Speech Transcript:

 To the Congress of the United States:

In discharge of a constitutional duty, and following a
well-established precedent in the Executive office, I herewith
transmit to the Congress at its reassembling certain information
concerning the state of the Union, together with such recommendations
for legislative consideration as appear necessary and expedient.

Our Government has consistently maintained its relations of
friendship toward all other powers and of neighborly interest toward
those whose possessions are contiguous to our own. Few questions have
arisen during the past year with other governments, and none of those
are beyond the reach of settlement in friendly counsel.

We are as yet without provision for the settlement of claims of
citizens of the United States against Chile for injustice during the
late war with Peru and Bolivia. The mixed commissions organized under
claims conventions concluded by the Chilean Government with certain
European States have developed an amount of friction which we trust
can be avoided in the convention which our representative at Santiago
is authorized to negotiate.

The cruel treatment of inoffensive Chinese has, I regret to say, been
repeated in some of the far Western States and Territories, and acts
of violence against those people, beyond the power of the local
constituted authorities to prevent and difficult to punish, are
reported even in distant Alaska. Much of this violence can be traced
to race prejudice and competition of labor, which can not, however,
justify the oppression of strangers whose safety is guaranteed by our
treaty with China equally with the most favored nations.

In opening our vast domain to alien elements the purpose of our
lawgivers was to invite assimilation, and not to provide an arena for
endless antagonism. The paramount duty of maintaining public order and
defending the interests of our own people may require the adoption of
measures of restriction, but they should not tolerate the oppression
of individuals of a special race. I am not without assurance that the
Government of China, whose friendly disposition toward us I am most
happy to recognize, will meet us halfway in devising a comprehensive
remedy by which an effective limitation of Chinese emigration, joined
to protection of those Chinese subjects who remain in this country,
may be secured.

Legislation is needed to execute the provisions of our Chinese
convention of 1880 touching the opium traffic.

While the good will of the Colombian Government toward our country is
manifest, the situation of American interests on the Isthmus of Panama
has at times excited concern and invited friendly action looking to
the performance of the engagements of the two nations concerning the
territory embraced in the interoceanic transit. With the subsidence
of the Isthmian disturbances and the erection of the State of Panama
into a federal district under the direct government of the
constitutional administration at Bogota, a new order of things has
been inaugurated, which, although as yet somewhat experimental and
affording scope for arbitrary exercise of power by the delegates of
the national authority, promises much improvement.

The sympathy between the people of the United States and France, born
during our colonial struggle for independence and continuing today,
has received a fresh impulse in the successful completion and
dedication of the colossal statue of "Liberty Enlightening the World"
in New York Harbor--the gift of Frenchmen to Americans.

A convention between the United States and certain other powers for
the protection of submarine cables was signed at Paris on March 14,
1884, and has been duly ratified and proclaimed by this Government.
By agreement between the high contracting parties this convention is
to go into effect on the 1st of January next, but the legislation
required for its execution in the United States has not yet been
adopted. I earnestly recommend its enactment.

Cases have continued to occur in Germany giving rise to much
correspondence in relation to the privilege of sojourn of our
naturalized citizens of German origin revisiting the land of their
birth, yet I am happy to state that our relations with that country
have lost none of their accustomed cordiality.

The claims for interest upon the amount of tonnage dues illegally
exacted from certain German steamship lines were favorably reported
in both Houses of Congress at the last session, and I trust will
receive final and favorable action at an early day.

The recommendations contained in my last annual message in relation
to a mode of settlement of the fishery rights in the waters of
British North America, so long a subject of anxious difference
between the United States and Great Britain, was met by an adverse
vote of the Senate on April 13 last, and thereupon negotiations were
instituted to obtain an agreement with Her Britannic Majesty's
Government for the promulgation of such joint interpretation and
definition of the article of the convention of 1818 relating to the
territorial waters and inshore fisheries of the British Provinces as
should secure the Canadian rights from encroachment by the United
States fishermen and at the same time insure the enjoyment by the
latter of the privileges guaranteed to them by such convention.

The questions involved are of long standing, of grave consequence,
and from time to time for nearly three-quarters of a century have
given rise to earnest international discussions, not unaccompanied by
irritation.

Temporary arrangements by treaties have served to allay friction,
which, however, has revived as each treaty was terminated. The last
arrangement, under the treaty of 1871, was abrogated after due notice
by the United States on June 30, 1885, but I was enabled to obtain for
our fishermen for the remainder of that season enjoyment of the full
privileges accorded by the terminated treaty.

The joint high commission by whom the treaty had been negotiated,
although invested with plenary power to make a permanent settlement,
were content with a temporary arrangement, after the termination of
which the question was relegated to the stipulations of the treaty of
1818, as to the first article of which no construction satisfactory to
both countries has ever been agreed upon.

The progress of civilization and growth of population in the British
Provinces to which the fisheries in question are contiguous and the
expansion of commercial intercourse between them and the United
States present to-day a condition of affairs scarcely realizable at
the date of the negotiations of 1818.

New and vast interests have been brought into existence; modes of
intercourse between the respective countries have been invented and
multiplied; the methods of conducting the fisheries have been wholly
changed; and all this is necessarily entitled to candid and careful
consideration in the adjustment of the terms and conditions of
intercourse and commerce between the United States and their
neighbors along a frontier of over 3,500 miles.

This propinquity, community of language and occupation, and
similarity of political and social institutions indicate the
practicability and obvious wisdom of maintaining mutually beneficial
and friendly relations.

Whilst I am unfeignedly desirous that such relations should exist
between us and the inhabitants of Canada, yet the action of their
officials during the past season toward our fishermen has been such
as to seriously threaten their continuance.

Although disappointed in my efforts to secure a satisfactory
settlement of the fishery question, negotiations are still pending,
with reasonable hope that before the close of the present session of
Congress announcement may be made that an acceptable conclusion has
been reached.

As at an early day there may be laid before Congress the
correspondence of the Department of State in relation to this
important subject, so that the history of the past fishing season may
be fully disclosed and the action and the attitude of the
Administration clearly comprehended, a more extended reference is not
deemed necessary in this communication.

The recommendation submitted last year that provision be made for a
preliminary reconnoissance of the conventional boundary line between
Alaska and British Columbia is renewed.

I express my unhesitating conviction that the intimacy of our
relations with Hawaii should be emphasized. As a result of the
reciprocity treaty of 1875, those islands, on the highway of Oriental
and Australasian traffic, are virtually an outpost of American
commerce and a stepping-stone to the growing trade of the Pacific.
The Polynesian Island groups have been so absorbed by other and more
powerful governments that the Hawaiian Islands are left almost alone
in the enjoyment of their autonomy, which it is important for us
should be preserved. Our treaty is now terminable on one year's
notice, but propositions to abrogate it would be, in my judgment,
most ill advised. The paramount influence we have there acquired,
once relinquished, could only with difficulty be regained, and a
valuable ground of vantage for ourselves might be converted into a
stronghold for our commercial competitors. I earnestly recommend that
the existing treaty stipulations be extended for a further term of
seven years. A recently signed treaty to this end is now before the
Senate.

The importance of telegraphic communication between those islands and
the United States should not be overlooked.

The question of a general revision of the treaties of Japan is again
under discussion at Tokyo. As the first to open relations with that
Empire, and as the nation in most direct commercial relations with
Japan, the United States have lost no opportunity to testify their
consistent friendship by supporting the just claims of Japan to
autonomy and independence among nations.

A treaty of extradition between the United States and Japan, the
first concluded by that Empire, has been lately proclaimed.

The weakness of Liberia and the difficulty of maintaining effective
sovereignty over its outlying districts have exposed that Republic to
encroachment. It can not be forgotten that this distant community is
an offshoot of our own system, owing its origin to the associated
benevolence of American citizens, whose praiseworthy efforts to
create a nucleus of civilization in the Dark Continent have commanded
respect and sympathy everywhere, especially in this country. Although
a formal protectorate over Liberia is contrary to our traditional
policy, the moral right and duty of the United States to assist in
all proper ways in the maintenance of its integrity is obvious, and
has been consistently announced during nearly half a century. I
recommend that in the reorganization of our Navy a small vessel, no
longer found adequate to our needs, be presented to Liberia, to be
employed by it in the protection of its coastwise revenues.

The encouraging development of beneficial and intimate relations
between the United States and Mexico, which has been so marked within
the past few years, is at once the occasion of congratulation and of
friendly solicitude. I urgently renew my former representation of the
need or speedy legislation by Congress to carry into effect the
reciprocity commercial convention of January 20, 1883.

Our commercial treaty of 1831 with Mexico was terminated, according
to its provisions, in 1881, upon notification given by Mexico in
pursuance of her announced policy of recasting all her commercial
treaties. Mexico has since concluded with several foreign governments
new treaties of commerce and navigation, defining alien rights of
trade, property, and residence, treatment of shipping, consular
privileges, and the like. Our yet unexecuted reciprocity convention
of 1883 covers none of these points, the settlement of which is so
necessary to good relationship. I propose to initiate with Mexico
negotiations for a new and enlarged treaty of commerce and
navigation.

In compliance with a resolution of the Senate, I communicated to that
body on August 2 last, and also to the House of Representatives, the
correspondence in the case of A. K. Cutting, an American citizen,
then imprisoned in Mexico, charged with the commission of a penal
offense in Texas, of which a Mexican citizen was the object.

After demand had been made for his release the charge against him was
amended so as to include a violation of Mexican law within Mexican
territory.

This joinder of alleged offenses, one within and the other exterior
to Mexico, induced me to order a special investigation of the case,
pending which Mr. Cutting was released.

The incident has, however, disclosed a claim of jurisdiction by
Mexico novel in our history, whereby any offense committed anywhere
by a foreigner, penal in the place of its commission, and of which a
Mexican is the object, may, if the offender be found in Mexico, be
there tried and punished in conformity with Mexican laws.

This jurisdiction was sustained by the courts of Mexico in the
Cutting case, and approved by the executive branch of that
Government, upon the authority of a Mexican statute. The appellate
court in releasing Mr. Cutting decided that the abandonment of the
complaint by the Mexican citizen aggrieved by the alleged crime (a
libelous publication) removed the basis of further prosecution, and
also declared justice to have been satisfied by the enforcement of a
small part of the original sentence.

The admission of such a pretension would be attended with serious
results, invasive of the jurisdiction of this Government and highly
dangerous to our citizens in foreign lands. Therefore I have denied
it and protested against its attempted exercise as unwarranted by the
principles of law and international usages.

A sovereign has jurisdiction of offenses which take effect within his
territory, although concocted or commenced outside of it; but the
right is denied of any foreign sovereign to punish a citizen of the
United States for an offense consummated on our soil in violation of
our laws, even though the offense be against a subject or citizen of
such sovereign. The Mexican statute in question makes the claim
broadly, and the principle, if conceded, would create a dual
responsibility in the citizen and lead to inextricable confusion,
destructive of that certainty in the law which is an essential of
liberty.

When citizens of the United States voluntarily go into a foreign
country, they must abide by the laws there in force, and will not be
protected by their own Government from the consequences of an offense
against those laws committed in such foreign country; but watchful
care and interest of this Government over its citizens are not
relinquished because they have gone abroad, and if charged with crime
committed in the foreign land a fair and open trial, conducted with
decent regard for justice and humanity, will be demanded for them.
With less than that this Government will not be content when the life
or liberty of its citizens is at stake.

Whatever the degree to which extraterritorial criminal jurisdiction
may have been formerly allowed by consent and reciprocal agreement
among certain of the European States, no such doctrine or practice
was ever known to the laws of this country or of that from which our
institutions have mainly been derived.

In the case of Mexico there are reasons especially strong for perfect
harmony in the mutual exercise of jurisdiction. Nature has made us
irrevocably neighbors, and wisdom and kind feeling should make us
friends.

The overflow of capital and enterprise from the United States is a
potent factor in assisting the development of the resources of Mexico
and in building up the prosperity of both countries.

To assist this good work all grounds of apprehension for the security
of person and property should be removed; and I trust that in the
interests of good neighborhood the statute referred to will be so
modified as to eliminate the present possibilities of danger to the
peace of the two countries.

The Government of the Netherlands has exhibited concern in relation
to certain features of our tariff laws, which are supposed by them to
be aimed at a class of tobacco produced in the Dutch East Indies.
Comment would seem unnecessary upon the unwisdom of legislation
appearing to have a special national discrimination for its object,
which, although unintentional, may give rise to injurious
retaliation.

The establishment, less than four years ago, of a legation at Teheran
is bearing fruit in the interest exhibited by the Shah's Government in
the industrial activity of the United States and the opportunities of
beneficial interchanges.

Stable government is now happily restored in Peru by the election of
a constitutional president, and a period of rehabilitation is entered
upon; but the recovery is necessarily slow from the exhaustion caused
by the late war and civil disturbances. A convention to adjust by
arbitration claims of our citizens has been proposed and is under
consideration.

The naval officer who bore to Siberia the testimonials bestowed by
Congress in recognition of the aid given to the Jeannette survivors
has successfully accomplished his mission. His interesting report
will be submitted. It is pleasant to know that this mark of
appreciation has been welcomed by the Russian Government and people
as befits the traditional friendship of the two countries.

Civil perturbations in the Samoan Islands have during the past few
years been a source of considerable embarrassment to the three
Governments-Germany, Great Britain, and the United States--whose
relations and extraterritorial rights in that important group are
guaranteed by treaties. The weakness of the native administration and
the conflict of opposing interests in the islands have led King
Malietoa to seek alliance or protection in some one quarter,
regardless of the distinct engagements whereby no one of the three
treaty powers may acquire any paramount or exclusive interest. In May
last Malietoa offered to place Samoa under the protection of the
United States, and the late consul, without authority, assumed to
grant it. The proceeding was promptly disavowed and the overzealous
official recalled. Special agents of the three Governments have been
deputed to examine the situation in the islands. With a change in the
representation of all three powers and a harmonious understanding
between them, the peace, prosperity, autonomous administration, and
neutrality of Samoa can hardly fail to be secured.

It appearing that the Government of Spain did not extend to the flag
of the United States in the Antilles the full measure of reciprocity
requisite under our statute for the continuance of the suspension of
discriminations against the Spanish flag in our ports, I was
constrained in October last to rescind my predecessor's proclamation
of February 14, 1884, permitting such suspension. An arrangement was,
however, speedily reached, and upon notification from the Government
of Spain that all differential treatment of our vessels and their
cargoes, from the United States or from any foreign country, had been
completely and absolutely relinquished, I availed myself of the
discretion conferred by law and issued on the 27th of October my
proclamation declaring reciprocal suspension in the United States. It
is most gratifying to bear testimony to the earnest spirit in which
the Government of the Queen Regent has met our efforts to avert the
initiation of commercial discriminations and reprisals, which are
ever disastrous to the material interests and the political good will
of the countries they may affect.

The profitable development of the large commercial exchanges between
the United States and the Spanish Antilles is naturally an object of
solicitude. Lying close at our doors, and finding here their main
markets of supply and demand, the welfare of Cuba and Puerto Rico and
their production and trade are scarcely less important to us than to
Spain. Their commercial and financial movements are so naturally a
part of our system that no obstacle to fuller and freer intercourse
should be permitted to exist. The standing instructions of our
representatives at Madrid and Havana have for years been to leave no
effort unessayed to further these ends, and at no time has the equal
good desire of Spain been more hopefully manifested than now.

The Government of Spain, by removing the consular tonnage fees on
cargoes shipped to the Antilles and by reducing passport fees, has
shown its recognition of the needs of less trammeled intercourse.

An effort has been made during the past year to remove the hindrances
to the proclamation of the treaty of naturalization with the Sublime
Porte, signed in 1874, which has remained inoperative owing to a
disagreement of interpretation of the clauses relative to the effects
of the return to and sojourn of a naturalized citizen in the land of
origin. I trust soon to be able to announce a favorable settlement of
the differences as to this interpretation.

It has been highly satisfactory to note the improved treatment of
American missionaries in Turkey, as has been attested by their
acknowledgments to our late minister to that Government of his
successful exertions in their behalf.

The exchange of ratifications of the convention of December 5, 1885,
with Venezuela, for the reopening of the awards of the Caracas
Commission under the claims convention of 1866, has not yet been
effected, owing to the delay of the Executive of that Republic in
ratifying the measure. I trust that this postponement will be brief;
but should it much longer continue, the delay may well be regarded as
a rescission of the compact and a failure on the part of Venezuela to
complete an arrangement so persistently sought by her during many
years and assented to by this Government in a spirit of international
fairness, although to the detriment of holders of bona fide awards of
the impugned commission.

I renew the recommendation of my last annual message that existing
legislation concerning citizenship and naturalization be revised. We
have treaties with many states providing for the renunciation of
citizenship by naturalized aliens, but no statute is found to give
effect to such engagements, nor any which provides a needed central
bureau for the registration of naturalized citizens.

Experience suggests that our statutes regulating extradition might be
advantageously amended by a provision for the transit across our
territory, now a convenient thoroughfare of travel from one foreign
country to another, of fugitives surrendered by a foreign government
to a third state. Such provisions are not unusual in the legislation
of other countries, and tend to prevent the miscarriage of justice.
It is also desirable, in order to remove present uncertainties, that
authority should be conferred on the Secretary of State to issue a
certificate, in case of an arrest for the purpose of extradition, to
the officer before whom the proceeding is pending, showing that a
requisition for the surrender of the person charged has been duly
made. Such a certificate, if required to be received before the
prisoner's examination, would prevent a long and expensive judicial
inquiry into a charge which the foreign government might not desire
to press. I also recommend that express provision be made for the
immediate discharge from custody of persons committed for extradition
where the President is of opinion that surrender should not be made.

The drift of sentiment in civilized communities toward full
recognition of the rights of property in the creations of the human
intellect has brought about the adoption by many important nations of
an international copyright convention, which was signed at Berne on
the 18th of September, 1885.

Inasmuch as the Constitution gives to the Congress the power "to
promote the progress of science and useful arts by securing for
limited times to authors and inventors the exclusive right to their
respective writings and discoveries," this Government did not feel
warranted in becoming a signatory pending the action of Congress upon
measures of international copyright now before it; but the right of
adhesion to the Berne convention hereafter has been reserved. I trust
the subject will receive at your hands the attention it deserves, and
that the just claims of authors, so urgently pressed, will be duly
heeded.

Representations continue to be made to me of the injurious effect
upon American artists studying abroad and having free access to the
art collections of foreign countries of maintaining a discriminating
duty against the introduction of the works of their brother artists
of other countries, and I am induced to repeat my recommendation for
the abolition of that tax.

Pursuant to a provision of the diplomatic and consular appropriation
act approved July 1, 1886, the estimates submitted by the Secretary
of State for the maintenance of the consular service have been recast
on the basis of salaries for all officers to whom such allowance is
deemed advisable. Advantage has been taken of this to redistribute
the salaries of the offices now appropriated for, in accordance with
the work performed, the importance of the representative duties of
the incumbent, and the cost of living at each post. The last
consideration has been too often lost sight of in the allowances
heretofore made. The compensation which may suffice for the decent
maintenance of a worthy and capable officer in a position of onerous
and representative trust at a post readily accessible, and where the
necessaries of life are abundant and cheap, may prove an inadequate
pittance in distant lands, where the better part of a year's pay is
consumed in reaching the post of duty, and where the comforts of
ordinary civilized existence can only be obtained with difficulty and
at exorbitant cost. I trust that in considering the submitted
schedules no mistaken theory of economy will perpetuate a system
which in the past has virtually closed to deserving talent many
offices where capacity and attainments of a high order are
indispensable, and in not a few instances has brought discredit on
our national character and entailed embarrassment and even suffering
on those deputed to uphold our dignity and interests abroad.

In connection with this subject I earnestly reiterate the practical
necessity of supplying some mode of trustworthy inspection and report
of the manner in which the consulates are conducted. In the absence of
such reliable information efficiency can scarcely be rewarded or its
opposite corrected.

Increasing competition in trade has directed attention to the value
of the consular reports printed by the Department of State, and the
efforts of the Government to extend the practical usefulness of these
reports have created a wider demand for them at home and a spirit of
emulation abroad. Constituting a record at the changes occurring in
trade and of the progress of the arts and invention in foreign
countries, they are much sought for by all interested in the subjects
which they embrace.

The report of the Secretary of the Treasury exhibits in detail the
condition of the public finances and of the several branches of the
Government related to his Department. I especially direct the
attention of the Congress to the recommendations contained in this
and the last preceding report of the Secretary touching the
simplification and amendment of the laws relating to the collection
of our revenues, and in the interest of economy and justice to the
Government I hope they may be adopted by appropriate legislation.

The ordinary receipts of the Government for the fiscal year ended
June 30, 1886, were $336,439,727.06. Of this amount $192,905,023.41
was received from customs and $116,805,936.48 from internal revenue.
The total receipts, as here stated, were $13,749,020.68 greater than
for the previous year, but the increase from customs was
$11,434,084.10 and from internal revenue $4,407,210.94, making a gain
in these items for the last year of $15,841,295.04, a falling off in
other resources reducing the total increase to the smaller amount
mentioned.

The expense at the different custom-houses of collecting this
increased customs revenue was less than the expense attending the
collection of such revenue for the preceding year by $490,608, and
the increased receipts of internal revenue were collected at a cost
to the Internal-Revenue Bureau $155,944.99 less than the expense of
such collection for the previous year.

The total ordinary expenses of the Government for the fiscal year
ended June 30, 1886, were $242,483,138.50, being less by $17,788,797
than such expenditures for the year preceding, and leaving a surplus
in the Treasury at the close of the last fiscal year of
$93,956,588.56, as against $63,463,771.27 at the close of the
previous year, being an increase in such surplus of $30,492,817.29.

The expenditures are compared with those of the preceding fiscal year
and classified as follows:

For the current year to end June 30, 1887, the ascertained receipts
up to October 1, 1886, with such receipts estimated for the remainder
of the year, amount to $356,000,000.

The expenditures ascertained and estimated for the same period are
$266,000,000, indicating an anticipated surplus at the close of the
year of $90,000,000.

The total value of the exports from the United States to foreign
countries during the fiscal year is stated and compared with the
preceding year as follows:

The value of some of our leading exports during the last fiscal year,
as compared with the value of the same for the year immediately
preceding, is here given, and furnishes information both interesting
and suggestive:

Our imports during the last fiscal year, as compared with the
previous year, were as follows:

In my last annual message to the Congress attention was directed to
the fact that the revenues of the Government exceeded its actual
needs, and it was suggested that legislative action should be taken
to relieve the people from the unnecessary burden of taxation thus
made apparent.

In view of the pressing importance of the subject I deem it my duty
to again urge its consideration.

The income of the Government, by its increased volume and through
economies in its collection, is now more than ever in excess of
public necessities. The application of the surplus to the payment of
such portion of the public debt as is now at our option subject to
extinguishment, if continued at the rate which has lately prevailed,
would retire that class of indebtedness within less than one year
from this date. Thus a continuation of our present revenue system
would soon result in the receipt of an annual income much greater
than necessary to meet Government expenses, with no indebtedness upon
which it could be applied. We should then be confronted with a vast
quantity of money, the circulating medium of the people, hoarded in
the Treasury when it should be in their hands, or we should be drawn
into wasteful public extravagance, with all the corrupting national
demoralization which follows in its train.

But it is not the simple existence of this surplus and its threatened
attendant evils which furnish the strongest argument against our
present scale of Federal taxation. Its worst phase is the exaction of
such a surplus through a perversion of the relations between the
people and their Government and a dangerous departure from the rules
which limit the right of Federal taxation.

Good government, and especially the government of which every
American citizen boasts, has for its objects the protection of every
person within its care in the greatest liberty consistent with the
good order of society and his perfect security in the enjoyment of
his earnings with the least possible diminution for public needs.
When more of the people's substance is exacted through the form of
taxation than is necessary to meet the just obligations of the
Government and the expense of its economical administration, such
exaction becomes ruthless extortion and a violation of the
fundamental principles of a free government.

The indirect manner in which these exactions are made has a tendency
to conceal their true character and their extent. But we have arrived
at a stage of superfluous revenue which has aroused the people to a
realization of the fact that the amount raised professedly for the
support of the Government is paid by them as absolutely if added to
the price of the things which supply their daily wants as if it was
paid at fixed periods into the hand of the tax gatherer.

Those who toil for daily wages are beginning to understand that
capital, though sometimes vaunting its importance and clamoring for
the protection and favor of the Government, is dull and sluggish
till, touched by the magical hand of labor, it springs into activity,
furnishing an occasion for Federal taxation and gaining the value
which enables it to bear its burden. And the laboring man is
thoughtfully inquiring whether in these circumstances, and
considering the tribute he constantly pays into the public Treasury
as he supplies his daily wants, he receives his fair share of
advantages.

There is also a suspicion abroad that the surplus of our revenues
indicates abnormal and exceptional business profits, which, under the
system which produces such surplus, increase without corresponding
benefit to the people at large the vast accumulations of a few among
our citizens, whose fortunes, rivaling the wealth of the most favored
in antidemocratic nations, are not the natural growth of a steady,
plain, and industrious republic.

Our farmers, too, and those engaged directly and indirectly in
supplying the products of agriculture, see that day by day, and as
often as the daily wants of their households recur, they are forced
to pay excessive and needless taxation, while their products struggle
in foreign markets with the competition of nations, which, by allowing
a freer exchange of productions than we permit, enable their people to
sell for prices which distress the American farmer.

As every patriotic citizen rejoices in the constantly increasing
pride of our people in American citizenship and in the glory of our
national achievements and progress, a sentiment prevails that the
leading strings useful to a nation in its infancy may well be to a
great extent discarded in the present stage of American ingenuity,
courage, and fearless self-reliance; and for the privilege of
indulging this sentiment with true American enthusiasm our citizens
are quite willing to forego an idle surplus in the public Treasury.

And all the people know that the average rate of Federal taxation
upon imports is to-day, in time of peace, but little less, while upon
some articles of necessary consumption it is actually more, than was
imposed by the grievous burden willingly borne at a time when the
Government needed millions to maintain by war the safety and
integrity of the Union.

It has been the policy of the Government to collect the principal
part of its revenues by a tax upon imports, and no change in this
policy is desirable. But the present condition of affairs constrains
our people to demand that by a revision of our revenue laws the
receipts of the Government shall be reduced to the necessary expense
of its economical administration; and this demand should be
recognized and obeyed by the people's representatives in the
legislative branch of the Government.

In readjusting the burdens of Federal taxation a sound public policy
requires that such of our citizens as have built up large and
important industries under present conditions should not be suddenly
and to their injury deprived of advantages to which they have adapted
their business; but if the public good requires it they should be
content with such consideration as shall deal fairly and cautiously
with their interests, while the just demand of the people for relief
from needless taxation is honestly answered.

A reasonable and timely submission to such a demand should certainly
be possible without disastrous shock to any interest; and a cheerful
concession sometimes averts abrupt and heedless action, often the
outgrowth of impatience and delayed justice.

Due regard should be also accorded in any proposed readjustment to
the interests of American labor so far as they are involved. We
congratulate ourselves that there is among us no laboring class fixed
within unyielding bounds and doomed under all conditions to the
inexorable fate of daily toil. We recognize in labor a chief factor
in the wealth of the Republic, and we treat those who have it in
their keeping as citizens entitled to the most careful regard and
thoughtful attention. This regard and attention should be awarded
them, not only because labor is the capital of our workingmen, justly
entitled to its share of Government favor, but for the further and not
less important reason that the laboring man, surrounded by his family
in his humble home, as a consumer is vitally interested in all that
cheapens the cost of living and enables him to bring within his
domestic circle additional comforts and advantages.

This relation of the workingman to the revenue laws of the country
and the manner in which it palpably influences the question of wages
should not be forgotten in the justifiable prominence given to the
proper maintenance of the supply and protection of well-paid labor.
And these considerations suggest such an arrangement of Government
revenues as shall reduce the expense of living, while it does not
curtail the opportunity for work nor reduce the compensation of
American labor and injuriously affect its condition and the dignified
place it holds in the estimation of our people.

But our farmers and agriculturists--those who from the soil produce
the things consumed by all--are perhaps more directly and plainly
concerned than any other of our citizens in a just and careful system
of Federal taxation. Those actually engaged in and more remotely
connected with this kind of work number nearly one-half of our
population. None labor harder or more continuously than they. No
enactments limit their hours of toil and no interposition of the
Government enhances to any great extent the value of their products.
And yet for many of the necessaries and comforts of life, which the
most scrupulous economy enables them to bring into their homes, and
for their implements of husbandry, they are obliged to pay a price
largely increased by an unnatural profit, which by the action of the
Government is given to the more favored manufacturer.

I recommend that, keeping in view all these considerations, the
increasing and unnecessary surplus of national income annually
accumulating be released to the people by an amendment to our revenue
laws which shall cheapen the price of the necessaries of life and give
freer entrance to such imported materials as by American labor may be
manufactured into marketable commodities.

Nothing can be accomplished, however, in the direction of this
much-needed reform unless the subject is approached in a patriotic
spirit of devotion to the interests of the entire country and with a
willingness to yield something for the public good.

The sum paid upon the public debt during the fiscal year ended June
30, 1886, was $44,551,043.36.

During the twelve months ended October 31,1886, 3 per cent bonds were
called for redemption amounting to $127,283,100, of which $80,643,200
was so called to answer the requirements of the law relating to the
sinking fund and $46,639,900 for the purpose of reducing the public
debt by application of a part of the surplus in the Treasury to that
object. Of the bonds thus called $102,269,450 became subject under
such calls to redemption prior to November 1, 1886. The remainder,
amounting to $25,013,650, matured under the calls after that date.

In addition to the amount subject to payment and cancellation prior
to November 1, there were also paid before that day certain of these
bonds, with the interest thereon, amounting to $5,072,350, which were
anticipated as to their maturity, of which $2,664,850 had not been
called, Thus $107,341,800 had been actually applied prior to the 1st
of November, 1886, to the extinguishment of our bonded and
interest-bearing debt, leaving on that day still outstanding the sum
of $1,153,443,112. Of this amount $86,848,700 were still represented
by 3 per cent bonds. They however, have been since November 1, or
will at once be, further reduced by $22,606,150, being bonds which
have been called, as already stated, but not redeemed and canceled
before the latter date.

During the fiscal year ended June 30, 1886, there were coined, under
the compulsory silver-coinage act of 1878,29,838,905 silver dollars,
and the cost of the silver used in such coinage was $23,448,960.01.
There had been coined up to the close of the previous fiscal year
under the provisions of the law 203,882,554 silver dollars, and on
the 1st day of December, 1886, the total amount of such coinage was
$247,131,549.

The Director of the Mint reports that at the time of the passage of
the law of 1878 directing this coinage the intrinsic value of the
dollars thus coined was 94 1/4 cents each, and that on the 31st day
of July, 1886, the price of silver reached the lowest stage ever
known, so that the intrinsic or bullion price of our standard silver
dollar at that date was less than 72 cents. The price of silver on
the 30th day of November last was such as to make these dollars
intrinsically worth 78 cents each.

These differences in value of the coins represent the fluctuations in
the price of silver, and they certainly do not indicate that
compulsory coinage by the Government enhances the price of that
commodity or secures uniformity in its value.

Every fair and legal effort has been made by the Treasury Department
to distribute this currency among the people. The withdrawal of
United States Treasury notes of small denominations and the issuing
of small silver certificates have been resorted to in the endeavor to
accomplish this result, in obedience to the will and sentiments of the
representatives of the people in the Congress. On the 27th day of
November, 1886, the people held of these coins, or certificates
representing them, the nominal sum of $166,873,041, and we still had
$79,464,345 in the Treasury as against about $142,894,055 so in the
hands of the people and $72,865,376 remaining in the Treasury one
year ago. The Director of the Mint again urges the necessity of more
vault room for the purpose of storing these silver dollars which are
not needed for circulation by the people.

I have seen no reason to change the views expressed in my last annual
message on the subject of this compulsory coinage, and I again urge
its suspension on all the grounds contained in my former
recommendation, reenforced by the significant increase of our gold
exportations during the last year, as appears by the comparative
statement herewith presented, and for the further reasons that the
more this currency is distributed among the people the greater
becomes our duty to protect it from disaster, that we now have
abundance for all our needs, and that there seems but little
propriety in building vaults to store such currency when the only
pretense for its coinage is the necessity of its use by the people as
a circulating medium.

The great number of suits now pending in the United States courts for
the southern district of New York growing out of the collection of
customs revenue at the port of New York and the number of such suits
that are almost daily instituted are certainly worthy the attention
of the Congress. These legal controversies, based upon conflicting
views by importers and the collector as to the interpretation of our
present complex and indefinite revenue laws, might be largely
obviated by an amendment of those laws.

But pending such amendment the present condition of this litigation
should be relieved. There are now pending about 2,500 of these suits.
More than 1,100 have been commenced within the past eighteen months,
and many of the others have been at issue for more than twenty-five
years. These delays subject the Government to loss of evidence and
prevent the preparation necessary to defeat unjust and fictitious
claims, while constantly accruing interest threatens to double the
demands involved.

In the present condition of the dockets of the courts, well filled
with private suits, and of the force allowed the district attorney,
no greater than is necessary for the ordinary and current business of
his office, these revenue litigations can not be considered.

In default of the adoption by the Congress of a plan for the general
reorganization of the Federal courts, as has been heretofore
recommended, I urge the propriety of passing a law permitting the
appointment of an additional Federal judge in the district where
these Government suits have accumulated, so that by continuous
sessions of the courts devoted to the trial of these cases they may
be determined.

It is entirely plain that a great saving to the Government would be
accomplished by such a remedy, and the suitors who have honest claims
would not be denied justice through delay.

The report of the Secretary of War gives a detailed account of the
administration of his Department and contains sundry recommendations
for the improvement of the service, which I fully approve.

The Army consisted at the date of the last consolidated return of
2,103 officers and 24,946 enlisted men.

The expenses of the Department for the last fiscal year were
$36,990,903.38, including $6,294,305.43 for public works and river
and harbor improvements.

I especially direct the attention of the Congress to the
recommendation that officers be required to submit to an examination
as a preliminary to their promotion. I see no objection, but many
advantages, in adopting this feature, which has operated so
beneficially in our Navy Department, as well as in some branches of
the Army.

The subject of coast defenses and fortifications has been fully and
carefully treated by the Board on Fortifications, whose report was
submitted at the last session of Congress; but no construction work
of the kind recommended by the board has been possible during the
last year from the lack of appropriations for such purpose.

The defenseless condition of our seacoast and lake frontier is
perfectly palpable. The examinations made must convince us all that
certain of our cities named in the report of the board should be
fortified and that work on the most important of these fortifications
should be commenced at once. The work has been thoroughly considered
and laid out, the Secretary of War reports, but all is delayed in
default of Congressional action.

The absolute necessity, judged by all standards of prudence and
foresight, of our preparation for an effectual resistance against the
armored ships and steel guns and mortars of modern construction which
may threaten the cities on our coasts is so apparent that I hope
effective steps will be taken in that direction immediately.

The valuable and suggestive treatment of this question by the
Secretary of War is earnestly commended to the consideration of the
Congress.

In September and October last the hostile Apaches who, under the
leadership of Geronimo, had for eighteen months been on the war path,
and during that time had committed many murders and been the cause of
constant terror to the settlers of Arizona, surrendered to General
Miles, the military commander who succeeded General Crook in the
management and direction of their pursuit.

Under the terms of their surrender as then reported, and in view of
the understanding which these murderous savages seemed to entertain
of the assurances given them, it was considered best to imprison them
in such manner as to prevent their ever engaging in such outrages
again, instead of trying them for murder. Fort Pickens having been
selected as a safe place of confinement, all the adult males were
sent thither and will be closely guarded as prisoners. In the
meantime the residue of the band, who, though still remaining upon
the reservation, were regarded as unsafe and suspected of furnishing
aid to those on the war path, had been removed to Fort Marion. The
women and larger children of the hostiles were also taken there, and
arrangements have been made for putting the children of proper age in
Indian schools.

The report of the Secretary of the Navy contains a detailed exhibit
of the condition of his Department, with such a statement of the
action needed to improve the same as should challenge the earnest
attention of the Congress.

The present Navy of the United States, aside from the ships in course
of construction, consists of--

First. Fourteen single-turreted monitors, none of which are in
commission nor at the present time serviceable. The batteries of
these ships are obsolete, and they can only be relied upon as
auxiliary ships in harbor defense, and then after such an expenditure
upon them as might not be deemed justifiable.

Second. Five fourth-rate vessels of small tonnage, only one of which
was designed as a war vessel, and all of which are auxiliary merely.

Third. Twenty-seven cruising ships, three of which are built of iron,
of small tonnage, and twenty-four of wood. Of these wooden vessels it
is estimated by the Chief Constructor of the Navy that only three
will be serviceable beyond a period of six years, at which time it
may be said that of the present naval force nothing worthy the name
will remain.

All the vessels heretofore authorized are under contract or in course
of construction except the armored ships, the torpedo and dynamite
boats, and one cruiser. As to the last of these, the bids were in
excess of the limit fixed by Congress. The production in the United
States of armor and gun steel is a question which it seems necessary
to settle at an early day if the armored war vessels are to be
completed with those materials of home manufacture. This has been the
subject of investigation by two boards and by two special committees
of Congress within the last three years. The report of the Gun
Foundry Board in 1884, of the Board on Fortifications made in January
last, and the reports of the select committees of the two Houses made
at the last session of Congress have entirely exhausted the subject,
so far as preliminary investigation is involved, and in their
recommendations they are substantially agreed.

In the event that the present invitation of the Department for bids
to furnish such of this material as is now authorized shall fail to
induce domestic manufacturers to undertake the large expenditures
required to prepare for this new manufacture, and no other steps are
taken by Congress at its coming session, the Secretary contemplates
with dissatisfaction the necessity of obtaining abroad the armor and
the gun steel for the authorized ships. It would seem desirable that
the wants of the Army and the Navy in this regard should be
reasonably met, and that by uniting their contracts such inducement
might be offered as would result in securing the domestication of
these important interests.

The affairs of the postal service show marked and gratifying
improvement during the past year. A particular account of its
transactions and condition is given in the report of the
Postmaster-General, which will be laid before you.

The reduction of the rate of letter postage in 1883, rendering the
postal revenues inadequate to sustain the expenditures, and business
depression also contributing, resulted in an excess of cost for the
fiscal year ended June 30, 1885, of eight and one-third millions of
dollars. An additional check upon receipts by doubling the measure of
weight in rating sealed correspondence and diminishing one-half the
charge for newspaper carriage was imposed by legislation which took
effect with the beginning of the past fiscal year, while the constant
demand of our territorial development and growing population for the
extension and increase of mail facilities and machinery necessitates
steady annual advance in outlay, and the careful estimate of a year
ago upon the rates of expenditure then existing contemplated the
unavoidable augmentation of the deficiency in the last fiscal year by
nearly $2,000,000. The anticipated revenue for the last year failed of
realization by about $64,000, but proper measures of economy have so
satisfactorily limited the growth of expenditure that the total
deficiency in fact fell below that of 1885, and at this time the
increase of revenue is in a gaining ratio over the increase of cost,
demonstrating the sufficiency of the present rates of postage
ultimately to sustain the service. This is the more pleasing because
our people enjoy now both cheaper postage proportionably to distances
and a vaster and more costly service than any other upon the globe.

Retrenchment has been effected in the cost of supplies, some
expenditures unwarranted by law have ceased, and the outlays for mail
carriage have been subjected to beneficial scrutiny. At the close of
the last fiscal year the expense of transportation on star routes
stood at an annual rate of cost less by over $560,000 than at the
close of the previous year and steamboat and mail-messenger service
at nearly $200,000 less.

The service has been in the meantime enlarged and extended by the
establishment of new offices, increase of routes of carriage,
expansion of carrier-delivery conveniences, and additions to the
railway mail facilities, in accordance with the growing exigencies of
the country and the long-established policy of the Government.

The Postmaster-General calls attention to the existing law for
compensating railroads and expresses the opinion that a method may be
devised which will prove more just to the carriers and beneficial to
the Government; and the subject appears worthy of your early
consideration.

The differences which arose during the year with certain of the ocean
steamship companies have terminated by the acquiescence of all in the
policy of the Government approved by the Congress in the postal
appropriation at its last session, and the Department now enjoys the
utmost service afforded by all vessels which sail from our ports upon
either ocean--a service generally adequate to the needs of our
intercourse. Petitions have, however, been presented to the
Department by numerous merchants and manufacturers for the
establishment of a direct service to the Argentine Republic and for
semimonthly dispatches to the Empire of Brazil, and the subject is
commended to your consideration. It is an obvious duty to provide the
means of postal communication which our commerce requires, and with
prudent forecast of results the wise extension of it may lead to
stimulating intercourse and become the harbinger of a profitable
traffic which will open new avenues for the disposition of the
products of our industry. The circumstances of the countries at the
far south of our continent are such as to invite our enterprise and
afford the promise of sufficient advantages to justify an unusual
effort to bring about the closer relations which greater freedom of
communication would tend to establish.

I suggest that, as distinguished from a grant or subsidy for the mere
benefit of any line of trade or travel, whatever outlay may be
required to secure additional postal service, necessary and proper
and not otherwise attainable, should be regarded as within the limit
of legitimate compensation for such service.

The extension of the free-delivery service as suggested by the
Postmaster-General has heretofore received my sanction, and it is to
be hoped a suitable enactment may soon be agreed upon.

The request for an appropriation sufficient to enable the general
inspection of fourth-class offices has my approbation.

I renew my approval of the recommendation of the Postmaster-General
that another assistant be provided for the Post-Office Department,
and I invite your attention to the several other recommendations in
his report.

The conduct of the Department of Justice for the last fiscal year is
fully detailed in the report of the Attorney-General, and I invite
the earnest attention of the Congress to the same and due
consideration of the recommendations therein contained.

In the report submitted by this officer to the last session of the
Congress he strongly recommended the erection of a penitentiary for
the confinement of prisoners convicted and sentenced in the United
States courts, and he repeats the recommendation in his report for
the last year.

This is a matter of very great importance and should at once receive
Congressional action. United States prisoners are now confined in
more than thirty different State prisons and penitentiaries scattered
in every part of the country. They are subjected to nearly as many
different modes of treatment and discipline and are far too much
removed from the control and regulation of the Government. So far as
they are entitled to humane treatment and an opportunity for
improvement and reformation, the Government is responsible to them
and society that these things are forthcoming. But this duty can
scarcely be discharged without more absolute control and direction
than is possible under the present system.

Many of our good citizens have interested themselves, with the most
beneficial results, in the question of prison reform. The General
Government should be in a situation, since there must be United
States prisoners, to furnish important aid in this movement, and
should be able to illustrate what may be practically done in the
direction of this reform and to present an example in the treatment
and improvement of its prisoners worthy of imitation.

With prisons under its own control the Government could deal with the
somewhat vexed question of convict labor, so far as its convicts were
concerned, according to a plan of its own adoption, and with due
regard to the rights and interests of our laboring citizens, instead
of sometimes aiding in the operation of a system which causes among
them irritation and discontent.

Upon consideration of this subject it might be thought wise to erect
more than one of these institutions, located in such places as would
best subserve the purposes of convenience and economy in
transportation. The considerable cost of maintaining these convicts
as at present, in State institutions, would be saved by the adoption
of the plan proposed, and by employing them in the manufacture of
such articles as were needed for use by the Government quite a large
pecuniary benefit would be realized in partial return for our
outlay.

I again urge a change in the Federal judicial system to meet the
wants of the people and obviate the delays necessarily attending the
present condition of affairs in our courts. All are agreed that
something should be done, and much favor is shown by those well able
to advise to the plan suggested by the Attorney-General at the last
session of the Congress and recommended in my last annual message.
This recommendation is here renewed, together with another made at
the same time, touching a change in the manner of compensating
district attorneys and marshals; and the latter subject is commended
to the Congress for its action in the interest of economy to the
Government, and humanity, fairness, and justice to our people.

The report of the Secretary of the Interior presents a comprehensive
summary of the work of the various branches of the public service
connected with his Department, and the suggestions and
recommendations which it contains for the improvement of the service
should receive your careful consideration.

The exhibit made of the condition of our Indian population and the
progress of the work for their enlightenment, notwithstanding the
many embarrassments which hinder the better administration of this
important branch of the service, is a gratifying and hopeful one.

The funds appropriated for the Indian service for the fiscal year
just passed, with the available income from Indian land and trust
moneys, amounting in all to $7,850,775.12, were ample for the service
under the conditions and restrictions of laws regulating their
expenditure. There remained a balance on hand on June 30, 1886, of
$1,660,023.30, of which $ 1,337,768.21 are permanent funds for
fulfillment of treaties and other like purposes, and the remainder,
$322,255.09, is subject to be carried to the surplus fund as required
by law.

The estimates presented for appropriations for the ensuing fiscal
year amount to $5,608,873.64, or $442,386.20 less than those laid
before the Congress last year.

The present system of agencies, while absolutely necessary and well
adapted for the management of our Indian affairs and for the ends in
view when it was adopted, is in the present stage of Indian
management inadequate, standing alone, for the accomplishment of an
object which has become pressing in its importance--the more rapid
transition from tribal organizations to citizenship of such portions
of the Indians as are capable of civilized life.

When the existing system was adopted, the Indian race was outside of
the limits of organized States and Territories and beyond the
immediate reach and operation of civilization, and all efforts were
mainly directed to the maintenance of friendly relations and the
preservation of peace and quiet on the frontier. All this is now
changed. There is no such thing as the Indian frontier. Civilization,
with the busy hum of industry and the influences of Christianity,
surrounds these people at every point. None of the tribes are outside
of the bounds of organized government and society, except that the
Territorial system has not been extended over that portion of the
country known as the Indian Territory. As a race the Indians are no
longer hostile, but may be considered as submissive to the control of
the Government. Few of them only are troublesome. Except the fragments
of several bands, all are now gathered upon reservations.

It is no longer possible for them to subsist by the chase and the
spontaneous productions of the earth.

With an abundance of land, if furnished with the means and implements
for profitable husbandry, their life of entire dependence upon
Government rations from day to day is no longer defensible. Their
inclination, long fostered by a defective system of control, is to
cling to the habits and customs of their ancestors and struggle with
persistence against the change of life which their altered
circumstances press upon them. But barbarism and civilization can not
live together. It is impossible that such incongruous conditions
should coexist on the same soil.

They are a portion of our people, are under the authority of our
Government, and have a peculiar claim upon and are entitled to the
fostering care and protection of the nation. The Government can not
relieve itself of this responsibility until they are so far trained
and civilized as to be able wholly to manage and care for themselves.
The paths in which they should walk must be clearly marked out for
them, and they must be led or guided until they are familiar with the
way and competent to assume the duties and responsibilities of our
citizenship.

Progress in this great work will continue only at the present slow
pace and at great expense unless the system and methods of management
are improved to meet the changed conditions and urgent demands of the
service.

The agents, having general charge and supervision in many cases of
more than 5,000 Indians, scattered over large reservations, and
burdened with the details of accountability for funds and supplies,
have time to look after the industrial training and improvement of a
few Indians only. The many are neglected and remain idle and
dependent, conditions not favorable for progress and civilization.

The compensation allowed these agents and the conditions of the
service are not calculated to secure for the work men who are fitted
by ability and skill to properly plan and intelligently direct the
methods best adapted to produce the most speedy results and permanent
benefits.

Hence the necessity for a supplemental agency or system directed to
the end of promoting the general and more rapid transition of the
tribes from habits and customs of barbarism to the ways of
civilization.

With an anxious desire to devise some plan of operation by which to
secure the welfare of the Indians and to relieve the Treasury as far
as possible from the support of an idle and dependent population, I
recommended in my previous annual message the passage of a law
authorizing the appointment of a commission as an instrumentality
auxiliary to those already established for the care of the Indians.
It was designed that this commission should be composed of six
intelligent and capable persons--three to be detailed from the
Army--having practical ideas upon the sub