Speech Transcript:

 To the Congress of the United States:

Your assembling is clouded by a sense of public bereavement, caused
by the recent and sudden death of Thomas A. Hendricks, Vice-President
of the United States. His distinguished public services, his complete
integrity and devotion to every duty, and his personal virtues will
find honorable record in his country's history.

Ample and repeated proofs of the esteem and confidence in which he
was held by his fellow-countrymen were manifested by his election to
offices of the most important trust and highest dignity; and at
length, full of years and honors, he has been laid at rest amid
universal sorrow and benediction.

The Constitution, which requires those chosen to legislate for the
people to annually meet in the discharge of their solemn trust, also
requires the President to give to Congress information of the state
of the Union and recommend to their consideration such measures as he
shall deem necessary and expedient. At the threshold of a compliance
with these constitutional directions it is well for us to bear in
mind that our usefulness to the people's interests will be promoted
by a constant appreciation of the scope and character of our
respective duties as they relate to Federal legislation. While the
Executive may recommend such measures as he shall deem expedient, the
responsibility for legislative action must and should rest upon those
selected by the people to make their laws.

Contemplation of the grave and responsible functions assigned to the
respective branches of the Government under the Constitution will
disclose the partitions of power between our respective departments
and their necessary independence, and also the need for the exercise
of all the power intrusted to each in that spirit of comity and
cooperation which is essential to the proper fulfillment of the
patriotic obligations which rest upon us as faithful servants of the
people.

The jealous watchfulness of our constituencies, great and small,
supplements their suffrages, and before the tribunal they establish
every public servant should be judged.

It is gratifying to announce that the relations of the United States
with all foreign powers continue to be friendly. Our position after
nearly a century of successful constitutional government, maintenance
of good faith in all our engagements, the avoidance of complications
with other nations, and our consistent and amicable attitude toward
the strong and weak alike furnish proof of a political disposition
which renders professions of good will unnecessary. There are no
questions of difficulty pending with any foreign government.

The Argentine Government has revived the long dormant question of the
Falkland Islands by claiming from the United States indemnity for
their loss, attributed to the action of the commander of the sloop of
war Lexington in breaking up a piratical colony on those islands in
1831, and their subsequent occupation by Great Britain. In view of
the ample justification for the act of the Lexington and the derelict
condition of the islands before and after their alleged occupation by
Argentine colonists, this Government considers the claim as wholly
groundless.

Question has arisen with the Government of Austria-Hungary touching
the representation of the United States at Vienna. Having under my
constitutional prerogative appointed an estimable citizen of
unimpeached probity and competence as minister at that court, the
Government of Austria-Hungary invited this Government to take
cognizance of certain exceptions, based upon allegations against the
personal acceptability of Mr. Keiley, the appointed envoy, asking
that in view thereof the appointment should be withdrawn. The reasons
advanced were such as could not be acquiesced in without violation of
my oath of office and the precepts of the Constitution, since they
necessarily involved a limitation in favor of a foreign government
upon the right of selection by the Executive and required such an
application of a religious test as a qualification for office under
the United States as would have resulted in the practical
disfranchisement of a large class of our citizens and the abandonment
of a vital principle in our Government. The Austro-Hungarian
Government finally decided not to receive Mr. Keiley as the envoy of
the United States, and that gentleman has since resigned his
commission, leaving the post vacant. I have made no new nomination,
and the interests of this Government at Vienna are now in the care of
the secretary of legation, acting as charge d'affaires ad interim.

Early in March last war broke out in Central America, caused by the
attempt of Guatemala to consolidate the several States into a single
government. In these contests between our neighboring States the
United States forebore to interfere actively, but lent the aid of
their friendly offices in deprecation of war and to promote peace and
concord among the belligerents, and by such counsel contributed
importantly to the restoration of tranquillity in that locality.

Emergencies growing out of civil war in the United States of Colombia
demanded of the Government at the beginning of this Administration the
employment of armed forces to fulfill its guaranties under the
thirty-fifth article of the treaty of 1846, in order to keep the
transit open across the Isthmus of Panama. Desirous of exercising
only the powers expressly reserved to us by the treaty, and mindful
of the rights of Colombia, the forces sent to the Isthmus were
instructed to confine their action to "positively and efficaciously"
preventing the transit and its accessories from being "interrupted or
embarrassed."

The execution of this delicate and responsible task necessarily
involved police control where the local authority was temporarily
powerless, but always in aid of the sovereignty of Colombia.

The prompt and successful fulfillment of its duty by this Government
was highly appreciated by the Government of Colombia, and has been
followed by expressions of its satisfaction.

High praise is due to the officers and men engaged in this service.
The restoration of peace on the Isthmus by the reestablishment of the
constituted Government there being thus accomplished, the forces of
the United States were withdrawn.

Pending these occurrences a question of much importance was presented
by decrees of the Colombian Government proclaiming the closure of
certain ports then in the hands of insurgents and declaring vessels
held by the revolutionists to be piratical and liable to capture by
any power. To neither of these propositions could the United States
assent. An effective closure of ports not in the possession of the
Government, but held by hostile partisans, could not be recognized;
neither could the vessels of insurgents against the legitimate
sovereignty be deemed hostes humani generis within the precepts of
international law, whatever might be the definition and penalty of
their acts under the municipal law of the State against whose
authority they were in revolt. The denial by this Government of the
Colombian propositions did not, however, imply the admission of a
belligerent status on the part of the insurgents.

The Colombian Government has expressed its willingness to negotiate
conventions for the adjustment by arbitration of claims by foreign
citizens arising out of the destruction of the city of Aspinwall by
the insurrectionary forces.

The interest of the United States in a practicable transit for ships
across the strip of land separating the Atlantic from the Pacific has
been repeatedly manifested during the last half century.

My immediate predecessor caused to be negotiated with Nicaragua a
treaty for the construction, by and at the sole cost of the United
States, of a canal through Nicaraguan territory, and laid it before
the Senate. Pending the action of that body thereon, I withdrew the
treaty for reexamination. Attentive consideration of its provisions
leads me to withhold it from resubmission to the Senate.

Maintaining, as I do, the tenets of a line of precedents from
Washington's day, which proscribe entangling alliances with foreign
states, I do not favor a policy of acquisition of new and distant
territory or the incorporation of remote interests with our own.

The laws of progress are vital and organic, and we must be conscious
of that irresistible tide of commercial expansion which, as the
concomitant of our active civilization, day by day is being urged
onward by those increasing facilities of production, transportation,
and communication to which steam and electricity have given birth;
but our duty in the present instructs us to address ourselves mainly
to the development of the vast resources of the great area committed
to our charge and to the cultivation of the arts of peace within our
own borders, though jealously alert in preventing the American
hemisphere from being involved in the political problems and
complications of distant governments. Therefore I am unable to
recommend propositions involving paramount privileges of ownership or
right outside of our own territory, when coupled with absolute and
unlimited engagements to defend the territorial integrity of the
state where such interests lie. While the general project of
connecting the two oceans by means of a canal is to be encouraged, I
am of opinion that any scheme to that end to be considered with favor
should be free from the features alluded to.

The Tehuantepec route is declared by engineers of the highest repute
and by competent scientists to afford an entirely practicable transit
for vessels and cargoes, by means of a ship railway, from the Atlantic
to the Pacific. The obvious advantages of such a route, if feasible,
over others more remote from the axial lines of traffic between
Europe and the pacific, and particularly between the Valley of the
Mississippi and the western coast of North and South America, are
deserving of consideration.

Whatever highway may be constructed across the barrier dividing the
two greatest maritime areas of the world must be for the world's
benefit--a trust for mankind, to be removed from the chance of
domination by any single power, nor become a point of invitation for
hostilities or a prize for warlike ambition. An engagement combining
the construction, ownership, and operation of such a work by this
Government, with an offensive and defensive alliance for its
protection, with the foreign state whose responsibilities and rights
we would share is, in my judgment, inconsistent with such dedication
to universal and neutral use, and would, moreover, entail measures
for its realization beyond the scope of our national polity or
present means.

The lapse of years has abundantly confirmed the wisdom and foresight
of those earlier Administrations which, long before the conditions of
maritime intercourse were changed and enlarged by the progress of the
age, proclaimed the vital need of interoceanic transit across the
American Isthmus and consecrated it in advance to the common use of
mankind by their positive declarations and through the formal
obligation of treaties. Toward such realization the efforts of my
Administration will be applied, ever bearing in mind the principles
on which it must rest, and which were declared in no uncertain tones
by Mr. Cass, who, while Secretary of State, in 1858, announced that
"what the United States want in Central America, next to the
happiness of its people, is the security and neutrality of the
interoceanic routes which lead through it."

The construction of three transcontinental lines of railway, all in
successful operation, wholly within our territory, and uniting the
Atlantic and the Pacific oceans, has been accompanied by results of a
most interesting and impressive nature, and has created new
conditions, not in the routes of commerce only, but in political
geography, which powerfully affect our relations toward and
necessarily increase our interests in any transisthmian route which
may be opened and employed for the ends of peace and traffic, or, in
other contingencies, for uses inimical to both.

Transportation is a factor in the cost of commodities scarcely second
to that of their production, and weighs as heavily upon the consumer.

Our experience already has proven the great importance of having the
competition between land carriage and water carriage fully developed,
each acting as a protection to the public against the tendencies to
monopoly which are inherent in the consolidation of wealth and power
in the hands of vast corporations.

These suggestions may serve to emphasize what I have already said on
the score of the necessity of a neutralization of any interoceanic
transit; and this can only be accomplished by making the uses of the
route open to all nations and subject to the ambitions and warlike
necessities of none.

The drawings and report of a recent survey of the Nicaragua Canal
route, made by Chief Engineer Menocal, will be communicated for your
information.

The claims of citizens of the United States for losses by reason of
the late military operations of Chile in Peru and Bolivia are the
subject of negotiation for a claims convention with Chile, providing
for their submission to arbitration.

The harmony of our relations with China is fully sustained.

In the application of the acts lately passed to execute the treaty of
1880, restrictive of the immigration of Chinese laborers into the
United States, individual cases of hardship have occurred beyond the
power of the Executive to remedy, and calling for judicial
determination.

The condition of the Chinese question in the Western States and
Territories is, despite this restrictive legislation, far from being
satisfactory. The recent outbreak in Wyoming Territory, where numbers
of unoffending Chinamen, indisputably within the protection of the
treaties and the law, were murdered by a mob, and the still more
recent threatened outbreak of the same character in Washington
Territory, are fresh in the minds of all, and there is apprehension
lest the bitterness of feeling against the Mongolian race on the
Pacific Slope may find vent in similar lawless demonstrations. All
the power of this Government should be exerted to maintain the
amplest good faith toward China in the treatment of these men, and
the inflexible sternness of the law in bringing the wrongdoers to
justice should be insisted upon.

Every effort has been made by this Government to prevent these
violent outbreaks and to aid the representatives of China in their
investigation of these outrages; and it is but just to say that they
are traceable to the lawlessness of men not citizens of the United
States engaged in competition with Chinese laborers.

Race prejudice is the chief factor in originating these disturbances,
and it exists in a large part of our domain, jeopardizing our domestic
peace and the good relationship we strive to maintain with China.

The admitted right of a government to prevent the influx of elements
hostile to its internal peace and security may not be questioned,
even where there is no treaty stipulation on the subject. That the
exclusion of Chinese labor is demanded in other countries where like
conditions prevail is strongly evidenced in the Dominion of Canada,
where Chinese immigration is now regulated by laws more exclusive
than our own. If existing laws are inadequate to compass the end in
view, I shall be prepared to give earnest consideration to any
further remedial measures, within the treaty limits, which the wisdom
of Congress may devise.

The independent State of the Kongo has been organized as a government
under the sovereignty of His Majesty the King of the Belgians, who
assumes its chief magistracy in his personal character only, without
making the new State a dependency of Belgium. It is fortunate that a
benighted region, owing all it has of quickening civilization to the
beneficence and philanthropic spirit of this monarch, should have the
advantage and security of his benevolent supervision.

The action taken by this Government last year in being the first to
recognize the flag of the International Association of the Kongo has
been followed by formal recognition of the new nationality which
succeeds to its sovereign powers.

A conference of delegates of the principal commercial nations was
held at Berlin last winter to discuss methods whereby the Kongo basin
might be kept open to the world's trade. Delegates attended on behalf
of the United States on the understanding that their part should be
merely deliberative, without imparting to the results any binding
character so far as the United States were concerned. This reserve
was due to the indisposition of this Government to share in any
disposal by an international congress of jurisdictional questions in
remote foreign territories. The results of the conference were
embodied in a formal act of the nature of an international
convention, which laid down certain obligations purporting to be
binding on the signatories, subject to ratification within one year.
Notwithstanding the reservation under which the delegates of the
United States attended, their signatures were attached to the general
act in the same manner as those of the plenipotentiaries of other
governments, thus making the United States appear, without reserve or
qualification, as signatories to a joint international engagement
imposing on the signers the conservation of the territorial integrity
of distant regions where we have no established interests or control.

This Government does not, however, regard its reservation of liberty
of action in the premises as at all impaired; and holding that an
engagement to share in the obligation of enforcing neutrality in the
remote valley of the Kongo would be an alliance whose
responsibilities we are not in a position to assume, I abstain from
asking the sanction of the Senate to that general act.

The correspondence will be laid before you, and the instructive and
interesting report of the agent sent by this Government to the Kongo
country and his recommendations for the establishment of commercial
agencies on the African coast are also submitted for your
consideration.

The commission appointed by my predecessor last winter to visit the
Central and South American countries and report on the methods of
enlarging the commercial relations of the United States therewith has
submitted reports, which will be laid before you.

No opportunity has been omitted to testify the friendliness of this
Government toward Korea, whose entrance into the family of treaty
powers the United States were the first to recognize. I regard with
favor the application made by the Korean Government to be allowed to
employ American officers as military instructors, to which the assent
of Congress becomes necessary, and I am happy to say this request has
the concurrent sanction of China and Japan.

The arrest and imprisonment of Julio R. Santos, a citizen of the
United States, by the authorities of Ecuador gave rise to a
contention with that Government, in which his right to be released or
to have a speedy and impartial trial on announced charges and with all
guaranties of defense stipulated by treaty was insisted upon by us.
After an elaborate correspondence and repeated and earnest
representations on our part Mr. Santos was, after an alleged trial
and conviction, eventually included in a general decree of amnesty
and pardoned by the Ecuadorian Executive and released, leaving the
question of his American citizenship denied by the Ecuadorian
Government, but insisted upon by our own.

The amount adjudged by the late French and American Claims Commission
to be due from the United States to French claimants on account of
injuries suffered by them during the War of Secession, having been
appropriated by the last Congress, has been duly paid to the French
Government.

The act of February 25, 1885, provided for a preliminary search of
the records of French prize courts for evidence bearing on the claims
of American citizens against France for spoliations committed prior to
1801. The duty has been performed, and the report of the agent will be
laid before you.

I regret to say that the restrictions upon the importation of our
pork into France continue, notwithstanding the abundant demonstration
of the absence of sanitary danger in its use; but I entertain strong
hopes that with a better understanding of the matter this vexatious
prohibition will be removed. It would be pleasing to be able to say
as much with respect to Germany, Austria, and other countries, where
such food products are absolutely excluded, without present prospect
of reasonable change.

The interpretation of our existing treaties of naturalization by
Germany during the past year has attracted attention by reason of an
apparent tendency on the part of the Imperial Government to extend
the scope of the residential restrictions to which returning
naturalized citizens of German origin are asserted to be liable under
the laws of the Empire. The temperate and just attitude taken by this
Government with regard to this class of questions will doubtless lead
to a satisfactory understanding.

The dispute of Germany and Spain relative to the domination of the
Caroline Islands has attracted the attention of this Government by
reason of extensive interests of American citizens having grown up in
those parts during the past thirty years, and because the question of
ownership involves jurisdiction of matters affecting the status of
our citizens under civil and criminal law. While standing wholly
aloof from the proprietary issues raised between powers to both of
which the United States are friendly, this Government expects that
nothing in the present contention shall unfavorably affect our
citizens carrying on a peaceful commerce or there domiciled, and has
so informed the Governments of Spain and Germany.

The marked good will between the United States and Great Britain has
been maintained during the past year.

The termination of the fishing clauses of the treaty of Washington,
in pursuance of the joint resolution of March 3, 1883, must have
resulted in the abrupt cessation on the 1st of July of this year, in
the midst of their ventures, of the operations of citizens of the
United States engaged in fishing in British American waters but for a
diplomatic understanding reached with Her Majesty's Government in June
last, whereby assurance was obtained that no interruption of those
operations should take place during the current fishing season.

In the interest of good neighborhood and of the commercial
intercourse of adjacent communities, the question of the North
American fisheries is one of much importance. Following out the
intimation given by me when the extensory arrangement above described
was negotiated, I recommend that the Congress provide for the
appointment of a commission in which the Governments of the United
States and Great Britain shall be respectively represented, charged
with the consideration and settlement, upon a just, equitable, and
honorable basis, of the entire question of the fishing rights of the
two Governments and their respective citizens on the coasts of the
United States and British North America. The fishing interests being
intimately related to other general questions dependent upon
contiguity and intercourse, consideration thereof in all their
equities might also properly come within the purview of such a
commission, and the fullest latitude of expression on both sides
should be permitted.

The correspondence in relation to the fishing rights will be
submitted. The arctic exploring steamer Alert, which was generously
given by Her Majesty's Government to aid in the relief of the Greely
expedition, was, after the successful attainment of that humane
purpose, returned to Great Britain, in pursuance of the authority
conferred by the act of March 3, 1885.

The inadequacy of the existing engagements for extradition between
the United States and Great Britain has been long apparent. The tenth
article of the treaty of 1842, one of the earliest compacts in this
regard entered into by us, stipulated for surrender in respect of a
limited number of offenses. Other crimes no less inimical to the
social welfare should be embraced and the procedure of extradition
brought in harmony with present international practice. Negotiations
with Her Majesty's Government for an enlarged treaty of extradition
have been pending since 1870, and I entertain strong hopes that a
satisfactory result may be soon attained.

The frontier line between Alaska and British Columbia, as defined by
the treaty of cession with Russia, follows the demarcation assigned
in a prior treaty between Great Britain and Russia. Modern
exploration discloses that this ancient boundary is impracticable as
a geographical fact. In the unsettled condition of that region the
question has lacked importance, but the discovery of mineral wealth
in the territory the line is supposed to traverse admonishes that the
time has come when an accurate knowledge of the boundary is needful to
avert jurisdictional complications. I recommend, therefore, that
provision be made for a preliminary reconnoissance by officers of the
United States, to the end of acquiring more precise information on the
subject. I have invited Her Majesty's Government to consider with us
the adoption of a more convenient line, to be established by meridian
observations or by known geographical features without the necessity
of an expensive survey of the whole.

The late insurrectionary movements in Hayti having been quelled, the
Government of that Republic has made prompt provision for
adjudicating the losses suffered by foreigners because of hostilities
there, and the claims of certain citizens of the United States will be
in this manner determined.

The long-pending claims of two citizens of the United States,
Pelletier and Lazare, have been disposed of by arbitration, and an
award in favor of each claimant has been made, which by the terms of
the engagement is final. It remains for Congress to provide for the
payment of the stipulated moiety of the expenses.

A question arose with Hayti during the past year by reason of the
exceptional treatment of an American citizen, Mr. Van Bokkelen, a
resident of Port-au-Prince, who, on suit by creditors residing in the
United States, was sentenced to imprisonment, and, under the operation
of a Haytian statute, was denied relief secured to a native Haytian.
This Government asserted his treaty right to equal treatment with
natives of Hayti in all suits at law. Our contention was denied by
the Haytian Government, which, however, while still professing to
maintain the ground taken against Mr. Van Bokkelen's right,
terminated the controversy by setting him at liberty without
explanation.

An international conference to consider the means of arresting the
spread of cholera and other epidemic diseases was held at Rome in May
last, and adjourned to meet again on further notice. An expert
delegate on behalf of the United States has attended its sessions and
will submit a report.

Our relations with Mexico continue to be most cordial, as befits
those of neighbors between whom the strongest ties of friendship and
commercial intimacy exist, as the natural and growing consequence of
our similarity of institutions and geographical propinquity.

The relocation of the boundary line between the United States and
Mexico westward of the Rio Grande, under the convention of July 29,
1882, has been unavoidably delayed, but I apprehend no difficulty in
securing a prolongation of the period for its accomplishment.

The lately concluded commercial treaty with Mexico still awaits the
stipulated legislation to carry its provisions into effect, for which
one year's additional time has been secured by a supplementary article
signed in February last and since ratified on both sides.

As this convention, so important to the commercial welfare of the two
adjoining countries, has been constitutionally confirmed by the
treaty- making branch, I express the hope that legislation needed to
make it effective may not be long delayed.

The large influx of capital and enterprise to Mexico from the United
States continues to aid in the development of the resources and in
augmenting the material well-being of our sister Republic. Lines of
railway, penetrating to the heart and capital of the country, bring
the two peoples into mutually beneficial intercourse, and enlarged
facilities of transit add to profitable commerce, create new markets,
and furnish avenues to otherwise isolated communities.

I have already adverted to the suggested construction of a ship
railway across the narrow formation of the territory of Mexico at
Tehuantepec.

With the gradual recovery of Peru from the effects of her late
disastrous conflict with Chile, and with the restoration of civil
authority in that distracted country, it is hoped that pending war
claims of our citizens will be adjusted.

In conformity with notification given by the Government of Peru, the
existing treaties of commerce and extradition between the United
States and that country will terminate March 31, 1886.

Our good relationship with Russia continues.

An officer of the Navy, detailed for the purpose, is now on his way
to Siberia bearing the testimonials voted by Congress to those who
generously succored the survivors of the unfortunate Jeannette
expedition.

It is gratifying to advert to the cordiality of our intercourse with
Spain.

The long-pending claim of the owners of the ship Masonic for loss
suffered through the admitted dereliction of the Spanish authorities
in the Philippine Islands has been adjusted by arbitration and an
indemnity awarded. The principle of arbitration in such cases, to
which the United States have long and consistently adhered, thus
receives a fresh and gratifying confirmation.

Other questions with Spain have been disposed of or are under
diplomatic consideration with a view to just and honorable
settlement.

The operation of the commercial agreement with Spain of January 2--
February 13, 1884, has been found inadequate to the commercial needs
of the United States and the Spanish Antilies, and the terms of the
agreement are subjected to conflicting interpretations in those
islands.

Negotiations have been instituted at Madrid for a full treaty not
open to these objections and in the line of the general policy
touching the neighborly intercourse of proximate communities, to
which I elsewhere advert, and aiming, moreover, at the removal of
existing burdens and annoying restrictions; and although a
satisfactory termination is promised, I am compelled to delay its
announcement.

An international copyright conference was held at Berne in September,
on the invitation of the Swiss Government. The envoy of the United
States attended as a delegate, but refrained from committing this
Government to the results, even by signing the recommendatory
protocol adopted. The interesting and important subject of
international copyright has been before you for several years. Action
is certainly desirable to effect the object in view; and while there
may be question as to the relative advantage of treating it by
legislation or by specific treaty, the matured views of the Berne
conference can not fail to aid your consideration of the subject.

The termination of the commercial treaty of 1862 between the United
States and Turkey has been sought by that Government. While there is
question as to the sufficiency of the notice of termination given,
yet as the commercial rights of our citizens in Turkey come under the
favored-nation guaranties of the prior treaty of 1830, and as equal
treatment is admitted by the Porte, no inconvenience can result from
the assent of this Government to the revision of the Ottoman tariffs,
in which the treaty powers have been invited to join.

Questions concerning our citizens in Turkey may be affected by the
Porte's nonacquiescence in the right of expatriation and by the
imposition of religious tests as a condition of residence, in which
this Government can not concur. The United States must hold in their
intercourse with every power that the status of their citizens is to
be respected and equal civil privileges accorded to them without
regard to creed, and affected by no considerations save those growing
out of domiciliary return to the land of original allegiance or of
unfulfilled personal obligations which may survive, under municipal
laws, after such voluntary return.

The negotiation with Venezuela relative to the rehearing of the
awards of the mixed commission constituted under the treaty of 1866
was resumed in view of the recent acquiescence of the Venezuelan
envoy in the principal point advanced by this Government, that the
effects of the old treaty could only be set aside by the operation of
a new convention. A result in substantial accord with the advisory
suggestions contained in the joint resolution of March 3, 1883, has
been agreed upon and will shortly be submitted to the Senate for
ratification.

Under section 3659 of the Revised Statutes all funds held in trust by
the United States and the annual interest accruing thereon, when not
otherwise required by treaty, are to be invested in stocks of the
United States bearing a rate of interest not less than 5 per cent per
annum. There being now no procurable stocks paying so high a rate of
interest, the letter of the statute is at present inapplicable, but
its spirit is subserved by continuing to make investments of this
nature in current stocks bearing the highest interest now paid. The
statute, however, makes no provision for the disposal of such
accretions. It being contrary to the general rule of this Government
to allow interest on claims, I recommend the repeal of the provision
in question and the disposition, under a uniform rule, of the present
accumulations from investment of trust funds.

The inadequacy of existing legislation touching citizenship and
naturalization demands your consideration.

While recognizing the right of expatriation, no statutory provision
exists providing means for renouncing citizenship by an American
citizen, native born or naturalized, nor for terminating and vacating
an improper acquisition of citizenship. Even a fraudulent decree of
naturalization can not now be canceled. The privilege and franchise
of American citizenship should be granted with care, and extended to
those only who intend in good faith to assume its duties and
responsibilities when attaining its privileges and benefits. It
should be withheld from those who merely go through the forms of
naturalization with the intent of escaping the duties of their
original allegiance without taking upon themselves those of their new
status, or who may acquire the rights of American citizenship for no
other than a hostile purpose toward their original governments. These
evils have had many flagrant illustrations.

I regard with favor the suggestion put forth by one of my
predecessors that provision be made for a central bureau of record of
the decrees of naturalization granted by the various courts throughout
the United States now invested with that power.

The rights which spring from domicile in the United States,
especially when coupled with a declaration of intention to become a
citizen, are worthy of definition by statute. The stranger coming
hither with intent to remain, establishing his residence in our
midst, contributing to the general welfare, and by his voluntary act
declaring his purpose to assume the responsibilities of citizenship,
thereby gains an inchoate status which legislation may properly
define. The laws of certain States and Territories admit a domiciled
alien to the local franchise, conferring on him the rights of
citizenship to a degree which places him in the anomalous position of
being a citizen of a State and yet not of the United States within the
purview of Federal and international law.

It is important within the scope of national legislation to define
this right of alien domicile as distinguished from Federal
naturalization.

The commercial relations of the United States with their immediate
neighbors and with important areas of traffic near our shores suggest
especially liberal intercourse between them and us.

Following the treaty of 1883 with Mexico, which rested on the basis
of a reciprocal exemption from customs duties, other similar treaties
were initiated by my predecessor.

Recognizing the need of less obstructed traffic with Cuba and Puerto
Rico, and met by the desire of Spain to succor languishing interests
in the Antilles, steps were taken to attain those ends by a treaty of
commerce. A similar treaty was afterwards signed by the Dominican
Republic. Subsequently overtures were made by Her Britannic Majesty's
Government for a like mutual extension of commercial intercourse with
the British West Indian and South American dependencies, but without
result.

On taking office I withdrew for reexamination the treaties signed
with Spain and Santo Domingo, then pending before the Senate. The
result has been to satisfy me of the inexpediency of entering into
engagements of this character not covering the entire traffic.

These treaties contemplated the surrender by the United States of
large revenues for inadequate considerations. Upon sugar alone duties
were surrendered to an amount far exceeding all the advantages offered
in exchange. Even were it intended to relieve our consumers, it was
evident that so long as the exemption but partially covered our
importation such relief would be illusory. To relinquish a revenue so
essential seemed highly improvident at a time when new and large
drains upon the Treasury were contemplated. Moreover, embarrassing
questions would have arisen under the favored-nation clauses of
treaties with other nations.

As a further objection, it is evident that tariff regulation by
treaty diminishes that independent control over its own revenues
which is essential for the safety and welfare of any government.
Emergency calling for an increase of taxation may at any time arise,
and no engagement with a foreign power should exist to hamper the
action of the Government.

By the fourteenth section of the shipping act approved June 26, 1884,
certain reductions and contingent exemptions from tonnage dues were
made as to vessels entering ports of the United States from any
foreign port in North and Central America, the West India Islands,
the Bahamas and Bermudas, Mexico, and the Isthmus as far as Aspinwall
and Panama. The Governments of Belgium, Denmark, Germany, Portugal,
and Sweden and Norway have asserted, under the favored-nation clause
in their treaties with the United States, a claim to like treatment
in respect of vessels coming to the United States from their home
ports. This Government, however, holds that the privileges granted by
the act are purely geographical, inuring to any vessel of any foreign
power that may choose to engage in traffic between this country and
any port within the defined zone, and no warrant exists under the
most-favored-nation clause for the extension of the privileges in
question to vessels sailing to this country from ports outside the
limitation of the act.

Undoubtedly the relations of commerce with our near neighbors, whose
territories form so long a frontier line difficult to be guarded, and
who find in our country, and equally offer to us, natural markets,
demand special and considerate treatment. It rests with Congress to
consider what legislative action may increase facilities of
intercourse which contiguity makes natural and desirable.

I earnestly urge that Congress recast the appropriations for the
maintenance of the diplomatic and consular service on a footing
commensurate with the importance of our national interests. At every
post where a representative is necessary the salary should be so
graded as to permit him to live with comfort. With the assignment of
adequate salaries the so-called notarial extra official fees, which
our officers abroad are now permitted to treat as personal
perquisites, should be done away with. Every act requiring the
certification and seal of the officer should be taxable at schedule
rates and the fee therefor returned to the Treasury. By restoring
these revenues to the public use the consular service would be
self-supporting, even with a liberal increase of the present low
salaries.

In further prevention of abuses a system of consular inspection
should be instituted.

The appointment of a limited number of secretaries of legation at
large, to be assigned to duty wherever necessary, and in particular
for temporary service at missions which for any cause may be without
a head, should also be authorized.

I favor also authorization for the detail of officers of the regular
service as military or naval attaches at legations.

Some foreign governments do not recognize the union of consular with
diplomatic functions. Italy and Venezuela will only receive the
appointee in one of his two capacities, but this does not prevent the
requirement of a bond and submission to the responsibilities of an
office whose duties he can not discharge. The superadded title of
consul-general should be abandoned at all missions.

I deem it expedient that a well-devised measure for the
reorganization of the extraterritorial courts in Oriental countries
should replace the present system, which labors under the
disadvantage of combining judicial and executive functions in the
same office.

In several Oriental countries generous offers have been made of
premises for housing the legations of the United States. A grant of
land for that purpose was made some years since by Japan, and has
been referred to in the annual messages of my predecessor. The
Siamese Government has made a gift to the United States of commodious
quarters in Bangkok. In Korea the late minister was permitted to
purchase a building from the Government for legation use. In China
the premises rented for the legation are favored as to local charges.
At Tangier the house occupied by our representative has been for many
years the property; this Government, having been given for that
purpose in 1822 by the Sultan of Morocco. I approve the suggestion
heretofore made, that, view of the conditions of life and
administration in the Eastern countries, the legation buildings in
China, Japan, Korea, Siam, and perhaps Persia, should be owned and
furnished by the Government with a view to permanency and security.
To this end I recommend that authority be given to accept the gifts
adverted to in Japan and Siam, and to purchase in the other countries
named, with provision for furniture and repairs. A considerable saving
in rentals would result.

The World's Industrial Exposition, held at New Orleans last winter,
with the assistance of the Federal Government, attracted a large
number of foreign exhibits, and proved of great value in spreading
among the concourse of visitors from Mexico and Central and South
America a wider knowledge of the varied manufactures and productions
of this country and their availability in exchange for the
productions of those regions.

Past Congresses have had under consideration the advisability of
abolishing the discrimination made by the tariff laws in favor of the
works of American artists. The odium of the policy which subjects to a
high rate of duty the paintings of foreign artists and exempts the
productions of American artists residing abroad, and who receive
gratuitously advantages and instruction, is visited upon our citizens
engaged in art culture in Europe, and has caused them with practical
unanimity to favor the abolition of such an ungracious distinction;
and in their interest, and for other obvious reasons, I strongly
recommend it.

The report of the Secretary of the Treasury fully exhibits the
condition of the public finances and of the several branches of the
Government connected with his Department. The suggestions of the
Secretary relating to the practical operations of this important
Department, and his recommendations in the direction of
simplification and economy, particularly in the work of collecting
customs duties, are especially urged upon the attention of Congress.

The ordinary receipts from all sources for the fiscal year ended June
30, 1885, were $322,690,706.38. Of this sum $181,471,939.34 was
received from customs and $112,498,725.54 from internal revenue. The
total receipts, as given above, were $24,829,163.54 less than those
for the year ended June 30, 1884. This diminution embraces a falling
off of $13,595,550.42 in the receipts from customs and $9,687,346.97
in the receipts from internal revenue.

The total ordinary expenditures of the Government for the fiscal year
were $260,226,935.50, leaving a surplus in the Treasury at the close
of the year of $63,463,771.27. This is $40,929,854.32 less than the
surplus reported at the close of the previous year.

The expenditures are classified as follows:

The amount paid on the public debt during the fiscal year ended June
30, 1885, was $45,993,235.43, and there has been paid since that date
and up to November 1, 1885, the sum of $369,828, leaving the amount of
the debt at the last-named date $1,514,475,860.47. There was however,
at that time in the Treasury, applicable to the general purposes of
the Government, the sum of $66,818,292.38.

The total receipts for the current fiscal year ending June 30, 1886,
ascertained to October 1, 1885, and estimated for the remainder of
the year, are $315,000,000. The expenditures ascertained and
estimated for the same time are $245,000,000, leaving a surplus at
the close of the year estimated at $70,000,000.

The value of the exports from the United States to foreign countries
during the last fiscal year was as follows:

Some of the principal exports, with their values and the percentage
they respectively bear to the total exportation, are given as
follows:

Our imports during the year were as follows:

The following are given as prominent articles of import during the
year, with their values and the percentage they bear to the total
importation:

Of the entire amount of duties collected 70 per cent was collected
from the following articles of import:

The fact that our revenues are in excess of the actual needs of all
economical administration of the Government justifies a reduction in
the amount exacted from the people for its support. Our Government is
but the means established by the will of a free people by which
certain principles are applied which they have adopted for their
benefit and protection; and it is never better administered and its
true spirit is never better observed than when the people's taxation
for its support is scrupulously limited to the actual necessity of
expenditure and distributed according to a just and equitable plan.

The proposition with which we have to deal is the reduction of the
revenue received by the Government, and indirectly paid by the
people, from customs duties. The question of free trade is not
involved, nor is there now any occasion for the general discussion of
the wisdom or expediency of a protective system.

Justice and fairness dictate that in any modification of our present
laws relating to revenue the industries and interests which have been
encouraged by such laws, and in which our citizens have large
investments, should not be ruthlessly injured or destroyed. We should
also deal with the subject in such manner as to protect the interests
of American labor, which is the capital of our workingmen. Its
stability and proper remuneration furnish the most justifiable
pretext for a protective policy.

Within these limitations a certain reduction should be made in our
customs revenue. The amount of such reduction having been determined,
the inquiry follows, Where can it best be remitted and what articles
can best be released from duty in the interest of our citizens?

I think the reduction should be made in the revenue derived from a
tax upon the imported necessaries of life. We thus directly lessen
the cost of living in every family of the land and release to the
people in every humble home a larger measure of the rewards of frugal
industry.

During the year ended November 1, 1885, 145 national banks were
organized, with an aggregate capital of $16,938,000, and circulating
notes have been issued to them amounting to $4,274,910. The whole
number of these banks in existence on the day above mentioned was
2,727.

The very limited amount of circulating notes issued by our national
banks, compared with the amount the law permits them to issue upon a
deposit of bonds for their redemption, indicates that the volume of
our circulating medium may be largely increased through this
instrumentality.

Nothing more important than the present condition of our currency and
coinage can claim your attention.

Since February, 1878, the Government has, under the compulsory
provisions of law, purchased silver bullion and coined the same at
the rate of more than $2,000,000 every month. By this process up to
the present date 215,759,431 silver dollars have been coined.

A reasonable appreciation of a delegation of power to the General
Government would limit its exercise, without express restrictive
words, to the people's needs and the requirements of the public
welfare.

Upon this theory the authority to "coin money" given to Congress by
the Constitution, if it permits the purchase by the Government of
bullion for coinage in any event, does not justify such purchase and
coinage to an extent beyond the amount needed for a sufficient
circulating medium.

The desire to utilize the silver product of the country should not
lead to a misuse or the perversion of this power.

The necessity for such an addition to the silver currency of the
nation as is compelled by the silver-coinage act is negatived by the
fact that up to the present time only about 50,000,000 of the silver
dollars so coined have actually found their way into circulation,
leaving more than 165,000,000 in the possession of the Government,
the custody of which has entailed a considerable expense for the
construction of vaults for it deposit. Against this latter amount
there are outstanding silver certificates amounting to about
$93,000,000.

Every month two millions of gold in the public Treasury are paid our
for two millions or more of silver dollars, to be added to the idle
mass already accumulated.

If continued long enough, this operation will result in the
substitution of silver for all the gold the Government owns
applicable to its general purposes. It will not do to rely upon the
customs receipts of the Government to make good this drain of gold,
because the silver thus coined having been made legal tender for all
debts and dues, public and private, at times during the last six
months 58 per cent of the receipts for duties has been in silver or
silver certificates, while the average within that period has been 20
per cent. The proportion of silver and its certificates received by
the Government will probably increase as time goes on, for the reason
that the nearer the period approaches when it will be obliged to offer
silver in payment of its obligations the greater inducement there will
be to hoard gold against depreciation in the value of silver or for
the purpose of speculating.

This hoarding of gold has already begun.

When the time comes that gold has been withdrawn from circulation,
then will be apparent the difference between the real value of the
silver dollar and a dollar in gold, and the two coins will part
company. Gold, still the standard of value and necessary in our
dealings with other countries, will be at a premium over silver;
banks which have substituted gold for the deposits of their customers
may pay them with silver bought with such gold, thus making a handsome
profit; rich speculators will sell their hoarded gold to their
neighbors who need it to liquidate their foreign debts, at a ruinous
premium over silver, and the laboring men and women of the land, most
defenseless of all, will find that the dollar received for the wage of
their toil has sadly shrunk in its purchasing power. It may be said
that the latter result will be but temporary, and that ultimately the
price of labor will be adjusted to the change; but even if this takes
place the wage-worker can not possibly gain, but must inevitably
lose, since the price he is compelled to pay for his living will not
only be measured in a coin heavily depreciated and fluctuating and
uncertain in its value, but this uncertainty in the value of the
purchasing medium will be made the pretext for an advance in prices
beyond that justified by actual depreciation.

The words uttered in 1834 by Daniel Webster in the Senate of the
United States are true to-day: The very man of all others who has the
deepest interest in a sound currency, and who suffers most by
mischievous legislation in money matters, is the man who earns his
daily bread by his daily toil. The most distinguished advocate of
bimetallism, discussing our silver coinage, has lately written: No
American citizen's hand has yet felt the sensation of cheapness,
either in receiving or expending the silver-act dollars. And those
who live by labor or legitimate trade never will feel that sensation
of cheapness. However plenty silver dollars may become, they will not
be distributed as gifts among the people; and if the laboring man
should receive four depreciated dollars where he now receives but
two, he will pay in the depreciated coin more than double the price
he now pays for all the necessaries and comforts of life.

Those who do not fear any disastrous consequences arising from the
continued compulsory coinage of silver as now directed by law, and
who suppose that the addition to the currency of the country intended
as its result will be a public benefit, are reminded that history
demonstrates that the point is easily reached in the attempt to float
at the same time two sorts of money of different excellence when the
better will cease to be in general circulation. The hoarding of gold
which has already taken place indicates that we shall not escape the
usual experience in such cases. So if this silver coinage be
continued we may reasonably expect that gold and its equivalent will
abandon the field of circulation to silver alone. This of course must
produce a severe contraction of our circulating medium, instead of
adding to it.

It will not be disputed that any attempt on the part of the
Government to cause the circulation of silver dollars worth 80 cents
side by side with gold dollars worth 100 cents, even within the limit
that legislation does not run counter to the laws of trade, to be
successful must be seconded by the confidence of the people that both
coins will retain the same purchasing power and be interchangeable at
will. A special effort has been made by the Secretary of the Treasury
to increase the amount of our silver coin in circulation; but the fact
that a large share of the limited amount thus put out has soon
returned to the public Treasury in payment of duties leads to the
belief that the people do not now desire to keep it in hand, and
this, with the evident disposition to hoard gold, gives rise to the
suspicion that there already exists a lack of confidence among the
people touching our financial processes. There is certainly not
enough silver now in circulation to cause uneasiness, and the whole
amount coined and now on hand might after a time be absorbed by the
people without apprehension; but it is the ceaseless stream that
threatens to overflow the land which causes fear and uncertainty.

What has been thus far submitted upon this subject relates almost
entirely to considerations of a home nature, unconnected with the
bearing which the policies of other nations have upon the question.
But it is perfectly apparent that a line of action in regard to our
currency can not wisely be settled upon or persisted in without
considering the attitude on the subject of other countries with whom
we maintain intercourse through commerce, trade, and travel. An
acknowledgment of this fact is found in the act by virtue of which
our silver is compulsorily coined. It provides that--The President
shall invite the governments of the countries composing the Latin
Union, so called, and of such other European nations as he may deem
advisable, to join the United States in a conference to adopt a
common ratio between gold and silver for the purpose of establishing
internationally the use of bimetallic money and securing fixity of
relative value between those metals. This conference absolutely
failed, and a similar fate has awaited all subsequent efforts in the
same direction. And still we continue our coinage of silver at a
ratio different from that of any other nation. The most vital part of
the silver-coinage act remains inoperative and unexecuted, and without
an ally or friend we battle upon the silver field in an illogical and
losing contest.

To give full effect to the design of Congress on this subject I have
made careful and earnest endeavor since the adjournment of the last
Congress.

To this end I delegated a gentleman well instructed in fiscal science
to proceed to the financial centers of Europe and, in conjunction with
our ministers to England, France, and Germany, to obtain a full
knowledge of the attitude and intent of those governments in respect
of the establishment of such an international ratio as would procure
free coinage of both metals at the mints of those countries and our
own. By my direction our consul-general at Paris has given close
attention to the proceedings of the congress of the Latin Union, in
order to indicate our interest in its objects and report its action.

It may be said in brief, as the result of these efforts, that the
attitude of the leading powers remains substantially unchanged since
the monetary conference of 1881, nor is it to be questioned that the
views of these governments are in each instance supported by the
weight of public opinion.

The steps thus taken have therefore only more fully demonstrated the
uselessness of further attempts at present to arrive at any agreement
on the subject with other nations.

In the meantime we are accumulating silver coin, based upon our own
peculiar ratio, to such an extent, and assuming so heavy a burden to
be provided for in any international negotiations, as will render us
an undesirable party to any future monetary conference of nations.

It is a significant fact that four of the five countries composing
the Latin Union mentioned in our coinage act, embarrassed with their
silver currency, have just completed an agreement among themselves
that no more silver shall be coined by their respective Governments
and that such as has been already coined and in circulation shall be
redeemed in gold by the country of its coinage. The resort to this
expedient by these countries may well arrest the attention of those
who suppose that we can succeed without shock or injury in the
attempt to circulate upon its merits all the silver we may coin under
the provisions of our silver-coinage act.

The condition in which our Treasury may be placed by a persistence in
our present course is a matter of concern to every patriotic citizen
who does not desire his Government to pay in silver such of its
obligations as should be paid in gold. Nor should our condition be
such as to oblige us, in a prudent management of our affairs, to
discontinue the calling in and payment of interest-bearing
obligations which we have the right now to discharge, and thus avoid
the payment of further interest thereon.

The so-called debtor class, for whose benefit the continued
compulsory coinage of silver is insisted upon, are not dishonest
because they are in debt, and they should not be suspected of a
desire to jeopardize the financial safety of the country in order
that they may cancel their present debts by paying the same in
depreciated dollars. Nor should it be forgotten that it is not the
rich nor the money lender alone that must submit to such a
readjustment, enforced by the Government and their debtors. The
pittance of the widow and the orphan and the incomes of helpless
beneficiaries of all kinds would be disastrously reduced. The
depositors in savings banks and in other institutions which hold in
trust the savings of the poor, when their little accumulations are
scaled down to meet the new order of things, would in their distress
painfully realize the delusion of the promise made to them that
plentiful money would improve their condition.

We have now on hand all the silver dollars necessary to supply the
present needs of the people and to satisfy those who from sentiment
wish to see them in circulation, and if their coinage is suspended
they can be readily obtained by all who desire them. If the need of
more is at anytime apparent, their coinage may be renewed.

That disaster has not already overtaken us furnishes no proof that
danger does not wait upon a continuation of the present silver
coinage. We have been saved by the most careful management and
unusual expedients, by a combination of fortunate conditions, and by
a confident expectation that the course of the Government in regard
to silver coinage would be speedily changed by the action of
Congress.

Prosperity hesitates upon our threshold because of the dangers and
uncertainties surrounding this question. Capital timidly shrinks from
trade, and investors are unwilling to take the chance of the
questionable shape in which their money will be returned to them,
while enterprise halts at a risk against which care and sagacious
management do not protect.

As a necessary consequence, labor lacks employment and suffering and
distress are visited upon a portion of our fellow-citizens especially
entitled to the careful consideration of those charged with the duties
of legislation. No interest appeals to us so strongly for a safe and
stable currency as the vast army of the unemployed.

I recommend the suspension of the compulsory coinage of silver
dollars, directed by the law passed in February, 1878.

The Steamboat-Inspection Service on the 30th day of June, 1885, was
composed of 140 persons, including officers, clerks, and messengers.
The expenses of the service over the receipts were $138,822.22 during
the fiscal year. The special inspection of foreign steam vessels,
organized under a law passed in 1882, was maintained during the year
at an expense of $36,641.63. Since the close of the fiscal year
reductions have been made in the force employed which will result in
a saving during the current year of $17,000 without affecting the
efficiency of the service.

The Supervising Surgeon-General reports that during the fiscal year
41,714 patients have received relief through the Marine-Hospital
Service, of whom 12,803 were treated in hospitals and 28,911 at the
dispensaries.

Active and effective efforts have been made through the medium of
this service to protect the country against an invasion of cholera,
which has prevailed in Spain and France, and the smallpox, which
recently broke out in Canada.

The most gratifying results have attended the operations of the Life
Saving Service during the last fiscal year. The observance of the
provision of law requiring the appointment of the force employed in
this service to be made "solely with reference to their fitness, and
without reference to their political or party affiliation," has
secured the result which may confidently be expected in any branch of
public employment where such a rule is applied. As a consequence, this
service is composed of men well qualified for the performance of their
dangerous and exceptionally important duties.

The number of stations in commission at the close of the year was
203. The number of disasters to vessels and craft of all kinds within
their field of action was 371. The number of persons endangered in
such disasters was 2,439, of whom 2,428 were saved and only 11 lost.
Other lives which were imperiled, though not by disasters to
shipping, were also rescued, and a large amount of property was saved
through the aid of this service. The cost of its maintenance during
the year was $828,474.43.

The work of the Coast and Geodetic Survey was during the last fiscal
year carried on within the boundaries and off the coasts of
thirty-two States, two Territories, and the District of Columbia. In
July last certain irregularities were found to exist in the
management of this Bureau, which led to a prompt investigation of its
methods. The abuses which were brought to light by this examination
and the reckless disregard of duty and the interests of the
Government developed on the part of some of those connected with the
service made a change of superintendency and a few of its other
officers necessary. Since the Bureau has been in new hands an
introduction of economies and the application of busine