposition of the
products of our industry. The circumstances of the countries at the far
south of our continent are such as to invite our enterprise and afford the
promise of sufficient advantages to justify an unusual effort to bring
about the closer relations which greater freedom of communication would
tend to establish.

I suggest that, as distinguished from a grant or subsidy for the mere
benefit of any line of trade or travel, whatever outlay may be required to
secure additional postal service, necessary and proper and not otherwise
attainable, should be regarded as within the limit of legitimate
compensation for such service.

The extension of the free-delivery service as suggested by the
Postmaster-General has heretofore received my sanction, and it is to be
hoped a suitable enactment may soon be agreed upon.

The request for an appropriation sufficient to enable the general
inspection of fourth-class offices has my approbation.

I renew my approval of the recommendation of the Postmaster-General that
another assistant be provided for the Post-Office Department, and I invite
your attention to the several other recommendations in his report.

The conduct of the Department of Justice for the last fiscal year is fully
detailed in the report of the Attorney-General, and I invite the earnest
attention of the Congress to the same and due consideration of the
recommendations therein contained.

In the report submitted by this officer to the last session of the Congress
he strongly recommended the erection of a penitentiary for the confinement
of prisoners convicted and sentenced in the United States courts, and he
repeats the recommendation in his report for the last year.

This is a matter of very great importance and should at once receive
Congressional action. United States prisoners are now confined in more than
thirty different State prisons and penitentiaries scattered in every part
of the country. They are subjected to nearly as many different modes of
treatment and discipline and are far too much removed from the control and
regulation of the Government. So far as they are entitled to humane
treatment and an opportunity for improvement and reformation, the
Government is responsible to them and society that these things are
forthcoming. But this duty can scarcely be discharged without more absolute
control and direction than is possible under the present system.

Many of our good citizens have interested themselves, with the most
beneficial results, in the question of prison reform. The General
Government should be in a situation, since there must be United States
prisoners, to furnish important aid in this movement, and should be able to
illustrate what may be practically done in the direction of this reform and
to present an example in the treatment and improvement of its prisoners
worthy of imitation.

With prisons under its own control the Government could deal with the
somewhat vexed question of convict labor, so far as its convicts were
concerned, according to a plan of its own adoption, and with due regard to
the rights and interests of our laboring citizens, instead of sometimes
aiding in the operation of a system which causes among them irritation and
discontent.

Upon consideration of this subject it might be thought wise to erect more
than one of these institutions, located in such places as would best
subserve the purposes of convenience and economy in transportation. The
considerable cost of maintaining these convicts as at present, in State
institutions, would be saved by the adoption of the plan proposed, and by
employing them in the manufacture of such articles as were needed for use
by the Government quite a large pecuniary benefit would be realized in
partial return for our outlay.

I again urge a change in the Federal judicial system to meet the wants of
the people and obviate the delays necessarily attending the present
condition of affairs in our courts. All are agreed that something should be
done, and much favor is shown by those well able to advise to the plan
suggested by the Attorney-General at the last session of the Congress and
recommended in my last annual message. This recommendation is here renewed,
together with another made at the same time, touching a change in the
manner of compensating district attorneys and marshals; and the latter
subject is commended to the Congress for its action in the interest of
economy to the Government, and humanity, fairness, and justice to our
people.

The report of the Secretary of the Interior presents a comprehensive
summary of the work of the various branches of the public service connected
with his Department, and the suggestions and recommendations which it
contains for the improvement of the service should receive your careful
consideration.

The exhibit made of the condition of our Indian population and the progress
of the work for their enlightenment, notwithstanding the many
embarrassments which hinder the better administration of this important
branch of the service, is a gratifying and hopeful one.

The funds appropriated for the Indian service for the fiscal year just
passed, with the available income from Indian land and trust moneys,
amounting in all to $7,850,775.12, were ample for the service under the
conditions and restrictions of laws regulating their expenditure. There
remained a balance on hand on June 30, 1886, of $1,660,023.30, of which $
1,337,768.21 are permanent funds for fulfillment of treaties and other like
purposes, and the remainder, $322,255.09, is subject to be carried to the
surplus fund as required by law.

The estimates presented for appropriations for the ensuing fiscal year
amount to $5,608,873.64, or $442,386.20 less than those laid before the
Congress last year.

The present system of agencies, while absolutely necessary and well adapted
for the management of our Indian affairs and for the ends in view when it
was adopted, is in the present stage of Indian management inadequate,
standing alone, for the accomplishment of an object which has become
pressing in its importance--the more rapid transition from tribal
organizations to citizenship of such portions of the Indians as are capable
of civilized life.

When the existing system was adopted, the Indian race was outside of the
limits of organized States and Territories and beyond the immediate reach
and operation of civilization, and all efforts were mainly directed to the
maintenance of friendly relations and the preservation of peace and quiet
on the frontier. All this is now changed. There is no such thing as the
Indian frontier. Civilization, with the busy hum of industry and the
influences of Christianity, surrounds these people at every point. None of
the tribes are outside of the bounds of organized government and society,
except that the Territorial system has not been extended over that portion
of the country known as the Indian Territory. As a race the Indians are no
longer hostile, but may be considered as submissive to the control of the
Government. Few of them only are troublesome. Except the fragments of
several bands, all are now gathered upon reservations.

It is no longer possible for them to subsist by the chase and the
spontaneous productions of the earth.

With an abundance of land, if furnished with the means and implements for
profitable husbandry, their life of entire dependence upon Government
rations from day to day is no longer defensible. Their inclination, long
fostered by a defective system of control, is to cling to the habits and
customs of their ancestors and struggle with persistence against the change
of life which their altered circumstances press upon them. But barbarism
and civilization can not live together. It is impossible that such
incongruous conditions should coexist on the same soil.

They are a portion of our people, are under the authority of our
Government, and have a peculiar claim upon and are entitled to the
fostering care and protection of the nation. The Government can not relieve
itself of this responsibility until they are so far trained and civilized
as to be able wholly to manage and care for themselves. The paths in which
they should walk must be clearly marked out for them, and they must be led
or guided until they are familiar with the way and competent to assume the
duties and responsibilities of our citizenship.

Progress in this great work will continue only at the present slow pace and
at great expense unless the system and methods of management are improved
to meet the changed conditions and urgent demands of the service.

The agents, having general charge and supervision in many cases of more
than 5,000 Indians, scattered over large reservations, and burdened with
the details of accountability for funds and supplies, have time to look
after the industrial training and improvement of a few Indians only. The
many are neglected and remain idle and dependent, conditions not favorable
for progress and civilization.

The compensation allowed these agents and the conditions of the service are
not calculated to secure for the work men who are fitted by ability and
skill to properly plan and intelligently direct the methods best adapted to
produce the most speedy results and permanent benefits.

Hence the necessity for a supplemental agency or system directed to the end
of promoting the general and more rapid transition of the tribes from
habits and customs of barbarism to the ways of civilization.

With an anxious desire to devise some plan of operation by which to secure
the welfare of the Indians and to relieve the Treasury as far as possible
from the support of an idle and dependent population, I recommended in my
previous annual message the passage of a law authorizing the appointment of
a commission as an instrumentality auxiliary to those already established
for the care of the Indians. It was designed that this commission should be
composed of six intelligent and capable persons--three to be detailed from
the Army--having practical ideas upon the subject of the treatment of
Indians and interested in their welfare, and that it should be charged,
under the direction of the Secretary of the Interior, with the management
of such matters of detail as can not with the present organization be
properly and successfully conducted, and which present different phases, as
the Indians themselves differ in their progress, needs, disposition, and
capacity for improvement or immediate self-support.

By the aid of such a commission much unwise and useless expenditure of
money, waste of materials, and unavailing efforts might be avoided; and it
is hoped that this or some measure which the wisdom of Congress may better
devise to supply the deficiency of the present system may receive your
consideration and the appropriate legislation be provided.

The time is ripe for the work of such an agency.

There is less opposition to the education and training of the Indian youth,
as shown by the increased attendance upon the schools, and there is a
yielding tendency for the individual holding of lands. Development and
advancement in these directions are essential, and should have every
encouragement. As the rising generation are taught the language of
civilization and trained in habits of industry they should assume the
duties, privileges, and responsibilities of citizenship.

No obstacle should hinder the location and settlement of any Indian willing
to take land in severalty; on the contrary, the inclination to do so should
be stimulated at all times when proper and expedient. But there is no
authority of law for making allotments on some of the reservations, and on
others the allotments provided for are so small that the Indians, though
ready and desiring to settle down, are not willing to accept such small
areas when their reservations contain ample lands to afford them homesteads
of sufficient size to meet their present and future needs.

These inequalities of existing special laws and treaties should be
corrected and some general legislation on the subject should be provided,
so that the more progressive members of the different tribes may be settled
upon homesteads, and by their example lead others to follow, breaking away
from tribal customs and substituting therefor the love of home, the
interest of the family, and the rule of the state.

The Indian character and nature are such that they are not easily led while
brooding over unadjusted wrongs. This is especially so regarding their
lands. Matters arising from the construction and operation of railroads
across some of the reservations, and claims of title and right of occupancy
set up by white persons to some of the best land within other reservations
require legislation for their final adjustment.

The settlement of these matters will remove many embarrassments to progress
in the work of leading the Indians to the adoption of our institutions and
bringing them under the operation, the influence, and the protection of the
universal laws of our country.

The recommendations of the Secretary of the Interior and the Commissioner
of the General Land Office looking to the better protection of public lands
and of the public surveys, the preservation of national forests, the
adjudication of grants to States and corporations and of private land
claims, and the increased efficiency of the public-land service are
commended to the attention of Congress. To secure the widest distribution
of public lands in limited quantities among settlers for residence and
cultivation, and thus make the greatest number of individual homes, was the
primary object of the public-land legislation in the early days of the
Republic. This system was a simple one. It commenced with an admirable
scheme of public surveys, by which the humblest citizen could identify the
tract upon which he wished to establish his home. The price of lands was
placed within the reach of all the enterprising, industrious, and honest
pioneer citizens of the country. It was soon, however, found that the
object of the laws was perverted, under the system of cash sales, from a
distribution of land among the people to an accumulation of land capital by
wealthy and speculative persons. To check this tendency a preference right
of purchase was given to settlers on the land, a plan which culminated in
the general preemption act of 1841. The foundation of this system was
actual residence and cultivation. Twenty years later the homestead law was
devised to more surely place actual homes in the possession of actual
cultivators of the soil. The land was given without price, the sole
conditions being residence, improvement, and cultivation. Other laws have
followed, each designed to encourage the acquirement and use of land in
limited individual quantities. But in later years these laws, through
vicious administrative methods and under changed conditions of
communication and transportation, have been so evaded and violated that
their beneficent purpose is threatened with entire defeat. The methods of
such evasions and violations are set forth in detail in the reports of the
Secretary of the Interior and Commissioner of the General Land Office. The
rapid appropriation of our public lands without bona fide settlements or
cultivation, and not only without intention of residence, but for the
purpose of their aggregation in large holdings, in many cases in the hands
of foreigners, invites the serious and immediate attention of the
Congress.

The energies of the Land Department have been devoted during the present
Administration to remedy defects and correct abuses in the public-land
service. The results of these efforts are so largely in the nature of
reforms in the processes and methods of our land system as to prevent
adequate estimate; but it appears by a compilation from the reports of the
Commissioner of the General Land Office that the immediate effect in
leading cases which have come to a final termination has been the
restoration to the mass of public lands of 2,750,000 acres; that 2,370,000
acres are embraced in investigations now pending before the Department or
the courts, and that the action of Congress has been asked to effect the
restoration of 2,790,000 acres additional; besides which 4,000,000 acres
have been withheld from reservation and the rights of entry thereon
maintained.

I recommend the repeal of the preemption and timber-culture acts, and that
the homestead laws be so amended as to better secure compliance with their
requirements of residence, improvement, and cultivation for the period of
five years from date of entry, without commutation or provision for
speculative relinquishment. I also recommend the repeal of the desert-land
laws unless it shall be the pleasure of the Congress to so amend these laws
as to render them less liable to abuses. As the chief motive for an evasion
of the laws and the principal cause of their result in land accumulation
instead of land distribution is the facility with which transfers are made
of the right intended to be secured to settlers, it may be deemed advisable
to provide by legislation some guards and checks upon the alienation of
homestead rights and lands covered thereby until patents issue.

Last year an Executive proclamation was issued directing the removal of
fences which inclosed the public domain. Many of these have been removed in
obedience to such order, but much of the public land still remains within
the lines of these unlawful fences. The ingenious methods resorted to in
order to continue these trespasses and the hardihood of the pretenses by
which in some cases such inclosures are justified are fully detailed in the
report of the Secretary of the Interior.

The removal of the fences still remaining which inclose public lands will
be enforced with all the authority and means with which the executive
branch of the Government is or shall be invested by the Congress for that
purpose.

The report of the Commissioner of Pensions contains a detailed and most
satisfactory exhibit of the operations of the Pension Bureau during the
last fiscal year. The amount of work done was the largest in any year since
the organization of the Bureau, and it has been done at less cost than
during the previous year in every division.

On the 30th day of June, 1886, there were 365,783 pensioners on the rolls
of the Bureau.

Since 1861 there have been 1,018,735 applications for pensions filed, of
which 78,834 were based upon service in the War of 1812. There were 621,754
of these applications allowed, including 60,178 to the soldiers of 1812 and
their widows.

The total amount paid for pensions since 1861 is $808,624,811.57.

The number of new pensions allowed during the year ended June 30, 1886, is
40,857, a larger number than has been allowed in any year save one since
1861. The names of 2,229 pensioners which had been previously dropped from
the rolls were restored during the year, and after deducting those dropped
within the same time for various causes a net increase remains for the year
of 20,658 names.

From January 1, 1861, to December 1, 1885, 1,967 private pension acts had
been passed. Since the last-mentioned date, and during the last session of
the Congress, 644 such acts became laws.

It seems to me that no one can examine our pension establishment and its
operations without being convinced that through its instrumentality justice
can be very nearly done to all who are entitled under present laws to the
pension bounty of the Government.

But it is undeniable that cases exist, well entitled to relief, in which
the Pension Bureau is powerless to aid. The really worthy cases of this
class are such as only lack by misfortune the kind or quantity of proof
which the law and regulations of the Bureau require, or which, though their
merit is apparent, for some other reason can not be justly dealt with
through general laws. These conditions fully justify application to the
Congress and special enactments. But resort to the Congress for a special
pension act to overrule the deliberate and careful determination of the
Pension Bureau on the merits or to secure favorable action when it could
not be expected under the most liberal execution of general laws, it must
be admitted opens the door to the allowance of questionable claims and
presents to the legislative and executive branches of the Government
applications concededly not within the law and plainly devoid of merit, but
so surrounded by sentiment and patriotic feeling that they are hard to
resist. I suppose it will not be denied that many claims for pension are
made without merit and that many have been allowed upon fraudulent
representations. This has been declared from the Pension Bureau, not only
in this but in prior Administrations.

The usefulness and the justice of any system for the distribution of
pensions depend upon the equality and uniformity of its operation.

It will be seen from the report of the Commissioner that there are now paid
by the Government 131 different rates of pension.

He estimates from the best information he can obtain that 9,000 of those
who have served in the Army and Navy of the United States are now
supported, in whole or in part, from public funds or by organized
charities, exclusive of those in soldiers' homes under the direction and
control of the Government. Only 13 per cent of these are pensioners, while
of the entire number of men furnished for the late war something like 20
per cent, including their widows and relatives, have been or now are in
receipt of pensions.

The American people, with a patriotic and grateful regard for our
ex-soldiers, too broad and too sacred to be monopolized by any special
advocates, are not only willing but anxious that equal and exact justice
should be done to all honest claimants for pensions. In their sight the
friendless and destitute soldier, dependent on public charity, if otherwise
entitled, has precisely the same right to share in the provision made for
those who fought their country's battles as those better able, through
friends and influence, to push their claims. Every pension that is granted
under our present plan upon any other grounds than actual service and
injury or disease incurred in such service, and every instance of the many
in which pensions are increased on other grounds than the merits of the
claim, work an injustice to the brave and crippled, but poor and
friendless, soldier, who is entirely neglected or who must be content with
the smallest sum allowed under general laws.

There are far too many neighborhoods in which are found glaring cases of
inequality of treatment in the matter of pensions, and they are largely due
to a yielding in the Pension Bureau to importunity on the part of those,
other than the pensioner, who are especially interested, or they arise from
special acts passed for the benefit of individuals.

The men who fought side by side should stand side by side when they
participate in a grateful nation's kind remembrance.

Every consideration of fairness and justice to our ex-soldiers and the
protection of the patriotic instinct of our citizens from perversion and
violation point to the adoption of a pension system broad and comprehensive
enough to cover every contingency, and which shall make unnecessary an
objectionable volume of special legislation.

As long as we adhere to the principle of granting pensions for service, and
disability as the result of the service, the allowance of pensions should
be restricted to cases presenting these features.

Every patriotic heart responds to a tender consideration for those who,
having served their country long and well, are reduced to destitution and
dependence, not as an incident of their service, but with advancing age or
through sickness or misfortune. We are all tempted by the contemplation of
such a condition to supply relief, and are often impatient of the
limitations of public duty. Yielding to no one in the desire to indulge
this feeling of consideration, I can not rid myself of the conviction that
if these ex-soldiers are to be relieved they and their cause are entitled
to the benefit of an enactment under which relief may be claimed as a
right, and that such relief should be granted under the sanction of law,
not in evasion of it; nor should such worthy objects of care, all equally
entitled, be remitted to the unequal operation of sympathy or the tender
mercies of social and political influence, with their unjust
discriminations.

The discharged soldiers and sailors of the country are our fellow-citizens,
and interested with us in the passage and faithful execution of wholesome
laws. They can not be swerved from their duty of citizenship by artful
appeals to their spirit of brotherhood born of common peril and suffering,
nor will they exact as a test of devotion to their welfare a willingness to
neglect public duty in their behalf.

On the 4th of March, 1885, the current business of the Patent Office was,
on an average, five and a half months in arrears, and in several divisions
more than twelve months behind. At the close of the last fiscal year such
current work was but three months in arrears, and it is asserted and
believed that in the next few months the delay in obtaining an examination
of an application for a patent will be but nominal.

The number of applications for patents during the last fiscal year,
including reissues, designs, trade-marks, and labels, equals 40,678, which
is considerably in excess of the number received during any preceding
year.

The receipts of the Patent Office during the year aggregate $1,205,167.80,
enabling the office to turn into the Treasury a surplus revenue, over and
above all expenditures, of about $163,710.30.

The number of patents granted during the last fiscal year, including
reissues, trade-marks, designs, and labels, was 25,619, a number also quite
largely in excess of that of any preceding year.

The report of the Commissioner shows the office to be in a prosperous
condition and constantly increasing in its business. No increase of force
is asked for.

The amount estimated for the fiscal year ending June 30, 1886, was
$890,760. The amount estimated for the year ending June 30, 1887, was
$853,960. The amount estimated for the fiscal year ending June 30, 1888, is
$778,770.

The Secretary of the Interior suggests a change in the plan for the payment
of the indebtedness of the Pacific subsidized roads to the Government. His
suggestion has the unanimous indorsement of the persons selected by the
Government to act as directors of these roads and protect the interests of
the United States in the board of direction. In considering the plan
proposed the sole matters which should be taken into account, in my
opinion, are the situation of the Government as a creditor and the surest
way to secure the payment of the principal and interest of its debt.

By a recent decision of the Supreme Court of the United States it has been
adjudged that the laws of the several States are inoperative to regulate
rates of transportation upon railroads if such regulation interferes with
the rate of carriage from one State into another. This important field of
control and regulation having been thus left entirely unoccupied, the
expediency of Federal action upon the subject is worthy of consideration.

The relations of labor to capital and of laboring men to their employers
are of the utmost concern to every patriotic citizen. When these are
strained and distorted, unjustifiable claims are apt to be insisted upon by
both interests, and in the controversy which results the welfare of all and
the prosperity of the country are jeopardized. Any intervention of the
General Government, within the limits of its constitutional authority, to
avert such a condition should be willingly accorded.

In a special message transmitted to the Congress at its last session I
suggested the enlargement of our present Labor Bureau and adding to its
present functions the power of arbitration in cases where differences arise
between employer and employed. When these differences reach such a stage as
to result in the interruption of commerce between the States, the
application of this remedy by the General Government might be regarded as
entirely within its constitutional powers. And I think we might reasonably
hope that such arbitrators, if carefully selected and if entitled to the
confidence of the parties to be affected, would be voluntarily called to
the settlement of controversies of less extent and not necessarily within
the domain of Federal regulation.

I am of the opinion that this suggestion is worthy the attention of the
Congress.

But after all has been done by the passage of laws, either Federal or
State, to relieve a situation full of solicitude, much more remains to be
accomplished by the reinstatement and cultivation of a true American
sentiment which recognizes the equality of American citizenship. This, in
the light of our traditions and in loyalty to the spirit of our
institutions, would teach that a hearty cooperation on the part of all
interests is the surest path to national greatness and the happiness of all
our people; that capital should, in recognition of the brotherhood of our
citizenship and in a spirit of American fairness, generously accord to
labor its just compensation and consideration, and that contented labor is
capital's best protection and faithful ally. It would teach, too, that the
diverse situations of our people are inseparable from our civilization;
that every citizen should in his sphere be a contributor to the general
good; that capital does not necessarily tend to the oppression of labor,
and that violent disturbances and disorders alienate from their promoters
true American sympathy and kindly feeling.

The Department of Agriculture, representing the oldest and largest of our
national industries, is subserving well the purposes of its organization.
By the introduction of new subjects of farming enterprise and by opening
new sources of agricultural wealth and the dissemination of early
information concerning production and prices it has contributed largely to
the country's prosperity. Through this agency advanced thought and
investigation touching the subjects it has in charge should, among other
things, be practically applied to the home production at a low cost of
articles of food which are now imported from abroad. Such an innovation
will necessarily, of course, in the beginning be within the domain of
intelligent experiment, and the subject in every stage should receive all
possible encouragement from the Government.

The interests of millions of our citizens engaged in agriculture are
involved in an enlargement and improvement of the results of their labor,
and a zealous regard for their welfare should be a willing tribute to those
whose productive returns are a main source of our progress and power.

The existence of pleuro-pneumonia among the cattle of various States has
led to burdensome and in some cases disastrous restrictions in an important
branch of our commerce, threatening to affect the quantity and quality of
our food supply. This is a matter of such importance and of such
far-reaching consequences that I hope it will engage the serious attention
of the Congress, to the end that such a remedy may be applied as the limits
of a constitutional delegation of power to the General Government will
permit.

I commend to the consideration of the Congress the report of the
Commissioner and his suggestions concerning the interest intrusted to his
care.

The continued operation of the law relating to our civil service has added
the most convincing proofs of its necessity and usefulness. It is a fact
worthy of note that every public officer who has a just idea of his duty to
the people testifies to the value of this reform. Its staunchest, friends
are found among those who understand it best, and its warmest supporters
are those who are restrained and protected by its requirements.

The meaning of such restraint and protection is not appreciated by those
who want places under the Government regardless of merit and efficiency,
nor by those who insist that the selection of such places should rest upon
a proper credential showing active partisan work. They mean to public
officers, if not their lives, the only opportunity afforded them to attend
to public business, and they mean to the good people of the country the
better performance of the work of their Government.

It is exceedingly strange that the scope and nature of this reform are so
little understood and that so many things not included within its plan are
called by its name. When cavil yields more fully to examination, the system
will have large additions to the number of its friends.

Our civil-service reform may be imperfect in some of its details; it may be
misunderstood and opposed; it may not always be faithfully applied; its
designs may sometimes miscarry through mistake or willful intent; it may
sometimes tremble under the assaults of its enemies or languish under the
misguided zeal of impracticable friends; but if the people of this country
ever submit to the banishment of its underlying principle from the
operation of their Government they will abandon the surest guaranty of the
safety and success of American institutions.

I invoke for this reform the cheerful and ungrudging support of the
Congress. I renew my recommendation made last year that the salaries of the
Commissioners be made equal to other officers of the Government having like
duties and responsibilities, and I hope that such reasonable appropriations
may be made as will enable them to increase the usefulness of the cause
they have in charge.

I desire to call the attention of the Congress to a plain duty which the
Government owes to the depositors in the Freedman's Savings and Trust
Company.

This company was chartered by the Congress for the benefit of the most
illiterate and humble of our people, and with the intention of encouraging
in them industry and thrift. Most of its branches were presided over by
officers holding the commissions and clothed in the uniform of the United
States. These and other circumstances reasonably, I think, led these simple
people to suppose that the invitation to deposit their hard-earned savings
in this institution implied an undertaking on the part of their Government
that their money should be safely kept for them.

When this company failed, it was liable in the sum of $2,939,925.22 to
61,131 depositors. Dividends amounting in the aggregate to 62 per cent have
been declared, and the sum called for and paid of such dividends seems to
be $1,648,181.72. This sum deducted from the entire amount of deposits
leaves $1,291,744.50 still unpaid. Past experience has shown that quite a
large part of this sum will not be called for. There are assets still on
hand amounting to the estimated sum of $16,000.

I think the remaining 38 per cent of such of these deposits as have
claimants should be paid by the Government, upon principles of equity and
fairness.

The report of the commissioner, soon to be laid before Congress, will give
more satisfactory details on this subject.

The control of the affairs of the District of Columbia having been placed
in the hands of purely executive officers, while the Congress still retains
all legislative authority relating to its government, it becomes my duty to
make known the most pressing needs of the District and recommend their
consideration.

The laws of the District appear to be in an uncertain and unsatisfactory
condition, and their codification or revision is much needed.

During the past year one of the bridges leading from the District to the
State of Virginia became unfit for use, and travel upon it was forbidden.
This leads me to suggest that the improvement of all the bridges crossing
the Potomac and its branches from the city of Washington is worthy the
attention of Congress.

The Commissioners of the District represent that the laws regulating the
sale of liquor and granting licenses therefor should be at once amended,
and that legislation is needed to consolidate, define, and enlarge the
scope and powers of charitable and penal institutions within the District.

I suggest that the Commissioners be clothed with the power to make, within
fixed limitations, police regulations. I believe this power granted and
carefully guarded would tend to subserve the good order of the
municipality.

It seems that trouble still exists growing out of the occupation of the
streets and avenues by certain railroads having their termini in the city.
It is very important that such laws should be enacted upon this subject as
will secure to the railroads all the facilities they require for the
transaction of their business and at the same time protect citizens from
injury to their persons or property.

The Commissioners again complain that the accommodations afforded them for
the necessary offices for District business and for the safe-keeping of
valuable books and papers are entirely insufficient. I recommend that this
condition of affairs be remedied by the Congress, and that suitable
quarters be furnished for the needs of the District government.

In conclusion I earnestly invoke such wise action on the part of the
people's legislators as will subserve the public good and demonstrate
during the remaining days of the Congress as at present organized its
ability and inclination to so meet the people's needs that it shall be
gratefully remembered by an expectant constituency.

***

State of the Union Address
Grover Cleveland
December 6, 1887

To the Congress of the United States:

You are confronted at the threshold of your legislative duties with a
condition of the national finances which imperatively demands immediate and
careful consideration.

The amount of money annually exacted, through the operation of present
laws, from the industries and necessities of the people largely exceeds the
sum necessary to meet the expenses of the Government.

When we consider that the theory of our institutions guarantees to every
citizen the full enjoyment of all the fruits of his industry and
enterprise, with only such deduction as may be his share toward the careful
and economical maintenance of the Government which protects him, it is
plain that the exaction of more than this is indefensible extortion and a
culpable betrayal of American fairness and justice. This wrong inflicted
upon those who bear the burden of national taxation, like other wrongs,
multiplies a brood of evil consequences. The public Treasury, which should
only exist as a conduit conveying the people's tribute to its legitimate
objects of expenditure, becomes a hoarding place for money needlessly
withdrawn from trade and the people's use, thus crippling our national
energies, suspending our country's development, preventing investment in
productive enterprise, threatening financial disturbance, and inviting
schemes of public plunder.

This condition of our Treasury is not altogether new, and it has more than
once of late been submitted to the people's representatives in the
Congress, who alone can apply a remedy. And yet the situation still
continues, with aggravated incidents, more than ever presaging financial
convulsion and widespread disaster.

It will not do to neglect this situation because its dangers are not now
palpably imminent and apparent. They exist none the less certainly, and
await the unforeseen and unexpected occasion when suddenly they will be
precipitated upon us.

On the 30th day of June, 1885, the excess of revenues over public
expenditures, after complying with the annual requirement of the
sinking-fund act, was $17,859,735.84; during the year ended June 30, 1886,
such excess amounted to $49,405,545.20, and during the year ended June 30,
1887, it reached the sum of $55,567,849.54.

The annual contributions to the sinking fund during the three years above
specified, amounting in the aggregate to $138,058,320.94, and deducted from
the surplus as stated, were made by calling in for that purpose outstanding
3 per cent bonds of the Government. During the six months prior to June 30,
1887, the surplus revenue had grown so large by repeated accumulations, and
it was feared the withdrawal of this great sum of money needed by the
people would so affect the business of the country, that the sum of
$79,864,100 of such surplus was applied to the payment of the principal and
interest of the 3 per cent bonds still outstanding, and which were then
payable at the option of the Government. The precarious condition of
financial affairs among the people still needing relief, immediately after
the 30th day of June, 1887, the remainder of the 3 per cent bonds then
outstanding, amounting with principal and interest to the sum of
$18,877,500, were called in and applied to the sinking-fund contribution
for the current fiscal year. Notwithstanding these operations of the
Treasury Department, representations of distress in business circles not
only continued, but increased, and absolute peril seemed at hand. In these
circumstances the contribution to the sinking fund for the current fiscal
year was at once completed by the expenditure of $27,684,283.55 in the
purchase of Government bonds not yet due bearing 4 and 41/2 per cent
interest, the premium paid thereon averaging about 24 per cent for the
former and 8 per cent for the latter. In addition to this, the interest
accruing during the current year upon the outstanding bonded indebtedness
of the Government was to some extent anticipated, and banks selected as
depositories of public money were permitted to somewhat increase their
deposits.

While the expedients thus employed to release to the people the money lying
idle in the Treasury served to avert immediate danger, our surplus revenues
have continued to accumulate, the excess for the present year amounting on
the 1st day of December to $55,258,701.19, and estimated to reach the sum
of $113,000,000 on the 30th of June next, at which date it is expected that
this sum, added to prior accumulations, will swell the surplus in the
Treasury to $140,000,000.

There seems to be no assurance that, with such a withdrawal from use of the
people's circulating medium, our business community may not in the near
future be subjected to the same distress which was quite lately produced
from the same cause. And while the functions of our National Treasury
should be few and simple, and while its best condition would be reached, I
believe, by its entire disconnection with private business interests, yet
when, by a perversion of its purposes, it idly holds money uselessly
subtracted from the channels of trade, there seems to be reason for the
claim that some legitimate means should be devised by the Government to
restore in an emergency, without waste or extravagance, such money to its
place among the people.

If such an emergency arises, there now exists no clear and undoubted
executive power of relief. Heretofore the redemption of 3 per cent bonds,
which were payable at the option of the Government, has afforded a means
for the disbursement of the excess of our revenues; but these bonds have
all been retired, and there are no bonds outstanding the payment of which
we have a right to insist upon. The contribution to the sinking fund which
furnishes the occasion for expenditure in the purchase of bonds has been
already made for the current year, so that there is no outlet in that
direction.

In the present state of legislation the only pretense of any existing
executive power to restore at this time any part of our surplus revenues to
the people by its expenditure consists in the supposition that the
Secretary of the Treasury may enter the market and purchase the bonds of
the Government not yet due, at a rate of premium to be agreed upon. The
only provision of law from which such a power could be derived is found in
an appropriation bill passed a number of years ago, and it is subject to
the suspicion that it was intended as temporary and limited in its
application, instead of conferring a continuing discretion and authority.
No condition ought to exist which would justify the grant of power to a
single official, upon his judgment of its necessity, to withhold from or
release to the business of the people, in an unusual manner, money held in
the Treasury, and thus affect at his will the financial situation of the
country; and if it is deemed wise to lodge in the Secretary of the Treasury
the authority in the present juncture to purchase bonds, it should be
plainly vested, and provided, as far as possible, with such checks and
limitations as will define this official's right and discretion and at the
same time relieve him from undue responsibility.

In considering the question of purchasing bonds as a means of restoring to
circulation the surplus money accumulating in the Treasury, it should be
borne in mind that premiums must of course be paid upon such purchase, that
there may be a large part of these bonds held as investments which can not
be purchased at any price, and that combinations among holders who are
willing to sell may unreasonably enhance the cost of such bonds to the
Government.

It has been suggested that the present bonded debt might be refunded at a
less rate of interest and the difference between the old and new security
paid in cash, thus finding use for the surplus in the Treasury. The success
of this plan, it is apparent, must depend upon the volition of the holders
of the present bonds; and it is not entirely certain that the inducement
which must be offered them would result in more financial benefit to the
Government than the purchase of bonds, while the latter proposition would
reduce the principal of the debt by actual payment instead of extending
it.

The proposition to deposit the money held by the Government in banks
throughout the country for use by the people is, it seems to me,
exceedingly objectionable in principle, as establishing too close a
relationship between the operations of the Government Treasury and the
business of the country and too extensive a commingling of their money,
thus fostering an unnatural reliance in private business upon public funds.
If this scheme should be adopted, it should only be done as a temporary
expedient to meet an urgent necessity. Legislative and executive effort
should generally be in the opposite direction, and should have a tendency
to divorce, as much and as fast as can be safely done, the Treasury
Department from private enterprise.

Of course it is not expected that unnecessary and extravagant
appropriations will be made for the purpose of avoiding the accumulation of
an excess of revenue. Such expenditure, besides the demoralization of all
just conceptions of public duty which it entails, stimulates a habit of
reckless improvidence not in the least consistent with the mission of our
people or the high and beneficent purposes of our Government.

I have deemed it my duty to thus bring to the knowledge of my countrymen,
as well as to the attention of their representatives charged with the
responsibility of legislative relief, the gravity of our financial
situation. The failure of the Congress heretofore to provide against the
dangers which it was quite evident the very nature of the difficulty must
necessarily produce caused a condition of financial distress and
apprehension since your last adjournment which taxed to the utmost all the
authority and expedients within executive control; and these appear now to
be exhausted. If disaster results from the continued inaction of Congress,
the responsibility must rest where it belongs.

Though the situation thus far considered is fraught with danger which
should be fully realized, and though it presents features of wrong to the
people as well as peril to the country, it is but a result growing out of a
perfectly palpable and apparent cause, constantly reproducing the same
alarming circumstances--a congested National Treasury and a depleted
monetary condition in the business of the country. It need hardly be stated
that while the present situation demands a remedy, we can only be saved
from a like predicament in the future by the removal of its cause.

Our scheme of taxation, by means of which this needless surplus is taken
from the people and put into the public Treasury, consists of a tariff or
duty levied upon importations from abroad and internal-revenue taxes levied
upon the consumption of tobacco and spirituous and malt liquors. It must be
conceded that none of the things subjected to internal-revenue taxation
are, strictly speaking, necessaries. There appears to be no just complaint
of this taxation by the consumers of these articles, and there seems to be
nothing so well able to bear the burden without hardship to any portion of
the people.

But our present tariff laws, the vicious, inequitable, and illogical source
of unnecessary taxation, ought to be at once revised and amended. These
laws, as their primary and plain effect, raise the price to consumers of
all articles imported and subject to duty by precisely the sum paid for
such duties. Thus the amount of the duty measures the tax paid by those who
purchase for use these imported articles. Many of these things, however,
are raised or manufactured in our own country, and the duties now levied
upon foreign goods and products are called protection to these home
manufactures, because they render it possible for those of our people who
are manufacturers to make these taxed articles and sell them for a price
equal to that demanded for the imported goods that have paid customs duty.
So it happens that while comparatively a few use the imported articles,
millions of our people, who never used and never saw any of the foreign
products, purchase and use things of the same kind made in this country,
and pay therefor nearly or quite the same enhanced price which the duty
adds to the imported articles. Those who buy imports pay the duty charged
thereon into the public Treasury, but the great majority of our citizens,
who buy domestic articles of the same class, pay a sum at least
approximately equal to this duty to the home manufacturer. This reference
to the operation of our tariff laws is not made by way of instruction, but
in order that we may be constantly reminded of the manner in which they
impose a burden upon those who consume domestic products as well as those
who consume imported articles, and thus create a tax upon all our people.

It is not proposed to entirely relieve the country of this taxation. It
must be extensively continued as the source of the Government's income; and
in a readjustment of our tariff the interests of American labor engaged in
manufacture should be carefully considered, as well as the preservation of
our manufacturers. It may be called protection or by any other name, but
relief from the hardships and dangers of our present tariff laws should be
devised with especial precaution against imperiling the existence of our
manufacturing interests. But this existence should not mean a condition
which, without regard to the public welfare or a national exigency, must
always insure the realization of immense profits instead of moderately
profitable returns. As the volume and diversity of our national activities
increase, new recruits are added to those who desire a continuation of the
advantages which they conceive the present system of tariff taxation
directly affords them. So stubbornly have all efforts to reform the present
condition been resisted by those of our fellow-citizens thus engaged that
they can hardly complain of the suspicion, entertained to a certain extent,
that there exists an organized combination all along the line to maintain
their advantage.

We are in the midst of centennial celebrations, and with becoming pride we
rejoice in American skill and ingenuity, in American energy and enterprise,
and in the wonderful natural advantages and resources developed by a
century's national growth. Yet when an attempt is made to justify a scheme
which permits a tax to be laid upon every consumer in the land for the
benefit of our manufacturers, quite beyond a reasonable demand for
governmental regard, it suits the purposes of advocacy to call our
manufactures infant industries still needing the highest and greatest
degree of favor and fostering care that can be wrung from Federal
legislation.

It is also said that the increase in the price of domestic manufactures
resulting from the present tariff is necessary in order that higher wages
may be paid to our workingmen employed in manufactories than are paid for
what is called the pauper labor of Europe. All will acknowledge the force
of an argument which involves the welfare and liberal compensation of our
laboring people. Our labor is honorable in the eyes of every American
citizen; and as it lies at the foundation of our development and progress,
it is entitled, without affectation or hypocrisy, to the utmost regard. The
standard of our laborers' life should not be measured by that of any other
country less favored, and they are entitled to their full share of all our
advantages.

By the last census it is made to appear that of the 17,392,099 of our
population engaged in all kinds of industries 7,670,493 are employed in
agriculture, 4,074,238 in professional and personal service (2,934,876 of
whom are domestic servants and laborers), while 1,810,256 are employed in
trade and transportation and 3,837,112 are classed as employed in
manufacturing and mining.

For present purposes, however, the last number given should be considerably
reduced. Without attempting to enumerate all, it will be conceded that
there should be deducted from those which it includes 375,143 carpenters
and joiners, 285,401 milliners, dressmakers, and seamstresses, 172,726
blacksmiths, 133,756 tailors and tailoresses, 102,473 masons, 76,241
butchers, 41,309 bakers, 22,083 plasterers, and 4,891 engaged in
manufacturing agricultural implements, amounting in the aggregate to
1,214,023, leaving 2,623,089 persons employed in such manufacturing
industries as are claimed to be benefited by a high tariff.

To these the appeal is made to save their employment and maintain their
wages by resisting a change. There should be no disposition to answer such
suggestions by the allegation that they are in a minority among those who
labor, and therefore should forego an advantage in the interest of low
prices for the majority. Their compensation, as it may be affected by the
operation of tariff laws, should at all times be scrupulously kept in view;
and yet with slight reflection they will not overlook the fact that they
are consumers with the rest; that they too have their own wants and those
of their families to supply from their earnings, and that the price of the
necessaries of life, as well as the amount of their wages, will regulate
the measure of their welfare and comfort.

But the reduction of taxation demanded should be so measured as not to
necessitate or justify either the loss of employment by the workingman or
the lessening of his wages; and the profits still remaining to the
manufacturer after a necessary readjustment should furnish no excuse for
the sacrifice of the interests of his employees, either in their
opportunity to work or in the diminution of their compensation. Nor can the
worker in manufactures fail to understand that while a high tariff is
claimed to be necessary to allow the payment of remunerative wages, it
certainly results in a very large increase in the price of nearly all sorts
of manufactures, which, in almost countless forms, he needs for the use of
himself and his family. He receives at the desk of his employer his wages,
and perhaps before he reaches his home is obliged, in a purchase for family
use of an article which embraces his own labor, to return in the payment of
the increase in price which the tariff permits the hard-earned compensation
of many days of toil.

The farmer and the agriculturist, who manufacture nothing, but who pay the
increased price which the tariff imposes upon every agricultural implement,
upon all he wears, and upon all he uses and owns, except the increase of
his flocks and herds and such things as his husbandry produces from the
soil, is invited to aid in maintaining the present situation; and he is
told that a high duty on imported wool is necessary for the benefit of
those who have sheep to shear, in order that the price of their wool may be
increased. They, of course, are not reminded that the farmer who has no
sheep is by this scheme obliged, in his purchases of clothing and woolen
goods, to pay a tribute to his fellow-farmer as well as to the manufacturer
and merchant, nor is any mention made of the fact that the sheep owners
themselves and their households must wear clothing and use other articles
manufactured from the wool they sell at tariff prices, and thus as
consumers must return their share of this increased price to the
tradesman.

I think it may be fairly assumed that a large proportion of the sheep owned
by the farmers throughout the country are found in small flocks, numbering
from twenty-five to fifty. The duty on the grade of imported wool which
these sheep yield is 10 cents each pound if of the value of 30 cents or
less and 12 cents if of the value of more than 30 cents. If the liberal
estimate of 6 pounds be allowed for each fleece, the duty thereon would be
60 or 72 cents; and this may be taken as the utmost enhancement of its
price to the farmer by reason of this duty. Eighteen dollars would thus
represent the increased price of the wool from twenty-five sheep and $36
that from the wool of fifty sheep; and at present values this addition
would amount to about one-third of its price. If upon its sale the farmer
receives this or a less tariff profit, the wool leaves his hands charged
with precisely that sum, which in all its changes will adhere to it until
it reaches the consumer. When manufactured into cloth and other goods and
material for use, its cost is not only increased to the extent of the
farmer's tariff profit, but a further sum has been added for the benefit of
the manufacturer under the operation of other tariff laws. In the meantime
the day arrives when the farmer finds it necessary to purchase woolen goods
and material to clothe himself and family for the winter. When he faces the
tradesman for that purpose, he discovers that he is obliged not only to
return in the way of increased prices his tariff profit on the wool he
sold, and which then perhaps lies before him in manufactured form, but that
he must add a considerable sum thereto to meet a further increase in cost
caused by a tariff duty on the manufacture. Thus in the end he is aroused
to the fact that he has paid upon a moderate purchase, as a result of the
tariff scheme, which when he sold his wool seemed so profitable, an
increase in price more than sufficient to sweep away all the tariff profit
he received upon the wool he produced and sold.

When the number of farmers engaged in wool raising is compared with all the
farmers in the country and the small proportion they bear to our population
is considered; when it is made apparent that in the case of a large part of
those who own sheep the benefit of the present tariff on wool is illusory;
and, above all, when it must be conceded that the increase of the cost of
living caused by such tariff becomes a burden upon those with moderate
means and the poor, the employed and unemployed, the sick and well, and the
young and old, and that it constitutes a tax which with relentless grasp is
fastened upon the clothing of every man, woman, and child in the land,
reasons are suggested why the removal or reduction of this duty should be
included in a revision of our tariff laws.

In speaking of the increased cost to the consumer of our home manufactures
resulting from a duty laid upon imported articles of the same description,
the fact is not ever looked that competition among our domestic producers
sometimes has the effect of keeping the price of their products below the
highest limit allowed by such duty. But it is notorious that this
competition is too often strangled by combinations quite prevalent at this
time, and frequently called trusts, which have for their object the
regulation of the supply and price of commodities made and sold by members
of the combination. The people can hardly hope for any consideration in the
operation of these selfish schemes.

If, however, in the absence of such combination, a healthy and free
competition reduces the price of any particular dutiable article of home
production below the limit which it might otherwise reach under our tariff
laws, and if with such reduced price its manufacture continues to thrive,
it is entirely evident that one thing has been discovered which should be
carefully scrutinized in an effort to reduce taxation.

The necessity of combination to maintain the price of any commodity to the
tariff point furnishes proof that someone is willing to accept lower prices
for such commodity and that such prices are remunerative; and lower prices
produced by competition prove the same thing. Thus where either of these
conditions exists a case would seem to be presented for an easy reduction
of taxation.

The considerations which have been presented touching our tariff laws are
intended only to enforce an earnest recommendation that the surplus
revenues of the Government be prevented by the reduction of our customs
duties, and at the same time to emphasize a suggestion that in
accomplishing this purpose we may discharge a double duty to our people by
granting to them a measure of relief from tariff taxation in quarters where
it is most needed and from sources where it can be most fairly and justly
accorded.

Nor can the presentation made of such considerations be with any degree of
fairness regarded as evidence of unfriendliness toward our manufacturing
interests or of any lack of appreciation of their value and importance.

These interests constitute a leading and most substantial element of our
national greatness and furnish the proud proof of our country's progress.
But if in the emergency that presses upon us our manufacturers are asked to
surrender something for the public good and to avert disaster, their
patriotism, as well as a grateful recognition of advantages already
afforded, should lead them to willing cooperation. No demand is made that
they shall forego all the benefits of governmental regard; but they can not
fail to be admonished of their duty, as well as their enlightened
self-interest and safety, when they are reminded of the fact that financial
panic and collapse, to which the present condition tends, afford no greater
shelter or protection to our manufactures than to other important
enterprises. Opportunity for safe, careful, and deliberate reform is now
offered; and none of us should be unmindful of a time when an abused and
irritated people, heedless of those who have resisted timely and reasonable
relief, may insist upon a radical and sweeping rectification of their
wrongs.

The difficulty attending a wise and fair revision of our tariff laws is not
underestimated. It will require on the part of the Congress great labor and
care, and especially a broad and national contemplation of the subject and
a patriotic disregard of such local and selfish claims as are unreasonable
and reckless of the welfare of the entire country.

Under our present laws more than 4,000 articles are subject to duty. Many
of these do not in any way compete with our own manufactures, and many are
hardly worth attention as subjects of revenue. A considerable reduction can
be made in the aggregate by adding them to the free list. The taxation of
luxuries presents no features of hardship; but the necessaries of life used
and consumed by all the people, the duty upon which adds to the cost of
living in every home, should be greatly cheapened.

The radical reduction of the duties imposed upon raw material used in
manufactures, or its free importation, is of course an important factor in
any effort to reduce the price of these necessaries. It would not only
relieve them from the increased cost caused by the tariff on such material,
but the manufactured product being thus cheapened that part of the tariff
now laid upon such product, as a compensation to our manufacturers for the
present price of raw material, could be accordingly modified. Such
reduction or free importation would serve besides to largely reduce the
revenue. It is not apparent how such a change can have any injurious effect
upon our manufacturers. On the contrary, it would appear to give them a
better chance in foreign markets with the manufacturers of other countries,
who cheapen their wares by free material. Thus our people might have the
opportunity of extending their sales beyond the limits of home consumption,
saving them from the depression, interruption in business, and loss caused
by a glutted domestic market and affording their employees more certain and
steady labor, with its resulting quiet and contentment.

The question thus imperatively presented for solution should be approached
in a spirit higher than partisanship and considered in the light of that
regard for patriotic duty which should characterize the action of those
intrusted with the weal of a confiding people. But the obligation to
declared party policy and principle is not wanting to urge prompt and
effective action. Both of the great political parties now represented in
the Government have by repeated and authoritative declarations condemned
the condition of our laws which permit the collection from the people of
unnecessary revenue, and have in the most solemn manner promised its
correction; and neither as citizens nor partisans are our countrymen in a
mood to condone the deliberate violation of these pledges.

Our progress toward a wise conclusion will not be improved by dwelling upon
the theories of protection and free trade. This savors too much of bandying
epithets. It is a condition which confronts us, not a theory. Relief from
this condition may involve a slight reduction of the advantages which we
award our home productions, but the entire withdrawal of such advantages
should not be contemplated. The question of free trade is absolutely
irrelevant, and the persistent claim made in certain quarters that all the
efforts to relieve the people from unjust and unnecessary taxation are
schemes of so-called free traders is mischievous and far removed from any
consideration for the public good.

The simple and plain duty which we owe the people is to reduce taxation to
the necessary expenses of an economical operation of the Government and to
restore to the business of the country the money which we hold in the
Treasury through the perversion of governmental powers. These things can
and should be done with safety to all our industries, without danger to the
opportunity for remunerative labor which our workingmen need, and with
benefit to them and all our people by cheapening their means of subsistence
and increasing the measure of their comforts.

The Constitution provides that the President "shall from time to time give
to the Congress information of the state of the Union." It has been the
custom of the Executive, in compliance with this provision, to annually
exhibit to the Congress, at the opening of its session, the general
condition of the country, and to detail with some particularity the
operations of the different Executive Departments. It would be especially
agreeable to follow this course at the present time and to call attention
to the valuable accomplishments of these Departments during the last fiscal
year; but I am so much impressed with the paramount importance of the
subject to which this communication has thus far been devoted that I shall
forego the addition of any other topic, and only urge upon your immediate
consideration the "state of the Union" as shown in the present condition of
our Treasury and our general fiscal situation, upon which every element of
our safety and prosperity depends.

The reports of the heads of Departments, which will be submitted, contain
full and explicit information touching the transaction of the business
intrusted to them and such recommendations relating to legislation in the
public interest as they deem advisable. I ask for these reports and
recommendations the deliberate examination and action of the legislative
branch of the Government.

There are other subjects not embraced in the departmental reports demanding
legislative consideration, and which I should be glad to submit. Some of
them, however, have been earnestly presented in previous messages, and as
to them I beg leave to repeat prior recommendations.

As the law makes no provision for any report from the Department of State,
a brief history of the transactions of that important Department, together
with other matters which it may hereafter be deemed essential to commend to
the attention of the Congress, may furnish the occasion for a future
communication.

***

State of the Union Address
Grover Cleveland
December 3, 1888

To the Congress of the United States:

As you assemble for the discharge of the duties you have assumed as the
representatives of a free and generous people, your meeting is marked by an
interesting and impressive incident. With the expiration of the present
session of the Congress the first century of our constitutional existence
as a nation will be completed.

Our survival for one hundred years is not sufficient to assure us that we
no longer have dangers to fear in the maintenance, with all its promised
blessings, of a government rounded upon the freedom of the people. The time
rather admonishes us to soberly inquire whether in the past we have always
closely kept in the course of safety, and whether we have before us a way
plain and clear which leads to happiness and perpetuity.

When the experiment of our Government was undertaken, the chart adopted for
our guidance was the Constitution. Departure from the lines there laid down
is failure. It is only by a strict adherence to the direction they indicate
and by restraint within the limitations they fix that we can furnish proof
to the world of the fitness of the American people for self-government.

The equal and exact justice of which we boast as the underlying principle
of our institutions should not be confined to the relations of our citizens
to each other. The Government itself is under bond to the American people
that in the exercise of its functions and powers it will deal with the body
of our citizens in a manner scrupulously honest and fair and absolutely
just. It has agreed that American citizenship shall be the only credential
necessary to justify the claim of equality before the law, and that no
condition in life shall give rise to discrimination in the treatment of the
people by their Government.

The citizen of our Republic in its early days rigidly insisted upon full
compliance with the letter of this bond, and saw stretching out before him
a clear field for individual endeavor. His tribute to the support of his
Government was measured by the cost of its economical maintenance, and he
was secure in the enjoyment of the remaining recompense of his steady and
contented toil. In those days the frugality of the people was stamped upon
their Government, and was enforced by the free, thoughtful, and intelligent
suffrage of the citizen. Combinations, monopolies, and aggregations of
capital were either avoided or sternly regulated and restrained. The pomp
and glitter of governments less free offered no temptation and presented no
delusion to the plain people who, side by side, in friendly competition,
wrought for the ennoblement and dignity of man, for the solution of the
problem of free government, and for the achievement of the grand destiny
awaiting the land which God had given them.

A century has passed. Our cities are the abiding places of wealth and
luxury; our manufactories yield fortunes never dreamed of by the fathers of
the Republic; our business men are madly striving in the race for riches,
and immense aggregations of capital outrun the imagination in the magnitude
of their undertakings.

We view with pride and satisfaction this bright picture of our country's
growth and prosperity, while only a closer scrutiny develops a somber
shading. Upon more careful inspection we find the wealth and luxury of our
cities mingled with poverty and wretchedness and unremunerative toil. A
crowded and constantly increasing urban population suggests the
impoverishment of rural sections and discontent with agricultural pursuits.
The farmer's son, not satisfied with his father's simple and laborious
life, joins the eager chase for easily acquired wealth.

We discover that the fortunes realized by our manufacturers are no longer
solely the reward of sturdy industry and enlightened foresight, but that
they result from the discriminating favor of the Government and are largely
built upon undue exactions from the masses of our people. The gulf between
employers and the employed is constantly widening, and classes are rapidly
forming, one comprising the very rich and powerful, while in another are
found the toiling poor.

As we view the achievements of aggregated capital, we discover the
existence of trusts, combinations, and monopolies, while the citizen is
struggling far in the rear or is trampled to death beneath an iron heel.
Corporations, which should be the carefully restrained creatures of the law
and the servants of the people, are fast becoming the people's masters.

Still congratulating ourselves upon the wealth and prosperity of our
country and complacently contemplating every incident of change inseparable
from these conditions, it is our duty as patriotic citizens to inquire at
the present stage of our progress how the bond of the Government made with
the people has been kept and performed.

Instead of limiting the tribute drawn from our citizens to the necessities
of its economical administration, the Government persists in exacting from
the substance of the people millions which, unapplied and useless, lie
dormant in its Treasury. This flagrant injustice and this breach of faith
and obligation add to extortion the danger attending the diversion of the
currency of the country from the legitimate channels of business.

Under the same laws by which these results are produced the Government
permits many millions more to be added to the cost of the living of our
people and to be taken from our consumers, which unreasonably swell the
profits of a small but powerful minority.

The people must still be taxed for the support of the Government under the
operation of tariff laws. But to the extent that the mass of our citizens
are inordinately burdened beyond any useful public purpose and for the
benefit of a favored few, the Government, under pretext of an exercise of
its taxing power, enters gratuitously into partnership with these
favorites, to their advantage and to the injury of a vast majority of our
people.

This is not equality before the law.

The existing situation is injurious to the health of our entire body
politic. It stifles in those for whose benefit it is permitted all
patriotic love of country, and substitutes in its place selfish greed and
grasping avarice. Devotion to American citizenship for its own sake and for
what it should accomplish as a motive to our nation's advancement and the
happiness of all our people is displaced by the assumption that the
Government, instead of being the embodiment of equality, is but an
instrumentality through which especial and individual advantages are to be
gained.

The arrogance of this assumption is unconcealed. It appears in the sordid
disregard of all but personal interests, in the refusal to abate for the
benefit of others one iota of selfish advantage, and in combinations to
perpetuate such advantages through efforts to control legislation and
improperly influence the suffrages of the people.

The grievances of those not included within the circle of these
beneficiaries, when fully realized, will surely arouse irritation and
discontent. Our farmers, long suffering and patient, struggling in the race
of life with the hardest and most unremitting toil, will not fail to see,
in spite of misrepresentations and misleading fallacies, that they are
obliged to accept such prices for their products as are fixed in foreign
markets where they compete with the farmers of the world; that their lands
are declining in value while their debts increase, and that without
compensating favor they are forced by the action of the Government to pay
for the benefit of others such enhanced prices for the things they need
that the scanty returns of their labor fail to furnish their support or
leave no margin for accumulation.

Our workingmen, enfranchised from all delusions and no longer frightened by
the cry that their wages are endangered by a just revision of our tariff
laws, will reasonably demand through such revision steadier employment,
cheaper means of living in their homes, freedom for themselves and their
children from the doom of perpetual servitude, and an open door to their
advancement beyond the limits of a laboring class. Others of our citizens,
whose comforts and expenditures are measured by moderate salaries and fixed
incomes, will insist upon the fairness and justice of cheapening the cost
of necessaries for themselves and their families.

When to the selfishness of the beneficiaries of unjust discrimination under
our laws there shall be added the discontent of those who suffer from such
discrimination, we will realize the fact that the beneficent purposes of
our Government, dependent upon the patriotism and contentment of our
people, are endangered.

Communism is a hateful thing and a menace to peace and organized
government; but the communism of combined wealth and capital, the outgrowth
of overweening cupidity and selfishness, which insidiously undermines the
justice and integrity of free institutions, is not less dangerous than the
communism of oppressed poverty and toil, which, exasperated by injustice
and discontent, attacks with wild disorder the citadel of rule.

He mocks the people who proposes that the Government shall protect the rich
and that they in turn will care for the laboring poor. Any intermediary
between the people and their Government or the least delegation of the care
and protection the Government owes to the humblest citizen in the land
makes the boast of free institutions a glittering delusion and the
pretended boon of American citizenship a shameless imposition.

A just and sensible revision of our tariff laws should be made for the
relief of those of our countrymen who suffer under present conditions. Such
a revision should receive the support of all who love that justice and
equality due to American citizenship; of all who realize that in this
justice and equality our Government finds its strength and its power to
protect the citizen and his property; of all who believe that the contented
competence and comfort of many accord better with the spirit of our
institutions than colossal fortunes unfairly gathered in the hands of a
few; of all who appreciate that the forbearance and fraternity among our
people, which recognize the value of every American interest, are the
surest guaranty of our national progress, and of all who desire to see the
products of American skill and ingenuity in every market of the world, with
a resulting restoration of American commerce.

The necessity of the reduction of our revenues is so apparent as to be
generally conceded, but the means by which this end shall be accomplished
and the sum of direct benefit which shall result to our citizens present a
controversy of the utmost importance. There should be no scheme accepted as
satisfactory by which the burdens of the people are only apparently
removed. Extravagant appropriations of public money, with all their
demoralizing consequences, should not be tolerated, either as a means of
relieving the Treasury of its present surplus or as furnishing pretext for
resisting a proper reduction in tariff rates. Existing evils and injustice
should be honestly recognized, boldly met, and effectively remedied. There
should be no cessation of the struggle until a plan is perfected, fair and
conservative toward existing industries, but which will reduce the cost to
consumers of the necessaries of life, while it provides for our
manufacturers the advantage of freer raw materials and permits no injury to
the interests of American labor.

The cause for which the battle is waged is comprised within lines clearly
and distinctly defined. It should never be compromised. It is the people's
cause.

It can not be denied that the selfish and private interests which are so
persistently heard when efforts are made to deal in a just and
comprehensive manner with our tariff laws are related to, if they are not
responsible for, the sentiment largely prevailing among the people that the
General Government is the fountain of individual and private aid; that it
may be expected to relieve with paternal care the distress of citizens and
communities, and that from the fullness of its Treasury it should, upon the
slightest possible pretext of promoting the general good, apply public
funds to the benefit of localities and individuals. Nor can it be denied
that there is a growing assumption that, as against the Government and in
favor of private claims and interests, the usual rules and limitations of
business principles and just dealing should be waived.

These ideas have been unhappily much encouraged by legislative
acquiescence. Relief from contracts made with the Government is too easily
accorded in favor of the citizen; the failure to support claims against the
Government by proof is often supplied by no better consideration than the
wealth of the Government and the poverty of the claimant; gratuities in the
form of pensions are granted upon no other real ground than the needy
condition of the applicant, or for reasons less valid; and large sums are
expended for public buildings and other improvements upon representations
scarcely claimed to be related to public needs and necessities.

The extent to which the consideration of such matters subordinate and
postpone action upon subjects of great public importance, but involving no
special private or partisan interest, should arrest attention and lead to
reformation.

A few of the numerous illustrations of this condition may be stated.

The crowded condition of the calendar of the Supreme Court, and the delay
to suitors and denial of justice resulting therefrom, has been strongly
urged upon the attention of the Congress, with a plan for the relief of the
situation approved by those well able to judge of its merits. While this
subject remains without effective consideration, many laws have been passed
providing for the holding of terms of inferior courts at places to suit the
convenience of localities, or to lay the foundation of an application for
the erection of a new public building.

Repeated recommendations have been submitted for the amendment and change
of the laws relating to our public lands so that their spoliation and
diversion to other uses than as homes for honest settlers might be
prevented. While a measure to meet this conceded necessity of reform
remains awaiting the action of the Congress, many claims to the public
lands and applications for their donation, in favor of States and
individuals, have been allowed.

A plan in aid of Indian management, recommended by those well informed as
containing valuable features in furtherance of the solution of the Indian
problem, has thus far failed of legislative sanction, while grants of
doubtful expediency to railroad corporations, permitting them to pass
through Indian reservations, have greatly multiplied.

The propriety and necessity of the erection of one or more prisons for the
confinement of United States convicts, and a post-office building in the
national capital, are not disputed. But these needs yet remain answered,
while scores of public buildings have been erected where their necessity
for public purposes is not apparent.

A revision of our pension laws could easily be made which would rest upon
just principles and provide for every worthy applicant. But while our
general pension laws remain confused and imperfect, hundreds of private
pension laws are annually passed, which are the sources of unjust
discrimination and popular demoralization.

Appropriation bills for the support of the Government are defaced by items
and provisions to meet private ends, and it is freely asserted by
responsible and experienced parties that a bill appropriating money for
public internal improvement would fail to meet with favor unless it
contained items more for local and private advantage than for public
benefit.

These statements can be much emphasized by an ascertainment of the
proportion of Federal legislation which either bears upon its face its
private character or which upon examination develops such a motive power.

And yet the people wait and expect from their chosen representatives such
patriotic action as will advance the welfare of the entire country; and
this expectation can only be answered by the performance of public duty
with unselfish purpose. Our mission among the nations of the earth and our
success in accomplishing the work God has given the American people to do
require of those intrusted with the making and execution of our laws
perfect devotion, above all other things, to the public good.

This devotion will lead us to strongly resist all impatience of
constitutional limitations of Federal power and to persistently check the
increasing tendency to extend the scope of Federal legislation into the
domain of State and local jurisdiction upon the plea of subserving the
public welfare. The preservation of the partitions between proper subjects
of Federal and local care and regulation is of such importance under the
Constitution, which is the law of our very existence, that no consideration
of expediency or sentiment should tempt us to enter upon doubtful ground.
We have undertaken to discover and proclaim the richest blessings of a free
government, with the Constitution as our guide. Let us follow the way it
points out; it will not mislead us. And surely no one who has taken upon
himself the solemn obligation to support and preserve the Constitution can
find justification or solace for disloyalty in the excuse that he wandered
and disobeyed in search of a better way to reach the public welfare than
the Constitution offers.

What has been said is deemed not inappropriate at a time when, from a
century's height, we view the way already trod by the American people and
attempt to discover their future path.

The seventh President of the United States--the soldier and statesman and
at all times the firm and brave friend of the people--in vindication of his
course as the protector of popular rights and the champion of true American
citizenship, declared: The ambition which leads me on is an anxious desire
and a fixed determination to restore to the people unimpaired the sacred
trust they have confided to my charge; to, heal the wounds of the
Constitution and to preserve it from further violation; to persuade my
countrymen, so far as I may, that it is not in a splendid government
supported by powerful monopolies and aristocratical establishments that
they will find happiness or their liberties protection, but in a plain
system, void of pomp, protecting all and granting favors to none,
dispensing its blessings like the dews of heaven, unseen and unfelt save in
the freshness and beauty they contribute to produce. It is such a
government that the genius of our people requires--such an one only under
which our States may remain for ages to come united, prosperous, and free.
In pursuance of a constitutional provision requiring the President from
time to time to give to the Congress information of the state of the Union,
I have the satisfaction to announce that the close of the year finds the
United States in the enjoyment of domestic tranquillity and at peace with
all the nations.

Since my last annual message our foreign relations have been strengthened
and improved by performance of international good offices and by new and
renewed treaties of amity, commerce, and reciprocal extradition of
criminals.

Those international questions which still await settlement are all
reasonably within the domain of amicable negotiation, and there is no
existing subject of dispute between the United States and any foreign power
that is not susceptible of satisfactory adjustment by frank diplomatic
treatment.

The questions between Great Britain and the United States relating to the
rights of American fishermen, under treaty and international comity, in the
territorial waters of Canada and Newfoundland, I regret to say, are not yet
satisfactorily adjusted.

These matters were fully treated in my message to the Senate of February 20
1888, together with which a convention, concluded under my authority with
Her Majesty's Government on the 15th of February last, for the removal of
all causes of misunderstanding, was submitted by me for the approval of the
Senate.

This treaty having been rejected by the Senate, I transmitted a message to
the Congress on the 23d of August last reviewing the transactions and
submitting for consideration certain recommendations for legislation
concerning the important questions involved.

Afterwards, on the 12th of September, in response to a resolution of the
Senate, I again communicated fully all the information in my possession as
to the action of the government of Canada affecting the commercial
relations between the Dominion and the United States, including the
treatment of American fishing vessels in the ports and waters of British
North America.

These communications have all been published, and therefore opened to the
knowledge of both Houses of Congress, although two were addressed to the
Senate alone.

Comment upon or repetition of their contents would be superfluous, and I am
not aware that anything has since occurred which should be added to the
facts therein stated. Therefore I merely repeat, as applicable to the
present time, the statement which will be found in my message to the Senate
of September 12 last, that--Since March 3, 1887, no case has been reported
to the Department of State wherein complaint was made of unfriendly or
unlawful treatment of American fishing vessels on the part of the Canadian
authorities in which reparation was not promptly and satisfactorily
obtained by the United States consul-general at Halifax. Having essayed in
the discharge of my duty to procure by negotiation the settlement of a
long-standing cause of dispute and to remove a constant menace to the good
relations of the two countries, and continuing to be of opinion that the
treaty of February last, which failed to receive the approval of the
Senate, did supply "a satisfactory, practical, and final adjustment, upon a
basis honorable and just to both parties, of the difficult and vexed
question to which it related," and having subsequently and unavailingly
recommended other legislation to Congress which I hoped would suffice to
meet the exigency created by the rejection of the treaty, I now again
invoke the earnest and immediate attention of the Congress to the condition
of this important question as it now stands before them and the country,
and for the settlement of which I am deeply solicitous.

Near the close of the month of October last occurrences of a deeply
regrettable nature were brought to my knowledge, which made it my painful
but imperative duty to obtain with as little delay as possible a new
personal channel of diplomatic intercourse in this country with the
Government of Great Britain.

The correspondence in relation to this incident will in due course be laid
before you, and will disclose the unpardonable conduct of the official
referred to in his interference by advice and counsel with the suffrages of
American citizens in the very crisis of the Presidential election then near
at hand, and also in his subsequent public declarations to justify his
action, superadding impugnment of the Executive and Senate of the United
States in connection with important questions now pending in controversy
between the two Governments.

The offense thus committed was most grave, involving disastrous
possibilities to the good relations of the United States and Great Britain,
constituting a gross breach of diplomatic privilege and an invasion of the
purely domestic affairs and essential sovereignty of the Government to
which the envoy was accredited.

Having first fulfilled the just demands of international comity by
affording full opportunity for Her Majesty's Government to act in relief of
the situation, I considered prolongation of discussion to be unwarranted,
and thereupon declined to further recognize the diplomatic character of the
person whose continuance in such function would destroy that mutual
confidence which is essential to the good understanding of the two
Governments and was inconsistent with the welfare and self-respect of the
Government of the United States.

The usual interchange of communication has since continued through Her
Majesty's legation in this city.

My endeavors to establish by international cooperation measures for the
prevention of the extermination of fur seals in Bering Sea have not been
relaxed, and I have hopes of being enabled shortly to submit an effective
and satisfactory conventional projet with the maritime powers for the
approval of the Senate.

The coastal boundary between our Alaskan possessions and British Columbia,
I regret to say, has not received the attention demanded by its importance,
and which on several occasions heretofore I have had the honor to recommend
to the Congress.

The admitted impracticability, if not impossibility, of making an accurate
and precise survey and demarcation of the boundary line as it is recited in
the treaty with Russia under which Alaska was ceded to the United States
renders it absolutely requisite for the prevention of international
jurisdictional complications that adequate appropriation for a
reconnoissance and survey to obtain proper knowledge of the locality and
the geographical features of the boundary should be authorized by Congress
with as little delay as possible.

Knowledge to be only thus obtained is an essential prerequisite for
negotiation for ascertaining a common boundary, or as preliminary to any
other mode of settlement.

It is much to be desired that some agreement should be reached with Her
Majesty's Government by which the damages to life and property on the Great
Lakes may be alleviated by removing or humanely regulating the obstacles to
reciprocal assistance to wrecked or stranded vessels.

The act of June 19, 1878, which offers to Canadian vessels free access to
our inland waters in aid of wrecked or disabled vessels, has not yet become
effective through concurrent action by Canada.

The due protection of our citizens of French origin or descent from claim
of military service in the event of their returning to or visiting France
has called forth correspondence which was laid before you at the last
session.

In the absence of conventional agreement as to naturalization, which is
greatly to be desired, this Government sees no occasion to recede from the
sound position it has maintained not only with regard to France, but as to
all countries with which the United States have not concluded special
treaties.

Twice within the last year has the imperial household of Germany been
visited by death; and I have hastened to express the sorrow of this people,
and their appreciation of the lofty character of the late aged Emperor
William, and their sympathy with the heroism under suffering of his son the
late Emperor Frederick.

I renew my recommendation of two years ago for the passage of a bill for
the refunding to certain German steamship lines of the interest upon
tonnage dues illegally exacted.

On the 12th [2d] of April last I laid before the House of Representatives
full information respecting our interests in Samoa; and in the subsequent
correspondence on the same subject, which will be laid before you in due
course, the history of events in those islands will be found.

In a message accompanying my approval, on the 1st day of October last, of a
bill for the exclusion of Chinese laborers, I laid before Congress full
information and all correspondence touching the negotiation of the treaty
with China concluded at this capital on the 12th day of March, 1888, and
which, having been confirmed by the Senate with certain amendments, was
rejected by the Chinese Government. This message contained a recommendation
that a sum of money be appropriated as compensation to Chinese subjects who
had suffered injuries at the hands of lawless men within our jurisdiction.
Such appropriation having been duly made, the fund awaits reception by the
Chinese Government.

It is sincerely hoped that by the cessation of the influx of this class of
Chinese subjects, in accordance with the expressed wish of both
Governments, a cause of unkind feeling has been permanently removed.

On the 9th of August, 1887, notification was given by the Japanese minister
at this capital of the adjournment of the conference for the revision of
the treaties of Japan with foreign powers, owing to the objection of his
Government to the provision in the draft jurisdictional convention which
required the submission of the criminal code of the Empire to the powers in
advance of its becoming operative. This notification was, however,
accompanied with an assurance of Japan's intention to continue the work of
revision.

Notwithstanding this temporary interruption of negotiations, it is hoped
that improvements may soon be secured in the jurisdictional system as
respects foreigners in Japan, and relief afforded to that country from the
present undue and oppressive foreign control in matters of commerce.

I earnestly recommend that relief be provided for the injuries accidentally
caused to Japanese subjects in the island Ikisima by the target practice of
one of our vessels.

A diplomatic mission from Korea has been received, and the formal
intercourse between the two countries contemplated by the treaty of 1882 is
now established.

Legislative provision is hereby recommended to organize and equip consular
courts in Korea.

Persia has established diplomatic representation at this capital, and has
evinced very great interest in the enterprise and achievements of our
citizens. I am therefore hopeful that beneficial commercial relations
between the two countries may be brought about.

I announce with sincere regret that Hayti has again become the theater of
insurrection, disorder, and bloodshed. The titular government of president
Saloman has been forcibly overthrown and he driven out of the country to
France, where he has since died.

The tenure of power has been so unstable amid the war of factions that has
ensued since the expulsion of President Saloman that no government
constituted by the will of the Haytian people has been recognized as
administering responsibly the affairs of that country. Our representative
has been instructed to abstain from interference between the warring
factions, and a vessel of our Navy has been sent to Haytian waters to
sustain our minister and for the protection of the persons and property of
American citizens.

Due precautions have been taken to enforce our neutrality laws and prevent
our territory from becoming the base of military supplies for either of the
warring factions.

Under color of a blockade, of which no reasonable notice had been given,
and which does not appear to have been efficiently maintained, a seizure of
vessels under the American flag has been reported, and in consequence
measures to prevent and redress any molestation of our innocent merchantmen
have been adopted.

Proclamation was duly made on the 9th day of November, 1887, of the
conventional extensions of the treaty of June 3, 1875, with Hawaii, under
which relations of such special and beneficent intercourse have been
created.

In the vast field of Oriental commerce now unfolded from our Pacific
borders no feature presents stronger recommendations for Congressional
action than the establishment of communication by submarine telegraph with
Honolulu.

The geographical position of the Hawaiian group in relation to our Pacific
States creates a natural interdependency and mutuality of interest which
our present treaties were intended to foster, and which make close
communication a logical and commercial necessity.

The wisdom of concluding a treaty of commercial reciprocity with Mexico has
been heretofore stated in my messages to Congress, and the lapse of time
and growth of commerce with that close neighbor and sister Republic confirm
the judgment so expressed.

The precise relocation of our boundary line is needful, and adequate
appropriation is now recommended.

It is with sincere satisfaction that I am enabled to advert to the spirit
of good neighborhood and friendly cooperation and conciliation that has
marked the correspondence and action of the Mexican authorities in their
share of the task of maintaining law and order about the line of our common
boundary.

The long-pending boundary dispute between Costa Rica and Nicaragua was
referred to my arbitration, and by an award made on the 22d of March last
the question has been finally settled to the expressed satisfaction of both
of the parties in interest.

The Empire of Brazil, in abolishing the last vestige of slavery among
Christian nations, called forth the earnest congratulations of this
Government in expression of the cordial sympathies of our people.

The claims of nearly all other countries against Chile growing out of her
late war with Bolivia and Peru have been disposed of, either by arbitration
or by a lump settlement. Similar claims of our citizens will continue to be
urged upon the Chilean Government, and it is hoped will not be subject to
further delays.

A comprehensive treaty of amity and commerce with Peru was proclaimed on
November 7 last, and it is expected that under its operation mutual
prosperity and good understanding will be promoted.

In pursuance of the policy of arbitration, a treaty to settle the claim of
Santos, an American citizen, against Ecuador has been concluded under my
authority, and will be duly submitted for the approval of the Senate.

Like disposition of the claim of Carlos Butterfield against Denmark and of
Van Bokkelen against Hayti will probably be made, and I trust the principle
of such settlements may be extended in practice under the approval of the
Senate.

Through unforeseen causes, foreign to the will of both Governments, the
ratification of the convention of December 5, 1885, with Venezuela, for the
rehearing of claims of citizens of the United States under the treaty of
1866, failed of exchange within the term provided, and a supplementary
convention, further extending the time for exchange of ratifications and
explanatory of an ambiguous provision of the prior convention, now awaits
the advice and consent of the Senate.

Although this matter, in the stage referred to, concerns only the
concurrent treaty-making power of one branch of Congress, I advert to it in
view of the interest repeatedly and conspicuously shown by you in your
legislative capacity in favor of a speedy and equitable adjustment of the
questions growing out of the discredited judgments of the previous mixed
commission of Caracas. With every desire to do justice to the
representations of Venezuela in this regard, the time seems to have come to
end this matter, and I trust the prompt confirmation by both parties of the
supplementary action referred to will avert the need of legislative or
other action to prevent the longer withholding of such rights of actual
claimants as may be shown to exist.

As authorized by the Congress, preliminary steps have been taken for the
assemblage at this capital during the coming year of the representatives of
South and Central American States, together with those of Mexico, Hayti,
and San Domingo, to discuss sundry important monetary and commercial
topics.

Excepting in those cases where, from reasons of contiguity of territory and
the existence of a common border line incapable of being guarded,
reciprocal commercial treaties may be found expedient, it is believed that
commercial policies inducing freer mutual exchange of products can be most
advantageously arranged by independent but cooperative legislation.

In the mode last mentioned the control of our taxation for revenue will be
always retained in our own hands unrestricted by conventional agreements
with other governments.

In conformity also with Congressional authority, the maritime powers have
been invited to confer in Washington in April next upon the practicability
of devising uniform rules and measures for the greater security of life and
property at sea. A disposition to accept on the part of a number of the
powers has already been manifested, and if the cooperation of the nations
chiefly interested shall be secured important results may be confidently
anticipated.

The act of June 26, 1884, and the acts amendatory thereof, in relation to
tonnage duties, have given rise to extended correspondence with foreign
nations with whom we have existing treaties of navigation and commerce, and
have caused wide and regrettable divergence of opinion in relation to the
imposition of the duties referred to. These questions are important, and I
shall make them the subject of a special and more detailed communication at
the present session.

With the rapid increase of immigration to our shores and the facilities of
modern travel, abuses of the generous privileges afforded by our
naturalization laws call for their careful revision.

The easy and unguarded manner in which certificates of American citizenship
can now be obtained has induced a class, unfortunately large, to avail
themselves of the opportunity to become absolved from allegiance to their
native land, and yet by a foreign residence to escape any just duty and
contribution of service to the country of their proposed adoption. Thus,
while evading the duties of citizenship to the United States, they may make
prompt claim for its national protection and demand its intervention in
their behalf. International complications of a serious nature arise, and
the correspondence of the State Department discloses the great number and
complexity of the questions which have been raised.

Our laws regulating the issue of passports should be carefully revised, and
the institution of a central bureau of registration at the capital is again
strongly recommended. By this means full particulars of each case of
naturalization in the United States would be secured and properly indexed
and recorded, and thus many cases of spurious citizenship would be detected
and unjust responsibilities would be avoided.

The reorganization of the consular service is a matter of serious
importance to our national interests. The number of existing principal
consular offices is believed to be greater than is at all necessary for the
conduct of the public business. It need not be our policy to maintain more
than a moderate number of principal offices, each supported by a salary
sufficient to enable the incumbent to live in comfort, and so distributed
as to secure the convenient supervision, through subordinate agencies, of
affairs over a considerable district.

I repeat the recommendations heretofore made by me that the appropriations
for the maintenance of our diplomatic and consular service should be
recast; that the so-called notarial or unofficial fees, which our
representatives abroad are now permitted to treat as personal perquisites,
should be forbidden; that a system of consular inspection should be
instituted, and that a limited number of secretaries of legation at large
should be authorized.

Preparations for the centennial celebration, on April 30, 1889, of the
inauguration of George Washington as President of the United States, at the
city of New York, have been made by a voluntary organization of the
citizens of that locality, and believing that an opportunity should be
afforded for the expression of the interest felt throughout the country in
this event, I respectfully recommend fitting and cooperative action by
Congress on behalf of the people of the United States.

The report of the Secretary of the Treasury exhibits in detail the
condition of our national finances and the operations of the several
branches of the Government related to his Department.

The total ordinary revenues of the Government for the fiscal year ended
June 30, 1888, amounted to $379,266,074.76, of which $219,091,173.63 was
received from customs duties and $124,296,871.98 from internal revenue
taxes.

The total receipts from all sources exceeded those for the fiscal year
ended June 30, 1887, by $7,862,797.10.

The ordinary expenditures of the Government for the fiscal year ending June
30, 1888, were $259,653,958.67, leaving a surplus of $119,612,116.09.

The decrease in these expenditures as compared with the fiscal year ended
June 30, 1887, was $8,278,221.30, notwithstanding the payment of more than
$5,000,000 for pensions in excess of what was paid for that purpose in the
latter-mentioned year.

The revenues of the Government for the year ending June 30, 1889,
ascertained for the quarter ended September 30, 1888, and estimated for the
remainder of the time, amount to $377,000,000, and the actual and estimated
ordinary expenditures for the same year are $273,000,000, leaving an
estimated surplus of $104,000,000.

The estimated receipts for the year ending June 30, 1890, are $377,000,000,
and the estimated ordinary expenditures for the same time are
$275,767,488.34, showing a surplus of $101,232,511.66.

The foregoing statements of surplus do not take into account the sum
necessary to be expended to meet the requirements of the sinking-fund act,
amounting to more than $47,000,000 annually.

The cost of collecting the customs revenues for the last fiscal year was
2.44 per cent; for the year 1885 it was 3.77 per cent.

The excess of internal-revenue taxes collected during the last fiscal year
over those collected for the year ended June 30, 1887, was $5,489,174.26,
and the cost of collecting this revenue decreased from 3.4 per cent in 1887
to less than 3.2 per cent for the last year. The tax collected on
oleomargarine was $723,948.04 for the year ending June 30, 1887, and
$864,139.88 for the following year.

The requirements of the sinking-fund act have been met for the year ended
June 30, 1888, and for the current year also, by the purchase of bonds.
After complying with this law as positively required, and bonds sufficient
for that purpose had been bought at a premium, it was not deemed prudent to
further expend the surplus in such purchases until the authority to do so
should be more explicit. A resolution, however, having been passed by both
Houses of Congress removing all doubt as to Executive authority, daily
purchases of bonds were commenced on the 23d day of April, 1888, and have
continued until the present time. By this plan bonds of the Government not
yet due have been purchased up to and including the 30th day of November,
1888, amounting to $94,700,400, the premium paid thereon amounting to
$17,508,613.08.

The premium added to the principal of these bonds represents an investment
yielding about 2 per cent interest for the time they still had to run, and
the saving to the Government represented by the difference between the
amount of interest at 2 per cent upon the sum paid for principal and
premium and what it would have paid for interest at the rate specified in
the bonds if they had run to their maturity is about $27,165,000.

At first sight this would seem to be a profitable and sensible transaction
on the part of the Government, but, as suggested by the Secretary of the
Treasury, the surplus thus expended for the purchase of bonds was money
drawn from the people in excess of any actual need of the Government and
was so expended rather than allow it to remain idle in the Treasury. If
this surplus, under the operation of just and equitable laws, had been left
in the hands of the people, it would have been worth in their business at
least 6 per cent per annum. Deducting from the amount of interest upon the
principal and premium of these bonds for the time they had to run at the
rate of 6 per cent the saving of 2 per cent made for the people by the
purchase of such bonds, the loss will appear to be $55,760,000.

This calculation would seem to demonstrate that if excessive and
unnecessary taxation is continued and the Government is forced to pursue
this policy of purchasing its own bonds at the premiums which it will be
necessary to pay, the loss to the people will be hundreds of millions of
dollars.

Since the purchase of bonds was undertaken as mentioned nearly all that
have been offered were at last accepted. It has been made quite apparent
that the Government was in danger of being subjected to combinations to
raise their price, as appears by the instance cited by the Secretary of the
offering of bonds of the par value of only $326,000 so often that the
aggregate of the sums demanded for their purchase amounted to more than $
19,700,000.

Notwithstanding the large sums paid out in the purchase of bonds, the
surplus in the Treasury on the 30th day of November, 1888, was
$52,234,610.01, after deducting about $20,000,000 just drawn out for the
payment of pensions.

At the close of the fiscal year ended June 30, 1887, there had been coined
under the compulsory silver-coinage act $266,988,280 in silver dollars,
$55,504,310 of which were in the hands of the people.

On the 30th day of June, 1888, there had been coined $299,708,790; and of
this $55,829,303 was in circulation in coin, and $200,387,376 in silver
certificates, for the redemption of which silver dollars to that amount
were held by the Government.

On the 30th day of November, 1888, $312,570,990 had been coined,
$60,970,990 of the silver dollars were actually in circulation, and
$237,418,346 in certificates.

The Secretary recommends the suspension of the further coinage of silver,
and in such recommendation I earnestly concur.

For further valuable information and timely recommendations I ask the
careful attention of the Congress to the Secretary's report.

The Secretary of War reports that the Army at the date of the last
consolidated returns consisted of 2,189 officers and 24,549 enlisted men.

The actual expenditures of the War Department for the fiscal year ended
June 30, 1888, amounted to $41,165,107.07, of which sum $9,158,516.63 was
expended for public works, including river and harbor improvements.

"The Board of Ordnance and Fortifications" provided for under the act
approved September 22 last was convened October 30, 1888, and plans and
specifications for procuring forgings for 8, 10, and 12 inch guns, under
provisions of section 4, and also for procuring 12-inch breech-loading
mortars, cast iron, hooped with steel, under the provisions of section 5 of
the said act, were submitted to the Secretary of War for reference to the
board, by the Ordnance Department, on the same date.

These plans and specifications having been promptly approved by the board
and the Secretary of War, the necessary authority to publish advertisements
inviting proposals in the newspapers throughout the country was granted by
the Secretary on November 12, and on November 13 the advertisements were
sent out to the different newspapers designated. The bids for the steel
forgings are to be opened on December 20, 1888, and for the mortars on
December 15, 1888.

A board of ordnance officers was convened at the Watervliet Arsenal on
October 4, 1888, to prepare the necessary plans and specifications for the
establishment of an army gun factory at that point. The preliminary report
of this board, with estimates for shop buildings and officers' quarters,
was approved by the Board of Ordnance and Fortifications November 6 and 8.
The specifications and form of advertisement and instructions to bidders
have been prepared, and advertisements inviting proposals for the
excavations for the shop building and for erecting the two sets of
officers' quarters have been published. The detailed drawings and
specifications for the gun-factory building are well in hand, and will be
finished within three or four months, when bids will be invited for the
erection of the building. The list of machines, etc., is made out, and it
is expected that the plans for the large lathes, etc., will be completed
within about four months, and after approval by the Board of Ordnance and
Fortifications bids for furnishing the same will be invited. The machines
and other fixtures will be completed as soon as the shop is in readiness to
receive them, probably about July, 1890.

Under the provisions of the Army bill for the procurement of pneumatic
dynamite guns, the necessary specifications are now being prepared, and
advertisements for proposals will issue early in December. The guns will
probably be of 15 inches caliber and fire a projectile that will carry a
charge each of about 500 pounds of explosive gelatine with full-caliber
projectiles. The guns will probably be delivered in from six to ten months
from the date of the contract, so that all the guns of this class that can
be procured under the provisions of the law will be purchased during the
year 1889.

I earnestly request that the recommendations contained in the Secretary's
report, all of which are, in my opinion, calculated to increase the
usefulness and discipline of the Army, may receive the consideration of the
Congress. Among these the proposal that there should be provided a plan for
the examination of officers to test their fitness for promotion is of the
utmost importance. This reform has been before recommended in the reports
of the Secretary, and its expediency is so fully demonstrated by the
argument he presents in its favor that its adoption should no longer be
neglected.

The death of General Sheridan in August last was a national affliction. The
Army then lost the grandest of its chiefs. The country lost a brave and
experienced soldier, a wise and discreet counselor, and a modest and
sensible man. Those who in any manner came within the range of his personal
association will never fail to pay deserved and willing homage to his
greatness and the glory of his career, but they will cherish with more
tender sensibility the loving memory of his simple, generous, and
considerate nature.

The Apache Indians, whose removal from their reservation in Arizona
followed the capture of those of their number who engaged in a bloody
and murderous raid during a part of the years 1885 and 1886, are now held
as prisoners of war at Mount Vernon Barracks, in the State of Alabama. They
numbered on the 31st day of October, the date of the last report, 83 men,
170 women, 70 boys, and 59 girls; in all, 382 persons. The commanding
officer states that they are in good health and contented, and that they
are kept employed as fully as is possible in the circumstances. The
children, as they arrive at a suitable age, are sent to the Indian schools
at Carlisle and Hampton.

Last summer some charitable and kind people asked permission to send two
teachers to these Indians for the purpose of instructing the adults as well
as such children as should be found there. Such permission was readily
granted, accommodations were provided for the teachers, and some portions
of the buildings at the barracks were made available for school purposes.
The good work contemplated has been commenced, and the teachers engaged are
paid by the ladies with whom the plan originated.

I am not at all in sympathy with those benevolent but injudicious people
who are constantly insisting that these Indians should be returned to their
reservation. Their removal was an absolute necessity if the lives and
property of citizens upon the frontier are to be at all regarded by the
Government. Their continued restraint at a distance from the scene of their
repeated and cruel murders and outrages is still necessary. It is a
mistaken philanthropy, every way injurious, which prompts the desire to see
these savages returned to their old haunts. They are in their present
location as the result of the best judgment of those having official
responsibility in the matter, and who are by no means lacking in kind
consideration for the Indians. A number of these prisoners have forfeited
their lives to outraged law and humanity. Experience has proved that they
are dangerous and can not be trusted. This is true not only of those who on
the warpath have heretofore actually been guilty of atrocious murder, but
of their kindred and friends, who, while they remained upon their
reservation, furnished aid and comfort to those absent with bloody intent.

These prisoners should be treated kindly and kept in restraint far from the
locality of their former reservation; they should be subjected to efforts
calculated to lead to their improvement and the softening of their savage
and cruel instincts, but their return to their old home should be
persistently resisted.

The Secretary in his report gives a graphic history of these Indians, and
recites with painful vividness their bloody deeds and the unhappy failure
of the Government to manage them by peaceful means. It will be amazing if a
perusal of this history will allow the survival of a desire for the return
of these prisoners to their reservation upon sentimental or any other
grounds.

The report of the Secretary of the Navy demonstrates very intelligent
management in that important Department, and discloses the most
satisfactory progress in the work of reconstructing the Navy made during
the past year. Of the ships in course of construction five, viz, the
Charleston, Baltimore, Yorktown, Vesuvius, and the Petrel, have in that
time been launched and are rapidly approaching completion; and in addition
to the above, the Philadelphia, the San Francisco, the Newark, the
Bennington, the Concord, and the Herreshoff torpedo boat are all under
contract for delivery to the Department during the next year. The progress
already made and being made gives good ground for the expectation that
these eleven vessels will be incorporated as part of the American Navy
within the next twelve months.

The report shows that notwithstanding the large expenditures for new
construction and the additional labor they involve the total ordinary or
current expenditures of the Department for the three years ending June 30,
1888, are less by more than 20 per cent than such expenditures for the
three years ending June 30, 1884.

The various steps which have been taken to improve the business methods of
the Department are reviewed by the Secretary. The purchasing of supplies
has been consolidated and placed under a responsible bureau head. This has
resulted in the curtailment of open purchases, which in the years 1884 and
1885 amounted to over 50 per cent of all the purchases of the Department,
to less than 11 per cent; so that at the present time about 90 per cent of
the total departmental purchases are made by contract and after
competition. As the expenditures on this account exceed an average of
$2,000,000 annually, it is evident that an important improvement in the
system has been inaugurated and substantial economies introduced.

The report of the Postmaster-General shows a marked increase of business in
every branch of the postal service.

The number of post-offices on July 1, 1888, was 57,376, an increase of
6,124 in three years and of 2,219 for the last fiscal year. The
latter-mentioned increase is classified as follows:

New England States -

Middle States - 181

Southern States and Indian Territory (41) - 1,406

The States and Territories of the Pacific Coast - 190

The ten States and Territories of the West and Northwest - 435

District of Columbia - 2


***


State of the Union Address
Grover Cleveland
December 4, 1893

To the Congress of the United States:

The constitutional duty which requires the President from time to time
to give to the Congress information of the state of the Union and
recommend to their consideration such measures as he shall judge
necessary and expedient is fittingly entered upon by commending to the
Congress a careful examination of the detailed statements and
well-supported recommendations contained in the reports of the heads of
Departments, who are chiefly charged with the executive work of the
Government. In an effort to abridge this communication as much as is
consistent with its purpose I shall supplement a brief reference to the
contents of these departmental reports by the mention of such executive
business and incidents as are not embraced therein and by such
recommendations as appear to be at this particular time appropriate.

While our foreign relations have not at all times during the past year
been entirely free from perplexity, no embarrassing situation remains
that will not yield to the spirit of fairness and love of justice
which, joined with consistent firmness, characterize a truly American
foreign policy.

My predecessor having accepted the office of arbitrator of the
long-standing Missions boundary dispute, tendered to the President by
the Argentine Republic and Brazil, it has been my agreeable duty to
receive the special envoys commissioned by those States to lay before
me evidence and arguments in behalf of their respective Governments.

The outbreak of domestic hostilities in the Republic of Brazil found
the United States alert to watch the interests of our citizens in that
country, with which we carry on important commerce. Several vessels of
our new Navy are now and for some time have been stationed at Rio de
Janeiro. The struggle being between the established Government, which
controls the machinery of administration, and with which we maintain
friendly relations, and certain officers of the navy employing the
vessels of their command in an attack upon the national capital and
chief seaport, and lacking as it does the elements of divided
administration, I have failed to see that the insurgents can reasonably
claim recognition as belligerents.

Thus far the position of our Government has been that of an attentive
but impartial observer of the unfortunate conflict. Emphasizing our
fixed policy of impartial neutrality in such a condition of affairs as
now exists, I deemed it necessary to disavow in a manner not to be
misunderstood the unauthorized action of our late naval commander in
those waters in saluting the revolted Brazilian admiral, being
indisposed to countenance an act calculated to give gratuitous sanction
to the local insurrection.

The convention between our Government and Chile having for its object
the settlement and adjustment of the demand of the two countries
against each other has been made effective by he organization of the
claims commission provided for. The two Governments failing to agree
upon the third member of the commission, the good offices of the
President of the Swiss Republic were invoked, as provided in the
treaty, and the selection of the Swiss representative in this country
to complete the organization was gratifying alike to the United States
and Chile.

The vexatious question of so-called legation asylum for offenders
against the state and its laws was presented anew in Chile by the
unauthorized action of the late United States minister in receiving
into his official residence two persons who had just failed in an
attempt at revolution and against whom criminal charges were pending
growing out of a former abortive disturbance. The doctrine of asylum as
applied to this case is not sanctioned by the best precedents, and when
allowed tends to encourage sedition and strife. Under no circumstances
can the representatives of this Government be permitted, under the
ill-defined fiction of extraterritoriality, to interrupt the
administration of criminal justice in the countries to which they are
accredited. A temperate demand having been made by the Chilean
Government for the correction of this conduct in the instance
mentioned, the minister was instructed no longer to harbor the
offenders.

The legislation of last year known as the Geary law, requiring the
registration of all Chinese laborers entitled to residence in the
United States and the deportation of all not complying with the
provisions of the act within the time prescribed, met with much
opposition from Chinamen in this country. Acting upon the advice of
eminent counsel that the law was unconstitutional, the great mass of
Chinese laborers, pending judicial inquiry as to its validity, in good
faith declined to apply for the certificates required by its
provisions. A test case upon proceeding by habeas corpus was brought
before the Supreme Court, and on May 15, 1893, a decision was made by
that tribunal sustaining the law.

It is believed that under the recent amendment of the act extending the
time for registration the Chinese laborers thereto entitled who desire
to reside in this country will now avail themselves of the renewed
privilege thus afforded of establishing by lawful procedure their right
to remain, and that thereby the necessity of enforced deportation may
to a great degree be avoided.

It has devolved upon the United States minister at Peking, as dean of
the diplomatic body, and in the absence of a representative of Sweden
and Norway, to press upon the Chinese Government reparation for the
recent murder of Swedish missionaries at Sung-pu. This question is of
vital interest to all countries whose citizens engage in missionary
work in the interior.

By Article XII of the general act of Brussels, signed July 2, 1890, for
the suppression of the slave trade and the restriction of certain
injurious commerce in the Independent State of the Kongo and in the
adjacent zone of central Africa, the United States and the other
signatory powers agreed to adopt appropriate means for the punishment
of persons selling arms and ammunition to the natives and for the
confiscation of the inhibited articles. It being the plain duty of this
Government to aid in suppressing the nefarious traffic, impairing as it
does the praiseworthy and civilizing efforts now in progress in that
region, I recommend that an act be passed prohibiting the sale of arms
and intoxicants to natives in the regulated zone by our citizens.

Costa Rica has lately testified its friendliness by surrendering to the
United States, in the absence of a convention of extradition, but upon
duly submitted evidence of criminality, a noted fugitive from justice.
It is trusted that the negotiation of a treaty with that country to
meet recurring cases of this kind will soon be accomplished. In my
opinion treaties for reciprocal extradition should be concluded with
all those countries with which the United States has not already
conventional arrangements of that character.

I have deemed it fitting to express to the Governments of Costa Rica
and Colombia the kindly desire of the United States to see their
pending boundary dispute finally closed by arbitration in conformity
with the spirit of the treaty concluded between them some years ago.

Our relations with the French Republic continue to be intimate and
cordial. I sincerely hope that the extradition treaty with that
country, as amended by the Senate, will soon be operative.

While occasional questions affecting our naturalized citizens returning
to the land of their birth have arisen in our intercourse with Germany,
our relations with that country continue satisfactory.

The questions affecting our relations with Great Britain have been
treated in a spirit of friendliness.

Negotiations are in progress between the two Governments with a view to
such concurrent action as will make the award and regulations agreed
upon by the Bering Sea Tribunal of Arbitration practically effective,
and it is not doubted that Great Britain will cooperate freely with
this country for the accomplishment of that purpose.

The dispute growing out of the discriminating tolls imposed in the
Welland Canal upon cargoes of cereals bound to and from the lake ports
of the United States was adjusted by the substitution of a more
equitable schedule of charges, and my predecessor thereupon suspended
his proclamation imposing discriminating tolls upon British transit
through our canals.

A request for additions to the list of extraditable offenses covered by
the existing treaty between the two countries is under consideration.

During the past year an American citizen employed in a subordinate
commercial position in Hayti, after suffering a protracted imprisonment
on an unfounded charge of smuggling, was finally liberated on judicial
examination. Upon urgent representation to the Haytian Government a
suitable indemnity was paid to the sufferer.

By a law of Hayti a sailing vessel, having discharged her cargo, is
refused clearance until the duties on such cargo have been paid. The
hardship of this measure upon American shipowners, who conduct the bulk
of the carrying trade of that country, has been insisted on with a view
of securing the removal of this cause of complaint.

Upon receiving authentic information of the firing upon an American
mail steamer touching at the port of Amapala because her captain
refused to deliver up a passenger in transit from Nicaragua to
Guatemala upon demand of the military authorities of Honduras, our
minister to that country, under instructions, protested against the
wanton act and demanded satisfaction. The Government of Honduras,
actuated by a sense of justice and in a spirit of the utmost
friendship, promptly disavowed the illegal conduct of its officers and
expressed sincere regret for the occurrence.

It is confidently anticipated that a satisfactory adjustment will soon
be reached of the questions arising out of the seizure and use of
American vessels by insurgents in Honduras and the subsequent denial by
the successful Government of commercial privileges to those vessels on
that account.

A notable part of the southeasterly coast of Liberia between the
Cavally and San Pedro rivers, which for nearly half a century has been
generally recognized as belonging to that Republic by cession and
purchase, has been claimed to be under the protectorate of France in
virtue of agreements entered into by the native tribes, over whom
Liberia's control has not been well maintained.

More recently negotiations between the Liberian representative and the
French Government resulted in the signature at Paris of a treaty
whereby as an adjustment certain Liberian territory is ceded to France.
This convention at last advices had not been ratified by the Liberian
Legislature and Executive.

Feeling a sympathetic interest in the fortunes of the little
Commonwealth, the establishment and development of which were largely
aided by the benevolence of our countrymen, and which constitutes the
only independently sovereign state on the west coast of Africa, this
Government has suggested to the French Government its earnest concern
lest territorial impairment in Liberia should take place without her
unconstrained consent.

Our relations with Mexico continue to be of that close and friendly
nature which should always characterize the intercourse of two
neighboring republics.

The work of relocating the monuments marking the boundary between the
two countries from Paso del Norte to the Pacific is now nearly
completed.

The commission recently organized under the conventions of 1884 and
1889 it is expected will speedily settle disputes growing out of the
shifting currents of the Rio Grande River east of E1 Paso.

Nicaragua has recently passed through two revolutions, the party at
first successful having in turn been displaced by another. Our newly
appointed minister by his timely good offices aided in a peaceful
adjustment of the controversy involved in the first conflict. The large
American interests established in that country in connection with the
Nicaragua Canal were not molested.

The canal company has unfortunately become financially seriously
embarrassed, but a generous treatment had been extended to it by the
Government of Nicaragua. The United States are especially interested in
the successful achievement of the vast undertaking this company has in
charge. That it should be accomplished under distinctively American
auspices, and its enjoyment assured not only to the vessels of this
country as a channel of communication between our Atlantic and Pacific
sea-boards, but to the ships of the world in the interests of
civilization, is a proposition which, in my judgment, does not admit of
question.

Guatemala has also been visited by the political vicissitudes which
have afflicted her Central American neighbors, but the dissolution of
its Legislature and the proclamation of a dictatorship have been
unattended with civil war.

An extradition treaty with Norway has recently been exchanged and
proclaimed.

The extradition treaty with Russia signed in March, 1887, and amended
and confirmed by the Senate in February last, was duly proclaimed last
June.

Led by a desire to compose differences and contribute to the
restoration of order in Samoa, which for some years previous had been
the scene of conflicting foreign pretensions and native strife, the
United States, departing from its policy consecrated by a century of
observance, entered four years ago into the treaty of Berlin, thereby
becoming jointly bound with England and Germany to establish and
maintain Malietoa Laupepa as King of Samoa. The treaty provided for a
foreign court of justice; a municipal council for the district of Apia,
with a foreign president thereof, authorized to advise the King; a
tribunal for the settlement of native and foreign land titles, and a
revenue system for the Kingdom. It entailed upon the three powers that
part of the cost of the new Government not met by the revenue of the
islands.

Early in the life of this triple protectorate the native dissensions it
was designed to quell revived. Rivals defied the authority of the new
King, refusing to pay taxes and demanding the election of a ruler by
native suffrage. Mataafa, an aspirant to the throne, and a large number
of his native adherents were in open rebellion on one of the islands.
Quite lately, at the request of the other powers and in fulfillment of
its treaty obligation, this Government agreed to unite in a joint
military movement of such dimensions as would probably secure the
surrender of the insurgents without bloodshed.

The war ship Philadelphia was accordingly put under orders for Samoa,
but before she arrived the threatened conflict was precipitated by King
Malietoa's attack upon the insurgent camp. Mataafa was defeated and a
number of his men killed. The British and German naval vessels present
subsequently secured the surrender of Mataafa and his adherents. The
defeated chief and ten of his principal supporters were deported to a
German island of the Marshall group, where they are held as prisoners
under the joint responsibility and cost of the three powers.

This incident and the events leading up to it signally illustrate the
impolicy of entangling alliances with foreign powers.

More than fifteen years ago this Government preferred a claim against
Spain in behalf of one of our citizens for property seized and
confiscated in Cuba. In 1886 the claim was adjusted, Spain agreeing to
pay unconditionally, as a fair indemnity, $1,500,000. A respectful but
earnest note was recently addressed to the Spanish Government insisting
upon prompt fulfillment of its long-neglected obligation.

Other claims preferred by the United States against Spain in behalf of
American citizens for property confiscated in Cuba have been pending
for many years.

At the time Spain's title to the Caroline Islands was confirmed by
arbitration that Government agreed that the rights which had been
acquired there by American missionaries should be recognized and
respected. It is sincerely hoped that this pledge will be observed by
allowing our missionaries, who were removed from Ponape to a place of
safety by a United States war ship during the late troubles between the
Spanish garrison and the natives, to return to their field of
usefulness.

The reproduced caravel Santa Maria, built by Spain and sent to the
Columbian Exposition, has been presented to the United States in token
of amity and in commemoration of the event it was designed to
celebrate. I recommend that in accepting this gift Congress make
grateful recognition of the sincere friendship which prompted it.

Important matters have demanded attention in our relations with the
Ottoman Porte.

The firing and partial destruction by an unrestrained mob of one of the
school buildings of Anatolia College, established by citizens of the
United States at Marsovan, and the apparent indifference of the Turkish
Government to the outrage, notwithstanding the complicity of some of
its officials, called for earnest remonstrance, which was followed by
promise of reparation and punishment of the offenders.

Indemnity for the injury to the buildings has already been paid,
permission to rebuild given, registration of the school property in the
name of the American owners secured, and efficient protection
guaranteed.

Information received of maltreatment suffered by an inoffensive
American woman engaged in missionary work in Turkish Koordistan was
followed by such representations to the Porte as resulted in the
issuance of orders for the punishment of her assailants, the removal of
a delinquent official, and the adoption of measures for the protection
of our citizens engaged in mission and other lawful work in that
quarter.

Turkey complains that her Armenian subjects obtain citizenship in this
country not to identify themselves in good faith with our people, but
with the intention of returning to the land of their birth and there
engaging in sedition. This complaint is not wholly without foundation.
A journal published in this country in the Armenian language openly
counsels its readers to arm, organize, and participate in movements for
the subversion of Turkish authority in the Asiatic provinces. The
Ottoman Government has announced its intention to expel from its
dominions Armenians who have obtained naturalization in the United
States since 1868.

The right to exclude any or all classes of aliens is an attribute of
sovereignty. It is a right asserted and, to a limited extent, enforced
by the United States, with the sanction of our highest court. There
being no naturalization treaty between the United States and Turkey,
our minister at Constantinople has been instructed that, while
recognizing the right of that Government to enforce its declared policy
against naturalized Armenians, he is expected to protect them from
unnecessary harshness of treatment.

In view of the impaired financial resources of Venezuela consequent
upon the recent revolution there, a modified arrangement for the
satisfaction of the awards of the late revisory claims commission, in
progressive installments, has been assented to, and payments are being
regularly made thereunder.

The boundary dispute between Venezuela and British Guiana is yet
unadjusted. A restoration of diplomatic intercourse between that
Republic and Great Britain and reference of the question to impartial
arbitration would be a most gratifying consummation.

The ratification by Venezuela of the convention for the arbitration of
the long-deferred claim of the Venezuelan Transportation Company is
awaited.

It is hardly necessary for me to state that the questions arising from
our relations with Hawaii have caused serious embarrassment. Just prior
to the installation of the present Administration the existing
Government of Hawaii had been suddenly overthrown and a treaty of
annexation had been negotiated between the Provisional Government of
the islands and the United States and submitted to the Senate for
ratification. This treaty I withdrew for examination and dispatched
Hon. James H. Blount, of Georgia, to Honolulu as a special commissioner
to make an impartial investigation of the circumstances attending the
change of government and of all the conditions bearing upon the subject
of the treaty. After a thorough and exhaustive examination Mr. Blount
submitted to me his report, showing beyond all question that the
constitutional Government of Hawaii had been subverted with the active
aid of our representative to that Government and through the
intimidation caused by the presence of an armed naval force of the
United States, which was landed for that purpose at the instance of our
minister. Upon the facts developed it seemed to me the only honorable
course for our Government to pursue was to undo the wrong that had been
done by those representing us and to restore as far as practicable the
status existing at the time of our forcible intervention. With a view
of accomplishing this result within the constitutional limits of
executive power, and recognizing all our obligations and
responsibilities growing out of any changed conditions brought about by
our unjustifiable interference, our present minister at Honolulu has
received appropriate instructions to that end. Thus far no information
of the accomplishment of any definite results has been received from
him.

Additional advices are soon expected. When received they will be
promptly sent to the Congress, together with all other information at
hand, accompanied by a special Executive message fully detailing all
the facts necessary to a complete understanding of the case and
presenting a history of all the material events leading up to the
present situation.

By a concurrent resolution passed by the Senate February 14, 1890, and
by the House of Representatives on the 3d of April following the
President was requested to "invite from time to time, as fit occasions
may arise, negotiations with any government with which the United
States has or may have diplomatic relations, to the end that any
differences or disputes arising between the two governments which can
not be adjusted by diplomatic agency may be referred to arbitration and
be peaceably adjusted by such means." April 18, 1890, the International
American Conference of Washington by resolution expressed the wish that
all controversies between the republics of America and the nations of
Europe might be settled by arbitration, and recommended that the
government of each nation represented in that conference should
communicate this wish to all friendly powers. A favorable response has
been received from Great Britain in the shape of a resolution adopted
by Parliament July 16 last, cordially sympathizing with the purpose in
view and expressing the hope that Her Majesty's Government will lend
ready cooperation to the Government of the United States upon the basis
of the concurrent resolution above quoted.

It affords me signal pleasure to lay this parliamentary resolution
before the Congress and to express my sincere gratification that the
sentiment of two great and kindred nations is thus authoritatively
manifested in favor of the rational and peaceable settlement of
international quarrels by honorable resort to arbitration.

Since the-passage of the act of March 3, 1893, authorizing the
President to raise the grade of our envoys to correspond with the rank
in which foreign countries accredit their agents here, Great Britain,
France, Italy, and Germany have conferred upon their representatives at
this capital the title of ambassador, and I have responded by
accrediting the agents of the United States in those countries with the
same title. A like elevation of mission is announced by Russia, and
when made will be similarly met. This step fittingly comports with the
position the United States hold in the family of nations.

During my former Administration I took occasion to recommend a recast
of the laws relating to the consular service, in order that it might
become a more efficient agency in the promotion of the interests it was
intended to subserve. The duties and powers of consuls have been
expanded with the growing requirements of our foreign trade.
Discharging important duties affecting our commerce and American
citizens abroad, and in certain countries exercising judicial
functions, these officers should be men of character, intelligence, and
ability.

Upon proof that the legislation of Denmark secures copyright to
American citizens on equal footing with its own, the privileges of our
copyright laws have been extended by proclamation to subjects of that
country.

The Secretary of the Treasury reports that the receipts of the
Government from all sources during the fiscal year ended June 30, 1893,
amounted to $461,716,561.94 and its expenditures to $459,374,674.29.
There was collected from customs $205,355,016.73 and from internal
revenue $161,027,623.93. Our dutiable imports amounted to $421,856,711,
an increase of $52,453,907 over the preceding year, and importations
free of duty amounted to $444,544,211, a decrease from the preceding
year of $13,455,447. Internal-revenue receipts exceeded those of the
preceding year by $7,147,445.32. The total tax collected on distilled
spirits was $94,720,260.55, on manufactured tobacco $31,889,711.74, and
on fermented liquors $32,548,983.07. We exported merchandise during the
year amounting to $847,665,194, a decrease of $182,612,954 from the
preceding year. The amount of gold exported was larger than any
previous year in the history of the Government, amounting to
$108,680,844, and exceeding the amount exported during the preceding
year by$58,485,517.

The sum paid from the Treasury for sugar bounty was $9,375,130.88, an
increase over the preceding year of $2,033,053.09.

It is estimated upon the basis of present revenue laws that the
receipts of the Government for the year ending June 30, 1894, will be
$430,121,365.38 and its expenditures $458,121,365.28, resulting in a
deficiency of $28,000,000.

On the 1st day of November, 1893, the amount of money of all kinds in
circulation, or not included in Treasury holdings, was $1,718,544,682,
an increase for the year of $112,404,947. Estimating our population at
67,426,000 at the time mentioned, the per capita circulation was
$25.49. On the same date there was in the Treasury gold bullion
amounting to $96,657,273 and silver bullion which was purchased at a
cost of $126,261,553.

The purchases of silver under the law of July 14, 1890, during the last
fiscal year aggregated 54,008,162.59 fine ounces, which cost
$45,531,374.53. The total amount of silver purchased from the time that
law became operative until the repeal of its purchasing clause, on the
1st day of November, 1893, was 168,674,590.46 fine ounces, which cost
$155,930,940.84. Between the 1st day of March, 1873, and the 1st day of
November, 1893, the Government purchased under all laws 503,003,717
fine ounces of silver, at a cost of $516,622,948. The silver dollars
that have been coined under the act of July 14, 1890, number
36,087,285. The seigniorage arising from such coinage was
$6,977,098.39, leaving on hand in the mints 140,699,760 fine ounces of
silver, which cost $126,758,218.

Our total coinage of all metals during the last fiscal year consisted
of 97,280,875 pieces, valued at $43,685,178.80, of which there was
$30,038,140 in gold coin, $5,343,715 in silver dollars, $7,217,220.90
in subsidiary silver coin, and $1,086,102.90 in minor coins.

During the calendar year 1892 the production of precious metals in the
United States was estimated to be 1,596,375 fine ounces of gold of the
commercial and coinage value of $33,000,000 and 58,000,000 fine ounces
of silver of the bullion or market value of $50,750,000 and of the
coinage value of $74,989,900.

It is estimated that on the 1st day of July, 1893, the metallic stock
of money in the United States, consisting of coin and bullion, amounted
to $1,213,559,169, of which $597,697,685 was gold and $615,861,484 was
silver.

One hundred and nineteen national banks were organized during the year
ending October 31, 1893, with a capital of $11,230,000. Forty-six went
into voluntary liquidation and 158 suspended. Sixty-five of the
suspended banks were insolvent, 86 resumed business, and 7 remain in
the hands of the bank examiners, with prospects of speedy resumption.
Of the new banks organized, 44 were located in the Eastern States, 41
west of the Mississippi River, and 34 in the Central and Southern
States. The total number of national banks in existence on October 31,
1893, was 3,796, having an aggregate capital of $695,558,120. The net
increase in the circulation of these banks during the year was
$36,886,972.

The recent repeal of the provision of law requiring the purchase of
silver bullion by the Government as a feature of our monetary scheme
has made an entire change in the complexion of our currency affairs. I
do not doubt that the ultimate result of this action will be most
salutary and far-reaching. In the nature of things, however, it is
impossible to know at this time precisely what conditions will be
brought about by the change, or what, if any, supplementary legislation
may in the light of such conditions appear to be essential or
expedient. Of course, after the recent financial perturbation, time is
necessary for the reestablishment of business confidence. When,
however, through this restored confidence, the money which has been
frightened into hoarding places is returned to trade and enterprise, a
survey of the situation will probably disclose a safe path leading to a
permanently sound currency, abundantly sufficient to meet every
requirement of our increasing population and business.

In the pursuit of this object we should resolutely turn away from
alluring and temporary expedients, determined to be content with
nothing less than a lasting and comprehensive financial plan. In these
circumstances I am convinced that a reasonable delay in dealing with
this subject, instead of being injurious, will increase the probability
of wise action.

The monetary conference which assembled at Brussels upon our invitation
was adjourned to the 30th day of November of the present year. The
considerations just stated and the fact that a definite proposition
from us seemed to be expected upon the reassembling of the conference
led me to express a willingness to have the meeting still further
postponed.

It seems to me that it would be wise to give general authority to the
President to invite other nations to such a conference at any time when
there should be a fair prospect of accomplishing an international
agreement on the subject of coinage.

I desire also to earnestly suggest the wisdom of amending the existing
statutes in regard to the issuance of Government bonds. The authority
now vested in the Secretary of the Treasury to issue bonds is not as
clear as it should be, and the bonds authorized are disadvantageous to
the Government both as to the time of their maturity and rate of
interest.

The Superintendent of Immigration, through the Secretary of the
Treasury, reports that during the last fiscal year there arrived at our
ports 440,793 immigrants. Of these, 1,063 were not permitted to land
under the limitations of the law and 577 were returned to the countries
from whence they came by reason of their having become public charges.
The total arrivals were 141,034 less than for the previous year.

The Secretary in his report gives an account of the operation of the
Marine-Hospital Service and of the good work done under its supervision
in preventing the entrance and spread of contagious diseases.

The admonitions of the last two years touching our public health and
the demonstrated danger of the introduction of contagious diseases from
foreign ports have invested the subject of national quarantine with
increased interest. A more general and harmonious system than now
exists, acting promptly and directly everywhere and constantly
operating by preventive means to shield our country from the invasion
of disease, and at the same time having due regard to the rights and
duties of local agencies, would, I believe, add greatly to the safety
of our people.

The Secretary of War reports that the strength of the Army on the 30th
day of September last was 25,778 enlisted men and 2,144 officers.

The total expenditures of the Department for the year ending June 30,
1893, amounted to $51,966,074.89. Of this sum $1,992,581.95 was for
salaries and contingent expenses, $23,377,828.35 for the support of the
military establishment, $6,077,033.18 for miscellaneous objects, and
518,631.41 for public works. This latter sum includes $15,296,876.46
for river and harbor improvements and $3,266,141.20 for fortifications
and other works of defense.

The total enrollment of the militia of the several States was on the
31st of October of the current year 112,597 officers and enlisted men.
The officers of the Army detailed for the inspection and instruction of
this reserve of our military force report that increased interest and
marked progress are apparent in the discipline and efficiency of the
organization.

Neither Indian outbreaks nor domestic violence have called the Army
into service during the year, and the only active military duty
required of it has been in the Department of Texas, where violations of
the neutrality laws of the United States and Mexico were promptly and
efficiently dealt with by the troops, eliciting the warm approval of
the civil and military authorities of both countries.

The operation of wise laws and the influences of civilization
constantly tending to relieve the country from the dangers of Indian
hostilities, together with the increasing ability of the States,
through the efficiency of the National Guard organizations, to protect
their citizens from domestic violence, lead to the suggestion that the
time is fast approaching when there should be a reorganization of our
Army on the lines of the present necessities of the country. This
change contemplates neither increase in number nor added expense, but a
redistribution of the force and an encouragement of measures tending to
greater efficiency among the men and improvement of the service.

The adoption of battalion formations for infantry regiments, the
strengthening of the artillery force, the abandonment of smaller and
unnecessary posts, and the massing of the troops at important and
accessible stations all promise to promote the usefulness of the Army.
In the judgment of army officers, with but few exceptions, the
operation of the law forbidding the reenlistment of men after ten
years' service has not proved its wisdom, and while the arguments that
led to its adoption were not without merit the experience of the year
constrains me to join in the recommendation for its repeal.

It is gratifying to note that we have begun to attain completed results
in the comprehensive scheme of seacoast defense and fortification
entered upon eight years ago. A large sum has been already expended,
but the cost of maintenance will be inconsiderable as compared with the
expense of construction and ordnance. At the end of the current
calendar year the War Department will have nine 12-inch guns, twenty
10-inch, and thirty-four 8-inch guns ready to be mounted on gun lifts
and carriages, and seventy-five 12-inch mortars. In addition to the
product of the Army Gun Factory, now completed at Watervliet, the
Government has contracted with private parties for the purchase of one
hundred guns of these calibers, the first of which should be delivered
to the Department for test before July 1, 1894.

The manufacture of heavy ordnance keeps pace with current needs, but to
render these guns available for the purposes they are designed to meet
emplacements must be prepared for them. Progress has been made in this
direction, and it is desirable that Congress by adequate appropriations
should provide for the uninterrupted prosecution of this necessary work.

After much preliminary work and exhaustive examination in accordance
with the requirements of the law, the board appointed to select a
magazine rifle of modern type with which to replace the obsolete
Springfield rifle of the infantry service completed its labors during
the last year, and the work of manufacture is now in progress at the
national armory at Springfield. It is confidently expected that by the
end of the current year our infantry will be supplied with a weapon
equal to that of the most progressive armies of the world.

The work on the projected Chickamauga and Chattanooga National Military
Park has been prosecuted with zeal and judgment, and its opening will
be celebrated during the coming year. Over 9 square miles of the
Chickamauga battlefield have been acquired, 25 miles of roadway have
been constructed, and permanent tablets have been placed at many
historical points, while the invitation to the States to mark the
positions of their troops participating in the battle has been very
generally accepted.

The work of locating and preserving the lines of battle at the
Gettysburg battlefield is making satisfactory progress on the plans
directed by the last Congress.

The reports of the Military Academy at West Point and the several
schools for special instruction of officers show marked advance in the
education of the Army and a commendable ambition among its officers to
excel in the military profession and to fit themselves for the highest
service to the country.

Under the supervision of Adjutant-General Robert Williams, lately
retired, the Bureau of Military Information has become well established
and is performing a service that will put in possession of the
Government in time of war most valuable information, and at all times
serve a purpose of great utility in keeping the Army advised of the
world's progress in all matters pertaining to the art of war.

The report of the Attorney-General contains the usual summary of the
affairs and proceedings of the Department of Justice for the past year,
together with certain recommendations as to needed legislation on
various subjects. I can not too heartily indorse the proposition that
the fee system as applicable to the compensation of United States
attorneys, marshals, clerks of Federal courts, and United States
commissioners should be abolished with as little delay as possible. It
is clearly in the interest of the community that the business of the
courts, both civil and criminal, shall be as small and as inexpensively
transacted as the ends of justice will allow.

The system is therefore thoroughly vicious which makes the compensation
of court officials depend upon the volume of such business, and thus
creates a conflict between a proper execution of the law and private
gain, which can not fail to be dangerous to the rights and freedom of
the citizen and an irresistible temptation to the unjustifiable
expenditure of public funds. If in addition to this reform another was
inaugurated which would give to United States commissioners the final
disposition of petty offenses within the grade of misdemeanors,
especially those coming under the internal-revenue laws, a great
advance would be made toward a more decent administration of the
criminal law.

In my first message to Congress, dated December 8, 1885, I strongly
recommended these changes and referred somewhat at length to the evils
of the present system. Since that time the criminal business of the
Federal courts and the expense attending it have enormously increased.
The number of criminal prosecutions pending in the circuit and district
courts of the United States on the 1st day of July, 1885, was 3,808, of
which 1,884 were for violations of the internal-revenue laws, while the
number of such prosecutions pending on the 1st day of July, 1893, was
9,500, of which 4,200 were for violations of the internal-revenue laws.
The expense of the United States courts, exclusive of judges' salaries,
for the year ending July 1, 1885, was $2,874,733.11 and for the year
ending July 1, 1893, $4,528,676.87.

It is therefore apparent that the reasons given in 1885 for a change in
the manner of enforcing the Federal criminal law have gained cogency
and strength by lapse of time.

I also heartily join the Attorney-General in recommending legislation
fixing degrees of the crime of murder within Federal jurisdiction, as
has been done in many of the States; authorizing writs of error on
behalf of the Government in cases where final judgment is rendered
against the sufficiency of an indictment or against the Government upon
any other question arising before actual trial; limiting the right of
review in cases of felony punishable only by fine and imprisonment to
the circuit court of appeals, and making speedy provision for the
construction of such prisons and reformatories as may be necessary for
the confinement of United States convicts.

The report of the Postmaster-General contains a detailed statement of
the operations of the Post-Office Department during the last fiscal
year and much interesting information touching this important branch of
the public service.

The business of the mails indicates with absolute certainty the
condition of the business of the country, and depression in financial
affairs inevitably and quickly reduces the postal revenues. Therefore a
larger discrepancy than usual between the post-office receipts and
expenditures is the expected and unavoidable result of the distressing
stringency which has prevailed throughout the country during much of
the time covered by the Postmaster-General's report. At a date when
better times were anticipated it was estimated by his predecessor that
the deficiency on the 30th day of June, 1893, would be but a little
over a million and a half dollars. It amounted, however, to more than
five millions. At the same time and under the influence of like
anticipations estimates were made for the current fiscal year, ending
June 30, 1894, which exhibited a surplus of revenue over expenditures
of $872,245.71; but now, in view of the actual receipts and
expenditures during that part of the current fiscal year already
expired, the present Postmaster-General estimates that at its close
instead of a surplus there will be a deficiency of nearly $8,000,000.

The post-office receipts for the last fiscal year amounted to
$75,896,933.16 and its expenditures to $81,074,104.90. This post-office
deficiency would disappear or be immensely decreased if less matter
were carried free through the mails, an item of which is upward of 300
tons of seeds and grain from the Agricultural Department.

The total number of post-offices in the United States on the 30th day
of June, 1893, was 68,403, an increase of 1,284 over the preceding
year. Of these, 3,360 were Presidential, an increase in that class of
204 over the preceding year.

Forty-two free-delivery offices were added during the year to those
already existing, making a total of 610 cities and towns provided with
free delivery on June 30, 1893. Ninety-three other cities and towns are
now entitled to this service under the law, but it has not been
accorded them on account of insufficient funds to meet the expenses of
its establishment.

I am decidedly of the opinion that the provisions of the present law
permit as general an introduction of this feature of mail service as is
necessary or justifiable, and that it ought not to be extended to
smaller communities than are now designated.

The expenses of free delivery for the fiscal year ending June 30, 1894,
will be more than $11,000,000, and under legislation now existing there
must be a constant increase in this item of expenditure.

There were 6,401 additions to the domestic money-order offices during
the last fiscal year, being the largest increase in any year since the
inauguration of the system. The total number of these offices at the
close of the year was 18,434. There were 13,309,735 money orders issued
from these offices, being an increase over the preceding year of
1,240,293, and the value of these orders amounted to $127,576,433.65,
an increase of $7,509,632.58. There were also issued during the year
postal notes amounting to $12,903,076.73.

During the year 195 international money-order offices were added to
those already provided, making a total of 2,407 in operation on June
30, 1893. The number of international money orders issued during the
year was 1,055,999, an increase over the preceding year of 72,525, and
their value was $16,341,837.86, an increase of $2,221,506.31. The
number of orders paid was 300,917, an increase over the preceding year
of 13,503, and their value was $5,283,375.70, an increase of $94,094.83.

From the foregoing statements it appears that the total issue of money
orders and postal notes for the year amounted to $156,822,348.24.

The number of letters and packages mailed during the year for special
delivery was 3,375,693, an increase over the preceding year of nearly
22 per cent. The special-delivery stamps used upon these letters and
packages amounted to $337,569.30, and the messengers' fees paid for
their delivery amounted to $256,592.71, leaving a profit to the
Government of $80,976.59.

The Railway Mail Service not only adds to the promptness of mail
delivery at all offices, but it is the especial instrumentality which
puts the smaller and way places in the service on an equality in that
regard with the larger and terminal offices. This branch of the postal
service has therefore received much attention from the
Postmaster-General, and though it is gratifying to know that it is in a
condition of high efficiency and great usefulness, I am led to agree
with the Postmaster-General that there is room for its further
improvement.

There are now connected to the Post-Office establishment 28,324
employees who are in the classified service. The head of this great
Department gives conclusive evidence of the value of civil-service
reform when, after an experience that renders his judgment on the
subject absolutely reliable, he expresses the opinion that without the
benefit of this system it would be impossible to conduct the vast
business intrusted to him.

I desire to commend as especially worthy of prompt attention the
suggestions of the Postmaster-General relating to a more sensible and
business like organization and a better distribution of responsibility
in his Department.

The report of the Secretary of the Navy contains a history of the
operations of his Department during the past year and exhibits a most
gratifying condition of the personnel of our Navy. He presents a
satisfactory account of the progress which has been made in the
construction of vessels and makes a number of recommendations to which
attention is especially invited.

During the past six months the demands for cruising vessels have been
many and urgent. There have been revolutions calling for vessels to
protect American interests in Nicaragua, Guatemala, Costa Rica,
Honduras, Argentina, and Brazil, while the condition of affairs in
Honolulu has required the constant presence of one or more ships. With
all these calls upon our Navy it became necessary, in order to make up
a sufficient fleet to patrol the Bering Sea under the modus vivendi
agreed upon with Great Britain, to detail to that service one vessel
from the Fish Commission and three from the Revenue Marine.

Progress in the construction of new vessels has not been as rapid as
was anticipated. There have been delays in the completion of unarmored
vessels, but for the most part they have been such as are constantly
occurring even in countries having the largest experience in naval
shipbuilding. The most serious delays, however, have been in the work
upon armored ships. The trouble has been the failure of contractors to
deliver armor as agreed. The difficulties seem now, however, to have
been all overcome, and armor is being delivered with satisfactory
promptness. As a result of the experience acquired by shipbuilders and
designers and material men, it is believed that the dates when vessels
will be completed can now be estimated with reasonable accuracy. Great
guns, rapid-fire guns, torpedoes, and powder are being promptly
supplied.

The following vessels of the new Navy have been completed and are now
ready for service: The double-turreted coast-defense monitor
Miantonomoh, the double-turreted coast-defense monitor Monterey, the
armored cruiser New York, the protected cruisers Baltimore, Chicago,
Philadelphia, Newark, San Francisco, Charleston, Atlanta, and Boston,
the cruiser Detroit, the gunboats Yorktown, Concord, Bennington,
Machias, Castine, and Petrel, the dispatch vessel Dolphin, the practice
vessel Bancroft, and the dynamite gunboat Vesuvius. Of these the
Bancroft, Machias, Detroit, and Castine have been placed in commission
during the current calendar year.

The following vessels are in process of construction: The second-class
battle ships Maine and Texas, the cruisers Montgomery and Marblehead,
and the coast-defense monitors Terror, Puritan, Amphitrite, and
Monadnock, all of which will be completed within one year; the
harbor-defense ram Katahdin and the protected cruisers Columbia,
Minneapolis, Olympia, Cincinnati, and Raleigh, all of which will be
completed prior to July 1, 1895; the first-class battle ships Iowa,
Indiana, Massachusetts, and Oregon, which will be completed February 1,
1896, and the armored cruiser Brooklyn, which will be completed by
August 1 of that year. It is also expected that the three gunboats
authorized by the last Congress will be completed in less than two
years.

Since 1886 Congress has at each session authorized the building of one
or more vessels, and the Secretary of the Navy presents an earnest plea
for the continuance of this plan. He recommends the authorization of at
least one battle ship and six torpedo boats.

While I am distinctly in favor of consistently pursuing the policy we
have inaugurated of building up a thorough and efficient Navy, I can
not refrain from the suggestion that the Congress should carefully take
into account the number of unfinished vessels on our hands and the
depleted condition of our Treasury in considering the propriety of an
appropriation at this time to begin new work.

The method of employing mechanical labor at navy-yards through boards
of labor and making efficiency the sole test by which laborers are
employed and continued is producing the best results, and the Secretary
is earnestly devoting himself to its development. Attention is invited
to the statements of his report in regard to the workings of the system.

The Secretary of the Interior has the supervision of so many important
subjects that his report is of especial value and interest.

On the 30th day of June, 1893, there were on the pension rolls 966,012
names, an increase of 89,944 over the number on the rolls June 30,
1892. Of these there were 17 widows and daughters of Revolutionary
soldiers, 86 survivors of the War of 1812, 5,425 widows of soldiers of
that war, 21,518 survivors and widows of the Mexican War, 3,882
survivors and widows of Indian wars, 284 army nurses. and 475,645
survivors and widows and children of deceased soldiers and sailors of
the War of the Rebellion. The latter number represents those pensioned
on account of disabilities or death resulting from army and navy
service. The number of persons remaining on the rolls June 30, 1893,
who were pensioned under the act of June 27, 1890, which allows
pensions on account of death and disability not chargeable to army
service, was 459,155.

The number added to the rolls during the year was 123,634 and the
number dropped was 33,690. The first payments on pensions allowed
during the year amounted to $33,756,549.98. This includes arrears, or
the accumulation between the time from which the allowance of pension
dates and the time of actually granting the certificate.

Although the law of 1890 permits pensions for disabilities not related
to military service, yet as a requisite to its benefits a disability
must exist incapacitating applicants "from the performance of manual
labor to such a degree as to render them unable to earn a support." The
execution of this law in its early stages does not seem to have been in
accord with its true intention, but toward the close of the last
Administration an authoritative construction was given to the statute,
and since that time this construction has been followed. This has had
the effect of limiting the operation of the law to its intended
purpose. The discovery having been made that many names had been put
upon the pension roll by means of wholesale and gigantic frauds, the
Commissioner suspended payments upon a number of pensions which seemed
to be fraudulent or unauthorized pending a complete examination, giving
notice to the pensioners, in order that they might have an opportunity
to establish, if possible, the justice of their claims notwithstanding
apparent invalidity.

This, I understand, is the practice which has for a long time prevailed
in the Pension Bureau; but after entering upon these recent
investigations the Commissioner modified this rule so as not to allow
until after a complete examination interference with the payment of a
pension apparently not altogether void, but which merely had been fixed
at a rate higher than that authorized by law.

I am unable to understand why frauds in the pension rolls should not be
exposed and corrected with thoroughness and vigor. Every name
fraudulently put upon these rolls is a wicked imposition upon the
kindly sentiment in which pensions have their origin; every fraudulent
pensioner has become a bad citizen; every false oath in support of a
pension has made perjury more common, and false and undeserving
pensioners rob the people not only of their money, but of the patriotic
sentiment which the survivors of a war fought for the preservation of
the Union ought to inspire. Thousands of neighborhoods have their
well-known fraudulent pensioners, and recent developments by the Bureau
establish appalling conspiracies to accomplish pension frauds. By no
means the least wrong done is to brave and deserving pensioners, who
certainly ought not to be condemned to such association.

Those who attempt in the line of duty to rectify these wrongs should
not be accused of enmity or indifference to the claims of honest
veterans. The sum expended on account of pensions for the year ending
June 30, 1893, was $156,740,467.14.

The Commissioner estimates that $165,000,000 will be required to pay
pensions during the year ending June 30, 1894.

The condition of the Indians and their ultimate fate are subjects which
are related to a sacred duty of the Government and which strongly
appeal to the sense of justice and the sympathy of our people.

Our Indians number about 248,000. Most of them are located on 161
reservations, containing 86,116,531 acres of land. About 110,000 of
these Indians have to a large degree adopted civilized customs. Lands
in severalty have been allotted to many of them. Such allotments have
been made to 10,000 individuals during the last fiscal year, embracing
about 1,000,000 acres. The number of Indian Government schools opened
during the year was 195, an increase of 12 over the preceding year. Of
this total 170 were on reservations, of which 73 were boarding schools
and 97 were day schools. Twenty boarding schools and 5 day schools
supported by the Government were not located on reservations. The total
number of Indian children enrolled during the year as attendants of all
schools was 21,138, an increase of 1,231 over the enrollment for the
previous year.

I am sure that secular education and moral and religious teaching must
be important factors in any effort to save the Indian and lead him to
civilization. I believe, too, that the relinquishment of tribal
relations and the holding of land in severalty may in favorable
conditions aid this consummation. It seems to me, however, that
allotments of land in severalty ought to be made with great care and
circumspection. If hastily done, before the Indian knows its meaning,
while yet he has little or no idea of tilling a farm and no conception
of thrift, there is great danger that a reservation life in tribal
relations may be exchanged for the pauperism of civilization instead of
its independence and elevation.

The solution of the Indian problem depends very largely upon good
administration. The personal fitness of agents and their adaptability
to the peculiar duty of caring for their wards are of the utmost
importance.

The law providing that, except in special cases, army officers shall be
detailed as Indian agents it is hoped will prove a successful
experiment.

There is danger of great abuses creeping into the prosecution of claims
for Indian depredations, and I recommend that every possible safeguard
be provided against the enforcement of unjust and fictitious claims of
this description.

The appropriations on account of the Indian Bureau for the year ending
June 30, 1894, amount to $7,954,962.99, a decrease as compared with the
year preceding it of $387,131.95.

The vast area of land which but a short time ago constituted the public
domain is rapidly falling into private hands. It is certain that in the
transfer the beneficent intention of the Government to supply from its
domain homes to the industrious and worthy home seekers is often
frustrated. Though the speculator, who stands with extortionate purpose
between the land office and those who, with their families, are invited
by the Government to settle on the public lands, is a despicable
character who ought not to be tolerated, yet it is difficult to thwart
his schemes. The recent opening to settlement of the lands in the
Cherokee Outlet, embracing an area of 6,500,000 acres, notwithstanding
the utmost care in framing the regulations governing the selection of
locations and notwithstanding the presence of United States troops,
furnished an exhibition, though perhaps in a modified degree, of the
mad scramble, the violence, and the fraudulent occupation which have
accompanied previous openings of public land.

I concur with the Secretary in the belief that these outrageous
incidents can not be entirely prevented without a change in the laws on
the subject, and I hope his recommendations in that direction will be
favorably considered.

I especially commend to the attention of the Congress the statements
contained in the Secretary's report concerning forestry. The time has
come when efficient measures should be taken for the preservation of
our forests from indiscriminate and remediless destruction.

The report of the Secretary of Agriculture will be found exceedingly
interesting, especially to that large part of our citizens intimately
concerned in agricultural occupations.

On the 7th day of March, 1893, there were upon its pay rolls 2,430
employees. This number has been reduced to 1,850 persons. In view of a
depleted public Treasury and the imperative demand of the people for
economy in the administration of their Government, the Secretary has
entered upon the task of rationally reducing expenditures by the
elimination from the pay rolls of all persons not needed for an
efficient conduct of the affairs of the Department.

During the first quarter of the present year the expenses of the
Department aggregated $345,876.76, as against $402,012.42 for the
corresponding period of the fiscal year ending June 30, 1893. The
Secretary makes apparent his intention to continue this rate of
reduction by submitting estimates for the next fiscal year less by
$994,280 than those for the present year.

Among the heads of divisions in this Department the changes have been
exceedingly few. Three vacancies occurring from death and resignations
have been filled by the promotion of assistants in the same divisions.

These promotions of experienced and faithful assistants have not only
been in the interest of efficient work, but have suggested to those in
the Department who look for retention and promotion that merit and
devotion to duty are their best reliance.

The amount appropriated for the Bureau of Animal Industry for the
current fiscal year is $850,000. The estimate for the ensuing year is
$700,000.

The regulations of 1892 concerning Texas fever have been enforced
during the last year and the large stock yards of the country have been
kept free from infection. Occasional local outbreaks have been largely
such as could have been effectually guarded against by the owners of
the affected cattle.

While contagious pleuro-pneumonia in cattle has been eradicated, animal
tuberculosis, a disease widespread and more dangerous to human life
than pleuro-pneumonia, is still prevalent. Investigations have been
made during the past year as to the means of its communication and the
method of its correct diagnosis. Much progress has been made in this
direction by the studies of the division of animal pathology, but work
ought to be extended, in cooperation with local authorities, until the
danger to human life arising from this cause is reduced to a minimum.

The number of animals arriving from Canada during the year and
inspected by Bureau officers was 462,092, and the number from
transatlantic countries was 1,297. No contagious diseases were found
among the imported animals.

The total number of inspections of cattle for export during the past
fiscal year was 611,542. The exports show a falling off of about 25 per
cent from the preceding year, the decrease occurring entirely in the
last half of the year. This suggests that the falling off may have been
largely due to an increase in the price of American export cattle.

During the year ending June 30, 1893, exports of inspected pork
aggregated 10,677,410 pounds, as against 38,152,874 pounds for the
preceding year. The falling off in this export was not confined,
however, to inspected pork, the total quantity exported for 1892 being
665,490,616 pounds, while in 1893 it was only 527,308,695 pounds.

I join the Secretary in recommending that hereafter each applicant for
the position of inspector or assistant inspector in the Bureau of
Animal Industry be required, as a condition precedent to his
appointment, to exhibit to the United States Civil Service Commission
his diploma from an established, regular, and reputable veterinary
college, and that this be supplemented by such an examination in
veterinary science as the Commission may prescribe.

The exports of agricultural products from the United States for the
fiscal year ending June 30, 1892, attained the enormous figure of
$800,000,000, in round numbers, being 78.7 per cent of our total
exports. In the last fiscal year this aggregate was greatly reduced,
but nevertheless reached 615,000,000, being 75.1 per cent of all
American commodities exported.

A review of our agricultural exports with special reference to their
destination will show that in almost every line the United Kingdom of
Great Britain and Ireland absorbs by far the largest proportion. Of
cattle the total exports aggregated in value for the fiscal year ending
June 30, 1893, $26,000,000, of which Great Britain took considerably
over $25,000,000. Of beef products of all kinds our total exports were
$28,000,000, of which Great Britain took $24,000,000. Of pork products
the total exports were $84,000,000, of which Great Britain took
$53,000,000. In breadstuffs, cotton, and minor products like
proportions sent to the same destination are shown.

The work of the statistical division of the Department of Agriculture
deals with all that relates to the economics of farming.

The main purpose of its monthly reports is to keep the farmers informed
as fully as possible of all matters having any influence upon the
world's markets, in which their products find sale. Its publications
relate especially to the commercial side of farming.

It is therefore of profound importance and vital concern to the farmers
of the United States, who represent nearly one-half of our population,
and also of direct interest to the whole country, that the work of this
division be efficiently performed and that the information it has
gathered be promptly diffused.

It is a matter for congratulation to know that the Secretary will not
spare any effort to make this part of his work thoroughly useful.

In the year 1839 the Congress appropriated $1,000, to be taken from the
Patent Office funds, for the purpose of collecting and distributing
rare and improved varieties of seeds and for prosecuting agricultural
investigations and procuring agricultural statistics. From this small
beginning the seed division of the Department of Agriculture has grown
to its present unwieldy and unjustifiably extravagant proportions.

During the last fiscal year the cost of seeds purchased was $66,548.61.
The remainder of an appropriation of $135,000 was expended in putting
them up and distributing them. It surely never could have entered the
minds of those who first sanctioned appropriations of public money for
the purchase of new and improved varieties of seeds for gratuitous
distribution that from this would grow large appropriations for the
purchase and distribution by members of Congress of ordinary seeds,
bulbs, and cuttings which are common in all the States and Territories
and everywhere easily obtainable at low prices.

In each State and Territory an agricultural experiment station has been
established. These stations, by their very character and name, are the
proper agencies to experiment with and test new varieties of seeds; and
yet this indiscriminate and wasteful distribution by legislation and
legislators continues, answering no purpose unless it be to remind
constituents that their representatives are willing to remember them
with gratuities at public cost.

Under the sanction of existing legislation there was sent out from the
Agricultural Department during the last fiscal year enough of cabbage
seed to plant 19,200 acres of land, a sufficient quantity of beans to
plant 4,000 acres, beet seed enough to plant 2,500 acres, sweet corn
enough to plant 7,800 acres, sufficient cucumber seed to cover 2,025
acres with vines, and enough muskmelon and watermelon seeds to plant
2,675 acres. The total quantity of flower and vegetable seeds thus
distributed was contained in more than 9,000,000 packages, and they
were sufficient if planted to cover 89,596 acres of land.

In view of these facts this enormous expenditure without legitimate
returns of benefit ought to be abolished. Anticipating a consummation
so manifestly in the interest of good administration, more than
$100,000 has been stricken from the estimate made to cover this object
for the year ending June 30, 1895; and the Secretary recommends that
the remaining $35,000 of the estimate be confined strictly to the
purchase of new and improved varieties of seeds, and that these be
distributed through experiment stations.

Thus the seed will be tested, and after the test has been completed by
the experiment station the propagation of the useful varieties and the
rejection of the valueless may safely be left to the common sense of
the people.

The continued intelligent execution of the civil-service law and the
increasing approval by the people of its operation are most gratifying.
The recent extension of its limitations and regulations to the
employees at free-delivery post-offices, which has been honestly and
promptly accomplished by the Commission, with the hearty cooperation of
the Postmaster-General, is an immensely important advance in the
usefulness of the system.

I am, if possible, more than ever convinced of the incalculable
benefits conferred by the civil-service law, not only in its effect
upon the public service, but also, what is even more important, in its
effect in elevating the tone of political life generally.

The course of civil-service reform in this country instructively and
interestingly illustrates how strong a hold a movement gains upon our
people which has underlying it a sentiment of justice and right and
which at the same time promises better administration of their
Government.

The law embodying this reform found its way to our statute book more
from fear of the popular sentiment existing in its favor than from any
love for the reform itself on the part of legislators, and it has lived
and grown and flourished in spite of the covert as well as open
hostility of spoilsmen and notwithstanding the querulous
impracticability of many self-constituted guardians. Beneath all the
vagaries and sublimated theories which are attracted to it there
underlies this reform a sturdy common-sense principle not only suited
to this mundane sphere, but whose application our people are more and
more recognizing to be absolutely essential to the most successful
operation of their Government, if not to its perpetuity.

It seems to me to be entirely inconsistent with the character of this
reform, as well as with its best enforcement, to oblige the Commission
to rely for clerical assistance upon clerks detailed from other
Departments. There ought not to be such a condition in any Department
that clerks hired to do work there can be spared to habitually work at
another place, and it does not accord with a sensible view of
civil-service reform that persons should be employed on the theory that
their labor is necessary in one Department when in point of fact their
services are devoted to entirely different work in another Department.

I earnestly urge that the clerks necessary to carry on the work of the
Commission be regularly put upon its roster and that the system of
obliging the Commissioners to rely upon the services of clerks
belonging to other Departments be discontinued. This ought not to
increase the expense to the Government, while it would certainly be
more consistent and add greatly to the efficiency of the Commission.

Economy in public expenditure is a duty that can not innocently be
neglected by those intrusted with the control of money drawn from the
people for public uses. It must be confessed that our apparently
endless resources, the familiarity of our people with immense
accumulations of wealth, the growing sentiment among them that the
expenditure of public money should in some manner be to their immediate
and personal advantage, the indirect and almost stealthy manner in
which a large part of our taxes is exacted, and a degenerated sense of
official accountability have led to growing extravagance in
governmental appropriations.

At this time, when a depleted public Treasury confronts us, when many
of our people are engaged in a hard struggle for the necessaries of
life, and when enforced economy is pressing upon the great mass of our
countrymen, I desire to urge with all the earnestness at my command
that Congressional legislation be so limited by strict economy as to
exhibit an appreciation of the condition of the Treasury and a sympathy
with the straitened circumstances of our fellow-citizens.

The duty of public economy is also of immense importance in its
intimate and necessary relation to the task now in hand of providing
revenue to meet Government expenditures and yet reducing the people's
burden of Federal taxation.

After a hard struggle tariff reform is directly before us. Nothing so
important claims our attention and nothing so clearly presents itself
as both an opportunity and a duty--an opportunity to deserve the
gratitude of our fellow-citizens and a duty imposed upon us by our
oft-repeated professions and by the emphatic mandate of the people.
After full discussion our countrymen have spoken in favor of this
reform, and they have confided the work of its accomplishment to the
hands of those who are solemnly pledged to it.

If there is anything in the theory of a representation in public places
of the people and their desires, if public officers are really the
servants of the people, and if political promises and professions have
any binding force, our failure to give the relief so long awaited will
be sheer recreancy. Nothing should intervene to distract our attention
or disturb our effort until this reform is accomplished by wise and
careful legislation.

While we should stanchly adhere to the principle that only the
necessity of revenue justifies the imposition of tariff duties and
other Federal taxation and that they should be limited by strict
economy, we can not close our eyes to the fact that conditions have
grown up among us which in justice and fairness call for discriminating
care in the distribution of such duties and taxation as the emergencies
of our Government actually demand.

Manifestly if we are to aid the people directly through tariff reform,
one of its most obvious features should be a reduction in present
tariff charges upon the necessaries of life. The benefits of such a
reduction would be palpable and substantial, seen and felt by thousands
who would be better fed and better clothed and better sheltered. These
gifts should be the willing benefactions of a Government whose highest
function is the promotion of the welfare of the people.

Not less closely related to our people's prosperity and well-being is
the removal of restrictions upon the importation of the raw materials
necessary to our manufactures. The world should be open to our national
ingenuity and enterprise. This can not be while Federal legislation
through the imposition of high tariff forbids to American manufacturers
as cheap materials as those used by their competitors. It is quite
obvious that the .enhancement of the price of our manufactured products
resulting from this policy not only confines the market for these
products within our own borders, to the direct disadvantage of our
manufacturers, but also increases their cost to our citizens.

The interests of labor are certainly, though indirectly, involved in
this feature of our tariff system. The sharp competition and active
struggle among our manufacturers to supply the limited demand for their
goods soon fill the narrow market to which they are confined. Then
follows a suspension of work in mills and factories, a discharge of
employees, and distress in the homes of our workingmen.

Even if the often-disproved assertion could be made good that a lower
rate of wages would result from free raw materials and low tariff
duties, the intelligence of our workmen leads them quickly to discover
that their steady employment, permitted by free raw materials, is the
most important factor in their relation to tariff legislation.

A measure has been prepared by the appropriate Congressional committee
embodying tariff reform on the lines herein suggested, which will be
promptly submitted for legislative action. It is the result of much
patriotic and unselfish work, and I believe it deals with its subject
consistently and as thoroughly as existing conditions permit.

I am satisfied that the reduced tariff duties provided for in the
proposed legislation, added to existing internal-revenue taxation, will
in the near future, though perhaps not immediately, produce sufficient
revenue to meet the needs of the Government.

The committee, after full consideration and to provide against a
temporary deficiency which may exist before the business of the country
adjusts itself to the new tariff schedules, have wisely embraced in
their plan a few additional internal-revenue taxes, including a small
tax upon incomes derived from certain corporate investments.

These new adjustments are not only absolutely just and easily borne,
but they have the further merit of being such as can be remitted
without unfavorable business disturbance whenever the necessity of
their imposition no longer exists.

In my great desire for the success of this measure I can not restrain
the suggestion that its success can only be attained by means of
unselfish counsel on the part of the friends of tariff reform and as a
result of their willingness to subordinate personal desires and
ambitions to the general good. The local interests affected by the
proposed reform are so numerous and so varied that if all are insisted
upon the legislation embodying the reform must inevitably fail.

In conclusion my intense feeling of responsibility impels me to invoke
for the manifold interests of a generous and confiding people the most
scrupulous care and to pledge my willing support to every legislative
effort for the advancement of the greatness and prosperity of our
beloved country.

GROVER CLEVELAND



***


State of the Union Address
Grover Cleveland
December 3, 1894


To the Congress of the United States:

The assemblage within the nation's legislative halls of those charged
with the duty of making laws for the benefit of a generous and free
people impressively suggests the exacting obligation and inexorable
responsibility involved in their task. At the threshold of such labor
now to be undertaken by the Congress of the United States, and in the
discharge of an executive duty enjoined by the Constitution, I submit
this communication, containing a brief statement of the condition of
our national affairs and recommending such legislation as seems to me
necessary and expedient.

The history of our recent dealings with other nations and our peaceful
relations with them at this time additionally demonstrate the advantage
of consistently adhering to a firm but just foreign policy, free from
envious or ambitious national schemes and characterized by entire
honesty and sincerity.

During the past year, pursuant to a law of Congress, commissioners were
appointed to the Antwerp Industrial Exposition. Though the
participation of American exhibitors fell far short of completely
illustrating our national ingenuity and industrial achievements, yet it
was quite creditable in view of the brief time allowed for preparation.

I have endeavored to impress upon the Belgian Government the
heedlessness and positive harmfulness of its restrictions upon the
importation of certain of our food products, and have strongly urged
that the rigid supervision and inspection under our laws are amply
sufficient to prevent the exportation from this country of diseased
cattle and unwholesome meat.

The termination of the civil war in Brazil has been followed by the
general prevalence of peace and order. It appearing at an early stage
of the insurrection that its course would call for unusual watchfulness
on the part of this Government, our naval force in the harbor of Rio de
Janeiro was strengthened. This precaution, I am satisfied, tended to
restrict the issue to a simple trial of strength between the Brazilian
Government and the insurgents and to avert complications which at times
seemed imminent. Our firm attitude of neutrality was maintained to the
end. The insurgents received no encouragement of eventual asylum from
our commanders, and such opposition as they encountered was for the
protection of our commerce and was clearly justified by public law.

A serious tension of relations having arisen at the close of the war
between Brazil and Portugal by reason of the escape of the insurgent
admiral Da Gama and his followers, the friendly offices of our
representatives to those countries were exerted for the protection of
the subjects of either within the territory of the other.

Although the Government of Brazil was duly notified that the commercial
arrangement existing between the United States and that country based
on the third section of the tariff act of 1890 was abrogated on August
28, 1894, by the taking effect of the tariff law now in force, that
Government subsequently notified us of its intention to terminate such
arrangement on the 1st day of January, 1895, in the exercise of the
right reserved in the agreement between the two countries. I invite
attention to the correspondence between the Secretary of State and the
Brazilian minister on this subject.

The commission organized under the convention which we had entered into
with Chile for the settlement of the outstanding claims of each
Government against the other adjourned at the end of the period
stipulated for its continuance leaving undetermined a number of
American cases which had been duly presented. These claims are not
barred, and negotiations are in progress for their submission to a new
tribunal.

On the 17th of March last a new treaty with China in further regulation
of emigration was signed at Washington, and on August 13 it received
the sanction of the Senate. Ratification on the part of China and
formal exchange are awaited to give effect to this mutually beneficial
convention.

A gratifying recognition of the uniform impartiality of this country
toward all foreign states was manifested by the coincident request of
the Chinese and Japanese Governments that the agents of the United
States should within proper limits afford protection to the subjects of
the other during the suspension of diplomatic relations due to a state
of war. This delicate office was accepted, and a misapprehension which
gave rise to the belief that in affording this kindly unofficial
protection our agents would exercise the same authority which the
withdrawn agents of the belligerents had exercised was promptly
corrected. Although the war between China and Japan endangers no policy
of the United States, it deserves our gravest consideration by reason
of its disturbance of our growing commercial interests in the two
countries and the increased dangers which may result to our citizens
domiciled or sojourning in the interior of China.

Acting under a stipulation in our treaty with Korea (the first
concluded with a western power), I felt constrained at the beginning of
the controversy to tender our good offices to induce an amicable
arrangement of the initial difficulty growing out of the Japanese
demands for administrative reforms in Korea, but the unhappy
precipitation of actual hostilities defeated this kindly purpose.

Deploring the destructive war between the two most powerful of the
eastern nations and anxious that our commercial interests in those
countries may be preserved and that the safety of our citizens there
shall not be jeopardized, I would not hesitate to heed any intimation
that our friendly aid for the honorable termination of hostilities
would be acceptable to both belligerents.

A convention has been finally concluded for the settlement by
arbitration of the prolonged dispute with Ecuador growing out of the
proceedings against Emilio Santos, a naturalized citizen of the United
States.

Our relations with the Republic of France continue to be such as should
exist between nations so long bound together by friendly sympathy and
similarity in their form of government.

The recent cruel assassination of the President of this sister Republic
called forth such universal expressions of sorrow and condolence from
our people and Government as to leave no doubt of the depth and
sincerity of our attachment. The resolutions passed by the Senate and
House of Representatives on the occasion have been communicated to the
widow of President Carnot.

Acting upon the reported discovery of Texas fever in cargoes of
American cattle, the German prohibition against importations of live
stock and fresh meats from this country has been revived. It is hoped
that Germany will soon become convinced that the inhibition is as
needless as it is harmful to mutual interests.

The German Government has protested against that provision of the
customs tariff act which imposes a discriminating duty of one-tenth of
1 cent a pound on sugars coming from countries paying an export bounty
thereon, claiming that the exaction of such duty is in contravention of
Articles V and IX of the treaty of 1828 with Prussia.

In the interests of the commerce of both countries and to avoid even
the accusation of treaty violation, I recommend the repeal of so much
of the statute as imposes that duty, and I invite attention to the
accompanying report of the Secretary of State, containing a discussion
of the questions raised by the German protests.

Early in the present year an agreement was reached with Great Britain
concerning instructions to be given to the naval commanders of the two
Governments in Bering Sea and the contiguous North Pacific Ocean for
their guidance in the execution of the award of the Paris Tribunal of
Arbitration and the enforcement of the regulations therein prescribed
for the protection of seal life in the waters mentioned. An
understanding has also been reached for the payment by the United
States of

$425,000 in full satisfaction of all claims which may be made by Great
Britain for damages growing out of the controversy as to fur seals in
Bering Sea or the seizure of British vessels engaged in taking seal in
those waters. The award and findings of the Paris Tribunal to a great
extent determined the facts and principles upon which these claims
should be adjusted, and they have been subjected by both Governments to
a thorough examination upon the principles as well as the facts which
they involve. I am convinced that a settlement upon the terms mentioned
would be an equitable and advantageous one, and I recommend that
provision be made for the prompt payment of the stated sum.

Thus far only France and Portugal have signified their willingness to
adhere to the regulations established under the award of the Paris
Tribunal of Arbitration.

Preliminary surveys of the Alaskan boundary and a preparatory
examination of the question of protection of food fish in the
contiguous waters of the United States and the Dominion of Canada are
in progress.

The boundary of British Guiana still remains in dispute between Great
Britain and Venezuela. Believing that its early settlement on some just
basis alike honorable to both parties is in the line of our established
policy to remove from this hemisphere all causes of difference with
powers beyond the sea, I shall renew the efforts heretofore made to
bring about a restoration of diplomatic relations between the
disputants and to induce a reference to arbitration--a resort which
Great Britain so conspicuously favors in principle and respects in
practice and which is earnestly sought by her weaker adversary.

Since communicating the voluminous correspondence in regard to Hawaii
and the action taken by the Senate and House of Representatives on
certain questions submitted to the judgment and wider discretion of
Congress the organization of a government in place of the provisional
arrangement which followed the deposition of the Queen has been
announced, with evidence of its effective operation. The recognition
usual in such cases has been accorded the new Government.

Under our present treaties of extradition with Italy miscarriages of
justice have occurred owing to the refusal of that Government to
surrender its own subjects. Thus far our efforts to negotiate an
amended convention obviating this difficulty have been unavailing.

Apart from the war in which the Island Empire is engaged, Japan
attracts increasing attention in this country by her evident desire to
cultivate more liberal intercourse with us and to seek our kindly aid
in furtherance of her laudable desire for complete autonomy in her
domestic affairs and full equality in the family of nations. The
Japanese Empire of to-day is no longer the Japan of the past, and our
relations with this progressive nation should not be less broad and
liberal than those with other powers.

Good will, fostered by many interests in common, has marked our
relations with our nearest southern neighbor. Peace being restored
along her northern frontier, Mexico has asked the punishment of the
late disturbers of her tranquillity. There ought to be a new treaty of
commerce and navigation with that country to take the place of the one
which terminated thirteen years ago. The friendliness of the
intercourse between the two countries is attested by the fact that
during this long period the commerce of each has steadily increased
under the rule of mutual consideration, being neither stimulated by
conventional arrangements nor retarded by jealous rivalries or selfish
distrust.

An indemnity tendered by Mexico as a gracious act for the murder in
1887 of Leon Baldwin, an American citizen, by a band of marauders in
Durango has been accepted and is being paid in installments.

The problem of the storage and use of the waters of the Rio Grande for
irrigation should be solved by appropriate concurrent action of the two
interested countries. Rising in the Colorado heights, the stream flows
intermittently, yielding little water during the dry months to the
irrigation channels already constructed along its course. This scarcity
is often severely felt in the regions where the river forms a common
boundary. Moreover, the frequent changes in its course through level
sands often raise embarrassing questions of territorial jurisdiction.

Prominent among the questions of the year was the Bluefields incident,
in what is known as the Mosquito Indian Strip, bordering on the
Atlantic Ocean and within the jurisdiction of Nicaragua. By the treaty
of 1860 between Great Britain and Nicaragua the former Government
expressly recognized the sovereignty of the latter over the strip, and
a limited form of self-government was guaranteed to the Mosquito
Indians, to be exercised according to their customs, for themselves and
other dwellers within its limits. The so-called native government,
which grew to be largely made up of aliens, for many years disputed the
sovereignty of Nicaragua over the strip and claimed the right to
maintain therein a practically independent municipal government. Early
in the past year efforts of Nicaragua to maintain sovereignty over the
Mosquito territory led to serious disturbances, culminating in the
suppression of the native government and the attempted substitution of
an impracticable composite administration in which Nicaragua and alien
residents were to participate. Failure was followed by an insurrection,
which for a time subverted Nicaraguan rule, expelling her officers and
restoring the old organization. This in turn gave place to the existing
local government established and upheld by Nicaragua.

Although the alien interests arrayed against Nicaragua in these
transactions have been largely American and the commerce of that region
for some time has been and still is chiefly controlled by our citizens,
we can not for that reason challenge the rightful sovereignty of
Nicaragua over this important part of her domain.

For some months one, and during part of the time two, of our naval
ships have been stationed at Bluefields for the protection of all
legitimate interests of our citizens. In September last the Government
at Managua expelled from its territory twelve or more foreigners,
including two Americans, for alleged participation in the seditious or
revolutionary movements against the Republic at Bluefields already
mentioned; but through the earnest remonstrance of this Government the
two Americans have been permitted to return to the peaceful management
of their business. Our naval commanders at the scene of these
disturbances by their constant exhibition of firmness and good judgment
contributed largely to the prevention of more serious consequences and
to the restoration of quiet and order. I regret that in the midst of
these occurrences there happened a most grave and irritating failure of
Nicaraguan justice. An American citizen named Wilson, residing at Rama,
in the Mosquito territory, was murdered by one Arguello, the acting
governor of the town. After some delay the murderer was arrested, but
so insecurely confined or guarded that he escaped, and notwithstanding
our repeated demands it is claimed that his recapture has been
impossible by reason of his flight beyond Nicaraguan jurisdiction.

The Nicaraguan authorities, having given notice of forfeiture of their
concession to the canal company on grounds purely technical and not
embraced in the contract, have receded from that position.

Peru, I regret to say, shows symptoms of domestic disturbance, due
probably to the slowness of her recuperation from the distresses of the
war of 1881. Weakened in resources, her difficulties in facing
international obligations invite our kindly sympathy and justify our
forbearance in pressing long-pending claims. I have felt constrained to
testify this sympathy in connection with certain demands urgently
preferred by other powers.

The recent death of the Czar of Russia called forth appropriate
expressions of sorrow and sympathy on the part of our Government with
his bereaved family and the Russian people. As a further demonstration
of respect and friendship our minister at St. Petersburg was directed
to represent our Government at the funeral ceremonies.

The sealing interests of Russia in Bering Sea are second only to our
own. A modus vivendi has therefore been concluded with the Imperial
Government restrictive of poaching on the Russian rookeries and of
sealing in waters which were not comprehended in the protected area
defined in the Paris award.

Occasion has been found to urge upon the Russian Government equality of
treatment for our great life-insurance companies whose operations have
been extended throughout Europe. Admitting as we do foreign
corporations to transact business in the United States, we naturally
expect no less tolerance for our own in the ample fields of competition
abroad.

But few cases of interference with naturalized citizens returning to
Russia have been reported during the current year. One Krzeminski was
arrested last summer in a Polish province on a reported charge of
unpermitted renunciation of Russian allegiance, but it transpired that
the proceedings originated in alleged malfeasance committed by
Krzeminski while an imperial official a number of years ago. Efforts
for his release, which promised to be successful, were in progress when
his death was reported.

The Government of Salvador having been overthrown by an abrupt popular
outbreak, certain of its military and civil officers, while hotly
pursued by infuriated insurgents, sought refuge on board the United
States war ship Bennington, then lying in a Salvadorean port. Although
the practice of asylum is not favored by this Government, yet in view
of the imminent peril which threatened the fugitives and solely from
considerations of humanity they were afforded shelter by our naval
commander, and when afterwards demanded under our treaty of extradition
with Salvador for trial on charges of murder, arson, and robbery I
directed that such of them as had not voluntarily left the ship be
conveyed to one of our nearest ports where a hearing could be had
before a judicial officer, in compliance with the terms of the treaty.
On their arrival at San Francisco such a proceeding was promptly
instituted before the United States district judge, who held that the
acts constituting the alleged offenses were political and discharged
all the accused except one Cienfuegos, who was held for an attempt to
murder. Thereupon I was constrained to direct his release for the
reason that an attempt to murder was not one of the crimes charged
against him and upon which his surrender to the Salvadorean authorities
had been demanded.

Unreasonable and unjust fines imposed by Spain on the vessels and
commerce of the United States have demanded from time to time during
the last twenty years earnest remonstrance on the part of our
Government. In the immediate past exorbitant penalties have been
imposed upon our vessels and goods by customs authorities of Cuba and
Puerto Rico for clerical errors of the most trivial character in the
manifests of bills of lading. In some cases fines amounting to
thousands of dollars have been levied upon cargoes or the carrying
vessels when the goods in question were entitled to free entry. Fines
have been exacted even when the error had been detected and the Spanish
authorities notified before the arrival of the goods in port.

This conduct is in strange contrast with the considerate and liberal
treatment extended to Spanish vessels and cargoes in our ports in like
cases. No satisfactory settlement of these vexatious questions has yet
been reached.

The Mora case, referred to in my last annual message, remains
unsettled. From the diplomatic correspondence on this subject which has
been laid before the Senate it will be seen that this Government has
offered to conclude a convention with Spain for disposal by arbitration
of outstanding claims between the two countries, except the Mora claim.
which, having been long ago adjusted, now only awaits payment as
stipulated, and of course it could not be included in the proposed
convention. It was hoped that this offer would remove parliamentary
obstacles encountered by the Spanish Government in providing payment of
the Mora indemnity. I regret to say that no definite reply to this
offer has yet been made and all efforts to secure payment of this
settled claim have been unavailing.

In my last annual message I adverted to the claim on the part of Turkey
of the right to expel as persons undesirable and dangerous Armenians
naturalized in the United States and returning to Turkish jurisdiction.
Numerous questions in this relation have arisen. While this Government
acquiesces in the asserted right of expulsion, it will not consent that
Armenians may be imprisoned or otherwise punished for no other reason
than having acquired without imperial consent American citizenship.

Three of the assailants of Miss Melton, an American teacher in Mosul,
have been convicted by the Ottoman courts, and I am advised that an
appeal against the acquittal of the remaining five has been taken by
the Turkish prosecuting officer.

A convention has been concluded with Venezuela for the arbitration of a
long-disputed claim growing out of the seizure of certain vessels the
property of citizens of the United States. Although signed, the treaty
of extradition with Venezuela is not yet in force, owing to the
insistence of that Government that when surrendered its citizens shall
in no case be liable to capital punishment.

The rules for the prevention of collisions at sea which were framed by
the maritime conference held in this city in 1889, having been
concurrently incorporated in the statutes of the United States and
Great Britain have been announced to take effect March 1, 1895, and
invitations have been extended to all maritime nations to adhere to
them. Favorable responses have thus far been received from Austria,
France, Portugal, Spain, and Sweden.

In my last annual message I referred briefly to the unsatisfactory
state of affairs in Samoa under the operation of the Berlin treaty as
signally illustrating the impolicy of entangling alliances with foreign
powers, and on May 9, 1894, in response to a resolution of the Senate,
I sent a Special message and documents to that body on the same
subject, which emphasized my previously expressed opinions. Later
occurrences, the correspondence in regard to which will be laid before
the Congress, further demonstrate that the Government which was devised
by the three powers and forced upon the Samoans against their
inveterate hostility can be maintained only by the continued presence
of foreign military force and at no small sacrifice of life and
treasure.

The suppression of the Mataafa insurrection by the powers and the
subsequent banishment of the leader and eleven other chiefs, as recited
in my last message, did not bring lasting peace to the islands.
Formidable uprisings continued, and finally a rebellion broke out in
the capital island, Upolu, headed in Aana, the western district, by the
younger Tamasese, and in Atua, the eastern district, by other leaders.
The insurgents ravaged the country and fought the Government's troops
up to the very doors of Apia. The King again appealed to the powers for
help, and the combined British and German naval forces reduced the
Atuans to apparent subjection, not, however, without considerable loss
to the natives. A few days later Tamasese and his adherents, fearing
the ships and the marines, professed submission.

Reports received from our agents at Apia do not justify the belief that
the peace thus brought about will be of long duration. It is their
conviction that the natives are at heart hostile to the present
Government, that such of them as profess loyalty to it do so from fear
of the powers, and that it would speedily go to pieces if the war ships
were withdrawn. In reporting to his Government on the unsatisfactory
situation since the suppression of the late revolt by foreign armed
forces, the German consul at Apia stated:

That peace will be lasting is hardly to be presumed. The lesson given
by firing on Atua was not sufficiently sharp and incisive to leave a
lasting impression on the forgetful Samoan temperament. In fact,
conditions are existing which show that peace will not last and is not
seriously intended. Malietoa, the King, and his chiefs are convinced
that the departure of the war ships will be a signal for a renewal of
war. The circumstance that the representatives of the villages of all
the districts which were opposed to the Government have already
withdrawn to Atua to hold meetings, and that both Atua and Aana have
forbidden inhabitants of those districts which fought on the side of
the Government to return to their villages, and have already partly
burned down the latter, indicates that a real conciliation of the
parties is still far off.
 And in a note of the 10th ultimo, inclosing a copy of that report for the information of this Government, the German ambassador said:
The contents of the report awakened the imperial Government's
apprehension that under existing circumstances the peace concluded with
the rebels will afford no assurance of the lasting restoration of
tranquillity in the islands.
 The present Government has utterly failed to correct, if indeed it has not aggravated, the very evils it was intended to prevent. It has not stimulated our commerce with the islands. Our participation in its establishment against the wishes of the natives was in plain defiance of the conservative teachings and warnings of the wise and patriotic men who laid the foundations of our free institutions, and I invite an expression of the judgment of Congress on the propriety of steps being taken by this Government looking to the withdrawal from its engagements with the other powers on some reasonable terms not prejudicial to any of our existing rights.
The Secretary of the Treasury reports that the receipts of the
Government from all sources of revenue during the fiscal year ending
June 30, 1894, amounted to $372,802,498.29 and its expenditures to
$442,605,758.87, leaving a deficit of $69,803,260.58. There was a
decrease of $15,952,674.66 in the ordinary expense of the Government as
compared with the fiscal year 1893.

There was collected from customs $131,818,530.62 and from internal
revenue $147,168,449.70. The balance of the income for the year,
amounting to $93,815,517.97, was derived from the sales of lands and
other sources.

The value of our total dutiable imports amounted to $275,199,086, being
$146,657,625 less than during the preceding year, and the importations
free of duty amounted to $379,795,536, being $64,748,675 less than
during the preceding year. The receipts from customs were
$73,536,486.11 less and from internal revenue $13,836,539.97 less than
in 1893.

The total tax collected from distilled spirits was $85,259,250.25, on
manufactured tobacco $28,617,898.62, and on fermented liquors
$31,414,788.04.

Our exports of merchandise, domestic and foreign, amounted during the
year to $892,140,572, being an increase over the preceding year of
$44,495,378.

The total amount of gold exported during the fiscal year was
$76,898,061, as against $108,680,444 during the fiscal year 1893. The
amount imported was $72,449,119, as against $21,174,381 during the
previous year.

The imports of silver were $13,186,552 and the exports were $50,451,265.

The total bounty paid upon the production of sugar in the United States
for the fiscal year was $12,100,208.89, being an increase of
$2,725,078.01 over the payments made during the preceding year. The
amount of bounty paid from July 1, 1894, to August 28, 1894, the time
when further payments ceased by operation of law, was $966,185.84. The
total expenses incurred in the payment of the bounty upon sugar during
the fiscal year was $130,140.85.

It is estimated that upon the basis of the present revenue laws the
receipts of the Government during the current fiscal year, ending June
30, 1895, will be $424,427,748.44 and its expenditures $444,427,748.44,
resulting in a deficit of $20,000,000.

On the 1st day of November, 1894, the total stock of money of all kinds
in the country was $2,240,773,88.8, as against $2,204,651,000 on the
1st day of November, 1893, and the money of all kinds in circulation,
or not included in the Treasury holdings, was $1,672,093,422, or $24.27
per capita upon an estimated population of 68,887,000. At the same date
there was held in the Treasury gold bullion amounting to $44,615,177.55
and silver bullion which was purchased at a cost of $127,772,988. The
purchase of silver bullion under the act of July 14, 1890, ceased on
the 1st day of November, 1893, and up to that time there had been
purchased during the fiscal year 11,917,658.78 fine ounces, at a cost
of $8,715,521.32, an average cost of $0.7313 per fine ounce. The total
amount of silver purchased from the time that law took effect until the
repeal of its purchasing clause, on the date last mentioned, was
168,674,682.53 fine ounces, which cost $155,931,002.25, the average
price per fine ounce being $0.9244.

The total amount of standard silver dollars coined at the mints of the
United States since the passage of the act of February 28, 1878, is
$421,776,408, of which $378,166,793 were coined under the provisions of
that act, $38,531,143 under the provisions of the act of July 14, 1890,
and $5,078,472 under the act providing for the coinage of trade-dollar
bullion.

The total coinage of all metals at our mints during the last fiscal
year consisted of 63,485,220 pieces, valued at $106,216,730.06, of
which there were $99,474,912.50 in gold coined, $758 in standard silver
dollars, $6,024,140.30 in subsidiary silver coin, and $716,919.26 in
minor coin.

During the calendar year 1893 the production of precious metals in the
United States was estimated at 1,739,323 fine ounces of gold of the
commercial and coinage value of $35,955,000 and 70,000,000 fine ounces
of silver of the bullion or market value of $46,800,000 and of the
coinage value of $77,576,000. It is estimated that on the 1st day of
July, 1894, the stock of metallic money in the United States,
consisting of coin and bullion, amounted to $1,251,640,958, of which
$627,923,201 was gold and $624,347,757 was silver.

Fifty national banks were organized during the year ending October 31,
1894, with a capital of $5,285,000, and 79, with a capital of
$10,475,000, went into voluntary liquidation. Twenty-one banks, with a
capital of $2,770,000, were placed in the hands of receivers. The total
number of national banks in existence on the 31st day of October last
was 3,756, being 40 less than on the 31st day of October, 1893. The
capital stock paid in was $672,671,365, being $9,678,491 less than at
the same time in the previous year, and the surplus fund and individual
profits, less expenses and taxes paid, amounted to $334,121,082.10,
which was $16,089,780 less than on October 31, 1893. The circulation
was decreased $1,741,563. The obligations of the banks to each other
were increased $117,268,334 and the individual deposits were
$277,294,489 less than at the corresponding date in the previous year.
Loans and discounts were $161,206,923 more than at the same time the
previous year, and checks and other cash items were $90,349,963 more.
The total resources of the banks at the date mentioned amounted to
$3,473,922,055, as against $3,109,563,184.36 in 1893.

From the report of the Secretary of War it appears that the strength of
the Army on September 30, 1894, was 2,135 officers and 25,765 enlisted
men. Although this is apparently a very slight decrease compared with
the previous year, the actual effective force has been increased to the
equivalent of nearly two regiments through the reorganization of the
system of recruiting and the consequent release to regimental duty of
the large force of men hitherto serving at the recruiting depots. The
abolition of these depots, it is predicted, will furthermore effect an
annual reduction approximating $250,000 in the direct expenditures,
besides promoting generally the health, morale, and discipline of the
troops.

The execution of the policy of concentrating the Army at important
centers of population and transportation, foreshadowed in the last
annual report of the Secretary, has resulted in the abandonment of
fifteen of the smaller posts, which was effected under a plan which
assembles organizations of the same regiments hitherto widely
separated. This renders our small forces more readily effective for any
service which they may be called upon to perform, increases the extent
of the territory under protection without diminishing the security
heretofore afforded to any locality, improves the discipline, training,
and esprit de corps of the Army, besides considerably decreasing the
cost of its maintenance.

Though the forces of the Department of the East have been somewhat
increased, more than three-fourths of the Army is still stationed west
of the Mississippi. This carefully matured policy, which secures the
best and greatest service in the interests of the general welfare from
the small force comprising our Regular Army, should not be
thoughtlessly embarrassed by the creation of new and unnecessary posts
through acts of Congress to gratify the ambitions or interests of
localities.

While the maximum legal strength of the Army is 25,000 men, the
effective strength, through various causes, is but little over 20,000
men. The purpose of Congress does not, therefore, seem to be fully
attained by the existing condition. While no considerable increase in
the Army is, in my judgment, demanded by recent events, the policy of
seacoast fortification, in the prosecution of which we have been
steadily engaged for some years, has so far developed as to suggest
that the effective strength of the Army be now made at least equal to
the legal strength. Measures taken by the Department during the year,
as indicated, have already considerably augmented the effective force,
and the Secretary of War presents a plan, which I recommend to the
consideration of Congress, to attain the desired end. Economies
effected in the Department in other lines of its work will offset to a
great extent the expenditure involved in the proposition submitted.
Among other things this contemplates the adoption of the
three-battalion formation of regiments, which for several years has
been indorsed by the Secretaries of War and the Generals Commanding the
Army. Compact in itself, it provides a skeleton organization, ready to
be filled out in the event of war, which is peculiarly adapted to our
strength and requirements; and the fact that every other nation, with a
single exception, has adopted this formation to meet the conditions of
modern warfare should alone secure for the recommendation an early
consideration.

It is hardly necessary to recall the fact that in obedience to the
commands of the Constitution and the laws, and for the purpose of
protecting the property of the United States, aiding the process of
Federal courts, and removing lawless obstructions to the performance by
the Government of its legitimate functions, it became necessary in
various localities during the year to employ a considerable portion of
the regular troops. The duty was discharged promptly, courageously, and
with marked discretion by the officers and men, and the most gratifying
proof was thus afforded that the Army deserves that complete confidence
in its efficiency and discipline which the country has at all times
manifested.

The year has been free from disturbances by Indians, and the chances of
further depredations on their part are constantly becoming more remote
and improbable.

The total .expenditures for the War Department for the year ended June
30, 1894, amounted to $56,039,009.34. Of this sum $2,000,614.99 was for
salaries and contingent expenses, $23,665,156.16 for the support of the
military establishment, $5,001,682.23 for miscellaneous objects, and
$25,371,555.96 for public works. This latter sum includes
$19,494,037.49 for river and harbor improvements and $3,947,863.56 for
fortifications and other works of defense. The appropriations for the
current year aggregate $52,429,112.78, and the estimates submitted by
the Secretary of War for the next fiscal year call for appropriations
amounting to $52,318,629.55.

The skill and industry of our ordnance officers and inventors have, it
is believed, overcome the mechanical obstacles which have heretofore
delayed the armament of our coasts, and this great national undertaking
upon which we have entered may now proceed as rapidly as Congress shall
determine. With a supply of finished guns of large caliber already on
hand, to which additions should now rapidly follow, the wisdom of
providing carriages and emplacements for their mount can not be too
strongly urged.

The total enrollment of the militia of the several States is 117,533
officers and enlisted men, an increase of 5,343 over the number
reported at the close of the previous year. The reports of militia
inspections by Regular Army officers show a marked increase in interest
and efficiency among the State organizations, and I strongly recommend
a continuance of the policy of affording every practical encouragement
possible to this important auxiliary of our military establishment.

The condition of the Apache Indians held as prisoners by the Government
for eight years at a cost of half a million dollars has been changed
during the year from captivity to one which gives them an opportunity
to demonstrate their capacity for self-support and at least partial
civilization. Legislation enacted at the late session of Congress gave
the War Department authority to transfer the survivors, numbering 346,
from Mount Vernon Barracks, in Alabama, to any suitable reservation.
The Department selected as their future home the military lands near
Fort Sill, Ind. T., where, under military surveillance, the former
prisoners have been established in agriculture under conditions
favorable to their advancement.

In recognition of the long and distinguished military services and
faithful discharge of delicate and responsible civil duties by
Major-General John M. Schofield, now the General Commanding the Army,
it is suggested to Congress that the temporary revival of the grade of
lieutenant-general in his behalf would be a just and gracious act and
would permit his retirement, now near at hand, with rank befitting his
merits.

The report of the Attorney-General notes the gratifying progress made
by the Supreme Court in overcoming the arrears of its business and in
reaching a condition in which it will be able to dispose of cases as
they arise without any unreasonable delay. This result is of course
very largely due to the successful working of the plan inaugurating
circuit courts of appeals. In respect to these tribunals the suggestion
is made, in quarters entitled to the highest consideration that an
additional circuit judge for each circuit would greatly strengthen
these courts and the confidence reposed in their adjudications, and
that such an addition would not create a greater force of judges than
the increasing business of such courts requires. I commend the
suggestion to the careful consideration of the Congress. Other
important topics are adverted to in the report, accompanied by
recommendations, many of which have been treated at large in previous
messages, and at this time, therefore, need only be named. I refer to
the abolition of the fee system as a measure of compensation to Federal
officers; the enlargement of the powers of United States commissioners,
at least in the Territories; the allowance of writs of error in
criminal cases on behalf of the United States, and the establishment of
degrees in the crime of murder. A topic dealt with by the
Attorney-General of much importance is the condition of the
administration of justice in the Indian Territory. The permanent
solution of what is called the Indian problem is probably not to be
expected at once, but meanwhile such ameliorations of present
conditions as the existing system will admit of ought not to be
neglected. I am satisfied there should be a Federal court established
for the Territory, with sufficient judges, and that this court should
sit within the Territory and have the same jurisdiction as to
Territorial affairs as is now vested in the Federal courts sitting in
Arkansas and Texas.

Another subject of pressing moment referred to by the Attorney-General
is the reorganization of the Union Pacific Railway Company on a basis
equitable as regards all private interests and as favorable to the
Government as existing conditions will permit. The operation of a
railroad by a court through a receiver is an anomalous state of things
which should be terminated on all grounds, public and private, at the
earliest possible moment. Besides, not to enact the needed enabling
legislation at the present session postpones the whole matter until the
assembling of a new Congress and inevitably increases all the
complications of the situation, and could not but be regarded as a
signal failure to solve a problem which has practically been before the
present Congress ever since its organization.

Eight years ago in my annual message I urged upon the Congress as
strongly as I could the location and construction of two prisons for
the confinement of United States prisoners. A similar recommendation
has been made from time to time since, and a few years ago a law was
passed providing for the selection of sites for three such
institutions. No appropriation has, however, been made to carry the act
into effect, and the old and discreditable condition still exists.

It is not my purpose at this time to repeat the considerations which
make an impregnable case in favor of the ownership and management by
the Government of the penal institutions in which Federal prisoners are
confined. I simply desire to again urge former recommendations on the
subject and to particularly call the attention of the Congress to that
part of the report of the Secretary of War in which he states that the
military prison at Fort Leavenworth, Kans., can be turned over to the
Government as a prison for Federal convicts without the least
difficulty and with an actual saving of money from every point of view.

Pending a more complete reform, I hope that by the adoption of the
suggestion of the Secretary of War this easy step may be taken in the
direction of the proper care of its convicts by the Government of the
United States.

The report of the Postmaster-General presents a comprehensive statement
of the operations of the Post-Office Department for the last fiscal
year.

The receipts of the Department during the year amounted to
$75,080,479.04 and the expenditures to $84,324,414.15.

The transactions of the postal service indicate with barometric
certainty the fluctuations in the business of the country. Inasmuch,
therefore, as business complications continued to exist throughout the
last year to an unforeseen extent, it is not surprising that the
deficiency of revenue to meet the expenditures of the Post-Office
Department, which was estimated in advance at about $8,000,000, should
be exceeded by nearly $1,225,000. The ascertained revenues of the last
year, which were the basis of calculation for the current year, being
less than estimated, the deficiency for the current year will be
correspondingly greater, though the Postmaster-General states that the
latest indications are so favorable that he confidently predicts an
increase of at least 8 per cent in the revenues of the current year
over those of the last year.

The expenditures increase steadily and necessarily with the growth and
needs of the country, so that the deficiency is greater or less in any
year, depending upon the volume of receipts.

The Postmaster-General states that this deficiency is unnecessary and
might be obviated at once if the law regulating rates upon mail matter
of the second class was modified. The rate received for the
transmission of this second-class matter is 1 cent per pound, while the
cost of such transmission to the Government is eight times that amount.
In the general terms of the law this rate covers newspapers and
periodicals. The extensions of the meaning of these terms from time to
time have admitted to the privileges intended for legitimate newspapers
and periodicals a surprising range of publications and created abuses
the cost of which amounts in the aggregate to the total deficiency of
the Post-Office Department. Pretended newspapers are started by
business houses for the mere purpose of advertising goods, complying
with the law in form only and discontinuing the publications as soon as
the period of advertising is over. "Sample copies" of pretended
newspapers are issued in great numbers for a like purpose only. The
result is a great loss of revenue to the Government, besides its
humiliating use as an agency to aid in carrying out the scheme of a
business house to advertise its goods by means of a trick upon both its
rival houses and the regular and legitimate newspapers. Paper-covered
literature, consisting mainly of trashy novels, to the extent of many
thousands of tons is sent through the mails at 1 cent per pound, while
the publishers of standard works are required to pay eight times that
amount in sending their publications. Another abuse consists in the
free carriage through the mails of hundreds of tons of seed and grain
uselessly distributed through the Department of Agriculture. The
Postmaster-General predicts that if the law be so amended as to
eradicate these abuses not only will the Post-Office Department show no
deficiency, but he believes that in the near future all legitimate
newspapers and periodical magazines might be properly transmitted
through the mails to their subscribers free of cost. I invite your
prompt consideration of this subject and fully indorse the views of the
Postmaster-General.

The total number of post-offices in the United States on the 30th day
of June, 1894, was 69,805, an increase of 1,403 over the preceding
year. Of these, 3,428 were Presidential, an increase in that class of
68 over the preceding year.

Six hundred and ten cities and towns are provided with free delivery.
Ninety-three other cities and towns entitled to this service under the
law have not been accorded it on account of insufficient funds. The
expense of free delivery for the current fiscal year will be more than
$12,300,000, and under existing legislation this item of expenditure is
subject to constant increase. The estimated cost of rural free delivery
generally is so very large that it ought not to be considered in the
present condition of affairs.

During the year 830 additional domestic money-order offices were
established. The total number of these offices at the close of the year
was 19,264. There were 14,304,041 money orders issued during the year,
being an increase over the preceding year of 994,306. The value of
these orders amounted to $138,793,579.49, an increase of
$11,217,145.84. There were also issued during the year postal notes
amounting to $12,649,094.55.

During the year 218 international money-order offices were added to
those already established, making a total of 2,625 such offices in
operation June 30, 1894. The number of international money orders
issued during the year was 917,823, a decrease in number of 138,176,
and their value was $13,792,455.31, a decrease in amount of
$2,549,382.55. The number of orders paid was 361,180, an increase over
the preceding year of 60,263, and their value was $6,568,493.78, an
increase of $1,285,118.08.

From the foregoing statements it appears that the total issue of money
orders and postal notes for the year amounted to $165,235,129.35.

The number of letters and packages mailed during the year for special
delivery was 3,436,970. The special-delivery stamps used upon these
letters and packages amounted to $343,697. The messengers fees paid for
their delivery amounted to $261,209.70, leaving a balance in favor of
the Government of $82,487.30.

The report shows most gratifying results in the way of economies worked
out without affecting the efficiency of the postal service. These
consist in the abrogation of steamship subsidy contracts, reletting of
mail transportation contracts, and in the cost and amount of supplies
used in the service, amounting in all to $16,619,047.42.

This report also contains a valuable contribution to the history of the
Universal Postal Union, an arrangement which amounts practically to the
establishment of one postal system for the entire civilized world.
Special attention is directed to this subject at this time in view of
the fact that the next congress of the union will meet in Washington in
1897, and it is hoped that timely action will be taken in the direction
of perfecting preparations for that event.

The Postmaster-General renews the suggestion made in a previous report
that the Department organization be increased to the extent of creating
a direct district supervision of all postal affairs, and in this
suggestion I fully concur.

There are now connected with the Post-Office establishment 32,661
employees who are in the classified service. This includes many who
have been classified upon the suggestion of the Postmaster-General. He
states that another year's experience at the head of the Department
serves only to strengthen the conviction as to the excellent working of
the civil-service law in this branch of the public service.

Attention is called to the report of the Secretary of the Navy, which
shows very gratifying progress in the construction of ships for our new
Navy. All the vessels now building, including the three torpedo boats
authorized at the last session of Congress and excepting the
first-class battle ship Iowa, will probably be completed during the
coming fiscal year.

The estimates for the increase of the Navy for the year ending June 30,
1896, are large, but they include practically the entire sum necessary
to complete and equip all the new ships not now in commission, so that
unless new ships are authorized the appropriations for the naval
service for the fiscal year ending June 30, 1897, should fall below the
estimates for the coming year by at least $12,000,000.

The Secretary presents with much earnestness a plea for the
authorization of three additional battle ships and ten or twelve
torpedo boats. While the unarmored vessels heretofore authorized,
including those now nearing completion, will constitute a fleet which
it is believed is sufficient for ordinary cruising purposes in time of
peace, we have now completed and in process of construction but four
first-class battle ships and but few torpedo boats. If we are to have a
navy for warlike operations, offensive and defensive, we certainly
ought to increase both the number of battle ships and torpedo boats.

The manufacture of armor requires expensive plants and the aggregation
of many skilled workmen. All the armor necessary to complete the
vessels now building will be delivered before the 1st of June next. If
no new contracts are given out, contractors must disband their workmen
and their plants must lie idle. Battle ships authorized at this time
would not be well under way until late in the coming fiscal year, and
at least three years and a half from the date of the contract would be
required for their completion. The Secretary states that not more than
15 per cent of the cost of such ships need be included in the
appropriations for the coming year.

I recommend that provision be made for the construction of additional
battle ships and torpedo boats. The Secretary recommends the
manufacture not only of a reserve supply of ordnance and ordnance
material for ships of the Navy, but also a supply for the auxiliary
fleet. Guns and their appurtenances should be provided and kept on hand
for both these purposes. We have not to-day a single gun that could be
put upon the ships Paris or New York of the International Navigation
Company or any other ship of our reserve Navy.

The manufacture of guns at the Washington Navy-Yard is proceeding
satisfactorily, and none of our new ships will be required to wait for
their guns or ordnance equipment.

An important order has been issued by the Secretary of the Navy
coordinating the duties of the several bureaus concerned in the
construction of ships. This order, it is believed, will secure to a
greater extent than has heretofore been possible the harmonious action
of these several bureaus and make the attainment of the best results
more certain.

During the past fiscal year there has been an unusual and pressing
demand in many quarters of the world for the presence of vessels to
guard American interests.

In January last, during the Brazilian insurrection, a large fleet was
concentrated in the harbor of Rio de Janeiro. The vigorous action of
Rear-Admiral Benham in protecting the personal and commercial rights of
our citizens during the disturbed conditions afforded results which
will, it is believed, have a far-reaching and wholesome influence
whenever in like circumstances it may become necessary for our naval
commanders to interfere on behalf of our people in foreign ports.

The war now in progress between China and Japan has rendered it
necessary or expedient to dispatch eight vessels to those waters.

Both the Secretary of the Navy and the Secretary of the Treasury
recommend the transfer of the work of the Coast Survey proper to the
Navy Department. I heartily concur in this recommendation. Excluding
Alaska and a very small area besides, all the work of mapping and
charting our coasts has been completed. The hydrographic work, which
must be done over and over again by reason of the shifting and varying
depths of water consequent upon the action of streams and tides, has
heretofore been done under the direction of naval officers in
subordination to the Superintendent of the Coast Survey. There seems to
be no good reason why the Navy should not have entire charge hereafter
of such work, especially as the Hydrographic Office of the Navy
Department is now and has been for many years engaged in making
efficient maps entirely similar to those prepared by the Coast Survey.

I feel it my imperative duty to call attention to the recommendation of
the Secretary in regard to the personnel of the line of the Navy. The
stagnation of promotion in this the vital branch of the service is so
great as to seriously impair its efficiency.

I consider it of the utmost importance that the young and middle-aged
officers should before the eve of retirement be permitted to reach a
grade entitling them to active and important duty.

The system adopted a few years ago regulating the employment of labor
at the navy-yards is rigidly upheld and has fully demonstrated its
usefulness and expediency. It is within the domain of civil-service
reform inasmuch as workmen are employed through a board of labor
selected at each navy-yard and are given work without reference to
politics and in the order of their application, preference, however,
being given to Army and Navy veterans and those having former navy-yard
experience.

Amendments suggested by experience have been made to the rules
regulating the system. Through its operation the work at our navy-yards
has been vastly improved in efficiency and the opportunity to work has
been honestly and fairly awarded to willing and competent applicants.

It is hoped that if this system continues to be strictly adhered to
there will soon be as a natural consequence such an equalization of
party benefit as will remove all temptation to relax or abandon it.

The report of the Secretary of the Interior exhibits the situation of
the numerous and interesting branches of the public service connected
with his Department. I commend this report and the valuable
recommendations of the Secretary to the careful attention of the
Congress.

The public land disposed of during the year amounted to 10,406,100.77
acres, including 28,876.05 of Indian lands.

It is estimated that the public domain still remaining amounts to a
little more than 600,000,000 acres, including, however, about
360,000,000 acres in Alaska, as well as military reservations and
railroad and other selections of lands yet unadjudicated.

The total cash receipts from sale of lands amounted to $2,674,285.79,
including $91,981.03 received for Indian lands.

Thirty-five thousand patents were issued for agricultural lands, and
3,100 patents were issued to Indians on allotments of their holdings in
severalty, the land so allotted being inalienable by the Indian
allottees for a period of twenty-five years after patent.

There were certified and patented on account of railroad and wagon-road
grants during the year 865,556.45 acres of land, and at the close of
the year 29,000,000 acres were embraced in the lists of selections made
by railroad and wagon-road companies and awaited settlement.

The selections of swamp lands and that taken as indemnity therefor
since the passage of the act providing for the same in 1849 amount to
nearly or quite 80,500,000 acres, of which 58,000,000 have been
patented to States. About 138,000 acres were patented during the last
year. Nearly 820,000 acres of school and education grants were approved
during the year, and at its close 1,250,363.81 acres remained
unadjusted.

It appears that the appropriation for the current year on account of
special service for the protection of the public lands and the timber
thereon is much less than those for previous years, and inadequate for
an efficient performance of the work. A larger sum of money than has
been appropriated during a number of years past on this account has
been returned to the Government as a result of the labors of those
employed in the particular service mentioned, and I hope it will not be
crippled by insufficient appropriation.

I fully indorse the recommendation of the Secretary that adequate
protection be provided for our forest reserves and that a comprehensive
forestry system be inaugurated. Such keepers and superintendents as are
necessary to protect the forests already reserved should be provided.

I am of the opinion that there should be an abandonment of the policy
sanctioned by present laws under which the Government, for a very small
consideration, is rapidly losing title to immense tracts of land
covered with timber, which should be properly reserved as permanent
sources of timber supply.

The suggestion that a change be made in the manner of securing surveys
of the public lands is especially worthy of consideration. I am
satisfied that these surveys should be made by a corps of competent
surveyors under the immediate control and direction of the Commissioner
of the General Land Office.

An exceedingly important recommendation of the Secretary relates to the
manner in which contests and litigated cases growing out of efforts to
obtain Government land are determined. The entire testimony upon which
these controversies depend in all their stages is taken before the
local registers and receivers, and yet these officers have no power to
subpoena witnesses or to enforce their attendance to testify. These
cases, numbering three or four thousand annually, are sent by the local
officers to the Commissioner of the General Land Office for his action.
The exigencies of his other duties oblige him to act upon the decisions
of the registers and receivers without an opportunity of thorough
personal examination. Nearly 2,000 of these cases are appealed annually
from the Commissioner to the Secretary of the Interior. Burdened with
other important administrative duties, his determination of these
appeals must be almost perfunctory and based upon the examination of
others, though this determination of the Secretary operates as a final
adjudication upon rights of very great importance.

I concur in the opinion that the Commissioner of the General Land
Office should be relieved from the duty of deciding litigated land
cases, that a nonpartisan court should be created to pass on such
cases, and that the decisions of this court should be final, at least
so far as the decisions of the Department are now final. The proposed
court might be given authority to certify questions of law in matters
of especial importance to the Supreme Court of the United States or the
court of appeals for the District of Columbia for decision. The
creation of such a tribunal would expedite the disposal of cases and
insure decisions of a more satisfactory character. The registers and
receivers who originally hear and decide these disputes should be
invested with authority to compel witnesses to attend and testify
before them.

Though the condition of the Indians shows a steady and healthy
progress, their situation is not satisfactory at all points. Some of
them to whom allotments of land have been made are found to be unable
or disinclined to follow agricultural pursuits or to otherwise
beneficially manage their land. This is especially true of the
Cheyennes and Arapahoes, who, as it appears by reports of their agent,
have in many instances never been located upon their allotments, and in
some cases do not even know where their allotments are. Their condition
has deteriorated. They are not self-supporting and they live in camps
and spend their time in idleness.

I have always believed that allotments of reservation lands to Indians
in severalty should be made sparingly, or at least slowly, and with the
utmost caution. In these days, when white agriculturists and stock
raisers of experience and intelligence find their lot a hard one, we
ought not to expect Indians, unless far advanced in civilization and
habits of industry, to support themselves on the small tracts of land
usually allotted to them.

If the self-supporting scheme by allotment fails, the wretched
pauperism of the allottees which results is worse than their original
condition of regulated dependence. It is evident that the evil
consequences of ill-advised allotment are intensified in cases where
the false step can not be retraced on account of the purchase by the
Government of reservation lands remaining after allotments are made and
the disposition of such remaining lands to settlers or purchasers from
the Government.

I am convinced that the proper solution of the Indian problem and the
success of every step taken in that direction depend to a very large
extent upon the intelligence and honesty of the reservation agents and
the interest they have in their work. An agent fitted for his place can
do much toward preparing the Indians under his charge for citizenship
and allotment of their lands, and his advice as to any matter
concerning their welfare will not mislead. An unfit agent will make no
effort to advance the Indians on his reservation toward civilization or
preparation for allotment of lands in severalty, and his opinion as to
their condition in this and other regards is heedless and valueless.

The indications are that the detail of army officers as Indian agents
will result in improved management on the reservations.

Whenever allotments are made and any Indian on the reservation has
previously settled upon a lot and cultivated it or shown a disposition
to improve it in any way, such lot should certainly be allotted to him,
and this should be made plainly obligatory by statute.

In the light of experience and considering the uncertainty of the
Indian situation and its exigencies in the future, I am not only
disposed to be very cautious in making allotments, but I incline to
agree with the Secretary of the Interior in the opinion that when
allotments are made the balance of reservation land remaining after
allotment, instead of being bought by the Government from the Indians
and opened for settlement with such scandals and unfair practices as
seem unavoidable, should remain for a time at least as common land or
be sold by the Government on behalf of the Indians in an orderly way
and at fixed prices, to be determined by its location and desirability,
and that the proceeds, less expenses, should be held in trust for the
benefit of the Indian proprietors.

The intelligent Indian-school management of the past year has been
followed by gratifying results. Efforts have been made to advance the
work in a sound and practical manner. Five institutes of Indian
teachers have been held during the year, and have proved very
beneficial through the views exchanged and methods discussed
particularly applicable to Indian education.

Efforts are being made in the direction of a gradual reduction of the
number of Indian contract schools, so that in a comparatively short
time they may give way altogether to Government schools, and it is
hoped that the change may be so gradual as to be perfected without too
great expense to the Government or undue disregard of investments made
by those who have established and are maintaining such contract schools.

The appropriation for the current year, ending June 30, 1895,
applicable to the ordinary expenses of the Indian service amounts to
$6,733,003.18, being less by $663,240.64 than the sum appropriated on
the same account for the previous year.

At the close of the last fiscal year, on the 30th day of June, 1894,
there were 969,544 persons on our pension rolls, being a net increase
of 3,532 over the number reported at the end of the previous year.

These pensioners may be classified as follows: Soldiers and sailors
survivors of all wars, 753,968; widows and relatives of deceased
soldiers, 215,162; army nurses in the War of the Rebellion, 414. Of
these pensioners 32,039 are surviving soldiers of Indian and other wars
prior to the late Civil War and the widows or relatives of such
soldiers.

The remainder, numbering 937,505, are receiving pensions on account of
the rebellion, and of these 469,344 are on the rolls under the
authority of the act of June 27, 1890, sometimes called the
dependent-pension law.

The total amount expended for pensions during the year was
$139,804,461.05, leaving an unexpended balance from the sum
appropriated of $25,205,712.65.

The sum necessary to meet pension expenditures for the year ending June
30, 1896, is estimated at $140,000,000.

The Commissioner of Pensions is of the opinion that the year 1895,
being the thirtieth after the close of the War of the Rebellion, must,
according to all sensible human calculation, see the highest limit of
the pension roll, and that after that year it must begin to decline.

The claims pending in the Bureau have decreased more than 90,000 during
the year. A large proportion of the new claims filed are for increase
of pension by those now on the rolls.

The number of certificates issued was 80,213.

The names dropped from the rolls for all causes during the year
numbered 37,951.

Among our pensioners are 9 widows and 3 daughters of soldiers of the
Revolution and 45 survivors of the War of 1812.

The barefaced and extensive pension frauds exposed under the direction
of the courageous and generous veteran soldier now at the head of the
Bureau leave no room for the claim that no purgation of our pension
rolls was needed or that continued vigilance and prompt action are not
necessary to the same end.

The accusation that an effort to detect pension frauds is evidence of
unfriendliness toward our worthy veterans and a denial of their claims
to the generosity of the Government suggests an unfortunate
indifference to the commission of any offense which has for its motive
the securing of a pension and indicates a willingness to be blind to
the existence of mean and treacherous crimes which play upon demagogic
fears and make sport of the patriotic impulse of a grateful people.

The completion of the Eleventh Census is now in charge of the
Commissioner of Labor. The total disbursements on account of the work
for the fiscal year ending June 30, 1894, amounted to $10,365,676.81.
At the close of the year the number of persons employed in the Census
Office was 679; at present there are about 400. The whole number of
volumes necessary to comprehend the Eleventh Census will be 25, and
they will contain 22,270 printed pages. The assurance is confidently
made that before the close of the present calendar year the material
still incomplete will be practically in hand, and the census can
certainly be closed by the 4th of March, 1895. After that the revision
and proof reading necessary to bring out the volumes will still be
required.

The text of the census volumes has been limited as far as possible to
the analysis of the statistics presented. This method, which is in
accordance with law, has caused more or less friction and in some
instances individual disappointment, for when the Commissioner of Labor
took charge of the work he found much matter on hand which according to
this rule he was compelled to discard. The census is being prepared
according to the theory that it is designed to collect facts and
certify them to the public, not to elaborate arguments or to present
personal views.

The Secretary of Agriculture in his report reviews the operations of
his Department for the last fiscal year and makes recommendations for
the further extension of its usefulness. He reports a saving in
expenditures during the year of $600,000, which is covered back into
the Treasury. This sum is 23 per cent of the entire appropriation.

A special study has been made of the demand for American farm products
in all foreign markets, especially Great Britain, That country received
from the United States during the nine months ending September 30,
1894, 305,910 live beef cattle, valued at $26,500,000, as against
182,611 cattle, valued at $16,634,000, during the same period for 1893.

During the first six months of 1894 the United Kingdom took also
112,000,000 pounds of dressed beef from the United States, valued at
nearly $10,000,000.

The report shows that during the nine months immediately preceding
September 30, 1894, the United States exported to Great Britain
222,676,000 pounds of pork; of apples, 1,900,000 bushels, valued at
$2,500,000, and of horses 2,811, at an average value of $139 per head.
There was a falling off in American wheat exports of 13,500,000
bushels, and the Secretary is inclined to believe that wheat may not in
the future be the staple export cereal product of our country, but that
corn will continue to advance in importance as an export on account of
the new uses to which it is constantly being appropriated.

The exports of agricultural products from the United States for the
fiscal year ending June 30, 1894, amounted to $628,363,038, being 72.28
per cent of American exports of every description, and the United
Kingdom of Great Britain took more than 54 per cent of all farm
products finding foreign markets.

The Department of Agriculture has undertaken during the year two new
and important lines of research. The first relates to grasses and
forage plants, with the purpose of instructing and familiarizing the
people as to the distinctive grasses of the United States and teaching
them how to introduce valuable foreign forage plants which may be
adapted to this country. The second relates to agricultural soils and
crop production, involving the analyses of samples of soils from all
sections of the American Union, to demonstrate their adaptability to
particular plants and crops. Mechanical analyses of soils may be of
such inestimable utility that it is foremost in the new lines of
agricultural research, and the Secretary therefore recommends that a
division having it in charge be permanently established in the
Department.

The amount appropriated for the Weather Bureau was $951,100. Of that
sum $138,500, or 14 per cent, has been saved and is returned to the
Treasury.

As illustrating the usefulness of this service it may be here stated
that the warnings which were very generally given of two tropical
storms occurring in September and October of the present year resulted
in detaining safely in port 2,305 vessels, valued at $36,183,913, laden
with cargoes of probably still greater value. What is much more
important and gratifying, many human lives on these ships were also
undoubtedly saved.

The appropriation to the Bureau of Animal Industry was $850,000, and
the expenditures for the year were only $495,429.24, thus leaving
unexpended $354,570.76. The inspection of beef animals for export and
interstate trade has been continued, and 12,944,056 head were inspected
during the year, at a cost of 1 3/4 cents per head, against 4 3/4 cents
for 1893. The amount of pork microscopically examined was 35,437,937
pounds, against 20,677,410 pounds in the preceding year. The cost of
this inspection has been diminished from 8 3/4 cents per head in 1893
to 6 1/2 cents in 1894.

The expense of inspecting the pork sold in 1894 to Germany and France
by the United States was $88,922.10. The quantity inspected was greater
by 15,000,000 pounds than during the preceding year, when the cost of
such inspection was $172,367.08. The Secretary of Agriculture
recommends that the law providing for the microscopic inspection of
export and interstate meat be so amended as to compel owners of the
meat inspected to pay the cost of such inspection, and I call attention
to the arguments presented in his report in support of this
recommendation.

The live beef cattle exported and tagged during the year numbered
353,535. This is an increase of 69,533 head over the previous year.

The sanitary inspection of cattle shipped to Europe has cost an average
of 10 3/4 cents for each animal, and the cost of inspecting Southern
cattle and the disinfection of cars and stock yards averages 2.7 cents
per animal.

The scientific inquiries of the Bureau of Animal Industry have
progressed steadily during the year. Much tuberculin and mallein have
been furnished to State authorities for use in the agricultural
colleges and experiment stations for the treatment of tuberculosis and
glanders.

Quite recently this Department has published the results of its
investigations of bovine tuberculosis, and its researches will be
vigorously continued. Certain herds in the District of Columbia will be
thoroughly inspected and will probably supply adequate scope for the
Department to intelligently prosecute its scientific work and furnish
sufficient material for purposes of illustration, description, and
definition.

The sterilization of milk suspected of containing the bacilli of
tuberculosis has been during the year very thoroughly explained in a
leaflet by Dr. D. E. Salmon, the Chief of the Bureau, and given general
circulation throughout the country.

The Office of Experiment Stations, which is a part of the United States
Department of Agriculture, has during the past year engaged itself
almost wholly in preparing for publication works based upon the reports
of agricultural experiment stations and other institutions for
agricultural inquiry in the United States and foreign countries.

The Secretary in his report for 1893 called attention to the fact that
the appropriations made for the support of the experiment stations
throughout the Union were the only moneys taken out of the National
Treasury by act of Congress for which no accounting to Federal
authorities was required. Responding to this suggestion, the
Fifty-third Congress, in making the appropriation for the Department
for the present fiscal year, provided that--

The Secretary of Agriculture shall prescribe the form of annual
financial statement required by section 3 of said act of March 2, 1887;
shall ascertain whether the expenditures under the appropriation hereby
made are in accordance with the provisions of said act, and shall make
report thereon to Congress.
 In obedience to this law the Department of Agriculture immediately sent out blank forms of expense accounts to each station, and proposes in addition to make, through trusted experts, systematic examination of the several stations during each year for the purpose of acquiring by personal investigation the detailed information necessary to enable the Secretary of Agriculture to make, as the statute provides, a satisfactory report to Congress. The boards of management of the several stations with great alacrity and cordiality have approved the amendment to the law providing this supervision of their expenditures, anticipating that it will increase the efficiency of the stations and protect their directors and managers from loose charges concerning their use of public funds, besides bringing the Department of Agriculture into closer and more confidential relations with the experimental stations, and through their joint service largely increasing their usefulness to the agriculture of the country.
Acting upon a recommendation contained in the report of 1893, Congress
appropriated $10,000 "to enable the Secretary of Agriculture to
investigate and report upon the nutritive value of the various articles
and commodities used for human food, with special suggestions of full,
wholesome, and edible rations less wasteful and more economical than
those in common use."

Under this appropriation the Department has prepared and now has nearly
ready for distribution an elementary discussion of the nutritive value
and pecuniary economy of food. When we consider that fully one-half of
all the money earned by the wage earners of the civilized world is
expended by them for food, the importance and utility of such an
investigation is apparent.

The Department expended in the fiscal year 1893 $2,354,809.56, and out
of that sum the total amount expended in scientific research was 45.6
per cent. But in the year ending June 30, 1894, out of a total
expenditure of $1,948,988.38, the Department applied 51.8 per cent of
that sum to scientific work and investigation. It is therefore very
plainly observable that the economies which have been practiced in the
administration of the Department have not been at the expense of
scientific research.

The recommendation contained in the report of the Secretary for 1893
that the vicious system of promiscuous free distribution of its
departmental documents be abandoned is again urged. These publications
may well be furnished without cost to public libraries, educational
institutions, and the officers and libraries of States and of the
Federal Government; but from all individuals applying for them a price
covering the cost of the document asked for should be required. Thus
the publications and documents would be secured by those who really
desire them for proper purposes. Half a million of copies of the report
of the Secretary of Agriculture are printed for distribution, at an
annual cost of about $300,000. Large numbers of them are cumbering
storerooms at the Capitol and the shelves of secondhand-book stores
throughout the country. All this labor and waste might be avoided if
the recommendations of the Secretary were adopted.

The Secretary also again recommends that the gratuitous distribution of
seeds cease and that no money be appropriated for that purpose except
to experiment stations. He reiterates the reasons given in his report
for 1893 for discontinuing this unjustifiable gratuity, and I fully
concur in the conclusions which he has reached.

The best service of the statistician of the Department of Agriculture
is the ascertainment, by diligence and care, of the actual and real
conditions, favorable or unfavorable, of the farmers and farms of the
country, and to seek the causes which produce these conditions, to the
end that the facts ascertained may guide their intelligent treatment.

A further important utility in agricultural statistics is found in
their elucidation of the relation of the supply of farm products to the
demand for them in the markets of the United States and of the world.

It is deemed possible that an agricultural census may be taken each
year through the agents of the statistical division of the Department.
Such a course is commended for trial by the chief of that division. Its
scope would be:
 (1) The area under each of the more important crops.
 (2) The aggregate products of each of such crops.
 (3) The quantity of wheat and corn in the hands of farmers at a date after the spring sowings and plantings and before the beginning of harvest, and also the quantity of cotton and tobacco remaining in the hands of planters, either at the same date or at some other designated time.

The cost of the work is estimated at $500,000.

Owing to the peculiar quality of the statistician's work and the
natural and acquired fitness necessary to its successful prosecution,
the Secretary of Agriculture expresses the opinion that every person
employed in gathering statistics under the chief of that division
should be admitted to that service only after a thorough, exhaustive,
and successful examination at the hands of the United States Civil
Service Commission. This has led him to call for such examination of
candidates for the position of assistant statisticians, and also of
candidates for chiefs of sections in that division.

The work done by the Department of Agriculture is very superficially
dealt with in this communication, and I commend the report of the
Secretary and the very important interests with which it deals to the
careful attention of the Congress.

The advantages to the public service of an adherence to the principles
of civil-service reform are constantly more apparent, and nothing is so
encouraging to those in official life who honestly desire good
government as the increasing appreciation by our people of these
advantages. A vast majority of the voters of the land are ready to
insist that the time and attention of those they select to perform for
them important public duties should not be distracted by doling out
minor offices, and they are growing to be unanimous in regarding party
organization as something that should be used in establishing party
principles instead of dictating the distribution of public places as
rewards of partisan activity.

Numerous additional offices and places have lately been brought within
civil-service rules and regulations, and some others will probably soon
be included.

The report of the Commissioners will be submitted to the Congress, and
I invite careful attention to the recommendations it contains.

I am entirely convinced that we ought not to be longer without a
national board of health or national health officer charged with no
other duties than such as pertain to the protection of our country from
the invasion of pestilence and disease. This would involve the
establishment by such board or officer of proper quarantine
precautions, or the necessary aid and counsel to local authorities on
the subject; prompt advice and assistance to local boards of health or
health officers in the suppression of contagious disease, and in cases
where there are no such local boards or officers the immediate
direction by the national board or officer of measures of suppression;
constant and authentic information concerning the health of foreign
countries and all parts of our own country as related to contagious
diseases, and consideration of regulations to be enforced in foreign
ports to prevent the introduction of contagion into our cities and the
measures which should be adopted to secure their enforcement.

There seems to be at this time a decided inclination to discuss
measures of protection against contagious diseases in international
conference, with a view of adopting means of mutual assistance. The
creation of such a national health establishment would greatly aid our
standing in such conferences and improve our opportunities to avail
ourselves of their benefits.

I earnestly recommend the inauguration of a national board of health or
similar national instrumentality, believing the same to be a needed
precaution against contagious disease and in the interest of the safety
and health of our people.

By virtue of a statute of the United States passed in 1888 I appointed
in July last Hon. John D. Kernan, of the State of New York, and Hon.
Nicholas E. Worthington, of the State of Illinois, to form, with Hon.
Carroll D. Wright, Commissioner of Labor, who was designated by said
statute, a commission for the purpose of making careful inquiry into
the causes of the controversies between certain railroads and their
employees which had resulted in an extensive and destructive strike,
accompanied by much violence and dangerous disturbance, with
considerable loss of life and great destruction of property.

The report of the commissioners has been submitted to me and will be
transmitted to the Congress with the evidence taken upon their
investigation.

Their work has been well done, and their standing and intelligence give
assurance that the report and suggestions they make are worthy of
careful consideration.

The tariff act passed at the last session of the Congress needs
important amendments if it is to be executed effectively and with
certainty. In addition to such necessary amendments as will not change
rates of duty, I am still very decidedly in favor of putting coal and
iron upon the free list.

So far as the sugar schedule is concerned, I would be glad, under
existing aggravations, to see every particle of differential duty in
favor of refined sugar stricken out of our tariff law. If with all the
favor now accorded the sugar-refining interest in our tariff laws it
still languishes to the extent of closed refineries and thousands of
discharged workmen, it would seem to present a hopeless case for
reasonable legislative aid. Whatever else is done or omitted, I
earnestly repeat here the recommendation I have made in another portion
of this communication, that the additional duty of one-tenth of a cent
per pound laid upon sugar imported from countries paying a bounty on
its export be abrogated. It seems to me that exceedingly important
considerations point to the propriety of this amendment.

With the advent of a new tariff policy not only calculated to relieve
the consumers of our land in the cost of their daily life, but to
invite a better development of American thrift and create for us closer
and more profitable commercial relations with the rest of the world, it
follows as a logical and imperative necessity that we should at once
remove the chief if not the only obstacle which has so long prevented
our participation in the foreign carrying trade of the sea. A tariff
built upon the theory that it is well to check imports and that a home
market should bound the industry and effort of American producers was
fitly supplemented by a refusal to allow American registry to vessels
built abroad, though owned and navigated by our people, thus exhibiting
a willingness to abandon all contest for the advantages of American
transoceanic carriage. Our new tariff policy, built upon the theory
that it is well to encourage such importations as our people need, and
that our products and manufactures should find markets in every part of
the habitable globe, is consistently supplemented by the greatest
possible liberty to our citizens in the ownership and navigation of
ships in which our products and manufactures may be transported. The
millions now paid to foreigners for carrying American passengers and
products across the sea should be turned into American hands.
Shipbuilding, which has been protected to strangulation, should be
revived by the prospect of profitable employment for ships when built,
and the American sailor should be resurrected and again take his
place--a sturdy and industrious citizen in time of peace and a
patriotic and safe defender of American interests in the day of
conflict.

The ancient provision of our law denying American registry to ships
built abroad and owned by Americans appears in the light of present
conditions not only to be a failure for good at every point, but to be
nearer a relic of barbarism than anything that exists under the
permission of a statute of the United States. I earnestly recommend its
prompt repeal.

During the last month the gold reserved in the Treasury for the purpose
of redeeming the notes of the Government circulating as money in the
hands of the people became so reduced and its further depletion in the
near future seemed so certain that in the exercise of proper care for
the public welfare it became necessary to replenish this reserve and
thus maintain popular faith in the ability and determination of the
Government to meet as agreed its pecuniary obligations.

It would have been well if in this emergency authority had existed to
issue the bonds of the Government bearing a low rate of interest and
maturing within a short period; but the Congress having failed to
confer such authority, resort was necessarily had to the resumption act
of 1875, and pursuant to its provisions bonds were issued drawing
interest at the rate of 5 per cent per annum and maturing ten years
after their issue, that being the shortest time authorized by the act.
I am glad to say, however, that on the sale of these bonds the premium
received operated to reduce the rate of interest to be paid by the
Government to less than 3 per cent.

Nothing could be worse or further removed from sensible finance than
the relations existing between the currency the Government has issued,
the gold held for its redemption, and the means which must be resorted
to for the purpose of replenishing such redemption fund when impaired.
Even if the claims upon this fund were confined to the obligations
originally intended and if the redemption of these obligations meant
their cancellation, the fund would be very small. But these obligations
when received and redeemed in gold are not canceled, but are reissued
and may do duty many times by way of drawing gold from the Treasury.
Thus we have an endless chain in operation constantly depleting the
Treasury's gold and never near a final rest. As if this was not bad
enough, we have, by a statutory declaration that it is the policy of
the Government to maintain the parity between gold and silver, aided
the force and momentum of this exhausting process and added largely to
the currency obligations claiming this peculiar gold redemption. Our
small gold reserve is thus subject to drain from every side. The
demands that increase our danger also increase the necessity of
protecting this reserve against depletion, and it is most
unsatisfactory to know that the protection afforded is only a temporary
palliation.

It is perfectly and palpably plain that the only way under present
conditions by which this reserve when dangerously depleted can be
replenished is through the issue and sale of the bonds of the
Government for gold, and yet Congress has not only thus far declined to
authorize the issue of bonds best suited to such a purpose, but there
seems a disposition in some quarters to deny both the necessity and
power for the issue of bonds at all.

I can not for a moment believe that any of our citizens are
deliberately willing that their Government should default in its
pecuniary obligations or that its financial operations should be
reduced to a silver basis. At any rate, I should not feel that my duty
was done if I omitted any effort I could make to avert such a calamity.
As long, therefore, as no provision is made for the final redemption or
the putting aside of the currency obligation now used to repeatedly and
constantly draw from the Government its gold, and as long as no better
authority for bond issues is allowed than at present exists, such
authority will be utilized whenever and as often as it becomes
necessary to maintain a sufficient gold reserve, and in abundant time
to save the credit of our country and make good the financial
declarations of our Government.

Questions relating to our banks and currency are closely connected with
the subject just referred to, and they also present some unsatisfactory
features. Prominent among them are the lack of elasticity in our
currency circulation and its frequent concentration in financial
centers when it is most needed in other parts of the country.

The absolute divorcement of the Government from the business of banking
is the ideal relationship of the Government to the circulation of the
currency of the country.

This condition can not be immediately reached, but as a step in that
direction and as a means of securing a more elastic currency and
obviating other objections to the present arrangement of bank
circulation the Secretary of the Treasury presents in his report a
scheme modifying present banking laws and providing for the issue of
circulating notes by State banks free from taxation under certain
limitations.

The Secretary explains his plan so plainly and its advantages are
developed by him with such remarkable clearness that any effort on my
part to present argument in its support would be superfluous. I shall
therefore content myself with an unqualified indorsement of the
Secretary's proposed changes in the law and a brief and imperfect
statement of their prominent features.
 It is proposed to repeal all laws providing for the deposit of United States bonds as security for circulation; to permit national banks to issue circulating notes not exceeding in amount 75 per cent of their paid-up and unimpaired capital, provided they deposit with the Government as a guaranty fund, in United States legal-tender notes, including Treasury notes of 1890, a sum equal in amount to 30 per cent of the notes they desire to issue, this deposit to be maintained at all times, but whenever any bank retires any part of its circulation a proportional part of its guaranty fund shall be returned to it; to permit the Secretary of the Treasury to prepare and keep on hand ready for issue in case an increase in circulation is desired blank national-bank notes for each bank having circulation and to repeal the provisions of the present law imposing limitations and restrictions upon banks desiring to reduce or increase their circulation, thus permitting such increase or reduction within the limit of 75 per cent of capital to be quickly made as emergencies arise.

In addition to the guaranty fund required, it is proposed to provide a
safety fund for the immediate redemption of the circulating notes of
failed banks by imposing a small annual tax, say one-half of 1 per
cent, upon the average circulation of each bank until the fund amounts
to 5 per cent of the total circulation outstanding. When a bank fails
its guaranty fund is to be paid into this safety fund and its notes are
to be redeemed in the first instance from such safety fund thus
augmented, any impairment of such fund caused thereby to be made good
from the immediately available cash assets of said bank, and if these
should be insufficient such impairment to be made good by pro rata
assessment among the other banks, their contributions constituting a
first lien upon the assets of the failed bank in favor of the
contributing banks. As a further security it is contemplated that the
existing provision fixing the individual liability of stockholders is
to be retained and the bank's indebtedness on account of its
circulating notes is to be made a first lien on all its assets.

For the purpose of meeting the expense of printing notes, official
supervision, cancellation, and other like charges there shall be
imposed a tax of say one-half of 1 per cent per annum upon the average
amount of notes in circulation.

It is further provided that there shall be no national-bank notes
issued of a less denomination than $10; that each national bank, except
in case of a failed bank, shall redeem or retire its notes in the first
instance at its own office or at agencies to be designated by it, and
that no fixed reserve need be maintained on account of deposits.

Another very important feature of this plan is the exemption of State
banks from taxation by the United States in cases where it is shown to
the satisfaction of the Secretary of the Treasury and Comptroller of
the Currency by banks claiming such exemption that they have not had
outstanding their circulating notes exceeding 75 per cent of their
paid-up and unimpaired capital; that their stockholders are
individually liable for the redemption of their circulating notes to
the full extent of their ownership of stock; that the liability of said
banks upon their circulating notes constitutes under their State law a
first lien upon their assets; that such banks have kept and maintained
a guaranty fund in United States legal-tender notes, including Treasury
notes of 1890, equal to 30 per cent of their outstanding circulating
notes, and that such banks have promptly redeemed their circulating
notes when presented at their principal or branch offices.

It is quite likely that this scheme may be usefully amended in some of
its details, but I am satisfied it furnishes a basis for a very great
improvement in our present banking and currency system.

I conclude this communication fully appreciating that the
responsibility for all legislation affecting the people of the United
States rests upon their representatives in the Congress, and assuring
them that, whether in accordance with recommendations I have made or
not, I shall be glad to cooperate in perfecting any legislation that
tends to the prosperity and welfare of our country.

GROVER CLEVELAND



***


State of the Union Address
Grover Cleveland
December 2, 1895

To the Congress of the United States:

The present assemblage of the legislative branch of our Government
occurs at a time when the interests of our people and the needs of the
country give especial prominence to the condition of our foreign
relations and the exigencies of our national finances. The reports of
the heads of the several administrative Departments of the Government
fully and plainly exhibit what has been accomplished within the scope
of their respective duties and present such recommendations for the
betterment of our country's condition as patriotic and intelligent
labor and observation suggest.

I therefore deem my executive duty adequately performed at this time by
presenting to the Congress the important phases of our situation as
related to our intercourse with foreign nations and a statement of the
financial problems which confront us, omitting, except as they are
related to these topics, any reference to departmental operations.

I earnestly invite, however, not only the careful consideration but the
severely critical scrutiny of the Congress and my fellow-countrymen to
the reports concerning these departmental operations. If justly and
fairly examined, they will furnish proof of assiduous and painstaking
care for the public welfare. I press the recommendations they contain
upon the respectful attention of those charged with the duty of
legislation, because I believe their adoption would promote the
people's good.

By amendatory tariff legislation in January last the Argentine
Republic, recognizing the value of the large market opened to the free
importation of its wools under our last tariff act, has admitted
certain products of the United States to entry at reduced duties. It is
pleasing to note that the efforts we have made to enlarge the exchanges
of trade on a sound basis of mutual benefit are in this instance
appreciated by the country from which our woolen factories draw their
needful supply of raw material.

The Missions boundary dispute between the Argentine Republic and
Brazil, referred to the President of the United States as arbitrator
during the term of my predecessor, and which was submitted to me for
determination, resulted in an award in favor of Brazil upon the
historical and documentary evidence presented, thus ending a
long-protracted controversy and again demonstrating the wisdom and
desirability of settling international boundary disputes by recourse to
friendly arbitration.

Negotiations are progressing for a revival of the United States and
Chilean Claims Commission, whose work was abruptly terminated last year
by the expiration of the stipulated time within which awards could be
made.

The resumption of specie payments by Chile is a step of great interest
and importance both in its direct consequences upon her own welfare and
as evincing the ascendency of sound financial principles in one of the
most influential of the South American Republics.

The close of the momentous struggle between China and Japan, while
relieving the diplomatic agents of this Government from the delicate
duty they undertook at the request of both countries of rendering such
service to the subjects of either belligerent within the territorial
limits of the other as our neutral position permitted, developed a
domestic condition in the Chinese Empire which has caused much anxiety
and called for prompt and careful attention. Either as a result of a
weak control by the central Government over the provincial
administrations, following a diminution of traditional governmental
authority under the stress of an overwhelming national disaster, or as
a manifestation upon good opportunity of the aversion of the Chinese
population to all foreign ways and undertakings, there have occurred in
widely separated provinces of China serious outbreaks of the old
fanatical spirit against foreigners, which, unchecked by the local
authorities, if not actually connived at by them, have culminated in
mob attacks on foreign missionary stations, causing much destruction of
property and attended with personal injuries as well as loss of life.

Although but one American citizen was reported to have been actually
wounded, and although the destruction of property may have fallen more
heavily upon the missionaries of other nationalities than our own, it
plainly behooved this Government to take the most prompt and decided
action to guard against similar or perhaps more dreadful calamities
befalling the hundreds of American mission stations which have grown up
throughout the interior of China under the temperate rule of
toleration, custom, and imperial edict. The demands of the United
States and other powers for the degradation and punishment of the
responsible officials of the respective cities and provinces who by
neglect or otherwise had permitted uprisings, and for the adoption of
stern measures by the Emperor's Government for the protection of the
life and property of foreigners, were followed by the disgrace and
dismissal of certain provincial officials found derelict in duty and
the punishment by death of a number of those adjudged guilty of actual
participation in the outrages.

This Government also insisted that a special American commission should
visit the province where the first disturbances occurred for the
purpose of investigation. The latter commission, formed after much
opposition, has gone overland from Tientsin, accompanied by a suitable
Chinese escort, and by its demonstration of the readiness and ability
of our Government to protect its citizens will act, it is believed, as
a most influential deterrent of any similar outbreaks.

The energetic steps we have thus taken are all the more likely to
result in future safety to our citizens in China because the Imperial
Government is, I am persuaded, entirely convinced that we desire only
the liberty and protection of our own citizens and redress for any
wrongs they may have suffered, and that we have no ulterior designs or
objects, political or otherwise. China will not forget either our
kindly service to her citizens during her late war nor the further fact
that, while furnishing all the facilities at our command to further the
negotiation of a peace between her and Japan, we sought no advantages
and interposed no counsel.

The Governments of both China and Japan have, in special dispatches
transmitted through their respective diplomatic representatives,
expressed in a most pleasing manner their grateful appreciation of our
assistance to their citizens during the unhappy struggle and of the
value of our aid in paving the way to their resumption of peaceful
relations.

The customary cordial relations between this country and France have
been undisturbed, with the exception that a full explanation of the
treatment of John L. Waller by the expeditionary military authorities
of France still remains to be given. Mr. Waller, formerly United States
consul at Tamatav, remained in Madagascar after his term of office
expired, and was apparently successful in procuring business
concessions from the Hovas of greater or less value. After the
occupation of Tamatav and the declaration of martial law by the French
he was arrested upon various charges, among them that of communicating
military information to the enemies of France, was tried and convicted
by a military tribunal, and sentenced to twenty years' imprisonment.

Following the course justified by abundant precedents, this Government
requested from that of France the record of the proceedings of the
French tribunal which resulted in Mr. Waller's condemnation. This
request has been complied with to the extent of supplying a copy of the
official record, from which appear the constitution and organization of
the court, the charges as formulated, and the general course and result
of the trial, and by which it is shown that the accused was tried in
open court and was defended by counsel; but the evidence adduced in
support of the charges, which was not received by the French minister
for foreign affairs till the first week in October, has thus far been
withheld, the French Government taking the ground that its production
in response to our demand would establish a bad precedent. The efforts
of our ambassador to procure it, however, though impeded by recent
changes in the French ministry, have not been relaxed, and it is
confidently expected that some satisfactory solution of the matter will
shortly be reached. Meanwhile it appears that Mr. Waller's confinement
has every alleviation which the state of his health and all the other
circumstances of the case demand or permit.

In agreeable contrast to the difference above noted respecting a matter
of common concern, where nothing is sought except such a mutually
satisfactory outcome as the true merits of the case require, is the
recent resolution of the French Chambers favoring the conclusion of a
permanent treaty of arbitration between the two countries.

An invitation has been extended by France to the Government and people
of the United States to participate in a great international exposition
at Paris in 1900 as a suitable commemoration of the close of this the
world's marvelous century of progress. I heartily recommend its
acceptance, together with such legislation as will adequately provide
for a due representation of this Government and its people on the
occasion.

Our relations with the States of the German Empire are in some aspects
typical of a condition of things elsewhere found in countries whose
productions and trade are similar to our own. The close rivalries of
competing industries; the influence of the delusive doctrine that the
internal development of a nation is promoted and its wealth increased
by a policy which, in undertaking to reserve its home markets for the
exclusive use of its own producers, necessarily obstructs their sales
in foreign markets and prevents free access to the products of the
world; the desire to retain trade in time-worn ruts, regardless of the
inexorable laws of new needs and changed conditions of demand and
supply, and our own halting tardiness in inviting a freer exchange of
commodities, and by this means imperiling our footing in the external
markets naturally open to us, have created a situation somewhat
injurious to American export interests, not only in Germany, where they
are perhaps most noticeable, but in adjacent countries. The exports
affected are largely American cattle and other food products, the
reason assigned for unfavorable discrimination being that their
consumption is deleterious to the public health. This is all the more
irritating in view of the fact that no European state is as jealous of
the excellence and wholesomeness of its exported food supplies as the
United States, nor so easily able, on account of inherent soundness, to
guarantee those qualities.

Nor are these difficulties confined to our food products designed for
exportation. Our great insurance companies, for example, having built
up a vast business abroad and invested a large share of their gains in
foreign countries in compliance with the local laws and regulations
then existing, now find themselves within a narrowing circle of onerous
and unforeseen conditions, and are confronted by the necessity of
retirement from a field thus made unprofitable, if, indeed, they are
not summarily expelled, as some of them have lately been from Prussia.

It is not to be forgotten that international trade can not be
one-sided. Its currents are alternating, and its movements should be
honestly reciprocal. Without this it almost necessarily degenerates
into a device to gain advantage or a contrivance to secure benefits
with only the semblance of a return. In our dealings with other nations
we ought to be open-handed and scrupulously fair. This should be our
policy as a producing nation, and it plainly becomes us as a people who
love generosity and the moral aspects of national good faith and
reciprocal forbearance.

These considerations should not, however, constrain us to submit to
unfair discrimination nor to silently acquiesce in vexatious hindrances
to the enjoyment of our share of the legitimate advantages of proper
trade relations. If an examination of the situation suggests such
measures on our part as would involve restrictions similar to those
from which we suffer, the way to such a course is easy. It should,
however, by no means be lightly entered upon, since the necessity for
the inauguration of such a policy would be regretted by the best
sentiment of our people and because it naturally and logically might
lead to consequences of the gravest character.

I take pleasure in calling to your attention the encomiums bestowed on
those vessels of our new Navy which took part in the notable ceremony
of the opening of the Kiel Canal. It was fitting that this
extraordinary achievement of the newer German nationality should be
celebrated in the presence of America's exposition of the latest
developments of the world' s naval energy.

Our relations with Great Britain, always intimate and important, have
demanded during the past year even a greater share of consideration
than is usual.

Several vexatious questions were left undetermined by the decision of
the Bering Sea Arbitration Tribunal. The application of the principles
laid down by that august body has not been followed by the results they
were intended to accomplish, either because the principles themselves
lacked in breadth and definiteness or because their execution has been
more or less imperfect. Much correspondence has been exchanged between
the two Governments on the subject of preventing the exterminating
slaughter of seals. The insufficiency of the British patrol of Bering
Sea under the regulations agreed on by the two Governments has been
pointed out, and yet only two British ships have been on police duty
during this season in those waters.

The need of a more effective enforcement of existing regulations as
well as the adoption of such additional regulations as experience has
shown to be absolutely necessary to carry out the intent of the award
have been earnestly urged upon the British Government, but thus far
without effective results. In the meantime the depletion of the seal
herds by means of pelagic hunting has so alarmingly progressed that
unless their slaughter is at once effectively checked their extinction
within a few years seems to be a matter of absolute certainty.

The understanding by which the United States was to pay and Great
Britain to receive a lump sum of $425,000 in full settlement of all
British claims for damages arising from our seizure of British sealing
vessels unauthorized under the award of the Paris Tribunal of
Arbitration was not confirmed by the last Congress, which declined to
make the necessary appropriation. I am still of the opinion that this
arrangement was a judicious and advantageous one for the Government,
and I earnestly recommend that it be again considered and sanctioned.
If, however, this does not meet with the favor of Congress, it
certainly will hardly dissent from the proposition that the Government
is bound by every consideration of honor and good faith to provide for
the speedy adjustment of these claims by arbitration as the only other
alternative. A treaty of arbitration has therefore been agreed upon,
and will be immediately laid before the Senate, so that in one of the
modes suggested a final settlement may be reached.

Notwithstanding that Great Britain originated the proposal to enforce
international rules for the prevention of collisions at sea, based on
the recommendations of the Maritime Conference of Washington, and
concurred in, suggesting March 11, 1895, as the date to be set by
proclamation for carrying these rules into general effect, Her
Majesty's Government, having encountered opposition on the part of
British shipping interests, announced its inability to accept that
date, which was consequently canceled. The entire matter is still in
abeyance, without prospect of a better condition in the near future.

The commissioners appointed to mark the international boundary in
Passamaquoddy Bay according to the description of the treaty of Ghent
have not yet fully agreed.

The completion of the preliminary survey of that Alaskan boundary which
follows the contour of the coast from the southernmost point of Prince
of Wales Island until it strikes the one hundred and forty-first
meridian at or near the summit of Mount St. Elias awaits further
necessary appropriation, which is urgently recommended. This survey was
undertaken under the provisions of the convention entered into by this
country and Great Britain July 22, 1892, and the supplementary
convention of February 3, 1894.

As to the remaining section of the Alaskan boundary, which follows the
one hundred and forty-first meridian northwardly from Mount St. Elias
to the Frozen Ocean, the settlement of which involves the physical
location of the meridian mentioned, no conventional agreement has yet
been made. The ascertainment of a given meridian at a particular point
is a work requiring much time and careful observations and surveys.
Such observations and surveys were undertaken by the United States
Coast and Geodetic Survey in 1890 and 1891, while similar work in the
same quarters, under British auspices, is believed to give nearly
coincident results; but these surveys have been independently
conducted, and no international agreement to mark those or any other
parts of the one hundred and forty-first meridian by permanent
monuments has yet been made. In the meantime the valley of the Yukon is
becoming a highway through the hitherto unexplored wilds of Alaska, and
abundant mineral wealth has been discovered in that region, especially
at or near the junction of the boundary meridian with the Yukon and its
tributaries. In these circumstances it is expedient, and, indeed,
imperative, that the jurisdictional limits of the respective
Governments in this new region be speedily determined. Her Britannic
Majesty's Government has proposed a joint delimitation of the one
hundred and forty-first meridian by an international commission of
experts, which, if Congress will authorize it and make due provision
therefor, can be accomplished with no unreasonable delay. It is
impossible to overlook the vital importance of continuing the work
already entered upon and supplementing it by further effective measures
looking to the exact location of this entire boundary line.

I call attention to the unsatisfactory delimitation of the respective
jurisdictions of the United States and the Dominion of Canada in the
Great Lakes at the approaches to the narrow waters that connect them.
The waters in question are frequented by fishermen of both
nationalities and their nets are there used. Owing to the uncertainty
and ignorance as to the true boundary, vexations disputes and injurious
seizures of boats and nets by Canadian cruisers often occur, while any
positive settlement thereof by an accepted standard is not easily to be
reached. A joint commission to determine the line in those quarters on
a practical basis, by measured courses following range marks on shore,
is a necessity for which immediate provision should be made.

It being apparent that the boundary dispute between Great Britain and
the Republic of Venezuela concerning the limits of British Guiana was
approaching an acute stage, a definite statement of the interest and
policy of the United States as regards the controversy seemed to be
required both on its own account and in view of its relations with the
friendly powers directly concerned. In July last, therefore, a dispatch
was addressed to our ambassador at London for communication to the
British Government in which the attitude of the United States was fully
and distinctly set forth. The general conclusions therein reached and
formulated are in substance that the traditional and established policy
of this Government is firmly opposed to a forcible increase by any
European power of its territorial possessions on this continent; that
this policy is as well rounded in principle as it is strongly supported
by numerous precedents; that as a consequence the United States is
bound to protest against the enlargement of the area of British Guiana
in derogation of the rights and against the will of Venezuela; that
considering the disparity in strength of Great Britain and Venezuela
the territorial dispute between them can be reasonably settled only by
friendly and impartial arbitration, and that the resort to such
arbitration should include the whole controversy, and is not satisfied
if one of the powers concerned is permitted to draw an arbitrary line
through the territory in debate and to declare that it will submit to
arbitration only the portion lying on one side of it. In view of these
conclusions, the dispatch in question called upon the British
Government for a definite answer to the question whether it would or
would not submit the territorial controversy between itself and
Venezuela in its entirety to impartial arbitration. The answer of the
British Government has not yet been received, but is expected shortly,
when further communication on the subject will probably be made to the
Congress.

Early in January last an uprising against the Government of Hawaii was
promptly suppressed. Martial law was forthwith proclaimed and numerous
arrests were made of persons suspected of being in sympathy with the
Royalist party. Among these were several citizens of the United States,
who were either convicted by a military court and sentenced to death,
imprisonment, or fine or were deported without trial. The United
States, while denying protection to such as had taken the Hawaiian oath
of allegiance, insisted that martial law, though altering the forms of
justice, could not supersede justice itself, and demanded stay of
execution until the proceedings had been submitted to this Government
and knowledge obtained therefrom that our citizens had received fair
trial. The death sentences were subsequently commuted or were remitted
on condition of leaving the islands. The cases of certain Americans
arrested and expelled by arbitrary order without formal charge or trial
have had attention, and in some instances have been found to justify
remonstrance and a claim for indemnity, which Hawaii has not thus far
conceded.

Mr. Thurston, the Hawaiian minister, having furnished this Government
abundant reason for asking that he be recalled, that course was
pursued, and his successor has lately been received.

The deplorable lynching of several Italian laborers in Colorado was
naturally followed by international representations, and I am happy to
say that the best efforts of the State in which the outrages occurred
have been put forth to discover and punish the authors of this
atrocious crime. The dependent families of some of the unfortunate
victims invite by their deplorable condition gracious provision for
their needs.

These manifestations against helpless aliens may be traced through
successive stages to the vicious padroni system, which, unchecked by
our immigration and contract-labor statutes, controls these workers
from the moment of landing on our shores and farms them out in distant
and often rude regions, where their cheapening competition in the
fields of bread-winning toil brings them into collision with other
labor interests. While welcoming, as we should, those who seek our
shores to merge themselves in our body politic and win personal
competence by honest effort, we can not regard such assemblages of
distinctively alien laborers, hired out in the mass to the profit of
alien speculators and shipped hither and thither as the prospect of
gain may dictate, as otherwise than repugnant to the spirit of our
civilization, deterrent to individual advancement, and hindrances to
the building up of stable communities resting upon the wholesome
ambitions of the citizen and constituting the prime factor in the
prosperity and progress of our nation. If legislation can reach this
growing evil, it certainly should be attempted.

Japan has furnished abundant evidence of her vast gain in every trait
and characteristic that constitutes a nation's greatness. We have
reason for congratulation in the fact that the Government of the United
States, by the exchange of liberal treaty stipulations with the new
Japan, was the first to recognize her wonderful advance and to extend
to her the consideration and confidence due to her national
enlightenment and progressive character.

The boundary dispute which lately threatened to embroil Guatemala and
Mexico has happily yielded to pacific counsels, and its determination
has, by the joint agreement of the parties, been submitted to the sole
arbitration of the United States minister to Mexico.

The commission appointed under the convention of February 18, 1889, to
set new monuments along the boundary between the United States and
Mexico has completed its task.

As a sequel to the failure of a scheme for the colonization in Mexico
of negroes, mostly immigrants from Alabama under contract, a great
number of these helpless and suffering people, starving and smitten
with contagious disease, made their way or were assisted to the
frontier, where, in wretched plight, they were quarantined by the Texas
authorities. Learning of their destitute condition, I directed rations
to be temporarily furnished them through the War Department. At the
expiration of their quarantine they were conveyed by the railway
companies at comparatively nominal rates to their homes in Alabama,
upon my assurance, in the absence of any fund available for the cost of
their transportation, that I would recommend to Congress an
appropriation for its payment. I now strongly urge upon Congress the
propriety of making such an appropriation. It should be remembered that
the measures taken were dictated not only by sympathy and humanity, but
by a conviction that it was not compatible with the dignity of this
Government that so large a body of our dependent citizens should be
thrown for relief upon the charity of a neighboring state.

In last year's message I narrated at some length the jurisdictional
questions then freshly arisen in the Mosquito Indian Strip of
Nicaragua. Since that time, by the voluntary act of the Mosquito
Nation, the territory reserved to them has been incorporated with
Nicaragua, the Indians formally subjecting themselves to be governed by
the general laws and regulations of the Republic instead of by their
own customs and regulations, and thus availing themselves of a
privilege secured to them by the treaty between Nicaragua and Great
Britain of January 28, 1860.

After this extension of uniform Nicaraguan administration to the
Mosquito Strip, the case of the British vice-consul, Hatch, and of
several of his countrymen who had been summarily expelled from
Nicaragua and treated with considerable indignity provoked a claim by
Great Britain upon Nicaragua for pecuniary indemnity, which, upon
Nicaragua's refusal to admit liability, was enforced by Great Britain.
While the sovereignty and jurisdiction of Nicaragua was in no way
questioned by Great Britain, the former's arbitrary conduct in regard
to British subjects furnished the ground for this proceeding.

A British naval force occupied without resistance the Pacific seaport
of Corinto, but was soon after withdrawn upon the promise that the sum
demanded would be paid. Throughout this incident the kindly offices of
the United States were invoked and were employed in favor of as
peaceful a settlement and as much consideration and indulgence toward
Nicaragua as were consistent with the nature of the case. Our efforts
have since been made the subject of appreciative and grateful
recognition by Nicaragua. The coronation of the Czar of Russia at
Moscow in May next invites the ceremonial participation of the United
States, and in accordance with usage and diplomatic propriety our
minister to the imperial court has been directed to represent our
Government on the occasion.

Correspondence is on foot touching the practice of Russian consuls
within the jurisdiction of the United States to interrogate citizens as
to their race and religious faith, and upon ascertainment thereof to
deny to Jews authentication of passports or legal documents for use in
Russia. Inasmuch as such a proceeding imposes a disability which in the
case of succession to property in Russia may be found to infringe the
treaty rights of our citizens, and which is an obnoxious invasion of
our territorial jurisdiction, it has elicited fitting remonstrance, the
result of which, it is hoped, will remove the cause of complaint. The
pending claims of sealing vessels of the United States seized in
Russian waters remain unadjusted. Our recent convention with Russia
establishing a modus vivendi as to imperial jurisdiction in such cases
has prevented further difficulty of this nature.

The Russian Government has welcomed in principle our suggestion for a
modus vivendi, to embrace Great Britain and Japan, looking to the
better preservation of seal life in the North Pacific and Bering Sea
and the extension of the protected area defined by the Paris Tribunal
to all Pacific waters north of the thirty-fifth parallel. It is
especially noticeable that Russia favors prohibition of the use of
firearms in seal hunting throughout the proposed area and a longer
closed season for pelagic sealing.

In my last two annual messages I called the attention of the Congress
to the position we occupied as one of the parties to a treaty or
agreement by which we became jointly bound with England and Germany to
so interfere with the government and control of Samoa as in effect to
assume the management of its affairs. On the 9th day of May, 1894, I
transmitted to the Senate a special message, with accompanying
documents, giving information on the subject and emphasizing the
opinion I have at all times entertained, that our situation in this
matter was inconsistent with the mission and traditions of our
Government, in violation of the principles we profess, and in all its
phases mischievous and vexatious.

I again press this subject upon the attention of the Congress and ask
for such legislative action or expression as will lead the way to our
relief from obligations both irksome and unnatural.

Cuba is again gravely disturbed. An insurrection in some respects more
active than the last preceding revolt, which continued from 1868 to
1878, now exists in a large part of the eastern interior of the island,
menacing even some populations on the coast. Besides deranging the
commercial exchanges of the island, of which our country takes the
predominant share, this flagrant condition of hostilities, by arousing
sentimental sympathy and inciting adventurous support among our people,
has entailed earnest effort on the part of this Government to enforce
obedience to our neutrality laws and to prevent the territory of the
United States from being abused as a vantage ground from which to aid
those in arms against Spanish sovereignty.

Whatever may be the traditional sympathy of our countrymen as
individuals with a people who seem to be struggling for larger autonomy
and greater freedom, deepened, as such sympathy naturally must be, in
behalf of our neighbors, yet the plain duty of their Government is to
observe in good faith the recognized obligations of international
relationship. The performance of this duty should not be made more
difficult by a disregard on the part of our citizens of the obligations
growing out of their allegiance to their country, which should restrain
them from violating as individuals the neutrality which the nation of
which they are members is bound to observe in its relations to friendly
sovereign states. Though neither the warmth of our people's sympathy
with the Cuban insurgents, nor our loss and material damage consequent
upon the futile endeavors thus far made to restore peace and order, nor
any shock our humane sensibilities may have received from the cruelties
which appear to especially characterize this sanguinary and fiercely
conducted war, have in the least shaken the determination of the
Government to honestly fulfill every international obligation, yet it
is to be earnestly hoped on every ground that the devastation of armed
conflict may speedily be stayed and order and quiet restored to the
distracted island, bringing in their train the activity and thrift of
peaceful pursuits.

One notable instance of interference by Spain with passing American
ships has occurred. On March 8 last the Allianca, while bound from
Colon to New York, and following the customary track for vessels near
the Cuban shore, but outside the 3-mile limit, was fired upon by a
Spanish gunboat. Protest was promptly made by the United States against
this act as not being justified by a state of war, nor permissible in
respect of vessels on the usual paths of commerce, nor tolerable in
view of the wanton peril occasioned to innocent life and property. The
act was disavowed, with full expression of regret and assurance of
nonrecurrence of such just cause of complaint, while the offending
officer was relieved of his command. Military arrests of citizens of
the United States in Cuba have occasioned frequent reclamations. Where
held on criminal charges their delivery to the ordinary civil
jurisdiction for trial has been demanded and obtained in conformity
with treaty provisions, and where merely detained by way of military
precaution under a proclaimed state of siege, without formulated
accusation, their release or trial has been insisted upon. The right of
American consular officers in the island to prefer protests and demands
in such cases having been questioned by the insular authority, their
enjoyment of the privilege stipulated by treaty for the consuls of
Germany was claimed under the most-favored-nation provision of our own
convention and was promptly recognized.

The long-standing demand of Antonio Maximo Mora against Spain has at
last been settled by the payment, on the 14th of September last, of the
sum originally agreed upon in liquidation of the claim. Its
distribution among the parties entitled to receive it has proceeded as
rapidly as the rights of those claiming the fund could be safely
determined.

The enforcement of differential duties against products of this country
exported to Cuba and Puerto Rico prompted the immediate claim on our
part to the benefit of the minimum tariff of Spain in return for the
most favorable treatment permitted by our laws as regards the
production of Spanish territories. A commercial arrangement was
concluded in January last securing the treatment so claimed.

Vigorous protests against excessive fines imposed on our ships and
merchandise by the customs officers of these islands for trivial errors
have resulted in the remission of such fines in instances where the
equity of the complaint was apparent, though the vexatious practice has
not been wholly discontinued.

Occurrences in Turkey have continued to excite concern. The reported
massacres of Christians in Armenia and the development there and in
other districts of a spirit of fanatic hostility to Christian
influences naturally excited apprehension for the safety of the devoted
men and women who, as dependents of the foreign missionary societies in
the United States, reside in Turkey under the guaranty of law and usage
and in the legitimate performance of their educational and religious
mission. No efforts have been spared in their behalf, and their
protection in person and property has been earnestly and vigorously
enforced by every means within our power.

I regret, however, that an attempt on our part to obtain better
information concerning the true condition of affairs in the disturbed
quarter of the Ottoman Empire by sending thither the United States
consul at Sivas to make investigation and report was thwarted by the
objections of the Turkish Government. This movement on our part was in
no sense meant as a gratuitous entanglement of the United States in the
so-called Eastern question nor as an officious interference with the
right and duty which belong by treaty to certain great European powers
calling for their intervention in political matters affecting the good
government and religious freedom of the non-Mussulman subjects of the
Sultan, but it arose solely from our desire to have an accurate
knowledge of the conditions in our efforts to care for those entitled
to our protection.

The presence of our naval vessels which are now in the vicinity of the
disturbed localities affords opportunities to acquire a measure of
familiarity with the condition of affairs and will enable us to take
suitable steps for the protection of any interests of our countrymen
within reach of our ships that might be found imperiled.

The Ottoman Government has lately issued an imperial irade exempting
forever from taxation an American college for girls at Scutari.
Repeated assurances have also been obtained by our envoy at
Constantinople that similar institutions maintained and administered by
our countrymen shall be secured in the enjoyment of all rights and that
our citizens throughout the Empire shall be protected.

The Government, however, in view of existing facts, is far from relying
upon such assurances as the limit of its duty. Our minister has been
vigilant and alert in affording all possible protection in individual
cases where danger threatened or safety was imperiled. We have sent
ships as far toward the points of actual disturbance as it is possible
for them to go, where they offer refuge to those obliged to flee, and
we have the promise of other powers which have ships in the
neighborhood that our citizens as well as theirs will be received and
protected on board those ships. On the demand of our minister orders
have been issued by the Sultan that Turkish soldiers shall guard and
escort to the coast American refugees.

These orders have been carried out, and our latest intelligence gives
assurance of the present personal safety of our citizens and
missionaries. Though thus far no lives of American citizens have been
sacrificed, there can be no doubt that serious loss and destruction of
mission property have resulted from riotous conflicts and outrageous
attacks.

By treaty several of the most powerful European powers have secured a
right and have assumed a duty not only in behalf of their own citizens
and in furtherance of their own interests, but as agents of the
Christian world. Their right is to enforce such conduct of Turkish
government as will restrain fanatical brutality, and if this fails
their duty is to so interfere as to insure against such dreadful
occurrences in Turkey as have lately shocked civilization. The powers
declare this right and this duty to be theirs alone, and it is
earnestly hoped that prompt and effective action on their part will not
be delayed.

The new consulates at Erzerum and Harpoot, for which appropriation was
made last session, have been provisionally filled by trusted employees
of the Department of State. These appointees, though now in Turkey,
have not yet received their exequaturs.

The arbitration of the claim of the Venezuela Steam Transportation
Company under the treaty of January 19, 1892, between the United States
and Venezuela, resulted in an award in favor of the claimant.

The Government has used its good offices toward composing the
differences between Venezuela on the one hand and France and Belgium on
the other growing out of the dismissal of the representatives of those
powers on the ground of a publication deemed offensive to Venezuela.
Although that dismissal was coupled with a cordial request that other
more personally agreeable envoys be sent in their stead, a rupture of
intercourse ensued and still continues.

In view of the growth of our interests in foreign countries and the
encouraging prospects for a general expansion of our commerce, the
question of an improvement in the consular service has increased in
importance and urgency. Though there is no doubt that the great body of
consular officers are rendering valuable services to the trade and
industries of the country, the need of some plan of appointment and
control which would tend to secure a higher average of efficiency can
not be denied.

The importance of the subject has led the Executive to consider what
steps might properly be taken without additional legislation to answer
the need of a better system of consular appointments. The matter having
been committed to the consideration of the Secretary of State, in
pursuance of his recommendations an Executive order was issued on the
20th of September, 1895, by the terms of which it is provided that
after that date any vacancy in a consulate or commercial agency with an
annual salary or compensation from official fees of not more than
$2,500 or less than $1,000 should be filled either by transfer or
promotion from some other position under the Department of State of a
character tending to qualify the incumbent for the position to be
filled, or by the appointment of a person not under the Department of
State, but having previously served thereunder and shown his capacity
and fitness for consular duty, or by the appointment of a person who,
having been selected by the President and sent to a board for
examination, is found upon such examination to be qualified for the
position. Posts which pay less than $1,000 being usually, on account of
their small compensation, filled by selection from residents of the
locality, it was not deemed practicable to put them under the new
system.

The compensation of $2,500 was adopted as the maximum limit in the
classification for the reason that consular officers receiving more
than that sum are often charged with functions and duties scarcely
inferior in dignity and importance to those of diplomatic agents, and
it was therefore thought best to continue their selection in the
discretion of the Executive without subjecting them to examination
before a board. Excluding 71 places with compensation at present less
than $1,000 and 53 places above the maximum in compensation, the number
of positions remaining within the scope of the order is 196. This
number will undoubtedly be increased by the inclusion of consular
officers whose remuneration in fees, now less than $1,000, will be
augmented with the growth of our foreign commerce and a return to more
favorable business conditions.

In execution of the Executive order referred to the Secretary of State
has designated as a board to conduct the prescribed examinations the
Third Assistant Secretary of State, the Solicitor of the Department of
State, and the Chief of the Consular Bureau, and has specified the
subjects to which such examinations shall relate.

It is not assumed that this system will prove a full measure of
consular reform. It is quite probable that actual experience will show
particulars in which the order already issued may be amended and
demonstrate that for the best results appropriate legislation by
Congress is imperatively required.

In any event, these efforts to improve the consular service ought to be
immediately supplemented by legislation providing for consular
inspection. This has frequently been a subject of Executive
recommendation, and I again urge such action by Congress as will permit
the frequent and thorough inspection of consulates by officers
appointed for that purpose or by persons already in the diplomatic or
consular service. The expense attending such a plan would be
insignificant compared with its usefulness, and I hope the legislation
necessary to set it on foot will be speedily forthcoming.

I am thoroughly convinced that in addition to their salaries our
ambassadors and ministers at foreign courts should be provided by the
Government with official residences. The salaries of these officers are
comparatively small and in most cases insufficient to pay, with other
necessary expenses, the cost of maintaining household establishments in
keeping with their important and delicate functions. The usefulness of
a nation's diplomatic representative undeniably depends much upon the
appropriateness of his surroundings, and a country like ours, while
avoiding unnecessary glitter and show, should be certain that it does
not suffer in its relations with foreign nations through parsimony and
shabbiness in its diplomatic outfit. These considerations and the other
advantages of having fixed and somewhat permanent locations for our
embassies would abundantly justify the moderate expenditure necessary
to carry out this suggestion.

As we turn from a review of our foreign relations to the contemplation
of our national financial situation we are immediately aware that we
approach a subject of domestic concern more important than any other
that can engage our attention, and one at present in such a perplexing
and delicate predicament as to require prompt and wise treatment.

We may well be encouraged to earnest effort in this direction when we
recall the steps already taken toward improving our economic and
financial situation and when we appreciate how well the way has been
prepared for further progress by an aroused and intelligent popular
interest in these subjects.

By command of the people a customs-revenue system designed for the
protection and benefit of favored classes at the expense of the great
mass of our countrymen, and which, while inefficient for the purpose of
revenue, curtailed our trade relations and impeded our entrance to the
markets of the world, has been superseded by a tariff policy which in
principle is based upon a denial of the right of the Government to
obstruct the avenues to our people's cheap living or lessen their
comfort and contentment for the sake of according especial advantages
to favorites, and which, while encouraging our intercourse and trade
with other nations, recognizes the fact that American self-reliance,
thrift, and ingenuity can build up our country's industries and develop
its resources more surely than enervating paternalism.

The compulsory purchase and coinage of silver by the Government,
unchecked and unregulated by business conditions and heedless of our
currency needs, which for more than fifteen years diluted our
circulating medium, undermined confidence abroad in our financial
ability, and at last culminated in distress and panic at home, has been
recently stopped by the repeal of the laws which forced this reckless
scheme upon the country.

The things thus accomplished, notwithstanding their extreme importance
and beneficent effects, fall far short of curing the monetary evils
from which we suffer as a result of long indulgence in ill-advised
financial expedients.

The currency denominated United States notes and commonly known as
greenbacks was issued in large volume during the late Civil War and was
intended originally to meet the exigencies of that period. It will be
seen by a reference to the debates in Congress at the time the laws
were passed authorizing the issue of these notes that their advocates
declared they were intended for only temporary use and to meet the
emergency of war. In almost if not all the laws relating to them some
provision was made contemplating their voluntary or compulsory
retirement. A large quantity of them, however, were kept on foot and
mingled with the currency of the country, so that at the close of the
year 1874 they amounted to $381,999,073.

Immediately after that date, and in January, 1875, a law was passed
providing for the resumption of specie payments, by which the Secretary
of the Treasury was required whenever additional circulation was issued
to national banks to retire United States notes equal in amount to 80
per cent of such additional national-bank circulation until such notes
were reduced to $300,000,000. This law further provided that on and
after the 1st day of January, 1879, the United States notes then
outstanding should be redeemed in coin, and in order to provide and
prepare for such redemption the Secretary of the Treasury was
authorized not only to use any surplus revenues of the Government, but
to issue bonds of the United States and dispose of them for coin and to
use the proceeds for the purposes contemplated by the statute.

In May, 1878, and before the date thus appointed for the redemption and
retirement of these notes, another statute was passed forbidding their
further cancellation and retirement. Some of them had, however, been
previously redeemed and canceled upon the issue of additional
national-bank circulation, as permitted by the law of 1875, so that the
amount outstanding at the time of the passage of the act forbidding
their further retirement was $346,681,016.

The law of 1878 did not stop at distinct prohibition, but contained in
addition the following express provision:

And when any of said notes may be redeemed or be received into the
Treasury under any law from any source whatever, and shall belong to
the United States, they shall not be retired, canceled, or destroyed,
but they shall be reissued and paid out again and kept in circulation.
 This was the condition of affairs on the 1st day of January, 1879, which had been fixed upon four years before as the date for entering upon the redemption and retirement of all these notes, and for which such abundant means had been provided.
The Government was put in the anomalous situation of owing to the
holders of its notes debts payable in gold on demand which could
neither be retired by receiving such notes in discharge of obligations
due the Government nor canceled by actual payment in gold. It was
forced to redeem without redemption and to pay without acquittance.

There had been issued and sold $95,500,000 of the bonds authorized by
the resumption act of 1875, the proceeds of which, together with other
gold in the Treasury, created a gold fund deemed sufficient to meet the
demands which might be made upon it for the redemption of the
outstanding United States notes. This fund, together with such other
gold as might be from time to time in the Treasury available for the
same purpose, has been since called our gold reserve, and $100,000,000
has been regarded as an adequate amount to accomplish its object. This
fund amounted on the 1st day of January, 1879, to $114,193,360, and
though thereafter constantly fluctuating it did not fall below that sum
until July, 1892. In April, 1893, for the first time since its
establishment, this reserve amounted to less than $100,000,000,
containing at that date only $97,011,330.

In the meantime, and in July, 1890, an act had been passed directing
larger governmental monthly purchases of silver than had been required
under previous laws, and providing that in payment for such silver
Treasury notes of the United States should be issued payable on demand
in gold or silver coin, at the discretion of the Secretary of the
Treasury. It was, however, declared in the act to be" the established
policy of the United States to maintain the two metals on a parity with
each other upon the present legal ratio or such ratio as may be
provided by law." In view of this declaration it was not deemed
permissible for the Secretary of the Treasury to exercise the
discretion in terms conferred on him by refusing to pay gold on these
notes when demanded, because by such discrimination in favor of the
gold dollar the so-called parity of the two metals would be destroyed
and grave and dangerous consequences would be precipitated by affirming
or accentuating the constantly widening disparity between their actual
values under the existing ratio.

It thus resulted that the Treasury notes issued in payment of silver
purchases under the law of 1890 were necessarily treated as gold
obligations at the option of the holder. These notes on the 1st day of
November, 1893, when the law compelling the monthly purchase of silver
was repealed, amounted to more than $155,000,000. The notes of this
description now outstanding added to the United States notes still
undiminished by redemption or cancellation constitute a volume of gold
obligations amounting to nearly $500,000,000.

These obligations are the instruments which ever since we had a gold
reserve have been used to deplete it.

This reserve, as has been stated, had fallen in April, 1893, to
$97,111,330. It has from that time to the present, with very few and
unimportant upward movements, steadily decreased, except as it has been
temporarily replenished by the sale of bonds.

Among the causes for this constant and uniform shrinkage in this fund
may be mentioned the great falling off of exports under the operation
of the tariff law until recently in force, which crippled our exchange
of commodities with foreign nations and necessitated to some extent the
payment of our balances in gold; the unnatural infusion of silver into
our currency and the increasing agitation for its free and unlimited
coinage, which have created apprehension as to our disposition or
ability to continue gold payments; the consequent hoarding of gold at
home and the stoppage of investments of foreign capital, as well as the
return of our securities already sold abroad; and the high rate of
foreign exchange, which induced the shipment of our gold to be drawn
against as a matter of speculation.

In consequence of these conditions the gold reserve on the 1st day of
February, 1894, was reduced to $65,438,377, having lost more than
$31,000,000 during the preceding nine months, or since April, 1893. Its
replenishment being necessary and no other manner of accomplishing it
being possible, resort was had to the issue and sale of bonds provided
for by the resumption act of 1875. Fifty millions of these bonds were
sold, yielding $58,633,295.71, which was added to the reserve fund of
gold then on hand. As a result of this operation this reserve, which
had suffered constant and large withdrawals in the meantime, stood on
the 6th day of March, 1894, at the sum of $107,446,802. Its depletion
was, however, immediately thereafter so accelerated that on the 30th
day of June, 1894, it had fallen to $64,873,025, thus losing by
withdrawals more than $42,000,000 in five months and dropping slightly
below its situation when the sale of $50,000,000 in bonds was effected
for its replenishment.

This depressed condition grew worse, and on the 24th day of November,
1894, our gold reserve being reduced to $57,669,701, it became
necessary to again strengthen it.

This was done by another sale of bonds amounting to $50,000,000, from
which there was realized $58,538,500, with which the fund was increased
to $111,142,021 on the 4th day of December, 1894.

Again disappointment awaited the anxious hope for relief. There was not
even a lull in the exasperating withdrawals of gold. On the contrary,
they grew larger and more persistent than ever. Between the 4th day of
December, 1894, and early in February, 1895, a period of scarcely more
than two months after the second reenforcement of our gold reserve by
the sale of bonds, it had lost by such withdrawals more than
$69,000,000 and had fallen to $41,340,181. Nearly $43,000,000 had been
withdrawn within the month immediately preceding this situation.

In anticipation of impending trouble I had on the 28th day of January,
1895, addressed a communication to the Congress fully setting forth our
difficulties and dangerous position and earnestly recommending that
authority be given the Secretary of the Treasury to issue bonds bearing
a low rate of interest, payable by their terms in gold, for the purpose
of maintaining a sufficient gold reserve and also for the redemption
and cancellation of outstanding United States notes and the Treasury
notes issued for the purchase of silver under the law of 1890. This
recommendation did not, however, meet with legislative approval.

In February, 1895, therefore, the situation was exceedingly critical.
With a reserve perilously low and a refusal of Congressional aid,
everything indicated that the end of gold payments by the Government
was imminent. The results of prior bond issues had been exceedingly
unsatisfactory, and the large withdrawals of gold immediately
succeeding their public sale in open market gave rise to a reasonable
suspicion that a large part of the gold paid into the Treasury upon
such sales was promptly drawn out again by the presentation of United
States notes or Treasury notes, and found its way to the hands of those
who had only temporarily parted with it in the purchase of bonds.

In this emergency, and in view of its surrounding perplexities, it
became entirely apparent to those upon whom the struggle for safety was
devolved not only that our gold reserve must, for the third time in
less than thirteen months, be restored by another issue and sale of
bonds bearing a high rate of interest and badly suited to the purpose,
but that a plan must be adopted for their disposition promising better
results than those realized on previous sales. An agreement was
therefore made with a number of financiers and bankers whereby it was
stipulated that bonds described in the resumption act of 1875, payable
in coin thirty years after their date, bearing interest at the rate of
4 pet cent per annum, and amounting to about $62,000,000, should be
exchanged for gold, receivable by weight, amounting to a little more
than $65,000,000.

This gold was to be delivered in such installments as would complete
its delivery within about six months from the date of the contract, and
at least one-half of the amount was to be furnished from abroad. It was
also agreed by those supplying this gold that during the continuance of
the contract they would by every means in their power protect the
Government against gold withdrawals. The contract also provided that if
Congress would authorize their issue bonds payable by their terms in
gold and bearing interest at the rate of 3 per cent per annum might
within ten days be substituted at par for the 4 per cent bonds
described in the agreement.

On the day this contract was made its terms were communicated to
Congress by a special Executive message, in which it was stated that
more than $16,000,000 would be saved to the Government if gold bonds
bearing 3 per cent interest were authorized to be substituted for those
mentioned in the contract.

The Congress having declined to grant the necessary authority to secure
this saving, the contract, unmodified, was carried out, resulting in a
gold reserve amounting to $107,571,230 on the 8th day of July, 1895.
The performance of this contract not only restored the reserve, but
checked for a time the withdrawals of gold and brought on a period of
restored confidence and such peace and quiet in business circles as
were of the greatest possible value to every interest that affects our
people. I have never had the slightest misgiving concerning the wisdom
or propriety of this arrangement, and am quite willing to answer for my
full share of responsibility for its promotion. I believe it averted a
disaster the imminence of which was, fortunately, not at the time
generally understood by our people.

Though the contract mentioned stayed for a time the tide of gold
withdrawal, its good results could not be permanent. Recent withdrawals
have reduced the reserve from $107,571,230 on the 8th day of July,
1895, to $79,333,966. How long it will remain large enough to render
its increase unnecessary is only matter of conjecture, though quite
large withdrawals for shipment in the immediate future are predicted in
well-informed quarters. About $16,000,000 has been withdrawn during the
month of November.

The foregoing statement of events and conditions develops the fact that
after increasing our interest-bearing bonded indebtedness more than
$162,000,000 to save our gold reserve we are nearly where we started,
having now in such reserve $79,333,966, as against $65,438,377 in
February, 1894, when the first bonds were issued.

Though the amount of gold drawn from the Treasury appears to be very
large as gathered from the facts and figures herein presented, it
actually was much larger, considerable sums having been acquired by the
Treasury within the several periods stated without the issue of bonds.
On the 28th of January, 1895, it was reported by the Secretary of the
Treasury that more than $172,000,000 of gold had been withdrawn for
hoarding or shipment during the year preceding. He now reports that
from January 1, 1879, to July 14, 1890, a period of more than eleven
years, only a little over $28,000,000 was withdrawn, and that between
July 14, 1890, the date of the passage of the law for an increased
purchase of silver, and the 1st day of December, 1895, or within less
than five and a half years, there was withdrawn nearly $375,000,000,
making a total of more than $403,000,000 drawn from the Treasury in
gold since January 1, 1879, the date fixed in 1875 for the retirement
of the United States notes.

Nearly $327,000,000 of the gold thus withdrawn has been paid out on
these United States notes, and yet every one of the $346,000,000 is
still uncanceled and ready to do service in future gold depletions.

More than $76,000,000 in gold has since their creation in 1890 been
paid out from the Treasury upon the notes given on the purchase of
silver by the Government, and yet the whole, amounting to $155,000,000,
except a little more than $16,000,000 which has been retired by
exchanges for silver at the request of the holders, remains outstanding
and prepared to join their older and more experienced allies in future
raids upon the Treasury's gold reserve.

In other words, the Government has paid in gold more than nine-tenths
of its United States notes and still owes them all. It has paid in gold
about one-half of its notes given for silver purchases without
extinguishing by such payment one dollar of these notes.

When, added to all this, we are reminded that to carry on this astound,
lug financial scheme the Government has incurred a bonded indebtedness
of $95,500,000 in establishing a gold reserve and of $162,315,400 in
efforts to maintain it; that the annual interest charge on such bonded
indebtedness is more than $11,000,000; that a continuance of our
present course may result in further bond issues, and that we have
suffered or are threatened with all this for the sake of supplying gold
for foreign shipment or facilitating its hoarding at home, a situation
is exhibited which certainly ought to arrest attention and provoke
immediate legislative relief.

I am convinced the only thorough and practicable remedy for our
troubles is found in the retirement and cancellation of our United
States notes, commonly called greenbacks, and the outstanding Treasury
notes issued by the Government in payment of silver purchases under the
act of 1890.

I believe this could be quite readily accomplished by the exchange of
these notes for United States bonds, of small as well as large
denominations, bearing a low rate of interest. They should be long-term
bonds, thus increasing their desirability as investments, and because
their payment could be well postponed to a period far removed from
present financial burdens and perplexities, when with increased
prosperity and resources they would be more easily met.

To further insure the cancellation of these notes and also provide a
way by which gold may be added to our currency in lieu of them, a
feature in the plan should be an authority given to the Secretary of
the Treasury to dispose of the bonds abroad for gold if necessary to
complete the contemplated redemption and cancellation, permitting him
to use the proceeds of such bonds to take up and cancel any of the
notes that may be in the Treasury or that may be received by the
Government on any account.

The increase of our bonded debt involved in this plan would be amply
compensated by renewed activity and enterprise in all business circles,
the restored confidence at home, the reinstated faith in our monetary
strength abroad, and the stimulation of every interest and industry
that would follow the cancellation of the gold-demand obligations now
afflicting us. In any event, the bonds proposed would stand for the
extinguishment of a troublesome indebtedness, while in the path we now
follow there lurks the menace of unending bonds, with our indebtedness
still undischarged and aggravated in every feature. The obligations
necessary to fund this indebtedness would not equal in amount those
from which we have been relieved since 1884 by anticipation and payment
beyond the requirements of the sinking fund out of our surplus revenues.

The currency withdrawn by the retirement of the United States notes and
Treasury notes, amounting to probably less than $486,000,000, might be
supplied by such gold as would be used on their retirement or by an
increase in the circulation of our national banks. Though the aggregate
capital of those now in existence amounts to more than $664,000,000,
their outstanding circulation based on bond security amounts to only
about $190,000,000. They are authorized to issue notes amounting to 90
per cent of the bonds deposited to secure their circulation, but in no
event beyond the amount of their capital stock, and they are obliged to
pay 1 per cent tax on the circulation they issue.

I think they should be allowed to issue circulation equal to the par
value of the bonds they deposit to secure it, and that the tax on their
circulation should be reduced to one-fourth of 1 per cent, which would
undoubtedly meet all the expense the Government incurs on their
account. In addition they should be allowed to substitute or deposit in
lieu of the bonds now required as security for their circulation those
which would be issued for the purpose of retiring the United States
notes and Treasury notes.

The banks already existing, if they desired to avail themselves of the
provisions of law thus modified, could issue circulation, in addition
to that already outstanding, amounting to $478,000,000, which would
nearly or quite equal the currency proposed to be canceled. At any
rate, I should confidently expect to see the existing national banks or
others to be organized avail themselves of the proposed encouragements
to issue circulation and promptly fill any vacuum and supply every
currency need.

It has always seemed to me that the provisions of law regarding the
capital of national banks, which operate as a limitation to their
location, fail to make proper compensation for the suppression of State
banks, which came near to the people in all sections of the country and
readily furnished them with banking accommodations and facilities. Any
inconvenience or embarrassment arising from these restrictions on the
location of national banks might well be remedied by better adapting
the present system to the creation of banks in smaller communities or
by permitting banks of large capital to establish branches in such
localities as would serve the people, so regulated and restrained as to
secure their safe and conservative control and management.

But there might not be the necessity for such an addition to the
currency by new issues of bank circulation as at first glance is
indicated. If we should be relieved from maintaining a gold reserve
under conditions that constitute it the barometer of our solvency, and
if our Treasury should no longer be the foolish purveyor of gold for
nations abroad or for speculation and hoarding by our citizens at home,
I should expect to see gold resume its natural and normal functions in
the business affairs of the country and cease to be an object
attracting the timid watch of our people and exciting their sensitive
imaginations.

I do not overlook the fact that the cancellation of the Treasury notes
issued under the silver-purchasing act of 1890 would leave the Treasury
in the actual ownership of sufficient silver, including seigniorage, to
coin nearly $178,000,000 in standard dollars. It is worthy of
consideration whether this might not from time to time be converted
into dollars or fractional coin and slowly put into circulation, as in
the judgment of the Secretary of the Treasury the necessities of the
country should require.

Whatever is attempted should be entered upon fully appreciating the
fact that by careless, easy descent we have reached a dangerous depth,
and that our ascent will not be accomplished without laborious toil and
struggle. We shall be wise if we realize that we are financially ill
and that our restoration to health may require heroic treatment and
unpleasant remedies.

In the present stage of our difficulty it is not easy to understand how
the amount of our revenue receipts directly affects it. The important
question is not the quantity of money received in revenue payments, but
the kind of money we maintain and our ability to continue in sound
financial condition. We are considering the Government's holdings of
gold as related to the soundness of our money and as affecting our
national credit and monetary strength.

If our gold reserve had never been impaired; if no bonds had ever been
issued to replenish it; if there had been no fear and timidity
concerning our ability to continue gold payments; if any part of our
revenues were now paid in gold, and if we could look to our gold
receipts as a means of maintaining a safe reserve, the amount of our
revenues would be an influential factor in the problem. But,
unfortunately, all the circumstances that might lend weight to this
consideration are entirely lacking.

In our present predicament no gold is received by the Government in
payment of revenue charges, nor would there be if the revenues were
increased. The receipts of the Treasury, when not in silver
certificates, consist of United States notes and Treasury notes issued
for silver purchases. These forms of money are only useful to the
Government in paying its current ordinary expenses, and its quantity in
Government possession does not in the least contribute toward giving us
that kind of safe financial standing or condition which is built on
gold alone.

If it is said that these notes if held by the Government can be used to
obtain gold for our reserve, the answer is easy. The people draw gold
from the Treasury on demand upon United States notes and Treasury
notes, but the proposition that the Treasury can on demand draw gold
from the people upon them would be regarded in these days with wonder
and amusement; and even if this could be done there is nothing to
prevent those thus parting with their gold from regaining it the next
day or the next hour by the presentation of the notes they received in
exchange for it.

The Secretary of the Treasury might use such notes taken from a surplus
revenue to buy gold in the market. Of course he could not do this
without paying a premium. Private holders of gold, unlike the
Government, having no parity to maintain, would not be restrained from
making the best bargain possible when they furnished gold to the
Treasury; but the moment the Secretary of the Treasury bought gold on
any terms above par he would establish a general and universal premium
upon it, thus breaking down the parity between gold and silver, which
the Government is pledged to maintain, and opening the way to new and
serious complications. In the meantime the premium would not remain
stationary, and the absurd spectacle might be presented of a dealer
selling gold to the Government and with United States notes or Treasury
notes in his hand immediately clamoring for its return and a resale at
a higher premium.

It may be claimed that a large revenue and redundant receipts might
favorably affect the situation under discussion by affording an
opportunity of retaining these notes in the Treasury when received, and
thus preventing their presentation for gold. Such retention to be
useful ought to be at least measurably permanent; and this is precisely
what is prohibited, so far as United States notes are concerned, by the
law of 1878, forbidding their further retirement. That statute in so
many words provides that these notes when received into the Treasury
and belonging to the United States shall be "paid out again and kept in
circulation."

It will, moreover, be readily seen that the Government could not refuse
to pay out United States notes and Treasury notes in current
transactions when demanded, and insist on paying out silver alone, and
still maintain the parity between that metal and the currency
representing gold. Besides, the accumulation in the Treasury of
currency of any kind exacted from the people through taxation is justly
regarded as an evil, and it can not proceed far without vigorous
protest against an unjustifiable retention of money from the business
of the country and a denunciation of a scheme of taxation which proves
itself to be unjust when it takes from the earnings and income of the
citizen money so much in excess of the needs of Government support that
large sums can be gathered and kept in the Treasury. Such a condition
has heretofore in times of surplus revenue led the Government to
restore currency to the people by the purchase of its unmatured bonds
at a large premium and by a large increase of its deposits in national
banks, and we easily remember that the abuse of Treasury accumulation
has furnished a most persuasive argument in favor of legislation
radically reducing our tariff taxation.

Perhaps it is supposed that sufficient revenue receipts would in a
sentimental way improve the situation by inspiring confidence in our
solvency and allaying the fear of pecuniary exhaustion. And yet through
all our struggles to maintain our gold reserve there never has been any
apprehension as to our ready ability to pay our way with such money as
we had, and the question whether or not our current receipts met our
current expenses has not entered into the estimate of our solvency. Of
course the general state of our funds, exclusive of gold, was entirely
immaterial to the foreign creditor and investor. His debt could only be
paid in gold, and his only concern was our ability to keep on hand that
kind of money.

On July 1, 1892, more than a year and a half before the first bonds
were issued to replenish the gold reserve, there was a net balance in
the Treasury, exclusive of such reserve, of less than $13,000,000, but
the gold reserve amounted to more than $114,000,000, which was the
quieting feature of the situation. It was when the stock of gold began
rapidly to fall that fright supervened and our securities held abroad
were returned for sale and debts owed abroad were pressed for payment.
In the meantime extensive shipments of gold and other unfavorable
indications caused restlessness and fright among our people at home.
Thereupon the general state of our funds, exclusive of gold, became
also immaterial to them, and they too drew gold from the Treasury for
hoarding against all contingencies. This is plainly shown by the large
increase in the proportion of gold withdrawn which was retained by our
own people as time and threatening incidents progressed. During the
fiscal year ending June 30, 1894, nearly $85,000,000 in gold was
withdrawn from the Treasury and about $77,000,000 was sent abroad,
while during the fiscal year ending June 30, 1895, over $117,000,000
was drawn out, of which only about $66,000,000 was shipped, leaving the
large balance of such withdrawals to be accounted for by domestic
hoarding.

Inasmuch as the withdrawal of our gold has resulted largely from
fright, there is nothing apparent that will prevent its continuance or
recurrence, with its natural consequences, except such a change in our
financial methods as will reassure the frightened and make the desire
for gold less intense. It is not clear how an increase fix revenue,
unless it be in gold, can satisfy those whose only anxiety is to gain
gold from the Government's store.

It can not, therefore, be safe to rely upon increased revenues as a
cure for our present troubles.

It is possible that the suggestion of increased revenue as a remedy for
the difficulties we are considering may have originated in an
intimation or distinct allegation that the bonds which have been issued
ostensibly to replenish our gold reserve were really issued to supply
insufficient revenue. Nothing can be further from the truth. Bonds were
issued to obtain gold for the maintenance of our national credit. As
has been shown, the gold thus obtained has been drawn again from the
Treasury upon United States notes and Treasury notes. This operation
would have been promptly prevented if possible; but these notes having
thus been passed to the Treasury, they became the money of the
Government, like any other ordinary Government funds, and there was
nothing to do but to use them in paying Government expenses when needed.

At no time when bonds have been issued has there been any consideration
of the question of paying the expenses of Government with their
proceeds. There was no necessity to consider that question. At the time
of each bond issue we had a safe surplus in the Treasury for ordinary
operations, exclusive of the gold in our reserve. In February, 1894,
when the first issue of bonds was made, such surplus amounted to over
$18,000,000; in November, when the second issue was made, it amounted
to more than $42,000,000, and in February, 1895, when bonds for the
third time were issued, such surplus amounted to more than
$100,000,000. It now amounts to $98,072,420.30.

Besides all this, the Secretary of the Treasury had no authority
whatever to issue bonds to increase the ordinary revenues or pay
current expenses.

I can not but think there has been some confusion of ideas regarding
the effects of the issue of bonds and the results of the withdrawal of
gold. It was the latter process, and not the former, that, by
substituting in the Treasury United States notes and Treasury notes for
gold, increased by their amount the money which was in the first
instance subject to ordinary Government expenditure.

Although the law compelling an increased purchase of silver by the
Government was passed on the 14th day of July, 1890, withdrawals of
gold from the Treasury upon the notes given in payment on such
purchases did not begin until October, 1891. Immediately following that
date the withdrawals upon both these notes and United States notes
increased very largely, and have continued to such an extent that since
the passage of that law there has been more than thirteen times as much
gold taken out of the Treasury upon United States notes and Treasury
notes issued for silver purchases as was thus withdrawn during the
eleven and a half years immediately prior thereto and after the 1st day
of January, 1879, when specie payments were resumed.

It is neither unfair nor unjust to charge a large share of our present
financial perplexities and dangers to the operation of the laws of 1878
and 1890 compelling the purchase of silver by the Government, which not
only furnished a new Treasury obligation upon which its gold could be
withdrawn, but so increased the fear of an overwhelming flood of silver
and a forced descent to silver payments that even the repeal of these
laws did not entirely cure the evils of their existence.

While I have endeavored to make a plain statement of the disordered
condition of our currency and the present dangers menacing our
prosperity and to suggest a way which leads to a safer financial
system, I have constantly had in mind the fact that many of my
countrymen, whose sincerity I do not doubt, insist that the cure for
the ills now threatening us may be found in the single and simple
remedy of the free coinage of silver. They contend that our mints shall
be at once thrown open to the free, unlimited, and independent coinage
of both gold and silver dollars of full legal-tender quality,
regardless of the action of any other government and in full view of
the fact that the ratio between the metals which they suggest calls for
100 cents' worth of gold in the gold dollar at the present standard and
only 50 cents in intrinsic worth of silver in the silver dollar.

Were there infinitely stronger reasons than can be adduced for hoping
that such action would secure for us a bimetallic currency moving on
lines of parity, an experiment so novel and hazardous as that proposed
might well stagger those who believe that stability is an imperative
condition of sound money.

No government, no human contrivance or act of legislation, has ever
been able to hold the two metals together in free coinage at a ratio
appreciably different from that which is established in the markets of
the world.

Those who believe that our independent free coinage of silver at an
artificial ratio with gold of 16 to 1 would restore the parity between
the metals, and consequently between the coins, oppose an unsupported
and improbable theory to the general belief and practice of other
nations; and to the teaching of the wisest statesmen and economists of
the world, both in the past and present, and, what is far more
conclusive, they run counter to our own actual experiences.

Twice in our earlier history our lawmakers, in attempting to establish
a bimetallic currency, undertook free coinage upon a ratio which
accidentally varied from the actual relative values of the two metals
not more than 3 per cent. In both cases, notwithstanding greater
difficulties and cost of transportation than now exist, the coins whose
intrinsic worth was undervalued. in the ratio gradually and surely
disappeared from our circulation and went to other countries where
their real value was better recognized.

Acts of Congress were impotent to create equality where natural causes
decreed even a slight inequality.

Twice in our recent history we have signally failed to raise by
legislation the value of silver. Under an act of Congress passed in
1878 the Government was required for more than twelve years to expend
annually at least $24,000,000 in the purchase of silver bullion for
coinage. The act of July 14, 1890, in a still bolder effort, increased
the amount of silver the Government was compelled to purchase and
forced it to become the buyer annually of 54,000,000 ounces, or
practically the entire product of our mines. Under both laws silver
rapidly and steadily declined in value. The prophecy and the expressed
hope and expectation of those in the Congress who led in the passage of
the last-mentioned act that it would reestablish and maintain the
former parity between the two metals are still fresh in our memory.

In the light of these experiences, which accord with the experiences of
other nations, there is certainly no secure ground for the belief that
an act of Congress could now bridge an inequality of 50 per cent
between gold and silver at our present ratio, nor is there the least
possibility that our country, which has less than one-seventh of the
silver money in the world, could by its action alone raise not only our
own but all silver to its lost ratio with gold. Our attempt to
accomplish this by the free coinage of silver at a ratio differing
widely from actual relative values would be the signal for the complete
departure of gold from our circulation, the immediate and large
contraction of our circulating medium, and a shrinkage in the real
value and monetary efficiency of all other forms of currency as they
settled to the level of silver monometallism. Everyone who receives a
fixed salary and every worker for wages would find the dollar in his
hand ruthlessly scaled down to the point of bitter disappointment, if
not to pinching privation.

A change in our standard to silver monometallism would also bring on a
collapse of the entire system of credit, which, when based on a
standard which is recognized and adopted by the world of business, is
many times more potent and useful than the entire volume of currency
and is safely capable of almost indefinite expansion to meet the growth
of trade and enterprise. In a self-invited struggle through darkness
and uncertainty our humiliation would be increased by the consciousness
that we had parted company with all the enlightened and progressive
nations of the world and were desperately and hopelessly striving to
meet the stress of modern commerce and competition with a debased and
unsuitable currency and in association with the few weak and laggard
nations which have silver alone as their standard of value.

All history warns us against rash experiments which threaten violent
changes in our monetary standard and the degradation of our currency.
The past is full of lessons teaching not only the economic dangers but
the national immorality that follow in the train of such experiments. I
will not believe that the American people can be persuaded after sober
deliberation to jeopardize their nation's prestige and proud standing
by encouraging financial nostrums, nor that they will yield to the
false allurements of cheap money when they realize that it must result
in the weakening of that financial integrity and rectitude which thus
far in our history has been so devotedly cherished as one of the traits
of true Americanism.

Our country's indebtedness, whether owing by the Government or existing
between individuals, has been contracted with reference to our present
standard. To decree by act of Congress that these debts shall be
payable in less valuable dollars than those within the contemplation
and intention of the parties when contracted would operate to transfer
by the fiat of law and without compensation an amount of property and a
volume of rights and interests almost incalculable.

Those who advocate a blind and headlong plunge to free coinage in the
name of bimetallism, and professing the belief, contrary to all
experience, that we could thus establish a double standard and a
concurrent circulation of both metals in our coinage, are certainly
reckoning from a cloudy standpoint. Our present standard of value is
the standard of the civilized world and permits the only bimetallism
now possible, or at least that is within the independent reach of any
single nation, however powerful that nation may be. While the value of
gold as a standard is steadied by almost universal commercial and
business use, it does not despise silver nor seek its banishment.
Wherever this standard is maintained there is at its side in free and
unquestioned circulation a volume of silver currency sometimes equaling
and sometimes even exceeding it in amount both maintained at a parity
notwithstanding a depreciation or fluctuation in the intrinsic value of
silver.

There is a vast difference between a standard of value and a currency
for monetary use. The standard must necessarily be fixed and certain.
The currency may be in divers forms and of various kinds. No
silver-standard country has a gold currency in circulation, but an
enlightened and wise system of finance secures the benefits of both
gold and silver as currency and circulating medium by keeping the
standard stable and all other currency at par with it. Such a system
and such a standard also give free scope for the use and expansion of
safe and conservative credit, so indispensable to broad and growing
commercial transactions and so well substituted for the actual use of
money. If a fixed and stable standard is maintained, such as the
magnitude and safety of our commercial transactions and business
require, the use of money itself is conveniently minimized.

Every dollar of fixed and stable value has through the agency of
confident credit an astonishing capacity of multiplying itself in
financial work. Every unstable and fluctuating dollar fails as a basis
of credit, and in its use begets gambling speculation and undermines
the foundations of honest enterprise.

I have ventured to express myself on this subject with earnestness and
plainness of speech because I can not rid myself of the belief that
there lurk in the proposition for the free coinage of silver, so
strongly approved and so enthusiastically advocated by a multitude of
my countrymen, a serious menace to our prosperity and an insidious
temptation of our people to wander from the allegiance they owe to
public and private integrity. It is because I do not distrust the good
faith and sincerity of those who press this scheme that I have
imperfectly but with zeal submitted my thoughts upon this momentous
subject. I can not refrain from begging them to reexamine their views
and beliefs in the light of patriotic reason and familiar experience
and to weigh again and again the consequences of such legislation as
their efforts have invited. Even the continued agitation of the subject
adds greatly to the difficulties of a dangerous financial situation
already forced upon us.

In conclusion I especially entreat the people's representatives in the
Congress, who are charged with the responsibility of inaugurating
measures for the safety and prosperity of our common country, to
promptly and effectively consider the ills of our critical financial
plight. I have suggested a remedy which my judgment approves. I desire,
however, to assure the Congress that I am prepared to cooperate with
them in perfecting any other measure promising thorough and practical
relief, and that I will gladly labor with them in every patriotic
endeavor to further the interests and guard the welfare of our
countrymen, whom in our respective places of duty we have undertaken to
serve.

GROVER CLEVELAND



***


State of the Union Address
Grover Cleveland
December 7, 1896

To the Congress of the United States:

As representatives of the people in the legislative branch of their
Government, you have assembled at a time when the strength and
excellence of our free institutions and the fitness of our citizens to
enjoy popular rule have been again made manifest. A political contest
involving momentous consequences, fraught with feverish apprehension,
and creating aggressiveness so intense as to approach bitterness and
passion has been waged throughout our land and determined by the decree
of free and independent suffrage without disturbance of our
tranquillity or the least sign of weakness in our national structure.

When we consider these incidents and contemplate the peaceful obedience
and manly submission which have succeeded a heated clash of political
opinions, we discover abundant evidence of a determination on the part
of our countrymen to abide by every verdict of the popular will and to
be controlled at all times by an abiding faith in the agencies
established for the direction of the affairs of their Government.

Thus our people exhibit a patriotic disposition which entitles them to
demand of those who undertake to make and execute their laws such
faithful and unselfish service in their behalf as can only be prompted
by a serious appreciation of the trust and confidence which the
acceptance of public duty invites.

In obedience to a constitutional requirement I herein submit to the
Congress certain information concerning national affairs, with the
suggestion of such legislation as in my judgment is necessary and
expedient. To secure brevity and avoid tiresome narration I shall omit
many details concerning matters within Federal control which, though by
no means unimportant, are more profitably discussed in departmental
reports. I shall also further curtail this communication by omitting a
minute recital of many minor incidents connected with our foreign
relations which have heretofore found a place in Executive messages,
but are now contained in a report of the Secretary of State, which is
herewith submitted.

At the outset of a reference to the more important matters affecting
our relations with foreign powers it would afford me satisfaction if I
could assure the Congress that the disturbed condition in Asiatic
Turkey had during the past year assumed a less hideous and bloody
aspect and that, either as a consequence of the awakening of the
Turkish Government to the demands of humane civilization or as the
result of decisive action on the part of the great nations having the
right by treaty to interfere for the protection of those exposed to the
rage of mad bigotry and cruel fanaticism, the shocking features of the
situation had been mitigated. Instead, however, of welcoming a softened
disposition or protective intervention, we have been afflicted by
continued and not unfrequent reports of the wanton destruction of homes
and the bloody butchery of men, women, and children, made martyrs to
their profession of Christian faith.

While none of our citizens in Turkey have thus far been killed or
wounded, though often in the midst of dreadful scenes of danger, their
safety in the future is by no means assured. Our Government at home and
our minister at Constantinople have left nothing undone to protect our
missionaries in Ottoman territory, who constitute nearly all the
individuals residing there who have a right to claim our protection on
the score of American citizenship. Our efforts in this direction will
not be relaxed; but the deep feeling and sympathy that have been
aroused among our people ought not to so far blind their reason and
judgment as to lead them to demand impossible things. The outbreaks of
the blind fury which lead to murder and pillage in Turkey occur
suddenly and without notice, and an attempt on our part to force such a
hostile presence there as might be effective for prevention or
protection would not only be resisted by the Ottoman Government, but
would be regarded as an interruption of their plans by the great
nations who assert their exclusive right to intervene in their own time
and method for the security of life and property in Turkey.

Several naval vessels are stationed in the Mediterranean as a measure
of caution and to furnish all possible relief and refuge in case of
emergency.

We have made claims against the Turkish Government for the pillage and
destruction of missionary property at Harpoot and Marash during
uprisings at those places. Thus far the validity of these demands has
not been admitted, though our minister, prior to such outrages and in
anticipation of danger, demanded protection for the persons and
property of our missionary citizens in the localities mentioned and
notwithstanding that strong evidence exists of actual complicity of
Turkish soldiers in the work of destruction and robbery.

The facts as they now appear do not permit us to doubt the justice of
these claims, and nothing will be omitted to bring about their prompt
settlement.

A number of Armenian refugees having arrived at our ports, an order has
lately been obtained from the Turkish Government permitting the wives
and children of such refugees to join them here. It is hoped that
hereafter no obstacle will be interposed to prevent the escape of all
those who seek to avoid the perils which threaten them in Turkish
dominions.

Our recently appointed consul to Erzerum is at his post and discharging
the duties of his office, though for some unaccountable reason his
formal exequatur from the Sultan has not been issued.

I do not believe that the present somber prospect in Turkey will be
long permitted to offend the sight of Christendom. It so mars the
humane and enlightened civilization that belongs to the close of the
nineteenth century that it seems hardly possible that the earnest
demand of good people throughout the Christian world for its corrective
treatment will remain unanswered.

The insurrection in Cuba still continues with all its perplexities. It
is difficult to perceive that any progress has thus far been made
toward the pacification of the island or that the situation of affairs
as depicted in my last annual message has in the least improved. If
Spain still holds Havana and the seaports and all the considerable
towns, the insurgents still roam at will over at least two-thirds of
the inland country. If the determination of Spain to put down the
insurrection seems but to strengthen with the lapse of time and is
evinced by her unhesitating devotion of largely increased military and
naval forces to the task, there is much reason to believe that the
insurgents have gained in point of numbers and character and resources
and are none the less inflexible in their resolve not to succumb
without practically securing the great objects for which they took up
arms. If Spain has not yet reestablished her authority, neither have
the insurgents yet made good their title to be regarded as an
independent state. Indeed, as the contest has gone on the pretense that
civil government exists on the island, except so far as Spain is able
to maintain it, has been practically abandoned. Spain does keep on foot
such a government, more or less imperfectly, in the large towns and
their immediate suburbs; but that exception being made, the entire
country is either given over to anarchy or is subject to the military
occupation of one or the other party. It is reported, indeed, on
reliable authority that at the demand of the commander in chief of the
insurgent army the putative Cuban government has now given up all
attempt to exercise its functions, leaving that government confessedly
(what there is the best reason for supposing it always to have been in
fact) a government merely on paper.

Were the Spanish armies able to meet their antagonists in the open or
in pitched battle, prompt and decisive results might be looked for, and
the immense superiority of the Spanish forces in numbers, discipline,
and equipment could hardly fail to tell greatly to their advantage. But
they are called upon to face a foe that shuns general engagements, that
can choose and does choose its own ground, that from the nature of the
country is visible or invisible at pleasure, and that fights only from
ambuscade and when all the advantages of position and numbers are on
its side. In a country where all that is indispensable to life in the
way of food, clothing, and shelter is so easily obtainable, especially
by those born and bred on the soil, it is obvious that there is hardly
a limit to the time during which hostilities of this sort may be
prolonged. Meanwhile, as in all cases of protracted civil strife, the
passions of the combatants grow more and more inflamed and excesses on
both sides become more frequent and more deplorable. They are also
participated in by bands of marauders, who, now in the name of one
party and now in the name of the other, as may best suit the occasion,
harry the country at will and plunder its wretched inhabitants for
their own advantage. Such a condition of things would inevitably entail
immense destruction of property, even if it were the policy of both
parties to prevent it as far as practicable; but while such seemed to
be the original policy of the Spanish Government, it has now apparently
abandoned it and is acting upon the same theory as the insurgents,
namely, that the exigencies of the contest require the wholesale
annihilation of property that it may not prove of use and advantage to
the enemy.

It is to the same end that, in pursuance of general orders, Spanish
garrisons are now being withdrawn from plantations and the rural
population required to concentrate itself in the towns. The sure result
would seem to be that the industrial value of the island is fast
diminishing and that unless there is a speedy and radical change in
existing conditions it will soon disappear altogether. That value
consists very largely, of course, in its capacity to produce sugar--a
capacity already much reduced by the interruptions to tillage which
have taken place during the last two years. It is reliably asserted
that should these interruptions continue during the current year, and
practically extend, as is now threatened, to the entire sugar-producing
territory of the island, so much time and so much money will be
required to restore the land to its normal productiveness that it is
extremely doubtful if capital can be induced to even make the attempt.

The spectacle of the utter ruin of an adjoining country, by nature one
of the most fertile and charming on the globe, would engage the serious
attention of the Government and people of the United States in any
circumstances. In point of fact, they have a concern with it which is
by no means of a wholly sentimental or philanthropic character. It lies
so near to us as to be hardly separated from our territory. Our actual
pecuniary interest in it is second only to that of the people and
Government of Spain. It is reasonably estimated that at least from
$30,000,000 to $50,000,000 of American capital are invested in
plantations and in railroad, mining, and other business enterprises on
the island. The volume of trade between the United States and Cuba,
which in 1889 amounted to about $64,000,000, rose in 1893 to about
$103,000,000, and in 1894, the year before the present insurrection
broke out, amounted to nearly $96,000,000. Besides this large pecuniary
stake in the fortunes of Cuba, the United States finds itself
inextricably involved in the present contest in other ways, both
vexatious and costly.

Many Cubans reside in this country, and indirectly promote the
insurrection through the press, by public meetings, by the purchase and
shipment of arms, by the raising of funds, and by other means which the
spirit of our institutions and the tenor of our laws do not permit to
be made the subject of criminal prosecutions. Some of them, though
Cubans at heart and in all their feelings and interests, have taken out
papers as naturalized citizens of the United States--a proceeding
resorted to with a view to possible protection by this Government, and
not unnaturally regarded with much indignation by the country of their
origin. The insurgents are undoubtedly encouraged and supported by the
widespread sympathy the people of this country always and instinctively
feel for every struggle for better and freer government, and which, in
the case of the more adventurous and restless elements of our
population, leads in only too many instances to active and personal
participation in the contest. The result is that this Government is
constantly called upon to protect American citizens, to claim damages
for injuries to persons and property, now estimated at many millions of
dollars, and to ask explanations and apologies for the acts of Spanish
officials whose zeal for the repression of rebellion sometimes blinds
them to the immunities belonging to the unoffending citizens of a
friendly power. It follows from the same causes that the United States
is compelled to actively police a long line of seacoast against
unlawful expeditions, the escape of which the utmost vigilance will not
always suffice to prevent.

These inevitable entanglements of the United States with the rebellion
in Cuba, the large American property interests affected, and
considerations of philanthropy and humanity in general have led to a
vehement demand in various quarters for some sort of positive
intervention on the part of the United States. It was at first proposed
that belligerent rights should be accorded to the insurgents--a
proposition no longer urged because untimely and in practical operation
dearly perilous and injurious to our own interests. It has since been
and is now sometimes contended that the independence of the insurgents
should be recognized; but imperfect and restricted as the Spanish
government of the island may be, no other exists there, unless the will
of the military officer in temporary command of a particular district
can be dignified as a species of government. It is now also suggested
that the United States should buy the island--a suggestion possibly
worthy of consideration if there were any evidence of a desire or
willingness on the part of Spain to entertain such a proposal. It is
urged finally that, all other methods failing, the existing internecine
strife in Cuba should be terminated by our intervention, even at the
cost of a war between the United States and Spain--a war which its
advocates confidently prophesy could neither be large in its
proportions nor doubtful in its issue.

The correctness of this forecast need be neither affirmed nor denied.
The United States has, nevertheless, a character to maintain as a
nation, which plainly dictates that right and not might should be the
rule of its conduct. Further, though the United States is not a nation
to which peace is a necessity, it is in truth the most pacific of
powers and desires nothing so much as to live in amity with all the
world. Its own ample and diversified domains satisfy all possible
longings for territory, preclude all dreams of conquest, and prevent
any casting of covetous eyes upon neighboring regions, however
attractive. That our conduct toward Spain and her dominions has
constituted no exception to this national disposition is made manifest
by the course of our Government, not only thus far during the present
insurrection, but during the ten years that followed the rising at Yara
in 1868. No other great power, it may safely be said, under
circumstances of similar perplexity, would have manifested the same
restraint and the same patient endurance. It may also be said that this
persistent attitude of the United States toward Spain in connection
with Cuba unquestionably evinces no slight respect and regard for Spain
on the part of the American people. They in truth do not forget her
connection with the discovery of the Western Hemisphere, nor do they
underestimate the great qualities of the Spanish people nor fail to
fully recognize their splendid patriotism and their chivalrous devotion
to the national honor.

They view with wonder and admiration the cheerful resolution with which
vast bodies of men are sent across thousands of miles of ocean and an
enormous debt accumulated that the costly possession of the gem of the
Antilles may still hold its place in the Spanish crown. And yet neither
the Government nor the people of the United States have shut their eyes
to the course of events in Cuba or have failed to realize the existence
of conceded grievances which have led to the present revolt from the
authority of Spain--grievances recognized by the Queen Regent and by
the Cortes, voiced by the most patriotic and enlightened of Spanish
statesmen, without regard to party, and demonstrated by reforms
proposed by the executive and approved by the legislative branch of the
Spanish Government. It is in the assumed temper and disposition of the
Spanish Government to remedy these grievances, fortified by indications
of influential public opinion in Spain, that this Government has hoped
to discover the most promising and effective means of composing the
present strife with honor and advantage to Spain and with the
achievement of all the reasonable objects of the insurrection.

It would seem that if Spain should offer to Cuba genuine autonomy--a
measure of home rule which, while preserving the sovereignty of Spain,
would satisfy all rational requirements of her Spanish subjects--there
should be no just reason why the pacification of the island might not
be effected on that basis. Such a result would appear to be in the true
interest of all concerned. It would at once stop the conflict which is
now consuming the resources of the island and making it worthless for
whichever party may ultimately prevail. It would keep intact the
possessions of Spain without touching her honor, which will be
consulted rather than impugned by the adequate redress of admitted
grievances. It would put the prosperity of the island and the fortunes
of its inhabitants within their own control without severing the
natural and ancient ties which bind them to the mother country, and
would yet enable them to test their capacity for self-government under
the most favorable conditions. It has been objected on the one side
that Spain should not promise autonomy until her insurgent subjects lay
down their arms; on the other side, that promised autonomy, however
liberal, is insufficient, because without assurance of the promise
being fulfilled.

But the reasonableness of a requirement by Spain of unconditional
surrender on the part of the insurgent Cubans before their autonomy is
conceded is not altogether apparent. It ignores important features of
the situation--the stability two years' duration has given to the
insurrection; the feasibility of its indefinite prolongation in the
nature of things, and, as shown by past experience, the utter and
imminent ruin of the island unless the present strife is speedily
composed; above all, the rank abuses which all parties in Spain, all
branches of her Government, and all her leading public men concede to
exist and profess a desire to remove. Facing such circumstances, to
withhold the proffer of needed reforms until the parties demanding them
put themselves at mercy by throwing down their arms has the appearance
of neglecting the gravest of perils and inviting suspicion as to the
sincerity of any professed willingness to grant reforms. The objection
on behalf of the insurgents that promised reforms can not be relied
upon must of course be considered, though we have no right to assume
and no reason for assuming that anything Spain undertakes to do for the
relief of Cuba will not be done according to both the spirit and the
letter of the undertaking.

Nevertheless, realizing that suspicions and precautions on the part of
the weaker of two combatants are always natural and not always
unjustifiable, being sincerely desirous in the interest of both as well
as on its own account that the Cuban problem should be solved with the
least possible delay, it was intimated by this Government to the
Government of Spain some months ago that if a satisfactory measure of
home rule were tendered the Cuban insurgents and would be accepted by
them upon a guaranty of its execution the United States would endeavor
to find a way not objectionable to Spain of furnishing such graranty.
While no definite response to this intimation has yet been received
from the Spanish Government, it is believed to be not altogether
unwelcome, while, as already suggested, no reason is perceived why it
should not be approved by the insurgents. Neither party can fail to see
the importance of early action, and both must realize that to prolong
the present state of things for even a short period will add enormously
to the time and labor and expenditure necessary to bring about the
industrial recuperation of the island. It is therefore fervently hoped
on all grounds that earnest efforts for healing the breach between
Spain and the insurgent Cubans upon the lines above indicated may be at
once inaugurated and pushed to an immediate and successful issue. The
friendly offices of the United States, either in the manner above
outlined or in any other way consistent with our Constitution and laws,
will always be at the disposal of either party.

Whatever circumstances may arise, our policy and our interests would
constrain us to object to the acquisition of the island or an
interference with its control by any other power.

It should be added that it can not be reasonably assumed that the
hitherto expectant attitude of the United States will be indefinitely
maintained. While we are anxious to accord all due respect to the
sovereignty of Spain, we can not view the pending conflict in all its
features and properly apprehend our inevitably close relations to it
and its possible results without considering that by the course of
events we may be drawn into such an unusual and unprecedented condition
as will fix a limit to our patient waiting for Spain to end the
contest, either alone and in her own way or with our friendly
cooperation.

When the inability of Spain to deal successfully with the insurrection
has become manifest and it is demonstrated that her sovereignty is
extinct in Cuba for all purposes of its rightful existence, and when a
hopeless struggle for its reestablishment has degenerated into a strife
which means nothing more than the useless sacrifice of human life and
the utter destruction of the very subject-matter of the conflict, a
situation will be presented in which our obligations to the sovereignty
of Spain will be superseded by higher obligations, which we can hardly
hesitate to recognize and discharge. Deferring the choice of ways and
methods until the time for action arrives, we should make them depend
upon the precise conditions then existing; and they should not be
determined upon without giving careful heed to every consideration
involving our honor and interest or the international duty we owe to
Spain. Until we face the contingencies suggested or the situation is by
other incidents imperatively changed we should continue in the line of
conduct heretofore pursued, thus in all circumstances exhibiting our
obedience to the requirements of public law and our regard for the duty
enjoined upon us by the position we occupy in the family of nations.

A contemplation of emergencies that may arise should plainly lead us to
avoid their creation, either through a careless disregard of present
duty or even an undue stimulation and ill-timed expression of feeling.
But I have deemed it not amiss to remind the Congress that a time may
arrive when a correct policy and care for our interests, as well as a
regard for the interests of other nations and their citizens, joined by
considerations of humanity and a desire to see a rich and fertile
country intimately related to us saved from complete devastation, will
constrain our Government to such action as will subserve the interests
thus involved and at the same time promise to Cuba and its inhabitants
an opportunity to enjoy the blessings of peace.

The Venezuelan boundary question has ceased to be a matter of
difference between Great Britain and the United States, their
respective Governments having agreed upon the substantial provisions of
a treaty between Great Britain and Venezuela submitting the whole
controversy to arbitration. The provisions of the treaty are so
eminently just and fair that the assent of Venezuela thereto may
confidently be anticipated.

Negotiations for a treaty of general arbitration for all differences
between Great Britain and the United States are far advanced and
promise to reach a successful consummation at an early date.

The scheme of examining applicants for certain consular positions to
test their competency and fitness, adopted under an Executive order
issued on the 20th of September, 1895, has fully demonstrated the
usefulness of this innovation. In connection with this plan of
examination promotions and transfers of deserving incumbents have been
quite extensively made, with excellent results.

During the past year 35 appointments have been made in the consular
service, 27 of which were made to fill vacancies caused by death or
resignation or to supply newly created posts, 2 to succeed incumbents
removed for cause, 2 for the purpose of displacing alien consular
officials by American citizens, and 4 merely changing the official
title of incumbent from commercial agent to consul. Twelve of these
appointments were transfers or promotions from other positions under
the Department of State, 4 of those appointed had rendered previous
service under the Department, 8 were made of persons who passed a
satisfactory examination, 7 were appointed to places not included in
the order of September 20, 1895, and 4 appointments, as above stated,
involved no change of incumbency. The inspection of consular offices
provided for by an appropriation for that purpose at the last session
of the Congress has been productive of such wholesome effects that I
hope this important work will in the future be continued. I know of
nothing that can be done with the same slight expense so improving to
the service.

I desire to repeat the recommendation contained in my last annual
message in favor of providing at public expense official residences for
our ambassadors and ministers at foreign capitals. The reasons
supporting this recommendation are strongly stated in the report of the
Secretary of State, and the subject seems of such importance that I
hope it may receive the early attention of the Congress.

We have during the last year labored faithfully and against unfavorable
conditions to secure better preservation of seal life in the Bering
Sea. Both the United States and Great Britain have lately dispatched
commissioners to these waters to study the habits and condition of the
seal herd and the causes of their rapid decrease. Upon the reports of
these commissioners, soon to be submitted, and with the exercise of
patience and good sense on the part of all interested parties, it is
earnestly hoped that hearty cooperation may be secured for the
protection against threatened extinction of seal life in the Northern
Pacific and Bering Sea.

The Secretary of the Treasury reports that during the fiscal year ended
June 30, 1896, the receipts of the Government from all sources amounted
to $409,475,408.78. During the same period its expenditures were
$434,678,654.48, the excess of expenditures over receipts thus
amounting to $25,203,245.70. The ordinary expenditures during the year
were $4,015,852.21 less than during the preceding fiscal year. Of the
receipts mentioned there was derived from customs the sum of
$160,021,751.67 and from internal revenue $146,830,615.66. The receipts
from customs show an increase of $7,863,134.22 over those from the same
source for the fiscal year ended June 30, 1895, and the receipts from
internal revenue an increase of $3,584,537.91.

The value of our imported dutiable merchandise during the last fiscal
year was $369,757,470 and the value of free goods imported
$409,967,470, being an increase of $6,523,675 in the value of dutiable
goods and $41,231,034 in the value of free goods over the preceding
year. Our exports of merchandise, foreign and domestic, amounted in
value to $882,606,938, being an increase over the preceding year of
$75,068,773. The average ad valorem duty paid on dutiable goods
imported during the year was 39.94 per cent and on free and dutiable
goods taken together 20.55 per cent.

The cost of collecting our internal revenue was 2.78 per cent, as
against 2.81 per cent for the fiscal year ending June 30, 1895. The
total production of distilled spirits, exclusive of fruit brandies, was
86,588,703 taxable gallons, being an increase of 6,639,108 gallons over
the preceding year. There was also an increase of 1,443,676 gallons of
spirits produced from fruit as compared with the preceding year. The
number of barrels of beer produced was 35,859,250, as against
33,589,784 produced in the preceding fiscal year, being all increase of
2,269,466 barrels.

The total amount of gold exported during the last fiscal year was
$112,409,947 and of silver $60,541,670, being an increase of
$45,941,466 of gold and $13,246,384 of silver over the exportations of
the preceding fiscal year. The imports of gold were $33,525,065 and of
silver $28,777,186, being $2,859,695 less of gold and $8,566,007 more
of silver than during the preceding year.

The total stock of metallic money in the United States at the close of
the last fiscal year, ended on the 30th day of June, 1896, was
$1,228,326,035, of which $599,597,964 was in gold and $628,728,071 in
silver.

On the 1st day of November, 1896, the total stock of money of all kinds
in the country was $2,285,410,590, and the amount in circulation, not
including that in the Treasury holdings, was $1,627,055,641, being
$22.63 per capita upon an estimated population of 71,902,000.

The production of the precious metals in the United States during the
calendar year 1895 is estimated to have been 2,254,760 fine ounces of
gold, of the value of $46,610,000, and 55,727,000 fine ounces of
silver, of the commercial value of $36,445,000 and the coinage value of
$72,051,000. The estimated production of these metals throughout the
world during the same period was 9,688,821 fine ounces of gold,
amounting to $200,285,700 in value, and 169,189,249 fine ounces of
silver, of the commercial value of $110,654,000 and of the coinage
value of $218,738,100 according to our ratio.

The coinage of these metals in the various countries of the world
during the same calendar year amounted to $232,701,438 in gold and
$121,996,219 in silver.

The total coinage at the mints of the United States during the fiscal
year ended June 30, 1896, amounted to $71,188,468.52, of which
$58,878,490 was in gold coins and $12,309,978.52 in standard silver
dollars, subsidiary coins, and minor coins

The number of national banks organized from the time the law
authorizing their creation was passed up to October 31, 1896, was
5,051, and of this number 3,679 were at the date last mentioned in
active operation, having authorized capital stock of $650,014,895, held
by 288,902 shareholders, and circulating notes amounting to
$211,412,620.

The total outstanding circulating notes of all national banks on the
31st day of October, 1896, amounted to $234,553,807, including
unredeemed but fully secured notes of banks insolvent and in process of
liquidation. The increase in national-bank circulation during the year
ending on that day was $21,099,429. On October 6, 1896, when the
condition of national banks was last reported, the total resources of
the 3,679 active institutions were $3,263,685,313.83, which included
$1,893,268,839.31 in loans and discounts and $362,165,733.85 in money
of all kinds on hand. Of their liabilities $1,597,891,058.03 was due to
individual depositors and $209,944,019 consisted of outstanding
circulating notes.

There were organized during the year preceding the date last mentioned
28 national banks, located in 15 States, of which 12 were organized in
the Eastern States, with a capital of $1,180,000, 6 in the Western
States, with a capital of $875,000, and 10 in the Southern States, with
a capital of $1,190,000. During the year, however, 37 banks voluntarily
abandoned their franchises under the national law, and in the case of
27 others it was found necessary to appoint receivers. Therefore, as
compared with the year preceding, there was a decrease of 36 in the
number of active banks.

The number of existing banks organized under State laws is 5,708. The
number of immigrants arriving in the United States during the fiscal
year was 343,267, of whom 340,468 were permitted to land and 2,799 were
debarred on various grounds prescribed by law and returned to the
countries whence they came at the expense of the steamship companies by
which they were brought in. The increase in immigration over the
preceding year amounted to 84,731. It is reported that with some
exceptions the immigrants of the past year were of a hardy laboring
class, accustomed and able to earn a support for themselves, and it is
estimated that the money brought with them amounted to at least
$5,000,000, though it was probably much in excess of that sum, since
only those having less than $30 are required to disclose the exact
amount, and it is known that many brought considerable sums of money to
buy land and build homes. Including all the immigrants arriving who
were over 14 years of age, 28.63 per cent were illiterate, as against
20.37 per cent of those of that age arriving during the preceding
fiscal year. The number of immigrants over 14 years old, the countries
from which they came, and the percentage of illiterates among them were
as follows: Italy, 57,515, with 54.59 per cent; Ireland, 37,496, with 7
per cent; Russia, 35,188, with 41.14 per cent; Austria-Hungary and
provinces, 57,053, with 38.92 per cent; Germany, 25,334, with 2.96 per
cent; Sweden, 18,821, with 1.16 per cent; while from Portugal there
came 2,067, of whom 77.69 per cent were illiterate. There arrived from
Japan during the year only 1,110 immigrants, and it is the opinion of
the immigration authorities that the apprehension heretofore existing
to some extent of a large immigration from Japan to the United States
is without any substantial foundation.

From the Life-Saving Service it is reported that the number of
disasters to documented vessels within the limits of its operations
during the year was 437. These vessels had on board 4,608 persons, of
whom 4,595 were saved and 13 lost. The value of such vessels is
estimated at $8,880,140 and of their cargoes $3,846,380, making the
total value of property imperiled $12,726,520. Of this amount
$11,292,707 was saved and $1,432,750 was lost. Sixty-seven of the
vessels were totally wrecked. There were besides 243 casualties to
small undocumented craft, on board of which there were 594 persons, of
whom 587 were saved and 7 were lost. The value of the property involved
in these latter casualties is estimated at $119,265, of which $114,915
was saved and $4,350 was lost. The life-saving crews during the year
also rescued or assisted numerous other vessels and warned many from
danger by signals, both by day and night. The number of disasters
during the year exceeded that of any previous year in the history of
the service, but the saving of both life and property was greater than
ever before in proportion to the value of the property involved and to
the number of persons imperiled.

The operations of the Marine-Hospital Service, the Revenue-Cutter
Service, the Steamboat-Inspection Service, the Light-House Service, the
Bureau of Navigation, and other branches of public work attached to the
Treasury Department, together with various recommendations concerning
their support and improvement, are fully stated in the report of the
Secretary of the Treasury, to which the attention of the Congress is
especially invited.

The report of the Secretary of War exhibits satisfactory conditions in
the several branches of the public service intrusted to his charge.

The limit of our military force as fixed by law is constantly and
readily maintained. The present discipline and morale of our Army are
excellent, and marked progress and efficiency are apparent throughout
its entire organization.

With the exception of delicate duties in the suppression of slight
Indian disturbances along our southwestern boundary, in which the
Mexican troops cooperated, and the compulsory but peaceful return, with
the consent of Great Britain, of a band of Cree Indians from Montana to
the British possessions, no active operations have been required of the
Army during the year past.

Changes in methods of administration, the abandonment of unnecessary
posts and consequent concentration of troops, and the exercise of care
and vigilance by the various officers charged with the responsibility
in the expenditure of the appropriations have resulted in reducing to a
minimum the cost of maintenance of our military establishment.

During the past year the work of constructing permanent infantry and
cavalry posts has been continued at the places heretofore designated.
The Secretary of War repeats his recommendation that appropriations for
barracks and quarters should more strictly conform to the needs of the
service as judged by the Department rather than respond to the wishes
and importunities of localities. It is imperative that much of the
money provided for such construction should now be allotted to the
erection of necessary quarters for the garrisons assigned to the coast
defenses, where many men will be needed to properly care for and
operate modern guns. It is essential, too, that early provision be made
to supply the necessary force of artillery to meet the demands of this
service.

The entire Army has now been equipped with the new magazine arms, and
wise policy demands that all available public and private resources
should be so employed as to provide within a reasonable time a
sufficient number to supply the State militia with these modern weapons
and provide an ample reserve for any emergency.

The organized militia numbers 112,879 men. The appropriations for its
support by the several States approximate $2,800,000 annually, and
$400,000 is contributed by the General Government. Investigation shows
these troops to be usually well drilled and inspired with much military
interest, but in many instances they are so deficient in proper arms
and equipment that a sudden call to active duty would find them
inadequately prepared for field service. I therefore recommend that
prompt measures be taken to remedy this condition and that every
encouragement be given to this deserving body of unpaid and voluntary
citizen soldiers, upon whose assistance we must largely rely in time of
trouble.

During the past year rapid progress has been made toward the completion
of the scheme adopted for the erection and armament of fortifications
along our seacoast, while equal progress has been made in providing the
material for submarine defense in connection with these works.

It is peculiarly gratifying at this time to note the great advance that
has been made in this important undertaking since the date of my annual
message to the Fifty-third Congress at the opening of its second
session, in December, 1893. At that time I informed the Congress of the
approaching completion of nine 12-inch, twenty 10-inch, and thirty-four
8-inch high-power steel guns and seventy-five 12-inch rifled mortars.

This total then seemed insignificant when compared with the great work
remaining to be done. Yet it was none the less a source of satisfaction
to every citizen when he reflected that it represented the first
installment of the new ordnance of American design and American
manufacture and demonstrated our ability to supply from our own
resources guns of unexcelled power and accuracy.

At that date, however, there were practically no carriages upon which
to mount these guns and only thirty-one emplacements for guns and
sixty-four for mortars. Nor were all these emplacements in condition to
receive their armament. Only one high-power gun was at that time in
position for the defense of the entire coast.

Since that time the number of guns actually completed has been
increased to a total of twenty-one 12-inch, fifty-six 10-inch,
sixty-one 8-inch high-power breech-loading steel guns, ten rapid-fire
guns, and eighty 12-inch rifled mortars. In addition there are in
process of construction one 16-inch-type gun, fifty 12-inch, fifty-six
10-inch, twenty-seven 8-inch high-power guns, and sixty-six 12-inch
rifled mortars; in all, four hundred and twenty-eight guns and mortars.

During the same year, immediately preceding the message referred to,
the first modern gun carriage had been completed and eleven more were
in process of construction. All but one were of the nondisappearing
type. These, however, were not such as to secure necessary cover for
the artillery gunners against the intense fire of modern machine
rapid-fire and high-power guns.

The inventive genius of ordnance and civilian experts has been taxed in
designing carriages that would obviate this fault, resulting, it is
believed, in the solution of this difficult problem. Since 1893 the
number of gun carriages constructed or building has been raised to a
total of 129, of which 90 are on the disappearing principle, and the
number of mortar carriages to 152, while the 95 emplacements which were
provided for prior to that time have been increased to 280 built and
building.

This improved situation is largely due to the recent generous response
of Congress to the recommendations of the War Department.

Thus we shall soon have complete about one-fifth of the comprehensive
system the first step in which was noted in my message to the Congress
of December 4, 1893.

When it is understood that a masonry emplacement not only furnishes a
platform for the heavy modern high-power gun, but also in every
particular serves the purpose and takes the place of the fort of former
days, the importance of the work accomplished is better comprehended.

In the hope that the work will be prosecuted with no less vigor in the
future, the Secretary of War has submitted an estimate by which, if
allowed, there will be provided and either built or building by the end
of the next fiscal year such additional guns, mortars, gun carriages,
and emplacements as will represent not far from one-third of the total
work to be done under the plan adopted for our coast defenses, thus
affording a prospect that the entire work will be substantially
completed within six years. In less time than that, however, we shall
have attained a marked degree of security.

The experience and results of the past year demonstrate that with a
continuation of present careful methods the cost of the remaining work
will be much less than the original estimate.

We should always keep in mind that of all forms of military preparation
coast defense alone is essentially pacific in its nature. While it
gives the sense of security due to a consciousness of strength, it is
neither the purpose nor the effect of such permanent fortifications to
involve us in foreign complications, but rather to guarantee us against
them. They are not temptation to war, but security against it. Thus
they are thoroughly in accord with all the traditions of our national
diplomacy.

The Attorney-General presents a detailed and interesting statement of
the important work done under his supervision during the last fiscal
year.

The ownership and management by the Government of penitentiaries for
the confinement of those convicted in United States courts of
violations of Federal laws, which for many years has been a subject of
Executive recommendation, have at last to a slight extent been realized
by the utilization of the abandoned military prison at Fort Leavenworth
as a United States penitentiary.

This is certainly a movement in the right direction, but it ought to be
at once supplemented by the rebuilding or extensive enlargement of this
improvised prison and the construction of at least one more, to be
located in the Southern States. The capacity of the Leavenworth
penitentiary is so limited that the expense of its maintenance,
calculated at a per capita rate upon the number of prisoners it can
accommodate, does not make as economical an exhibit as it would if it
were larger and better adapted to prison purposes; but I am thoroughly
convinced that economy, humanity, and a proper sense of responsibility
and duty toward those whom we punish for violations of Federal law
dictate that the Federal Government should have the entire control and
management of the penitentiaries where convicted violators are confined.

It appears that since the transfer of the Fort Leavenworth Military
Prison to its new uses the work previously done by prisoners confined
there, and for which expensive machinery has been provided, has been
discontinued. This work consisted of the manufacture of articles for
army use, now done elsewhere. On all grounds it is exceedingly
desirable that the convicts confined in this penitentiary be allowed to
resume work of this description.

It is most gratifying to note the satisfactory results that have
followed the inauguration of the new system provided for by the act of
May 28, 1896, under which certain Federal officials are compensated by
salaries instead of fees. The new plan was put in operation on the 1st
day of July, 1896, and already the great economy it enforces, its
prevention of abuses, and its tendency to a better enforcement of the
laws are strikingly apparent. Detailed evidence of the usefulness of
this long-delayed but now happily accomplished reform will be found
clearly set forth in the Attorney-General's report.

Our Post-Office Department is in good condition, and the exhibit made
of its operations during the fiscal year ended June 30, 1896, if
allowance is made for imperfections in the laws applicable to it, is
very satisfactory. The total receipts during the year were
$82,499,208.40. The total expenditures were $90,626,296.84, exclusive
of the $1,559,898.27 which was earned by the Pacific Railroad for
transportation and credited on their debt to the Government. There was
an increase of receipts over the previous year of $5,516,080.21, or 7.1
per cent, and an increase of expenditures of $3,836,124.02, or 4.42 per
cent. The deficit was $1,679,956.19 less than that of the preceding
year. The chief expenditures of the postal service are regulated by law
and are not in the control of the Postmaster-General. All that he can
accomplish by the most watchful administration and economy is to
enforce prompt and thorough collection and accounting for public moneys
and such minor savings in small expenditures and in letting those
contracts, for post-office supplies and star service, which are not
regulated by statute.

An effective cooperation between the Auditor's Office and the
Post-Office Department and the making and enforcement of orders by the
Department requiring immediate notification to their sureties of all
delinquencies on the part of postmasters, and compelling such
postmasters to make more frequent deposits of postal funds, have
resulted in a prompter auditing of their accounts and much less default
to the Government than heretofore.

The year's report shows large extensions of both star-route service and
railway mail service, with increased postal facilities. Much higher
accuracy in handling mails has also been reached, as appears by the
decrease of errors in the railway mail service and the reduction of
mail matter returned to the Dead-Letter Office.

The deficit for the last year, although much less than that of the last
and preceding years, emphasizes the necessity for legislation to
correct the growing abuse of second-class rates, to which the
deficiency is mainly attributable. The transmission at the rate of 1
cent a pound of serial libraries, advertising sheets," house organs"
(periodicals advertising some particular "house" or institution),
sample copies, and the like ought certainly to be discontinued. A
glance at the revenues received for the work done last year will show
more plainly than any other statement the gross abuse of the postal
service and the growing waste of its earnings.

The free matter carried in the mails for the Departments, offices,
etc., of the Government and for Congress, in pounds, amounted to
94,480,189.

If this is offset against buildings for post-offices and stations, the
rental of which would more than compensate for such free postal
service, we have this exhibit:


Weight of mail matter (other than above) transmitted through the mails
for the year ending June 30, 1896.


  Class                                    Weight        Revenue
                                           Pounds

  1. Domestic and foreign letters and
       postal cards, etc                 65,337,343     $60,624,464

  2. Newspapers and periodicals,
       1 cent per pound                 348,988,648       2,996,403

  3. Books, seeds, etc.,
       8 cents a pound                   78,701,148      10,324,069

  4. Parcels, etc., 16 cents a pound     19,950,187       3,129,321

  Total                                 512,977,326      77,044,257

The remainder of our postal revenue, amounting to something more than
$5,000,000, was derived from box rents, registry fees, money-order
business, and other similar items.

The entire expenditures of the Department, including pay for
transportation credited to the Pacific railroads, were $92,186,195.11,
which may be considered as the cost of receiving, carrying, and
delivering the above mail matter. It thus appears that though the
second-class matter constituted more than two-thirds of the total that
was carried, the revenue derived from it was less than one-thirtieth of
the total expense.


  The average revenue was--

  From each pound of first-class matter ......... cents    93.0
  From each pound of second class ............... mills     8.5
  From each pound of third class ................ cents    13.1
  From each pound of fourth class ...............  do      15.6

  Of the second class 52,348,297 was county-free matter.


The growth in weight of second-class matter has been from 299,000,000
pounds in 1894 to 312,000,000 in 1895 and to almost 349,000,000 in
1896, and it is quite evident this increasing drawback is far
outstripping any possible growth of postal revenues.

Our mail service should of course be such as to meet the wants and even
the conveniences of our people at a direct charge upon them so light as
perhaps to exclude the idea of our Post-Office Department being a
money-making concern; but in the face of a constantly recurring
deficiency in its revenues and in view of the fact that we supply the
best mail service in the world it seems to me it is quite time to
correct the abuses that swell enormously our annual deficit. If we
concede the public policy of carrying weekly newspapers free in the
county of publication, and even the policy of carrying at less than
one-tenth of their cost other bona fide newspapers and periodicals,
there can be no excuse for subjecting the service to the further
immense and increasing loss involved in carrying at the nominal rate of
1 cent a pound the serial libraries, sometimes including trashy and
even harmful literature, and other matter which under the loose
interpretation of a loose statute have been gradually given
second-class rates, thus absorbing all profitable returns derived from
first-class matter, which pays three or four times more than its cost,
and producing a large annual loss to be paid by general taxation. If
such second-class matter paid merely the cost of its handling, our
deficit would disappear and a surplus result which might be used to
give the people still better mail facilities or cheaper rates of letter
postage. I recommend that legislation be at once enacted to correct
these abuses and introduce better business ideas in the regulation of
our postal rates.

Experience and observation have demonstrated that certain improvements
in the organization of the Post-Office Department must be secured
before we can gain the full benefit of the immense sums expended in its
administration. This involves the following reforms, which I earnestly
recommend:

There should be a small addition to the existing inspector service, to
be employed in the supervision of the carrier force, which now numbers
13,000 men and performs its service practically without the
surveillance exercised over all other branches of the postal or public
service. Of course such a lack of supervision and freedom from
wholesome disciplinary restraints must inevitably lead to imperfect
service. There should also be appointed a few inspectors who could
assist the central office in necessary investigation concerning matters
of post-office leases, post-office sites, allowances for rent, fuel,
and lights, and in organizing and securing the best results from the
work of the 14,000 clerks now employed in first and second class
offices.

I am convinced that the small expense attending the inauguration of
these reforms would actually be a profitable investment.

I especially recommend such a recasting of the appropriations by
Congress for the Post-Office Department as will permit the
Postmaster-General to proceed with the work of consolidating
post-offices. This work has already been entered upon sufficiently to
fully demonstrate by experiment and experience that such consolidation
is productive of better service, larger revenues, and less
expenditures, to say nothing of the further advantage of gradually
withdrawing post-offices from the spoils system.

The Universal Postal Union, which now embraces all the civilized world
and whose delegates will represent 1,000,000,000 people, will hold its
fifth congress in the city of Washington in May, 1897. The United
States may be said to have taken the initiative which led to the first
meeting of this congress, at Berne in 1874, and the formation of the
Universal Postal Union, which brings the postal service of all
countries to every man's neighborhood and has wrought marvels in
cheapening postal rates and securing absolutely safe mail communication
throughout the world. Previous congresses have met in Berne, Paris,
Lisbon, and Vienna, and the respective countries in which they have
assembled have made generous provision for their accommodation and for
the reception and entertainment of the delegates.

In view of the importance of this assemblage and of its deliberations
and of the honors and hospitalities accorded to our representatives by
other countries on similar occasions, I earnestly hope that such an
appropriation will be made for the expenses necessarily attendant upon
the coming meeting in our capital city as will be worthy of our
national hospitality and indicative of our appreciation of the event.

The work of the Navy Department and its present condition are fully
exhibited in the report of the Secretary.

The construction of vessels for our new Navy has been energetically
prosecuted by the present Administration upon the general lines
previously adopted, the Department having seen no necessity for radical
changes in prior methods, under which the work was found to be
progressing in a manner highly satisfactory. It has been decided,
however, to provide in every shipbuilding contract that the builder
should pay all trial expenses, and it has also been determined to pay
no speed premiums in future contracts. The premiums recently earned and
some yet to be decided are features of the contracts made before this
conclusion was reached.

On March 4, 1893, there were in commission but two armored vessels--the
double-turreted monitors Miantonomoh and Monterey. Since that date, of
vessels theretofore authorized, there have been placed in their first
commission 3 first-class and 2 second-class battle ships, 2 armored
cruisers, 1 harbor-defense ram, and 5 double-turreted monitors,
including the Maine and the Puritan, just completed. Eight new
unarmored cruisers and 2 new gunboats have also been commissioned. The
Iowa, another battle ship, will be completed about March 1, and at
least 4 more gunboats will be ready for sea in the early spring.

It is gratifying to state that our ships and their outfits are believed
to be equal to the best that can be manufactured elsewhere, and that
such notable reductions have been made in their cost as to justify the
statement that quite a number of vessels are now being constructed at
rates as low as those that prevail in European shipyards.

Our manufacturing facilities are at this time ample for all possible
naval contingencies. Three of our Government navy-yards--those at Mare
Island, Cal., Norfolk, Va., and Brooklyn, N. Y.--are equipped for
shipbuilding, our ordnance plant in Washington is equal to any in the
world, and at the torpedo station we are successfully making the
highest grades of smokeless powder. The first-class private shipyards
at Newport News, Philadelphia, and San Francisco are building battle
ships; eleven contractors, situated in the States of Maine, Rhode
Island, Pennsylvania, New Jersey, Maryland, Virginia, and the State of
Washington, are constructing gunboats or torpedo boats; two plants are
manufacturing large quantities of first-class armor, and American
factories are producing automobile torpedoes, powder, projectiles,
rapid-fire guns, and everything else necessary for the complete outfit
of naval vessels.

There have been authorized by Congress since March, 1893, 5 battle
ships, 6 light-draft gunboats, 16 torpedo boats, and 1 submarine
torpedo boat. Contracts for the building of all of them have been let.
The Secretary expresses the opinion that we have for the present a
sufficient supply of cruisers and gunboats, and that hereafter the
construction of battle ships and torpedo boats will supply our needs.

Much attention has been given to the methods of carrying on
departmental business. Important modifications in the regulations have
been made, tending to unify the control of shipbuilding as far as may
be under the Bureau of Construction and Repair, and also to improve the
mode of purchasing supplies for the Navy by the Bureau of Supplies and
Accounts. The establishment under recent acts of Congress of a supply
fund with which to purchase these supplies in large quantities and
other modifications of methods have tended materially to their
cheapening and better quality.

The War College has developed into an institution which it is believed
will be of great value to the Navy in teaching the science of war, as
well as in stimulating professional zeal in the Navy, and it will be
especially useful in the devising of plans for the utilization in case
of necessity of all the naval resources of the United States.

The Secretary has persistently adhered to the plan he found in
operation for securing labor at navy-yards through boards of labor
employment, and has done much to make it more complete and efficient.
The naval officers who are familiar with this system and its operation
express the decided opinion that its results have been to vastly
improve the character of the work done at our yards and greatly reduce
its cost.

Discipline among the officers and men of the Navy has been maintained
to a high standard and the percentage of American citizens enlisted has
been very much increased.

The Secretary is considering and will formulate during the coming
winter a plan for laying up ships in reserve, thereby largely reducing
the cost of maintaining our vessels afloat. This plan contemplates that
battle ships, torpedo boats, and such of the cruisers as are not needed
for active service at sea shall be kept in reserve with skeleton crews
on board to keep them in condition, cruising only enough to insure the
efficiency of the ships and their crews in time of activity.

The economy to result from this system is too obvious to need comment.

The Naval Militia, which was authorized a few years ago as an
experiment, has now developed into a body of enterprising young men,
active and energetic in the discharge of their duties and promising
great usefulness. This establishment has nearly the same relation to
our Navy as the National Guard in the different States bears to our
Army, and it constitutes a source of supply for our naval forces the
importance of which is immediately apparent.

The report of the Secretary of the Interior presents a comprehensive
and interesting exhibit of the numerous and important affairs committed
to his supervision. It is impossible in this communication to do more
than briefly refer to a few of the subjects concerning which the
Secretary gives full and instructive information.

The money appropriated on account of this Department and for its
disbursement for the fiscal year ended June 30, 1896, amounted to more
than $157,000,000, or a greater sum than was appropriated for the
entire maintenance of the Government for the two fiscal years ended
June 30, 1861.

Our public lands, originally amounting to 1,840,000,000 acres, have
been so reduced that only about 600,000,000 acres still remain in
Government control, excluding Alaska. The balance, being by far the
most valuable portion, has been given away to settlers, to new States,
and to railroads or sold at a comparatively nominal sum. The patenting
of land in execution of railroad grants has progressed rapidly during
the year, and since the 4th day of March, 1893, about 25,000,000 acres
have thus been conveyed to these corporations.

I agree with the Secretary that the remainder of our public lands
should be more carefully dealt with and their alienation guarded by
better economy and greater prudence.

The commission appointed from the membership of the National Academy of
Sciences, provided for by an act of Congress, to formulate plans for a
national forestry system will, it is hoped, soon be prepared to present
the result of thorough and intelligent examination of this important
subject.

The total Indian population of the United States is 177,235, according
to a census made in 1895, exclusive of those within the State of New
York and those comprising the Five Civilized Tribes. Of this number
there are approximately 38,000 children of school age. During the year
23,393 of these were enrolled in schools. The progress which has
attended recent efforts to extend Indian-school facilities and the
anticipation of continued liberal appropriations to that end can not
fail to afford the utmost satisfaction to those who believe that the
education of Indian children is a prime factor in the accomplishment of
Indian civilization.

It may be said in general terms that in every particular the
improvement of the Indians under Government care has been most marked
and encouraging.

The Secretary, the Commissioner of Indian Affairs, and the agents
having charge of Indians to whom allotments have been made strongly
urge the passage of a law prohibiting the sale of liquor to allottees
who have taken their lands in severalty. I earnestly join in this
recommendation and venture to express the hope that the Indian may be
speedily protected against this greatest of all obstacles to his
well-being and advancement.

The condition of affairs among the Five Civilized Tribes, who occupy
large tracts of land in the Indian Territory and who have governments
of their own, has assumed such an aspect as to render it almost
indispensable that there should be an entire change in the relations of
these Indians to the General Government. This seems to be necessary in
furtherance of their own interests, as well as for the protection of
non-Indian residents in their territory. A commission organized and
empowered under several recent laws is now negotiating with these
Indians for the relinquishment of their courts and the division of
their common lands in severalty and are aiding in the settlement of the
troublesome question of tribal membership. The reception of their first
proffers of negotiation was not encouraging, but through patience and
such conduct on their part as demonstrated that their intentions were
friendly and in the interest of the tribes the prospect of success has
become more promising. The effort should be to save these Indians from
the consequences of their own mistakes and improvidence and to secure
to the real Indian his rights as against intruders and professed
friends who profit by his retrogression. A change is also needed to
protect life and property through the operation of courts conducted
according to strict justice and strong enough to enforce their mandates.

As a sincere friend of the Indian, I am exceedingly anxious that these
reforms should be accomplished with the consent and aid of the tribes
and that no necessity may be presented for radical or drastic
legislation I hope, therefore, that the commission now conducting
negotiations will soon be able to report that progress has been made
toward a friendly adjustment of existing difficulties.

It appears that a very valuable deposit of gilsonite or asphaltum has
been found on the reservation in Utah occupied by the Uncompahgre Ute
Indians. Every consideration of care for the public interest and every
sensible business reason dictate such management or disposal of this
important source of public revenue as will except it from the general
rules and incidents attending the ordinary disposition of public lands
and secure to the Government a fair share at least of its advantages in
place of its transfer for a nominal sum to interested individuals.

I indorse the recommendation made by the present Secretary of the
Interior, as well as his predecessor, that a permanent commission,
consisting of three members, one of whom shall be an army officer, be
created to perform the duties now devolving upon the Commissioner and
Assistant Commissioner of Indian Affairs. The management of the Bureau
involves such numerous and diverse details and the advantages of an
uninterrupted policy are so apparent that I hope the change suggested
will meet the approval of the Congress.

The diminution of our enormous pension roll and the decrease of pension
expenditure, which have been so often confidently for told, still fail
in material realization. The number of pensioners on the polls at the
close of the fiscal year ended June 30, 1896, was 970,678. This is the
largest number ever reported. The amount paid exclusively for pensions
during the year was $138,214,761.94, a slight decrease from that of the
preceding year, while the total expenditures on account of pensions,
including the cost of maintaining the Department and expenses attending
pension distribution, amounted to $142,206,550.59, or within every
small fraction of one-third of the entire expense of supporting the
Government during the same year. The number of new pension certificates
issued was 90,640. Of these, 40,374 represent original allowances of
claims and 15,878 increases of existing pensions.

The number of persons receiving pensions from the United States, but
residing in foreign countries, at the close of the last fiscal year was
3,781, and the amount paid to them during the year was $582,735.38.

The sum appropriated for the payment of pensions for the current fiscal
year, ending June 30, 1897, is $140,000,000, and for the succeeding
year it is estimated that the same amount will be necessary.

The Commissioner of Pensions reports that during the last fiscal year
339 indictments were found against violators of the pension laws. Upon
these indictments 167 convictions resulted.

In my opinion, based upon such statements as these and much other
information and observation, the abuses which have been allowed to
creep into our pension system have done incalculable harm in
demoralizing our people and undermining good citizenship. I have
endeavored within my sphere of official duty to protect our pension
roll and make it what it should be, a roll of honor, containing the
names of those disabled in their country's service and worthy of their
country's affectionate remembrance. When I have seen those who pose as
the soldiers' friends active and alert in urging greater laxity and
more reckless pension expenditure, while nursing selfish schemes, I
have deprecated the approach of a situation when necessary retrenchment
and enforced economy may lead to an attack upon pension abuses so
determined as to overlook the discrimination due to those who, worthy
of a nation's care, ought to live and die under the protection of a
nation's gratitude.

The Secretary calls attention to the public interests involved in an
adjustment of the obligations of the Pacific railroads to the
Government. I deem it to be an important duty to especially present
this subject to the consideration of the Congress.

On January 1, 1897, with the amount already matured, more than
$13,000,000 of the principal of the subsidy bonds issued by the United
States in aid of the construction of the Union Pacific Railway,
including its Kansas line, and more than $6,000,000 of like bonds
issued in aid of the Central Pacific Railroad, including those issued
to the Western Pacific Railroad Company, will have fallen due and been
paid or must on that day be paid by the Government. Without any
reference to the application of the sinking fund now in the Treasury,
this will create such a default on the part of these companies to the
Government as will give it the right to at once institute proceedings
to foreclose its mortgage lien. In addition to this indebtedness, which
will be due January 1, 1897, there will mature between that date and
January 1, 1899, the remaining principal of such subsidy bonds, which
must also be met by the Government. These amount to more than
$20,000,000 on account of the Union Pacific lines and exceed
$21,000,000 on account of the Central Pacific lines.

The situation of these roads and the condition of their indebtedness to
the Government have been fully set forth in the reports of various
committees to the present and prior Congresses, and as early as 1887
they were thoroughly examined by a special commission appointed
pursuant to an act of Congress. The considerations requiring an
adjustment of the Government's relations to the companies have been
clearly presented and the conclusion reached with practical uniformity
that if these relations are not terminated they should be revised upon
a basis securing their safe continuance.

Under section 4 of the act of Congress passed March 3, 1887, the
President is charged with the duty, in the event that any mortgage or
other incumbrance paramount to the interest of the United States in the
property of the Pacific railroads should exist and be lawfully liable
to be enforced, to direct the action of the Departments of Treasury and
of justice in the protection of the interest of the United States by
redemption or through judicial proceedings, including foreclosures of
the Government liens.

In view of the fact that the Congress has for a number of years almost
constantly had under consideration various plans for dealing with the
conditions existing between these roads and the Government, I have thus
far felt justified in withholding action under the statute above
mentioned.

In the case of the Union Pacific Company, however, the situation has
become especially and immediately urgent. Proceedings have been
instituted to foreclose a first mortgage upon those aided parts of the
main lines upon which the Government holds a second and subordinate
mortgage lien. In consequence of those proceedings and increasing
complications, added to the default occurring on the 1st day of
January, 1897, a condition will be presented at that date, so far as
this company is concerned, that must emphasize the mandate of the act
of 1887 and give to Executive duty under its provisions a more
imperative aspect. Therefore, unless Congress shall otherwise direct or
shall have previously determined upon a different solution of the
problem, there will hardly appear to exist any reason for delaying
beyond the date of the default above mentioned such Executive action as
will promise to subserve the public interests and save the Government
from the loss threatened by further inaction.

The Department of Agriculture is so intimately related to the welfare
of our people and the prosperity of our nation that it should
constantly receive the care and encouragement of the Government. From
small beginnings it has grown to be the center of agricultural
intelligence and the source of aid and encouragement to agricultural
efforts. Large sums of money are annually appropriated for the
maintenance of this Department, and it must be confessed that the
legislation relating to it has not always been directly in the interest
of practical farming or properly guarded against waste and
extravagance. So far, however, as public money has been appropriated
fairly and sensibly to help those who actually till the soil, no
expenditure has been more profitably made or more generally approved by
the people.

Under the present management of the Department its usefulness has been
enhanced in every direction, and at the same time strict economy has
been enforced to the utmost extent permitted by Congressional action.
From the report of the Secretary it appears that through careful and
prudent financial management he has annually saved a large sum from his
appropriations, aggregating during his incumbency and up to the close
of the present fiscal year nearly one-fifth of the entire amount
appropriated. These results have been accomplished by a conscientious
study of the real needs of the farmer and such a regard for economy as
the genuine farmer ought to appreciate, supplemented by a rigid
adherence to civil-service methods in a Department which should be
conducted in the interest of agriculture instead of partisan politics.

The Secretary reports that the value of our exports of farm products
during the last fiscal year amounted to $570,000,000, an increase of
$17,000,000 over those of the year immediately preceding. This
statement is not the less welcome because of the fact that,
notwithstanding such increase, the proportion of exported agricultural
products to our total exports of all descriptions fell off during the
year. The benefits of an increase in agricultural exports being
assured, the decrease in its proportion to our total exports is the
more gratifying when we consider that it is owing to the fact that such
total exports for the year increased more than $75,000,000.

The large and increasing exportation of our agricultural products
suggests the great usefulness of the organization lately established in
the Department for the purpose of giving to those engaged in farming
pursuits reliable information concerning the condition, needs, and
advantages of different foreign markets. Inasmuch as the success of the
farmer depends upon the advantageous sale of his products, and inasmuch
as foreign markets must largely be the destination of such products, it
is quite apparent that a knowledge of the conditions and wants that
affect those markets ought to result in sowing more intelligently and
reaping with a better promise of profit. Such information points out
the way to a prudent foresight in the selection and cultivation of
crops and to a release from the bondage of unreasoning monotony of
production, a glutted and depressed market, and constantly recurring
unprofitable toil.

In my opinion the gratuitous distribution of seeds by the Department as
at present conducted ought to be discontinued. No one can read the
statement of the Secretary on this subject and doubt the extravagance
and questionable results of this practice. The professed friends of the
farmer, and certainly the farmers themselves, are naturally expected to
be willing to rid a Department devoted to the promotion of farming
interests of a feature which tends so much to its discredit.

The Weather Bureau, now attached to the Department of Agriculture, has
continued to extend its sphere of usefulness, and by an uninterrupted
improvement in the accuracy of its forecasts has greatly increased its
efficiency as an aid and protection to all whose occupations are
related to weather conditions.

Omitting further reference to the operations of the Department, I
commend the Secretary's report and the suggestions it contains to the
careful consideration of the Congress.

The progress made in civil-service reform furnishes a cause for the
utmost congratulation. It has survived the doubts of its friends as
well as the rancor of its enemies and has gained a permanent place
among the agencies destined to cleanse our politics and to improve,
economize, and elevate the public service.

There are now in the competitive classified service upward of 84,000
places, more than half of these having been included from time to time
since March 4, 1893. A most radical and sweeping extension was made by
Executive order dated the 6th day of May, 1896, and if fourth-class
postmasterships are not included in the statement it may be said that
practically all positions contemplated by the civil-service law are now
classified. Abundant reasons exist for including these
postmaster-ships, based upon economy, improved service, and the peace
and quiet of neighborhoods. If, however, obstacles prevent such action
at present, I earnestly hope that Congress will, without increasing
post-office appropriations, so adjust them as to permit in proper eases
a consolidation of these post-offices, to the end that through this
process the result desired may to a limited extent be accomplished.

The civil-service rules as amended during the last year provide for a
sensible and uniform method of promotion, basing eligibility to better
positions upon demonstrated efficiency and faithfulness. The absence of
fixed rules on this subject has been an infirmity in the system more
and more apparent as its other benefits have been better appreciated.

The advantages of civil-service methods in their business aspects are
too well understood to require argument. Their application has become a
necessity to the executive work of the Government. But those who gain
positions through the operation of these methods should be made to
understand that the nonpartisan scheme through which they receive their
appointments demands from them by way of reciprocity nonpartisan and
faithful performance of duty under every Administration and cheerful
fidelity to every chief. While they should be encouraged to decently
exercise their rights of citizenship and to support through their
suffrages the political beliefs they honestly profess, the noisy,
pestilent, and partisan employee, who loves political turmoil and
contention or who renders lax and grudging service to an Administration
not representing his political views, should be promptly and fearlessly
dealt with in such a way as to furnish a warning to others who may be
likewise disposed.

The annual report of the Commissioners will be duly transmitted, and I
commend the important matter they have in charge to the careful
consideration of the Congress.

The Interstate Commerce Commission has during the last year supplied
abundant evidence of its usefulness and the importance of the work
committed to its charge.

Public transportation is a universal necessity, and the question of
just and reasonable charges therefor has become of vital importance not
only to shippers and carriers, but also to the vast multitude of
producers and consumers. The justice and equity of the principles
embodied in the existing law passed for the purpose of regulating these
charges are everywhere conceded, and there appears to be no question
that the policy thus entered upon has a permanent place in our
legislation.

As the present statute when enacted was in the nature of the case more
or less tentative and experimental, it was hardly expected to supply a
complete and adequate system. While its wholesome effects are manifest
and have amply justified its enactment, it is evident that all desired
reforms in transportation methods have not been fully accomplished. In
view of the judicial interpretation which some provisions of this
statute have received and the defects disclosed by the efforts made for
its enforcement, its revision and amendment appear to be essential, to
the end that it may more effectually reach the evils designed to be
corrected. I hope the recommendations of the Commission upon this
subject will be promptly and favorably considered by the Congress.

I desire to recur to the statements elsewhere made concerning the
Government's receipts and expenditures for the purpose of venturing
upon some suggestions touching our present tariff law and its operation.

This statute took effect on the 28th day of August, 1894. Whatever may
be its shortcomings as a complete measure of tariff reform, it must be
conceded that it has opened the way to a freer and greater exchange of
commodities between us and other countries, and thus furnished a wider
market for our products and manufactures.

The only entire fiscal year during which this law has been in force
ended on the 30th day of June, 1896. In that year our imports increased
over those of the previous year more than $6,500,000, while the value
of the domestic products we exported and which found markets abroad was
nearly $70,000,000 more than during the preceding year.

Those who insist that the cost to our people of articles coming to them
from abroad for their needful use should only be increased through
tariff charges to an extent necessary to meet the expenses of the
Government, as well as those who claim that tariff charges may be laid
upon such articles beyond the necessities of Government revenue and
with the additional purpose of so increasing their price in our markets
as to give American manufacturers and producers better and more
profitable opportunities, must agree that our tariff laws are only
primarily justified as sources of revenue to enable the Government to
meet the necessary expenses of its maintenance. Considered as to its
efficiency in this aspect, the present law can by no means fall under
just condemnation. During the only complete fiscal year of its
operation it has yielded nearly $8,000,000 more revenue than was
received from tariff duties in the preceding year. There was,
nevertheless, a deficit between our receipts and expenditures of a
little more than $25,000,000 This, however, was not unexpected.

The situation was such in December last, seven months before the close
of the fiscal year, that the Secretary of the Treasury foretold a
deficiency of $17,000,000. The great and increasing apprehension and
timidity in business circles and the depression in all activities
intervening since that time, resulting from causes perfectly well
understood and entirely disconnected with our tariff law or its
operation, seriously checked the imports we would have otherwise
received and readily account for the difference between this estimate
of the Secretary and the actual deficiency, as well as for a continued
deficit. Indeed, it must be confessed that we could hardly have had a
more unfavorable period than the last two years for the collection of
tariff revenue. We can not reasonably hope that our recuperation from
this business depression will be sudden, but it has already set in with
a promise of acceleration and continuance.

I believe our present tariff law, if allowed a fair opportunity, will
in the near future yield a revenue which, with reasonably economical
expenditures, will overcome all deficiencies. In the meantime no
deficit that has occurred or may occur need excite or disturb us. To
meet any such deficit we have in the Treasury in addition to a gold
reserve of one hundred millions a surplus of more than $128,000,000
applicable to the payment of the expenses of the Government, and which
must, unless expended for that purpose, remain a useless hoard, or, if
not extravagantly wasted, must in any event be perverted from the
purpose of its exaction from our people. The payment, therefore, of any
deficiency in the revenue from this fund is nothing more than its
proper and legitimate use. The Government thus applying a surplus
fortunately in its Treasury to the payment of expenses not met by its
current revenues is not at all to be likened to a man living beyond his
income and thus incurring debt or encroaching on his principal.

It is not one of the functions of our Government to accumulate and make
additions to a fund not needed for immediate expenditure. With
individuals it is the chief object of struggle and effort. The
application of an accumulated fund by the Government to the payment of
its running expenses is a duty. An individual living beyond his income
and embarrassing himself with debt or drawing upon his accumulated fund
of principal is either unfortunate or improvident. The distinction is
between a government charged with the duty of expending for the benefit
of the people and for proper purposes all the money it receives from
any source, and the individual, who is expected to manifest a natural
desire to avoid debt or to accumulate as much as possible and to live
within the income derived from such accumulations, to the end that they
may be increased or at least remain unimpaired for the future use and
enjoyment of himself or the objects of his love and affection who may
survive him.

It is immeasurably better to appropriate our surplus to the payment of
justifiable expenses than to allow it to become an invitation to
reckless appropriations and extravagant expenditures.

I suppose it will not be denied that under the present law our people
obtain the necessaries of a comfortable existence at a cheaper rate
than formerly. This is a matter of supreme importance, since it is the
palpable duty of every just government to make the burdens of taxation
as light as possible. The people should not be required to relinquish
this privilege of cheaper living except under the stress of their
Government's necessity made plainly manifest.

This reference to the condition and prospects of our revenues naturally
suggests an allusion to the weakness and vices of our financial
methods. They have been frequently pressed upon the attention of
Congress in previous Executive communications and the inevitable danger
of their continued toleration pointed out. Without now repeating these
details, I can not refrain from again earnestly presenting the
necessity of the prompt reform of a system opposed to every rule of
sound finance and shown by experience to be fraught with the gravest
peril and perplexity. The terrible Civil War, which shook the
foundations of our Government more than thirty years ago, brought in
its train the destruction of property, the wasting of our country's
substance, and the estrangement of brethren. These are now past and
forgotten. Even the distressing loss of life the conflict entailed is
but a sacred memory which fosters patriotic sentiment and keeps alive a
tender regard for those who nobly died. And yet there remains with us
to-day in full strength and activity, as an incident of that tremendous
struggle, a feature of its financial necessities not only unsuited to
our present circumstances, but manifestly a disturbing menace to
business security and an ever-present agent of monetary distress.

Because we may be enjoying a temporary relief from its depressing
influence, this should not lull us into a false security nor lead us to
forget the suddenness of past visitations.

I am more convinced than ever that we can have no assured financial
peace and safety until the Government currency obligations upon which
gold may be demanded from the Treasury are withdrawn from circulation
and canceled. This might be done, as has been heretofore recommended,
by their exchange for long-term bonds bearing a low rate of interest or
by their redemption with the proceeds of such bonds. Even if only the
United States notes known as greenbacks were thus retired it is
probable that the Treasury notes issued in payment of silver purchases
under the act of July 14, 1890, now paid in gold when demanded, would
not create much disturbance, as they might from time to time, when
received in the Treasury by redemption in gold or otherwise, be
gradually and prudently replaced by silver coin.

This plan of issuing bonds for the purpose of redemption certainly
appears to be the most effective and direct path to the needed reform.
In default of this, however, it would be a step in the right direction
if currency obligations redeemable in gold whenever so redeemed should
be canceled instead of being reissued. This operation would be a slow
remedy, but it would improve present conditions.

National banks should redeem their own notes. They should be allowed to
issue circulation to the par value of bonds deposited as security for
its redemption and the tax on their circulation should be reduced to
one-fourth of 1 per cent.

In considering projects for the retirement of United States notes and
Treasury notes issued under the law of 1890, I am of the opinion that
we have placed too much stress upon the danger of contracting the
currency and have calculated too little upon the gold that would be
added to our circulation if invited to us by better and safer financial
methods. It is not so much a contraction of our currency that should be
avoided as its unequal distribution.

This might be obviated and any fear of harmful contraction at the same
time removed by allowing the organization of smaller banks and in less
populous communities than are now permitted, and also authorizing
existing banks to establish branches in small communities under proper
restrictions.

The entire case may be presented by the statement that the day of
sensible and sound financial methods will not dawn upon us until our
Government abandons the banking business and the accumulation of funds
and confines its monetary operations to the receipt of the money
contributed by the people for its support and to the expenditure of
such money for the people's benefit.

Our business interests and all good citizens long for rest from
feverish agitation and the inauguration by the Government of a reformed
financial policy which will encourage enterprise and make certain the
rewards of labor and industry.

Another topic in which our people rightfully take a deep interest may
be here briefly considered. I refer to the existence of trusts and
other huge aggregations of capital the object of which is to secure the
monopoly of some particular branch of trade, industry, or commerce and
to stifle wholesome competition. When these are defended, it is usually
on the ground that though they increase profits they also reduce
prices, and thus may benefit the public. It must be remembered,
however, that a reduction of prices to the people is not one of the
real objects of these organizations, nor is their tendency necessarily
in that direction. If it occurs in a particular case it is only because
it accords with the purposes or interests of those managing the scheme.

Such occasional results fall far short of compensating the palpable
evils charged to the account of trusts and monopolies. Their tendency
is to crush out individual independence and to hinder or prevent the
free use of human faculties and the full development of human
character. Through them the farmer, the artisan, and the small trader
is in danger of dislodgment from the proud position of being his own
master, watchful of all that touches his country's prosperity, in which
he has an individual lot, and interested in all that affects the
advantages of business of which he is a factor, to be relegated to the
level of a mere appurtenance to a great machine, with little free will,
with no duty but that of passive obedience, and with little hope or
opportunity of rising in the scale of responsible and helpful
citizenship.

To the instinctive belief that such is the inevitable trend of trusts
and monopolies is due the widespread and deep-seated popular aversion
in which they are held and the not unreasonable insistence that,
whatever may be their incidental economic advantages, their general
effect upon personal character, prospects, and usefulness can not be
otherwise than injurious.

Though Congress has attempted to deal with this matter by legislation,
the laws passed for that purpose thus far have proved ineffective, not
because of any lack of disposition or attempt to enforce them, but
simply because the laws themselves as interpreted by the courts do not
reach the difficulty. If the insufficiencies of existing laws can be
remedied by further legislation, it should be done. The fact must be
recognized, however, that all Federal legislation on this subject may
fall short of its purpose because of inherent obstacles and also
because of the complex character of our governmental system, which,
while making the Federal authority supreme within its sphere, has
carefully limited that sphere by metes and bounds that can not be
transgressed. The decision of our highest court on this precise
question renders it quite doubtful whether the evils of trusts and
monopolies can be adequately treated through Federal action unless they
seek directly and purposely to include in their objects transportation
or intercourse between States or between the United States and foreign
countries.

It does not follow, however, that this is the limit of the remedy that
may be applied. Even though it may be found that Federal authority is
not broad enough to fully reach the case, there can be no doubt of the
power of the several States to act effectively in the premises, and
there should be no reason to doubt their willingness to judiciously
exercise such power.

In concluding this communication its last words shall be an appeal to
the Congress for the most rigid economy in the expenditure of the money
it holds in trust for the people. The way to perplexing extravagance is
easy, but a return to frugality is difficult. When, however, it is
considered that those who bear the burdens of taxation have no guaranty
of honest care save in the fidelity of their public servants, the duty
of all possible retrenchment is plainly manifest.

When our differences are forgotten and our contests of political
opinion are no longer remembered, nothing in the retrospect of our
public service will be as fortunate and comforting as the recollection
of official duty well performed and the memory of a constant devotion
to the interests of our confiding fellow-countrymen.

GROVER CLEVELAND










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