To the Senate and House of Representatives:

In transmitting to you this my fourth annual message it is with
thankfulness to the Giver of All Good that as a nation we have been blessed
for the past year with peace at home, peace abroad, and a general
prosperity vouchsafed to but few peoples.

With the exception of the recent devastating fire which swept from the
earth with a breath, as it were, millions of accumulated wealth in the city
of Boston, there has been no overshadowing calamity within the year to
record. It is gratifying to note how, like their fellow-citizens of the
city of Chicago under similar circumstances a year earlier, the citizens of
Boston are rallying under their misfortunes, and the prospect that their
energy and perseverance will overcome all obstacles and show the same
prosperity soon that they would had no disaster befallen them. Otherwise we
have been free from pestilence, war, and calamities, which often overtake
nations; and, as far as human judgment can penetrate the future, no cause
seems to exist to threaten our present peace.

When Congress adjourned in June last, a question had been raised by Great
Britain, and was then pending, which for a time seriously imperiled the
settlement by friendly arbitration of the grave differences between this
Government and that of Her Britannic Majesty, which by the treaty of
Washington had been referred to the tribunal of arbitration which had met
at Geneva, in Switzerland.

The arbitrators, however, disposed of the question which had jeoparded the
whole of the treaty and threatened to involve the two nations in most
unhappy relations toward each other in a manner entirely satisfactory to
this Government and in accordance with the views and the policy which it
had maintained.

The tribunal, which had convened at Geneva in December, concluded its
laborious session on the 14th day of September last, on which day, having
availed itself of the discretionary power given to it by the treaty to
award a sum in gross, it made its decision, whereby it awarded the sum of
$15,500,000 in gold as the indemnity to be paid by Great Britain to the
United States for the satisfaction of all the claims referred to its
consideration.

This decision happily disposes of a long-standing difference between the
two Governments, and, in connection with another award, made by the German
Emperor under a reference to him by the same treaty, leaves these two
Governments without a shadow upon the friendly relations which it is my
sincere hope may forever remain equally unclouded.

The report of the agent of the United States appointed to attend the Geneva
tribunal, accompanied by the protocols of the proceedings of the
arbitrators, the arguments of the counsel of both Governments, the award of
the tribunal, and the opinions given by the several arbitrators, is
transmitted herewith.

I have caused to be communicated to the heads of the three friendly powers
who complied with the joint request made to them under the treaty the
thanks of this Government for the appointment of arbitrators made by them
respectively, and also my thanks to the eminent personages named by them,
and my appreciation of the dignity, patience, impartiality, and great
ability with which they discharged their arduous and high functions.

Her Majesty's Government has communicated to me the appreciation by Her
Majesty of the ability and indefatigable industry displayed by Mr. Adams,
the arbitrator named on the part of this Government during the protracted
inquiries and discussions of the tribunal. I cordially unite with Her
Majesty in this appreciation.

It is due to the agent of the United States before the tribunal to record
my high appreciation of the marked ability, unwearied patience, and the
prudence and discretion with which he has conducted the very responsible
and delicate duties committed to him, as it is also due to the learned and
eminent counsel who attended the tribunal on the part of this Government to
express my sense of the talents and wisdom which they brought to bear in
the attainment of the result so happily reached.

It will be the province of Congress to provide for the distribution among
those who may be entitled to it of their respective shares of the money to
be paid. Although the sum awarded is not payable until a year from the date
of the award, it is deemed advisable that no time be lost in making a
proper examination of the several cases in which indemnification may be
due. I consequently recommend the creation of a board of commissioners for
the purpose.

By the thirty-fourth article of the treaty of Washington the respective
claims of the United States and of Great Britain in their construction of
the treaty of the 15th of June, 1846, defining the boundary line between
their respective territories, were submitted to the arbitration and award
of His Majesty the Emperor of Germany, to decide which of those claims is
most in accordance with the true interpretation of the treaty of 1846.

His Majesty the Emperor of Germany, having been pleased to undertake the
arbitration, has the earnest thanks of this Government and of the people of
the United States for the labor, pains, and care which he has devoted to
the consideration of this long-pending difference. I have caused an
expression of my thanks to be communicated to His Majesty. Mr. Bancroft,
the representative of this Government at Berlin, conducted the case and
prepared the statement on the part of the United States with the ability
that his past services justified the public in expecting at his hands. As a
member of the Cabinet at the date of the treaty which has given rise to the
discussion between the two Governments, as the minister to Great Britain
when the construction now pronounced unfounded was first advanced, and as
the agent and representative of the Government to present the case and to
receive the award, he has been associated with the question in all of its
phases, and in every stage has manifested a patriotic zeal and earnestness
in maintenance of the claim of the United States. He is entitled to much
credit for the success which has attended the submission.

After a patient investigation of the case and of the statements of each
party, His Majesty the Emperor, on the 21st day of October last, signed his
award in writing, decreeing that the claim of the Government of the United
States, that the boundary line between the territories of Her Britannic
Majesty and the United States should be drawn through the Haro Channel, is
most in accordance with the true interpretation of the treaty concluded on
the 15th of June, 1846, between the Governments of Her Britannic Majesty
and of the United States.

Copies of the "case" presented on behalf of each Government, and of the
"statement in reply" of each, and a translation of the award, are
transmitted herewith.

This award confirms the United States in their claim to the important
archipelago of islands lying between the continent and Vancouvers Island,
which for more than twenty-six years (ever since the ratification of the
treaty) Great Britain has contested, and leaves us, for the first time in
the history of the United States as a nation, without a question of
disputed boundary between our territory and the possessions of Great
Britain on this continent.

It is my grateful duty to acknowledge the prompt, spontaneous action of Her
Majesty's Government in giving effect to the award. In anticipation of any
request from this Government, and before the reception in the United States
of the award signed by the Emperor, Her Majesty had given instructions for
the removal of her troops which had been stationed there and for the
cessation of all exercise or claim of jurisdiction, so as to leave the
United States in the exclusive possession of the lately disputed territory.
I am gratified to be able to announce that the orders for the removal of
the troops have been executed, and that the military joint occupation of
San Juan has ceased. The islands are now in the exclusive possession of the
United States.

It now becomes necessary to complete the survey and determination of that
portion of the boundary line (through the Haro Channel) upon which the
commission which determined the remaining part of the line were unable to
agree. I recommend the appointment of a commission to act jointly with one
which may be named by Her Majesty for that purpose.

Experience of the difficulties attending the determination of our admitted
line of boundary, after the occupation of the territory and its settlement
by those owing allegiance to the respective Governments, points to the
importance of establishing, by natural objects or other monuments, the
actual line between the territory acquired by purchase from Russia and the
adjoining possessions of Her Britannic Majesty. The region is now so
sparsely occupied that no conflicting interests of individuals or of
jurisdiction are likely to interfere to the delay or embarrassment of the
actual location of the line. If deferred until population shall enter and
occupy the territory, some trivial contest of neighbors may again array the
two Governments in antagonism. I therefore recommend the appointment of a
commission, to act jointly with one that may be appointed on the part of
Great Britain, to determine the line between our Territory of Alaska and
the conterminous possessions of Great Britain.

In my last annual message I recommended the legislation necessary on the
part of the United States to bring into operation the articles of the
treaty of Washington of May 8, 1871, relating to the fisheries and to other
matters touching the relations of the United States toward the British
North American possessions, to become operative so soon as the proper
legislation should be had on the part of Great Britain and its
possessions.

That legislation on the part of Great Britain and its possessions had not
then been had, and during the session of Congress a question was raised
which for the time raised a doubt whether any action by Congress in the
direction indicated would become important. This question has since been
disposed of, and I have received notice that the Imperial Parliament and
the legislatures of the provincial governments have passed laws to carry
the provisions of the treaty on the matters referred to into operation. I
therefore recommend your early adoption of the legislation in the same
direction necessary on the part of this Government.

The joint commission for determining the boundary line between the United
States and the British possessions between the Lake of the Woods and the
Rocky Mountains has organized and entered upon its work. It is desirable
that the force be increased, in order that the completion of the survey and
determination of the line may be the sooner attained. To this end I
recommend that a sufficient appropriation be made.

With France, our earliest ally; Russia, the constant and steady friend of
the United States; Germany, with whose Government and people we have so
many causes of friendship and so many common sympathies, and the other
powers of Europe, our relations are maintained on the most friendly terms.

Since my last annual message the exchange has been made of the
ratifications of a treaty with the Austro-Hungarian Empire relating to
naturalization; also of a treaty with the German Empire respecting consuls
and trade-marks; also of a treaty with Sweden and Norway relating to
naturalization; all of which treaties have been duly proclaimed.

Congress at its last session having made an appropriation to defray the
expense of commissioners on the part of the United States to the
International Statistical Congress at St. Petersburg, the persons appointed
in that character proceeded to their destination and attended the sessions
of the congress. Their report shall in due season be laid before you. This
congress meets at intervals of about three years, and has held its sessions
in several of the countries of Europe. I submit to your consideration the
propriety of extending an invitation to the congress to hold its next
meeting in the United States. The Centennial Celebration to be held in 1876
would afford an appropriate occasion for such meeting.

Preparations are making for the international exposition to be held during
the next year in Vienna, on a scale of very great magnitude. The tendency
of these expositions is in the direction of advanced civilization, and of
the elevation of industry and of labor, and of the increase of human
happiness, as well as of greater intercourse and good will between nations.
As this exposition is to be the first which will have been held in eastern
Europe, it is believed that American inventors and manufacturers will be
ready to avail themselves of the opportunity for the presentation of their
productions if encouraged by proper aid and protection.

At the last session of Congress authority was given for the appointment of
one or more agents to represent this Government at the exposition. The
authority thus given has been exercised, but, in the absence of any
appropriation, there is danger that the important benefits which the
occasion offers will in a large degree be lost to citizens of the United
States. I commend the subject strongly to your consideration, and recommend
that an adequate appropriation be made for the purpose.

To further aid American exhibitors at the Vienna Exposition, I would
recommend, in addition to an appropriation of money, that the Secretary of
the Navy be authorized to fit up two naval vessels to transport between our
Atlantic cities and Trieste, or the most convenient port to Vienna, and
back, their articles for exhibition.

Since your last session the President of the Mexican Republic,
distinguished by his high character and by his services to his country, has
died. His temporary successor has now been elected with great unanimity by
the people a proof of confidence on their part in his patriotism and wisdom
which it is believed will be confirmed by the results of his
administration. It is particularly desirable that nothing should be left
undone by the Government of either Republic to strengthen their relations
as neighbors and friends.

It is much to be regretted that many lawless acts continue to disturb the
quiet of the settlements on the border between our territory and that of
Mexico, and that complaints of wrongs to American citizens in various parts
of the country are made. The revolutionary condition in which the
neighboring Republic has so long been involved has in some degree
contributed to this disturbance. It is to be hoped that with a more settled
rule of order through the Republic, which may be expected from the present
Government, the acts of which just complaint is made will cease.

The proceedings of the commission under the convention with Mexico of the
4th of July, 1868, on the subject of claims, have, unfortunately, been
checked by an obstacle, for the removal of which measures have been taken
by the two Governments which it is believed will prove successful.

The commissioners appointed, pursuant to the joint resolution of Congress
of the 7th of May last, to inquire into depredations on the Texan frontier
have diligently made investigations in that quarter. Their report upon the
subject will be communicated to you. Their researches were necessarily
incomplete, partly on account of the limited appropriation made by
Congress. Mexico, on the part of that Government, has appointed a similar
commission to investigate these outrages. It is not announced officially,
but the press of that country states that the fullest investigation is
desired, and that the cooperation of all parties concerned is invited to
secure that end. I therefore recommend that a special appropriation be made
at the earliest day practicable, to enable the commissioners on the part of
the United States to return to their labors without delay.

It is with regret that I have again to announce a continuance of the
disturbed condition of the island of Cuba. No advance toward the
pacification of the discontented part of the population has been made.
While the insurrection has gained no advantages and exhibits no more of the
elements of power or of the prospects of ultimate success than were
exhibited a year ago, Spain, on the other hand, has not succeeded in its
repression, and the parties stand apparently in the same relative attitude
which they have occupied for a long time past.

This contest has lasted now for more than four years. Were its scene at a
distance from our neighborhood, we might be indifferent to its result,
although humanity could not be unmoved by many of its incidents wherever
they might occur. It is, however, at our door.

I can not doubt that the continued maintenance of slavery in Cuba is among
the strongest inducements to the continuance of this strife. A terrible
wrong is the natural cause of a terrible evil. The abolition of slavery and
the introduction of other reforms in the administration of government in
Cuba could not fail to advance the restoration of peace and order. It is
greatly to be hoped that the present liberal Government of Spain will
voluntarily adopt this view.

The law of emancipation, which was passed more than two years since, has
remained unexecuted in the absence of regulations for its enforcement. It
was but a feeble step toward emancipation, but it was the recognition of
right, and was hailed as such, and exhibited Spain in harmony with
sentiments of humanity and of justice and in sympathy with the other powers
of the Christian and civilized world.

Within the past few weeks the regulations for carrying out the law of
emancipation have been announced, giving evidence of the sincerity of
intention of the present Government to carry into effect the law of 1870. I
have not failed to urge the consideration of the wisdom, the policy, and
the justice of a more effective system for the abolition of the great evil
which oppresses a race and continues a bloody and destructive contest close
to our border, as well as the expediency and the justice of conceding
reforms of which the propriety is not questioned.

Deeply impressed with the conviction that the continuance of slavery is one
of the most active causes of the continuance of the unhappy condition in
Cuba, I regret to believe that citizens of the United States, or those
claiming to be such, are large holders in Cuba of what is there claimed as
property, but which is forbidden and denounced by the laws of the United
States. They are thus, in defiance of the spirit of our own laws,
contributing to the continuance of this distressing and sickening contest.
In my last annual message I referred to this subject, and I again recommend
such legislation as may be proper to denounce, and, if not prevent, at
least to discourage American citizens from holding or dealing in slaves.

It is gratifying to announce that the ratifications of the convention
concluded under the auspices of this Government between Spain on the one
part and the allied Republics of the Pacific on the other, providing for an
armistice, have been exchanged. A copy of the instrument is herewith
submitted. It is hoped that this may be followed by a permanent peace
between the same parties.

The differences which at one time threatened the maintenance of peace
between Brazil and the Argentine Republic it is hoped are in the way of
satisfactory adjustment.

With these States, as with the Republics of Central and of South America,
we continue to maintain the most friendly relations.

It is with regret, however, I announce that the Government of Venezuela has
made no further payments on account of the awards under the convention of
the 25th of April, 1866. That Republic is understood to be now almost, if
not quite, tranquilized. It is hoped, therefore, that it will lose no time
in providing for the unpaid balance of its debt to the United States,
which, having originated in injuries to our citizens by Venezuelan
authorities, and having been acknowledged, pursuant to a treaty, in the
most solemn form known among nations, would seem to deserve a preference
over debts of a different origin and contracted in a different manner. This
subject is again recommended to the attention of Congress for such action
as may be deemed proper.

Our treaty relations with Japan remain unchanged. An imposing embassy from
that interesting and progressive nation visited this country during the
year that is passing, but, being unprovided with powers for the signing of
a convention in this country, no conclusion in that direction was reached.
It is hoped, however, that the interchange of opinions which took place
during their stay in this country has led to a mutual appreciation of the
interests which may be promoted when the revision of the existing treaty
shall be undertaken.

In this connection I renew my recommendation of one year ago, that--

To give importance to and to add to the efficiency of our diplomatic
relations with Japan and China, and to further aid in retaining the good
opinion of those peoples, and to secure to the United States its share of
the commerce destined to flow between those nations and the balance of the
commercial world, an appropriation be made to support at least four
American youths in each of those countries, to serve as a part of the
official family of our ministers there. Our representatives would not even
then be placed upon an equality with the representatives of Great Britain
and of some other powers. As now situated, our representatives in Japan and
China have to depend for interpreters and translators upon natives of those
countries, who know our language imperfectly, or procure for the occasion
the services of employees in foreign business houses or the interpreters to
other foreign ministers.

I renew the recommendation made on a previous occasion, of the transfer to
the Department of the Interior, to which they seem more appropriately to
belong, of all the powers and duties in relation to the Territories with
which the Department of State is now charged by law or by custom.

Congress from the beginning of the Government has wisely made provision for
the relief of distressed seamen in foreign countries. No similar provision,
however, has hitherto been made for the relief of citizens in distress
abroad other than seamen. It is understood to be customary with other
governments to authorize consuls to extend such relief to their citizens or
subjects in certain cases. A similar authority and an appropriation to
carry it into effect are recommended in the case of citizens of the United
States destitute or sick under such circumstances. It is well known that
such citizens resort to foreign countries in great numbers. Though most of
them are able to bear the expenses incident to locomotion, there are some
who, through accident or otherwise, become penniless, and have no friends
at home able to succor them. Persons in this situation must either perish,
cast themselves upon the charity of foreigners, or be relieved at the
private charge of our own officers, who usually, even with the most
benevolent dispositions, have nothing to spare for such purposes.

Should the authority and appropriation asked for be granted, care will be
taken so to carry the beneficence of Congress into effect that it shall not
be unnecessarily or unworthily bestowed. TREASURY.

The moneys received and covered into the Treasury during the fiscal year
ended June 30, 1872, were:

From customs - $216,370,286.77

From sales of public lands - 2,575,714.19

From internal revenue - 130,642,177.72

From tax on national-bank circulation, etc - 6,523,396.39

From Pacific railway companies - 749,861.87

From customs fines, etc - 1,136,442.34

From fees--consular, patent, lands, etc - 2,284,095.92

From miscellaneous - 412,254.71 -