To the Senate and House of Representatives:

It gives me pleasure to extend greeting to the Fifty-fifth Congress,
assembled in regular session at the seat of Government, with many of whose
Senators and Representatives I have been associated in the legislative
service. Their meeting occurs under felicitous conditions, justifying
sincere congratulation and calling for our grateful acknowledgment to a
beneficent Providence which has so signally blessed and prospered us as a
nation. Peace and good will with all the nations of the earth continue
unbroken.

A matter of genuine satisfaction is the growing feeling of fraternal regard
and unification of all sections of our country, the incompleteness of which
has too long delayed realization of the highest blessings of the Union. The
spirit of patriotism is universal and is ever increasing in fervor. The
public questions which now most engross us are lifted far above either
partisanship, prejudice, or former sectional differences. They affect every
part of our common country alike and permit of no division on ancient
lines. Questions of foreign policy, of revenue, the soundness of the
currency, the inviolability of national obligations, the improvement of the
public service, appeal to the individual conscience of every earnest
citizen to whatever party he belongs or in whatever section of the country
he may reside.

The extra session of this Congress which closed during July last enacted
important legislation, and while its full effect has not yet been realized,
what it has already accomplished assures us of its timeliness and wisdom.
To test its permanent value further time will be required, and the people,
satisfied with its operation and results thus far, are in no mind to
withhold from it a fair trial.

Tariff legislation having been settled by the extra session of Congress,
the question next pressing for consideration is that of the currency.

The work of putting our finances upon a sound basis, difficult as it may
seem, will appear easier when we recall the financial operations of the
Government since 1866. On the 30th day of June of that year we had
outstanding demand liabilities in the sum of $728,868,447.41. On the 1st of
January, 1879, these liabilities had been reduced to $443,889,495.88. Of our
interest-bearing obligations, the figures are even more striking. On July
1, 1866, the principal of the interest-bearing debt of the Government was
$2,332,331,208. On the 1st day of July, 1893, this sum had been reduced to
$585,137,100, or an aggregate reduction of $1,747,294,108. The
interest-bearing debt of the United States on the 1st day of December,
1897, was $847,365,620. The Government money now outstanding (December 1)
consists of $346,681,016 of United States notes, $107,793,280 of Treasury
notes issued by authority of the law of 1890, $384,963,504 of silver
certificates, and $61,280,761 of standard silver dollars.

With the great resources of the Government, and with the honorable example
of the past before us, we ought not to hesitate to enter upon a currency
revision which will make our demand obligations less onerous to the
Government and relieve our financial laws from ambiguity and doubt.

The brief review of what was accomplished from the close of the war to
1893, makes unreasonable and groundless any distrust either of our
financial ability or soundness; while the situation from 1893 to 1897 must
admonish Congress of the immediate necessity of so legislating as to make
the return of the conditions then prevailing impossible.

There are many plans proposed as a remedy for the evil. Before we can find
the true remedy we must appreciate the real evil. It is not that our
currency of every kind is not good, for every dollar of it is good; good
because the Government's pledge is out to keep it so, and that pledge will
not be broken. However, the guaranty of our purpose to keep the pledge will
be best shown by advancing toward its fulfillment.

The evil of the present system is found in the great cost to the Government
of maintaining the parity of our different forms of money, that is, keeping
all of them at par with gold. We surely cannot be longer heedless of the
burden this imposes upon the people, even under fairly prosperous
conditions, while the past four years have demonstrated that it is not only
an expensive charge upon the Government, but a dangerous menace to the
National credit.

It is manifest that we must devise some plan to protect the Government
against bond issues for repeated redemptions. We must either curtail the
opportunity for speculation, made easy by the multiplied redemptions of our
demand obligations, or increase the gold reserve for their redemption. We
have $900,000,000 of currency which the Government by solemn enactment has
undertaken to keep at par with gold. Nobody is obliged to redeem in gold
but the Government. The banks are not required to redeem in gold. The
Government is obliged to keep equal with gold all its outstanding currency
and coin obligations, while its receipts are not required to be paid in
gold. They are paid in every kind of money but gold, and the only means by
which the Government can with certainty get gold is by borrowing. It can
get it in no other way when it most needs it. The Government without any
fixed gold revenue is pledged to maintain gold redemption, which it has
steadily and faithfully done, and which, under the authority now given, it
will continue to do.

The law which requires the Government, after having redeemed its United
States notes, to pay them out again as current funds, demands a constant
replenishment of the gold reserve. This is especially so in times of
business panic and when the revenues are insufficient to meet the expenses
of the Government. At such times the Government has no other way to supply
its deficit and maintain redemption but through the increase of its bonded
debt, as during the Administration of my predecessor, when $262,315,400 of
four-and-a-half per cent bonds were issued and sold and the proceeds used
to pay the expenses of the Government in excess of the revenues and sustain
the gold reserve. While it is true that the greater part of the proceeds of
these bonds were used to supply deficient revenues, a considerable portion
was required to maintain the gold reserve.

With our revenues equal to our expenses, there would be no deficit
requiring the issuance of bonds. But if the gold reserve falls below
$100,000,000, how will it be replenished except by selling more bonds? Is
there any other way practicable under existing law? The serious question
then is, Shall we continue the policy that has been pursued in the past;
that is, when the gold reserve reaches the point of danger, issue more
bonds and supply the needed gold, or shall we provide other means to
prevent these recurring drains upon the gold reserve? If no further
legislation is had and the policy of selling bonds is to be continued, then
Congress should give the Secretary of the Treasury authority to sell bonds
at long or short periods, bearing a less rate of interest than is now
authorized by law.

I earnestly recommend, as soon as the receipts of the Government are quite
sufficient to pay all the expenses of the Government, 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 be followed by another
bond issue to redeem them--another interest-bearing debt to redeem a
non-interest-bearing debt.

In my view, it is of the utmost importance that the Government should be
relieved from the burden of providing all the gold required for exchanges
and export. This responsibility is alone borne by the Government, without
any of the usual and necessary banking powers to help itself. The banks do
not feel the strain of gold redemption. The whole strain rests upon the
Government, and the size of the gold reserve in the Treasury has come to
be, with or without reason, the signal of danger or of security. This ought
to be stopped.

If we are to have an era of prosperity in the country, with sufficient
receipts for the expenses of the Government, we may feel no immediate
embarrassment from our present currency; but the danger still exists, and
will be ever present, menacing us so long as the existing system continues.
And, besides, it is in times of adequate revenues and business tranquillity
that the Government should prepare for the worst. We cannot avoid, without
serious consequences, the wise consideration and prompt solution of this
question.

The Secretary of the Treasury has outlined a plan, in great detail, for the
purpose of removing the threatened recurrence of a depleted gold reserve
and save us from future embarrassment on that account. To this plan I
invite your careful consideration.

I concur with the Secretary of the Treasury in his recommendation that
National banks be allowed to issue notes to the face value of the bonds
which they have deposited for circulation, and that the tax on circulating
notes secured by deposit of such bonds be reduced to one-half of one per
cent per annum. I also join him in recommending that authority be given for
the establishment of National banks with a minimum capital of $25,000. This
will enable the smaller villages and agricultural regions of the country to
be supplied with currency to meet their needs.

I recommend that the issue of National bank notes be restricted to the
denomination of ten dollars and upwards. If the suggestions I have herein
made shall have the approval of Congress, then I would recommend that
National banks be required to redeem their notes in gold.

The most important problem with which this Government is now called upon to
deal pertaining to its foreign relations concerns its duty toward Spain and
the Cuban insurrection. Problems and conditions more or less in common with
those now existing have confronted this Government at various times in the
past. The story of Cuba for many years has been one of unrest, growing
discontent, an effort toward a larger enjoyment of liberty and
self-control, of organized resistance to the mother country, of depression
after distress and warfare, and of ineffectual settlement to be followed by
renewed revolt. For no enduring period since the enfranchisement of the
continental possessions of Spain in the Western Continent has the condition
of Cuba or the policy of Spain toward Cuba not caused concern to the United
States.

The prospect from time to time that the weakness of Spain's hold upon the
island and the political vicissitudes and embarrassments of the home
Government might lead to the transfer of Cuba to a continental power called
forth between 1823 and 1860 various emphatic declarations of the policy of
the United States to permit no disturbance of Cuba's connection with Spain
unless in the direction of independence or acquisition by us through
purchase, nor has there been any change of this declared policy since upon
the part of the Government.

The revolution which began in 1868 lasted for ten years despite the
strenuous efforts of the successive peninsular governments to suppress it.
Then as now the Government of the United States testified its grave concern
and offered its aid to put an end to bloodshed in Cuba. The overtures made
by General Grant were refused and the war dragged on, entailing great loss
of life and treasure and increased injury to American interests, besides
throwing enhanced burdens of neutrality upon this Government. In 1878 peace
was brought about by the truce of Zanjon, obtained by negotiations between
the Spanish commander, Martinez de Campos, and the insurgent leaders.

The present insurrection broke out in February, 1895. It is not my purpose
at this time to recall its remarkable increase or to characterize its
tenacious resistance against the enormous forces massed against it by
Spain. The revolt and the efforts to subdue it carried destruction to every
quarter of the island, developing wide proportions and defying the efforts
of Spain for its suppression. The civilized code of war has been
disregarded, no less so by the Spaniards than by the Cubans.

The existing conditions can not but fill this Government and the American
people with the gravest apprehension. There is no desire on the part of our
people to profit by the misfortunes of Spain. We have only the desire to
see the Cubans prosperous and contented, enjoying that measure of
self-control which is the inalienable right of man, protected in their
right to reap the benefit of the exhaustless treasures of their country.

The offer made by my predecessor in April, 1896, tendering the friendly
offices of this Government, failed. Any mediation on our part was not
accepted. In brief, the answer read: "There is no effectual way to pacify
Cuba unless it begins with the actual submission of the rebels to the
mother country." Then only could Spain act in the promised direction, of
her own motion and after her own plans.

The cruel policy of concentration was initiated February 16, 1896. The
productive districts controlled by the Spanish armies were depopulated. The
agricultural inhabitants were herded in and about the garrison towns, their
lands laid waste and their dwellings destroyed. This policy the late
cabinet of Spain justified as a necessary measure of war and as a means of
cutting off supplies from the insurgents. It has utterly failed as a war
measure. It was not civilized warfare. It was extermination.

Against this abuse of the rights of war I have felt constrained on repeated
occasions to enter the firm and earnest protest of this Government. There
was much of public condemnation of the treatment of American citizens by
alleged illegal arrests and long imprisonment awaiting trial or pending
protracted judicial proceedings. I felt it my first duty to make instant
demand for the release or speedy trial of all American citizens under
arrest. Before the change of the Spanish cabinet in October last twenty-two
prisoners, citizens of the United States, had been given their freedom.

For the relief of our own citizens suffering because of the conflict the
aid of Congress was sought in a special message, and under the
appropriation of May 24, 1897, effective aid has been given to American
citizens in Cuba, many of them at their own request having been returned to
the United States.

The instructions given to our new minister to Spain before his departure
for his post directed him to impress upon that Government the sincere wish
of the United States to lend its aid toward the ending of the war in Cuba
by reaching a peaceful and lasting result, just and honorable alike to
Spain and to the Cuban people. These instructions recited the character and
duration of the contest, the widespread losses it entails, the burdens and
restraints it imposes upon us, with constant disturbance of national
interests, and the injury resulting from an indefinite continuance of this
state of things. It was stated that at this juncture our Government was
constrained to seriously inquire if the time was not ripe when Spain of her
own volition, moved by her own interests and every sentiment of humanity,
should put a stop to this destructive war and make proposals of settlement
honorable to herself and just to her Cuban colony. It was urged that as a
neighboring nation, with large interests in Cuba, we could be required to
wait only a reasonable time for the mother country to establish its
authority and restore peace and order within the borders of the island;
that we could not contemplate an indefinite period for the accomplishment
of this result.

No solution was proposed to which the slightest idea of humiliation to
Spain could attach, and, indeed, precise proposals were withheld to avoid
embarrassment to that Government. All that was asked or expected was that
some safe way might be speedily provided and permanent peace restored. It
so chanced that the consideration of this offer, addressed to the same
Spanish administration which had declined the tenders of my predecessor,
and which for more than two years had poured men and treasure into Cuba in
the fruitless effort to suppress the revolt, fell to others. Between the
departure of General Woodford, the new envoy, and his arrival in Spain the
statesman who had shaped the policy of his country fell by the hand of an
assassin, and although the cabinet of the late premier still held office
and received from our envoy the proposals he bore, that cabinet gave place
within a few days thereafter to a new administration, under the leadership
of Sagasta.

The reply to our note was received on the 23d day of October. It is in the
direction of a better understanding. It appreciates the friendly purposes
of this Government. It admits that our country is deeply affected by the
war in Cuba and that its desires for peace are just. It declares that the
present Spanish government is bound by every consideration to a change of
policy that should satisfy the United States and pacify Cuba within a
reasonable time. To this end Spain has decided to put into effect the
political reforms heretofore advocated by the present premier, without
halting for any consideration in the path which in its judgment leads to
peace. The military operations, it is said, will continue, but will be
humane and conducted with all regard for private rights, being accompanied
by political action leading to the autonomy of Cuba while guarding Spanish
sovereignty. This, it is claimed, will result in investing Cuba with a
distinct personality, the island to be governed by an executive and by a
local council or chamber, reserving to Spain the control of the foreign
relations, the army and navy, and the judicial administration. To
accomplish this the present government proposes to modify existing
legislation by decree, leaving the Spanish Cortes, with the aid of Cuban
senators and deputies, to solve the economic problem and properly
distribute the existing debt.

In the absence of a declaration of the measures that this Government
proposes to take in carrying out its proffer of good offices, it suggests
that Spain be left free to conduct military operations and grant political
reforms, while the United States for its part shall enforce its neutral
obligations and cut off the assistance which it is asserted the insurgents
receive from this country. The supposition of an indefinite prolongation of
the war is denied. It is asserted that the western provinces are already
well-nigh reclaimed, that the planting of cane and tobacco therein has been
resumed, and that by force of arms and new and ample reforms very early and
complete pacification is hoped for.

The immediate amelioration of existing conditions under the new
administration of Cuban affairs is predicted, and therewithal the
disturbance and all occasion for any change of attitude on the part of the
United States. Discussion of the question of the international duties and
responsibilities of the United States as Spain understands them is
presented, with an apparent disposition to charge us with failure in this
regard. This charge is without any basis in fact. It could not have been
made if Spain had been cognizant of the constant efforts this Government
has made, at the cost of millions and by the employment of the
administrative machinery of the nation at command, to perform its full duty
according to the law of nations. That it has successfully prevented the
departure of a single military expedition or armed vessel from our shores
in violation of our laws would seem to be a sufficient answer. But of this
aspect of the Spanish note it is not necessary to speak further now. Firm
in the conviction of a wholly performed obligation, due response to this
charge has been made in diplomatic course.

Throughout all these horrors and dangers to our own peace this Government
has never in any way abrogated its sovereign prerogative of reserving to
itself the determination of its policy and course according to its own high
sense of right and in consonance with the dearest interests and convictions
of our own people should the prolongation of the strife so demand.

Of the untried measures there remain only: Recognition of the insurgents as
belligerents; recognition of the independence of Cuba; neutral intervention
to end the war by imposing a rational compromise between the contestants,
and intervention in favor of one or the other party. I speak not of
forcible annexation, for that can not be thought of. That, by our code of
morality, would be criminal aggression.

Recognition of the belligerency of the Cuban insurgents has often been
canvassed as a possible, if not inevitable, step both in regard to the
previous ten years' struggle and during the present war. I am not unmindful
that the two Houses of Congress in the spring of 1896 expressed the opinion
by concurrent resolution that a condition of public war existed requiring
or justifying the recognition of a state of belligerency in Cuba, and
during the extra session the Senate voted a joint resolution of like
import, which, however, was not brought to a vote in the House of
Representatives. In the presence of these significant expressions of the
sentiment of the legislative branch it behooves the Executive to soberly
consider the conditions under which so important a measure must needs rest
for justification. It is to be seriously considered whether the Cuban
insurrection possesses beyond dispute the attributes of statehood, which
alone can demand the recognition of belligerency in its favor. Possession,
in short, of the essential qualifications of sovereignty by the insurgents
and the conduct of the war by them according to the received code of war
are no less important factors toward the determination of the problem of
belligerency than are the influences and consequences of the struggle upon
the internal polity of the recognizing state.

The wise utterances of President Grant in his memorable message of December
7, 1875, are signally relevant to the present situation in Cuba, and it may
be wholesome now to recall them. At that time a ruinous conflict had for
seven years wasted the neighboring island. During all those years an utter
disregard of the laws of civilized warfare and of the just demands of
humanity, which called forth expressions of condemnation from the nations
of Christendom, continued unabated. Desolation and ruin pervaded that
productive region, enormously affecting the commerce of all commercial
nations, but that of the United States more than any other by reason of
proximity and larger trade and intercourse. At that juncture General Grant
uttered these words, which now, as then, sum up the elements of the
problem: A recognition of the independence of Cuba being, in my opinion,
impracticable and indefensible, the question which next presents itself is
that of the recognition of belligerent rights in the parties to the
contest.

In a former message to Congress I had occasion to consider this question,
and reached the conclusion that the conflict in Cuba, dreadful and
devastating as were its incidents, did not rise to the fearful dignity of
war. It is possible that the acts of foreign powers, and even acts of Spain
herself, of this very nature, might be pointed to in defense of such
recognition. But now, as in its past history, the United States should
carefully avoid the false lights which might lead it into the mazes of
doubtful law and of questionable propriety, and adhere rigidly and sternly
to the rule, which has been its guide, of doing only that which is right
and honest and of good report. The question of according or of withholding
rights of belligerency must be judged in every case in view of the
particular attending facts. Unless justified by necessity, it is always,
and justly, regarded as an unfriendly act and a gratuitous demonstration of
moral support to the rebellion. It is necessary, and it is required, when
the interests and rights of another government or of its people are so far
affected by a pending civil conflict as to require a definition of its
relations to the parties thereto. But this conflict must be one which will
be recognized in the sense of international law as war. Belligerence, too,
is a fact. The mere existence of contending armed bodies and their
occasional conflicts do not constitute war in the sense referred to.
Applying to the existing condition of affairs in Cuba the tests recognized
by publicists and writers on international law, and which have been
observed by nations of dignity, honesty, and power when free from sensitive
or selfish and unworthy motives, I fail to find in the insurrection the
existence of such a substantial political organization, real, palpable, and
manifest to the world, having the forms and capable of the ordinary
functions of government toward its own people and to other states, with
courts for the administration of justice, with a local habitation,
possessing such organization of force, such material, such occupation of
territory, as to take the contest out of the category of a mere rebellious
insurrection or occasional skirmishes and place it on the terrible footing
of war, to which a recognition of belligerency would aim to elevate it. The
contest, moreover, is solely on land; the insurrection has not possessed
itself of a single seaport whence it may send forth its flag, nor has it
any means of communication with foreign powers except through the military
lines of its adversaries. No apprehension of any of those sudden and
difficult complications which a war upon the ocean is apt to precipitate
upon the vessels, both commercial and national, and upon the consular
officers of other powers calls for the definition of their relations to the
parties to the contest. Considered as a question of expediency, I regard
the accordance of belligerent rights still to be as unwise and premature as
I regard it to be, at present, indefensible as a measure of right. Such
recognition entails upon the country according the rights which flow from
it difficult and complicated duties, and requires the exaction from the
contending parties of the strict observance of their rights and
obligations. It confers the right of search upon the high seas by vessels
of both parties; it would subject the carrying of arms and munitions of
war, which now may be transported freely and without interruption in the
vessels of the United States, to detention and to possible seizure; it
would give rise to countless vexatious questions, would release the parent
Government from responsibility for acts done by the insurgents, and would
invest Spain with the right to exercise the supervision recognized by our
treaty of 1795 over our commerce on the high seas, a very large part of
which, in its traffic between the Atlantic and the Gulf States and between
all of them and the States on the Pacific, passes through the waters which
wash the shores of Cuba. The exercise of this supervision could scarce fail
to lead, if not to abuses, certainly to collisions perilous to the peaceful
relations of the two States. There can be little doubt to what result such
supervision would before long draw this nation. It would be unworthy of the
United States to inaugurate the possibilities of such result by measures of
questionable right or expediency or by any indirection. Turning to the
practical aspects of a recognition of belligerency and reviewing its
inconveniences and positive dangers, still further pertinent considerations
appear. In the code of nations there is no such thing as a naked
recognition of belligerency, unaccompanied by the assumption of
international neutrality. Such recognition, without more, will not confer
upon either party to a domestic conflict a status not theretofore actually
possessed or affect the relation of either party to other states. The act
of recognition usually takes the form of a solemn proclamation of
neutrality, which recites the de facto condition of belligerency as its
motive. It announces a domestic law of neutrality in the declaring state.
It assumes the international obligations of a neutral in the presence of a
public state of war. It warns all citizens and others within the
jurisdiction of the proclaimant that they violate those rigorous
obligations at their own peril and can not expect to be shielded from the
consequences. The right of visit and search on the seas and seizure of
vessels and cargoes and contraband of war and good prize under admiralty
law must under international law be admitted as a legitimate consequence of
a proclamation of belligerency. While according the equal belligerent
rights defined by public law to each party in our ports disfavors would be
imposed on both, which, while nominally equal, would weigh heavily in
behalf of Spain herself. Possessing a navy and controlling the ports of
Cuba, her maritime rights could be asserted not only for the military
investment of the island, but up to the margin of our own territorial
waters, and a condition of things would exist for which the Cubans within
their own domain could not hope to create a parallel, while its creation
through aid or sympathy from within our domain would be even more
impossible than now, with the additional obligations of international
neutrality we would perforce assume.

The enforcement of this enlarged and onerous code of neutrality would only
be influential within our own jurisdiction by land and sea and applicable
by our own instrumentalities. It could impart to the United States no
jurisdiction between Spain and the insurgents. It would give the United
States no right of intervention to enforce the conduct of the strife within
the paramount authority of Spain according to the international code of
war.

For these reasons I regard the recognition of the belligerency of the Cuban
insurgents as now unwise, and therefore inadmissible. Should that step
hereafter be deemed wise as a measure of right and duty, the Executive will
take it.

Intervention upon humanitarian grounds has been frequently suggested and
has not failed to receive my most anxious and earnest consideration. But
should such a step be now taken, when it is apparent that a hopeful change
has supervened in the policy of Spain toward Cuba? A new government has
taken office in the mother country. It is pledged in advance to the
declaration that all the effort in the world can not suffice to maintain
peace in Cuba by the bayonet; that vague promises of reform after
subjugation afford no solution of the insular problem; that with a
substitution of commanders must come a change of the past system of warfare
for one in harmony with a new policy, which shall no longer aim to drive
the Cubans to the "horrible alternative of taking to the thicket or
succumbing in misery;" that reforms must be instituted in accordance with
the needs and circumstances of the time, and that these reforms, while
designed to give full autonomy to the colony and to create a virtual entity
and self-controlled administration, shall yet conserve and affirm the
sovereignty of Spain by a just distribution of powers and burdens upon a
basis of mutual interest untainted by methods of selfish expediency.

The first acts of the new government lie in these honorable paths. The
policy of cruel rapine and extermination that so long shocked the universal
sentiment of humanity has been reversed. Under the new military commander a
broad clemency is proffered. Measures have already been set on foot to
relieve the horrors of starvation. The power of the Spanish armies, it is
asserted, is to be used not to spread ruin and desolation, but to protect
the resumption of peaceful agricultural pursuits and productive industries.
That past methods are futile to force a peace by subjugation is freely
admitted, and that ruin without conciliation must inevitably fail to win
for Spain the fidelity of a contented dependency.

Decrees in application of the foreshadowed reforms have already been
promulgated. The full text of these decrees has not been received, but as
furnished in a telegraphic summary from our minister are: All civil and
electoral rights of peninsular Spaniards are, in virtue of existing
constitutional authority, forthwith extended to colonial Spaniards. A
scheme of autonomy has been proclaimed by decree, to become effective upon
ratification by the Cortes. It creates a Cuban parliament, which, with the
insular executive, can consider and vote upon all subjects affecting local
order and interests, possessing unlimited powers save as to matters of
state, war, and the navy, as to which the Governor-General acts by his own
authority as the delegate of the central Government. This parliament
receives the oath of the Governor-General to preserve faithfully the
liberties and privileges of the colony, and to it the colonial secretaries
are responsible. It has the right to propose to the central Government,
through the Governor-General, modifications of the national charter and to
invite new projects of law or executive measures in the interest of the
colony.

Besides its local powers, it is competent, first, to regulate electoral
registration and procedure and prescribe the qualifications of electors and
the manner of exercising suffrage; second, to organize courts of justice
with native judges from members of the local bar; third, to frame the
insular budget, both as to expenditures and revenues, without limitation of
any kind, and to set apart the revenues to meet the Cuban share of the
national budget, which latter will be voted by the national Cortes with the
assistance of Cuban senators and deputies; fourth, to initiate or take part
in the negotiations of the national Government for commercial treaties
which may affect Cuban interests; fifth, to accept or reject commercial
treaties which the national Government may have concluded without the
participation of the Cuban government; sixth, to frame the colonial tariff,
acting in accord with the peninsular Government in scheduling articles of
mutual commerce between the mother country and the colonies. Before
introducing or voting upon a bill the Cuban government or the chambers will
lay the project before the central Government and hear its opinion thereon,
all the correspondence in such regard being made public. Finally, all
conflicts of jurisdiction arising between the different municipal,
provincial, and insular assemblies, or between the latter and the insular
executive power, and which from their nature may not be referable to the
central Government for decision, shall be submitted to the courts.

That the government of Sagasta has entered upon a course from which
recession with honor is impossible can hardly be questioned; that in the
few weeks it has existed it has made earnest of the sincerity of its
professions is undeniable. I shall not impugn its sincerity, nor should
impatience be suffered to embarrass it in the task it has undertaken. It is
honestly due to Spain and to our friendly relations with Spain that she
should be given a reasonable chance to realize her expectations and to
prove the asserted efficacy of the new order of things to which she stands
irrevocably committed. She has recalled the commander whose brutal orders
inflamed the American mind and shocked the civilized world. She has
modified the horrible order of concentration and has undertaken to care for
the helpless and permit those who desire to resume the cultivation of their
fields to do so, and assures them of the protection of the Spanish
Government in their lawful occupations. She has just released the
Competitor prisoners, heretofore sentenced to death, and who have been the
subject of repeated diplomatic correspondence during both this and the
preceding Administration.

Not a single American citizen is now in arrest or confinement in Cuba of
whom this Government has any knowledge. The near future will demonstrate
whether the indispensable condition of a righteous peace, just alike to the
Cubans and to Spain as well as equitable to all our interests so intimately
involved in the welfare of Cuba, is likely to be attained. If not, the
exigency of further and other action by the United States will remain to be
taken. When that time comes that action will be determined in the line of
indisputable right and duty. It will be faced, without misgiving or
hesitancy in the light of the obligation this Government owes to itself, to
the people who have confided to it the protection of their interests and
honor, and to humanity.

Sure of the right, keeping free from all offense ourselves, actuated only
by upright and patriotic considerations, moved neither by passion nor
selfishness, the Government will continue its watchful care over the rights
and property of American citizens and will abate none of its efforts to
bring about by peaceful agencies a peace which shall be honorable and
enduring. If it shall hereafter appear to be a duty imposed by our
obligations to ourselves, to civilization and humanity to intervene with
force, it shall be without fault on our part and only because the necessity
for such action will be so clear as to command the support and approval of
the civilized world.

By a special message dated the 16th day of June last, I laid before the
Senate a treaty signed that day by the plenipotentiaries of the United
States and of the Republic of Hawaii, having for its purpose the
incorporation of the Hawaiian Islands as an integral part of the United
States and under its sovereignty. The Senate having removed the injunction
of secrecy, although the treaty is still pending before that body, the
subject may be properly referred to in this Message because the necessary
action of the Congress is required to determine by legislation many details
of the eventual union should the fact of annexation be accomplished, as I
believe it should be.

While consistently disavowing from a very early period any aggressive
policy of absorption in regard to the Hawaiian group, a long series of
declarations through three-quarters of a century has proclaimed the vital
interest of the United States in the independent life of the Islands and
their intimate commercial dependence upon this country. At the same time it
has been repeatedly asserted that in no event could the entity of Hawaiian
statehood cease by the passage of the Islands under the domination or
influence of another power than the United States. Under these
circumstances, the logic of events required that annexation, heretofore
offered but declined, should in the ripeness of time come about as the
natural result of the strengthening ties that bind us to those Islands, and
be realized by the free will of the Hawaiian State.

That treaty was unanimously ratified without amendment by the Senate and
President of the Republic of Hawaii on the 10th of September last, and only
awaits the favorable action of the American Senate to effect the complete
absorption of the Islands into the domain of the United States. What the
conditions of such a union shall be, the political relation thereof to the
United States, the character of the local administration, the quality and
degree of the elective franchise of the inhabitants, the extension of the
federal laws to the territory or the enactment of special laws to fit the
peculiar condition thereof, the regulation if need be of the labor system
therein, are all matters which the treaty has wisely relegated to the
Congress.

If the treaty is confirmed as every consideration of dignity and honor
requires, the wisdom of Congress will see to it that, avoiding abrupt
assimilation of elements perhaps hardly yet fitted to share in the highest
franchises of citizenship, and having due regard to the geographical
conditions, the most just provisions for self-rule in local matters with
the largest political liberties as an integral part of our Nation will be
accorded to the Hawaiians. No less is due to a people who, after nearly
five years of demonstrated capacity to fulfill the obligations of
self-governing statehood, come of their free will to merge their destinies
in our body-politic.

The questions which have arisen between Japan and Hawaii by reason of the
treatment of Japanese laborers emigrating to the Islands under the
Hawaiian-Japanese convention of 1888, are in a satisfactory stage of
settlement by negotiation. This Government has not been invited to mediate,
and on the other hand has sought no intervention in that matter, further
than to evince its kindliest disposition toward such a speedy and direct
adjustment by the two sovereign States in interest as shall comport with
equity and honor. It is gratifying to learn that the apprehensions at first
displayed on the part of Japan lest the cessation of Hawaii's national life
through annexation might impair privileges to which Japan honorably laid
claim, have given place to confidence in the uprightness of this
Government, and in the sincerity of its purpose to deal with all possible
ulterior questions in the broadest spirit of friendliness.

As to the representation of this Government to Nicaragua, Salvador, and
Costa Rica, I have concluded that Mr. William L. Merry, confirmed as
minister of the United States to the States of Nicaragua, Salvador and
Costa Rica, shall proceed to San Jose, Costa Rica, and there temporarily
establish the headquarters of the United States to those three States. I
took this action for what I regarded as the paramount interests of this
country. It was developed upon an investigation by the Secretary of State
that the Government of Nicaragua, while not unwilling to receive Mr. Merry
in his diplomatic quality, was unable to do so because of the compact
concluded June 20, 1895, whereby that Republic and those of Salvador and
Honduras, forming what is known as the Greater Republic of Central America,
had surrendered to the representative Diet thereof their right to receive
and send diplomatic agents. The Diet was not willing to accept him because
he was not accredited to that body. I could not accredit him to that body
because the appropriation law of Congress did not permit it. Mr. Baker, the
present minister at Managua, has been directed to present his letters of
recall.

Mr. W. Godfrey Hunter has likewise been accredited to the Governments of
Guatemala and Honduras, the same as his predecessor. Guatemala is not a
member of the Greater Republic of Central America, but Honduras is. Should
this latter Government decline to receive him, he has been instructed to
report this fact to his Government and await its further instructions.

A subject of large importance to our country, and increasing appreciation
on the part of the people, is the completion of the great highway of trade
between the Atlantic and Pacific, known as the Nicaragua Canal. Its utility
and value to American commerce is universally admitted. The Commission
appointed under date of July 24 last "to continue the surveys and
examinations authorized by the act approved March 2, 1895," in regard to
"the proper route, feasibility, and cost of construction of the Nicaragua
Canal, with a view of making complete plans for the entire work of
construction of such canal," is now employed in the undertaking. In the
future I shall take occasion to transmit to Congress the report of this
Commission, making at the same time such further suggestions as may then
seem advisable.

Under the provisions of the act of Congress approved March 3, 1897, for the
promotion of an international agreement respecting bimetallism, I appointed
on the 14th day of April, 1897, Hon. Edward O. Wolcott of Colorado, Hon.
Adlai E. Stevenson of Illinois, and Hon. Charles J. Paine of Massachusetts,
as special envoys to represent the United States. They have been diligent
in their efforts to secure the concurrence and cooperation of European
countries in the international settlement of the question, but up to this
time have not been able to secure an agreement contemplated by their
mission.

The gratifying action of our great sister Republic of France in joining
this country in the attempt to bring about an agreement among the principal
commercial nations of Europe, whereby a fixed and relative value between
gold and silver shall be secured, furnishes assurance that we are not alone
among the larger nations of the world in realizing the international
character of the problem and in the desire of reaching some wise and
practical solution of it. The British Government has published a resume of
the steps taken jointly by the French ambassador in London and the special
envoys of the United States, with whom our ambassador at London actively
co-operated in the presentation of this subject to Her Majesty's
Government. This will be laid before Congress.

Our special envoys have not made their final report, as further
negotiations between the representatives of this Government and the
Governments of other countries are pending and in contemplation. They
believe that doubts which have been raised in certain quarters respecting
the position of maintaining the stability of the parity between the metals
and kindred questions may yet be solved by further negotiations.

Meanwhile it gives me satisfaction to state that the special envoys have
already demonstrated their ability and fitness to deal with the subject,
and it is to be earnestly hoped that their labors may result in an
international agreement which will bring about recognition of both gold and
silver as money upon such terms, and with such safeguards as will secure
the use of both metals upon a basis which shall work no injustice to any
class of our citizens.

In order to execute as early as possible the provisions of the third and
fourth sections of the Revenue Act, approved July 24, 1897, I appointed the
Hon. John A. Kasson of Iowa, a special commissioner plenipotentiary to
undertake the requisite negotiations with foreign countries desiring to
avail themselves of these provisions. The negotiations are now proceeding
with several Governments, both European and American. It is believed that
by a careful exercise of the powers conferred by that Act some grievances
of our own and of other countries in our mutual trade relations may be
either removed, or largely alleviated, and that the volume of our
commercial exchanges may be enlarged, with advantage to both contracting
parties.

Most desirable from every standpoint of national interest and patriotism is
the effort to extend our foreign commerce. To this end our merchant marine
should be improved and enlarged. We should do our full share of the
carrying trade of the world. We do not do it now. We should be the laggard
no longer. The inferiority of our merchant marine is justly humiliating to
the national pride. The Government by every proper constitutional means,
should aid in making our ships familiar visitors at every commercial port
of the world, thus opening up new and valuable markets to the surplus
products of the farm and the factory.

The efforts which had been made during the two previous years by my
predecessor to secure better protection to the fur seals in the North
Pacific Ocean and Bering Sea, were renewed at an early date by this
Administration, and have been pursued with earnestness. Upon my invitation,
the Governments of Japan and Russia sent delegates to Washington, and an
international conference was held during the months of October and November
last, wherein it was unanimously agreed that under the existing regulations
this species of useful animals was threatened with extinction, and that an
international agreement of all the interested powers was necessary for
their adequate protection.

The Government of Great Britain did not see proper to be represented at
this conference, but subsequently sent to Washington, as delegates, the
expert commissioners of Great Britain and Canada who had, during the past
two years, visited the Pribilof Islands, and who met in conference similar
commissioners on the part of the United States. The result of this
conference was an agreement on important facts connected with the condition
of the seal herd, heretofore in dispute, which should place beyond
controversy the duty of the Governments concerned to adopt measures without
delay for the preservation and restoration of the herd. Negotiations to
this end are now in progress, the result of which I hope to be able to
report to Congress at an early day.

International arbitration cannot be omitted from the list of subjects
claiming our consideration. Events have only served to strengthen the
general views on this question expressed in my inaugural address. The best
sentiment of the civilized world is moving toward the settlement of
differences between nations without resorting to the horrors of war.
Treaties embodying these humane principles on broad lines, without in any
way imperiling our interests or our honor, shall have my constant
encouragement.

The acceptance by this Government of the invitation of the Republic of
France to participate in the Universal Exposition of 1900, at Paris, was
immediately followed by the appointment of a special commissioner to
represent the United States in the proposed exposition, with special
reference to the securing of space for an adequate exhibit on behalf of the
United States.

The special commissioner delayed his departure for Paris long enough to
ascertain the probable demand for space by American exhibitors. His
inquiries developed an almost unprecedented interest in the proposed
exposition, and the information thus acquired enabled him to justify an
application for a much larger allotment of space for the American section
than had been reserved by the exposition authorities. The result was
particularly gratifying, in view of the fact that the United States was one
of the last countries to accept the invitation of France.

The reception accorded our special commissioner was most cordial, and he
was given every reasonable assurance that the United States would receive a
consideration commensurate with the proportions of our exhibit. The report
of the special commissioner as to the magnitude and importance of the
coming exposition, and the great demand for space by American exhibitors,
supplies new arguments for a liberal and judicious appropriation by
Congress, to the end that an exhibit fairly representative of the
industries and resources of our country may be made in an exposition which
will illustrate the world's progress during the nineteenth century. That
exposition is intended to be the most important and comprehensive of the
long series of international exhibitions, of which our own at Chicago was a
brilliant example, and it is desirable that the United States should make a
worthy exhibit of American genius and skill and their unrivaled
achievements in every branch of industry.

The present immediately effective force of the Navy consists of four battle
ships of the first class, two of the second, and forty-eight other vessels,
ranging from armored cruisers to torpedo boats. There are under
construction five battle ships of the first class, sixteen torpedo boats,
and one submarine boat. No provision has yet been made for the armor of
three of the five battle ships, as it has been impossible to obtain it at
the price fixed by Congress. It is of great importance that Congress
provide this armor, as until then the ships are of no fighting value.

The present naval force, especially in view of its increase by the ships
now under construction, while not as large as that of a few other powers,
is a formidable force; its vessels are the very best of each type; and with
the increase that should be made to it from time to time in the future, and
careful attention to keeping it in a high state of efficiency and repair,
it is well adapted to the necessities of the country.

The great increase of the Navy which has taken place in recent years was
justified by the requirements for national defense, and has received public
approbation. The time has now arrived, however, when this increase, to
which the country is committed, should, for a time, take the form of
increased facilities commensurate with the increase of our naval vessels.
It is an unfortunate fact that there is only one dock on the Pacific Coast
capable of docking our largest ships, and only one on the Atlantic Coast,
and that the latter has for the last six or seven months been under repair
and therefore incapable of use. Immediate steps should be taken to provide
three or four docks of this capacity on the Atlantic Coast, at least one on
the Pacific Coast, and a floating dock in the Gulf. This is the
recommendation of a very competent Board, appointed to investigate the
subject. There should also be ample provision made for powder and
projectiles, and other munitions of war, and for an increased number of
officers and enlisted men. Some additions are also necessary to our
navy-yards, for the repair and care of our large number of vessels. As
there are now on the stocks five battle ships of the largest class, which
cannot be completed for a year or two, I concur with the recommendation of
the Secretary of the Navy for an appropriation authorizing the construction
of one battle ship for the Pacific Coast, where, at present, there is only
one in commission and one under construction, while on the Atlantic Coast
there are three in commission and four under construction; and also that
several torpedo boats be authorized in connection with our general system
of coast defense.

The Territory of Alaska requires the prompt and early attention of
Congress. The conditions now existing demand material changes in the laws
relating to the Territory. The great influx of population during the past
summer and fall and the prospect of a still larger immigration in the
spring will not permit us to longer neglect the extension of civil
authority within the Territory or postpone the establishment of a more
thorough government.

A general system of public surveys has not yet been extended to Alaska and
all entries thus far made in that district are upon special surveys. The
act of Congress extending to Alaska the mining laws of the United States
contained the reservation that it should not be construed to put in force
the general land laws of the country. By act approved March 3, 1891,
authority was given for entry of lands for town-site purposes and also for
the purchase of not exceeding one hundred and sixty acres then or
thereafter occupied for purposes of trade and manufacture. The purpose of
Congress as thus far expressed has been that only such rights should apply
to that Territory as should be specifically named.

It will be seen how much remains to be done for that vast and remote and
yet promising portion of our country. Special authority was given to the
President by the Act of Congress approved July 24, 1897, to divide that
Territory into two land districts and to designate the boundaries thereof
and to appoint registers and receivers of said land offices, and the
President was also authorized to appoint a surveyor-general for the entire
district. Pursuant to this authority, a surveyor-general and receiver have
been appointed, with offices at Sitka. If in the ensuing year the
conditions justify it, the additional land district authorized by law will
be established, with an office at some point in the Yukon Valley. No
appropriation, however, was made for this purpose, and that is now
necessary to be done for the two land districts into which the Territory is
to be divided.

I concur with the Secretary of War in his suggestions as to the necessity
for a military force in the Territory of Alaska for the protection of
persons and property. Already a small force, consisting of twenty-five men,
with two officers, under command of Lieutenant-Colonel Randall, of the
Eighth Infantry, has been sent to St. Michael to establish a military
post.

As it is to the interest of the Government to encourage the development and
settlement of the country and its duty to follow up its citizens there with
the benefits of legal machinery, I earnestly urge upon Congress the
establishment of a system of government with such flexibility as will
enable it to adjust itself to the future areas of greatest population.

The startling though possibly exaggerated reports from the Yukon River
country, of the probable shortage of food for the large number of people
who are wintering there without the means of leaving the country are
confirmed in such measure as to justify bringing the matter to the
attention of Congress. Access to that country in winter can be had only by
the passes from Dyea and vicinity, which is a most difficult and perhaps an
impossible task. However, should these reports of the suffering of our
fellow-citizens be further verified, every effort at any cost should be
made to carry them relief.

For a number of years past it has been apparent that the conditions under
which the Five Civilized Tribes were established in the Indian Territory
under treaty provisions with the United States, with the right of
self-government and the exclusion of all white persons from within their
borders, have undergone so complete a change as to render the continuance
of the system thus inaugurated practically impossible. The total number of
the Five Civilized Tribes, as shown by the last census, is 45,494, and this
number has not materially increased; while the white population is
estimated at from 200,000 to 250,000 which, by permission of the Indian
Government has settled in the Territory. The present area of the Indian
Territory contains 25,694,564 acres, much of which is very fertile land.
The United States citizens residing in the Territory, most of whom have
gone there by invitation or with the consent of the tribal authorities,
have made permanent homes for themselves. Numerous towns have been built in
which from 500 to 5,000 white people now reside. Valuable residences and
business houses have been erected in many of them. Large business
enterprises are carried on in which vast sums of money are employed, and
yet these people, who have invested their capital in the development of the
productive resources of the country, are without title to the land they
occupy, and have no voice whatever in the government either of the Nations
or Tribes. Thousands of their children who were born in the Territory are
of school age, but the doors of the schools of the Nations are shut against
them, and what education they get is by private contribution. No provision
for the protection of the life or property of these white citizens is made
by the Tribal Governments and Courts.

The Secretary of the Interior reports that leading Indians have absorbed
great tracts of land to the exclusion of the common people, and government
by an Indian aristocracy has been practically established, to the detriment
of the people. It has been found impossible for the United States to keep
its citizens out of the Territory, and the executory conditions contained
in the treaties with these Nations have for the most part become impossible
of execution. Nor has it been possible for the Tribal Governments to secure
to each individual Indian his full enjoyment in common with Other Indians
of the common property of the Nations. Friends of the Indians have long
believed that the best interests of the Indians of the Five Civilized
Tribes would be found in American citizenship, with all the rights and
privileges which belong to that condition.

By section 16, of the act of March 3, 1893, the President was authorized to
appoint three commissioners to enter into negotiations with the Cherokee,
Choctaw, Chickasaw, Muscogee (or Creek), and Seminole Nations, commonly
known as the Five Civilized Tribes in the Indian Territory. Briefly, the
purposes of the negotiations were to be: The extinguishment of Tribal
titles to any lands within that Territory now held by any and all such
Nations or Tribes, either by cession of the same or some part thereof to
the United States, or by allotment and division of the same in severalty
among the Indians of such Nations or Tribes respectively as may be entitled
to the same, or by such other method as may be agreed upon between the
several Nations and Tribes aforesaid, or each of them, with the United
States, with a view to such an adjustment upon the basis of justice and
equity as may, with the consent of the said Nations of Indians so far as
may be necessary, be requisite and suitable to enable the ultimate creation
of a State or States of the Union which shall embrace the lands within said
Indian Territory.

The Commission met much opposition from the beginning. The Indians were
very slow to act, and those in control manifested a decided disinclination
to meet with favor the propositions submitted to them. A little more than
three years after this organization the Commission effected an agreement
with the Choctaw Nation alone. The Chickasaws, however, refused to agree to
its terms, and as they have a common interest with the Choctaws in the
lands of said Nations, the agreement with the latter Nation could have no
effect without the consent of the former. On April 23, 1897, the Commission
effected an agreement with both tribes--the Choctaws and Chickasaws. This
agreement, it is understood, has been ratified by the constituted
authorities of the respective Tribes or Nations parties thereto, and only
requires ratification by Congress to make it binding.

On the 27th of September, 1897, an agreement was effected with the Creek
Nation, but it is understood that the National Council of said Nation has
refused to ratify the same. Negotiations are yet to be had with the
Cherokees, the most populous of the Five Civilized Tribes, and with the
Seminoles, the smallest in point of numbers and territory.

The provision in the Indian Appropriation Act, approved June 10, 1896,
makes it the duty of the Commission to investigate and determine the rights
of applicants for citizenship in the Five Civilized Tribes, and to make
complete census rolls of the citizens of said Tribes. The Commission is at
present engaged in this work among the Creeks, and has made appointments
for taking the census of these people up to and including the 30th of the
present month.

Should the agreement between the Choctaws and Chickasaws be ratified by
Congress and should the other Tribes fail to make an agreement with the
Commission, then it will be necessary that some legislation shall be had by
Congress, which, while just and honorable to the Indians, shall be
equitable to the white people who have settled upon these lands by
invitation of the Tribal Nations.

Hon. Henry L. Dawes, Chairman of the Commission, in a letter to the
Secretary of the Interior, under date of October 11, 1897, says:
"Individual ownership is, in their (the Commission's) opinion, absolutely
essential to any permanent improvement in present conditions, and the lack
of it is the root of nearly all the evils which so grievously afflict these
people. Allotment by agreement is the only possible method, unless the
United States Courts are clothed with the authority to apportion the lands
among the citizen Indians for whose use it was originally granted."

I concur with the Secretary of the Interior that there can be no cure for
the evils engendered by the perversion of these great trusts, excepting by
their resumption by the Government which created them.

The recent prevalence of yellow fever in a number of cities and towns
throughout the South has resulted in much disturbance of commerce, and
demonstrated the necessity of such amendments to our quarantine laws as
will make the regulations of the national quarantine authorities paramount.
The Secretary of the Treasury, in the portion of his report relating to the
operation of the Marine Hospital Service, calls attention to the defects in
the present quarantine laws, and recommends amendments thereto which will
give the Treasury Department the requisite authority to prevent the
invasion of epidemic diseases from foreign countries, and in times of
emergency, like that of the past summer, will add to the efficiency of the
sanitary measures for the protection of the people, and at the same time
prevent unnecessary restriction of commerce. I concur in his
recommendation.

In further effort to prevent the invasion of the United States by yellow
fever, the importance of the discovery of the exact cause of the disease,
which up to the present time has been undetermined, is obvious, and to this
end a systematic bacteriological investigation should be made. I therefore
recommend that Congress authorize the appointment of a commission by the
President, to consist of four expert bacteriologists, one to be selected
from the medical officers of the Marine Hospital Service, one to be
appointed from civil life, one to be detailed from the medical officers of
the Army, and one from the medical officers of the Navy.

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.

The sale of the subsidized portion of the Kansas Pacific Line, upon which
the Government holds a second mortgage lien, has been postponed at the
instance of the Government to December 16, 1897. The debt of this division
of the Union Pacific Railway to the Government on November 1, 1897, was the
principal of the subsidy bonds, $6,303,000, and the unpaid and accrued
interest thereon, $6,626,690.33, making a total of $12,929,690.33.

The sale of this road was originally advertised for November 4, but for the
purpose of securing the utmost public notice of the event it was postponed
until December 16, and a second advertisement of the sale was made. By the
decree of the Court, the upset price on the sale of the Kansas Pacific will
yield to the Government the sum of $2,500,000 over all prior liens, costs,
and charges. If no other or better bid is made, this sum is all that the
Government will receive on its claim of nearly $13,000,000. The Government
has no information as to whether there will be other bidders or a better
bid than the minimum amount herein stated. The question presented therefore
is: Whether the Government shall, under the authority given it by the act
of March 3, 1887, purchase or redeem the road in the event that a bid is
not made by private parties covering the entire Government claim. To
qualify the Government to bid at the sales will require a deposit of
$900,000, as follows: In the Government cause $500,000 and in each of the
first mortgage causes $200,000, and in the latter the deposit must be in
cash. Payments at the sale are as follows: Upon the acceptance of the bid a
sum which with the amount already deposited shall equal fifteen per cent of
the bid; the balance in installments of twenty-five per cent thirty, forty,
and fifty days after the confirmation of the sale. The lien on the Kansas
Pacific prior to that of the Government on the 30th July, 1897, principal
and interest, amounted to $7,281,048.11. The Government, therefore, should
it become the highest bidder, will have to pay the amount of the first
mortgage lien.

I believe that under the act of 1887 it has the authority to do this and in
absence of any action by Congress I shall direct the Secretary of the
Treasury to make the necessary deposit as required by the Court's decree to
qualify as a bidder and to bid at the sale a sum which will at least equal
the principal of the debt due to the Government; but suggest in order to
remove all controversy that an amendment of the law be immediately passed
explicitly giving such powers and appropriating in general terms whatever
sum is sufficient therefor.

In so important a matter as the Government becoming the possible owner of
railroad property which it perforce must conduct and operate, I feel
constrained to lay before Congress these facts for its consideration and
action before the consummation of the sale. It is clear to my mind that the
Government should not permit the property to be sold at a price which will
yield less than one-half of the principal of its debt and less than
one-fifth of its entire debt, principal and interest. But whether the
Government, rather than accept less than its claim, should become a bidder
and thereby the owner of the property, I submit to the Congress for
action.

The Library building provided for by the act of Congress approved April 15,
1886, has been completed and opened to the public. It should be a matter of
congratulation that through the foresight and munificence of Congress the
nation possesses this noble treasure-house of knowledge. It is earnestly to
be hoped that having done so much toward the cause of education, Congress
will continue to develop the Library in every phase of research to the end
that it may be not only one of the most magnificent but among the richest
and most useful libraries in the world.

The important branch of our Government known as the Civil Service, the
practical improvement of which has long been a subject of earnest
discussion, has of late years received increased legislative and Executive
approval. During the past few months the service has been placed upon a
still firmer basis of business methods and personal merit. While the right
of our veteran soldiers to reinstatement in deserving cases has been
asserted, dismissals for merely political reasons have been carefully
guarded against, the examinations for admittance to the service enlarged
and at the same time rendered less technical and more practical; and a
distinct advance has been made by giving a hearing before dismissal upon
all cases where incompetency is charged or demand made for the removal of
officials in any of the Departments. This order has been made to give to
the accused his right to be heard but without in anyway impairing the power
of removal, which should always be exercised in cases of inefficiency and
incompetency, and which is one of the vital safeguards of the civil service
reform system, preventing stagnation and deadwood and keeping every
employee keenly alive to the fact that the security of his tenure depends
not on favor but on his own tested and carefully watched record of
service.

Much of course still remains to be accomplished before the system can be
made reasonably perfect for our needs. There are places now in the
classified service which ought to be exempted and others not classified may
properly be included. I shall not hesitate to exempt cases which I think
have been improperly included in the classified service or include those
which in my judgment will best promote the public service. The system has
the approval of the people and it will be my endeavor to uphold and extend
it.

I am forced by the length of this Message to omit many important references
to affairs of the Government with which Congress will have to deal at the
present session. They are fully discussed in the departmental reports, to
all of which I invite your earnest attention.

The estimates of the expenses of the Government by the several Departments
will, I am sure, have your careful scrutiny. While the Congress may not
find it an easy task to reduce the expenses of the Government, it should
not encourage their increase. These expenses will in my judgment admit of a
decrease in many branches of the Government without injury to the public
service. It is a commanding duty to keep the appropriations within the
receipts of the Government, and thus avoid a deficit.