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, three 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 1st, 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 Ist 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 three per cent. bonds. They, however, have been since November 1st, 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 ninety-four and one-fourth 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 seventy-two cents. The price of silver on the 30th day of November last was such as to make these dollars intrinsically worth seventy-eight 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, reinforced 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 twentyfive hundred of these suits. More than eleven hundred 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 cannot 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 recommen dations for the improvement of the service which I fully approve.

The Army consisted at the date of the last consolidated return, of two thousand one hundred and three officers and twenty-four thousand nine hundred and forty-six 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 sub

mitted 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 sea-coast 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.