Speech Transcript:

Fellow-Citizens of the Senate and House of Representatives:

The members of the Forty-sixth Congress have assembled in their first
regular session under circumstances calling for mutual congratulation
and grateful acknowledgment to the Giver of All Good for the large
and unusual measure of national prosperity which we now enjoy.

The most interesting events which have occurred in our public affairs
since my last annual message to Congress are connected with the
financial operations of the Government, directly affecting the
business interests of the country. I congratulate Congress on the
successful execution of the resumption act. At the time fixed, and in
the manner contemplated by law, United States notes began to be
redeemed in coin. Since the 1st of January last they have been
promptly redeemed on presentation, and in all business transactions,
public and private, in all parts of the country, they are received
and paid out as the equivalent of coin. The demand upon the Treasury
for gold and silver in exchange for United States notes has been
comparatively small, and the voluntary deposit of coin and bullion in
exchange for notes has been very large. The excess of the precious
metals deposited or exchanged for United States notes over the amount
of United States notes redeemed is about $40,000,000.

The resumption of specie payments has been followed by a very great
revival of business. With a currency equivalent in value to the money
of the commercial world, we are enabled to enter upon an equal
competition with other nations in trade and production. The
increasing foreign demand for our manufactures and agricultural
products has caused a large balance of trade in our favor, which has
been paid in gold, from the 1st of July last to November 15, to the
amount of about $59,000,000. Since the resumption of specie payments
there has also been a marked and gratifying improvement of the public
credit. The bonds of the Government bearing only 4 per cent interest
have been sold at or above par, sufficient in amount to pay off all
of the national debt which was redeemable under present laws. The
amount of interest saved annually by the process of refunding the
debt since March 1, 1877, is $14,297,177. The bonds sold were largely
in small sums, and the number of our citizens now holding the public
securities is much greater than ever before. The amount of the
national debt which matures within less than two years is
$792,121,700, of which $500,000,000 bear interest at the rate of 5
per cent, and the balance is in bonds bearing 6 per cent interest. It
is believed that this part of the public debt can be refunded by the
issue of 4 per cent bonds, and, by the reduction of interest which
will thus be effected, about $11,000,000 can be annually saved to the
Treasury. To secure this important reduction of interest to be paid by
the United States further legislation is required, which it is hoped
will be provided by Congress during its present session.

The coinage of gold by the mints of the United States during the last
fiscal year was $40,986,912. The coinage of silver dollars since the
passage of the act for that purpose up to November 1, 1879, was
$45,000,850, of which $12,700,344 have been issued from the Treasury
and are now in circulation, and $32,300,506 are still in the
possession of the Government.

The pendency of the proposition for unity of action between the
United States and the principal commercial nations of Europe to
effect a permanent system for the equality of gold and silver in the
recognized money of the world leads me to recommend that Congress
refrain from new legislation on the general subject. The great
revival of trade, internal and foreign, will supply during the coming
year its own instructions, which may well be awaited before attempting
further experimental measures with the coinage. I would, however,
strongly urge upon Congress the importance of authorizing the
Secretary of the Treasury to suspend the coinage of silver dollars
upon the present legal ratio. The market value of the silver dollar
being uniformly and largely less than the market value of the gold
dollar, it is obviously impracticable to maintain them at par with
each other if both are coined without limit. If the cheaper coin is
forced into circulation, it will, if coined without limit, soon
become the sole standard of value, and thus defeat the desired
object, which is a currency of both gold and silver which shall be of
equivalent value, dollar for dollar, with the universally recognized
money of the world.

The retirement from circulation of United States notes with the
capacity of legal tender in private contracts is a step to be taken
in our progress toward a safe and stable currency which should be
accepted as the policy and duty of the Government and the interest
and security of the people. It is my firm conviction that the issue
of legal-tender paper money based wholly upon the authority and
credit of the Government, except in extreme emergency, is without
warrant in the Constitution and a violation of sound financial
principles. The issue of United States notes during the late civil
war with the capacity of legal tender between private individuals was
not authorized except as a means of rescuing the country from imminent
peril. The circulation of these notes as paper money for any
protracted period of time after the accomplishment of this purpose
was not contemplated by the framers of the law under which they were
issued. They anticipated the redemption and withdrawal of these notes
at the earliest practicable period consistent with the attainment of
the object for which they were provided.

The policy of the United States, steadily adhered to from the
adoption of the Constitution, has been to avoid the creation of a
national debt; and when, from necessity in time of war, debts have
been created, they have been paid off, on the return of peace, as
rapidly as possible. With this view, and for this purpose, it is
recommended that the existing laws for the accumulation of a sinking
fund sufficient to extinguish the public debt within a limited period
be maintained. If any change of the objects or rates of taxation is
deemed necessary by Congress, it is suggested that experience has
shown that a duty can be placed on tea and coffee which will not
enhance the price of those articles to the consumer, and which will
add several millions of dollars annually to the Treasury.

The continued deliberate violation by a large number of the prominent
and influential citizens of the Territory of Utah of the laws of the
United States for the prosecution and punishment of polygamy demands
the attention of every department of the Government. This Territory
has a population sufficient to entitle it to admission as a State,
and the general interests of the nation, as well as the welfare of
the citizens of the Territory, require its advance from the
Territorial form of government to the responsibilities and privileges
of a State. This important change will not, however, be approved by
the country while the citizens of Utah in very considerable number
uphold a practice which is condemned as a crime by the laws of all
civilized communities throughout the world.

The law for the suppression of this offense was enacted with great
unanimity by Congress more than seventeen years ago, but has remained
until recently a dead letter in the Territory of Utah, because of the
peculiar difficulties attending its enforcement. The opinion widely
prevailed among the citizens of Utah that the law was in
contravention of the constitutional guaranty of religious freedom.
This objection is now removed. The Supreme Court of the United States
has decided the law to be within the legislative power of Congress and
binding as a rule of action for all who reside within the Territories.
There is no longer any reason for delay or hesitation in its
enforcement. It should be firmly and effectively executed. If not
sufficiently stringent in its provisions, it should be amended; and
in aid of the purpose in view I recommend that more comprehensive and
more searching methods for preventing as well as punishing this crime
be provided. If necessary to secure obedience to the law, the
enjoyment and exercise of the rights and privileges of citizenship in
the Territories of the United States may be withheld or withdrawn from
those who violate or oppose the enforcement of the law on this
subject.

The elections of the past year, though occupied only with State
officers, have not failed to elicit in the political discussions
which attended them all over the country new and decisive evidence of
the deep interest which the great body of citizens take in the
progress of the country toward a more general and complete
establishment, at whatever cost, of universal security and freedom in
the exercise of the elective franchise. While many topics of political
concern demand great attention from our people, both in the sphere of
national and State authority, I find no reason to qualify the opinion
I expressed in my last annual message, that no temporary or
administrative interests of government, however urgent or weighty,
will ever displace the zeal of our people in defense of the primary
rights of citizenship, and that the power of public opinion will
override all political prejudices, and all sectional and State
attachments in demanding that all over our wide territory the name
and character of citizen of the United States shall mean one and the
same thing and carry with them unchallenged security and respect. I
earnestly appeal to the intelligence and patriotism of all good
citizens of every part of the country, however much they maybe
divided in opinions on other political subjects, to unite in
compelling obedience to existing laws aimed at the protection of the
right of suffrage. I respectfully urge upon Congress to supply any
defects in these laws which experience has shown and which it is
within its power to remedy. I again invoke the cooperation of the
executive and legislative authorities of the States in this great
purpose. I am fully convinced that if the public mind can be set at
rest on this paramount question of popular rights no serious obstacle
will thwart or delay the complete pacification of the country or
retard the general diffusion of prosperity.

In a former message I invited the attention of Congress to the
subject of the reformation of the civil service of the Government,
and expressed the intention of transmitting to Congress as early as
practicable a report upon this subject by the chairman of the Civil
Service Commission.

In view of the facts that during a considerable period the Government
of Great Britain has been dealing with administrative problems and
abuses in various particulars analogous to those presented in this
country, and that in recent years the measures adopted were
understood to have been effective and in every respect highly
satisfactory, I thought it desirable to have fuller information upon
the subject, and accordingly requested the chairman of the Civil
Service Commission to make a thorough investigation for this purpose.
The result has been an elaborate and comprehensive report.

The report sets forth the history of the partisan spoils system in
Great Britain, and of the rise and fall of the parliamentary
patronage, and of official interference with the freedom of
elections. It shows that after long trials of various kinds of
examinations those which are competitive and open on equal terms to
all, and which are carried on under the superintendence of a single
commission, have, with great advantage, been established as
conditions of admission to almost every official place in the
subordinate administration of that country and of British India. The
completion of the report, owing to the extent of the labor involved
in its preparation and the omission of Congress to make any provision
either for the compensation or the expenses of the Commission, has
been postponed until the present time. It is herewith transmitted to
Congress.

While the reform measures of another government are of no authority
for us, they are entitled to influence to the extent to which their
intrinsic wisdom and their adaptation to our institutions and social
life may commend them to our consideration. The views I have
heretofore expressed concerning the defects and abuses in our civil
administration remain unchanged, except in so far as an enlarged
experience has deepened my sense of the duty both of officers and of
the people themselves to cooperate for their removal. The grave evils
and perils of a partisan spoils system of appointment to office and of
office tenure are now generally recognized. In the resolutions of the
great parties, in the reports of Departments, in the debates and
proceedings of Congress, in the messages of Executives, the gravity
of these evils has been pointed out and the need of their reform has
been admitted.

To command the necessary support, every measure of reform must be
based on common right and justice, and must be compatible with the
healthy existence of great parties, which are inevitable and
essential in a free state.

When the people have approved a policy at a national election,
confidence on the part of the officers they have selected and of the
advisers who, in accordance with our political institutions, should
be consulted in the policy which it is their duty to carry into
effect is indispensable. It is eminently proper that they should
explain it before the people, as well as illustrate its spirit in the
performance of their official duties.

Very different considerations apply to the greater number of those
who fill the subordinate places in the civil service. Their
responsibility is to their superiors in official position. It is
their duty to obey the legal instructions of those upon whom that
authority is devolved, and their best public service consists in the
discharge of their functions irrespective of partisan politics. Their
duties are the same whatever party is in power and whatever policy
prevails. As a consequence it follows that their tenure of office
should not depend on the prevalence of any policy or the supremacy of
any party, but should be determined by their capacity to serve the
people most usefully quite irrespective of partisan interests. The
same considerations that should govern the tenure should also prevail
in the appointment, discipline, and removal of these subordinates. The
authority of appointment and removal is not a perquisite, which may be
used to aid a friend or reward a partisan, but is a trust, to be
exercised in the public interest under all the sanctions which attend
the obligation to apply the public funds only for public purposes.

Every citizen has an equal right to the honor and profit of entering
the public service of his country. The only just ground of
discrimination is the measure of character and capacity he has to
make that service most useful to the people. Except in cases where,
upon just and recognized principles--as upon the theory of
pensions--offices and promotions are bestowed as rewards for past
services, their bestowal upon any theory which disregards personal
merit is an act of injustice to the citizen, as well as a breach of
that trust subject to which the appointing power is held.

In the light of these principles it becomes of great importance to
provide just and adequate means, especially for every Department and
large administrative office, where personal discrimination on the
part of its head is not practicable, for ascertaining those
qualifications to which appointments and removals should have
reference. To fail to provide such means is not only to deny the
opportunity of ascertaining the facts upon which the most righteous
claim to office depends, but of necessity to discourage all worthy
aspirants by handing over appointments and removals to mere influence
and favoritism. If it is the right of the worthiest claimant to gain
the appointment and the interest of the people to bestow it upon him,
it would seem clear that a wise and just method of ascertaining
personal fitness for office must be an important and permanent
function of every just and wise government. It has long since become
impossible in the great offices for those having the duty of
nomination and appointment to personally examine into the individual
qualifications of more than a small proportion of those seeking
office, and with the enlargement of the civil service that proportion
must continue to become less.

In the earlier years of the Government the subordinate offices were
so few in number that it was quite easy for those making appointments
and promotions to personally ascertain the merits of candidates. Party
managers and methods had not then become powerful agencies of
coercion, hostile to the free and just exercise of the appointing
power.

A large and responsible part of the duty of restoring the civil
service to the desired purity and efficiency rests upon the
President, and it is my purpose to do what is within my power to
advance such prudent and gradual measures of reform as will most
surely and rapidly bring about that radical change of system
essential to make our administrative methods satisfactory to a free
and intelligent people. By a proper exercise of authority it is in
the power of the Executive to do much to promote such a reform. But
it can not be too clearly understood that nothing adequate can be
accomplished without cooperation on the part of Congress and
considerate and intelligent support among the people. Reforms which
challenge the generally accepted theories of parties and demand
changes in the methods of Departments are not the work of a day.
Their permanent foundations must be laid in sound principles and in
an experience which demonstrates their wisdom and exposes the errors
of their adversaries. Every worthy officer desires to make his
official action a gain and an honor to his country; but the people
themselves, far more than their officers in public station, are
interested in a pure, economical, and vigorous administration.

By laws enacted in 1853 and 1855, and now in substance incorporated
in the Revised Statutes, the practice of arbitrary appointments to
the several subordinate grades in the great Departments was
condemned, and examinations as to capacity, to be conducted by
departmental boards of examiners, were provided for and made
conditions of admission to the public service. These statutes are a
decision by Congress that examinations of some sort as to attainments
and capacity are essential to the well-being of the public service.
The important questions since the enactment of these laws have been
as to the character of these examinations, and whether official favor
and partisan influence or common right and merit were to control the
access to the examinations. In practice these examinations have not
always been open to worthy persons generally who might wish to be
examined. Official favoritism and partisan influence, as a rule,
appear to have designated those who alone were permitted to go before
the examining boards, subjecting even the examiners to a pressure from
the friends of the candidates very difficult to resist. As a
consequence the standard of admission fell below that which the
public interest demanded. It was also almost inevitable that a system
which provided for various separate boards of examiners, with no
common supervision or uniform method of procedure, should result in
confusion, inconsistency, and inadequate tests of capacity, highly
detrimental to the public interest. A further and more radical change
was obviously required.

In the annual message of December, 1870, my predecessor declared
that-- There is no duty which so much embarrasses the Executive and
heads of Departments as that of appointments, nor is there any such
arduous and thankless labor imposed on Senators and Representatives
as that of finding places for constituents. The present system does
not secure the best men, and often not even fit men, for public
place. The elevation and purification of the civil service of the
Government will be hailed with approval by the whole people of the
United States. Congress accordingly passed the act approved March 3,
1871, "to regulate the civil service of the United States and promote
the efficiency thereof," giving the necessary authority to the
Executive to inaugurate a civil-service reform.

Acting under this statute, which was interpreted as intended to
secure a system of just and effectual examinations under uniform
supervision, a number of eminently competent persons were selected
for the purpose, who entered with zeal upon the discharge of their
duties, prepared with an intelligent appreciation of the requirements
of the service the regulations contemplated, and took charge of the
examinations, and who in their capacity as a board have been known as
the "Civil Service Commission." Congress for two years appropriated
the money needed for the compensation and for the expense of carrying
on the work of the Commission.

It appears from the report of the Commission submitted to the
President in April, 1874, that examinations had been held in various
sections of the country, and that an appropriation of about $25,000
would be required to meet the annual expenses, including salaries,
involved in discharging the duties of the Commission. The report was
transmitted to Congress by special message of April 18, 1874, with
the following favorable comment upon the labors of the Commission: If
sustained by Congress, I have no doubt the rules can, after the
experience gained, be so improved and enforced as to still more
materially benefit the public service and relieve the Executive,
members of Congress, and the heads of Departments from influences
prejudicial to good administration. The rules, as they have hitherto
been enforced, have resulted beneficially, as is shown by the
opinions of the members of the Cabinet and their subordinates in the
Departments, and in that opinion I concur. And in the annual message
of December of the same year similar views are expressed and an
appropriation for continuing the work of the Commission again
advised.

The appropriation was not made, and as a consequence the active work
of the Commission was suspended, leaving the Commission itself still
in existence. Without the means, therefore, of causing qualifications
to be tested in any systematic manner or of securing for the public
service the advantages of competition upon any extensive plan, I
recommended in my annual message of December, 1877, the making of an
appropriation for the resumption of the work of the Commission.

In the meantime, however, competitive examinations, under many
embarrassments, have been conducted within limited spheres in the
Executive Departments in Washington and in a number of the
custom-houses and post-offices of the principal cities of the
country, with a view to further test their effects, and in every
instance they have been found to be as salutary as they are stated to
have been under the Administration of my predecessor. I think the
economy, purity, and efficiency of the public service would be
greatly promoted by their systematic introduction, wherever
practicable, throughout the entire civil service of the Government,
together with ample provision for their general supervision in order
to secure consistency and uniform justice.

Reports from the Secretary of the Interior, from the
Postmaster-General, from the postmaster in the city of New York,
where such examinations have been some time on trial, and also from
the collector of the port, the naval officer, and the surveyor in
that city, and from the postmasters and collectors in several of the
other large cities, show that the competitive system, where applied,
has in various ways contributed to improve the public service.

The reports show that the results have been salutary in a marked
degree, and that the general application of similar rules can not
fail to be of decided benefit to the service.

The reports of the Government officers, in the city of New York
especially, bear decided testimony to the utility of open competitive
examinations in their respective offices, showing that--These
examinations and the excellent qualifications of those admitted to
the service through them have had a marked incidental effect upon the
persons previously in the service, and particularly upon those
aspiring to promotion. There has been on the part of these latter an
increased interest in the work and a desire to extend acquaintance
with it beyond the particular desk occupied, and thus the morale of
the entire force has been raised. The examinations have been attended
by many citizens, who have had an opportunity to thoroughly
investigate the scope and character of the tests and the method of
determining the results, and those visitors have without exception
approved the methods employed, and several of them have publicly
attested their favorable opinion. Upon such considerations I deem it
my duty to renew the recommendation contained in my annual message of
December, 1877, requesting Congress to make the necessary
appropriation for the resumption of the work of the Civil Service
Commission. Economy will be promoted by authorizing a moderate
compensation to persons in the public service who may perform extra
labor upon or under the Commission, as the Executive may direct.

I am convinced that if a just and adequate test of merit is enforced
for admission to the public service and in making promotions such
abuses as removals without good cause and partisan and official
interference with the proper exercise of the appointing power will in
large measure disappear.

There are other administrative abuses to which the attention of
Congress should be asked in this connection. Mere partisan
appointments and the constant peril of removal without cause very
naturally lead to an absorbing and mischievous political activity on
the part of those thus appointed, which not only interferes with the
due discharge of official duty, but is incompatible with the freedom
of elections. Not without warrant in the views of several of my
predecessors in the Presidential office, and directly within the law
of 1871, already cited, I endeavored, by regulation made on the 22d
day of June, 1877, to put some reasonable limits to such abuses. It
may not be easy, and it may never perhaps be necessary, to define
with precision the proper limit of political action on the part of
Federal officers. But while their right to hold and freely express
their opinions can not be questioned, it is very plain that they
should neither be allowed to devote to other subjects the time needed
for the proper discharge of their official duties nor to use the
authority of their office to enforce their own opinions or to coerce
the political action of those who hold different opinions.

Reasons of justice and public policy quite analogous to those which
forbid the use of official power for the oppression of the private
citizen impose upon the Government the duty of protecting its
officers and agents from arbitrary exactions. In whatever aspect
considered, the practice of making levies for party purposes upon the
salaries of officers is highly demoralizing to the public service and
discreditable to the country. Though an officer should be as free as
any other citizen to give his own money in aid of his opinions or his
party, he should also be as free as any other citizen to refuse to
make such gifts. If salaries are but a fair compensation for the time
and labor of the officer, it is gross injustice to levy a tax upon
them. If they are made excessive in order that they may bear the tax,
the excess is an indirect robbery of the public funds.

I recommend, therefore, such a revision and extension of present
statutes as shall secure to those in every grade of official life or
public employment the protection with which a great and enlightened
nation should guard those who are faithful in its service.

Our relations with foreign countries have continued peaceful.

With Great Britain there are still unsettled questions, growing out
of the local laws of the maritime provinces and the action of
provincial authorities deemed to be in derogation of rights secured
by treaty to American fishermen. The United States minister in London
has been instructed to present a demand for $105,305.02 in view of the
damages received by American citizens at Fortune Bay on the 6th day of
January, 1878. The subject has been taken into consideration by the
British Government, and an early reply is anticipated.

Upon the completion of the necessary preliminary examinations the
subject of our participation in the provincial fisheries, as
regulated by treaty, will at once be brought to the attention of the
British Government, with a view to an early and permanent settlement
of the whole question, which was only temporarily adjusted by the
treaty of Washington.

Efforts have been made to obtain the removal of restrictions found
injurious to the exportation of cattle to the United Kingdom.

Some correspondence has also occurred with regard to the rescue and
saving of life and property upon the Lakes, which has resulted in
important modifications of the previous regulations of the Dominion
government on the subject in the interest of humanity and commerce.

In accordance with the joint resolution of the last session of
Congress, commissioners were appointed to represent the United States
at the two international exhibitions in Australia, one of which is now
in progress at Sydney, and the other to be held next year at
Melbourne. A desire has been expressed by our merchants and
manufacturers interested in the important and growing trade with
Australia that an increased provision should be made by Congress for
the representation of our industries at the Melbourne exhibition of
next year, and the subject is respectfully submitted to your
favorable consideration.

The assent of the Government has been given to the landing on the
coast of Massachusetts of a new and independent transatlantic cable
between France, by way of the French island of St. Pierre, and this
country, subject to any future legislation of Congress on the
subject. The conditions imposed before allowing this connection with
our shores to be established are such as to secure its competition
with any existing or future lines of marine cable and preclude
amalgamation therewith, to provide for entire equality of rights to
our Government and people with those of France in the use of the
cable, and prevent any exclusive possession of the privilege as
accorded by France to the disadvantage of any future cable
communication between France and the United States which may be
projected and accomplished by our citizens. An important reduction of
the present rates of cable communication with Europe, felt to be too
burdensome to the interests of our commerce, must necessarily flow
from the establishment of this competing line.

The attention of Congress was drawn to the propriety of some general
regulation by Congress of the whole subject of transmarine cables by
my predecessor in his message of December 7, 1875, and I respectfully
submit to your consideration the importance of Congressional action in
the matter.

The questions of grave importance with Spain growing out of the
incidents of the Cuban insurrection have been for the most part
happily and honorably settled. It may reasonably be anticipated that
the commission now sitting in Washington for the decision of private
cases in this connection will soon be able to bring its labors to a
conclusion.

The long-standing question of East Florida claims has lately been
renewed as a subject of correspondence, and may possibly require
Congressional action for its final disposition.

A treaty with the Netherlands with respect to consular rights and
privileges similar to those with other powers has been signed and
ratified, and the ratifications were exchanged on the 31st of July
last. Negotiations for extradition treaties with the Netherlands and
with Denmark are now in progress.

Some questions with Switzerland in regard to pauper and convict
emigrants have arisen, but it is not doubted that they will be
arranged upon a just and satisfactory basis. A question has also
occurred with respect to an asserted claim by Swiss municipal
authorities to exercise tutelage over persons and property of Swiss
citizens naturalized in this country. It is possible this may require
adjustment by treaty.

With the German Empire frequent questions arise in connection with
the Subjects of naturalization and expatriation, but the Imperial
Government has constantly manifested a desire to strictly maintain
and comply with all treaty stipulations in regard to them.

In consequence of the omission of Congress to provide for a
diplomatic representative at Athens, the legation to Greece has been
withdrawn. There is now no channel of diplomatic communication
between the two countries, and the expediency of providing for one in
some form is submitted to Congress.

Relations with Austria, Russia, Italy, Portugal, Turkey, and Belgium
continue amicable, and marked by no incident of especial importance.

A change of the personal head of the Government of Egypt has taken
place. No change, however, has occurred in the relations between
Egypt and the United States. The action of the Egyptian Government in
presenting to the city of New York one of the ancient obelisks, which
possess such historic interest, is highly appreciated as a generous
mark of international regard. If prosperity should attend the
enterprise of its transportation across the Atlantic, its erection in
a conspicuous position in the chief commercial city of the nation will
soon be accomplished.

The treaty recently made between Japan and the United States in
regard to the revision of former commercial treaties it is now
believed will be followed by similar action on the part of other
treaty powers. The attention of Congress is again invited to the
subject of the indemnity funds received some years since from Japan
and China, which, with their accumulated interest, now amount to
considerable sums. If any part of these funds is justly due to
American citizens, they should receive it promptly; and whatever may
have been received by this Government in excess of strictly just
demands should in some form be returned to the nations to whom it
equitably belongs.

The Government of China has signified its willingness to consider the
question of the emigration of its subjects to the United States with a
dispassionate fairness and to cooperate in such measures as may tend
to prevent injurious consequences to the United States. The
negotiations are still proceeding, and will be pressed with
diligence.

A question having arisen between China and Japan about the Lew Chew
Islands, the United States Government has taken measures to inform
those powers of its readiness to extend its good offices for the
maintenance of peace if they shall mutually deem it desirable and
find it practicable to avail themselves of the proffer.

It is a gratification to be able to announce that, through the
judicious and energetic action of the military commanders of the two
nations on each side of the Rio Grande, under the instructions of
their respective Governments, raids and depredations have greatly
decreased, and in the localities where formerly most destructive have
now almost wholly ceased. In view of this result, I entertain a
confident expectation that the prevalence of quiet on the border will
soon become so assured as to justify a modification of the present
orders to our military commanders as to crossing the border, without
encouraging such disturbances as would endanger the peace of the two
countries.

The third installment of the award against Mexico under the claims
commission of July 4, 1868, was duly paid, and has been put in course
of distribution in pursuance of the act of Congress providing for the
same. This satisfactory situation between the two countries leads me
to anticipate an expansion of our trade with Mexico and an increased
contribution of capital and industry by our people to the development
of the great resources of that country. I earnestly commend to the
wisdom of Congress the provision of suitable legislation looking to
this result.

Diplomatic intercourse with Colombia is again fully restored by the
arrival of a minister from that country to the United States. This is
especially fortunate in view of the fact that the question of an
inter-oceanic canal has recently assumed a new and important aspect
and is now under discussion with the Central American countries
through whose territory the canal, by the Nicaragua route, would have
to pass. It is trusted that enlightened statesmanship on their part
will see that the early prosecution of such a work will largely inure
to the benefit, not only of their own citizens and those of the United
States, but of the commerce of the civilized world. It is not doubted
that should the work be undertaken under the protective auspices of
the United States, and upon satisfactory concessions for the right of
way and its security by the Central American Governments, the capital
for its completion would be readily furnished from this country and
Europe, which might, failing such guaranties, prove inaccessible.

Diplomatic relations with Chile have also been strengthened by the
reception of a minister from that country.

The war between Peru, Bolivia, and Chile still continues. The United
States have not deemed it proper to interpose in the matter further
than to convey to all the Governments concerned the assurance that
the friendly offices of the Government of the United States for the
restoration of peace upon an honorable basis will be extended in case
the belligerents shall exhibit a readiness to accept them.

Cordial relations continue with Brazil and the Argentine Republic,
and trade with those countries is improving. A provision for regular
and more frequent mail communication, in our own ships, between the
ports of this country and the nations of South America seems to me to
deserve the attention of Congress as an essential precursor of an
enlargement of our commerce with them and an extension of our
carrying trade.

A recent revolution in Venezuela has been followed by the
establishment of a provisional government. This government has not
yet been formally recognized, and it is deemed desirable to await the
proposed action of the people which is expected to give it the
sanction of constitutional forms.

A naval vessel has been sent to the Samoan Islands to make surveys
and take possession of the privileges ceded to the United States by
Samoa in the harbor of Pago-Pago. A coaling station is to be
established there, which will be convenient and useful to United
States vessels.

The subject of opening diplomatic relations with Roumania and Servia,
now become independent sovereignties, is at present under
consideration, and is the subject of diplomatic correspondence.

There is a gratifying increase of trade with nearly all European and
American countries, and it is believed that with judicious action in
regard to its development it can and will be still more enhanced and
that American products and manufactures will find new and expanding
markets. The reports of diplomatic and consular officers upon this
subject, under the system now adopted, have resulted in obtaining
much valuable information, which has been and will continue to be
laid before Congress and the public from time to time.

The third article of the treaty with Russia of March 30, 1867, by
which Alaska was ceded to the United States, provides that the
inhabitants of the ceded territory, with the exception of the
uncivilized native tribes, shall be admitted to the enjoyment of all
the rights of citizens of the United States and shall be maintained
and protected in the free enjoyment of their liberty, property, and
religion. The uncivilized tribes are subject to such laws and
regulations as the United States may from time to time adopt in
regard to the aboriginal tribes of that country.

Both the obligations of this treaty and the necessities of the people
require that some organized form of government over the Territory of
Alaska be adopted.

There appears to be no law for the arrest of persons charged with
common-law offenses, such as assault, robbery, and murder, and no
magistrate authorized to issue or execute process in such cases.
Serious difficulties have already arisen from offenses of this
character, not only among the original inhabitants, but among
citizens of the United States and other countries who have engaged in
mining, fishing, and other business operations within the territory. A
bill authorizing the appointment of justices of the peace and
constables and the arrest and detention of persons charged with
criminal offenses, and providing for an appeal to United States
courts for the district of Oregon in suitable cases, will at a proper
time be submitted to Congress.

The attention of Congress is called to the annual report of the
Secretary of the Treasury on the condition of the public finances.

The ordinary revenues from all sources for the fiscal year ended June
30, 1879, were $273,827,184.46; the ordinary expenditures for the same
period were $266,947,883.53, leaving a surplus revenue for the year of
$6,879,300.93.

The receipts for the present fiscal year, ending June 30, 1880,
actual and estimated, are as follows: Actual receipts for the first
quarter, commencing July 1, 1879, $79,843,663.61; estimated receipts
for the remaining three quarters of the year, $208,156,336.39; total
receipts for the current fiscal year, actual and estimated,
$288,000,000.

The expenditures for the same period will be, actual and estimated,
as follows: For the quarter commencing July 1, 1879, actual
expenditures, $91,683,385.10; and for the remaining three quarters of
the year the expenditures are estimated at $172,316,614.90, making the
total expenditures $264,000,000, and leaving an estimated surplus
revenue for the year ending June 30, 1880, of $24,000,000. The total
receipts during the next fiscal year, ending June 30, 1881, estimated
according to existing laws, will be $288,000,000, and the estimated
ordinary expenditures for the same period will be $278,097,364.39,
leaving a surplus of $9,902,635.61 for that year.

The large amount expended for arrears of pensions during the last and
the present fiscal year, amounting to $21,747,249.60, has prevented
the application of the full amount required by law to the sinking
fund for the current year; but these arrears having been
substantially paid, it is believed that the sinking fund can
hereafter be maintained without any change of existing law.

The Secretary of War reports that the War Department estimates for
the fiscal year ending June 30, 1881, are $40,380,428.93, the same
being for a less sum of money than any annual estimate rendered to
Congress from that Department during a period of at least twelve
years.

He concurs with the General of the Army in recommending such
legislation as will authorize the enlistment of the full number of
25,000 men for the line of the Army, exclusive of the 3,463 men
required for detached duty, and therefore not available for service
in the field.

He also recommends that Congress be asked to provide by law for the
disposition of a large number of abandoned military posts and
reservations, which, though very valuable in themselves, have been
rendered useless for military purposes by the advance of civilization
and settlement.

He unites with the Quartermaster-General in recommending that an
appropriation be made for the construction of a cheap and perfectly
fireproof building for the safe storage of a vast amount of money
accounts, vouchers, claims, and other valuable records now in the
Quartermaster-General's Office, and exposed to great risk of total
destruction by fire.

He also recommends, in conformity with the views of the
Judge-Advocate-General, some declaratory legislation in reference to
the military statute of limitations as applied to the crime of
desertion. In these several recommendations I concur.

The Secretary of War further reports that the work for the
improvement of the South Pass of the Mississippi River, under
contract with Mr. James B. Eads, made in pursuance of an act of
Congress, has been prosecuted during the past year with a greater
measure of success in the attainment of results than during any
previous year. The channel through the South Pass, which at the
beginning of operations in June, 1875, had a depth of only 7 1/2 feet
of water, had on the 8th of July, 1879, a minimum depth of 26 feet,
having a width of not less than 200 feet and a central depth of 30
feet. Payments have been made in accordance with the statute, as the
work progressed, amounting in the aggregate to $4,250,000; and
further payments will become due, as provided by the statute, in the
event of success in maintaining the channel now secured.

The reports of the General of the Army and of his subordinates
present a full and detailed account of the military operations for
the suppression of hostilities among the Indians of the Ute and
Apache tribes, and praise is justly awarded to the officers and
troops engaged for promptness, skill, and courage displayed.

The past year has been one of almost unbroken peace and quiet on the
Mexican frontier, and there is reason to believe that the efforts of
this Government and of Mexico to maintain order in that region will
prove permanently successful.

This Department was enabled during the past year to find temporary,
though crowded, accommodations and a safe depository for a portion of
its records in the completed east wing of the building designed for
the State, War, and Navy Departments. The construction of the north
wing of the building, a part of the structure intended for the use of
the War Department, is being carried forward with all possible
dispatch, and the work should receive from Congress such liberal
appropriations as will secure its speedy completion.

The report of the Secretary of the Navy shows continued improvement
in that branch of the service during the last fiscal year. Extensive
repairs have been made upon vessels, and two new ships have been
completed and made ready for sea.

The total expenditures of the year ended June 30, 1879, including
specific appropriations not estimated for by the Department, were
$13,555,710.09. The expenses chargeable to the year, after deducting
the amount of these specific appropriations, were $13,343,317.79; but
this is subject to a reduction of $283,725.99, that amount having been
drawn upon warrants, but not paid out during the year. The amount of
appropriations applicable to the last fiscal year was $14,538,646.17.
There was, therefore, a balance of $1,479,054.37 remaining unexpended
and to the credit of the Department on June 30, 1879. The estimates
for the fiscal year ending June 30, 1881, are $14,864,147.95, which
exceeds the appropriations for the present fiscal year $361,897.28.
The reason for this increase is explained in the Secretary's report.
The appropriations available for the present fiscal year are
$14,502,250.67, which will, in the opinion of the Secretary, answer
all the ordinary demands of the service. The amount drawn from the
Treasury from July 1 to November 1, 1879 was $5,770,404.12, of which
$1,095,440.33 has been refunded, leaving as the expenditure for that
period $4,674,963.79. If the expenditures of the remaining two-thirds
of the year do not exceed the proportion for these four months, there
will remain unexpended at the end of the year $477,359.30 of the
current appropriations. The report of the Secretary shows the
gratifying fact that among all the disbursing officers of the Pay
Corps of the Navy there is not one who is a defaulter to the extent
of a single dollar. I unite with him in recommending the removal of
the observatory to a more healthful location. That institution
reflects credit upon the nation, and has obtained the approbation of
scientific men in all parts of the world. Its removal from its
present location would not only be conducive to the health of its
officers and professors, but would greatly increase its usefulness.

The appropriation for judicial expenses, which has heretofore been
made for the Department of Justice in gross, was subdivided at the
last session of Congress, and no appropriation whatever was made for
the payment of the fees of marshals and their deputies, either in the
service of process or for the discharge of other duties; and since
June 30 these officers have continued the performance of their duties
without compensation from the Government, taking upon themselves the
necessary incidental outlays, as well as rendering their own
services. In only a few unavoidable instances has the proper
execution of the process of the United States failed by reason of the
absence of the requisite appropriation. This course of official
conduct on the part of these officers, highly creditable to their
fidelity, was advised by the Attorney-General, who informed them,
however, that they would necessarily have to rely for their
compensation upon the prospect of future legislation by Congress. I
therefore especially recommend that immediate appropriation be made
by Congress for this purpose.

The act making the principal appropriation for the Department of
Justice at previous sessions has uniformly contained the following
clause: And for defraying the expenses which my be incurred in the
enforcement of the act approved February 28, 1871, entitled "An act
to amend an act approved May 31, 1870, entitled 'An act to enforce
the rights of citizens of the United States to vote in the several
States of this Union, and for other purposes,'" or any acts
amendatory thereof or supplementary thereto. No appropriation was
made for this purpose for the current year. As no general election
for Members of Congress occurred, the omission was a matter of little
practical importance. Such election will, however, take place during
the ensuing year, and the appropriation made for the pay of marshals
and deputies should be sufficient to embrace compensation for the
services they may be required to perform at such elections.

The business of the Supreme Court is at present largely in arrears.
It can not be expected that more causes can be decided than are now
disposed of in its annual session, or that by any assiduity the
distinguished magistrates who compose the court can accomplish more
than is now done. In the courts of many of the circuits also the
business has increased to such an extent that the delay of justice
will call the attention of Congress to an appropriate remedy. It is
believed that all is done in each circuit which can fairly be
expected from its judicial force. The evils arising from delay are
less heavily felt by the United States than by private suitors, as
its causes are advanced by the courts when it is seen that they
involve the discussion of questions of a public character.

The remedy suggested by the Attorney-General is the appointment of
additional circuit judges and the creation of an intermediate court
of errors and appeals, which shall relieve the Supreme Court of a
part of its jurisdiction, while a larger force is also obtained for
the performance of circuit duties.

I commend this suggestion to the consideration of Congress. It would
seem to afford a complete remedy, and would involve, if ten
additional circuit judges are appointed, an expenditure, at the
present rate of salaries, of not more than $60,000 a year, which
would certainly be small in comparison with the objects to be
attained.

The report of the Postmaster-General bears testimony to the general
revival of business throughout the country. The receipts of the
Post-Office Department for the fiscal year ended June 30, 1879, were
$30,041,982.86, being $764,465.91 more than the revenues of the
preceding year. The amount realized from the sale of postage stamps,
stamped envelopes, and postal cards was $764,465.91 more than in the
preceding year, and $2,387,559.23 more than in 1877. The expenditures
of the Department were $33,449,899.45, of which the sum of $376,461.63
was paid on liabilities incurred in preceding years.

The expenditures during the year were $801,209.77 less than in the
preceding year. This reduction is to be attributed mainly to the
operation of the law passed June 17, 1878, changing the compensation
of postmasters from a commission on the value of stamps sold to a
commission on stamps canceled.

The amount drawn from the Treasury on appropriations, in addition to
the revenues of the Department, was $3,031,454.96, being
$2,276,197.86 less than in the preceding year.

The expenditures for the fiscal year ending June 30, 1881, are
estimated at $39,920,900 and the receipts from all sources at
$32,210,000, leaving a deficiency to be appropriated for out of the
Treasury of $7,710,900.

The relations of the Department with railroad companies have been
harmonized, notwithstanding the general reduction by Congress of
their compensation by the appropriation for special facilities, and
the railway post-office lines have been greatly extended, especially
in the Southern States. The interests of the Railway Mail Service and
of the public would be greatly promoted and the expenditures could be
more readily controlled by the classification of the employees of the
Railway Mail Service as recommended by the Postmaster-General, the
appropriation for salaries, with respect to which the maximum limit
is already fixed by law, to be made in gross.

The Postmaster-General recommends an amendment of the law regulating
the increase of compensation for increased service and increased
speed on star routes, so as to enable him to advertise for proposals
for such increased service and speed. He also suggests the advantages
to accrue to the commerce of the country from the enactment of a
general law authorizing contracts with American-built steamers,
carrying the American flag, for transporting the mail between ports
of the United States and ports of the West Indies and South America,
at a fixed maximum price per mile, the amount to be expended being
regulated by annual appropriations, in like manner with the amount
paid for the domestic star service.

The arrangement made by the Postmaster-General and the Secretary of
the Treasury for the collection of duty upon books received in the
mail from foreign countries has proved so satisfactory in its
practical operation that the recommendation is now made that Congress
shall extend the provisions of the act of March 3, 1879, under which
this arrangement was made, so as to apply to all other dutiable
articles received in the mails from foreign countries.

The reports of the Secretary of the Interior and of the Commissioner
of Indian Affairs, setting forth the present state of our relations
with the Indian tribes on our territory, the measures taken to
advance their civilization and prosperity, and the progress already
achieved by them, will be found of more than ordinary interest. The
general conduct of our Indian population has been so satisfactory
that the occurrence of two disturbances, which resulted in bloodshed
and destruction of property, is all the more to be lamented.

The history of the outbreak on the White River Ute Reservation, in
western Colorado, has become so familiar by elaborate reports in the
public press that its remarkable incidents need not be stated here in
detail. It is expected that the settlement of this difficulty will
lead to such arrangements as will prevent further hostile contact
between the Indians and the border settlements in western Colorado.

The other disturbance occurred at the Mescalero Agency, in New
Mexico, where Victoria, at the head of a small band of marauders,
after committing many atrocities, being vigorously chased by a
military force, made his way across the Mexican border and is now on
foreign soil.

While these occurrences, in which a comparatively small number of
Indians were engaged, are most deplorable, a vast majority of our
Indian population have fully justified the expectations of those who
believe that by humane and peaceful influences the Indian can be led
to abandon the habits of savage life and to develop a capacity for
useful and civilized occupations. What they have already accomplished
in the pursuit of agricultural and mechanical work, the remarkable
success which has attended the experiment of employing as freighters
a class of Indians hitherto counted among the wildest and most
intractable, and the general and urgent desire expressed by them for
the education of their children may be taken as sufficient proof that
they will be found capable of accomplishing much more if they continue
to be wisely and fairly guided. The "Indian policy" sketched in the
report of the Secretary of the Interior, the object of which is to
make liberal provision for the education of Indian youth, to settle
the Indians upon farm lots in severalty, to give them title in fee to
their farms, inalienable for a certain number of years, and when their
wants are thus provided for to dispose by sale of the lands on their
reservations not occupied and used by them, a fund to be formed out
of the proceeds for the benefit of the Indians, which will gradually
relieve the Government of the expenses now provided for by annual
appropriations, must commend itself as just and beneficial to the
Indians, and as also calculated to remove those obstructions which
the existence of large reservations presents to the settlement and
development of the country. I therefore earnestly recommend the
enactment of a law enabling the Government to give Indians a title in
fee, inalienable for twenty-five years, to the farm lands assigned to
them by allotment. I also repeat the recommendation made in my first
annual message, that a law be passed admitting Indians who can give
satisfactory proof of having by their own labor supported their
families for a number of years, and who are willing to detach
themselves from their tribal relations, to the benefit of the
homestead act, and to grant them patents containing the same
provision of inalienability for a certain period.

The experiment of sending a number of Indian children of both sexes
to the Hampton Normal and Agricultural Institute, in Virginia, to
receive an elementary English education and practical instruction in
farming and other useful industries, has led to results so promising
that it was thought expedient to turn over the cavalry barracks at
Carlisle, in Pennsylvania, to the Interior Department for the
establishment of an Indian school on a larger scale. This school has
now 158 pupils, selected from various tribes, and is in full
operation. Arrangements are also made for the education of a number
of Indian boys and girls belonging to tribes on the Pacific Slope in
a similar manner, at Forest Grove, in Oregon. These institutions will
commend themselves to the liberality of Congress and to the
philanthropic munificence of the American people.

Last spring information was received of the organization of an
extensive movement in the Western States, the object of which was the
occupation by unauthorized persons of certain lands in the Indian
Territory ceded by the Cherokees to the Government for the purpose of
settlement by other Indian tribes.

On the 26th of April I issued a proclamation warning all persons
against participation in such an attempt, and by the cooperation of a
military force the invasion was promptly checked. It is my purpose to
protect the rights of the Indian inhabitants of that Territory to the
full extent of the executive power; but it would be unwise to ignore
the fact that a territory so large and so fertile, with a population
so sparse and with so great a wealth of unused resources, will be
found more exposed to the repetition of such attempts as happened
this year when the surrounding States are more densely settled and
the westward movement of our population looks still more eagerly for
fresh lands to occupy. Under such circumstances the difficulty of
maintaining the Indian Territory in its present state will greatly
increase, and the Indian tribes inhabiting it would do well to
prepare for such a contingency. I therefore fully approve of the
advice given to them by the Secretary of the Interior on a recent
occasion, to divide among themselves in severalty as large a quantity
of their lands as they can cultivate; to acquire individual title in
fee instead of their present tribal ownership in common, and to
consider in what manner the balance of their lands may be disposed of
by the Government for their benefit. By adopting such a policy they
would more certainly secure for themselves the value of their
possessions, and at the same time promote their progress in
civilization and prosperity, than by endeavoring to perpetuate the
present state of things in the Territory.

The question whether a change in the control of the Indian service
should be made was in the Forty-fifth Congress referred to a joint
committee of both Houses for inquiry and report. In my last annual
message I expressed the hope that the decision of that question, then
in prospect, would "arrest further agitation of this subject, such
agitation being apt to produce a disturbing effect upon the service
as well as on the Indians themselves." Since then, the committee
having reported, the question has been decided in the negative by a
vote in the House of Representatives.

For the reasons here stated, and in view of the fact that further
uncertainty on this point will be calculated to obstruct other
much-needed legislation, to weaken the discipline of the service, and
to unsettle salutary measures now in progress for the government and
improvement of the Indians, I respectfully recommend that the
decision arrived at by Congress at its last session be permitted to
stand.

The efforts made by the Department of the Interior to arrest the
depredations on the timber lands of the United States have been
continued, and have met with considerable success. A large number of
cases of trespass have been prosecuted in the courts of the United
States; others have been settled, the trespassers offering to make
payment to the Government for the value of the timber taken by them.
The proceeds of these prosecutions and settlements turned into the
Treasury far exceed in amount the sums appropriated by Congress for
this purpose. A more important result, however, consists in the fact
that the destruction of our public forests by depredation, although
such cases still occur, has been greatly reduced in extent, and it is
probable that if the present policy is vigorously pursued and
sufficient provision to that end is made by Congress such trespasses,
at least those on a large scale, can be entirely suppressed, except in
the Territories, where timber for the daily requirements of the
population can not, under the present state of the law, be otherwise
obtained. I therefore earnestly invite the attention of Congress to
the recommendation made by the Secretary of the Interior, that a law
be enacted enabling the Government to sell timber from the public
lands without conveying the fee, where such lands are principally
valuable for the timber thereon, such sales to be so regulated as to
conform to domestic wants and business requirements, while at the
same time guarding against a sweeping destruction of the forests. The
enactment of such a law appears to become a more pressing necessity
every day.

My recommendations in former messages are renewed in favor of
enlarging the facilities of the Department of Agriculture.
Agriculture is the leading interest and the permanent industry of our
people. It is to the abundance of agricultural production, as compared
with our home consumption, and the largely increased and highly
profitable market abroad which we have enjoyed in recent years, that
we are mainly indebted for our present prosperity as a people. We
must look for its continued maintenance to the same substantial
resource. There is no branch of industry in which labor, directed by
scientific knowledge, yields such increased production in comparison
with unskilled labor, and no branch of the public service to which
the encouragement of liberal appropriations can be more appropriately
extended. The omission to render such aid is not a wise economy, but,
on the contrary, undoubtedly results in losses of immense sums
annually that might be saved through well-directed efforts by the
Government to promote this vital interest.

The results already accomplished with the very limited means
heretofore placed at the command of the Department of Agriculture is
an earnest of what may be expected with increased appropriations for
the several purposes indicated