Speech Transcript:

To the Senate and House of Representatives:

The year that has passed since the submission of my last message to
Congress has, especially during the latter part of it, been an
eventful one to the country. In the midst of great national
prosperity a financial crisis has occurred that has brought low
fortunes of gigantic proportions; political partisanship has almost
ceased to exist, especially in the agricultural regions; and,
finally, the capture upon the high seas of a vessel bearing our flag
has for a time threatened the most serious consequences, and has
agitated the public mind from one end of the country to the other.
But this, happily, now is in the course of satisfactory adjustment,
honorable to both nations concerned.

The relations of the United States, however, with most of the other
powers continue to be friendly and cordial. With France, Germany,
Russia, Italy, and the minor European powers; with Brazil and most of
the South American Republics, and with Japan, nothing has occurred
during the year to demand special notice. The correspondence between
the Department of State and various diplomatic representatives in or
from those countries is transmitted herewith.

In executing the will of Congress, as expressed in its joint
resolution of the 14th of February last, and in accordance with the
provisions of the resolution, a number of "practical artisans," of
"scientific men," and of "honorary commissioners" were authorized to
attend the exposition at Vienna as commissioners on the part of the
United States. It is believed that we have obtained the object which
Congress had in view when it passed the joint resolution--"in order
to enable the people of the United States to participate in the
advantages of the International Exhibition of the Products of
Agriculture, Manufactures, and the Fine Arts to be held at Vienna." I
take pleasure in adding that the American exhibitors have received a
gratifying number of diplomas and of medals.

During the exposition a conference was held at Vienna for the purpose
of consultation on the systems prevailing in different countries for
the protection of inventions. I authorized a representative from the
Patent Office to be present at Vienna at the time when this
conference was to take place, in order to aid as far as he might in
securing any possible additional protection to American inventors in
Europe. The report of this agent will be laid before Congress.

It is my pleasant duty to announce to Congress that the Emperor of
China, on attaining his majority, received the diplomatic
representatives of the Western powers in person. An account of these
ceremonies and of the interesting discussions which preceded them
will be found in the documents transmitted herewith. The accompanying
papers show that some advance, although slight, has been made during
the past year toward the suppression of the infamous Chinese cooly
trade. I recommend Congress to inquire whether additional legislation
be not needed on this subject.

The money awarded to the United States by the tribunal of arbitration
at Geneva was paid by Her Majesty's Government a few days in advance
of the time when it would have become payable according to the terms
of the treaty. In compliance with the provisions of the act of March
3, 1873, it was at once paid into the Treasury, and used to redeem,
so far as it might, the public debt of the United States; and the
amount so redeemed was invested in a 5 per cent registered bond of
the United States for $15,500,000, which is now held by the Secretary
of State, subject to the future disposition of Congress.

I renew my recommendation, made at the opening of the last session of
Congress, that a commission be created for the purpose of auditing and
determining the amounts of the several "direct losses growing out of
the destruction of vessels and their cargoes" by the Alabama, the
Florida, or the Shenandoah after leaving Melbourne, for which the
sufferers have received no equivalent or compensation, and of
ascertaining the names of the persons entitled to receive
compensation for the same, making the computations upon the basis
indicated by the tribunal of arbitration at Geneva; and that payment
of such losses be authorized to an extent not to exceed the awards of
the tribunal at Geneva.

By an act approved on the 14th day of February last Congress made
provision for completing, jointly with an officer or commissioner to
be named by Her Britannic Majesty, the determination of so much of
the boundary line between the territory of the United States and the
possessions of Great Britain as was left uncompleted by the
commissioners appointed under the act of Congress of August 11, 1856.
Under the provisions of this act the northwest water boundary of the
United States has been determined and marked in accordance with the
award of the Emperor of Germany. A protocol and a copy of the map
upon which the line was thus marked are contained in the papers
submitted herewith.

I also transmit a copy of the report of the commissioner for marking
the northern boundary between the United States and the British
possessions west of the Lake of the Woods, of the operations of the
commission during the past season. Surveys have been made to a point
497 miles west of the Lake of the Woods, leaving about 350 miles to
be surveyed, the field work of which can be completed during the next
season.

The mixed commission organized under the provisions of the treaty of
Washington for settling and determining the claims of citizens of
either power against the other arising out of acts committed against
their persons or property during the period between April 13, 1861,
and April 9, 1865, made its final award on the 25th day of September
last. It was awarded that the Government of the United States should
pay to the Government of Her Britannic Majesty, within twelve months
from the date of the award, the sum of $1,929,819 in gold. The
commission disallowed or dismissed all other claims of British
subjects against the United States. The amount of the claims
presented by the British Government, but disallowed or dismissed, is
understood to be about $93,000,000. It also disallowed all the claims
of citizens of the United States against Great Britain which were
referred to it.

I recommend the early passage of an act appropriating the amount
necessary to pay this award against the United States.

I have caused to be communicated to the Government of the King of
Italy the thanks of this Government for the eminent services rendered
by Count Corti as the third commissioner on this commission. With
dignity, learning, and impartiality he discharged duties requiring
great labor and constant patience, to the satisfaction, I believe, of
both Governments. I recommend legislation to create a special court,
to consist of three judges, who shall be empowered to hear and
determine all claims of aliens upon the United States arising out of
acts committed against their persons or property during the
insurrection. The recent reference under the treaty of Washington was
confined to claims of British subjects arising during the period named
in the treaty; but it is understood that there are other British
claims of a similar nature, arising after the 9th of April, 1865, and
it is known that other claims of a like nature are advanced by
citizens or subjects of other powers. It is desirable to have these
claims also examined and disposed of.

Official information being received from the Dutch Government of a
state of war between the King of the Netherlands and the Sultan of
Acheen, the officers of the United States who were near the seat of
the war were instructed to observe an impartial neutrality. It is
believed that they have done so.

The joint commission under the convention with Mexico of 1868, having
again been legally prolonged, has resumed its business, which, it is
hoped, may be brought to an early conclusion. The distinguished
representative of Her Britannic Majesty at Washington has kindly
consented, with the approval of his Government, to assume the arduous
and responsible duties of umpire in this commission, and to lend the
weight of his character and name to such decisions as may not receive
the acquiescence of both the arbitrators appointed by the respective
Governments.

The commissioners appointed pursuant to the authority of Congress to
examine into the nature and extent of the forays by trespassers from
that country upon the herds of Texas have made a report, which will
be submitted for your consideration.

The Venezuelan Government has been apprised of the sense of Congress
in regard to the awards of the joint commission under the convention
of 25th April, 1866, as expressed in the act of the 25th of February
last.

It is apprehended that that Government does not realize the character
of its obligations under that convention. As there is reason to
believe, however, that its hesitancy in recognizing them springs, in
part at least, from real difficulty in discharging them in connection
with its obligations to other governments, the expediency of further
forbearance on our part is believed to be worthy of your
consideration.

The Ottoman Government and that of Egypt have latterly shown a
disposition to relieve foreign consuls of the judicial powers which
heretofore they have exercised in the Turkish dominions, by
organizing other tribunals. As Congress, however, has by law provided
for the discharge of judicial functions by consuls of the United
States in that quarter under the treaty of 1830, I have not felt at
liberty formally to accept the proposed change without the assent of
Congress, whose decision upon the subject at as early a period as may
be convenient is earnestly requested.

I transmit herewith, for the consideration and determination of
Congress, an application of the Republic of Santo Domingo to this
Government to exercise a protectorate over that Republic.

Since the adjournment of Congress the following treaties with foreign
powers have been proclaimed: A naturalization convention with Denmark;
a convention with Mexico for renewing the Claims Commission; a
convention of friendship, commerce, and extradition with the Orange
Free State, and a naturalization convention with Ecuador.

I renew the recommendation made in my message of December, 1870, that
Congress authorize the Postmaster-General to issue all commissions to
officials appointed through his Department.

I invite the earnest attention of Congress to the existing laws of
the United States respecting expatriation and the election of
nationality by individuals. Many citizens of the United States reside
permanently abroad with their families. Under the provisions of the
act approved February 10, 1855, the children of such persons are to
be deemed and taken to be citizens of the United States, but the
rights of citizenship are not to descend to persons whose fathers
never resided in the United States.

It thus happens that persons who have never resided within the United
States have been enabled to put forward a pretension to the protection
of the United States against the claim to military service of the
government under whose protection they were born and have been
reared. In some cases even naturalized citizens of the United States
have returned to the land of their birth, with intent to remain
there, and their children, the issue of a marriage contracted there
after their return, and who have never been in the United States,
have laid claim to our protection when the lapse of many years had
imposed upon them the duty of military service to the only government
which had ever known them personally.

Until the year 1868 it was left, embarrassed by conflicting opinions
of courts and of jurists, to determine how far the doctrine of
perpetual allegiance derived from our former colonial relations with
Great Britain was applicable to American citizens. Congress then
wisely swept these doubts away by enacting that--Any declaration,
instruction, opinion, order, or decision of any officer of this
Government which denies, restricts, impairs, or questions the right
of expatriation is inconsistent with the fundamental principles of
this Government. But Congress did not indicate in that statute, nor
has it since done so, what acts are to be deemed to work
expatriation. For my own guidance in determining such questions I
required (under the provisions of the Constitution) the opinion in
writing of the principal officer in each of the Executive Departments
upon certain questions relating to this subject. The result satisfies
me that further legislation has become necessary. I therefore commend
the subject to the careful consideration of Congress, and I transmit
herewith copies of the several opinions of the principal officers of
the Executive Departments, together with other correspondence and
pertinent information on the same subject.

The United States, who led the way in the overthrow of the feudal
doctrine of perpetual allegiance, are among the last to indicate how
their own citizens may elect another nationality. The papers
submitted herewith indicate what is necessary to place us on a par
with other leading nations in liberality of legislation on this
international question. We have already in our treaties assented to
the principles which would need to be embodied in laws intended to
accomplish such results. We have agreed that citizens of the United
States may cease to be citizens and may voluntarily render allegiance
to other powers. We have agreed that residence in a foreign land,
without intent to return, shall of itself work expatriation. We have
agreed in some instances upon the length of time necessary for such
continued residence to work a presumption of such intent. I invite
Congress now to mark out and define when and how expatriation can be
accomplished; to regulate by law the condition of American women
marrying foreigners; to fix the status of children born in a foreign
country of American parents residing more or less permanently abroad,
and to make rules for determining such other kindred points as may
seem best to Congress.

In compliance with the request of Congress, I transmitted to the
American minister at Madrid, with instructions to present it to the
Spanish Government, the joint resolution approved on the 3d of March
last, tendering to the people of Spain, in the name and on the behalf
of the American people, the congratulations of Congress upon the
efforts to consolidate in Spain the principles of universal liberty
in a republican form of government.

The existence of this new Republic was inaugurated by striking the
fetters from the slaves in Porto Rico. This beneficent measure was
followed by the release of several thousand persons illegally held as
slaves in Cuba. Next, the Captain-General of that colony was deprived
of the power to set aside the orders of his superiors at Madrid,
which had pertained to the office since 1825. The sequestered estates
of American citizens, which had been the cause of long and fruitless
correspondence, were ordered to be restored to their owners. All
these liberal steps were taken in the face of a violent opposition
directed by the reactionary slave-holders of Havana, who are vainly
striving to stay the march of ideas which has terminated slavery in
Christendom, Cuba only excepted. Unhappily, however, this baneful
influence has thus far succeeded in defeating the efforts of all
liberal-minded men in Spain to abolish slavery in Cuba, and in
preventing the promised reform in that island. The struggle for
political supremacy continues there.

The proslavery and aristocratic party in Cuba is gradually arraigning
itself in more and more open hostility and defiance of the home
government, while it still maintains a political connection with the
Republic in the peninsula; and although usurping and defying the
authority of the home government whenever such usurpation or defiance
tends in the direction of oppression or of the maintenance of abuses,
it is still a power in Madrid, and is recognized by the Government.
Thus an element more dangerous to continued colonial relations
between Cuba and Spain than that which inspired the insurrection at
Yara--an element opposed to granting any relief from misrule and
abuse, with no aspirations after freedom, commanding no sympathies in
generous breasts, aiming to rivet still stronger the shackles of
slavery and oppression--has seized many of the emblems of power in
Cuba, and, under professions of loyalty to the mother country, is
exhausting the resources of the island, and is doing acts which are
at variance with those principles of justice, of liberality, and of
right which give nobility of character to a republic. In the
interests of humanity, of civilization, and of progress, it is to be
hoped that this evil influence may be soon averted.

The steamer Virginius was on the 26th day of September, 1870, duly
registered at the port of New York as a part of the commercial marine
of the United States. On the 4th of October, 1870, having received the
certificate of her register in the usual legal form, she sailed from
the port of New York and has not since been within the territorial
jurisdiction of the United States. On the 31st day of October last,
while sailing under the flag of the United States on the high seas,
she was forcibly seized by the Spanish gunboat Tornado, and was
carried into the port of Santiago de Cuba, where fifty-three of her
passengers and crew were inhumanly, and, so far at least as relates
to those who were citizens of the United States, without due process
of law, put to death.

It is a well-established principle, asserted by the United States
from the beginning of their national independence, recognized by
Great Britain and other maritime powers, and stated by the Senate in
a resolution passed unanimously on the 16th of June, 1858,
that--American vessels on the high seas in time of peace, bearing the
American flag, remain under the jurisdiction of the country to which
they belong, and therefore any visitation, molestation, or detention
of such vessel by force, or by the exhibition of force, on the part
of a foreign power is in derogation of the sovereignty of the United
States. In accordance with this principle, the restoration of the
Virginius and the surrender of the survivors of her passengers and
crew, and a due reparation to the flag, and the punishment of the
authorities who had been guilty of the illegal acts of violence, were
demanded. The Spanish Government has recognized the justice of the
demand, and has arranged for the immediate delivery of the vessel,
and for the surrender of the survivors of the passengers and crew,
and for a salute to the flag, and for proceedings looking to the
punishment of those who may be proved to have been guilty of illegal
acts of violence toward citizens of the United States, and also
toward indemnifying those who may be shown to be entitled to
indemnity. A copy of a protocol of a conference between the Secretary
of State and the Spanish minister, in which the terms of this
arrangement were agreed to, is transmitted herewith.

The correspondence on this subject with the legation of the United
States in Madrid was conducted in cipher and by cable, and needs the
verification of the actual text of the correspondence. It has seemed
to me to be due to the importance of the case not to submit this
correspondence until the accurate text can be received by mail. It is
expected shortly, and will be submitted when received.

In taking leave of this subject for the present I wish to renew the
expression of my conviction that the existence of African slavery in
Cuba is a principal cause of the lamentable condition of the island.
I do not doubt that Congress shares with me the hope that it will
soon be made to disappear, and that peace and prosperity may follow
its abolition.

The embargoing of American estates in Cuba, cruelty to American
citizens detected in no act of hostility to the Spanish Government,
the murdering of prisoners taken with arms in their hands, and,
finally, the capture upon the high seas of a vessel sailing under the
United States flag and bearing a United States registry have
culminated in an outburst of indignation that has seemed for a time
to threaten war. Pending negotiations between the United States and
the Government of Spain on the subject of this capture, I have
authorized the Secretary of the Navy to put our Navy on a war
footing, to the extent, at least, of the entire annual appropriation
for that branch of the service, trusting to Congress and the public
opinion of the American people to justify my action.

Assuming from the action of the last Congress in appointing a
Committee on Privileges and Elections to prepare and report to this
Congress a constitutional amendment to provide a better method of
electing the President and Vice-President of the United States, and
also from the necessity of such an amendment, that there will be
submitted to the State legislatures for ratification such an
improvement in our Constitution, I suggest two others for your
consideration:

First. To authorize the Executive to approve of so much of any
measure passing the two Houses of Congress as his judgment may
dictate, without approving the whole, the disapproved portion or
portions to be subjected to the same rules as now, to wit, to be
referred back to the House in which the measure or measures
originated, and, if passed by a two-thirds vote of the two Houses,
then to become a law without the approval of the President. I would
add to this a provision that there should be no legislation by
Congress during the last twenty-four hours of its sitting, except
upon vetoes, in order to give the Executive an opportunity to examine
and approve or disapprove bills understandingly.

Second. To provide by amendment that when an extra session of
Congress is convened by Executive proclamation legislation during the
continuance of such extra session shall be confined to such subjects
as the Executive may bring before it from time to time in writing.

The advantages to be gained by these two amendments are too obvious
for me to comment upon them. One session in each year is provided for
by the Constitution, in which there are no restrictions as to the
subjects of legislation by Congress. If more are required, it is
always in the power of Congress, during their term of office, to
provide for sessions at any time. The first of these amendments would
protect the public against the many abuses and waste of public moneys
which creep into appropriation bills and other important measures
passing during the expiring hours of Congress, to which otherwise due
consideration can not be given.

Treasury Department.

The receipts of the Government from all sources for the last fiscal
year were $333,738,204, and expenditures on all accounts
$290,345,245, thus showing an excess of receipts over expenditures of
$43,392,959. But it is not probable that this favorable exhibit will
be shown for the present fiscal year. Indeed, it is very doubtful
whether, except with great economy on the part of Congress in making
appropriations and the same economy in administering the various
Departments of Government, the revenues will not fall short of
meeting actual expenses, including interest on the public debt.

I commend to Congress such economy, and point out two sources where
It seems to me it might commence, to wit, in the appropriations for
public buildings in the many cities where work has not yet been
commenced; in the appropriations for river and harbor improvement in
those localities where the improvements are of but little benefit to
general commerce, and for fortifications.

There is a still more fruitful source of expenditure, which I will
point out later in this message. I refer to the easy method of
manufacturing claims for losses incurred in suppressing the late
rebellion.

I would not be understood here as opposing the erection of good,
substantial, and even ornamental buildings by the Government wherever
such buildings are needed. In fact, I approve of the Government owning
its own buildings in all sections of the country, and hope the day is
not far distant when it will not only possess them, but will erect in
the capital suitable residences for all persons who now receive
commutation for quarters or rent at Government expense, and for the
Cabinet, thus setting an example to the States which may induce them
to erect buildings for their Senators. But I would have this work
conducted at a time when the revenues of the country would abundantly
justify it.

The revenues have materially fallen off for the first five months of
the present fiscal year from what they were expected to produce,
owing to the general panic now prevailing, which commenced about the
middle of September last. The full effect of this disaster, if it
should not prove a "blessing in disguise," is yet to be demonstrated.
In either event it is your duty to heed the lesson and to provide by
wise and well-considered legislation, as far as it lies in your
power, against its recurrence, and to take advantage of all benefits
that may have accrued.

My own judgment is that, however much individuals may have suffered,
one long step has been taken toward specie payments; that we can
never have permanent prosperity until a specie basis is reached: and
that a specie basis can not be reached and maintained until our
exports, exclusive of gold, pay for our imports, interest due abroad,
and other specie obligations, or so nearly so as to leave an
appreciable accumulation of the precious metals in the country from
the products of our mines.

The development of the mines of precious metals during the past year
and the prospective development of them for years to come are
gratifying in their results. Could but one-half of the gold extracted
from the mines be retained at home, our advance toward specie payments
would be rapid.

To increase our exports sufficient currency is required to keep all
the industries of the country employed. Without this national as well
as individual bankruptcy must ensue. Undue inflation, on the other
hand, while it might give temporary relief, would only lead to
inflation of prices, the impossibility of competing in our own
markets for the products of home skill and labor, and repeated
renewals of present experiences. Elasticity to our circulating
medium, therefore, and just enough of it to transact the legitimate
business of the country and to keep all industries employed, is what
is most to be desired. The exact medium is specie, the recognized
medium of exchange the world over. That obtained, we shall have a
currency of an exact degree of elasticity. If there be too much of it
for the legitimate purposes of trade and commerce, it will flow out of
the country. If too little, the reverse will result. To hold what we
have and to appreciate our currency to that standard is the problem
deserving of the most serious consideration of Congress.

The experience of the present panic has proven that the currency of
the country, based, as it is, upon the credit of the country, is the
best that has ever been devised. Usually in times of such trials
currency has become worthless, or so much depreciated in value as to
inflate the values of all the necessaries of life as compared with
the currency. Everyone holding it has been anxious to dispose of it
on any terms. Now we witness the reverse. Holders of currency hoard
it as they did gold in former experiences of a like nature.

It is patent to the most casual observer that much more currency, or
money, is required to transact the legitimate trade of the country
during the fall and winter months, when the vast crops are being
removed, than during the balance of the year. With our present system
the amount in the country remains the same throughout the entire year,
resulting in an accumulation of all the surplus capital of the country
in a few centers when not employed in the moving of crops, tempted
there by the offer of interest on call loans. Interest being paid,
this surplus capital must earn this interest paid with a profit.
Being subject to "call," it can not be loaned, only in part at best,
to the merchant or manufacturer for a fixed term. Hence, no matter
how much currency there might be in the country, it would be
absorbed, prices keeping pace with the volume, and panics,
stringency, and disasters would ever be recurring with the autumn.
Elasticity in our monetary system, therefore, is the object to be
attained first, and next to that, as far as possible, a prevention of
the use of other people's money in stock and other species of
speculation. To prevent the latter it seems to me that one great step
would be taken by prohibiting the national banks from paying interest
on deposits, by requiring them to hold their reserves in their own
vaults, and by forcing them into resumption, though it would only be
in legal-tender notes. For this purpose I would suggest the
establishment of clearing houses for your consideration.

To secure the former many plans have been suggested, most, if not
all, of which look to me more like inflation on the one hand, or
compelling the Government, on the other, to pay interest, without
corresponding benefits, upon the surplus funds of the country during
the seasons when otherwise unemployed.

I submit for your consideration whether this difficulty might not be
overcome by authorizing the Secretary of the Treasury to issue at any
time to national banks of issue any amount of their own notes below a
fixed percentage of their issue (say 40 per cent), upon the banks'
depositing with the Treasurer of the United States an amount of
Government bonds equal to the amount of notes demanded, the banks to
forfeit to the Government, say, 4 per cent of the interest accruing
on the bonds so pledged during the time they remain with the
Treasurer as security for the increased circulation, the bonds so
pledged to be redeemable by the banks at their pleasure, either in
whole or in part, by returning their own bills for cancellation to an
amount equal to the face of the bonds withdrawn. I would further
suggest for your consideration the propriety of authorizing national
banks to diminish their standing issue at pleasure, by returning for
cancellation their own bills and withdrawing so many United States
bonds as are pledged for the bills returned.

In view of the great actual contraction that has taken place in the
currency and the comparative contraction continuously going on, due
to the increase of population, increase of manufactories and all the
industries, I do not believe there is too much of it now for the
dullest period of the year. Indeed, if clearing houses should be
established, thus forcing redemption, it is a question for your
consideration whether banking should not be made free, retaining all
the safeguards now required to secure bill holders. In any
modification of the present laws regulating national banks, as a
further step toward preparing for resumption of specie payments, I
invite your attention to a consideration of the propriety of exacting
from them the retention as a part of their reserve either the whole or
a part of the gold interest accruing upon the bonds pledged as
security for their issue. I have not reflected enough on the bearing
this might have in producing a scarcity of coin with which to pay
duties on imports to give it my positive recommendation. But your
attention is invited to the subject.

During the last four years the currency has been contracted,
directly, by the withdrawal of 3 per cent certificates,
compound-interest notes, and "seven-thirty" bonds outstanding on the
4th of March, 1869, all of which took the place of legal-tenders in
the bank reserves to the extent of $63,000,000.

During the same period there has been a much larger comparative
contraction of the currency. The population of the country has
largely increased. More than 25,000 miles of railroad have been
built, requiring the active use of capital to operate them. Millions
of acres of land have been opened to cultivation, requiring capital
to move the products. Manufactories have multiplied beyond all
precedent in the same period of time, requiring capital weekly for
the payment of wages and for the purchase of material; and probably
the largest of all comparative contraction arises from the organizing
of free labor in the South. Now every laborer there receives his
wages, and, for want of savings banks, the greater part of such wages
is carried in the pocket or hoarded until required for use.

These suggestions are thrown out for your consideration, without any
recommendation that they shall be adopted literally, but hoping that
the best method may be arrived at to secure such an elasticity of the
currency as will keep employed all the industries of the country and
prevent such an inflation as will put off indefinitely the resumption
of specie payments, an object so devoutly to be wished for by all, and
by none more earnestly than the class of people most directly
interested--those who "earn their bread by the sweat of their brow."
The decisions of Congress on this subject will have the hearty
support of the Executive.

In previous messages I have called attention to the decline in
American shipbuilding and recommended such legislation as would
secure to us our proportion of the carrying trade. Stimulated by high
rates and abundance of freight, the progress for the last year in
shipbuilding has been very satisfactory. There has been an increase
of about 3 per cent in the amount transported in American vessels
over the amount of last year. With the reduced cost of material which
has taken place, it may reasonably be hoped that this progress will be
maintained, and even increased. However, as we pay about $80,000,000
per annum to foreign vessels for the transportation to a market of
our surplus products, thus increasing the balance of trade against us
to this amount, the subject is one worthy of your serious
consideration.

"Cheap transportation" is a subject that has attracted the attention
of both producers and consumers for the past few years, and has
contributed to, if it has not been the direct cause of, the recent
panic and stringency.

As Congress, at its last session, appointed a special committee to
investigate this whole subject during the vacation and report at this
session, I have nothing to recommend until their report is read.

There is one work, however, of a national character, in which the
greater portion of the East and the West, the North and the South,
are equally interested, to which I will invite your attention.

The State of New York has a canal connecting Lake Erie with tide
water on the Hudson River. The State of Illinois has a similar work
connecting Lake Michigan with navigable water on the Illinois River,
thus making water communication inland between the East and the West
and South. These great artificial water courses are the property of
the States through which they pass, and pay toll to those States.
Would it not be wise statesmanship to pledge these States that if
they will open these canals for the passage of large vessels the
General Government will look after and keep in navigable condition
the great public highways with which they connect, to wit, the
Overslaugh on the Hudson, the St. Clair Flats, and the Illinois and
Mississippi rivers? This would be a national work; one of great value
to the producers of the West and South in giving them cheap
transportation for their produce to the seaboard and a market, and to
the consumers in the East in giving them cheaper food, particularly of
those articles of food which do not find a foreign market, and the
prices of which, therefore, are not regulated by foreign demands. The
advantages of such a work are too obvious for argument. I submit the
subject to you, therefore, without further comment.

In attempting to regain our lost commerce and carrying trade I have
heretofore called attention to the States south of us offering a
field where much might be accomplished. To further this object I
suggest that a small appropriation be made, accompanied with
authority for the Secretary of the Navy to fit out a naval vessel to
ascend the Amazon River to the mouth of the Madeira; thence to
explore that river and its tributaries into Bolivia, and to report to
Congress at its next session, or as soon as practicable, the
accessibility of the country by water, its resources, and the
population so reached. Such an exploration would cost but little; it
can do no harm, and may result in establishing a trade of value to
both nations.

In further connection with the Treasury Department I would recommend
a revision and codification of the tariff laws and the opening of
more mints for coining money, with authority to coin for such nations
as may apply.

War Department.

The attention of Congress is invited to the recommendations contained
in the report of the Secretary of War herewith accompanying.

The apparent great cost of supporting the Army is fully explained by
this report, and I hope will receive your attention.

While inviting your general attention to all the recommendations made
by the Secretary of War, there are two which I would especially invite
you to consider: First, the importance of preparing for war in time of
peace by providing proper armament for our seacoast defenses. Proper
armament is of vastly more importance than fortifications. The latter
can be supplied very speedily for temporary purposes when needed; the
former can not. The second is the necessity of reopening promotion in
the staff corps of the Army. Particularly is this necessity felt in
the Medical, Pay, and Ordnance departments.

At this time it is necessary to employ "contract surgeons" to supply
the necessary medical attendance required by the Army.

With the present force of the Pay Department it is now difficult to
make the payments to troops provided for by law. Long delays in
payments are productive of desertions and other demoralization, and
the law prohibits the payment of troops by other than regular army
paymasters.

There are now sixteen vacancies in the Ordnance Department, thus
leaving that branch of the service without sufficient officers to
conduct the business of the different arsenals on a large scale if
ever required.

Navy Department.

During the past year our Navy has been depleted by the sale of some
vessels no longer fit for naval service and by the condemnation of
others not yet disposed of. This, however, has been more than
compensated for by the repair of six of the old wooden ships and by
the building of eight new sloops of war, authorized by the last
Congress. The building of these latter has occurred at a doubly
fortunate time. They are about being completed at a time when they
may possibly be much needed, and the work upon them has not only
given direct employment to thousands of men, but has no doubt been
the means of keeping open establishments for other work at a time of
great financial distress.

Since the commencement of the last month, however, the distressing
occurrences which have taken place in the waters of the Caribbean
Sea, almost on our very seaboard, while they illustrate most forcibly
the necessity always existing that a nation situated like ours should
maintain in a state of possible efficiency a navy adequate to its
responsibilities, has at the same time demanded that all the
effective force we really have shall be put in immediate readiness
for warlike service. This has been and is being done promptly and
effectively, and I am assured that all the available ships and every
authorized man of the American Navy will be ready for whatever action
is required for the safety of our citizens or the maintenance of our
honor. This, of course, will require the expenditure in a short time
of some of the appropriations which were calculated to extend through
the fiscal year, but Congress will, I doubt not, understand and
appreciate the emergency, and will provide adequately not only for
the present preparation, but for the future maintenance of our naval
force. The Secretary of the Navy has during the past year been
quietly putting some of our most effective monitors in condition for
service, and thus the exigency finds us in a much better condition
for work than we could possibly have been without his action.

Post-Office Depafrtment.

A complete exhibit is presented in the accompanying report of the
postmaster-General of the operations of the Post-Office Department
during the year. The ordinary postal revenues for the fiscal year
ended June 30, 1873, amounted to $22,996,741.57, and the expenditures
of all kinds to $29,084,945.67. The increase of revenues over 1872 was
$1,081,315.20, and the increase of expenditures $2,426,753.36.

Independent of the payments made from special appropriations for mail
steamship lines, the amount drawn from the General Treasury to meet
deficiencies was $5,265,475. The constant and rapid extension of our
postal service, particularly upon railways, and the improved
facilities for the collection, transmission, distribution, and
delivery of the mails which are constantly being provided account for
the increased expenditures of this popular branch of the public
service.

The total number of post-offices in operation on June 30, 1873, was
33,244, a net increase of 1,381 over the number reported the
preceding year. The number of Presidential offices was 1,363, an
increase of 163 during the year. The total length of railroad mail
routes at the close of the year was 63,457 miles, an increase of
5,546 miles over the year 1872. Fifty-nine railway post-office lines
were in operation June 30, 1873, extending over 14,866 miles of
railroad routes and performing an aggregate service of 34,925 miles
daily.

The number of letters exchanged with foreign countries was
27,459,185, an increase of 3,096,685 over the previous year, and the
postage thereon amounted to $2,021,310.86. The total weight of
correspondence exchanged in the mails with European countries
exceeded 912 tons, an increase of 92 tons over the previous year. The
total cost of the United States ocean steamship service, including
$725,000 paid from special appropriations to subsidized lines of mail
steamers, was $1,047,271.35.

New or additional postal conventions have been concluded with Sweden,
Norway, Belgium, Germany, Canada, Newfoundland, and Japan, reducing
postage rates on correspondence exchanged with those countries; and
further efforts have been made to conclude a satisfactory postal
convention with France, but without success.

I invite the favorable consideration of Congress to the suggestions
and recommendations of the Postmaster-General for an extension of the
free-delivery system in all cities having a population of not less
than 10,000; for the prepayment of postage on newspapers and other
printed matter of the second class; for a uniform postage and limit
of weight on miscellaneous matter; for adjusting the compensation of
all postmasters not appointed by the President, by the old method of
commissions on the actual receipts of the office, instead of the
present mode of fixing the salary in advance upon special returns;
and especially do I urge favorable action by Congress on the
important recommendations of the Postmaster-General for the
establishment of United States postal savings depositories.

Your attention is also again called to a consideration of the
question of postal telegraphs and the arguments adduced in support
thereof, in the hope that you may take such action in connection
therewith as in your judgment will most contribute to the best
interests of the country.

Department Of Justice

Affairs in Utah require your early and special attention. The Supreme
Court of the United States, in the case of Clinton vs. Englebrecht,
decided that the United States marshal of that Territory could not
lawfully summon jurors for the district courts; and those courts hold
that the Territorial marshal can not lawfully perform that duty,
because he is elected by the legislative assembly, and not appointed
as provided for in the act organizing the Territory. All proceedings
at law are practically abolished by these decisions, and there have
been but few or no jury trials in the district courts of that
Territory since the last session of Congress. Property is left
without protection by the courts, and crimes go unpunished. To
prevent anarchy there it is absolutely necessary that Congress
provide the courts with some mode of obtaining jurors, and I
recommend legislation to that end, and also that the probate courts
of the Territory, now assuming to issue writs of injunction and
habeas corpus and to try criminal cases and questions as to land
titles, be denied all jurisdiction not possessed ordinarily by courts
of that description.

I have become impressed with the belief that the act approved March
2, 1867, entitled "An act to establish a uniform system of bankruptcy
throughout the United States," is productive of more evil than good at
this time. Many considerations might be urged for its total repeal,
but, if this is not considered advisable, I think it will not be
seriously questioned that those portions of said act providing for
what is called involuntary bankruptcy operate to increase the
financial embarrassments of the country. Careful and prudent men very
often become involved in debt in the transaction of their business,
and though they may possess ample property, if it could be made
available for that purpose, to meet all their liabilities, yet, on
account of the extraordinary scarcity of money, they may be unable to
meet all their pecuniary obligations as they become due, in
consequence of which they are liable to be prostrated in their
business by proceedings in bankruptcy at the instance of unrelenting
creditors. People are now so easily alarmed as to monetary matters
that the mere filing of a petition in bankruptcy by an unfriendly
creditor will necessarily embarrass, and oftentimes accomplish the
financial ruin, of a responsible business man. Those who otherwise
might make lawful and just arrangements to relieve themselves from
difficulties produced by the present stringency in money are
prevented by their constant exposure to attack and disappointment by
proceedings against them in bankruptcy, and, besides, the law is made
use of in many cases by obdurate creditors to frighten or force
debtors into a compliance with their wishes and into acts of
injustice to other creditors and to themselves. I recommend that so
much of said act as provides for involuntary bankruptcy on account of
the suspension of payment be repealed.

Your careful attention is invited to the subject of claims against
the Government and to the facilities afforded by existing laws for
their prosecution. Each of the Departments of State, Treasury, and
War has demands for many millions of dollars upon its files, and they
are rapidly accumulating. To these may be added those now pending
before Congress, the Court of Claims, and the Southern Claims
Commission, making in the aggregate an immense sum. Most of these
grow out of the rebellion, and are intended to indemnify persons on
both sides for their losses during the war; and not a few of them are
fabricated and supported by false testimony. Projects are on foot, it
is believed, to induce Congress to provide for new classes of claims,
and to revive old ones through the repeal or modification of the
statute of limitations, by which they are now barred. I presume these
schemes, if proposed, will be received with little favor by Congress,
and I recommend that persons having claims against the United States
cognizable by any tribunal or Department thereof be required to
present them at an early day, and that legislation be directed as far
as practicable to the defeat of unfounded and unjust demands upon the
Government; and I would suggest, as a means of preventing fraud, that
witnesses be called upon to appear in person to testify before those
tribunals having said claims before them for adjudication. Probably
the largest saving to the National Treasury can be secured by timely
legislation on these subjects of any of the economic measures that
will be proposed.

You will be advised of the operations of the Department of Justice by
the report of the Attorney-General, and I invite your attention to the
amendments of existing laws suggested by him, with the view of
reducing the expenses of that Department.

Department Of The Interior.

The policy inaugurated toward the Indians at the beginning of the
last Administration has been steadily pursued, and, I believe, with
beneficial results. It will be continued with only such modifications
as time and experience may demonstrate as necessary.

With the encroachment of civilization upon the Indian reservations
and hunting grounds, disturbances have taken place between the
Indians and whites during the past year, and probably will continue
to do so until each race appreciates that the other has rights which
must be respected.

The policy has been to collect the Indians as rapidly as possible on
reservations, and as far as practicable within what is known as the
Indian Territory, and to teach them the arts of civilization and
self-support. Where found off their reservations, and endangering the
peace and safety of the whites, they have been punished, and will
continue to be for like offenses.

The Indian Territory south of Kansas and west of Arkansas is
sufficient in area and agricultural resources to support all the
Indians east of the Rocky Mountains. In time, no doubt, all of them,
except a few who may elect to make their homes among white people,
will be collected there. As a preparatory step for this consummation,
I am now satisfied that a Territorial form of government should be
given them, which will secure the treaty rights of the original
settlers and protect their homesteads from alienation for a period of
twenty years.

The operations of the Patent Office are growing to such a magnitude
and the accumulation of material is becoming so great that the
necessity of more room is becoming more obvious day by day. I
respectfully invite your attention to the reports of the Secretary of
the Interior and Commissioner of Patents on this subject.

The business of the General Land Office exhibits a material increase
in all its branches during the last fiscal year. During that time
there were disposed of out of the public lands 13,030,606 acres,
being an amount greater by 1,165,631 acres than was disposed of
during the preceding year. Of the amount disposed of, 1,626,266 acres
were sold for cash, 214,940 acres were located with military land
warrants, 3,793,612 acres were taken for homesteads, 653,446 acres
were located with agricultural-college scrip, 6,083,536 acres were
certified by railroads, 76,576 acres were granted to wagon roads,
238,548 acres were approved to States as swamp lands, 138,681 acres
were certified for agricultural colleges, common schools,
universities, and seminaries, 190,775 acres were approved to States
for internal improvements, and 14,222 acres were located with Indian
scrip. The cash receipts during the same time were $3,408,515.50,
being $190,415.50 in excess of the receipts of the previous year.
During the year 30,488,132 acres of public land were surveyed, an
increase over the amount surveyed the previous year of 1,037,193
acres, and, added to the area previously surveyed, aggregates
616,554,895 acres which have been surveyed, leaving 1,218,443,505
acres of the public land still unsurveyed.

The increased and steadily increasing facilities for reaching our
unoccupied public domain and for the transportation of surplus
products enlarge the available field for desirable homestead
locations, thus stimulating settlement and extending year by year in
a gradually increasing ratio the area of occupation and cultivation.

The expressed desire of the representatives of a large colony of
citizens of Russia to emigrate to this country, as is understood,
with the consent of their Government, if certain concessions can be
made to enable them to settle in a compact colony, is of great
interest, as going to show the light in which our institutions are
regarded by an industrious, intelligent, and wealthy people, desirous
of enjoying civil and religious liberty; and the acquisition of so
large an immigration of citizens of a superior class would without
doubt be of substantial benefit to the country. I invite attention to
the suggestion of the Secretary of the Interior in this behalf.

There was paid during the last fiscal year for pensions, including
the expense of disbursement, $29,185,289.62, being an amount less by
$984,050.98 than was expended for the same purpose the preceding
year. Although this statement of expenditures would indicate a
material reduction in amount compared with the preceding year, it is
believed that the changes in the pension laws at the last session of
Congress will absorb that amount the current year. At the close of
the last fiscal year there were on the pension rolls 99,804 invalid
military pensioners and 112,088 widows, orphans, and dependent
relatives of deceased soldiers, making a total of that class of
211,892; 18,266 survivors of the War of 1812 and 5,058 widows of
soldiers of that war pensioned under the act of Congress of February
14, 1871, making a total of that class of 23,319; 1,480 invalid navy
pensioners and 1,770 widows, orphans, and dependent relatives of
deceased officers, sailors, and marines of the Navy, making a total
of navy pensioners of 3,200, and a grand total of pensioners of 311
classes of 238,411, showing a net increase during the last fiscal
year of 6,182. During the last year the names of 16,405 pensioners
were added to the rolls, and 10,223 names were dropped therefrom for
various causes.

The system adopted for the detection of frauds against the Government
in the matter of pensions has been productive of satisfactory results,
but legislation is needed to provide, if possible, against the
perpetration of such frauds in future.

The evidently increasing interest in the cause of education is a most
encouraging feature in the general progress and prosperity of the
country, and the Bureau of Education is earnest in its efforts to
give proper direction to the new appliances and increased facilities
which are being offered to aid the educators of the country in their
great work.

The Ninth Census has been completed, the report thereof published and
distributed, and the working force of the Bureau disbanded. The
Secretary of the Interior renews his recommendation for a census to
be taken in 1875, to which subject the attention of Congress is
invited. The original suggestion in that behalf has met with the
general approval of the country; and even if it be not deemed
advisable at present to provide for a regular quinquennial census, a
census taken in 1875, the report of which could be completed and
published before the one hundredth anniversary of our national
independence, would be especially interesting and valuable, as
showing the progress of the country during the first century of our
national existence. It is believed, however, that a regular census
every five years would be of substantial benefit to the country,
inasmuch as our growth hitherto has been so rapid that the results of
the decennial census are necessarily unreliable as a basis of
estimates for the latter years of a decennial period.

District Of Columbia.

Under the very efficient management of the governor and the board of
public works of this District the city of Washington is rapidly
assuming the appearance of a capital of which the nation may well be
proud. From being a most unsightly place three years ago,
disagreeable to pass through in summer in consequence of the dust
arising from unpaved streets, and almost impassable in the winter
from the mud, it is now one of the most sightly cities in the
country, and can boast of being the best paved.

The work has been done systematically, the plans, grades, location of
sewers, water and gas mains being determined upon before the work was
commenced, thus securing permanency when completed. I question
whether so much has ever been accomplished before in any American
city for the same expenditures. The Government having large
reservations in the city, and the nation at large having an interest
in their capital, I recommend a liberal policy toward the District of
Columbia, and that the Government should bear its just share of the
expense of these improvements. Every citizen visiting the capital
feels a pride in its growing beauty, and that he too is part owner in
the investments made here.

I would suggest to Congress the propriety of promoting the
establishment in this District of an institution of learning, or
university of the highest class, by the donation of lands. There is
no place better suited for such an institution than the national
capital. There is no other place in which every citizen is so
directly interested.

Civil-Service Reform.

In three successive messages to Congress I have called attention to
the subject of "civil-service reform."

Action has been taken so far as to authorize the appointment of a
board to devise rules governing methods of making appointments and
promotions, but there never has been any action making these rules,
or any rules, binding, or even entitled to observance, where persons
desire the appointment of a friend or the removal of an official who
may be disagreeable to them.

To have any rules effective they must have the acquiescence of
Congress as well as of the Executive. I commend, therefore, the
subject to your attention, and suggest that a special committee of
Congress might confer with the Civil-Service Board during the present
session for the purpose of devising such rules as can be maintained,
and which will secure the services of honest and capable officials,
and which will also protect them in a degree of independence while in
office.

Proper rules will protect Congress, as well as the Executive, from
much needless persecution, and will prove of great value to the
public at large.

I would recommend for your favorable consideration the passage of an
enabling act for the admission of Colorado as a State in the Union.
It possesses all the elements of a prosperous State, agricultural and
mineral, and, I believe, has a population now to justify such
admission. In connection with this I would also recommend the
encouragement of a canal for purposes of irrigation from the eastern
slope of the Rocky Mountains to the Missouri River. As a rule I am
opposed to further donations of public lands for internal
improvements owned and controlled by private corporations, but in
this instance I would make an exception. Between the Missouri River
and the Rocky Mountains there is an arid belt of public land from 300
to 500 miles in width, perfectly valueless for the occupation of man,
for the want of sufficient rain to secure the growth of any product.
An irrigating canal would make productive a belt as wide as the
supply of water could be made to spread over across this entire
country, and would secure a cordon of settlements connecting the
present population of the mountain and mining regions with that of
the older States. All the land reclaimed would be clear gain. If
alternate sections are retained by the Government, I would suggest
that the retained sections be thrown open to entry under the
homestead laws, or sold to actual settlers for a very low price.

I renew my previous recommendation to Congress for general amnesty.
The number engaged in the late rebellion yet laboring under
disabilities is very small, but enough to keep up a constant
irritation. No possible danger can accrue to the Government by
restoring them to eligibility to hold office.

I suggest for your consideration the enactment of a law to better
secure the civil rights which freedom should secure, but has not
effectually secured, to the enfranchised slave.

Ulysses S. Grant