Speech Transcript:

To the Senate and House of Representatives:

Since the convening of Congress one year ago the nation has undergone
a prostration in business and industries such as has not been
witnessed with us for many years. Speculation as to the causes for
this prostration might be indulged in without profit, because as many
theories would be advanced as there would be independent
writers--those who expressed their own views without borrowing--upon
the subject. Without indulging in theories as to the cause of this
prostration, therefore, I will call your attention only to the fact,
and to some plain questions as to which it would seem there should be
no disagreement.

During this prostration two essential elements of prosperity have
been most abundant--labor and capital. Both have been largely
unemployed. Where security has been undoubted, capital has been
attainable at very moderate rates. Where labor has been wanted, it
has been found in abundance, at cheap rates compared with what--of
necessaries and comforts of life--could be purchased with the wages
demanded. Two great elements of prosperity, therefore, have not been
denied us. A third might be added: Our soil and climate are
unequaled, within the limits of any contiguous territory under one
nationality, for its variety of products to feed and clothe a people
and in the amount of surplus to spare to feed less favored peoples.
Therefore, with these facts in view, it seems to me that wise
statesmanship, at this session of Congress, would dictate legislation
ignoring the past; directing in proper channels these great elements
of prosperity to any people. Debt, debt abroad, is the only element
that can, with always a sound currency, enter into our affairs to
cause any continued depression in the industries and prosperity of
our people.

A great conflict for national existence made necessary, for temporary
purposes, the raising of large sums of money from whatever source
attainable. It made it necessary, in the wisdom of Congress--and I do
not doubt their wisdom in the premises, regarding the necessity of the
times--to devise a system of national currency which it proved to be
impossible to keep on a par with the recognized currency of the
civilized world. This begot a spirit of speculation involving an
extravagance and luxury not required for the happiness or prosperity
of a people, and involving, both directly and indirectly, foreign
indebtedness. The currency, being of fluctuating value, and therefore
unsafe to hold for legitimate transactions requiring money, became a
subject of speculation within itself. These two causes, however, have
involved us in a foreign indebtedness, contracted in good faith by
borrower and lender, which should be paid in coin, and according to
the bond agreed upon when the debt was contracted--gold or its
equivalent. The good faith of the Government can not be violated
toward creditors without national disgrace. But our commerce should
be encouraged; American shipbuilding and carrying capacity increased;
foreign markets sought for products of the soil and manufactories, to
the end that we may be able to pay these debts. Where a new market
can be created for the sale of our products, either of the soil, the
mine, or the manufactory, a new means is discovered of utilizing our
idle capital and labor to the advantage of the whole people. But, in
my judgment, the first step toward accomplishing this object is to
secure a currency of fixed, stable value; a currency good wherever
civilization reigns; one which, if it becomes superabundant with one
people, will find a market with some other; a currency which has as
its basis the labor necessary to produce it, which will give to it
its value. Gold and silver are now the recognized medium of exchange
the civilized world over, and to this we should return with the least
practicable delay. In view of the pledges of the American Congress
when our present legal-tender system was adopted, and debt
contracted, there should be no delay--certainly no unnecessary
delay--in fixing by legislation a method by which we will return to
specie. To the accomplishment of this end I invite your special
attention. I believe firmly that there can be no prosperous and
permanent revival of business and industries until a policy is
adopted--with legislation to carry it out--looking to a return to a
specie basis. It is easy to conceive that the debtor and speculative
classes may think it of value to them to make so-called money
abundant until they can throw a portion of their burdens upon others.
But even these, I believe, would be disappointed in the result if a
course should be pursued which will keep in doubt the value of the
legal-tender medium of exchange. A revival of productive industry is
needed by all classes; by none more than the holders of property, of
whatever sort, with debts to liquidate from realization upon its
sale. But admitting that these two classes of citizens are to be
benefited by expansion, would it be honest to give it? Would not the
general loss be too great to justify such relief? Would it not be
just as honest and prudent to authorize each debtor to issue his own
legal-tenders to the extent of his liabilities? Than to do this,
would it not be safer, for fear of overissues by unscrupulous
creditors, to say that all debt obligations are obliterated in the
United States, and now we commence anew, each possessing all he has
at the time free from incumbrance? These propositions are too absurd
to be entertained for a moment by thinking or honest people. Yet
every delay in preparation for final resumption partakes of this
dishonesty, and is only less in degree as the hope is held out that a
convenient season will at last arrive for the good work of redeeming
our pledges to commence. It will never come, in my opinion, except by
positive action by Congress, or by national disasters which will
destroy, for a time at least, the credit of the individual and the
State at large. A sound currency might be reached by total bankruptcy
and discredit of the integrity of the nation and of individuals. I
believe it is in the power of Congress at this session to devise such
legislation as will renew confidence, revive all the industries, start
us on a career of prosperity to last for many years and to save the
credit of the nation and of the people. Steps toward the return to a
specie basis are the great requisites to this devoutly to be sought
for end. There are others which I may touch upon hereafter.

A nation dealing in a currency below that of specie in value labors
under two great disadvantages: First, having no use for the world's
acknowledged medium of exchange, gold and silver, these are driven
out of the country because there is no need for their use; second,
the medium of exchange in use being of a fluctuating value--for,
after all, it is only worth just what it will purchase of gold and
silver, metals having an intrinsic value just in proportion to the
honest labor it takes to produce them--a larger margin must be
allowed for profit by the manufacturer and producer. It is months
from the date of production to the date of realization. Interest upon
capital must be charged, and risk of fluctuation in the value of that
which is to be received in payment added. Hence high prices, acting
as a protection to the foreign producer, who receives nothing in
exchange for the products of his skill and labor except a currency
good, at a stable value, the world over It seems to me that nothing
is clearer than that the greater part of the burden of existing
prostration, for the want of a sound financial system, falls upon the
working man, who must after all produce the wealth, and the salaried
man, who superintends and conducts business. The burden falls upon
them in two ways--by the deprivation of employment and by the
decreased purchasing power of their salaries. It is the duty of
Congress to devise the method of correcting the evils which are
acknowledged to exist, and not mine. But I will venture to suggest
two or three things which seem to me as absolutely necessary to a
return to specie payments, the first great requisite in a return to
prosperity. The legal-tender clause to the law authorizing the issue
of currency by the National Government should be repealed, to take
effect as to all contracts entered into after a day fixed in the
repealing act--not to apply, however, to payments of salaries by
Government, or for other expenditures now provided by law to be paid
in currency, in the interval pending between repeal and final
resumption. Provision should be made by which the Secretary of the
Treasury can obtain gold as it may become necessary from time to time
from the date when specie redemption commences. To this might and
should be added a revenue sufficiently in excess of expenses to
insure an accumulation of gold in the Treasury to sustain permanent
redemption.

I commend this subject to your careful consideration, believing that
a favorable solution is attainable, and if reached by this Congress
that the present and future generations will ever gratefully remember
it as their deliverer from a thraldom of evil and disgrace.

With resumption, free banking may be authorized with safety, giving
the same full protection to bill holders which they have under
existing laws. Indeed, I would regard free banking as essential. It
would give proper elasticity to the currency. As more currency should
be required for the transaction of legitimate business, new banks
would be started, and in turn banks would wind up their business when
it was found that there was a superabundance of currency. The
experience and judgment of the people can best decide just how much
currency is required for the transaction of the business of the
country. It is unsafe to leave the settlement of this question to
Congress, the Secretary of the Treasury, or the Executive. Congress
should make the regulation under which banks may exist, but should
not make banking a monopoly by limiting the amount of redeemable
paper currency that shall be authorized. Such importance do I attach
to this subject, and so earnestly do I commend it to your attention,
that I give it prominence by introducing it at the beginning of this
message.

During the past year nothing has occurred to disturb the general
friendly and cordial relations of the United States with other
powers.

The correspondence submitted herewith between this Government and its
diplomatic representatives, as also with the representatives of other
countries, shows a satisfactory condition of all questions between
the United States and the most of those countries, and with few
exceptions, to which reference is hereafter made, the absence of any
points of difference to be adjusted.

The notice directed by the resolution of Congress of June 17, 1874,
to be given to terminate the convention of July 17, 1858, between the
United States and Belgium has been given, and the treaty will
accordingly terminate on the 1st day of July, 1875. This convention
secured to certain Belgian vessels entering the ports of the United
States exceptional privileges which are not accorded to our own
vessels. Other features of the convention have proved satisfactory,
and have tended to the cultivation of mutually beneficial commercial
intercourse and friendly relations between the two countries. I hope
that negotiations which have been invited will result in the
celebration of another treaty which may tend to the interests of both
countries.

Our relations with China continue to be friendly. During the past
year the fear of hostilities between China and Japan, growing out of
the landing of an armed force upon the island of Formosa by the
latter, has occasioned uneasiness. It is earnestly hoped, however,
that the difficulties arising from this cause will be adjusted, and
that the advance of civilization in these Empires may not be retarded
by a state of war. In consequence of the part taken by certain
citizens of the United States in this expedition, our representatives
in those countries have been instructed to impress upon the
Governments of China and Japan the firm intention of this country to
maintain strict neutrality in the event of hostilities, and to
carefully prevent any infraction of law on the part of our citizens.

In connection with this subject I call the attention of Congress to a
generally conceded fact--that the great proportion of the Chinese
immigrants who come to our shores do not come voluntarily, to make
their homes with us and their labor productive of general prosperity,
but come under contracts with headmen, who own them almost absolutely.
In a worse form does this apply to Chinese women. Hardly a perceptible
percentage of them perform any honorable labor, but they are brought
for shameful purposes, to the disgrace of the communities where
settled and to the great demoralization of the youth of those
localities. If this evil practice can be legislated against, it will
be my pleasure as well as duty to enforce any regulation to secure so
desirable an end.

It is hoped that negotiations between the Government of Japan and the
treaty powers, looking to the further opening of the Empire and to the
removal of various restrictions upon trade and travel, may soon
produce the results desired, which can not fail to inure to the
benefit of all the parties. Having on previous occasions submitted to
the consideration of Congress the propriety of the release of the
Japanese Government from the further payment of the indemnity under
the convention of October 22, 1864, and as no action had been taken
thereon, it became my duty to regard the obligations of the
convention as in force; and as the other powers interested had
received their portion of the indemnity in full, the minister of the
United States in Japan has, in behalf of this Government, received
the remainder of the amount due to the United States under the
convention of Simonosaki. I submit the propriety of applying the
income of a part, if not of the whole, of this fund to the education
in the Japanese language of a number of young men to be under
obligations to serve the Government for a specified time as
interpreters at the legation and the consulates in Japan. A limited
number of Japanese youths might at the same time be educated in our
own vernacular, and mutual benefits would result to both Governments.
The importance of having our own citizens, competent and familiar with
the language of Japan, to act as interpreters and in other capacities
connected with the legation and the consulates in that country can
not readily be overestimated.

The amount awarded to the Government of Great Britain by the mixed
commission organized under the provisions of the treaty of Washington
in settlement of the claims of British subjects arising from acts
committed between April 13, 1861, and April 9, 1865, became payable,
under the terms of the treaty, within the past year, and was paid
upon the 21st day of September, 1874. In this connection I renew my
recommendation, made at the opening of the last session of Congress,
that a special court be created to hear and determine all claims of
aliens against the United States arising from acts committed against
their persons or property during the insurrection. It appears
equitable that opportunity should be offered to citizens of other
states to present their claims, as well as to those British subjects
whose claims were not admissible under the late commission, to the
early decision of some competent tribunal. To this end I recommend
the necessary legislation to organize a court to dispose of all
claims of aliens of the nature referred to in an equitable and
satisfactory manner, and to relieve Congress and the Departments from
the consideration of these questions.

The legislation necessary to extend to the colony of Newfoundland
certain articles of the treaty of Washington of the 8th day of May,
1871, having been had, a protocol to that effect was signed in behalf
of the United States and of Great Britain on the 28th day of May last,
and was duly proclaimed on the following day. A copy of the
proclamation is submitted herewith.

A copy of the report of the commissioner appointed under the act of
March 19, 1872, for surveying and marking the boundary between the
United States and the British possessions from the Lake of the Woods
to the summit of the Rocky Mountains is herewith transmitted. I am
happy to announce that the field work of the commission has been
completed, and the entire line from the northwest corner of the Lake
of the Woods to the summit of the Rocky Mountains has been run and
marked upon the surface of the earth. It is believed that the amount
remaining unexpended of the appropriation made at the last session of
Congress will be sufficient to complete the office work. I recommend
that the authority of Congress be given to the use of the unexpended
balance of the appropriation in the completion of the work of the
commission in making its report and preparing the necessary maps.

The court known as the Court of Commissioners of Alabama Claims,
created by an act of Congress of the last session, has organized and
commenced its work, and it is to be hoped that the claims admissible
under the provisions of the act may be speedily ascertained and
paid.

It has been deemed advisable to exercise the discretion conferred
upon the Executive at the last session by accepting the conditions
required by the Government of Turkey for the privilege of allowing
citizens of the United States to hold real estate in the former
country, and by assenting to a certain change in the jurisdiction of
courts in the latter. A copy of the proclamation upon these subjects
is herewith communicated.

There has been no material change in our relations with the
independent States of this hemisphere which were formerly under the
dominion of Spain. Marauding on the frontiers between Mexico and
Texas still frequently takes place, despite the vigilance of the
civil and military authorities in that quarter. The difficulty of
checking such trespasses along the course of a river of such length
as the Rio Grande, and so often fordable, is obvious. It is hoped
that the efforts of this Government will be seconded by those of
Mexico to the effectual suppression of these acts of wrong.

From a report upon the condition of the business before the American
and Mexican Joint Claims Commission, made by the agent on the part of
the United States, and dated October 28, 1874, it appears that of the
1,017 claims filed on the part of citizens of the United States, 483
had been finally decided and 75 were in the hands of the umpire,
leaving 462 to be disposed of; and of the 998 claims filed against
the United States, 726 had been finally decided, I was before the
umpire, and 271 remained to be disposed of. Since the date of such
report other claims have been disposed of, reducing somewhat the
number still pending; and others have been passed upon by the
arbitrators. It has become apparent, in view of these figures and of
the fact that the work devolving on the umpire is particularly
laborious, that the commission will be unable to dispose of the
entire number of claims pending prior to the 1st day of February,
1875--the date fixed for its expiration. Negotiations are pending
looking to the securing of the results of the decisions which have
been reached and to a further extension of the commission for a
limited time, which it is confidently hoped will suffice to bring all
the business now before it to a final close.

The strife in the Argentine Republic is to be deplored, both on
account of the parties thereto and from the probable effects on the
interests of those engaged in the trade to that quarter, of whom the
United States are among the principal. As yet, so far as I am aware,
there has been no violation of our neutrality rights, which, as well
as our duties in that respect, it shall be my endeavor to maintain
and observe.

It is with regret I announce that no further payment has been
received from the Government of Venezuela on account of awards in
favor of citizens of the United States. Hopes have been entertained
that if that Republic could escape both foreign and civil war for a
few years its great natural resources would enable it to honor its
obligations. Though it is now understood to be at peace with other
countries, a serious insurrection is reported to be in progress in an
important region of that Republic. This may be taken advantage of as
another reason to delay the payment of the dues of our citizens.

The deplorable strife in Cuba continues without any marked change in
the relative advantages of the contending forces. The insurrection
continues, but Spain has gained no superiority. Six years of strife
give to the insurrection a significance which can not be denied. Its
duration and the tenacity of its adherence, together with the absence
of manifested power of suppression on the part of Spain, can not be
controverted, and may make some positive steps on the part of other
powers a matter of self-necessity. I had confidently hoped at this
time to be able to announce the arrangement of some of the important
questions between this Government and that of Spain, but the
negotiations have been protracted. The unhappy intestine dissensions
of Spain command our profound sympathy, and must be accepted as
perhaps a cause of some delay. An early settlement, in part at least,
of the questions between the Governments is hoped. In the meantime,
awaiting the results of immediately pending negotiations, I defer a
further and fuller communication on the subject of the relations of
this country and Spain.

I have again to call the attention of Congress to the unsatisfactory
condition of the existing laws with reference to expatriation and the
election of nationality. Formerly, amid conflicting opinions and
decisions, it was difficult to exactly determine how far the doctrine
of perpetual allegiance was applicable to citizens of the United
States. Congress by the act of the 27th of July, 1868, asserted the
abstract right of expatriation as a fundamental principle of this
Government. Notwithstanding such assertion and the necessity of
frequent application of the principle, no legislation has been had
defining what acts or formalities shall work expatriation or when a
citizen shall be deemed to have renounced or to have lost his
citizenship. The importance of such definition is obvious. The
representatives of the United States in foreign countries are
continually called upon to lend their aid and the protection of the
United States to persons concerning the good faith or the reality of
whose citizenship there is at least great question. In some cases the
provisions of the treaties furnish some guide; in others it seems left
to the person claiming the benefits of citizenship, while living in a
foreign country, contributing in no manner to the performance of the
duties of a citizen of the United States, and without intention at
any time to return and undertake those duties, to use the claims to
citizenship of the United States simply as a shield from the
performance of the obligations of a citizen elsewhere.

The status of children born of American parents residing in a foreign
country, of American women who have married aliens, of American
citizens residing abroad where such question is not regulated by
treaty, are all sources of frequent difficulty and discussion.
Legislation on these and similar questions, and particularly defining
when and under what circumstances expatriation can be accomplished or
is to be presumed, is especially needed. In this connection I
earnestly call the attention of Congress to the difficulties arising
from fraudulent naturalization. The United States wisely, freely, and
liberally offers its citizenship to all who may come in good faith to
reside within its limits on their complying with certain prescribed
reasonable and simple formalities and conditions. Among the highest
duties of the Government is that to afford firm, sufficient, and
equal protection to all its citizens, whether native born or
naturalized. Care should be taken that a right carrying with it such
support from the Government should not be fraudulently obtained, and
should be bestowed only upon full proof of a compliance with the law;
and yet frequent instances are brought to the attention of the
Government of illegal and fraudulent naturalization and of the
unauthorized use of certificates thus improperly obtained. In some
cases the fraudulent character of the naturalization has appeared
upon the face of the certificate itself; in others examination
discloses that the holder had not complied with the law, and in
others certificates have been obtained where the persons holding them
not only were not entitled to be naturalized, but had not even been
within the United States at the time of the pretended naturalization.
Instances of each of these classes of fraud are discovered at our
legations, where the certificates of naturalization are presented
either for the purpose of obtaining passports or in demanding the
protection of the legation. When the fraud is apparent on the face of
such certificates, they are taken up by the representatives of the
Government and forwarded to the Department of State. But even then
the record of the court in which the fraudulent naturalization
occurred remains, and duplicate certificates are readily obtainable.
Upon the presentation of these for the issue of passports or in
demanding protection of the Government, the fraud sometimes escapes
notice, and such certificates are not infrequently used in
transactions of business to the deception and injury of innocent
parties. Without placing any additional obstacles in the way of the
obtainment of citizenship by the worthy and well-intentioned
foreigner who comes in good faith to cast his lot with ours, I
earnestly recommend further legislation to punish fraudulent
naturalization and to secure the ready cancellation of the record of
every naturalization made in fraud.

Since my last annual message the exchange has been made of the
ratification of treaties of extradition with Belgium, Ecuador, Peru,
and Salvador; also of a treaty of commerce and navigation with Peru,
and one of commerce and consular privileges with Salvador; all of
which have been duly proclaimed, as has also a declaration with
Russia with reference to trade-marks.

The report of the Secretary of the Treasury, which by law is made
directly to Congress, and forms no part of this message, will show
the receipts and expenditures of the Government for the last fiscal
year, the amount received from each source of revenue, and the amount
paid out for each of the Departments of Government. It will be
observed from this report that the amount of receipts over
expenditures has been but $2,344,882.30 for the fiscal year ending
June 30, 1874, and that for the current fiscal year the estimated
receipts over expenditures will not much exceed $9,000,000. In view
of the large national debt existing and the obligation to add 1 per
cent per annum to the sinking fund, a sum amounting now to over
$34,000,000 per annum, I submit whether revenues should not be
increased or expenditures diminished to reach this amount of surplus.
Not to provide for the sinking fund is a partial failure to comply
with the contracts and obligations of the Government. At the last
session of Congress a very considerable reduction was made in rates
of taxation and in the number of articles submitted to taxation; the
question may well be asked, whether or not, in some instances,
unwisely. In connection with this subject, too, I venture the opinion
that the means of collecting the revenue, especially from imports,
have been so embarrassed by legislation as to make it questionable
whether or not large amounts are not lost by failure to collect, to
the direct loss of the Treasury and to the prejudice of the interests
of honest importers and taxpayers.

The Secretary of the Treasury in his report favors legislation
looking to an early return to specie payments, thus supporting views
previously expressed in this message. He also recommends economy in
appropriations; calls attention to the loss of revenue from repealing
the tax on tea and coffee, without benefit to the consumer; recommends
an increase of 10 cents a gallon on whisky, and, further, that no
modification be made in the banking and currency bill passed at the
last session of Congress, unless modification should become necessary
by reason of the adoption of measures for returning to specie
payments. In these recommendations I cordially join.

I would suggest to Congress the propriety of readjusting the tariff
so as to increase the revenue, and at the same time decrease the
number of articles upon which duties are levied. Those articles which
enter into our manufactures and are not produced at home, it seems to
me, should be entered free. Those articles of manufacture which we
produce a constituent part of, but do not produce the whole, that
part which we do not produce should enter free also. I will instance
fine wool, dyes, etc. These articles must be imported to form a part
of the manufacture of the higher grades of woolen goods. Chemicals
used as dyes, compounded in medicines, and used in various ways in
manufactures come under this class. The introduction free of duty of
such wools as we do not produce would stimulate the manufacture of
goods requiring the use of those we do produce, and therefore would
be a benefit to home production. There are many articles entering
into "home manufactures" which we do not produce ourselves the tariff
upon which increases the cost of producing the manufactured article.
All corrections in this regard are in the direction of bringing labor
and capital in harmony with each other and of supplying one of the
elements of prosperity so much needed.

The report of the Secretary of War herewith attached, and forming a
part of this message, gives all the information concerning the
operations, wants, and necessities of the Army, and contains many
suggestions and recommendations which I commend to your special
attention.

There is no class of Government employees who are harder worked than
the Army--officers and men; none who perform their tasks more
cheerfully and efficiently and under circumstances of greater
privations and hardships.

Legislation is desirable to render more efficient this branch of the
public service. All the recommendations of the Secretary of War I
regard as judicious, and I especially commend to your attention the
following: The consolidation of Government arsenals; the restoration
of mileage to officers traveling under orders; the exemption of money
received from the sale of subsistence stores from being covered into
the Treasury; the use of appropriations for the purchase of
subsistence stores without waiting for the beginning of the fiscal
year for which the appropriation is made; for additional
appropriations for the collection of torpedo material; for increased
appropriations for the manufacture of arms; for relieving the various
States from indebtedness for arms charged to them during the
rebellion; for dropping officers from the rolls of the Army without
trial for the offense of drawing pay more than once for the same
period; for the discouragement of the plan to pay soldiers by cheek,
and for the establishment of a professorship of rhetoric and English
literature at West Point. The reasons for these recommendations are
obvious, and are set forth sufficiently in the reports attached. I
also recommend that the status of the staff corps of the Army be
fixed, where this has not already been done, so that promotions may
be made and vacancies filled as they occur in each grade when reduced
below the number to be fixed by law. The necessity for such
legislation is specially felt now in the Pay Department. The number
of officers in that department is below the number adequate to the
performance of the duties required of them by law.

The efficiency of the Navy has been largely increased during the last
year. Under the impulse of the foreign complications which threatened
us at the commencement of the last session of Congress, most of our
efficient wooden ships were put in condition for immediate service,
and the repairs of our ironclad fleet were pushed with the utmost
vigor. The result is that most of these are now in an effective state
and need only to be manned and put in commission to go at once into
service.

Some of the new sloops authorized by Congress are already in
commission, and most of the remainder are launched and wait only the
completion of their machinery to enable them to take their places as
part of our effective force.

Two iron torpedo ships have been completed during the last year, and
four of our large double-turreted ironclads are now undergoing
repairs. When these are finished, everything that is useful of our
Navy, as now authorized, will be in condition for service, and with
the advance in the science of torpedo warfare the American Navy,
comparatively small as it is, will be found at any time powerful for
the purposes of a peaceful nation.

Much has been accomplished during the year in aid of science and to
increase the sum of general knowledge and further the interests of
commerce and civilization. Extensive and much-needed soundings have
been made for hydrographic purposes and to fix the proper routes of
ocean telegraphs. Further surveys of the great Isthmus have been
undertaken and completed, and two vessels of the Navy are now
employed, in conjunction with those of England, France, Germany, and
Russia, in observations connected with the transit of Venus, so
useful and interesting to the scientific world.

The estimates for this branch of the public service do not differ
materially from those of last year, those for the general support of
the service being somewhat less and those for permanent improvements
at the various stations rather larger than the corresponding estimate
made a year ago. The regular maintenance and a steady increase in the
efficiency of this most important arm in proportion to the growth of
our maritime intercourse and interests is recommended to the
attention of Congress.

The use of the Navy in time of peace might be further utilized by a
direct authorization of the employment of naval vessels in
explorations and surveys of the supposed navigable waters of other
nationalities on this continent, especially the tributaries of the
two great rivers of South America, the Orinoco and the Amazon.
Nothing prevents, under existing laws, such exploration, except that
expenditures must be made in such expeditions beyond those usually
provided for in the appropriations. The field designated is
unquestionably one of interest and one capable of large development
of commercial interests--advantageous to the peoples reached and to
those who may establish relations with them.

Education of the people entitled to exercise the right of franchise I
regard essential to general prosperity everywhere, and especially so
in republics, where birth, education, or previous condition does not
enter into account in giving suffrage. Next to the public school, the
post-office is the great agent of education over our vast territory.
The rapidity with which new sections are being settled, thus
increasing the carrying of mails in a more rapid ratio than the
increase of receipts, is not alarming. The report of the
Postmaster-General herewith attached shows that there was an increase
of revenue in his Department in 1873 over the previous year of
$1,674,411, and an increase of cost of carrying the mails and paying
employees of $3,041,468.91. The report of the Postmaster-General
gives interesting statistics of his Department, and compares them
with the corresponding statistics of a year ago, showing a growth in
every branch of the Department.

A postal convention has been concluded with New South Wales, an
exchange of postal cards established with Switzerland, and the
negotiations pending for several years past with France have been
terminated in a convention with that country, which went into effect
last August.

An international postal congress was convened in Berne, Switzerland,
in September last, at which the United States was represented by an
officer of the Post-Office Department of much experience and of
qualification for the position. A convention for the establishment of
an international postal union was agreed upon and signed by the
delegates of the countries represented, subject to the approval of
the proper authorities of those countries.

I respectfully direct your attention to the report of the
Postmaster-General and to his suggestions in regard to an equitable
adjustment of the question of compensation to railroads for carrying
the mails.

Your attention will be drawn to the unsettled condition of affairs in
some of the Southern States.

On the 14th of September last the governor of Louisiana called upon
me, as provided by the Constitution and laws of the United States, to
aid in suppressing domestic violence in that State. This call was made
in view of a proclamation issued on that day by D. B. Penn, claiming
that he was elected lieutenant-governor in 1872, and calling upon the
militia of the State to arm, assemble, and drive from power the
usurpers, as he designated the officers of the State government. On
the next day I issued my proclamation commanding the insurgents to
disperse within five days from the date thereof, and subsequently
learned that on that day they had taken forcible possession of the
statehouse. Steps were taken by me to support the existing and
recognized State government, but before the expiration of the five
days the insurrectionary movement was practically abandoned, and the
officers of the State government, with some minor exceptions, resumed
their powers and duties. Considering that the present State
administration of Louisiana has been the only government in that
State for nearly two years; that it has been tacitly acknowledged and
acquiesced in as such by Congress, and more than once expressly
recognized by me, I regarded it as my clear duty, when legally called
upon for that purpose, to prevent its overthrow by an armed mob under
pretense of fraud and irregularity in the election of 1872. I have
heretofore called the attention of Congress to this subject, stating
that on account of the frauds and forgeries committed at said
election, and because it appears that the returns thereof were never
legally canvassed, it was impossible to tell thereby who were chosen;
but from the best sources of information at my command I have always
believed that the present State officers received a majority of the
legal votes actually cast at that election. I repeat what I said in
my special message of February 23, 1873, that in the event of no
action by Congress I must continue to recognize the government
heretofore recognized by me.

I regret to say that with preparations for the late election decided
indications appeared in some localities in the Southern States of a
determination, by acts of violence and intimidation, to deprive
citizens of the freedom of the ballot because of their political
opinions. Bands of men, masked and armed, made their appearance;
White Leagues and other societies were formed; large quantities of
arms and ammunition were imported and distributed to these
organizations; military drills, with menacing demonstrations, were
held, and with all these murders enough were committed to spread
terror among those whose political action was to be suppressed, if
possible, by these intolerant and criminal proceedings. In some
places colored laborers were compelled to vote according to the
wishes of their employers, under threats of discharge if they acted
otherwise; and there are too many instances in which, when these
threats were disregarded, they were remorselessly executed by those
who made them. I understand that the fifteenth amendment to the
Constitution was made to prevent this and a like state of things, and
the act of May 31, 1870, with amendments, was passed to enforce its
provisions, the object of both being to guarantee to all citizens the
right to vote and to protect them in the free enjoyment of that right.
Enjoined by the Constitution "to take care that the laws be faithfully
executed," and convinced by undoubted evidence that violations of said
act had been committed and that a widespread and flagrant disregard of
it was contemplated, the proper officers were instructed to prosecute
the offenders, and troops were stationed at convenient points to aid
these officers, if necessary, in the performance of their official
duties. Complaints are made of this interference by Federal
authority; but if said amendment and act do not provide for such
interference under the circumstances as above stated, then they are
without meaning, force, or effect, and the whole scheme of colored
enfranchisement is worse than mockery and little better than a crime.
Possibly Congress may find it due to truth and justice to ascertain,
by means of a committee, whether the alleged wrongs to colored
citizens for political purposes are real or the reports thereof were
manufactured for the occasion.

The whole number of troops in the States of Louisiana, Alabama,
Georgia, Florida, South Carolina, North Carolina, Kentucky,
Tennessee, Arkansas, Mississippi, Maryland, and Virginia at the time
of the election was 4,082. This embraces the garrisons of all the
forts from the Delaware to the Gulf of Mexico.

Another trouble has arisen in Arkansas. Article 13 of the
constitution of that State (which was adopted in 1868, and upon the
approval of which by Congress the State was restored to
representation as one of the States of the Union) provides in effect
that before any amendments proposed to this constitution shall become
a part thereof they shall be passed by two successive assemblies and
then submitted to and ratified by a majority of the electors of the
State voting thereon. On the 11th of May, 1874, the governor convened
an extra session of the general assembly of the State, which on the
18th of the same month passed an act providing for a convention to
frame a new constitution. Pursuant to this act, and at an election
held on the 30th of June, 1874, the convention was approved, and
delegates were chosen thereto, who assembled on the 14th of last July
and framed a new constitution, the schedule of which provided for the
election of an entire new set of State officers in a manner contrary
to the then existing election laws of the State. On the 13th of
October, 1874, this constitution, as therein provided, was submitted
to the people for their approval or rejection, and according to the
election returns was approved by a large majority of those qualified
to vote thereon; and at the same election persons were chosen to fill
all the State, county, and township offices. The governor elected in
1872 for the term of four years turned over his office to the
governor chosen under the new constitution, whereupon the
lieutenant-governor, also elected in 1872 for a term of four years,
claiming to act as governor, and alleging that said proceedings by
which the new constitution was made and a new set of officers elected
were unconstitutional, illegal, and void, called upon me, as provided
in section 4, Article IV, of the Constitution, to protect the State
against domestic violence. As Congress is now investigating the
political affairs of Arkansas, I have declined to interfere.

The whole subject of Executive interference with the affairs of a
State is repugnant to public opinion, to the feelings of those who,
from their official capacity, must be used in such interposition, and
to him or those who must direct. Unless most clearly on the side of
law, such interference becomes a crime; with the law to support it,
it is condemned without a heating. I desire, therefore, that all
necessity for Executive direction in local affairs may become
unnecessary and obsolete. I invite the attention, not of Congress,
but of the people of the United States, to the causes and effects of
these unhappy questions. Is there not a disposition on one side to
magnify wrongs and outrages, and on the other side to belittle them
or justify them? If public opinion could be directed to a correct
survey of what is and to rebuking wrong and aiding the proper
authorities in punishing it, a better state of feeling would be
inculcated, and the sooner we would have that peace which would leave
the States free indeed to regulate their own domestic affairs. I
believe on the part of our citizens of the Southern States--the
better part of them--there is a disposition to be law abiding, and to
do no violence either to individuals or to the laws existing. But do
they do right in ignoring the existence of violence and bloodshed in
resistance to constituted authority? I sympathize with their
prostrate condition, and would do all in my power to relieve them,
acknowledging that in some instances they have had most trying
governments to live under, and very oppressive ones in the way of
taxation for nominal improvements, not giving benefits equal to the
hardships imposed. But can they proclaim themselves entirely
irresponsible for this condition? They can not. Violence has been
rampant in some localities, and has either been justified or denied
by those who could have prevented it. The theory is even raised that
there is to be no further interference on the part of the General
Government to protect citizens within a State where the State
authorities fail to give protection. This is a great mistake. While I
remain Executive all the laws of Congress and the provisions of the
Constitution, including the recent amendments added thereto, will be
enforced with rigor, but with regret that they should have added one
jot or tittle to Executive duties or powers. Let there be fairness in
the discussion of Southern questions, the advocates of both or all
political parties giving honest, truthful reports of occurrences,
condemning the wrong and upholding the tight, and soon all will be
well. Under existing conditions the negro votes the Republican ticket
because he knows his friends are of that party. Many a good citizen
votes the opposite, not because he agrees with the great principles
of state which separate parties, but because, generally, he is
opposed to negro rule. This is a most delusive cry. Treat the negro
as a citizen and a voter, as he is and must remain, and soon parties
will be divided, not on the color line, but on principle. Then we
shall have no complaint of sectional interference.

The report of the Attorney-General contains valuable recommendations
relating to the administration of justice in the courts of the United
States, to which I invite your attention.

I respectfully suggest to Congress the propriety of increasing the
number of judicial districts in the United States to eleven (the
present number being nine) and the creation of two additional
judgeships. The territory to be traversed by the circuit judges is so
great and the business of the courts so steadily increasing that it is
growing more and more impossible for them to keep up with the business
requiring their attention. Whether this would involve the necessity of
adding two more justices of the Supreme Court to the present number I
submit to the judgment of Congress.

The attention of Congress is invited to the report of the Secretary
of the Interior and to the legislation asked for by him. The domestic
interests of the people are more intimately connected with this
Department than with either of the other Departments of Government.
Its duties have been added to from time to time until they have
become so onerous that without the most perfect system and order it
will be impossible for any Secretary of the Interior to keep trace of
all official transactions having his sanction and done in his name,
and for which he is held personally responsible.

The policy adopted for the management of Indian affairs, known as the
peace policy, has been adhered to with most beneficial results. It is
confidently hoped that a few years more will relieve our frontiers
from danger of Indian depredations.

I commend the recommendation of the Secretary for the extension of
the homestead laws to the Indians and for some sort of Territorial
government for the Indian Territory. A great majority of the Indians
occupying this Territory are believed yet to be incapable of
maintaining their rights against the more civilized and enlightened
white man. Any Territorial form of government given them, therefore,
should protect them in their homes and property for a period of at
least twenty years, and before its final adoption should be ratified
by a majority of those affected.

The report of the Secretary of the Interior herewith attached gives
much interesting statistical information, which I abstain from giving
an abstract of, but refer you to the report itself.

The act of Congress providing the oath which pensioners must
subscribe to before drawing their pensions cuts off from this bounty
a few survivors of the War of 1812 residing in the Southern States. I
recommend the restoration of this bounty to all such. The number of
persons whose names would thus be restored to the list of pensioners
is not large. They are all old persons, who could have taken no part
in the rebellion, and the services for which they were awarded
pensions were in defense of the whole country.

The report of the Commissioner of Agriculture herewith contains
suggestions of much interest to the general public, and refers to the
sly approaching Centennial and the part his Department is ready to
take in it. I feel that the nation at large is interested in having
this exposition a success, and commend to Congress such action as
will secure a greater general interest in it. Already many foreign
nations have signified their intention to be represented at it, and
it may be expected that every civilized nation will be represented.

The rules adopted to improve the civil service of the Government have
been adhered to as closely as has been practicable with the opposition
with which they meet. The effect, I believe, has been beneficial on
the whole, and has tended to the elevation of the service. But it is
impracticable to maintain them without direct and positive support of
Congress. Generally the support which this reform receives is from
those who give it their support only to find fault when the rules are
apparently departed from. Removals from office without preferring
charges against parties removed are frequently cited as departures
from the rules adopted, and the retention of those against whom
charges are made by irresponsible persons and without good grounds is
also often condemned as a violation of them. Under these
circumstances, therefore, I announce that if Congress adjourns
without positive legislation on the subject of "civil-service reform"
I will regard such action as a disapproval of the system, and will
abandon it, except so far as to require examinations for certain
appointees, to determine their fitness. Competitive examinations will
be abandoned.

The gentlemen who have given their services, without compensation, as
members of the board to devise rules and regulations for the
government of the civil service of the country have shown much zeal
and earnestness in their work, and to them, as well as to myself, it
will be a source of mortification if it is to be thrown away. But I
repeat that it is impossible to carry this system to a successful
issue without general approval and assistance and positive law to
support it.

I have stated that three elements of prosperity to the
nation--capital, labor, skilled and unskilled, and products of the
soil--still remain with us. To direct the employment of these is a
problem deserving the most serious attention of Congress. If
employment can be given to all the labor offering itself, prosperity
necessarily follows. I have expressed the opinion, and repeat it,
that the first requisite to the accomplishment of this end is the
substitution of a sound currency in place of one of a fluctuating
value. This secured, there are many interests that might be fostered
to the great profit of both labor and capital. How to induce capital
to employ labor is the question. The subject of cheap transportation
has occupied the attention of Congress. Much new light on this
question will without doubt be given by the committee appointed by
the last Congress to investigate and report upon this subject.

A revival of shipbuilding, and particularly of iron steamship
building, is of vast importance to our national prosperity. The
United States is now paying over $100,000,000 per annum for freights
and passage on foreign ships--to be carried abroad and expended in
the employment and support of other peoples--beyond a fair percentage
of what should go to foreign vessels, estimating on the tonnage and
travel of each respectively. It is to be regretted that this
disparity in the carrying trade exists, and to correct it I would be
willing to see a great departure from the usual course of Government
in supporting what might usually be termed private enterprise. I
would not suggest as a remedy direct subsidy to American steamship
lines, but I would suggest the direct offer of ample compensation for
carrying the mails between Atlantic Seaboard cities and the Continent
on American-owned and American-built steamers, and would extend this
liberality to vessels carrying the mails to South American States and
to Central America and Mexico, and would pursue the same policy from
our Pacific seaports to foreign seaports on the Pacific. It might be
demanded that vessels built for this service should come up to a
standard fixed by legislation in tonnage, speed, and all other
qualities, looking to the possibility of Government requiring them at
some time for war purposes. The right also of taking possession of
them in such emergency should be guarded.

I offer these suggestions, believing them worthy of consideration, in
all seriousness, affecting all sections and all interests alike. If
anything better can be done to direct the country into a course of
general prosperity, no one will be more ready than I to second the
plan.

Forwarded herewith will be found the report of the commissioners
appointed under an act of Congress approved June 20, 1874, to wind up
the affairs of the District government. It will be seen from the
report that the net debt of the District of Columbia, less securities
on hand and available, is:

Bonded debt issued prior to July 1, 1874	 $8,883,940.93
3.65 bonds, act of Congress June 20, 1874	  2,088,168.73
Certificates of the board of audit	          4,770,558.45
Ulysses S. Grant