To the Senate and House of Representatives:

Notwithstanding the added burdens rendered necessary by the war, our people
rejoice in a very satisfactory and steadily increasing degree of
prosperity, evidenced by the largest volume of business ever recorded.
Manufacture has been productive, agricultural pursuits have yielded
abundant returns, labor in all fields of industry is better rewarded,
revenue legislation passed by the present Congress has increased the
Treasury's receipts to the amount estimated by its authors, the finances of
the Government have been successfully administered and its credit advanced
to the first rank, while its currency has been maintained at the world's
highest standard. Military service under a common flag and for a righteous
cause has strengthened the national spirit and served to cement more
closely than ever the fraternal bonds between every section of the
country.

A review of the relation of the United States to other powers, always
appropriate, is this year of primary importance in view of the momentous
issues which have arisen, demanding in one instance the ultimate
determination by arms and involving far-reaching consequences which will
require the earnest attention of the Congress.

In my last annual message very full consideration was given to the question
of the duty of the Government of the United States toward Spain and the
Cuban insurrection as being by far the most important problem with which we
were then called upon to deal. The considerations then advanced and the
exposition of the views therein expressed disclosed my sense of the extreme
gravity of the situation. Setting aside as logically unfounded or
practically inadmissible the recognition of the Cuban insurgents as
belligerents, the recognition of the independence of Cuba, neutral
intervention to end the war by imposing a rational compromise between the
contestants, intervention in favor of one or the other party, and forcible
annexation of the island, I concluded it was honestly due to our friendly
relations with Spain that she should be given a reasonable chance to
realize her expectations of reform to which she had become irrevocably
committed. Within a few weeks previously she had announced comprehensive
plans which it was confidently asserted would be efficacious to remedy the
evils so deeply affecting our own country, so injurious to the true
interests of the mother country as well as to those of Cuba, and so
repugnant to the universal sentiment of humanity.

The ensuing month brought little sign of real progress toward the
pacification of Cuba. The autonomous administrations set up in the capital
and some of the principal cities appeared not to gain the favor of the
inhabitants nor to be able to extend their influence to the large extent of
territory held by the insurgents, while the military arm, obviously unable
to cope with the still active rebellion, continued many of the most
objectionable and offensive policies of the government that had preceded
it. No tangible relief was afforded the vast numbers of unhappy
reconcentrados, despite the reiterated professions made in that regard and
the amount appropriated by Spain to that end. The proffered expedient of
zones of cultivation proved illusory. Indeed no less practical nor more
delusive promises of succor could well have been tendered to the exhausted
and destitute people, stripped of all that made life and home dear and
herded in a strange region among unsympathetic strangers hardly less
necessitous than themselves.

By the end of December the mortality among them had frightfully increased.
Conservative estimates from Spanish sources placed the deaths among these
distressed people at over 40 per cent from the time General Weyler's decree
of reconcentration was enforced. With the acquiescence of the Spanish
authorities, a scheme was adopted for relief by charitable contributions
raised in this country and distributed, under the direction of the
consul-general and the several consuls, by noble and earnest individual
effort through the organized agencies of the American Red Cross. Thousands
of lives were thus saved, but many thousands more were inaccessible to such
forms of aid.

The war continued on the old footing, without comprehensive plan,
developing only the same spasmodic encounters, barren of strategic result,
that had marked the course of the earlier ten years' rebellion as well as
the present insurrection from its start. No alternative save physical
exhaustion of either combatant, and therewithal the practical ruin of the
island, lay in sight, but how far distant no one could venture to
conjecture.

At this juncture, on the 15th of February last, occurred the destruction of
the battle ship Maine while rightfully lying in the harbor of Havana on a
mission of international courtesy and good will--a catastrophe the
suspicious nature and horror of which stirred the nation's heart
profoundly. It is a striking evidence of the poise and sturdy good sense
distinguishing our national character that this shocking blow, falling upon
a generous people already deeply touched by preceding events in Cuba, did
not move them to an instant desperate resolve to tolerate no longer the
existence of a condition of danger and disorder at our doors that made
possible such a deed, by whomsoever wrought. Yet the instinct of justice
prevailed, and the nation anxiously awaited the result of the searching
investigation at once set on foot. The finding of the naval board of
inquiry established that the origin of the explosion was external, by a
submarine mine, and only halted through lack of positive testimony to fix
the responsibility of its authorship.

All these things carried conviction to the most thoughtful, even before the
finding of the naval court, that a crisis in our relations with Spain and
toward Cuba was at hand. So strong was this belief that it needed but a
brief Executive suggestion to the Congress to receive immediate answer to
the duty of making instant provision for the possible and perhaps speedily
probable emergency of war, and the remarkable, almost unique, spectacle was
presented of a unanimous vote of both Houses, on the 9th of March,
appropriating $50,000,000 "for the national defense and for each and every
purpose connected therewith, to be expended at the discretion of the
President." That this act of prevision came none too soon was disclosed
when the application of the fund was undertaken. Our coasts were
practically undefended. Our Navy needed large provision for increased
ammunition and supplies, and even numbers to cope with any sudden attack
from the navy of Spain, which comprised modern vessels of the highest type
of continental perfection. Our Army also required enlargement of men and
munitions. The details of the hurried preparation for the dreaded
contingency are told in the reports of the Secretaries of War and of the
Navy, and need not be repeated here. It is sufficient to say that the
outbreak of war when it did come found our nation not unprepared to meet
the conflict.

Nor was the apprehension of coming strife confined to our own country. It
was felt by the continental powers, which on April 6, through their
ambassadors and envoys, addressed to the Executive an expression of hope
that humanity and moderation might mark the course of this Government and
people, and that further negotiations would lead to an agreement which,
while securing the maintenance of peace, would afford all necessary
guaranties for the reestablishment of order in Cuba. In responding to that
representation I said I shared the hope the envoys had expressed that peace
might be preserved in a manner to terminate the chronic condition of
disturbance in Cuba, so injurious and menacing to our interests and
tranquillity, as well as shocking to our sentiments of humanity; and while
appreciating the humanitarian and disinterested character of the
communication they had made on behalf of the powers, I stated the
confidence of this Government, for its part, that equal appreciation would
be shown for its own earnest and unselfish endeavors to fulfill a duty to
humanity by ending a situation the indefinite prolongation of which had
become insufferable.

Still animated by the hope of a peaceful solution and obeying the dictates
of duty, no effort was relaxed to bring about a speedy ending of the Cuban
struggle. Negotiations to this object continued actively with the
Government of Spain, looking to the immediate conclusion of a six months'
armistice in Cuba, with a view to effect the recognition of her people's
right to independence. Besides this, the instant revocation of the order of
reconcentration was asked, so that the sufferers, returning to their homes
and aided by united American and Spanish effort, might be put in a way to
support themselves and, by orderly resumption of the well-nigh destroyed
productive energies of the island, contribute to the restoration of its
tranquillity and well-being. Negotiations continued for some little time at
Madrid, resulting in offers by the Spanish Government which could not but
be regarded as inadequate. It was proposed to confide the preparation of
peace to the insular parliament, yet to be convened under the autonomous
decrees of November, 1897, but without impairment in any wise of the
constitutional powers of the Madrid Government, which to that end would
grant an armistice, if solicited by the insurgents, for such time as the
general in chief might see fit to fix. How and with what scope of
discretionary powers the insular parliament was expected to set about the
"preparation" of peace did not appear. If it were to be by negotiation with
the insurgents, the issue seemed to rest on the one side with a body chosen
by a fraction of the electors in the districts under Spanish control, and
on the other with the insurgent population holding the interior country,
unrepresented in the so-called parliament and defiant at the suggestion of
suing for peace.

Grieved and disappointed at this barren outcome of my sincere endeavors to
reach a practicable solution, I felt it my duty to remit the whole question
to the Congress. In the message of April 11, 1898, I announced that with
this last overture in the direction of immediate peace in Cuba and its
disappointing reception by Spain the effort of the Executive was brought to
an end. I again reviewed the alternative courses of action which had been
proposed, concluding that the only one consonant with international policy
and compatible with our firm-set historical traditions was intervention as
a neutral to stop the war and check the hopeless sacrifice of life, even
though that resort involved "hostile constraint upon both the parties to
the contest, as well to enforce a truce as to guide the eventual
settlement." The grounds justifying that step were the interests of
humanity, the duty to protect the life and property of our citizens in
Cuba, the right to check injury to our commerce and people through the
devastation of the island, and, most important, the need of removing at
once and forever the constant menace and the burdens entailed upon our
Government by the uncertainties and perils of the situation caused by the
unendurable disturbance in Cuba. I said: The long trial has proved that the
object for which Spain has waged the war can not be attained. The fire of
insurrection may flame or may smolder with varying seasons, but it has not
been and it is plain that it can not be extinguished by present methods.
The only hope of relief and repose from a condition which can no longer be
endured is the enforced pacification of Cuba. In the name of humanity, in
the name of civilization, in behalf of endangered American interests which
give us the right and the duty to speak and to act, the war in Cuba must
stop. In view of all this the Congress was asked to authorize and empower
the President to take measures to secure a full and final termination of
hostilities between Spain and the people of Cuba and to secure in the
island the establishment of a stable government, capable of maintaining
order and observing its international obligations, insuring peace and
tranquillity and the security of its citizens as well as our own, and for
the accomplishment of those ends to use the military and naval forces of
the United States as might be necessary, with added authority to continue
generous relief to the starving people of Cuba.

The response of the Congress, after nine days of earnest deliberation,
during which the almost unanimous sentiment of your body was developed on
every point save as to the expediency of coupling the proposed action with
a formal recognition of the Republic of Cuba as the true and lawful
government of that island--a proposition which failed of adoption--the
Congress, after conference, on the 19th of April, by a vote of 42 to 35 in
the Senate and 311 to 6 in the House of Representatives, passed the
memorable joint resolution declaring--

First. That the people of the island of Cuba are, and of right ought to be,
free and independent.

Second. That it is the duty of the United States to demand, and the
Government of the United States does hereby demand, that the Government of
Spain at once relinquish its authority and government in the island of Cuba
and withdraw its land and naval forces from Cuba and Cuban waters.

Third. That the President of the United States be, and he hereby is,
directed and empowered to use the entire land and naval forces of the
United States and to call into the actual service of the United States the
militia of the several States to such extent as may be necessary to carry
these resolutions into effect.

Fourth. That the United States hereby disclaims any disposition or
intention to exercise sovereignty, jurisdiction, or control over said
island except for the pacification thereof, and asserts its determination
when that is accomplished to leave the government and control of the island
to its people. This resolution was approved by the Executive on the next
day, April 20. A copy was at once communicated to the Spanish minister at
this capital, who forthwith announced that his continuance in Washington
had thereby become impossible, and asked for his passports, which were
given him. He thereupon withdrew from Washington, leaving the protection of
Spanish interests in the United States to the French ambassador and the
Austro-Hungarian minister. Simultaneously with its communication to the
Spanish minister here, General Woodford, the American minister at Madrid,
was telegraphed confirmation of the text of the joint resolution and
directed to communicate it to the Government of Spain with the formal
demand that it at once relinquish its authority and government in the
island of Cuba and withdraw its forces therefrom, coupling this demand with
announcement of the intentions of this Government as to the future of the
island, in conformity with the fourth clause of the resolution, and giving
Spain until noon of April 23 to reply.

That demand, although, as above shown, officially made known to the Spanish
envoy here, was not delivered at Madrid. After the instruction reached
General Woodford on the morning of April 21, but before he could present
it, the Spanish minister of state notified him that upon the President's
approval of the joint resolution the Madrid Government, regarding the act
as "equivalent to an evident declaration of war," had ordered its minister
in Washington to withdraw, thereby breaking off diplomatic relations
between the two countries and ceasing all official communication between
their respective representatives. General Woodford thereupon demanded his
passports and quitted Madrid the same day.

Spain having thus denied the demand of the United States and initiated that
complete form of rupture of relations which attends a state of war, the
executive powers authorized by the resolution were at once used by me to
meet the enlarged contingency of actual war between sovereign states. On
April 22 I proclaimed a blockade of the north coast of Cuba, including
ports on said coast between Cardenas and Bahia Honda, and the port of
Cienfuegos, on the south coast of Cuba, and on the 23d I called for
volunteers to execute the purpose of the resolution. By my message of April
25 the Congress was informed of the situation, and I recommended formal
declaration of the existence of a state of war between the United States
and Spain. The Congress accordingly voted on the same day the act approved
April 25, 1898, declaring the existence of such war from and including the
21st day of April, and reenacted the provision of the resolution of April
20 directing the President to use all the armed forces of the nation to
carry that act into effect. Due notification of the existence of war as
aforesaid was given April 25 by telegraph to all the governments with which
the United States maintain relations, in order that their neutrality might
be assured during the war. The various governments responded with
proclamations of neutrality, each after its own methods. It is not among
the least gratifying incidents of the struggle that the obligations of
neutrality were impartially discharged by all, often under delicate and
difficult circumstances.

In further fulfillment of international duty I issued, April 26, 1893, a
proclamation announcing the treatment proposed to be accorded to vessels
and their cargoes as to blockade, contraband, the exercise of the right of
search, and the immunity of neutral flags and neutral goods under enemy's
flag. A similar proclamation was made by the Spanish Government. In the
conduct of hostilities the rules of the Declaration of Paris, including
abstention from resort to privateering, have accordingly been observed by
both belligerents, although neither was a party to that declaration.

Our country thus, after an interval of half a century of peace with all
nations, found itself engaged in deadly conflict with a foreign enemy.
Every nerve was strained to meet the emergency. The response to the initial
call for 125,000 volunteers was instant and complete, as was also the
result of the second call, of May 25, for 75,000 additional volunteers. The
ranks of the Regular Army were increased to the limits provided by the act
of April 26, 1898.

The enlisted force of the Navy on the 15th day of August, when it reached
its maximum, numbered 24,123 men and apprentices. One hundred and three
vessels were added to the Navy by purchase, 1 was presented to the
Government, 1 leased, and the 4 vessels of the International Navigation
Company--the St. Paul, St. Louis, New York, and Paris--were chartered. In
addition to these the revenue cutters and lighthouse tenders were turned
over to the Navy Department and became temporarily a part of the auxiliary
Navy.

The maximum effective fighting force of the Navy during the war, separated
into classes, was as follows:

Four battle ships of the first class, 1 battle ship of the second class, 2
armored cruisers, 6 coast-defense monitors, 1 armored ram, 12 protected
cruisers, 3 unprotected cruisers, 18 gunboats, 1 dynamite cruiser, 11
torpedo boats; vessels of the old Navy, including monitors, 14. Auxiliary
Navy: 11 auxiliary cruisers, 28 converted yachts, 27 converted tugs, 19
converted colliers, 15 revenue cutters, 4 light-house tenders, and 19
miscellaneous vessels.

Much alarm was felt along our entire Atlantic seaboard lest some attack
might be made by the enemy. Every precaution was taken to prevent possible
injury to our great cities lying along the coast. Temporary garrisons were
provided, drawn from the State militia; infantry and light batteries were
drawn from the volunteer force. About 12,000 troops were thus employed. The
coast signal service was established for observing the approach of an
enemy's ships to the coast of the United States, and the Life-Saving and
Light-House services cooperated, which enabled the Navy Department to have
all portions of the Atlantic coast, from Maine to Texas, under
observation.

The auxiliary Navy was created under the authority of Congress and was
officered and manned by the Naval Militia of the several States. This
organization patrolled the coast and performed the duty of a second line of
defense. Under the direction of the Chief of Engineers submarine mines were
placed at the most exposed points. Before the outbreak of the war permanent
mining casemates and cable galleries had been constructed at nearly all
important harbors. Most of the torpedo material was not to be found in the
market, and had to be specially manufactured. Under date of April 19
district officers were directed to take all preliminary measures short of
the actual attaching of the loaded mines to the cables, and on April 22
telegraphic orders were issued to place the loaded mines in position.

The aggregate number of mines placed was 1,535, at the principal harbors
from Maine to California. Preparations were also made for the planting of
mines at certain other harbors, but owing to the early destruction of the
Spanish fleet these mines were not placed.

The Signal Corps was promptly organized, and performed service of the most
difficult and important character. Its operations during the war covered
the electrical connection of all coast fortifications, the establishment of
telephonic and telegraphic facilities for the camps at Manila, Santiago,
and in Puerto Rico. There were constructed 300 miles of line at ten great
camps, thus facilitating military movements from those points in a manner
heretofore unknown in military administration. Field telegraph lines were
established and maintained under the enemy's fire at Manila, and later the
Manila-Hongkong cable was reopened.

In Puerto Rico cable communications were opened over a discontinued route,
and on land the headquarters of the commanding officer was kept in
telegraphic or telephonic communication with the division commanders on
four different lines of operations.

There was placed in Cuban waters a completely outfitted cable ship, with
war cables and cable gear, suitable both for the destruction of
communications belonging to the enemy and the establishment of our own. Two
ocean cables were destroyed under the enemy's batteries at Santiago. The
day previous to the landing of General Shafter's corps, at Caimanera,
within 20 miles of the landing place, cable communications were established
and a cable station opened giving direct communication with the Government
at Washington. This service was invaluable to the Executive in directing
the operations of the Army and Navy. With a total force of over 1,300, the
loss was by disease in camp and field, officers and men included, only 5.

The national-defense fund of $50,000,000 was expended in large part by the
Army and Navy, and the objects for which it was used are fully shown in the
reports of the several Secretaries. It was a most timely appropriation,
enabling the Government to strengthen its defenses and make preparations
greatly needed in case of war.

This fund being inadequate to the requirements of equipment and for the
conduct of the war, the patriotism of the Congress provided the means in
the war-revenue act of June 13 by authorizing a 3 per cent popular loan not
to exceed $400,000,000 and by levying additional imposts and taxes. Of the
authorized loan $200,000,000 were offered and promptly taken the
subscriptions so far exceeding the call as to cover it many times over,
while, preference being given to the smaller bids, no single allotment
exceeded $5,000. This was a most encouraging and significant result,
showing the vast resources of the nation and the determination of the
people to uphold their country's honor.

It is not within the province of this message to narrate the history of the
extraordinary war that followed the Spanish declaration of April 21, but a
brief recital of its more salient features is appropriate.

The first encounter of the war in point of date took place April 27, when a
detachment of the blockading squadron made a reconnoissance in force at
Matanzas, shelled the harbor forts, and demolished several new works in
construction.

The next engagement was destined to mark a memorable epoch in maritime
warfare. The Pacific fleet, under Commodore George Dewey, had lain for some
weeks at Hongkong. Upon the colonial proclamation of neutrality being
issued and the customary twenty-four hours' notice being given, it repaired
to Mirs Bay, near Hongkong, whence it proceeded to the Philippine Islands
under telegraphed orders to capture or destroy the formidable Spanish fleet
then assembled at Manila. At daybreak on the 1st of May the American force
entered Manila Bay, and after a few hours' engagement effected the total
destruction of the Spanish fleet, consisting of ten war ships and a
transport, besides capturing the naval station and forts at Cavite, thus
annihilating the Spanish naval power in the Pacific Ocean and completely
controlling the bay of Manila, with the ability to take the city at will.
Not a life was lost on our ships, the wounded only numbering seven, while
not a vessel was materially injured. For this gallant achievement the
Congress, upon my recommendation, fitly bestowed upon the actors preferment
and substantial reward.

The effect of this remarkable victory upon the spirit of our people and
upon the fortunes of the war was instant. A prestige of invincibility
thereby attached to our arms which continued throughout the struggle.
Reenforcements were hurried to Manila under the command of Major-General
Merritt and firmly established within sight of the capital, which lay
helpless before our guns.

On the 7th day of May the Government was advised officially of the victory
at Manila, and at once inquired of the commander of our fleet what troops
would be required. The information was received on the 15th day of May, and
the first army expedition sailed May 25 and arrived off Manila June 30.
Other expeditions soon followed, the total force consisting of 641 officers
and 15,058 enlisted men.

Only reluctance to cause needless loss of life and property prevented the
early storming and capture of the city, and therewith the absolute military
occupancy of the whole group. The insurgents meanwhile had resumed the
active hostilities suspended by the uncompleted truce of December, 1897.
Their forces invested Manila from the northern and eastern sides, but were
constrained by Admiral Dewey and General Merrill from attempting an
assault. It was fitting that whatever was to be done in the way of decisive
operations in that quarter should be accomplished by the strong arm of the
United States alone. Obeying the stern precept of war which enjoins the
overcoming of the adversary and the extinction of his power wherever
assailable as the speedy and sure means to win a peace, divided victory was
not permissible, for no partition of the rights and responsibilities
attending the enforcement of a just and advantageous peace could be thought
of.

Following the comprehensive scheme of general attack, powerful forces were
assembled at various points on our coast to invade Cuba and Puerto Rico.
Meanwhile naval demonstrations were made at several exposed points. On May
11 the cruiser Wilmington and torpedo boat Winslow were unsuccessful in an
attempt to silence the batteries at Cardenas, a gallant ensign, Worth
Bagley, and four seamen falling. These grievous fatalities were, strangely
enough, among the very few which occurred during our naval operations in
this extraordinary conflict.

Meanwhile the Spanish naval preparations had been pushed with great vigor.
A powerful squadron under Admiral Cervera, which had assembled at the Cape
Verde Islands before the outbreak of hostilities, had crossed the ocean,
and by its erratic movements in the Caribbean Sea delayed our military
plans while baffling the pursuit of our fleets. For a time fears were felt
lest the Oregon and Marietta, then nearing home after their long voyage
from San Francisco of over 15,000 miles, might be surprised by Admiral
Cervera's fleet, but their fortunate arrival dispelled these apprehensions
and lent much-needed reenforcement. Not until Admiral Cervera took refuge
in the harbor of Santiago de Cuba, about May 19, was it practicable to plan
a systematic naval and military attack upon the Antillean possessions of
Spain.

Several demonstrations occurred on the coasts of Cuba and Puerto Rico in
preparation for the larger event. On May 13 the North Atlantic Squadron
shelled San Juan de Puerto Rico. On May 30 Commodore Schley's squadron
bombarded the forts guarding the mouth of Santiago Harbor. Neither attack
had any material result. It was evident that well-ordered land operations
were indispensable to achieve a decisive advantage.

The next act in the war thrilled not alone the hearts of our countrymen but
the world by its exceptional heroism. On the night of June 3 Lieutenant
Hobson, aided by seven devoted volunteers, blocked the narrow outlet from
Santiago Harbor by sinking the collier Merrimac in the channel, under a
fierce fire from the shore batteries, escaping with their lives as by a
miracle, but falling into the hands of the Spaniards. It is a most
gratifying incident of the war that the bravery of this little band of
heroes was cordially appreciated by the Spanish admiral, who sent a flag of
truce to notify Admiral Sampson of their safety and to compliment them on
their daring act. They were subsequently exchanged July 7.

By June 7 the cutting of the last Cuban cable isolated the island.
Thereafter the invasion was vigorously prosecuted. On June 10, under a
heavy protecting fire, a landing of 600 marines from the Oregon,
Marblehead, and Yankee was effected in Guantanamo Bay, where it had been
determined to establish a naval station.

This important and essential port was taken from the enemy, after severe
fighting, by the marines, who were the first organized force of the United
States to land in Cuba.

The position so won was held despite desperate attempts to dislodge our
forces. By June 16 additional forces were landed and strongly in-trenched.
On June 22 the advance of the invading army under Major-General Shafter
landed at Daiquiri, about 15 miles east of Santiago. This was accomplished
under great difficulties, but with marvelous dispatch. On June 23 the
movement against Santiago was begun. On the 24th the first serious
engagement took place, in which the First and Tenth Cavalry and the First
United States Volunteer Cavalry, General Young's brigade of General
Wheeler's division, participated, losing heavily. By nightfall, however,
ground within 5 miles of Santiago was won. The advantage was steadily
increased. On July 1 a severe battle took place, our forces gaining the
outworks of Santiago; on the 2d El Caney and San Juan were taken after a
desperate charge, and the investment of the city was completed. The Navy
cooperated by shelling the town and the coast forts.

On the day following this brilliant achievement of our land forces, the 3d
of July, occurred the decisive naval combat of the war. The Spanish fleet,
attempting to leave the harbor, was met by the American squadron under
command of Commodore Sampson. In less than three hours all the Spanish
ships were destroyed, the two torpedo boats being sunk and the Maria
Teresa, Almirante Oquendo, Vizcaya, and Cristobal Colon driven ashore. The
Spanish admiral and over 1,300 men were taken prisoners. While the enemy's
loss of life was deplorably large, some 600 perishing, on our side but one
man was killed, on the Brooklyn, and one man seriously wounded. Although
our ships were repeatedly struck, not one was seriously injured. Where all
so conspicuously distinguished themselves, from the commanders to the
gunners and the unnamed heroes in the boiler rooms, each and all
contributing toward the achievement of this astounding victory, for which
neither ancient nor modern history affords a parallel in the completeness
of the event and the marvelous disproportion of casualties, it would be
invidious to single out any for especial honor. Deserved promotion has
rewarded the more conspicuous actors. The nation's profoundest gratitude is
due to all of these brave men who by their skill and devotion in a few
short hours crushed the sea power of Spain and wrought a triumph whose
decisiveness and far-reaching consequences can scarcely be measured. Nor
can we be unmindful of the achievements of our builders, mechanics, and
artisans for their skill in the construction of our war ships.

With the catastrophe of Santiago Spain's effort upon the ocean virtually
ceased. A spasmodic effort toward the end of June to send her Mediterranean
fleet, under Admiral Camara, to relieve Manila was abandoned, the
expedition being recalled after it had passed through the Suez Canal.

The capitulation of Santiago followed. The city was closely besieged by
land, while the entrance of our ships into the harbor cut off all relief on
that side. After a truce to allow of the removal of noncombatants
protracted negotiations continued from July 3 until July 15, when, under
menace of immediate assault, the preliminaries of surrender were agreed
upon. On the 17th General Shafter occupied the city. The capitulation
embraced the entire eastern end of Cuba. The number of Spanish soldiers
surrendering was 22,000, all of whom were subsequently conveyed to Spain at
the charge of the United States. The story of this successful campaign is
told in the report of the Secretary of War, which will be laid before you.
The individual valor of officers and soldiers was never more strikingly
shown than in the several engagements leading to the surrender of Santiago,
while the prompt movements and successive victories won instant and
universal applause. To those who gained this complete triumph, which
established the ascendency of the United States upon land as the fight off
Santiago had fixed our supremacy on the seas, the earnest and lasting
gratitude of the nation is unsparingly due. Nor should we alone remember
the gallantry of the living; the dead claim our tears, and our losses by
battle and disease must cloud any exultation at the result and teach us to
weigh the awful cost of war, however rightful the cause or signal the
victory.

With the fall of Santiago the occupation of Puerto Rico became the next
strategic necessity. General Miles had previously been assigned to organize
an expedition for that purpose. Fortunately he was already at Santiago,
where he had arrived on the 11th of July with reenforcements for General
Shafter's army.

With these troops, consisting of 3,415 infantry and artillery, two
companies of engineers, and one company of the Signal Corps, General Miles
left Guantanamo on July 21, having nine transports convoyed by the fleet
under Captain Higginson with the Massachusetts (flagship), Dixie,
Gloucester, Columbia, and Yale, the two latter carrying troops. The
expedition landed at Guanica July 25, which port was entered with little
opposition. Here the fleet was joined by the Annapolis and the Wasp, while
the Puritan and Amphitrite went to San Juan and joined the New Orleans,
which was engaged in blockading that port. The Major-General Commanding was
subsequently reenforced by General Schwan's brigade of the Third Army
Corps, by General Wilson with a part of his division, and also by General
Brooke with a part of his corps, numbering in all 16,973 officers and men.

On July 27 he entered Ponce, one of the most important ports in the island,
from which he thereafter directed operations for the capture of the
island.

With the exception of encounters with the enemy at Guayama, Hormigueros,
Coamo, and Yauco and an attack on a force landed at Cape San Juan, there
was no serious resistance. The campaign was prosecuted with great vigor,
and by the 12th of August much of the island was in our possession and the
acquisition of the remainder was only a matter of a short time. At most of
the points in the island our troops were enthusiastically welcomed.
Protestations of loyalty to the flag and gratitude for delivery from
Spanish rule met our commanders at every stage. As a potent influence
toward peace the outcome of the Puerto Rican expedition was of great
consequence, and generous commendation is due to those who participated in
it.

The last scene of the war was enacted at Manila, its starting place. On
August 15, after a brief assault upon the works by the land forces, in
which the squadron assisted, the capital surrendered unconditionally. The
casualties were comparatively few. By this the conquest of the Philippine
Islands, virtually accomplished when the Spanish capacity for resistance
was destroyed by Admiral Dewey's victory of the 1st of May, was formally
sealed. To General Merrill, his officers and men, for their uncomplaining
and devoted service and for their gallantry in action, the nation is
sincerely grateful. Their long voyage was made with singular success, and
the soldierly conduct of the men, most of whom were without previous
experience in the military service, deserves unmeasured praise.

The total casualties in killed and wounded in the Army during the war with
Spain were: Officers killed, 23; enlisted men killed, 257; total, 280;
officers wounded, 113; enlisted men wounded, 1,464; total, 1,577. Of the
Navy: Killed, 17; wounded, 67; died as result of wounds, 1; invalided from
service, 6; total, 91.

It will be observed that while our Navy was engaged in two great battles
and in numerous perilous undertakings in blockade and bombardment, and more
than 50,000 of our troops were transported to distant lands and were
engaged in assault and siege and battle and many skirmishes in unfamiliar
territory, we lost in both arms of the service a total of 1,668 killed and
wounded; and in the entire campaign by land and sea we did not lose a gun
or a flag or a transport or a ship, and, with the exception of the crew of
the Merrimac, not a soldier or sailor was taken prisoner.

On August 7, forty-six days from the date of the landing of General
Shafter's army in Cuba and twenty-one days from the surrender of Santiago,
the United States troops commenced embarkation for home, and our entire
force was returned to the United States as early as August 24. They were
absent from the United States only two months.

It is fitting that I should bear testimony to the patriotism and devotion
of that large portion of our Army which, although eager to be ordered to
the post of greatest exposure, fortunately was not required outside of the
United States. They did their whole duty, and, like their comrades at the
front, have earned the gratitude of the nation. In like manner, the
officers and men of the Army and of the Navy who remained in their
departments and stations faithfully performing most important duties
connected with the war, and whose requests for assignment in the field and
at sea I was compelled to refuse because their services were indispensable
here, are entitled to the highest commendation. It is my regret that there
seems to be no provision for their suitable recognition.

In this connection it is a pleasure for me to mention in terms of cordial
appreciation the timely and useful work of the American National Red Cross,
both in relief measures preparatory to the campaigns, in sanitary
assistance at several of the camps of assemblage, and later, under the able
and experienced leadership of the president of the society, Miss Clara
Barton, on the fields of battle and in the hospitals at the front in Cuba.
Working in conjunction with the governmental authorities and under their
sanction and approval, and with the enthusiastic cooperation of many
patriotic women and societies in the various States, the Red Cross has
fully maintained its already high reputation for intense earnestness and
ability to exercise the noble purposes of its international organization,
thus justifying the confidence and support which it has received at the
hands of the American people. To the members and officers of this society
and all who aided them in their philanthropic work the sincere and lasting
gratitude of the soldiers and the public is due and is freely accorded.

In tracing these events we are constantly reminded of our obligations to
the Divine Master for His watchful care over us and His safe guidance, for
which the nation makes reverent acknowledgment and offers humble prayer for
the continuance of His favor.

The annihilation of Admiral Cervera's fleet, followed by the capitulation
of Santiago, having brought to the Spanish Government a realizing sense of
the hopelessness of continuing a struggle now become wholly unequal, it
made overtures of peace through the French ambassador, who, with the assent
of his Government, had acted as the friendly representative of Spanish
interests during the war. On the 26th of July M. Cambon presented a
communication signed by the Duke of Almodovar, the Spanish minister of
state, inviting the United States to state the terms upon which it would be
willing to make peace. On the 30th of July, by a communication addressed to
the Duke of Almodovar and handed to M. Cambon, the terms of this Government
were announced substantially as in the protocol afterwards signed. On the
10th of August the Spanish reply, dated August 7, was handed by M. Cambon
to the Secretary of State. It accepted unconditionally the terms imposed as
to Cuba, Puerto Rico, and an island of the Ladrones group, but appeared to
seek to introduce inadmissible reservations in regard to our demand as to
the Philippine Islands. Conceiving that discussion on this point could
neither be practical nor profitable, I directed that in order to avoid
misunderstanding the matter should be forthwith closed by proposing the
embodiment in a formal protocol of the terms upon which the negotiations
for peace were to be undertaken. The vague and inexplicit suggestions of
the Spanish note could not be accepted, the only reply being to present as
a virtual ultimatum a draft of protocol embodying the precise terms
tendered to Spain in our note of July 30, with added stipulations of detail
as to the appointment of commissioners to arrange for the evacuation of the
Spanish Antilles. On August 12 M. Cambon announced his receipt of full
powers to sign the protocol so submitted. Accordingly, on the afternoon of
August 12, M. Cambon, as the plenipotentiary of Spain, and the Secretary of
State, as the plenipotentiary of the United States, signed a protocol
providing--

ARTICLE I. Spain will relinquish all claim of sovereignty over and title
to Cuba.

ART. II. Spain will cede to the United States the island of Puerto Rico and
other islands now under Spanish sovereignty in the West Indies, and also an
island in the Ladrones to be selected by the United States.

ART. III. The United States will occupy and hold the city, bay, and harbor
of Manila pending the conclusion of a treaty of peace which shall determine
the control, disposition, and government of the Philippines. The fourth
article provided for the appointment of joint commissions on the part of
the United States and Spain, to meet in Havana and San Juan, respectively,
for the purpose of arranging and carrying out the details of the stipulated
evacuation of Cuba, Puerto Rico, and other Spanish islands in the West
Indies.

The fifth article provided for the appointment of not more than five
commissioners on each side, to meet at Paris not later than October 1 and
to proceed to the negotiation and conclusion of a treaty of peace, subject
to ratification according to the respective constitutional forms of the two
countries.

The sixth and last article provided that upon the signature of the protocol
hostilities between the two countries should be suspended and that notice
to that effect should be given as soon as possible by each Government to
the commanders of its military and naval forces.

Immediately upon the conclusion of the protocol I issued a proclamation, of
August 12, suspending hostilities on the part of the United States. The
necessary orders to that end were at once given by telegraph. The blockade
of the ports of Cuba and San Juan de Puerto Rico was in like manner raised.
On the 18th of August the muster out of 100,000 volunteers, or as near that
number as was found to be practicable, was ordered.

On the 1st of December 101,165 officers and men had been mustered out and
discharged from the service, and 9,002 more will be mustered out by the
10th of this month; also a corresponding number of general and general
staff officers have been honorably discharged the service.

The military commissions to superintend the evacuation of Cuba, Puerto
Rico, and the adjacent islands were forthwith appointed--for Cuba,
Major-General James F. Wade, Rear-Admiral William T. Sampson, Major-General
Matthew C. Butler; for Puerto Rico, Major--General John R. Brooke,
Rear-Admiral Winfield S. Schley, Brigadier-General William W. Gordon--who
soon afterwards met the Spanish commissioners at Havana and San Juan,
respectively. The Puerto Rican Joint Commission speedily accomplished its
task, and by the 18th of October the evacuation of the island was
completed. The United States flag was raised over the island at noon on
that day. The administration of its affairs has been provisionally
intrusted to a military governor until the Congress shall otherwise
provide. The Cuban Joint Commission has not yet terminated its labors.
Owing to the difficulties in the way of removing the large numbers of
Spanish troops still in Cuba, the evacuation can not be completed before
the 1st of January next.

Pursuant to the fifth article of the protocol, I appointed William R. Day,
lately Secretary of State; Cushman K. Davis, William P. Frye, and George
Gray, Senators of the United States, and Whitelaw Reid to be the peace
commissioners on the part of the United States. Proceeding in due season to
Paris, they there met on the 1st of October five commissioners similarly
appointed on the part of Spain. Their negotiations have made hopeful
progress, so that I trust soon to be able to lay a definitive treaty of
peace before the Senate, with a review of the steps leading to its
signature.

I do not discuss at this time the government or the future of the new
possessions which will come to us as the result of the war with Spain. Such
discussion will be appropriate after the treaty of peace shall be ratified.
In the meantime and until the Congress has legislated otherwise it will be
my duty to continue the military governments which have existed since our
occupation and give to the people security in life and property and
encouragement under a just and beneficent rule.

As soon as we are in possession of Cuba and have pacified the island it
will be necessary to give aid and direction to its people to form a
government for themselves. This should be undertaken at the earliest moment
consistent with safety and assured success. It is important that our
relations with this people shall be of the most friendly character and our
commercial relations close and reciprocal. It should be our duty to assist
in every proper way to build up the waste places of the island, encourage
the industry of the people, and assist them to form a government which
shall be free and independent, thus realizing the best aspirations of the
Cuban people.

Spanish rule must be replaced by a just, benevolent, and humane government,
created by the people of Cuba, capable of performing all international
obligations, and which shall encourage thrift, industry, and prosperity and
promote peace and good will among all of the inhabitants, whatever may have
been their relations in the past. Neither revenge nor passion should have a
place in the new government. Until there is complete tranquillity in the
island and a stable government inaugurated military occupation will be
continued.

With the one exception of the rupture with Spain, the intercourse of the
United States with the great family of nations has been marked with
cordiality, and the close of the eventful year finds most of the issues
that necessarily arise in the complex relations of sovereign states
adjusted or presenting no serious obstacle to a just and honorable solution
by amicable agreement.

A long unsettled dispute as to the extended boundary between the Argentine
Republic and Chile, stretching along the Andean crests from the southern
border of the Atacama Desert to Magellan Straits, nearly a third of the
length of the South American continent, assumed an acute stage in the early
part of the year, and afforded to this Government occasion to express the
hope that the resort to arbitration, already contemplated by existing
conventions between the parties, might prevail despite the grave
difficulties arising in its application. I am happy to say that
arrangements to this end have been perfected, the questions of fact upon
which the respective commissioners were unable to agree being in course of
reference to Her Britannic Majesty for determination. A residual difference
touching the northern boundary line across the Atacama Desert, for which
existing treaties provided no adequate adjustment, bids fair to be settled
in like manner by a joint commission, upon which the United States minister
at Buenos Ayres has been invited to serve as umpire in the last resort.

I have found occasion to approach the Argentine Government with a view to
removing differences of rate charges imposed upon the cables of an American
corporation in the transmission between Buenos Ayres and the cities of
Uruguay and Brazil of through messages passing from and to the United
States. Although the matter is complicated by exclusive concessions by
Uruguay and Brazil to foreign companies, there is strong hope that a good
understanding will be reached and that the important channels of commercial
communication between the United States and the Atlantic cities of South
America may be freed from an almost prohibitory discrimination.

In this relation I may be permitted to express my sense of the fitness of
an international agreement whereby the interchange of messages over
connecting cables may be regulated on a fair basis of uniformity. The world
has seen the postal system developed from a congeries of independent and
exclusive services into a well-ordered union, of which all countries enjoy
the manifold benefits. It would be strange were the nations not in time
brought to realize that modern civilization, which owes so much of its
progress to the annihilation of space by the electric force, demands that
this all-important means of communication be a heritage of all peoples, to
be administered and regulated in their common behoof. A step in this
direction was taken when the international convention of 1884 for the
protection of submarine cables was signed, and the day is, I trust, not far
distant when this medium for the transmission of thought from land to land
may be brought within the domain of international concert as completely as
is the material carriage of commerce and correspondence upon the face of
the waters that divide them.

The claim of Thomas Jefferson Page against Argentina, which has been
pending many years, has been adjusted. The sum awarded by the Congress of
Argentina was $4,242.35.

The sympathy of the American people has justly been offered to the ruler
and the people of Austria-Hungary by reason of the affliction that has
lately befallen them in the assassination of the Empress-Queen of that
historic realm.

On the 10th of September, 1897, a conflict took place at Lattimer, Pa.,
between a body of striking miners and the sheriff of Luzerne County and his
deputies, in which 22 miners were killed and 44 wounded, of whom 10 of the
killed and 12 of the wounded were Austrian and Hungarian subjects. This
deplorable event naturally aroused the solicitude of the Austro-Hungarian
Government, which, on the assumption that the killing and wounding involved
the unjustifiable misuse of authority, claimed reparation for the
sufferers. Apart from the searching investigation and peremptory action of
the authorities of Pennsylvania, the Federal Executive took appropriate
steps to learn the merits of the case, in order to be in a position to meet
the urgent complaint of a friendly power. The sheriff and his deputies,
having been indicted for murder, were tried, and acquitted, after
protracted proceedings and the hearing of hundreds of witnesses, on the
ground that the killing was in the line of their official duty to uphold
law and preserve public order in the State. A representative of the
Department of Justice attended the trial and reported its course fully.
With all the facts in its possession, this Government expects to reach a
harmonious understanding on the subject with that of Austria-Hungary,
notwithstanding the renewed claim of the latter, after learning the result
of the trial, for indemnity for its injured subjects.

Despite the brief time allotted for preparation, the exhibits of this
country at the Universal Exposition at Brussels in 1897 enjoyed the
singular distinction of a larger proportion of awards, having regard to the
number and classes of articles entered than those of other countries. The
worth of such a result in making known our national capacity to supply the
world's markets is obvious.

Exhibitions of this international character are becoming more frequent as
the exchanges of commercial countries grow more intimate and varied. Hardly
a year passes that this Government is not invited to national participation
at some important foreign center, but often on too short notice to permit
of recourse to Congress for the power and means to do so. My predecessors
have suggested the advisability of providing by a general enactment and a
standing appropriation for accepting such invitations and for
representation of this country by a commission. This plan has my cordial
approval.

I trust that the Belgian restrictions on the importation of cattle from the
United States, originally adopted as a sanitary precaution, will at an
early day be relaxed as to their present features of hardship and
discrimination, so as to admit live cattle under due regulation of their
slaughter after landing. I am hopeful, too, of favorable change in the
Belgian treatment of our preserved and salted meats. The growth of direct
trade between the two countries, not alone for Belgian consumption and
Belgian products, but by way of transit from and to other continental
states, has been both encouraging and beneficial. No effort will be spared
to enlarge its advantages by seeking the removal of needless impediments
and by arrangements for increased commercial exchanges.

The year's events in Central America deserve more than passing mention.

A menacing rupture between Costa Rica and Nicaragua was happily composed by
the signature of a convention between the parties, with the concurrence of
the Guatemalan representative as a mediator, the act being negotiated and
signed on board the United States steamer Alert, then lying in Central
American waters. It is believed that the good offices of our envoy and of
the commander of that vessel contributed toward this gratifying outcome.

In my last annual message the situation was presented with respect to the
diplomatic representation of this Government in Central America created by
the association of Nicaragua, Honduras, and Salvador under the title of the
Greater Republic of Central America, and the delegation of their
international functions to the Diet thereof. While the representative
character of the Diet was recognized by my predecessor and has been
confirmed during my Administration by receiving its accredited envoy and
granting exequaturs to consuls commissioned under its authority, that
recognition was qualified by the distinct understanding that the
responsibility of each of the component sovereign Republics toward the
United States remained wholly unaffected.

This proviso was needful inasmuch as the compact of the three Republics was
at the outset an association whereby certain representative functions were
delegated to a tripartite commission rather than a federation possessing
centralized powers of government and administration. In this view of their
relation and of the relation of the United States to the several Republics,
a change in the representation of this country in Central America was
neither recommended by the Executive nor initiated by Congress, thus
leaving one of our envoys accredited, as heretofore, separately to two
States of the Greater Republic, Nicaragua and Salvador, and to a third
State, Costa Rica, which was not a party to the compact, while our other
envoy was similarly accredited to a union State, Honduras, and a nonunion
State, Guatemala. The result has been that the one has presented
credentials only to the President of Costa Rica, the other having been
received only by the Government of Guatemala.

Subsequently the three associated Republics entered into negotiations for
taking the steps forecast in the original compact. A convention of their
delegates framed for them a federal constitution under the name of the
United States of Central America, and provided for a central federal
government and legislature. Upon ratification by the constituent States,
the 1st of November last was fixed for the new system to go into operation.
Within a few weeks thereafter the plan was severely tested by revolutionary
movements arising, with a consequent demand for unity of action on the part
of the military power of the federal States to suppress them. Under this
strain the new union seems to have been weakened through the withdrawal of
its more important members. This Government was not officially advised of
the installation of the federation and has maintained an attitude of
friendly expectancy, while in no wise relinquishing the position held from
the outset that the responsibilities of the several States toward us
remained unaltered by their tentative relations among themselves.

The Nicaragua Canal Commission, under the chairmanship of Rear-Admiral John
G. Walker, appointed July 24, 1897, under the authority of a provision in
the sundry civil act of June 4 of that year, has nearly completed its
labors, and the results of its exhaustive inquiry into the proper route,
the feasibility, and the cost of construction of an interoceanic canal by a
Nicaraguan route will be laid before you. In the performance of its task
the commission received all possible courtesy and assistance from the
Governments of Nicaragua and Costa Rica, which thus testified their
appreciation of the importance of giving a speedy and practical outcome to
the great project that has for so many years engrossed the attention of the
respective countries.

As the scope of the recent inquiry embraced the whole subject, with the aim
of making plans and surveys for a canal by the most convenient route, it
necessarily included a review of the results of previous surveys and plans,
and in particular those adopted by the Maritime Canal Company under its
existing concessions from Nicaragua and Costa Rica, so that to this extent
those grants necessarily hold as essential a part in the deliberations and
conclusions of the Canal Commission as they have held and must needs hold
in the discussion of the matter by the Congress. Under these circumstances
and in view of overtures made to the Governments of Nicaragua and Costa
Rica by other parties for a new canal concession predicated on the assumed
approaching lapse of the contracts of the Maritime Canal Company with those
States, I have not hesitated to express my conviction that considerations
of expediency and international policy as between the several governments
interested in the construction and control of an interoceanic canal by this
route require the maintenance of the status quo until the Canal Commission
shall have reported and the United States Congress shall have had the
opportunity to pass finally upon the whole matter during the present
session, without prejudice by reason of any change in the existing
conditions.

Nevertheless, it appears that the Government of Nicaragua, as one of its
last sovereign acts before merging its powers in those of the newly formed
United States of Central America, has granted an optional concession to
another association, to become effective on the expiration of the present
grant. It does not appear what surveys have been made or what route is
proposed under this contingent grant, so that an examination of the
feasibility of its plans is necessarily not embraced in the report of the
Canal Commission. All these circumstances suggest the urgency of some
definite action by the Congress at this session if the labors of the past
are to be utilized and the linking of the Atlantic and Pacific oceans by a
practical waterway is to be realized. That the construction of such a
maritime highway is now more than ever indispensable to that intimate and
ready intercommunication between our eastern and western seaboards demanded
by the annexation of the Hawaiian Islands and the prospective expansion of
our influence and commerce in the Pacific, and that our national policy now
more imperatively than ever calls for its control by this Government, are
propositions which I doubt not the Congress will duly appreciate and wisely
act upon.

A convention providing for the revival of the late United States and
Chilean Claims Commission and the consideration of claims which were duly
presented to the late commission, but not considered because of the
expiration of the time limited for the duration of the commission, was
signed May 24, 1897, and has remained unacted upon by the Senate. The term
therein fixed for effecting the exchange of ratifications having elapsed,
the convention falls unless the time be extended by amendment, which I am
endeavoring to bring about, with the friendly concurrence of the Chilean
Government.

The United States has not been an indifferent spectator of the
extraordinary events transpiring in the Chinese Empire, whereby portions of
its maritime provinces are passing under the control of various European
powers; but the prospect that the vast commerce which the energy of our
citizens and the necessity of our staple productions for Chinese uses has
built up in those regions may not be prejudiced through any exclusive
treatment by the new occupants has obviated the need of our country
becoming an actor in the scene. Our position among nations, having a large
Pacific coast and a constantly expanding direct trade with the farther
Orient, gives us the equitable claim to consideration and friendly
treatment in this regard, and it will be my aim to subserve our large
interests in that quarter by all means appropriate to the constant policy
of our Government. The territories of Kiao-chow, of Wei-hai-wei, and of
Port Arthur and Talienwan, leased to Germany, Great Britain, and Russia,
respectively, for terms of years, will, it is announced, be open to
international commerce during such alien occupation; and if no
discriminating treatment of American citizens and their trade be found to
exist or be hereafter developed, the desire of this Government would appear
to be realized.

In this relation, as showing the volume and value of our exchanges with
China and the peculiarly favorable conditions which exist for their
expansion in the normal course of trade, I refer to the communication
addressed to the Speaker of the House of Representatives by the Secretary
of the Treasury on the 14th of last June, with its accompanying letter of
the Secretary of State, recommending an appropriation for a commission to
study the commercial and industrial conditions in the Chinese Empire and
report as to the opportunities for and obstacles to the enlargement of
markets in China for the raw products and manufactures of the United
States. Action was not taken thereon during the late session. I cordially
urge that the recommendation receive at your hands the consideration which
its importance and timeliness merit.

Meanwhile there may be just ground for disquietude in view of the unrest
and revival of the old sentiment of opposition and prejudice to alien
people which pervades certain of the Chinese provinces. As in the case of
the attacks upon our citizens in Szechuen and at Kutien in 1895, the United
States minister has been instructed to secure the fullest measure of
protection, both local and imperial, for any menaced American interests,
and to demand, in case of lawless injury to person or property, instant
reparation appropriate to the case. War ships have been stationed at
Tientsin for more ready observation of the disorders which have invaded
even the Chinese capital, so as to be in a position to act should need
arise, while a guard of marines has been sent to Peking to afford the
minister the same measure of authoritative protection as the
representatives of other nations have been constrained to employ.

Following close upon the rendition of the award of my predecessor as
arbitrator of the claim of the Italian subject Cerruti against the Republic
of Colombia, differences arose between the parties to the arbitration in
regard to the scope and extension of the award, of which certain articles
were contested by Colombia, while Italy claimed their literal fulfillment.
The award having been made by the President of the United States, as an act
of friendly consideration and with the sole view to an impartial
composition of the matter in dispute, I could not but feel deep concern at
such a miscarriage, and while unable to accept the Colombian theory that I,
in my official capacity, possessed continuing functions as arbitrator, with
power to interpret or revise the terms of the award, my best efforts were
lent to bring the parties to a harmonious agreement as to the execution of
its provisions.

A naval demonstration by Italy resulted in an engagement to pay the
liabilities claimed upon their ascertainment; but this apparent disposition
of the controversy was followed by a rupture of diplomatic intercourse
between Colombia and Italy, which still continues, although, fortunately,
without acute symptoms having supervened. Notwithstanding this, efforts are
reported to be continuing for the ascertainment of Colombia's contingent
liability on account of Cerruti's debts under the fifth article of the
award.

A claim of an American citizen against the Dominican Republic for a public
bridge over the Ozama River, which has been in diplomatic controversy for
several years, has been settled by expert arbitration and an award in favor
of the claimant amounting to about $90,000. It, however, remains unpaid,
despite urgent demands for its settlement according to the terms of the
compact.

There is now every prospect that the participation of the United States in
the Universal Exposition to be held in Paris in 1900 will be on a scale
commensurate with the advanced position held by our products and industries
in the world's chief marts.

The preliminary report of Mr. Moses P. Handy, who, under the act approved
July 19, 1897, was appointed special commissioner with a view to securing
all attainable information necessary to a full and complete understanding
by Congress in regard to the participation of this Government in the Paris
Exposition, was laid before you by my message of December 6, 1897, and
showed the large opportunities opened to make known our national progress
in arts, science, and manufactures, as well as the urgent need of immediate
and adequate provision to enable due advantage thereof to be taken. Mr.
Handy's death soon afterwards rendered it necessary for another to take up
and complete his unfinished work, and on January 11 last Mr. Thomas W.
Cridler, Third Assistant Secretary of State, was designated to fulfill that
task. His report was laid before you by my message of June 14, 1898, with
the gratifying result of awakening renewed interest in the projected
display. By a provision in the sundry civil appropriation act of July 1,
1898, a sum not to exceed $650,000 was allotted for the organization of a
commission to care for the proper preparation and installation of American
exhibits and for the display of suitable exhibits by the several Executive
Departments, particularly by the Department of Agriculture, the Fish
Commission, and the Smithsonian Institution, in representation of the
Government of the United States.

Pursuant to that enactment I appointed Mr. Ferdinand W. Peck, of Chicago,
commissioner-general, with an assistant commissioner-general and a
secretary. Mr. Peck at once proceeded to Paris, where his success in
enlarging the scope and variety of the United States exhibit has been most
gratifying. Notwithstanding the comparatively limited area of the
exposition site--less than one-half that of the World's Fair at
Chicago--the space assigned to the United States has been increased from
the absolute allotment of 157,403 square feet reported by Mr. Handy to some
202,000 square feet, with corresponding augmentation of the field for a
truly characteristic representation of the various important branches of
our country's development. Mr. Peck's report will be laid before you. In my
judgment its recommendations will call for your early consideration,
especially as regards an increase of the appropriation to at least one
million dollars in all, so that not only may the assigned space be fully
taken up by the best possible exhibits in every class, but the preparation
and installation be on so perfect a scale as to rank among the first in
that unparalleled competition of artistic and inventive production, and
thus counterbalance the disadvantage with which we start as compared with
other countries whose appropriations are on a more generous scale and whose
preparations are in a state of much greater forwardness than our own.

Where our artisans have the admitted capacity to excel, where our inventive
genius has initiated many of the grandest discoveries of these later days
of the century, and where the native resources of our land are as limitless
as they are valuable to supply the world's needs, it is our province, as it
should be our earnest care, to lead in the march of human progress, and not
rest content with any secondary place. Moreover, if this be due to
ourselves, it is no less due to the great French nation whose guests we
become, and which has in so many ways testified its wish and hope that our
participation shall befit the place the two peoples have won in the field
of universal development.

The commercial arrangement made with France on the 28th of May, 1898, under
the provisions of section 3 of the tariff act of 1897, went into effect on
the 1st day of June following. It has relieved a portion of our export
trade from serious embarrassment. Further negotiations are now pending
under section 4 of the same act with a view to the increase of trade
between the two countries to their mutual advantage. Negotiations with
other governments, in part interrupted by the war with Spain, are in
progress under both sections of the tariff act. I hope to be able to
announce some of the results of these negotiations during the present
session of Congress.

Negotiations to the same end with Germany have been set on foot. Meanwhile
no effort has been relaxed to convince the Imperial Government of the
thoroughness of our inspection of pork products for exportation, and it is
trusted that the efficient administration of this measure by the Department
of Agriculture will be recognized as a guaranty of the healthfulness of the
food staples we send abroad to countries where their use is large and
necessary.

I transmitted to the Senate on the 10th of February last information
touching the prohibition against the importation of fresh fruits from this
country, which had then recently been decreed by Germany on the ground of
danger of disseminating the San Jose scale insect. This precautionary
measure was justified by Germany on the score of the drastic steps taken in
several States of the Union against the spread of the pest, the elaborate
reports of the Department of Agriculture being put in evidence to show the
danger to German fruit-growing interests should the scale obtain a lodgment
in that country. Temporary relief was afforded in the case of large
consignments of fruit then on the way by inspection and admission when
found noninfected. Later the prohibition was extended to dried fruits of
every kind, but was relaxed so as to apply only to unpeeled fruit and fruit
waste. As was to be expected, the alarm reached to other countries, and
Switzerland has adopted a similar inhibition. Efforts are in progress to
induce the German and Swiss Governments to relax the prohibition in favor
of dried fruits shown to have been cured under circumstances rendering the
existence of animal life impossible.

Our relations with Great Britain have continued on the most friendly
footing. Assenting to our request, the protection of Americans and their
interests in Spanish jurisdiction was assumed by the diplomatic and
consular representatives of Great Britain, who fulfilled their delicate and
arduous trust with tact and zeal, eliciting high commendation. I may be
allowed to make fitting allusion to the instance of Mr. Ramsden, Her
Majesty's consul at Santiago de Cuba, whose untimely death after
distinguished service and untiring effort during the siege of that city was
sincerely lamented.

In the early part of April last, pursuant to a request made at the instance
of the Secretary of State by the British ambassador at this capital, the
Canadian government granted facilities for the passage of four United
States revenue cutters from the Great Lakes to the Atlantic coast by way of
the Canadian canals and the St. Lawrence River. The vessels had reached
Lake Ontario and were there awaiting the opening of navigation when war was
declared between the United States and Spain. Her Majesty's Government
thereupon, by a communication of the latter part of April, stated that the
permission granted before the outbreak of hostilities would not be
withdrawn provided the United States Government gave assurance that the
vessels in question would proceed direct to a United States port without
engaging in any hostile operation. This Government promptly agreed to the
stipulated condition, it being understood that the vessels would not be
prohibited from resisting any hostile attack.

It will give me especial satisfaction if I shall be authorized to
communicate to you a favorable conclusion of the pending negotiations with
Great Britain in respect to the Dominion of Canada. It is the earnest wish
of this Government to remove all sources of discord and irritation in our
relations with the neighboring Dominion. The trade between the two
countries is constantly increasing, and it is important to both countries
that all reasonable facilities should be granted for its development.

The Government of Greece strongly urges the onerousness of the duty here
imposed upon the currants of that country, amounting to 100 per cent or
more of their market value. This fruit is stated to be exclusively a Greek
product, not coming into competition with any domestic product. The
question of reciprocal commercial relations with Greece, including the
restoration of currants to the free list, is under consideration.

The long-standing claim of Bernard Campbell for damages for injuries
sustained from a violent assault committed against him by military
authorities in the island of Haiti has been settled by the agreement of
that Republic to pay him $10,000 in American gold. Of this sum $5,000 has
already been paid. It is hoped that other pending claims of American
citizens against that Republic may be amicably adjusted.

Pending the consideration by the Senate of the treaty signed June 1897, by
the plenipotentiaries of the United States and of the Republic of Hawaii,
providing for the annexation of the islands, a joint resolution to
accomplish the same purpose by accepting the offered cession and
incorporating the ceded territory into the Union was adopted by the
Congress and approved July 7, 1898. I thereupon directed the United States
steamship Philadelphia to convey Rear-Admiral Miller to Honolulu, and
intrusted to his hands this important legislative act, to be delivered to
the President of the Republic of Hawaii, with whom the Admiral and the
United States minister were authorized to make appropriate arrangements for
transferring the sovereignty of the islands to the United States. This was
simply but impressively accomplished on the 12th of August last by the
delivery of a certified copy of the resolution to President Dole, who
thereupon yielded up to the representative of the Government of the United
States the sovereignty and public property of the Hawaiian Islands.

Pursuant to the terms of the joint resolution and in exercise of the
authority thereby conferred upon me, I directed that the civil, judicial,
and military powers theretofore exercised by the officers of the Government
of the Republic of Hawaii should continue to be exercised by those officers
until Congress shall provide a government for the incorporated territory,
subject to my power to remove such officers and to fill vacancies. The
President, officers, and troops of the Republic thereupon took the oath of
allegiance to the United States, thus providing for the uninterrupted
continuance of all the administrative and municipal functions of the
annexed territory until Congress shall otherwise enact.

Following the further provision of the joint resolution, I appointed the
Hons. Shelby M. Cullom, of Illinois, John T. Morgan, of Alabama, Robert R.
Hitt, of Illinois, Sanford B. Dole, of Hawaii, and Walter F. Frear, of
Hawaii, as commissioners to confer and recommend to Congress such
legislation concerning the Hawaiian Islands as they should deem necessary
or proper. The commissioners having fulfilled the mission confided to them,
their report will be laid before you at an early day. It is believed that
their recommendations will have the earnest consideration due to the
magnitude of the responsibility resting upon you to give such shape to the
relationship of those mid-Pacific lands to our home Union as will benefit
both in the highest degree, realizing the aspirations of the community that
has cast its lot with us and elected to share our political heritage, while
at the same time justifying the foresight of those who for three-quarters
of a century have looked to the assimilation of Hawaii as a natural and
inevitable consummation, in harmony with our needs and in fulfillment of
our cherished traditions.

The questions heretofore pending between Hawaii and Japan growing out of
the alleged mistreatment of Japanese treaty immigrants were, I am pleased
to say, adjusted before the act of transfer by the payment of a reasonable
indemnity to the Government of Japan.

Under the provisions of the joint resolution, the existing customs
relations of the Hawaiian Islands with the United States and with other
countries remain unchanged until legislation shall otherwise provide. The
consuls of Hawaii here and in foreign countries continue to fulfill their
commercial agencies, while the United States consulate at Honolulu is
maintained for all appropriate services pertaining to trade and the
revenue. It would be desirable that all foreign consuls in the Hawaiian
Islands should receive new exequaturs from this Government.

The attention of Congress is called to the fact that, our consular offices
having ceased to exist in Hawaii and being about to cease in other
countries coming under the sovereignty of the United States, the provisions
for the relief and transportation of destitute American seamen in these
countries under our consular regulations will in consequence terminate. It
is proper, therefore, that new legislation should be enacted upon this
subject in order to meet the changed conditions.

The interpretation of certain provisions of the extradition convention of
December 11, 1861, has been at various times the occasion of controversy
with the Government of Mexico. An acute difference arose in the case of the
Mexican demand for the delivery of Jesus Guerra, who, having led a
marauding expedition near the border with the proclaimed purpose of
initiating an insurrection against President Diaz, escaped into Texas.
Extradition was refused on the ground that the alleged offense was
political in its character, and therefore came within the treaty proviso of
nonsurrender. The Mexican contention was that the exception only related to
purely political offenses, and that as Guerra's acts were admixed with the
common crime of murder, arson, kidnaping, and robbery, the option of
nondelivery became void, a position which this Government was unable to
admit in view of the received international doctrine and practice in the
matter. The Mexican Government, in view of this, gave notice January 24,
1898, of the termination of the convention, to take effect twelve months
from that date, at the same time inviting the conclusion of a new
convention, toward which negotiations are on foot.

In this relation I may refer to the necessity of some amendment of our
existing extradition statute. It is a common stipulation of such treaties
that neither party shall be bound to give up its own citizens, with the
added proviso in one of our treaties, that with Japan, that it may
surrender if it see fit. It is held in this country by an almost uniform
course of decisions that where a treaty negatives the obligation to
surrender the President is not invested with legal authority to act. The
conferment of such authority would be in the line of that sound morality
which shrinks from affording secure asylum to the author of a heinous
crime. Again, statutory provision might well be made for what is styled
extradition by way of transit, whereby a fugitive surrendered by one
foreign government to another may be conveyed across the territory of the
United States to the jurisdiction of the demanding state. A recommendation
in this behalf made in the President's message of 1886 was not acted upon.
The matter is presented for your consideration.

The problem of the Mexican free zone has been often discussed with regard
to its inconvenience as a provocative of smuggling into the United States
along an extensive and thinly guarded land border. The effort made by the
joint resolution of March 1, 1895, to remedy the abuse charged by
suspending the privilege of free transportation in bond across the
territory of the United States to Mexico failed of good result, as is
stated in Report No. 702 of the House of Representatives, submitted in the
last session, March 11, 1898. As the question is one to be conveniently met
by wise concurrent legislation of the two countries looking to the
protection of the revenues by harmonious measures operating equally on
either side of the boundary, rather than by conventional arrangements, I
suggest that Congress consider the advisability of authorizing and inviting
a conference of representatives of the Treasury Departments of the United
States and Mexico to consider the subject in all its complex bearings, and
make report with pertinent recommendations to the respective Governments
for the information and consideration of their Congresses.

The Mexican Water Boundary Commission has adjusted all matters submitted to
it to the satisfaction of both Governments save in three important
cases--that of the "Chamizal" at El Paso, Tex., where the two commissioners
failed to agree, and wherein, for this case only, this Government has
proposed to Mexico the addition of a third member; the proposed elimination
of what are known as "Bancos," small isolated islands formed by the cutting
off of bends in the Rio Grande, from the operation of the treaties of 1884
and 1889, recommended by the commissioners and approved by this Government,
but still under consideration by Mexico; and the subject of the "Equitable
distribution of the waters of the Rio Grande," for which the commissioners
recommended an international dam and reservoir, approved by Mexico, but
still under consideration by this Government. Pending these questions it is
necessary to extend the life of the commission, which expires December 23
next.

The coronation of the young Queen of the Netherlands was made the occasion
of fitting congratulations.

The claim of Victor H. McCord against Peru, which for a number of years has
been pressed by this Government and has on several occasions attracted the
attention of the Congress, has been satisfactorily adjusted. A protocol was
signed May 17, 1898, whereby, the fact of liability being admitted, the
question of the amount to be awarded was submitted to the chief justice of
Canada as sole arbitrator. His award sets the indemnity due the claimant at
$40,000.

The Government of Peru has given the prescribed notification of its
intention to abrogate the treaty of friendship, commerce, and navigation
concluded with this country August 31, 1887. As that treaty contains many
important provisions necessary to the maintenance of commerce and good
relations, which could with difficulty be replaced by the negotiation of
renewed provisions within the brief twelve months intervening before the
treaty terminates, I have invited suggestions by Peru as to the particular
provisions it is desired to annul, in the hope of reaching an arrangement
whereby the remaining articles may be provisionally saved.

His Majesty the Czar having announced his purpose to raise the Imperial
Russian mission at this capital to the rank of an embassy, I responded,
under the authority conferred by the act of March 3, 1893, by commissioning
and accrediting the actual representative at St. Petersburg in the capacity
of ambassador extraordinary and plenipotentiary. The Russian ambassador to
this country has since presented his credentials.

The proposal of the Czar for a general reduction of the vast military
establishments that weigh so heavily upon many peoples in time of peace was
communicated to this Government with an earnest invitation to be
represented in the conference which it is contemplated to assemble with a
view to discussing the means of accomplishing so desirable a result. His
Majesty was at once informed of the cordial sympathy of this Government
with the principle involved in his exalted proposal and of the readiness of
the United States to take part in the conference. The active military force
of the United States, as measured by our population, territorial area, and
taxable wealth, is, and under any conceivable prospective conditions must
continue to be, in time of peace so conspicuously less than that of the
armed powers to whom the Czar's appeal is especially addressed that the
question can have for us no practical importance save as marking an
auspicious step toward the betterment of the condition of the modern
peoples and the cultivation of peace and good will among them; but in this
view it behooves us as a nation to lend countenance and aid to the
beneficent project.

The claims of owners of American sealing vessels for seizure by Russian
cruisers in Bering Sea are being pressed to a settlement. The equities of
the cases justify the expectation that a measure of reparation will
eventually be accorded in harmony with precedent and in the light of the
proven facts.

The recommendation made in my special message of April 27 last is renewed,
that appropriation be made to reimburse the master and owners of the
Russian bark Hans for wrongful arrest of the master and detention of the
vessel in February, 1896, by officers of the United States district court
for the southern district of Mississippi. The papers accompanying my said
message make out a most meritorious claim and justify the urgency with
which it has been presented by the Government of Russia.

Malietoa Laupepa, King of Samoa, died on August 22 last. According to
Article I of the general act of Berlin, "his successor shall be duly
elected according to the laws and customs of Samoa."

Arrangements having been agreed upon between the signatories of the general
act for the return of Mataafa and the other exiled Samoan chiefs, they were
brought from Jaluit by a German war vessel and landed at Apia on September
18 last.

Whether the death of Malietoa and the return of his old-time rival Mataafa
will add to the undesirable complications which the execution of the
tripartite general act has heretofore developed remains to be seen. The
efforts of this Government will, as heretofore, be addressed toward a
harmonious and exact fulfillment of the terms of the international
engagement to which the United States became a party in 1889.

The Cheek claim against Siam, after some five years of controversy, has
been adjusted by arbitration under an agreement signed July 6, 1897, an
award of 706,721 ticals (about $187,987.78 ), with release of the Cheek
estate from mortgage claims, having been rendered March 21, 1898, in favor
of the claimant by the arbitrator, Sir Nicholas John Hannen, British chief
justice for China and Japan.

An envoy from Siam has been accredited to this Government and has presented
his credentials.

Immediately upon the outbreak of the war with Spain the Swiss Government,
fulfilling the high mission it has deservedly assumed as the patron of the
International Red Cross, proposed to the United States and Spain that they
should severally recognize and carry into execution, as a modus vivendi,
during the continuance of hostilities, the additional articles proposed by
the international conference of Geneva, October 20, 1868, extending the
effects of the existing Red Cross convention of 1864 to the conduct of
naval war. Following the example set by France and Germany in 1870 in
adopting such a modus vivendi, and in view of the accession of the United
States to those additional articles in 1882, although the exchange of
ratifications thereof still remained uneffected, the Swiss proposal was
promptly and cordially accepted by us, and simultaneously by Spain.

This Government feels a keen satisfaction in having thus been enabled to
testify its adherence to the broadest principles of humanity even amidst
the clash of war, and it is to be hoped that the extension of the Red Cross
compact to hostilities by sea as well as on land may soon become an
accomplished fact through the general promulgation of the additional naval
Red Cross articles by the maritime powers now parties to the convention of
1864.

The important question of the claim of Switzerland to the perpetual
cantonal allegiance of American citizens of Swiss origin has not made
hopeful progress toward a solution, and controversies in this regard still
continue.

The newly accredited envoy of the United States to the Ottoman Porte
carries instructions looking to the disposal of matters in controversy with
Turkey for a number of years. He is especially charged to press for a just
settlement of our claims for indemnity by reason of the destruction of the
property of American missionaries resident in that country during the
Armenian troubles of 1895, as well as for the recognition of older claims
of equal justness.

He is also instructed to seek an adjustment of the dispute growing out of
the refusal of Turkey to recognize the acquired citizenship of Ottoman-born
persons naturalized in the United States since 1869 without prior imperial
consent, and in the same general relation he is directed to endeavor to
bring about a solution of the question which has more or less acutely
existed since 1869 concerning the jurisdictional rights of the United
States in matters of criminal procedure and punishment under Article IV of
the treaty of 1830. This latter difficulty grows out of a verbal
difference, claimed by Turkey to be essential, between the original Turkish
text and the promulgated translation.

After more than two years from the appointment of a consul of this country
to Erzerum, he has received his exequatur.

The arbitral tribunal appointed under the treaty of February 2, 1897,
between Great Britain and Venezuela, to determine the boundary line between
the latter and the colony of British Guiana, is to convene at Paris during
the present month. It is a source of much gratification to this Government
to see the friendly resort of arbitration applied to the settlement of this
controversy, not alone because of the earnest part we have had in bringing
about the result, but also because the two members named on behalf of
Venezuela, Mr. Chief Justice Fuller and Mr. Justice Brewer, chosen from our
highest court, appropriately testify the continuing interest we feel in the
definitive adjustment of the question according to the strictest rules of
justice. The British members, Lord Herschell and Sir Richard Collins, are
jurists of no less exalted repute, while the fifth member and president of
the tribunal, M. F. De Martens, has earned a world-wide reputation as an
authority upon international law.

The claim of Felipe Scandella against Venezuela for arbitrary expulsion and
injury to his business has been adjusted by the revocation of the order of
expulsion and by the payment of the sum of $16,000.

I have the satisfaction of being able to state that the Bureau of the
American Republics, created in 1890 as the organ for promoting commercial
intercourse and fraternal relations among the countries of the Western
Hemisphere, has become a more efficient instrument of the wise purposes of
its founders, and is receiving the cordial support of the contributing
members of the international union which are actually represented in its
board of management. A commercial directory, in two volumes, containing a
mass of statistical matter descriptive of the industrial and commercial
interests of the various countries, has been printed in English, Spanish,
Portuguese, and French, and a monthly bulletin published in these four
languages and distributed in the Latin-American countries as well as in the
United States has proved to be a valuable medium for disseminating
information and furthering the varied interests of the international
union.

During the past year the important work of collecting information of
practical benefit to American industries and trade through the agency of
the diplomatic and consular officers has been steadily advanced, and in
order to lay such data before the public with the least delay the practice
was begun in January, 1898, of issuing the commercial reports from day to
day as they are received by the Department of State. It is believed that
for promptitude as well as fullness of information the service thus
supplied to our merchants and manufacturers will be found to show sensible
improvement and to merit the liberal support of Congress.

The experiences of the last year bring forcibly home to us a sense of the
burdens and the waste of war. We desire, in common with most civilized
nations, to reduce to the lowest possible point the damage sustained in
time of war by peaceable trade and commerce. It is true we may suffer in
such cases less than other communities, but all nations are damaged more or
less by the state of uneasiness and apprehension into which an outbreak of
hostilities throws the entire commercial world. It should be our object,
therefore, to minimize, so far as practicable, this inevitable loss and
disturbance. This purpose can probably best be accomplished by an
international agreement to regard all private property at sea as exempt
from capture or destruction by the forces of belligerent powers. The United
States Government has for many years advocated this humane and beneficent
principle, and is now in position to recommend it to other powers without
the imputation of selfish motives. I therefore suggest for your
consideration that the Executive be authorized to correspond with the
governments of the principal maritime powers with a view of incorporating
into the permanent law of civilized nations the principle of the exemption
of all private property at sea, not contraband of war, from capture or
destruction by belligerent powers.

The Secretary of the Treasury reports that the receipts of the Government
from all sources during the fiscal year ended June 30, 1898, including
$64,751,223 received from sale of Pacific railroads, amounted to
$405,321,335, and its expenditures to $443,168,582. There was collected
from customs $149,575,062 and from internal revenue $170,900,641. Our
dutiable imports amounted to $324,635,479, a decrease of $58,156,690 over
the preceding year, and importations free of duty amounted to $291,414,175,
a decrease from the preceding year of $90,524,068. Internal-revenue
receipts exceeded those of the preceding year by $24,212,067.

The total tax collected on distilled spirits was $92,546,999; on
manufactured tobacco, $36,230,522, and on fermented liquors, $39,515,421.
We exported merchandise during the year amounting to $1,231,482,330, an
increase of $180,488,774 from the preceding year.

It is estimated upon the basis of present revenue laws that the receipts of
the Government for the year ending June 30, 1899, will be $577,874,647, and
its expenditures $689,874,647, resulting in a deficiency of $112,000,000.

On the 1st of December, 1898, there was held in the Treasury gold coin
amounting to $138,441,547, gold bullion amounting to $138,502,545, silver
bullion amounting to $93,359,250, and other forms of money amounting to
$451,963,981.

On the same date the amount of money of all kinds in circulation, or not
included in Treasury holdings, was $1,886,879,504, an increase for the year
of $165,794,966. Estimating our population at 75,194,000 at the time
mentioned, the per capita circulation was $25.09. On the same date there
was in the Treasury gold bullion amounting to $138,502,545.

The provisions made for strengthening the resources of the Treasury in
connection with the war have given increased confidence in the purpose and
power of the Government to maintain the present standard, and have
established more firmly than ever the national credit at home and abroad. A
marked evidence of this is found in the inflow of gold to the Treasury. Its
net gold holdings on November 1, 1898, were $239,885,162 as compared with
$153,573,147 on November 1, 1897, and an increase of net cash of
$207,756,100, November 1, 1897, to $300,238,275, November 1, 1898. The
present ratio of net Treasury gold to outstanding Government liabilities,
including United States notes, Treasury notes of 1890, silver certificates,
currency certificates, standard silver dollars, and fractional silver coin,
November 1, 1898, was 25.35 per cent, as compared with 16.96 per cent,
November 1, 1897.

I renew so much of my recommendation of December, 1897, as follows: That
when any of the United States notes are presented for redemption in gold
and are redeemed in gold, such notes shall be kept and set apart and only
paid out in exchange for gold. This is an obvious duty. If the holder of
the United States note prefers the gold and gets it from the Government, he
should not receive back from the Government a United States note without
paying gold in exchange for it. The reason for this is made all the more
apparent when the Government issues an interest-bearing debt to provide
gold for the redemption of United States notes--a non-interest-bearing
debt. Surely it should not pay them out again except on demand and for
gold. If they are put out in any other way, they may return again, to he
followed by another bond issue to redeem them--another interest-bearing
debt to redeem a non-interest-bearing debt. This recommendation was made in
the belief that such provisions of law would insure to a greater degree the
safety of the present standard, and better protect our currency from the
dangers to which it is subjected from a disturbance in the general business
conditions of the country.

In my judgment the present condition of the Treasury amply justifies the
immediate enactment of the legislation recommended one year ago, under
which a portion of the gold holdings should be placed in a trust fund from
which greenbacks should be redeemed upon presentation, but when once
redeemed should not thereafter be paid out except for gold.

It is not to be inferred that other legislation relating to our currency is
not required; on the contrary, there is an obvious demand for it.

The importance of adequate provision which will insure to our future a
money standard related as our money standard now is to that of our
commercial rivals is generally recognized.

The companion proposition that our domestic paper currency shall be kept
safe and yet be so related to the needs of our industries and internal
commerce as to be adequate and responsive to such needs is a proposition
scarcely less important. The subject, in all its parts, is commended to the
wise consideration of the Congress.

The annexation of Hawaii and the changed relations of the United States to
Cuba, Puerto Rico, and the Philippines resulting from the war, compel the
prompt adoption of a maritime policy by the United States. There should be
established regular and frequent steamship communication, encouraged by the
United States, under the American flag, with the newly acquired islands.
Spain furnished to its colonies, at an annual cost of about $2,000,000,
steamship lines communicating with a portion of the world's markets, as
well as with trade centers of the home Government. The United States will
not undertake to do less. It is our duty to furnish the people of Hawaii
with facilities, under national control, for their export and import trade.
It will be conceded that the present situation calls for legislation which
shall be prompt, durable, and liberal.

The part which American merchant vessels and their seamen performed in the
war with Spain demonstrates that this service, furnishing both pickets and
the second line of defense, is a national necessity, and should be
encouraged in every constitutional way. Details and methods for the
accomplishment of this purpose are discussed in the report of the Secretary
of the Treasury, to which the attention of Congress is respectfully
invited.

In my last annual message I recommended that Congress authorize the
appointment of a commission for the purpose of making systematic
investigations with reference to the cause and prevention of yellow fever.
This matter has acquired an increased importance as a result of the
military occupation of the island of Cuba and the commercial intercourse
between this island and the United States which we have every reason to
expect. The sanitary problems connected with our new relations with the
island of Cuba and the acquisition of Puerto Rico are no less important
than those relating to finance, commerce, and administration. It is my
earnest desire that these problems may be considered by competent experts
and that everything may be done which the most recent advances in sanitary
science can offer for the protection of the health of our soldiers in those
islands and of our citizens who are exposed to the dangers of infection
from the importation of yellow fever. I therefore renew my recommendation
that the authority of Congress may be given and a suitable appropriation
made to provide for a commission of experts to be appointed for the purpose
indicated.

Under the act of Congress approved April 26, 1898, authorizing the
President in his discretion, "upon a declaration of war by Congress, or a
declaration by Congress that war exists," I directed the increase of the
Regular Army to the maximum of 62,000, authorized in said act.

There are now in the Regular Army 57,862 officers and men. In said act it
was provided--

That at the end of any war in which the United States may become
involved the Army shall be reduced to a peace basis by the transfer
in the same arm of the service or absorption by promotion or honorable
discharge, under such regulations as the Secretary of War may establish, of
supernumerary commissioned officers and the honorable discharge or transfer
of supernumerary enlisted men; and nothing contained in this act shall be
construed as authorizing the permanent increase of the commissioned or
enlisted force of the Regular Army beyond that now provided by the law in
force prior to the passage of this act, except as to the increase of
twenty-five majors provided for in section 1 hereof. The importance of
legislation for the permanent increase of the Army is therefore manifest,
and the recommendation of the Secretary of War for that purpose has my
unqualified approval. There can be no question that at this time, and
probably for some time in the future, 100,000 men will be none too many to
meet the necessities of the situation. At all events, whether that number
shall be required permanently or not, the power should be given to the
President to enlist that force if in his discretion it should be necessary;
and the further discretion should be given him to recruit for the Army
within the above limit from the inhabitants of the islands with the
government of which we are charged. It is my purpose to muster out the
entire Volunteer Army as soon as the Congress shall provide for the
increase of the regular establishment. This will be only an act of justice
and will be much appreciated by the brave men who left their homes and
employments to help the country in its emergency.

In my last annual message I stated: The Union Pacific Railway, main line,
was sold under the decree of the United States court for the district of
Nebraska on the 1st and 2d of November of this year. The amount due the
Government consisted of the principal of the subsidy bonds, $27,236,512,
and the accrued interest thereon, $31,211,711.75, making the total
indebtedness $58,448,223.75. The bid at the sale covered the first-mortgage
lien and the entire mortgage claim of the Government, principal and
interest. This left the Kansas Pacific case unconcluded. By a decree of the
court in that case an upset price for the property was fixed at a sum which
would yield to the Government only $2,500,000 upon its lien. The sale, at
the instance of the Government, was postponed first to December 15, 1897,
and later, upon the application of the United States, was postponed to the
16th day of February, 1898.

Having satisfied myself that the interests of the Government required that
an effort should be made to obtain a larger sum, I directed the Secretary
of the Treasury, under the act passed March 3, 1887, to pay out of the
Treasury to the persons entitled to receive the same the amounts due upon
all prior mortgages upon the Eastern and Middle divisions of said railroad
out of any money in the Treasury not otherwise appropriated, whereupon the
Attorney-General prepared a petition to be presented to the court, offering
to redeem said prior liens in such manner as the court might direct, and
praying that thereupon the United States might be held to be subrogated to
all the rights of said prior lien holders and that a receiver might be
appointed to take possession of the mortgaged premises and maintain and
operate the same until the court or Congress otherwise directed. Thereupon
the reorganization committee agreed that if said petition was withdrawn and
the sale allowed to proceed on the 16th of February, 1898, they would bid a
sum at the sale which would realize to the Government the entire principal
of its debt, $6,303,000.

Believing that no better price could be obtained and appreciating the
difficulties under which the Government would labor if it should become the
purchaser of the road at the sale, in the absence of any authority by
Congress to take charge of and operate the road I directed that upon the
guaranty of a minimum bid which should give the Government the principal of
its debt the sale should proceed. By this transaction the Government
secured an advance of $3,803,000 over and above the sum which the court had
fixed as the upset price, and which the reorganization committee had
declared was the maximum which they would pay for the property.

It is a gratifying fact that the result of these proceedings against the
Union Pacific system and the Kansas Pacific line is that the Government has
received on account of its subsidy claim the sum of $64,751,223.75, an
increase of $18,997,163.76 over the sum which the reorganization committee
originally agreed to bid for the joint property, the Government receiving
its whole claim, principal and interest, on the Union Pacific, and the
principal of its debt on the Kansas Pacific Railroad.

Steps had been taken to foreclose the Government's lien upon the Central
Pacific Railroad Company, but before action was commenced Congress passed
an act, approved July 7, 1898, creating a commission consisting of the
Secretary of the Treasury, the Attorney-General, and the Secretary of the
Interior, and their successors in office, with full power to settle the
indebtedness to the Government growing out of the issue of bonds in aid of
the construction of the Central Pacific and Western Pacific bond-aided
railroads, subject to the approval of the President.

No report has yet been made to me by the commission thus created. Whatever
action is had looking to a settlement of the indebtedness in accordance
with the act referred to will be duly submitted to the Congress.

I deem it my duty to call to the attention of Congress the condition of the
present building occupied by the Department of Justice. The business of
that Department has increased very greatly since it was established in its
present quarters. The building now occupied by it is neither large enough
nor of suitable arrangement for the proper accommodation of the business of
the Department. The Supervising Architect has pronounced it unsafe and
unsuited for the use to which it is put. The Attorney-General in his report
states that the library of the Department is upon the fourth floor, and
that all the space allotted to it is so crowded with books as to
dangerously overload the structure. The first floor is occupied by the
Court of Claims. The building is of an old and dilapidated appearance,
unsuited to the dignity which should attach to this important Department.

A proper regard for the safety, comfort, and convenience of the officers
and employees would justify the expenditure of a liberal sum of money in
the erection of a new building of commodious proportions and handsome
appearance upon the very advantageous site already secured for that
purpose, including the ground occupied by the present structure and
adjoining vacant lot, comprising in all a frontage of 201 feet on
Pennsylvania avenue and a depth of 136 feet.

In this connection I may likewise refer to the inadequate accommodations
provided for the Supreme Court in the Capitol, and suggest the wisdom of
making provision for the erection of a separate building for the court and
its officers and library upon available ground near the Capitol.

The postal service of the country advances with extraordinary growth.
Within twenty years both the revenues and the expenditures of the
Post-Office Department have multiplied threefold. In the last ten years
they have nearly doubled. Our postal business grows much more rapidly than
our population. It now involves an expenditure of $100,000,000 a year,
numbers 73,000 post-offices, and enrolls 200,000 employees. This remarkable
extension of a service which is an accurate index of the public conditions
presents gratifying evidence of the advancement of education, of the
increase of communication and business activity, and of the improvement of
mail facilities leading to their constantly augmenting use.

The war with Spain laid new and exceptional labors on the Post-Office
Department. The mustering of the military and naval forces of the United
States required special mail arrangements for every camp and every
campaign. The communication between home and camp was naturally eager and
expectant. In some of the larger places of rendezvous as many as 50,000
letters a day required handling. This necessity was met by the prompt
detail and dispatch of experienced men from the established force and by
directing all the instrumentalities of the railway mail and post-office
service, so far as necessary, to this new need. Congress passed an act
empowering the postmaster-General to establish offices or branches at every
military camp or station, and under this authority the postal machinery was
speedily put into effective operation.

Under the same authority, when our forces moved upon Cuba, Puerto Rico, and
the Philippines they were attended and followed by the postal service.
Though the act of Congress authorized the appointment of postmasters where
necessary, it was early determined that the public interests would best be
subserved, not by new designations, but by the detail of experienced men
familiar with every branch of the service, and this policy was steadily
followed. When the territory which was the theater of conflict came into
our possession, it became necessary to reestablish mail facilities for the
resident population as well as to provide them for our forces of
occupation, and the former requirement was met through the extension and
application of the latter obligation. I gave the requisite authority, and
the same general principle was applied to this as to other branches of
civil administration under military occupation. The details are more
particularly given in the report of the postmaster-General, and, while the
work is only just begun, it is pleasing to be able to say that the service
in the territory which has come under our control is already materially
improved.

The following recommendations of the Secretary of the Navy relative to the
increase of the Navy have my earnest approval:

1. Three seagoing sheathed and coppered battle ships of about 13,500 tons
trial displacement, carrying the heaviest armor and most powerful ordnance
for vessels of their class, and to have the highest practicable speed and
great radius of action. Estimated cost, exclusive of armor and armament,
$3,600,000 each.

2. Three sheathed and coppered armored cruisers of about 12,000 tons trial
displacement, carrying the heaviest armor and most powerful ordnance for
vessels of their class, and to have the highest practicable speed and great
radius of action. Estimated cost, exclusive of armor and armament,
$4,000,000 each.

3. Three sheathed and coppered protected cruisers of about 6,000 tons trial
displacement, to have the highest practicable speed and great radius of
action, and to carry the most powerful ordnance suitable for vessels of
their class. Estimated cost, exclusive of armor and armament, $2,150,000
each.

4. Six sheathed and coppered cruisers of about 2,500 tons trial
displacement, to have the highest speed compatible with good cruising
qualities, great radius of action, and to carry the most powerful ordnance
suited to vessels of their class. Estimated cost, exclusive of armament,
$1,141,800 each.

I join with the Secretary of the Navy in recommending that grades of
admiral and vice-admiral be temporarily revived, to be filled by officers
who have specially distinguished themselves in the war with Spain.

I earnestly urge upon Congress the importance of early legislation
providing for the taking of the Twelfth Census. This is necessary in view
of the large amount of work which must be performed in the preparation of
the schedules preparatory to the enumeration of the population.

There were on the pension rolls on June 30, 1898, 993,714 names, an
increase of nearly 18,000 over the number on the rolls on the same day of
the preceding year. The amount appropriated by the act of December 22,
1896, for the payment of pensions for the fiscal year of 1898 was
$140,000,000. Eight million seventy thousand eight hundred and seventy-two
dollars and forty-six cents was appropriated by the act of March 31, 1898,
to cover deficiencies in army pensions, and repayments in the sum of
$12,020.33, making a total of $148,082,892.79 available for the payment of
pensions during the fiscal year 1898. The amount disbursed from that sum
was $144,651,879.80, leaving a balance of $3,431,012.99 unexpended on the
30th of June, 1898, which was covered into the Treasury. There were 389
names added to the rolls during the year by special acts passed at the
second session of the Fifty-fifth Congress, making a total of 6,486
pensioners by Congressional enactments since 1861.

The total receipts of the Patent Office during the past year were
$1,253,948.44. The expenditures were $1,081,633.79, leaving a surplus of
$172,314.65.

The public lands disposed of by the Government during the year reached
8,453,896.92 acres, an increase of 614,780.26 acres over the previous year.
The total receipts from public lands during the fiscal year amounted to
$2,277,995.18, an increase of $190,063.90 over the preceding year. The
lands embraced in the eleven forest reservations which were suspended by
the act of June 4, 1897, again became subject to the operations of the
proclamations of February 22, 1897, creating them, which added an estimated
amount of 19,951,360 acres to the area embraced in the reserves previously
created. In addition thereto two new reserves were created during the
year--the Pine Mountain and Zaca Lake Reserve, in California, embracing
1,644,594 acres, and the Prescott Reserve, in Arizona, embracing 10,240
acres--while the Pecos River Reserve, in New Mexico, has been changed and
enlarged to include 120,000 additional acres.

At the close of the year thirty forest reservations, not including those of
the Afognak Forest and the Fish-Culture Reserve, in Alaska, had been
created by Executive proclamations under section 24 of the act of March 3,
1891, embracing an estimated area of 40,719,474 acres.

The Department of the Interior has inaugurated a forest system, made
possible by the act of July, 1898, for a graded force of officers in
control of the reserves. This system has only been in full operation since
August, but good results have already been secured in many sections. The
reports received indicate that the system of patrol has not only prevented
destructive fires from gaining headway, but has diminished the number of
fires.

The special attention of the Congress is called to that part of the report
of the Secretary of the Interior in relation to the Five Civilized Tribes.
It is noteworthy that the general condition of the Indians shows marked
progress. But one outbreak of a serious character occurred during the year,
and that among the Chippewa Indians of Minnesota, which happily has been
suppressed.

While it has not yet been practicable to enforce all the provisions of the
act of June 28, 1898, "for the protection of the people of the Indian
Territory, and for other purposes," it is having a salutary effect upon the
nations composing the five tribes. The Dawes Commission reports that the
most gratifying results and greater advance toward the attainment of the
objects of the Government have been secured in the past year than in any
previous year. I can not too strongly indorse the recommendation of the
commission and of the Secretary of the Interior for the necessity of
providing for the education of the 30,000 white children resident in the
Indian Territory.

The Department of Agriculture has been active in the past year. Explorers
have been sent to many of the countries of the Eastern and Western
hemispheres for seeds and plants that may be useful to the United States,
and with the further view of opening up markets for our surplus products.
The Forestry Division of the Department is giving special attention to the
treeless regions of our country and is introducing species specially
adapted to semiarid regions. Forest fires, which seriously interfere with
production, especially in irrigated regions, are being studied, that losses
from this cause may be avoided. The Department is inquiring into the use
and abuse of water in many States of the West, and collating information
regarding the laws of the States, the decisions of the courts, and the
customs of the people in this regard, so that uniformity may be secured.
Experiment stations are becoming more effective every year. The annual
appropriation of $720,000 by Congress is supplemented by $400,000 from the
States. Nation-wide experiments have been conducted to ascertain the
suitableness as to soil and climate and States for growing sugar beets. The
number of sugar factories has been doubled in the past two years, and the
ability of the United States to produce its own sugar from this source has
been clearly demonstrated.

The Weather Bureau forecast and observation stations have been extended
around the Caribbean Sea, to give early warning of the approach of
hurricanes from the south seas to our fleets and merchant marine.

In the year 1900 will occur the centennial anniversary of the founding of
the city of Washington for the permanent capital of the Government of the
United States by authority of an act of Congress approved July 16, 1790. In
May, 1800, the archives and general offices of the Federal Government were
removed to this place. On the 17th of November, 1800, the National Congress
met here for the first time and assumed exclusive control of the Federal
district and city. This interesting event assumes all the more significance
when we recall the circumstances attending the choosing of the site, the
naming of the capital in honor of the Father of his Country, and the
interest taken by him in the adoption of plans for its future development
on a magnificent scale.

These original plans have been wrought out with a constant progress and a
signal success even beyond anything their framers could have foreseen. The
people of the country are justly proud of the distinctive beauty and
government of the capital and of the rare instruments of science and
education which here find their natural home.

A movement lately inaugurated by the citizens to have the anniversary
celebrated with fitting ceremonies, including, perhaps, the establishment
of a handsome permanent memorial to mark so historical an occasion and to
give it more than local recognition, has met with general favor on the part
of the public.

I recommend to the Congress the granting of an appropriation for this
purpose and the appointment of a committee from its respective bodies. It
might also be advisable to authorize the President to appoint a committee
from the country at large, which, acting with the Congressional and
District of Columbia committees, can complete the plans for an appropriate
national celebration.

The alien contract law is shown by experience to need some amendment; a
measure providing better protection for seamen is proposed; the rightful
application of the eight-hour law for the benefit of labor and of the
principle of arbitration are suggested for consideration; and I commend
these subjects to the careful attention of the Congress.

The several departmental reports will be laid before you. They give in
great detail the conduct of the affairs of the Government during the past
year and discuss many questions upon which the Congress may feel called
upon to act.