To the Congress of the United States:

The assemblage within the nation's legislative halls of those charged with the
duty of making laws for the benefit of a generous and free people impressively
suggests the exacting obligation and inexorable responsibility involved in
their task. At the threshold of such labor now to be undertaken by the
Congress of the United States, and in the discharge of an executive duty
enjoined by the Constitution, I submit this communication, containing a brief
statement of the condition of our national affairs and recommending such
legislation as seems to me necessary and expedient.

The history of our recent dealings with other nations and our peaceful
relations with them at this time additionally demonstrate the advantage of
consistently adhering to a firm but just foreign policy, free from envious or
ambitious national schemes and characterized by entire honesty and sincerity.

During the past year, pursuant to a law of Congress, commissioners were
appointed to the Antwerp Industrial Exposition. Though the participation of
American exhibitors fell far short of completely illustrating our national
ingenuity and industrial achievements, yet it was quite creditable in view of
the brief time allowed for preparation.

I have endeavored to impress upon the Belgian Government the heedlessness and
positive harmfulness of its restrictions upon the importation of certain of
our food products, and have strongly urged that the rigid supervision and
inspection under our laws are amply sufficient to prevent the exportation from
this country of diseased cattle and unwholesome meat.

The termination of the civil war in Brazil has been followed by the general
prevalence of peace and order. It appearing at an early stage of the
insurrection that its course would call for unusual watchfulness on the part
of this Government, our naval force in the harbor of Rio de Janeiro was
strengthened. This precaution, I am satisfied, tended to restrict the issue to
a simple trial of strength between the Brazilian Government and the insurgents
and to avert complications which at times seemed imminent. Our firm attitude
of neutrality was maintained to the end. The insurgents received no
encouragement of eventual asylum from our commanders, and such opposition as
they encountered was for the protection of our commerce and was clearly
justified by public law.

A serious tension of relations having arisen at the close of the war between
Brazil and Portugal by reason of the escape of the insurgent admiral Da Gama
and his followers, the friendly offices of our representatives to those
countries were exerted for the protection of the subjects of either within the
territory of the other.

Although the Government of Brazil was duly notified that the commercial
arrangement existing between the United States and that country based on the
third section of the tariff act of 1890 was abrogated on August 28, 1894, by
the taking effect of the tariff law now in force, that Government subsequently
notified us of its intention to terminate such arrangement on the 1st day of
January, 1895, in the exercise of the right reserved in the agreement between
the two countries. I invite attention to the correspondence between the
Secretary of State and the Brazilian minister on this subject.

The commission organized under the convention which we had entered into with
Chile for the settlement of the outstanding claims of each Government against
the other adjourned at the end of the period stipulated for its continuance
leaving undetermined a number of American cases which had been duly presented.
These claims are not barred, and negotiations are in progress for their
submission to a new tribunal.

On the 17th of March last a new treaty with China in further regulation of
emigration was signed at Washington, and on August 13 it received the sanction
of the Senate. Ratification on the part of China and formal exchange are
awaited to give effect to this mutually beneficial convention.

A gratifying recognition of the uniform impartiality of this country toward
all foreign states was manifested by the coincident request of the Chinese and
Japanese Governments that the agents of the United States should within proper
limits afford protection to the subjects of the other during the suspension of
diplomatic relations due to a state of war. This delicate office was accepted,
and a misapprehension which gave rise to the belief that in affording this
kindly unofficial protection our agents would exercise the same authority
which the withdrawn agents of the belligerents had exercised was promptly
corrected. Although the war between China and Japan endangers no policy of the
United States, it deserves our gravest consideration by reason of its
disturbance of our growing commercial interests in the two countries and the
increased dangers which may result to our citizens domiciled or sojourning in
the interior of China.

Acting under a stipulation in our treaty with Korea (the first concluded with
a western power), I felt constrained at the beginning of the controversy to
tender our good offices to induce an amicable arrangement of the initial
difficulty growing out of the Japanese demands for administrative reforms in
Korea, but the unhappy precipitation of actual hostilities defeated this
kindly purpose.

Deploring the destructive war between the two most powerful of the eastern
nations and anxious that our commercial interests in those countries may be
preserved and that the safety of our citizens there shall not be jeopardized,
I would not hesitate to heed any intimation that our friendly aid for the
honorable termination of hostilities would be acceptable to both belligerents.

A convention has been finally concluded for the settlement by arbitration of
the prolonged dispute with Ecuador growing out of the proceedings against
Emilio Santos, a naturalized citizen of the United States.

Our relations with the Republic of France continue to be such as should exist
between nations so long bound together by friendly sympathy and similarity in
their form of government.

The recent cruel assassination of the President of this sister Republic called
forth such universal expressions of sorrow and condolence from our people and
Government as to leave no doubt of the depth and sincerity of our attachment.
The resolutions passed by the Senate and House of Representatives on the
occasion have been communicated to the widow of President Carnot.

Acting upon the reported discovery of Texas fever in cargoes of American
cattle, the German prohibition against importations of live stock and fresh
meats from this country has been revived. It is hoped that Germany will soon
become convinced that the inhibition is as needless as it is harmful to mutual
interests.

The German Government has protested against that provision of the customs
tariff act which imposes a discriminating duty of one-tenth of 1 cent a pound
on sugars coming from countries paying an export bounty thereon, claiming that
the exaction of such duty is in contravention of Articles V and IX of the
treaty of 1828 with Prussia.

In the interests of the commerce of both countries and to avoid even the
accusation of treaty violation, I recommend the repeal of so much of the
statute as imposes that duty, and I invite attention to the accompanying
report of the Secretary of State, containing a discussion of the questions
raised by the German protests.

Early in the present year an agreement was reached with Great Britain
concerning instructions to be given to the naval commanders of the two
Governments in Bering Sea and the contiguous North Pacific Ocean for their
guidance in the execution of the award of the Paris Tribunal of Arbitration
and the enforcement of the regulations therein prescribed for the protection
of seal life in the waters mentioned. An understanding has also been reached
for the payment by the United States of

$425,000 in full satisfaction of all claims which may be made by Great Britain
for damages growing out of the controversy as to fur seals in Bering Sea or
the seizure of British vessels engaged in taking seal in those waters. The
award and findings of the Paris Tribunal to a great extent determined the
facts and principles upon which these claims should be adjusted, and they have
been subjected by both Governments to a thorough examination upon the
principles as well as the facts which they involve. I am convinced that a
settlement upon the terms mentioned would be an equitable and advantageous
one, and I recommend that provision be made for the prompt payment of the
stated sum.

Thus far only France and Portugal have signified their willingness to adhere
to the regulations established under the award of the Paris Tribunal of
Arbitration.

Preliminary surveys of the Alaskan boundary and a preparatory examination of
the question of protection of food fish in the contiguous waters of the United
States and the Dominion of Canada are in progress.

The boundary of British Guiana still remains in dispute between Great Britain
and Venezuela. Believing that its early settlement on some just basis alike
honorable to both parties is in the line of our established policy to remove
from this hemisphere all causes of difference with powers beyond the sea, I
shall renew the efforts heretofore made to bring about a restoration of
diplomatic relations between the disputants and to induce a reference to
arbitration--a resort which Great Britain so conspicuously favors in principle
and respects in practice and which is earnestly sought by her weaker
adversary.

Since communicating the voluminous correspondence in regard to Hawaii and the
action taken by the Senate and House of Representatives on certain questions
submitted to the judgment and wider discretion of Congress the organization of
a government in place of the provisional arrangement which followed the
deposition of the Queen has been announced, with evidence of its effective
operation. The recognition usual in such cases has been accorded the new
Government.

Under our present treaties of extradition with Italy miscarriages of justice
have occurred owing to the refusal of that Government to surrender its own
subjects. Thus far our efforts to negotiate an amended convention obviating
this difficulty have been unavailing.

Apart from the war in which the Island Empire is engaged, Japan attracts
increasing attention in this country by her evident desire to cultivate more
liberal intercourse with us and to seek our kindly aid in furtherance of her
laudable desire for complete autonomy in her domestic affairs and full
equality in the family of nations. The Japanese Empire of to-day is no longer
the Japan of the past, and our relations with this progressive nation should
not be less broad and liberal than those with other powers.

Good will, fostered by many interests in common, has marked our relations with
our nearest southern neighbor. Peace being restored along her northern
frontier, Mexico has asked the punishment of the late disturbers of her
tranquillity. There ought to be a new treaty of commerce and navigation with
that country to take the place of the one which terminated thirteen years ago.
The friendliness of the intercourse between the two countries is attested by
the fact that during this long period the commerce of each has steadily
increased under the rule of mutual consideration, being neither stimulated by
conventional arrangements nor retarded by jealous rivalries or selfish
distrust.

An indemnity tendered by Mexico as a gracious act for the murder in 1887 of
Leon Baldwin, an American citizen, by a band of marauders in Durango has been
accepted and is being paid in installments.

The problem of the storage and use of the waters of the Rio Grande for
irrigation should be solved by appropriate concurrent action of the two
interested countries. Rising in the Colorado heights, the stream flows
intermittently, yielding little water during the dry months to the irrigation
channels already constructed along its course. This scarcity is often severely
felt in the regions where the river forms a common boundary. Moreover, the
frequent changes in its course through level sands often raise embarrassing
questions of territorial jurisdiction.

Prominent among the questions of the year was the Bluefields incident, in what
is known as the Mosquito Indian Strip, bordering on the Atlantic Ocean and
within the jurisdiction of Nicaragua. By the treaty of 1860 between Great
Britain and Nicaragua the former Government expressly recognized the
sovereignty of the latter over the strip, and a limited form of
self-government was guaranteed to the Mosquito Indians, to be exercised
according to their customs, for themselves and other dwellers within its
limits. The so-called native government, which grew to be largely made up of
aliens, for many years disputed the sovereignty of Nicaragua over the strip
and claimed the right to maintain therein a practically independent municipal
government. Early in the past year efforts of Nicaragua to maintain
sovereignty over the Mosquito territory led to serious disturbances,
culminating in the suppression of the native government and the attempted
substitution of an impracticable composite administration in which Nicaragua
and alien residents were to participate. Failure was followed by an
insurrection, which for a time subverted Nicaraguan rule, expelling her
officers and restoring the old organization. This in turn gave place to the
existing local government established and upheld by Nicaragua.

Although the alien interests arrayed against Nicaragua in these transactions
have been largely American and the commerce of that region for some time has
been and still is chiefly controlled by our citizens, we can not for that
reason challenge the rightful sovereignty of Nicaragua over this important
part of her domain.

For some months one, and during part of the time two, of our naval ships have
been stationed at Bluefields for the protection of all legitimate interests of
our citizens. In September last the Government at Managua expelled from its
territory twelve or more foreigners, including two Americans, for alleged
participation in the seditious or revolutionary movements against the Republic
at Bluefields already mentioned; but through the earnest remonstrance of this
Government the two Americans have been permitted to return to the peaceful
management of their business. Our naval commanders at the scene of these
disturbances by their constant exhibition of firmness and good judgment
contributed largely to the prevention of more serious consequences and to the
restoration of quiet and order. I regret that in the midst of these
occurrences there happened a most grave and irritating failure of Nicaraguan
justice. An American citizen named Wilson, residing at Rama, in the Mosquito
territory, was murdered by one Arguello, the acting governor of the town.
After some delay the murderer was arrested, but so insecurely confined or
guarded that he escaped, and notwithstanding our repeated demands it is
claimed that his recapture has been impossible by reason of his flight beyond
Nicaraguan jurisdiction.

The Nicaraguan authorities, having given notice of forfeiture of their
concession to the canal company on grounds purely technical and not embraced
in the contract, have receded from that position.

Peru, I regret to say, shows symptoms of domestic disturbance, due probably to
the slowness of her recuperation from the distresses of the war of 1881.
Weakened in resources, her difficulties in facing international obligations
invite our kindly sympathy and justify our forbearance in pressing
long-pending claims. I have felt constrained to testify this sympathy in
connection with certain demands urgently preferred by other powers.

The recent death of the Czar of Russia called forth appropriate expressions of
sorrow and sympathy on the part of our Government with his bereaved family and
the Russian people. As a further demonstration of respect and friendship our
minister at St. Petersburg was directed to represent our Government at the
funeral ceremonies.

The sealing interests of Russia in Bering Sea are second only to our own. A
modus vivendi has therefore been concluded with the Imperial Government
restrictive of poaching on the Russian rookeries and of sealing in waters
which were not comprehended in the protected area defined in the Paris award.

Occasion has been found to urge upon the Russian Government equality of
treatment for our great life-insurance companies whose operations have been
extended throughout Europe. Admitting as we do foreign corporations to
transact business in the United States, we naturally expect no less tolerance
for our own in the ample fields of competition abroad.

But few cases of interference with naturalized citizens returning to Russia
have been reported during the current year. One Krzeminski was arrested last
summer in a Polish province on a reported charge of unpermitted renunciation
of Russian allegiance, but it transpired that the proceedings originated in
alleged malfeasance committed by Krzeminski while an imperial official a
number of years ago. Efforts for his release, which promised to be successful,
were in progress when his death was reported.

The Government of Salvador having been overthrown by an abrupt popular
outbreak, certain of its military and civil officers, while hotly pursued by
infuriated insurgents, sought refuge on board the United States war ship
Bennington, then lying in a Salvadorean port. Although the practice of asylum
is not favored by this Government, yet in view of the imminent peril which
threatened the fugitives and solely from considerations of humanity they were
afforded shelter by our naval commander, and when afterwards demanded under
our treaty of extradition with Salvador for trial on charges of murder, arson,
and robbery I directed that such of them as had not voluntarily left the ship
be conveyed to one of our nearest ports where a hearing could be had before a
judicial officer, in compliance with the terms of the treaty. On their arrival
at San Francisco such a proceeding was promptly instituted before the United
States district judge, who held that the acts constituting the alleged
offenses were political and discharged all the accused except one Cienfuegos,
who was held for an attempt to murder. Thereupon I was constrained to direct
his release for the reason that an attempt to murder was not one of the crimes
charged against him and upon which his surrender to the Salvadorean
authorities had been demanded.

Unreasonable and unjust fines imposed by Spain on the vessels and commerce of
the United States have demanded from time to time during the last twenty years
earnest remonstrance on the part of our Government. In the immediate past
exorbitant penalties have been imposed upon our vessels and goods by customs
authorities of Cuba and Puerto Rico for clerical errors of the most trivial
character in the manifests of bills of lading. In some cases fines amounting
to thousands of dollars have been levied upon cargoes or the carrying vessels
when the goods in question were entitled to free entry. Fines have been
exacted even when the error had been detected and the Spanish authorities
notified before the arrival of the goods in port.

This conduct is in strange contrast with the considerate and liberal treatment
extended to Spanish vessels and cargoes in our ports in like cases. No
satisfactory settlement of these vexatious questions has yet been reached.

The Mora case, referred to in my last annual message, remains unsettled. From
the diplomatic correspondence on this subject which has been laid before the
Senate it will be seen that this Government has offered to conclude a
convention with Spain for disposal by arbitration of outstanding claims
between the two countries, except the Mora claim. which, having been long ago
adjusted, now only awaits payment as stipulated, and of course it could not be
included in the proposed convention. It was hoped that this offer would remove
parliamentary obstacles encountered by the Spanish Government in providing
payment of the Mora indemnity. I regret to say that no definite reply to this
offer has yet been made and all efforts to secure payment of this settled
claim have been unavailing.

In my last annual message I adverted to the claim on the part of Turkey of the
right to expel as persons undesirable and dangerous Armenians naturalized in
the United States and returning to Turkish jurisdiction. Numerous questions in
this relation have arisen. While this Government acquiesces in the asserted
right of expulsion, it will not consent that Armenians may be imprisoned or
otherwise punished for no other reason than having acquired without imperial
consent American citizenship.

Three of the assailants of Miss Melton, an American teacher in Mosul, have
been convicted by the Ottoman courts, and I am advised that an appeal against
the acquittal of the remaining five has been taken by the Turkish prosecuting
officer.

A convention has been concluded with Venezuela for the arbitration of a
long-disputed claim growing out of the seizure of certain vessels the property
of citizens of the United States. Although signed, the treaty of extradition
with Venezuela is not yet in force, owing to the insistence of that Government
that when surrendered its citizens shall in no case be liable to capital
punishment.

The rules for the prevention of collisions at sea which were framed by the
maritime conference held in this city in 1889, having been concurrently
incorporated in the statutes of the United States and Great Britain have been
announced to take effect March 1, 1895, and invitations have been extended to
all maritime nations to adhere to them. Favorable responses have thus far been
received from Austria, France, Portugal, Spain, and Sweden.

In my last annual message I referred briefly to the unsatisfactory state of
affairs in Samoa under the operation of the Berlin treaty as signally
illustrating the impolicy of entangling alliances with foreign powers, and on
May 9, 1894, in response to a resolution of the Senate, I sent a Special
message and documents to that body on the same subject, which emphasized my
previously expressed opinions. Later occurrences, the correspondence in regard
to which will be laid before the Congress, further demonstrate that the
Government which was devised by the three powers and forced upon the Samoans
against their inveterate hostility can be maintained only by the continued
presence of foreign military force and at no small sacrifice of life and
treasure.

The suppression of the Mataafa insurrection by the powers and the subsequent
banishment of the leader and eleven other chiefs, as recited in my last
message, did not bring lasting peace to the islands. Formidable uprisings
continued, and finally a rebellion broke out in the capital island, Upolu,
headed in Aana, the western district, by the younger Tamasese, and in Atua,
the eastern district, by other leaders. The insurgents ravaged the country and
fought the Government's troops up to the very doors of Apia. The King again
appealed to the powers for help, and the combined British and German naval
forces reduced the Atuans to apparent subjection, not, however, without
considerable loss to the natives. A few days later Tamasese and his adherents,
fearing the ships and the marines, professed submission.

Reports received from our agents at Apia do not justify the belief that the
peace thus brought about will be of long duration. It is their conviction that
the natives are at heart hostile to the present Government, that such of them
as profess loyalty to it do so from fear of the powers, and that it would
speedily go to pieces if the war ships were withdrawn. In reporting to his
Government on the unsatisfactory situation since the suppression of the late
revolt by foreign armed forces, the German consul at Apia stated:

That peace will be lasting is hardly to be presumed. The lesson given by
firing on Atua was not sufficiently sharp and incisive to leave a lasting
impression on the forgetful Samoan temperament. In fact, conditions are
existing which show that peace will not last and is not seriously intended.
Malietoa, the King, and his chiefs are convinced that the departure of the war
ships will be a signal for a renewal of war. The circumstance that the
representatives of the villages of all the districts which were opposed to the
Government have already withdrawn to Atua to hold meetings, and that both Atua
and Aana have forbidden inhabitants of those districts which fought on the
side of the Government to return to their villages, and have already partly
burned down the latter, indicates that a real conciliation of the parties is
still far off.

And in a note of the 10th ultimo, inclosing a copy of that report for the
information of this Government, the German ambassador said:

The contents of the report awakened the imperial Government's apprehension
that under existing circumstances the peace concluded with the rebels will
afford no assurance of the lasting restoration of tranquillity in the islands.

The present Government has utterly failed to correct, if indeed it has not
aggravated, the very evils it was intended to prevent. It has not stimulated
our commerce with the islands. Our participation in its establishment against
the wishes of the natives was in plain defiance of the conservative teachings
and warnings of the wise and patriotic men who laid the foundations of our
free institutions, and I invite an expression of the judgment of Congress on
the propriety of steps being taken by this Government looking to the
withdrawal from its engagements with the other powers on some reasonable terms
not prejudicial to any of our existing rights.

The Secretary of the Treasury reports that the receipts of the Government from
all sources of revenue during the fiscal year ending June 30, 1894, amounted
to $372,802,498.29 and its expenditures to $442,605,758.87, leaving a deficit
of $69,803,260.58. There was a decrease of $15,952,674.66 in the ordinary
expense of the Government as compared with the fiscal year 1893.

There was collected from customs $131,818,530.62 and from internal revenue
$147,168,449.70. The balance of the income for the year, amounting to
$93,815,517.97, was derived from the sales of lands and other sources.

The value of our total dutiable imports amounted to $275,199,086, being
$146,657,625 less than during the preceding year, and the importations free of
duty amounted to $379,795,536, being $64,748,675 less than during the
preceding year. The receipts from customs were $73,536,486.11 less and from
internal revenue $13,836,539.97 less than in 1893.

The total tax collected from distilled spirits was $85,259,250.25, on
manufactured tobacco $28,617,898.62, and on fermented liquors $31,414,788.04.

Our exports of merchandise, domestic and foreign, amounted during the year to
$892,140,572, being an increase over the preceding year of $44,495,378.

The total amount of gold exported during the fiscal year was $76,898,061, as
against $108,680,444 during the fiscal year 1893. The amount imported was
$72,449,119, as against $21,174,381 during the previous year.

The imports of silver were $13,186,552 and the exports were $50,451,265.

The total bounty paid upon the production of sugar in the United States for
the fiscal year was $12,100,208.89, being an increase of $2,725,078.01 over
the payments made during the preceding year. The amount of bounty paid from
July 1, 1894, to August 28, 1894, the time when further payments ceased by
operation of law, was $966,185.84. The total expenses incurred in the payment
of the bounty upon sugar during the fiscal year was $130,140.85.

It is estimated that upon the basis of the present revenue laws the receipts
of the Government during the current fiscal year, ending June 30, 1895, will
be $424,427,748.44 and its expenditures $444,427,748.44, resulting in a
deficit of $20,000,000.

On the 1st day of November, 1894, the total stock of money of all kinds in the
country was $2,240,773,88.8, as against $2,204,651,000 on the 1st day of
November, 1893, and the money of all kinds in circulation, or not included in
the Treasury holdings, was $1,672,093,422, or $24.27 per capita upon an
estimated population of 68,887,000. At the same date there was held in the
Treasury gold bullion amounting to $44,615,177.55 and silver bullion which was
purchased at a cost of $127,772,988. The purchase of silver bullion under the
act of July 14, 1890, ceased on the 1st day of November, 1893, and up to that
time there had been purchased during the fiscal year 11,917,658.78 fine
ounces, at a cost of $8,715,521.32, an average cost of $0.7313 per fine ounce.
The total amount of silver purchased from the time that law took effect until
the repeal of its purchasing clause, on the date last mentioned, was
168,674,682.53 fine ounces, which cost $155,931,002.25, the average price per
fine ounce being $0.9244.

The total amount of standard silver dollars coined at the mints of the United
States since the passage of the act of February 28, 1878, is $421,776,408, of
which $378,166,793 were coined under the provisions of that act, $38,531,143
under the provisions of the act of July 14, 1890, and $5,078,472 under the act
providing for the coinage of trade-dollar bullion.

The total coinage of all metals at our mints during the last fiscal year
consisted of 63,485,220 pieces, valued at $106,216,730.06, of which there were
$99,474,912.50 in gold coined, $758 in standard silver dollars, $6,024,140.30
in subsidiary silver coin, and $716,919.26 in minor coin.

During the calendar year 1893 the production of precious metals in the United
States was estimated at 1,739,323 fine ounces of gold of the commercial and
coinage value of $35,955,000 and 70,000,000 fine ounces of silver of the
bullion or market value of $46,800,000 and of the coinage value of
$77,576,000. It is estimated that on the 1st day of July, 1894, the stock of
metallic money in the United States, consisting of coin and bullion, amounted
to $1,251,640,958, of which $627,923,201 was gold and $624,347,757 was silver.

Fifty national banks were organized during the year ending October 31, 1894,
with a capital of $5,285,000, and 79, with a capital of $10,475,000, went into
voluntary liquidation. Twenty-one banks, with a capital of $2,770,000, were
placed in the hands of receivers. The total number of national banks in
existence on the 31st day of October last was 3,756, being 40 less than on the
31st day of October, 1893. The capital stock paid in was $672,671,365, being
$9,678,491 less than at the same time in the previous year, and the surplus
fund and individual profits, less expenses and taxes paid, amounted to
$334,121,082.10, which was $16,089,780 less than on October 31, 1893. The
circulation was decreased $1,741,563. The obligations of the banks to each
other were increased $117,268,334 and the individual deposits were
$277,294,489 less than at the corresponding date in the previous year. Loans
and discounts were $161,206,923 more than at the same time the previous year,
and checks and other cash items were $90,349,963 more. The total resources of
the banks at the date mentioned amounted to $3,473,922,055, as against
$3,109,563,184.36 in 1893.

From the report of the Secretary of War it appears that the strength of the
Army on September 30, 1894, was 2,135 officers and 25,765 enlisted men.
Although this is apparently a very slight decrease compared with the previous
year, the actual effective force has been increased to the equivalent of
nearly two regiments through the reorganization of the system of recruiting
and the consequent release to regimental duty of the large force of men
hitherto serving at the recruiting depots. The abolition of these depots, it
is predicted, will furthermore effect an annual reduction approximating
$250,000 in the direct expenditures, besides promoting generally the health,
morale, and discipline of the troops.

The execution of the policy of concentrating the Army at important centers of
population and transportation, foreshadowed in the last annual report of the
Secretary, has resulted in the abandonment of fifteen of the smaller posts,
which was effected under a plan which assembles organizations of the same
regiments hitherto widely separated. This renders our small forces more
readily effective for any service which they may be called upon to perform,
increases the extent of the territory under protection without diminishing the
security heretofore afforded to any locality, improves the discipline,
training, and esprit de corps of the Army, besides considerably decreasing the
cost of its maintenance.

Though the forces of the Department of the East have been somewhat increased,
more than three-fourths of the Army is still stationed west of the
Mississippi. This carefully matured policy, which secures the best and
greatest service in the interests of the general welfare from the small force
comprising our Regular Army, should not be thoughtlessly embarrassed by the
creation of new and unnecessary posts through acts of Congress to gratify the
ambitions or interests of localities.

While the maximum legal strength of the Army is 25,000 men, the effective
strength, through various causes, is but little over 20,000 men. The purpose
of Congress does not, therefore, seem to be fully attained by the existing
condition. While no considerable increase in the Army is, in my judgment,
demanded by recent events, the policy of seacoast fortification, in the
prosecution of which we have been steadily engaged for some years, has so far
developed as to suggest that the effective strength of the Army be now made at
least equal to the legal strength. Measures taken by the Department during the
year, as indicated, have already considerably augmented the effective force,
and the Secretary of War presents a plan, which I recommend to the
consideration of Congress, to attain the desired end. Economies effected in
the Department in other lines of its work will offset to a great extent the
expenditure involved in the proposition submitted. Among other things this
contemplates the adoption of the three-battalion formation of regiments, which
for several years has been indorsed by the Secretaries of War and the Generals
Commanding the Army. Compact in itself, it provides a skeleton organization,
ready to be filled out in the event of war, which is peculiarly adapted to our
strength and requirements; and the fact that every other nation, with a single
exception, has adopted this formation to meet the conditions of modern warfare
should alone secure for the recommendation an early consideration.

It is hardly necessary to recall the fact that in obedience to the commands of
the Constitution and the laws, and for the purpose of protecting the property
of the United States, aiding the process of Federal courts, and removing
lawless obstructions to the performance by the Government of its legitimate
functions, it became necessary in various localities during the year to employ
a considerable portion of the regular troops. The duty was discharged
promptly, courageously, and with marked discretion by the officers and men,
and the most gratifying proof was thus afforded that the Army deserves that
complete confidence in its efficiency and discipline which the country has at
all times manifested.

The year has been free from disturbances by Indians, and the chances of
further depredations on their part are constantly becoming more remote and
improbable.

The total .expenditures for the War Department for the year ended June 30,
1894, amounted to $56,039,009.34. Of this sum $2,000,614.99 was for salaries
and contingent expenses, $23,665,156.16 for the support of the military
establishment, $5,001,682.23 for miscellaneous objects, and $25,371,555.96 for
public works. This latter sum includes $19,494,037.49 for river and harbor
improvements and $3,947,863.56 for fortifications and other works of defense.
The appropriations for the current year aggregate $52,429,112.78, and the
estimates submitted by the Secretary of War for the next fiscal year call for
appropriations amounting to $52,318,629.55.

The skill and industry of our ordnance officers and inventors have, it is
believed, overcome the mechanical obstacles which have heretofore delayed the
armament of our coasts, and this great national undertaking upon which we have
entered may now proceed as rapidly as Congress shall determine. With a supply
of finished guns of large caliber already on hand, to which additions should
now rapidly follow, the wisdom of providing carriages and emplacements for
their mount can not be too strongly urged.

The total enrollment of the militia of the several States is 117,533 officers
and enlisted men, an increase of 5,343 over the number reported at the close
of the previous year. The reports of militia inspections by Regular Army
officers show a marked increase in interest and efficiency among the State
organizations, and I strongly recommend a continuance of the policy of
affording every practical encouragement possible to this important auxiliary
of our military establishment.

The condition of the Apache Indians held as prisoners by the Government for
eight years at a cost of half a million dollars has been changed during the
year from captivity to one which gives them an opportunity to demonstrate
their capacity for self-support and at least partial civilization. Legislation
enacted at the late session of Congress gave the War Department authority to
transfer the survivors, numbering 346, from Mount Vernon Barracks, in Alabama,
to any suitable reservation. The Department selected as their future home the
military lands near Fort Sill, Ind. T., where, under military surveillance,
the former prisoners have been established in agriculture under conditions
favorable to their advancement.

In recognition of the long and distinguished military services and faithful
discharge of delicate and responsible civil duties by Major-General John M.
Schofield, now the General Commanding the Army, it is suggested to Congress
that the temporary revival of the grade of lieutenant-general in his behalf
would be a just and gracious act and would permit his retirement, now near at
hand, with rank befitting his merits.

The report of the Attorney-General notes the gratifying progress made by the
Supreme Court in overcoming the arrears of its business and in reaching a
condition in which it will be able to dispose of cases as they arise without
any unreasonable delay. This result is of course very largely due to the
successful working of the plan inaugurating circuit courts of appeals. In
respect to these tribunals the suggestion is made, in quarters entitled to the
highest consideration that an additional circuit judge for each circuit would
greatly strengthen these courts and the confidence reposed in their
adjudications, and that such an addition would not create a greater force of
judges than the increasing business of such courts requires. I commend the
suggestion to the careful consideration of the Congress. Other important
topics are adverted to in the report, accompanied by recommendations, many of
which have been treated at large in previous messages, and at this time,
therefore, need only be named. I refer to the abolition of the fee system as a
measure of compensation to Federal officers; the enlargement of the powers of
United States commissioners, at least in the Territories; the allowance of
writs of error in criminal cases on behalf of the United States, and the
establishment of degrees in the crime of murder. A topic dealt with by the
Attorney-General of much importance is the condition of the administration of
justice in the Indian Territory. The permanent solution of what is called the
Indian problem is probably not to be expected at once, but meanwhile such
ameliorations of present conditions as the existing system will admit of ought
not to be neglected. I am satisfied there should be a Federal court
established for the Territory, with sufficient judges, and that this court
should sit within the Territory and have the same jurisdiction as to
Territorial affairs as is now vested in the Federal courts sitting in Arkansas
and Texas.

Another subject of pressing moment referred to by the Attorney-General is the
reorganization of the Union Pacific Railway Company on a basis equitable as
regards all private interests and as favorable to the Government as existing
conditions will permit. The operation of a railroad by a court through a
receiver is an anomalous state of things which should be terminated on all
grounds, public and private, at the earliest possible moment. Besides, not to
enact the needed enabling legislation at the present session postpones the
whole matter until the assembling of a new Congress and inevitably increases
all the complications of the situation, and could not but be regarded as a
signal failure to solve a problem which has practically been before the
present Congress ever since its organization.

Eight years ago in my annual message I urged upon the Congress as strongly as
I could the location and construction of two prisons for the confinement of
United States prisoners. A similar recommendation has been made from time to
time since, and a few years ago a law was passed providing for the selection
of sites for three such institutions. No appropriation has, however, been made
to carry the act into effect, and the old and discreditable condition still
exists.

It is not my purpose at this time to repeat the considerations which make an
impregnable case in favor of the ownership and management by the Government of
the penal institutions in which Federal prisoners are confined. I simply
desire to again urge former recommendations on the subject and to particularly
call the attention of the Congress to that part of the report of the Secretary
of War in which he states that the military prison at Fort Leavenworth, Kans.,
can be turned over to the Government as a prison for Federal convicts without
the least difficulty and with an actual saving of money from every point of
view.

Pending a more complete reform, I hope that by the adoption of the suggestion
of the Secretary of War this easy step may be taken in the direction of the
proper care of its convicts by the Government of the United States.

The report of the Postmaster-General presents a comprehensive statement of the
operations of the Post-Office Department for the last fiscal year.

The receipts of the Department during the year amounted to $75,080,479.04 and
the expenditures to $84,324,414.15.

The transactions of the postal service indicate with barometric certainty the
fluctuations in the business of the country. Inasmuch, therefore, as business
complications continued to exist throughout the last year to an unforeseen
extent, it is not surprising that the deficiency of revenue to meet the
expenditures of the Post-Office Department, which was estimated in advance at
about $8,000,000, should be exceeded by nearly $1,225,000. The ascertained
revenues of the last year, which were the basis of calculation for the current
year, being less than estimated, the deficiency for the current year will be
correspondingly greater, though the Postmaster-General states that the latest
indications are so favorable that he confidently predicts an increase of at
least 8 per cent in the revenues of the current year over those of the last
year.

The expenditures increase steadily and necessarily with the growth and needs
of the country, so that the deficiency is greater or less in any year,
depending upon the volume of receipts.

The Postmaster-General states that this deficiency is unnecessary and might be
obviated at once if the law regulating rates upon mail matter of the second
class was modified. The rate received for the transmission of this
second-class matter is 1 cent per pound, while the cost of such transmission
to the Government is eight times that amount. In the general terms of the law
this rate covers newspapers and periodicals. The extensions of the meaning of
these terms from time to time have admitted to the privileges intended for
legitimate newspapers and periodicals a surprising range of publications and
created abuses the cost of which amounts in the aggregate to the total
deficiency of the Post-Office Department. Pretended newspapers are started by
business houses for the mere purpose of advertising goods, complying with the
law in form only and discontinuing the publications as soon as the period of
advertising is over. "Sample copies" of pretended newspapers are issued in
great numbers for a like purpose only. The result is a great loss of revenue
to the Government, besides its humiliating use as an agency to aid in carrying
out the scheme of a business house to advertise its goods by means of a trick
upon both its rival houses and the regular and legitimate newspapers.
Paper-covered literature, consisting mainly of trashy novels, to the extent of
many thousands of tons is sent through the mails at 1 cent per pound, while
the publishers of standard works are required to pay eight times that amount
in sending their publications. Another abuse consists in the free carriage
through the mails of hundreds of tons of seed and grain uselessly distributed
through the Department of Agriculture. The Postmaster-General predicts that if
the law be so amended as to eradicate these abuses not only will the
Post-Office Department show no deficiency, but he believes that in the near
future all legitimate newspapers and periodical magazines might be properly
transmitted through the mails to their subscribers free of cost. I invite your
prompt consideration of this subject and fully indorse the views of the
Postmaster-General.

The total number of post-offices in the United States on the 30th day of June,
1894, was 69,805, an increase of 1,403 over the preceding year. Of these,
3,428 were Presidential, an increase in that class of 68 over the preceding
year.

Six hundred and ten cities and towns are provided with free delivery.
Ninety-three other cities and towns entitled to this service under the law
have not been accorded it on account of insufficient funds. The expense of
free delivery for the current fiscal year will be more than $12,300,000, and
under existing legislation this item of expenditure is subject to constant
increase. The estimated cost of rural free delivery generally is so very large
that it ought not to be considered in the present condition of affairs.

During the year 830 additional domestic money-order offices were established.
The total number of these offices at the close of the year was 19,264. There
were 14,304,041 money orders issued during the year, being an increase over
the preceding year of 994,306. The value of these orders amounted to
$138,793,579.49, an increase of $11,217,145.84. There were also issued during
the year postal notes amounting to $12,649,094.55.

During the year 218 international money-order offices were added to those
already established, making a total of 2,625 such offices in operation June
30, 1894. The number of international money orders issued during the year was
917,823, a decrease in number of 138,176, and their value was $13,792,455.31,
a decrease in amount of $2,549,382.55. The number of orders paid was 361,180,
an increase over the preceding year of 60,263, and their value was
$6,568,493.78, an increase of $1,285,118.08.

From the foregoing statements it appears that the total issue of money orders
and postal notes for the year amounted to $165,235,129.35.

The number of letters and packages mailed during the year for special delivery
was 3,436,970. The special-delivery stamps used upon these letters and
packages amounted to $343,697. The messengers fees paid for their delivery
amounted to $261,209.70, leaving a balance in favor of the Government of
$82,487.30.

The report shows most gratifying results in the way of economies worked out
without affecting the efficiency of the postal service. These consist in the
abrogation of steamship subsidy contracts, reletting of mail transportation
contracts, and in the cost and amount of supplies used in the service,
amounting in all to $16,619,047.42.

This report also contains a valuable contribution to the history of the
Universal Postal Union, an arrangement which amounts practically to the
establishment of one postal system for the entire civilized world. Special
attention is directed to this subject at this time in view of the fact that
the next congress of the union will meet in Washington in 1897, and it is
hoped that timely action will be taken in the direction of perfecting
preparations for that event.

The Postmaster-General renews the suggestion made in a previous report that
the Department organization be increased to the extent of creating a direct
district supervision of all postal affairs, and in this suggestion I fully
concur.

There are now connected with the Post-Office establishment 32,661 employees
who are in the classified service. This includes many who have been classified
upon the suggestion of the Postmaster-General. He states that another year's
experience at the head of the Department serves only to strengthen the
conviction as to the excellent working of the civil-service law in this branch
of the public service.

Attention is called to the report of the Secretary of the Navy, which shows
very gratifying progress in the construction of ships for our new Navy. All
the vessels now building, including the three torpedo boats authorized at the
last session of Congress and excepting the first-class battle ship Iowa, will
probably be completed during the coming fiscal year.

The estimates for the increase of the Navy for the year ending June 30, 1896,
are large, but they include practically the entire sum necessary to complete
and equip all the new ships not now in commission, so that unless new ships
are authorized the appropriations for the naval service for the fiscal year
ending June 30, 1897, should fall below the estimates for the coming year by
at least $12,000,000.

The Secretary presents with much earnestness a plea for the authorization of
three additional battle ships and ten or twelve torpedo boats. While the
unarmored vessels heretofore authorized, including those now nearing
completion, will constitute a fleet which it is believed is sufficient for
ordinary cruising purposes in time of peace, we have now completed and in
process of construction but four first-class battle ships and but few torpedo
boats. If we are to have a navy for warlike operations, offensive and
defensive, we certainly ought to increase both the number of battle ships and
torpedo boats.

The manufacture of armor requires expensive plants and the aggregation of many
skilled workmen. All the armor necessary to complete the vessels now building
will be delivered before the 1st of June next. If no new contracts are given
out, contractors must disband their workmen and their plants must lie idle.
Battle ships authorized at this time would not be well under way until late in
the coming fiscal year, and at least three years and a half from the date of
the contract would be required for their completion. The Secretary states that
not more than 15 per cent of the cost of such ships need be included in the
appropriations for the coming year.

I recommend that provision be made for the construction of additional battle
ships and torpedo boats. The Secretary recommends the manufacture not only of
a reserve supply of ordnance and ordnance material for ships of the Navy, but
also a supply for the auxiliary fleet. Guns and their appurtenances should be
provided and kept on hand for both these purposes. We have not to-day a single
gun that could be put upon the ships Paris or New York of the International
Navigation Company or any other ship of our reserve Navy.

The manufacture of guns at the Washington Navy-Yard is proceeding
satisfactorily, and none of our new ships will be required to wait for their
guns or ordnance equipment.

An important order has been issued by the Secretary of the Navy coordinating
the duties of the several bureaus concerned in the construction of ships. This
order, it is believed, will secure to a greater extent than has heretofore
been possible the harmonious action of these several bureaus and make the
attainment of the best results more certain.

During the past fiscal year there has been an unusual and pressing demand in
many quarters of the world for the presence of vessels to guard American
interests.

In January last, during the Brazilian insurrection, a large fleet was
concentrated in the harbor of Rio de Janeiro. The vigorous action of
Rear-Admiral Benham in protecting the personal and commercial rights of our
citizens during the disturbed conditions afforded results which will, it is
believed, have a far-reaching and wholesome influence whenever in like
circumstances it may become necessary for our naval commanders to interfere on
behalf of our people in foreign ports.

The war now in progress between China and Japan has rendered it necessary or
expedient to dispatch eight vessels to those waters.

Both the Secretary of the Navy and the Secretary of the Treasury recommend the
transfer of the work of the Coast Survey proper to the Navy Department. I
heartily concur in this recommendation. Excluding Alaska and a very small area
besides, all the work of mapping and charting our coasts has been completed.
The hydrographic work, which must be done over and over again by reason of the
shifting and varying depths of water consequent upon the action of streams and
tides, has heretofore been done under the direction of naval officers in
subordination to the Superintendent of the Coast Survey. There seems to be no
good reason why the Navy should not have entire charge hereafter of such work,
especially as the Hydrographic Office of the Navy Department is now and has
been for many years engaged in making efficient maps entirely similar to those
prepared by the Coast Survey.

I feel it my imperative duty to call attention to the recommendation of the
Secretary in regard to the personnel of the line of the Navy. The stagnation
of promotion in this the vital branch of the service is so great as to
seriously impair its efficiency.

I consider it of the utmost importance that the young and middle-aged officers
should before the eve of retirement be permitted to reach a grade entitling
them to active and important duty.

The system adopted a few years ago regulating the employment of labor at the
navy-yards is rigidly upheld and has fully demonstrated its usefulness and
expediency. It is within the domain of civil-service reform inasmuch as
workmen are employed through a board of labor selected at each navy-yard and
are given work without reference to politics and in the order of their
application, preference, however, being given to Army and Navy veterans and
those having former navy-yard experience.

Amendments suggested by experience have been made to the rules regulating the
system. Through its operation the work at our navy-yards has been vastly
improved in efficiency and the opportunity to work has been honestly and
fairly awarded to willing and competent applicants.

It is hoped that if this system continues to be strictly adhered to there will
soon be as a natural consequence such an equalization of party benefit as will
remove all temptation to relax or abandon it.

The report of the Secretary of the Interior exhibits the situation of the
numerous and interesting branches of the public service connected with his
Department. I commend this report and the valuable recommendations of the
Secretary to the careful attention of the Congress.

The public land disposed of during the year amounted to 10,406,100.77 acres,
including 28,876.05 of Indian lands.

It is estimated that the public domain still remaining amounts to a little
more than 600,000,000 acres, including, however, about 360,000,000 acres in
Alaska, as well as military reservations and railroad and other selections of
lands yet unadjudicated.

The total cash receipts from sale of lands amounted to $2,674,285.79,
including $91,981.03 received for Indian lands.

Thirty-five thousand patents were issued for agricultural lands, and 3,100
patents were issued to Indians on allotments of their holdings in severalty,
the land so allotted being inalienable by the Indian allottees for a period of
twenty-five years after patent.

There were certified and patented on account of railroad and wagon-road grants
during the year 865,556.45 acres of land, and at the close of the year
29,000,000 acres were embraced in the lists of selections made by railroad and
wagon-road companies and awaited settlement.

The selections of swamp lands and that taken as indemnity therefor since the
passage of the act providing for the same in 1849 amount to nearly or quite
80,500,000 acres, of which 58,000,000 have been patented to States. About
138,000 acres were patented during the last year. Nearly 820,000 acres of
school and education grants were approved during the year, and at its close
1,250,363.81 acres remained unadjusted.

It appears that the appropriation for the current year on account of special
service for the protection of the public lands and the timber thereon is much
less than those for previous years, and inadequate for an efficient
performance of the work. A larger sum of money than has been appropriated
during a number of years past on this account has been returned to the
Government as a result of the labors of those employed in the particular
service mentioned, and I hope it will not be crippled by insufficient
appropriation.

I fully indorse the recommendation of the Secretary that adequate protection
be provided for our forest reserves and that a comprehensive forestry system
be inaugurated. Such keepers and superintendents as are necessary to protect
the forests already reserved should be provided.

I am of the opinion that there should be an abandonment of the policy
sanctioned by present laws under which the Government, for a very small
consideration, is rapidly losing title to immense tracts of land covered with
timber, which should be properly reserved as permanent sources of timber
supply.

The suggestion that a change be made in the manner of securing surveys of the
public lands is especially worthy of consideration. I am satisfied that these
surveys should be made by a corps of competent surveyors under the immediate
control and direction of the Commissioner of the General Land Office.

An exceedingly important recommendation of the Secretary relates to the manner
in which contests and litigated cases growing out of efforts to obtain
Government land are determined. The entire testimony upon which these
controversies depend in all their stages is taken before the local registers
and receivers, and yet these officers have no power to subpoena witnesses or
to enforce their attendance to testify. These cases, numbering three or four
thousand annually, are sent by the local officers to the Commissioner of the
General Land Office for his action. The exigencies of his other duties oblige
him to act upon the decisions of the registers and receivers without an
opportunity of thorough personal examination. Nearly 2,000 of these cases are
appealed annually from the Commissioner to the Secretary of the Interior.
Burdened with other important administrative duties, his determination of
these appeals must be almost perfunctory and based upon the examination of
others, though this determination of the Secretary operates as a final
adjudication upon rights of very great importance.

I concur in the opinion that the Commissioner of the General Land Office
should be relieved from the duty of deciding litigated land cases, that a
nonpartisan court should be created to pass on such cases, and that the
decisions of this court should be final, at least so far as the decisions of
the Department are now final. The proposed court might be given authority to
certify questions of law in matters of especial importance to the Supreme
Court of the United States or the court of appeals for the District of
Columbia for decision. The creation of such a tribunal would expedite the
disposal of cases and insure decisions of a more satisfactory character. The
registers and receivers who originally hear and decide these disputes should
be invested with authority to compel witnesses to attend and testify before
them.

Though the condition of the Indians shows a steady and healthy progress, their
situation is not satisfactory at all points. Some of them to whom allotments
of land have been made are found to be unable or disinclined to follow
agricultural pursuits or to otherwise beneficially manage their land. This is
especially true of the Cheyennes and Arapahoes, who, as it appears by reports
of their agent, have in many instances never been located upon their
allotments, and in some cases do not even know where their allotments are.
Their condition has deteriorated. They are not self-supporting and they live
in camps and spend their time in idleness.

I have always believed that allotments of reservation lands to Indians in
severalty should be made sparingly, or at least slowly, and with the utmost
caution. In these days, when white agriculturists and stock raisers of
experience and intelligence find their lot a hard one, we ought not to expect
Indians, unless far advanced in civilization and habits of industry, to
support themselves on the small tracts of land usually allotted to them.

If the self-supporting scheme by allotment fails, the wretched pauperism of
the allottees which results is worse than their original condition of
regulated dependence. It is evident that the evil consequences of ill-advised
allotment are intensified in cases where the false step can not be retraced on
account of the purchase by the Government of reservation lands remaining after
allotments are made and the disposition of such remaining lands to settlers or
purchasers from the Government.

I am convinced that the proper solution of the Indian problem and the success
of every step taken in that direction depend to a very large extent upon the
intelligence and honesty of the reservation agents and the interest they have
in their work. An agent fitted for his place can do much toward preparing the
Indians under his charge for citizenship and allotment of their lands, and his
advice as to any matter concerning their welfare will not mislead. An unfit
agent will make no effort to advance the Indians on his reservation toward
civilization or preparation for allotment of lands in severalty, and his
opinion as to their condition in this and other regards is heedless and
valueless.

The indications are that the detail of army officers as Indian agents will
result in improved management on the reservations.

Whenever allotments are made and any Indian on the reservation has previously
settled upon a lot and cultivated it or shown a disposition to improve it in
any way, such lot should certainly be allotted to him, and this should be made
plainly obligatory by statute.

In the light of experience and considering the uncertainty of the Indian
situation and its exigencies in the future, I am not only disposed to be very
cautious in making allotments, but I incline to agree with the Secretary of
the Interior in the opinion that when allotments are made the balance of
reservation land remaining after allotment, instead of being bought by the
Government from the Indians and opened for settlement with such scandals and
unfair practices as seem unavoidable, should remain for a time at least as
common land or be sold by the Government on behalf of the Indians in an
orderly way and at fixed prices, to be determined by its location and
desirability, and that the proceeds, less expenses, should be held in trust
for the benefit of the Indian proprietors.

The intelligent Indian-school management of the past year has been followed by
gratifying results. Efforts have been made to advance the work in a sound and
practical manner. Five institutes of Indian teachers have been held during the
year, and have proved very beneficial through the views exchanged and methods
discussed particularly applicable to Indian education.

Efforts are being made in the direction of a gradual reduction of the number
of Indian contract schools, so that in a comparatively short time they may
give way altogether to Government schools, and it is hoped that the change may
be so gradual as to be perfected without too great expense to the Government
or undue disregard of investments made by those who have established and are
maintaining such contract schools.

The appropriation for the current year, ending June 30, 1895, applicable to
the ordinary expenses of the Indian service amounts to $6,733,003.18, being
less by $663,240.64 than the sum appropriated on the same account for the
previous year.

At the close of the last fiscal year, on the 30th day of June, 1894, there
were 969,544 persons on our pension rolls, being a net increase of 3,532 over
the number reported at the end of the previous year.

These pensioners may be classified as follows: Soldiers and sailors survivors
of all wars, 753,968; widows and relatives of deceased soldiers, 215,162; army
nurses in the War of the Rebellion, 414. Of these pensioners 32,039 are
surviving soldiers of Indian and other wars prior to the late Civil War and
the widows or relatives of such soldiers.

The remainder, numbering 937,505, are receiving pensions on account of the
rebellion, and of these 469,344 are on the rolls under the authority of the
act of June 27, 1890, sometimes called the dependent-pension law.

The total amount expended for pensions during the year was $139,804,461.05,
leaving an unexpended balance from the sum appropriated of $25,205,712.65.

The sum necessary to meet pension expenditures for the year ending June 30,
1896, is estimated at $140,000,000.

The Commissioner of Pensions is of the opinion that the year 1895, being the
thirtieth after the close of the War of the Rebellion, must, according to all
sensible human calculation, see the highest limit of the pension roll, and
that after that year it must begin to decline.

The claims pending in the Bureau have decreased more than 90,000 during the
year. A large proportion of the new claims filed are for increase of pension
by those now on the rolls.

The number of certificates issued was 80,213.

The names dropped from the rolls for all causes during the year numbered
37,951.

Among our pensioners are 9 widows and 3 daughters of soldiers of the
Revolution and 45 survivors of the War of 1812.

The barefaced and extensive pension frauds exposed under the direction of the
courageous and generous veteran soldier now at the head of the Bureau leave no
room for the claim that no purgation of our pension rolls was needed or that
continued vigilance and prompt action are not necessary to the same end.

The accusation that an effort to detect pension frauds is evidence of
unfriendliness toward our worthy veterans and a denial of their claims to the
generosity of the Government suggests an unfortunate indifference to the
commission of any offense which has for its motive the securing of a pension
and indicates a willingness to be blind to the existence of mean and
treacherous crimes which play upon demagogic fears and make sport of the
patriotic impulse of a grateful people.

The completion of the Eleventh Census is now in charge of the Commissioner of
Labor. The total disbursements on account of the work for the fiscal year
ending June 30, 1894, amounted to $10,365,676.81. At the close of the year the
number of persons employed in the Census Office was 679; at present there are
about 400. The whole number of volumes necessary to comprehend the Eleventh
Census will be 25, and they will contain 22,270 printed pages. The assurance
is confidently made that before the close of the present calendar year the
material still incomplete will be practically in hand, and the census can
certainly be closed by the 4th of March, 1895. After that the revision and
proof reading necessary to bring out the volumes will still be required.

The text of the census volumes has been limited as far as possible to the
analysis of the statistics presented. This method, which is in accordance with
law, has caused more or less friction and in some instances individual
disappointment, for when the Commissioner of Labor took charge of the work he
found much matter on hand which according to this rule he was compelled to
discard. The census is being prepared according to the theory that it is
designed to collect facts and certify them to the public, not to elaborate
arguments or to present personal views.

The Secretary of Agriculture in his report reviews the operations of his
Department for the last fiscal year and makes recommendations for the further
extension of its usefulness. He reports a saving in expenditures during the
year of $600,000, which is covered back into the Treasury. This sum is 23 per
cent of the entire appropriation.

A special study has been made of the demand for American farm products in all
foreign markets, especially Great Britain, That country received from the
United States during the nine months ending September 30, 1894, 305,910 live
beef cattle, valued at $26,500,000, as against 182,611 cattle, valued at
$16,634,000, during the same period for 1893.

During the first six months of 1894 the United Kingdom took also 112,000,000
pounds of dressed beef from the United States, valued at nearly $10,000,000.

The report shows that during the nine months immediately preceding September
30, 1894, the United States exported to Great Britain 222,676,000 pounds of
pork; of apples, 1,900,000 bushels, valued at $2,500,000, and of horses 2,811,
at an average value of $139 per head. There was a falling off in American
wheat exports of 13,500,000 bushels, and the Secretary is inclined to believe
that wheat may not in the future be the staple export cereal product of our
country, but that corn will continue to advance in importance as an export on
account of the new uses to which it is constantly being appropriated.

The exports of agricultural products from the United States for the fiscal
year ending June 30, 1894, amounted to $628,363,038, being 72.28 per cent of
American exports of every description, and the United Kingdom of Great Britain
took more than 54 per cent of all farm products finding foreign markets.

The Department of Agriculture has undertaken during the year two new and
important lines of research. The first relates to grasses and forage plants,
with the purpose of instructing and familiarizing the people as to the
distinctive grasses of the United States and teaching them how to introduce
valuable foreign forage plants which may be adapted to this country. The
second relates to agricultural soils and crop production, involving the
analyses of samples of soils from all sections of the American Union, to
demonstrate their adaptability to particular plants and crops. Mechanical
analyses of soils may be of such inestimable utility that it is foremost in
the new lines of agricultural research, and the Secretary therefore recommends
that a division having it in charge be permanently established in the
Department.

The amount appropriated for the Weather Bureau was $951,100. Of that sum
$138,500, or 14 per cent, has been saved and is returned to the Treasury.

As illustrating the usefulness of this service it may be here stated that the
warnings which were very generally given of two tropical storms occurring in
September and October of the present year resulted in detaining safely in port
2,305 vessels, valued at $36,183,913, laden with cargoes of probably still
greater value. What is much more important and gratifying, many human lives on
these ships were also undoubtedly saved.

The appropriation to the Bureau of Animal Industry was $850,000, and the
expenditures for the year were only $495,429.24, thus leaving unexpended
$354,570.76. The inspection of beef animals for export and interstate trade
has been continued, and 12,944,056 head were inspected during the year, at a
cost of 1 3/4 cents per head, against 4 3/4 cents for 1893. The amount of pork
microscopically examined was 35,437,937 pounds, against 20,677,410 pounds in
the preceding year. The cost of this inspection has been diminished from 8 3/4
cents per head in 1893 to 6 1/2 cents in 1894.

The expense of inspecting the pork sold in 1894 to Germany and France by the
United States was $88,922.10. The quantity inspected was greater by 15,000,000
pounds than during the preceding year, when the cost of such inspection was
$172,367.08. The Secretary of Agriculture recommends that the law providing
for the microscopic inspection of export and interstate meat be so amended as
to compel owners of the meat inspected to pay the cost of such inspection, and
I call attention to the arguments presented in his report in support of this
recommendation.

The live beef cattle exported and tagged during the year numbered 353,535.
This is an increase of 69,533 head over the previous year.

The sanitary inspection of cattle shipped to Europe has cost an average of 10
3/4 cents for each animal, and the cost of inspecting Southern cattle and the
disinfection of cars and stock yards averages 2.7 cents per animal.

The scientific inquiries of the Bureau of Animal Industry have progressed
steadily during the year. Much tuberculin and mallein have been furnished to
State authorities for use in the agricultural colleges and experiment stations
for the treatment of tuberculosis and glanders.

Quite recently this Department has published the results of its investigations
of bovine tuberculosis, and its researches will be vigorously continued.
Certain herds in the District of Columbia will be thoroughly inspected and
will probably supply adequate scope for the Department to intelligently
prosecute its scientific work and furnish sufficient material for purposes of
illustration, description, and definition.

The sterilization of milk suspected of containing the bacilli of tuberculosis
has been during the year very thoroughly explained in a leaflet by Dr. D. E.
Salmon, the Chief of the Bureau, and given general circulation throughout the
country.

The Office of Experiment Stations, which is a part of the United States
Department of Agriculture, has during the past year engaged itself almost
wholly in preparing for publication works based upon the reports of
agricultural experiment stations and other institutions for agricultural
inquiry in the United States and foreign countries.

The Secretary in his report for 1893 called attention to the fact that the
appropriations made for the support of the experiment stations throughout the
Union were the only moneys taken out of the National Treasury by act of
Congress for which no accounting to Federal authorities was required.
Responding to this suggestion, the Fifty-third Congress, in making the
appropriation for the Department for the present fiscal year, provided that--

The Secretary of Agriculture shall prescribe the form of annual financial
statement required by section 3 of said act of March 2, 1887; shall ascertain
whether the expenditures under the appropriation hereby made are in accordance
with the provisions of said act, and shall make report thereon to Congress.

In obedience to this law the Department of Agriculture immediately sent out
blank forms of expense accounts to each station, and proposes in addition to
make, through trusted experts, systematic examination of the several stations
during each year for the purpose of acquiring by personal investigation the
detailed information necessary to enable the Secretary of Agriculture to make,
as the statute provides, a satisfactory report to Congress. The boards of
management of the several stations with great alacrity and cordiality have
approved the amendment to the law providing this supervision of their
expenditures, anticipating that it will increase the efficiency of the
stations and protect their directors and managers from loose charges
concerning their use of public funds, besides bringing the Department of
Agriculture into closer and more confidential relations with the experimental
stations, and through their joint service largely increasing their usefulness
to the agriculture of the country.

Acting upon a recommendation contained in the report of 1893, Congress
appropriated $10,000 "to enable the Secretary of Agriculture to investigate
and report upon the nutritive value of the various articles and commodities
used for human food, with special suggestions of full, wholesome, and edible
rations less wasteful and more economical than those in common use."

Under this appropriation the Department has prepared and now has nearly ready
for distribution an elementary discussion of the nutritive value and pecuniary
economy of food. When we consider that fully one-half of all the money earned
by the wage earners of the civilized world is expended by them for food, the
importance and utility of such an investigation is apparent.

The Department expended in the fiscal year 1893 $2,354,809.56, and out of that
sum the total amount expended in scientific research was 45.6 per cent. But in
the year ending June 30, 1894, out of a total expenditure of $1,948,988.38,
the Department applied 51.8 per cent of that sum to scientific work and
investigation. It is therefore very plainly observable that the economies
which have been practiced in the administration of the Department have not
been at the expense of scientific research.

The recommendation contained in the report of the Secretary for 1893 that the
vicious system of promiscuous free distribution of its departmental documents
be abandoned is again urged. These publications may well be furnished without
cost to public libraries, educational institutions, and the officers and
libraries of States and of the Federal Government; but from all individuals
applying for them a price covering the cost of the document asked for should
be required. Thus the publications and documents would be secured by those who
really desire them for proper purposes. Half a million of copies of the report
of the Secretary of Agriculture are printed for distribution, at an annual
cost of about $300,000. Large numbers of them are cumbering storerooms at the
Capitol and the shelves of secondhand-book stores throughout the country. All
this labor and waste might be avoided if the recommendations of the Secretary
were adopted.

The Secretary also again recommends that the gratuitous distribution of seeds
cease and that no money be appropriated for that purpose except to experiment
stations. He reiterates the reasons given in his report for 1893 for
discontinuing this unjustifiable gratuity, and I fully concur in the
conclusions which he has reached.

The best service of the statistician of the Department of Agriculture is the
ascertainment, by diligence and care, of the actual and real conditions,
favorable or unfavorable, of the farmers and farms of the country, and to seek
the causes which produce these conditions, to the end that the facts
ascertained may guide their intelligent treatment.

A further important utility in agricultural statistics is found in their
elucidation of the relation of the supply of farm products to the demand for
them in the markets of the United States and of the world.

It is deemed possible that an agricultural census may be taken each year
through the agents of the statistical division of the Department. Such a
course is commended for trial by the chief of that division. Its scope would
be: (1) The area under each of the more important crops. (2) The aggregate
products of each of such crops. (3) The quantity of wheat and corn in the
hands of farmers at a date after the spring sowings and plantings and before
the beginning of harvest, and also the quantity of cotton and tobacco
remaining in the hands of planters, either at the same date or at some other
designated time.

The cost of the work is estimated at $500,000.

Owing to the peculiar quality of the statistician's work and the natural and
acquired fitness necessary to its successful prosecution, the Secretary of
Agriculture expresses the opinion that every person employed in gathering
statistics under the chief of that division should be admitted to that service
only after a thorough, exhaustive, and successful examination at the hands of
the United States Civil Service Commission. This has led him to call for such
examination of candidates for the position of assistant statisticians, and
also of candidates for chiefs of sections in that division.

The work done by the Department of Agriculture is very superficially dealt
with in this communication, and I commend the report of the Secretary and the
very important interests with which it deals to the careful attention of the
Congress.

The advantages to the public service of an adherence to the principles of
civil-service reform are constantly more apparent, and nothing is so
encouraging to those in official life who honestly desire good government as
the increasing appreciation by our people of these advantages. A vast majority
of the voters of the land are ready to insist that the time and attention of
those they select to perform for them important public duties should not be
distracted by doling out minor offices, and they are growing to be unanimous
in regarding party organization as something that should be used in
establishing party principles instead of dictating the distribution of public
places as rewards of partisan activity.

Numerous additional offices and places have lately been brought within
civil-service rules and regulations, and some others will probably soon be
included.

The report of the Commissioners will be submitted to the Congress, and I
invite careful attention to the recommendations it contains.

I am entirely convinced that we ought not to be longer without a national
board of health or national health officer charged with no other duties than
such as pertain to the protection of our country from the invasion of
pestilence and disease. This would involve the establishment by such board or
officer of proper quarantine precautions, or the necessary aid and counsel to
local authorities on the subject; prompt advice and assistance to local boards
of health or health officers in the suppression of contagious disease, and in
cases where there are no such local boards or officers the immediate direction
by the national board or officer of measures of suppression; constant and
authentic information concerning the health of foreign countries and all parts
of our own country as related to contagious diseases, and consideration of
regulations to be enforced in foreign ports to prevent the introduction of
contagion into our cities and the measures which should be adopted to secure
their enforcement.

There seems to be at this time a decided inclination to discuss measures of
protection against contagious diseases in international conference, with a
view of adopting means of mutual assistance. The creation of such a national
health establishment would greatly aid our standing in such conferences and
improve our opportunities to avail ourselves of their benefits.

I earnestly recommend the inauguration of a national board of health or
similar national instrumentality, believing the same to be a needed precaution
against contagious disease and in the interest of the safety and health of our
people.

By virtue of a statute of the United States passed in 1888 I appointed in July
last Hon. John D. Kernan, of the State of New York, and Hon. Nicholas E.
Worthington, of the State of Illinois, to form, with Hon. Carroll D. Wright,
Commissioner of Labor, who was designated by said statute, a commission for
the purpose of making careful inquiry into the causes of the controversies
between certain railroads and their employees which had resulted in an
extensive and destructive strike, accompanied by much violence and dangerous
disturbance, with considerable loss of life and great destruction of property.

The report of the commissioners has been submitted to me and will be
transmitted to the Congress with the evidence taken upon their investigation.

Their work has been well done, and their standing and intelligence give
assurance that the report and suggestions they make are worthy of careful
consideration.

The tariff act passed at the last session of the Congress needs important
amendments if it is to be executed effectively and with certainty. In addition
to such necessary amendments as will not change rates of duty, I am still very
decidedly in favor of putting coal and iron upon the free list.

So far as the sugar schedule is concerned, I would be glad, under existing
aggravations, to see every particle of differential duty in favor of refined
sugar stricken out of our tariff law. If with all the favor now accorded the
sugar-refining interest in our tariff laws it still languishes to the extent
of closed refineries and thousands of discharged workmen, it would seem to
present a hopeless case for reasonable legislative aid. Whatever else is done
or omitted, I earnestly repeat here the recommendation I have made in another
portion of this communication, that the additional duty of one-tenth of a cent
per pound laid upon sugar imported from countries paying a bounty on its
export be abrogated. It seems to me that exceedingly important considerations
point to the propriety of this amendment.

With the advent of a new tariff policy not only calculated to relieve the
consumers of our land in the cost of their daily life, but to invite a better
development of American thrift and create for us closer and more profitable
commercial relations with the rest of the world, it follows as a logical and
imperative necessity that we should at once remove the chief if not the only
obstacle which has so long prevented our participation in the foreign carrying
trade of the sea. A tariff built upon the theory that it is well to check
imports and that a home market should bound the industry and effort of
American producers was fitly supplemented by a refusal to allow American
registry to vessels built abroad, though owned and navigated by our people,
thus exhibiting a willingness to abandon all contest for the advantages of
American transoceanic carriage. Our new tariff policy, built upon the theory
that it is well to encourage such importations as our people need, and that
our products and manufactures should find markets in every part of the
habitable globe, is consistently supplemented by the greatest possible liberty
to our citizens in the ownership and navigation of ships in which our products
and manufactures may be transported. The millions now paid to foreigners for
carrying American passengers and products across the sea should be turned into
American hands. Shipbuilding, which has been protected to strangulation,
should be revived by the prospect of profitable employment for ships when
built, and the American sailor should be resurrected and again take his
place--a sturdy and industrious citizen in time of peace and a patriotic and
safe defender of American interests in the day of conflict.

The ancient provision of our law denying American registry to ships built
abroad and owned by Americans appears in the light of present conditions not
only to be a failure for good at every point, but to be nearer a relic of
barbarism than anything that exists under the permission of a statute of the
United States. I earnestly recommend its prompt repeal.

During the last month the gold reserved in the Treasury for the purpose of
redeeming the notes of the Government circulating as money in the hands of the
people became so reduced and its further depletion in the near future seemed
so certain that in the exercise of proper care for the public welfare it
became necessary to replenish this reserve and thus maintain popular faith in
the ability and determination of the Government to meet as agreed its
pecuniary obligations.

It would have been well if in this emergency authority had existed to issue
the bonds of the Government bearing a low rate of interest and maturing within
a short period; but the Congress having failed to confer such authority,
resort was necessarily had to the resumption act of 1875, and pursuant to its
provisions bonds were issued drawing interest at the rate of 5 per cent per
annum and maturing ten years after their issue, that being the shortest time
authorized by the act. I am glad to say, however, that on the sale of these
bonds the premium received operated to reduce the rate of interest to be paid
by the Government to less than 3 per cent.

Nothing could be worse or further removed from sensible finance than the
relations existing between the currency the Government has issued, the gold
held for its redemption, and the means which must be resorted to for the
purpose of replenishing such redemption fund when impaired. Even if the claims
upon this fund were confined to the obligations originally intended and if the
redemption of these obligations meant their cancellation, the fund would be
very small. But these obligations when received and redeemed in gold are not
canceled, but are reissued and may do duty many times by way of drawing gold
from the Treasury. Thus we have an endless chain in operation constantly
depleting the Treasury's gold and never near a final rest. As if this was not
bad enough, we have, by a statutory declaration that it is the policy of the
Government to maintain the parity between gold and silver, aided the force and
momentum of this exhausting process and added largely to the currency
obligations claiming this peculiar gold redemption. Our small gold reserve is
thus subject to drain from every side. The demands that increase our danger
also increase the necessity of protecting this reserve against depletion, and
it is most unsatisfactory to know that the protection afforded is only a
temporary palliation.

It is perfectly and palpably plain that the only way under present conditions
by which this reserve when dangerously depleted can be replenished is through
the issue and sale of the bonds of the Government for gold, and yet Congress
has not only thus far declined to authorize the issue of bonds best suited to
such a purpose, but there seems a disposition in some quarters to deny both
the necessity and power for the issue of bonds at all.

I can not for a moment believe that any of our citizens are deliberately
willing that their Government should default in its pecuniary obligations or
that its financial operations should be reduced to a silver basis. At any
rate, I should not feel that my duty was done if I omitted any effort I could
make to avert such a calamity. As long, therefore, as no provision is made for
the final redemption or the putting aside of the currency obligation now used
to repeatedly and constantly draw from the Government its gold, and as long as
no better authority for bond issues is allowed than at present exists, such
authority will be utilized whenever and as often as it becomes necessary to
maintain a sufficient gold reserve, and in abundant time to save the credit of
our country and make good the financial declarations of our Government.

Questions relating to our banks and currency are closely connected with the
subject just referred to, and they also present some unsatisfactory features.
Prominent among them are the lack of elasticity in our currency circulation
and its frequent concentration in financial centers when it is most needed in
other parts of the country.

The absolute divorcement of the Government from the business of banking is the
ideal relationship of the Government to the circulation of the currency of the
country.

This condition can not be immediately reached, but as a step in that direction
and as a means of securing a more elastic currency and obviating other
objections to the present arrangement of bank circulation the Secretary of the
Treasury presents in his report a scheme modifying present banking laws and
providing for the issue of circulating notes by State banks free from taxation
under certain limitations.

The Secretary explains his plan so plainly and its advantages are developed by
him with such remarkable clearness that any effort on my part to present
argument in its support would be superfluous. I shall therefore content myself
with an unqualified indorsement of the Secretary's proposed changes in the law
and a brief and imperfect statement of their prominent features. It is
proposed to repeal all laws providing for the deposit of United States bonds
as security for circulation; to permit national banks to issue circulating
notes not exceeding in amount 75 per cent of their paid-up and unimpaired
capital, provided they deposit with the Government as a guaranty fund, in
United States legal-tender notes, including Treasury notes of 1890, a sum
equal in amount to 30 per cent of the notes they desire to issue, this deposit
to be maintained at all times, but whenever any bank retires any part of its
circulation a proportional part of its guaranty fund shall be returned to it;
to permit the Secretary of the Treasury to prepare and keep on hand ready for
issue in case an increase in circulation is desired blank national-bank notes
for each bank having circulation and to repeal the provisions of the present
law imposing limitations and restrictions upon banks desiring to reduce or
increase their circulation, thus permitting such increase or reduction within
the limit of 75 per cent of capital to be quickly made as emergencies arise.

In addition to the guaranty fund required, it is proposed to provide a safety
fund for the immediate redemption of the circulating notes of failed banks by
imposing a small annual tax, say one-half of 1 per cent, upon the average
circulation of each bank until the fund amounts to 5 per cent of the total
circulation outstanding. When a bank fails its guaranty fund is to be paid
into this safety fund and its notes are to be redeemed in the first instance
from such safety fund thus augmented, any impairment of such fund caused
thereby to be made good from the immediately available cash assets of said
bank, and if these should be insufficient such impairment to be made good by
pro rata assessment among the other banks, their contributions constituting a
first lien upon the assets of the failed bank in favor of the contributing
banks. As a further security it is contemplated that the existing provision
fixing the individual liability of stockholders is to be retained and the
bank's indebtedness on account of its circulating notes is to be made a first
lien on all its assets.

For the purpose of meeting the expense of printing notes, official
supervision, cancellation, and other like charges there shall be imposed a tax
of say one-half of 1 per cent per annum upon the average amount of notes in
circulation.

It is further provided that there shall be no national-bank notes issued of a
less denomination than $10; that each national bank, except in case of a
failed bank, shall redeem or retire its notes in the first instance at its own
office or at agencies to be designated by it, and that no fixed reserve need
be maintained on account of deposits.

Another very important feature of this plan is the exemption of State banks
from taxation by the United States in cases where it is shown to the
satisfaction of the Secretary of the Treasury and Comptroller of the Currency
by banks claiming such exemption that they have not had outstanding their
circulating notes exceeding 75 per cent of their paid-up and unimpaired
capital; that their stockholders are individually liable for the redemption of
their circulating notes to the full extent of their ownership of stock; that
the liability of said banks upon their circulating notes constitutes under
their State law a first lien upon their assets; that such banks have kept and
maintained a guaranty fund in United States legal-tender notes, including
Treasury notes of 1890, equal to 30 per cent of their outstanding circulating
notes, and that such banks have promptly redeemed their circulating notes when
presented at their principal or branch offices.

It is quite likely that this scheme may be usefully amended in some of its
details, but I am satisfied it furnishes a basis for a very great improvement
in our present banking and currency system.

I conclude this communication fully appreciating that the responsibility for
all legislation affecting the people of the United States rests upon their
representatives in the Congress, and assuring them that, whether in accordance
with recommendations I have made or not, I shall be glad to cooperate in
perfecting any legislation that tends to the prosperity and welfare of our
country.

GROVER CLEVELAND