To the Congress of the United States:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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