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who may be proved to have been guilty of il- | Executive proclamation, legislation during the legal acts of violence toward citizens of the continuance of such extra session shall be conUnited States, and also toward indemnifying fined to such subjects as the Executive may those who may be shown to be entitled to in- bring before it, from time to time, in writing. demnity. A copy of a protocol of a conference The advantages to be gained by these two between the Secretary of State and the Spanish amendments are too obvious for me to comment minister, in which the terms of this arrange- upon them. One session in each year is proment were agreed to, is transmitted herewith. vided for by the Constitution, in which there The correspondence on this subject with the are no restrictions as to the subjects of legislalegation of the United States in Madrid was con- tion by Congress. If more are required, it is ducted in cipher and by cable, and needs the always in the power of Congress, during their verification of the actual text of the correspond- term of office, to provide for sessions at any ence. It has seemed to me to be due to the time. The first of these amendments would proimportance of the case not to submit this corres-tect the public against the many abuses, and pondence until the accurate text can be received by mail. It is expected shortly, and will be submitted when received.

In taking leave of this subject for the present, I wish to renew the expression of my conviction, that the existence of African slavery in Cuba is a principal cause of the lamentable condition of the island. I do not doubt that Congress shares with me the hope that it will soon be made to disappear, and that peace and prosperity may follow its abolition.

The embargoing of American estates in Cuba; cruelty to American citizens detected in no act of hostility to the Spanish Government; the murdering of prisoners taken with arms in their hands; and, finally, the capture upon the high seas of a vessel sailing under the United States flag and bearing a United States registry, have culminated in an outburst of indignation that has seemed for a time to threaten war. Pending negotiations between the United States and the government of Spain on the subject of this capture, I have authorized the Secretary of the Navy to put our navy on a war footing, to the extent, at least, of the entire annual appropriation for that branch of the service, trusting to Congress and the public opinion of the American people to justify my action.

Assuming from the action of the last Congress, in appointing a "Committee on Privileges and Elections," to prepare and report to this Congress a constitutional amendment to provide a better method of electing the President and Vice President of the United States, and also from the necessity of such an amendment, that there will be submitted to the State Legislatures, for ratification, such an improvement in our Constitution, I suggest two others for your consid

eration:

First. To authorize the Executive to approve of so much of any measure passing the two Houses of Congress as his judgment may dictate, without approving the whole, the disapproved portion, or portions, to be subjected to the same rules as now, to wit, to be referred back to the House in which the measure, or measures, originated, and if passed by a two-thirds vote of the two Houses, then to become a law without the approval of the President. I would add to this a provision that there should be no legislation by Congress during the last twenty-four hours of its sitting, except upon vetoes, in order to give the Executive an opportunity to examine and approve or disapprove bills understandingly.

waste of public moneys, which creep into appropriation bills, and other important measures passing during the expiring hours of Congress, to which, otherwise, due consideration cannot be given.

The receipts of the Government from all sources for the last fiscal year were $333,738,204, and expenditures on all accounts $290,345.245, thus showing an excess of receipts over expenditures of $43,392,959. But it is not probable that this favorable exhibit will be shown for the present fiscal year. Indeed, it is very doubtful whether, except with great economy on the part of Congress in making appropriations, and the same economy in administering the various departments of Government, the revenues will not fall short of meeting actual expenses, including interest on the public debt.

I commend to Congress such economy, and point out two sources where, it seems to me, it might commence, to wit, in the appropriations for public buildings in the many cities where work has not yet been commenced; in the appropriations for river and harbor improvement in those localities where the improvements are of but little benefit to general commerce, and for fortifications.

There is a still more fruitful source of expenditure, which I will point out later in this message. I refer to the easy method of manufacturing claims for losses incurred in suppressing the late rebellion.

I would not be understood here as opposing the erection of good, substantial, and even ornamental buildings by the Government wherever such buildings are needed. In fact, I approve of the Government owning its own buildings in all sections of the country, and hope the day is not far distant when it will not only possess them, but will erect in the capital suitable residences for all persons who now receive commutation for quarters or rent at Government expense, and for the Cabinet, thus setting an example to the States which may induce them to erect buildings for their Senators. But I would have this work conducted at a time when the revenues of the country would abundantly justify it.

The revenues have materially fallen off for the first five months of the present fiscal year from what they were expected to produce, owing to the general panic now prevailing, which commenced about the middle of September last. The full effect of this disaster, if it should not prove a blessing in disguise," is yet to be demonstrated. Second. To provide, by amendment, that when In either event it is your duty to heed the lesson, an extra session of Congress is convened by land to provide, by wise and well-considered legis

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lation, as far as it lies in your power, against its | in part at best, to the merchant or manufacturer recurrence, and to take advantage of all benefits that may have accrued.

for a fixed term. Hence, no matter how much currency there might be in the country, it would be absorbed, prices keeping pace with the volume, and panics, stringency, and disasters would ever be recurring with the autumn. Elasticity in our monetary system, therefore, is the object to be attained first, and next to that, as far as pos

My own judgment is that, however much individuals may have suffered, one long step has been taken toward specie payments; that we can never have permanent prosperity until a specie basis is reached; and that a specie basis cannot be reached and maintained until our ex-sible, a prevention of the use of other people's ports, exclusive of gold, pay for our imports, interest due abroad, and other specie obligations, or so nearly so as to leave an appreciable accumulation of the precious metals in the country from the products of our mines.

money in stock and other species of speculation. To prevent the latter it seems to me that one great step would be taken by prohibiting the national banks from paying interest on deposits, by requiring them to hold their reserves in their The development of the mines of precious own vaults, and by forcing them into resump metals during the past year, and the prospective tion, though it would only be in legal-tender development of them for years to come, are grati-notes. For this purpose I would suggest the fying in their results. Could but one-half of the the establishment of clearing-houses for your gold extracted from the mines be retained at consideration. home, our advance toward specie payments would be rapid.

To increase our exports sufficient currency is required to keep all the industries of the country employed. Without this national as well as individual bankruptcy must ensue. Undue inflation, on the other hand, while it might give temporary relief, would only lead to inflation of! prices, the impossibility of competing in our own markets for the products of home skill and labor, and repeated renewals of present experiences. Elasticity to our circulating medium, therefore, and just enough of it to transact the legitimate business of the country, and to keep all industries employed, is what is most to be desired. The exact medium is specie, the recognized medium of exchange the world over. That obtained, we shall have a currency of an exact degree of elasticity. If there be too much of it for the legitimate purposes of trade and commerce, it will flow out of the country. If too little, the reverse will result. To hold what we have, and to appreciate our currency to that standard, is the problem deserving of the most serious consideration of Congress.

The experience of the present panic has proven that the currency of the country, based as it is upon the credit of the country, is the best that has ever been devised. Usually, in times of such trials, currency has become worthless, or so much depreciated in value as to inflate the values of all the necessaries of life, as compared with the currency Every one holding it has been anxious to dispose of it on any terms. Now we witness the reverse. Holders of currency hoard it as they did gold in former experiences of a like nature.

To secure the former many plans have been suggested, most if not all of which look to me more like inflation on the one hand, or compelling the Government, on the other, to pay interest, without corresponding benefits, upon the surplus funds of the country during the seasons when otherwise unemployed.

I submit for your consideration whether this difficulty might not be overcome by authorizing the Secretary of the Treasury to issue at any time to national banks of issue any amount of their own notes below a fixed percentage of their issue, say forty per cent., upon the banks depositing with the Treasurer of the United States an amount of Government bonds equal to the amount of notes demanded, the banks to forfeit to the Government, say four per cent. of the interest accruing on the bonds so pledged during the time they remain with the Treasurer, as security for the increased circulation, the bonds so pledged to be redeemable by the banks at their pleasure, either in whole or in part, by returning their own bills for cancellation to an amount equal to the face of the bonds withdrawn. I would further suggest for your consideration the propriety of authorizing national banks to diminish their standing issue at pleasure, by returning for cancellation their own bills and withdrawing so many United States bonds as are pledged for the bills returned.

In view of the great actual contraction that has taken place in the currency, and the comparative contraction continuously going on, due to the increase of population, increase of manufactories, and all the industries, I do not believe there is too much of it now for the dullest period of the year. Indeed, if clearing houses should It is patent to the most casual observer that be established, thus forcing redemption, it is a much more currency or money is required to question for your consideration whether banktransact the legitimate trade of the country during should not be made free, retaining all the ing the fall and winter months, when the vast crops are being removed, than during the balance of the year. With our present system the amount in the country remains the same throughout the entire year, resulting in an accumulation of all the surplus capital of the country in a few centers, when not employed in the moving of crops, tempted there by the offer of interest on call loans. Interest being paid, this surplus capital must earn this interest paid with a profit. Being subject to "call," it cannot be loaned, only

safeguards now required to secure billholders. In any modification of the present laws regulat ing national banks, as a further step toward preparing for resumption of specie payments, I invite your attention to a consideration of the propriety of exacting from them the retention, as a part of their reserve, either the whole or a part of the gold interest accruing upon the bonds pledged as security for their issue. I have not reflected enough on the bearing this might have in producing a scarcity of coin with which to

pay duties on imports to give it my positive recommendation. But your attention is invited to the subject.

During the last four years the currency has been contracted directly by the withdrawal of three per cent. certificates, compound-interest notes, and "seven-thirty" bonds outstanding on the 4th of March, 1869, all of which took the place of legal tenders in the bank reserves to the extent of sixty-three million dollars.

During the same period there has been a much larger comparative contraction of the currency. The population of the country has largely increased. More than twenty-five thousand miles of railroad have been built, requiring the active use of capital to operate them. Millions of acres of land have been opened to cultivation, requiring capital to move the products. Manufactories have multiplied beyond all precedent in the same period of time, requiring capital weekly for the payment of wages and for the purchase of material; and probably the largest of all comparative contraction arises from the organizing of free labor in the South. Now every laborer there receives his wages, and for want of savings banks, the greater part of such wages is carried in the pocket or hoarded until required

for use.

These suggestions are thrown out for your consideration, without any recommendation that they shall be adopted literally, but hoping that the best method may be arrived at to secure such an elasticity of the currency as will keep employed all the industries of the country, and prevent such an inflation as will put off indefinitely the resumption of specie payments, an object so devoutly to be wished for by all, and by none more earnestly than the class of people most directly interested-those who "earn their bread by the sweat of their brow." The decisions of Congress on this subject will have the hearty support of the Executive.

In previous messages I have called attention to the decline in American ship building, and recommended such legislation as would secure to us our proportion of the carrying trade. Stimulated by high rates and abundance of freight, the progress for the last year in ship building has been very satisfactory. There has been an increase of about three per cent. in the amount transported in American vessels over the amount of last year. With the reduced cost of material which has taken place, it may reasonably be hoped that this progress will be maintained and even increased. However, as we pay about $80,000,000 per annum to foreign vessels for the transportation to a market of our surplus products, thus increasing the balance of trade against us to this amount, the subject is one worthy of your serious consideration.

"Cheap transportation" is a subject that has attracted the attention of both producers and consumers for the past few years, and has contributed to, if it has not been the direct cause of, the recent panic and stringency.

As Congress, at its last session, appointed a special committee to investigate this whole subject during the vacation, and report at this session, I have nothing to recommend until their report is read.

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There is one work, however, of a national character, in which the greater portion of the East and the West, the North and the South, are equally interested, to which I will invite your attention.

The State of New York has a canal connecting Lake Erie with tide-water on the Hudson river. The State of Illinois has a similar work connecting Lake Michigan with navigable water on the Illinois river, thus making watercommunication inland, between the East and the West and South. These great artificial water-courses are the property of the States through which they pass, and pay toll to those States. Would it not be wise statesmanship to pledge these States that if they will open these canals for the passage of large vessels the General Government will look after and keep in navigable condition the great public highways with which they connect, to wit: the overslaugh on the Hudson, the Saint Clair flats, and the Illinois and Mississippi rivers? This would be a national work; one of great value to the producers of the West and South in giving them cheap transportation for their produce to the sea-board and a market; and to the consumers in the East in giving them cheaper food, particularly of those articles of food which do not find a foreign market, and the prices of which, therefore, are not regulated by foreign demands. The advantages of such a work are too obvious for argument. I submit the subject to you, therefore, without further comment.

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During the past year our navy has been depleted by the sale of some vessels no longer fit for naval service, and by the condemnation of others not yet disposed of. This, however, has been more than compensated for by the repair of six of the old wooden ships, and by the building of eight new sloops of war, authorized by the last Congress. The building of these latter has occurred at a doubly fortunate time. They are about being completed at a time when they may possibly be much needed, and the work upon them has not only given direct employment to thousands of men, but has no doubt been the means of keeping open establishments for other work at a time of great financial distress.

Since the commencement of the last month, however, the distressing occurrences which have taken place in the waters of the Caribbean sea, almost on our very sea-board, while they illustrate most forcibly the necessity always existing that a nation situated like ours should maintain in a state of possible efficiency a navy adequate to its responsibilities, has at the same time demanded that all the effective force we really have shall be put in immediate readiness for warlike service. This has been and is being done promptly and effectively, and I am assured that all the available ships and every authorized man of the American navy will be ready for whatever action is required for the safety of our citizens or

the maintenance of our honor. This, of course, will require the expenditure in a short time of some of the appropriations which were calculated to extend through the fiscal year, but Congress will, I doubt not, understand and appreciate the emergency, and will provide adequately, not only for the present preparation, but for the future maintenance of our naval force. The Secretary of the Navy has, during the past year, been quietly putting some of our most effective monitors in condition for service, and thus the exigency finds us in a much better condition for work than we could possibly have been without his action.

A complete exhibit is presented, in the accompanying report of the Postmaster General, of the operations of the Post Office Department during the year. The ordinary postal revenues for the fiscal year ended June 30, 1873, amounted to $22,996,741 57, and the expenditures of all kinds to $29,084,945 67. The increase of revenues over 1872 was $1,081,315 20, and the increase of expenditures $2,426,753 36.

Independent of the payments made from special appropriations for mail-steamship lines, the amount drawn from the general Treasury to meet deficiencies was $5,265,475. The constant and rapid extension of our postal service, particularly upon railways, and the improved facilities for the collection, transmission, distribution, and delivery of the mails, which are constantly being provided, account for the increased expenditures of this popular branch of the public service.

The total number of post offices in operation on June 30, 1873, was 33,244, a net increase of of 1,381 over the number reported the preceding year. The number of presidential offices was 1,363, an increase of 163 during the year. The total length of railroad mail-routes at the close of the year was 63,457 miles, an increase of 5,546 miles over the year 1872. Fifty-nine railway post-office lines were in operation June 30, 1873, extending over 14,866 miles of railroad routes, and performing an aggregate service of 34,925 miles daily.

The number of letters exchanged with foreign countries was 27,459,185, an increase of 3,096,685 over the previous year, and the postage thereon amounted to $2,021,310 86. The total weight of correspondence exchanged in the mails with European countries exceeded 912 tons, an increase of 92 tons over the previous year. The total cost of the United States ocean-steamship service, including $725,000 paid from special appropriations to subsidized lines of mail steamers, was $1,047,271 35.

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Affairs in Utah require your early and special attention. The Supreme Court of the United States, in the case of Clinton vs. Englebrecht, decided that the United States marshal of that Territory could not lawfully summon jurors for the district courts; and those courts hold that the territorial marshal cannot lawfully perform that duty, because he is elected by the legislative assembly and not appointed as provided for in the act organizing the Territory. All proceedings at law are practically abolished by these decisions, and there have been but few or no

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jury trials in the district courts of that Territory since the last session of Congress. Property is left without protection by the courts, and crimes go unpunished. To prevent anarchy there, it is absolutely necessary that Congress provide the courts with some mode of obtaining jurors, and I recommend legislation to that end; and also that the probate courts of the Territory, now assuming to issue writs of injunction and habeas corpus, and to try criminal cases and questions as to land titles, be denied all jurisdiction not possessed ordinarily by courts of that description.

I have become impressed with the belief that the act approved March 2, 1867, entitled "An act to establish a uniform system of bankruptcy throughout the United States," is productive of more evil than good at this time. Many considerations might be urged for its total repeal, but, if this is not considered advisable, I think it will not be seriously questioned that those portions of said act providing for what is called involuntary bankruptcy operate to increase the financial embarrassments of the country. Careful and prudent men very often become involved in debt in the transaction of their business, and though they may possess ample property, if it could be made available for that purpose, to meet all their liabilities, yet, on account of the extraordinary scarcity of money, they may be unable to meet all their pecuniary obligations as they become due, in consequence of which they are liable to be prostrated in their business by proceedings in bankruptcy at the instance of unrelenting creditors. People are now so easily alarmed as to monetary matters that the mere filing of a petition in bankruptcy by an unfriendly creditor will necessarily embarrass, and oftentimes accomplish the financial ruin of a responsible business man. Those who otherwise might make lawful and just arrangements to relieve themselves from difficulties produced by the present stringency in money, are prevented by their constant exposure to attack and disappointment by proceedings against them in bankruptcy, and, beside, the law is made use of in many cases by obdurate creditors to frighten or force debtors into a compliance with their wishes and into acts of injustice to other creditors and to themselves. I recommend that so much of said act as provides for involuntary bankruptcy on account of the suspension of payment be repealed.

Your careful attention is invited to the subject of claims against the Government, and to the facilities afforded by existing laws for their prosecution. Each of the Departments of State, Treasury, and War have demands for many millions of dollars upon their files, and they are rapidly accumulating. To these may be added those now pending before Congress, the Court of Claims, and the Southern Claims Commission, making in the aggregate an immense sum. Most of these grow out of the rebellion, and are intended to indemnify persons on both sides for their losses during the war; and not a few of them are fabricated and supported by false testimony. Projects are on foot, it is believed, to induce Congress to provide for new classes of claims, and to revive old ones through the repeal

large an immigration of citizens of a superior class would, without doubt, be of substantial benefit to the country. I invite attention to the suggestion of the Secretary of the Interior in this behalf.

or modification of the statute of limitations, by | wealthy people, desirous of enjoying civil and which they are now barred. I presume these religious liberty; and the acquisition of so schemes, if proposed, will be received with little favor by Congress, and I recommend that persons having claims against the United States, cognizable by any tribunal or department thereof, be required to present them at an early day, and that legislation be directed as far as practicable to the defeat of unfounded and unjust demands upon the Government; and I would suggest, as a means of preventing fraud, that witnesses be called upon to appear in person to testify before those tribunals having said claims before them for adjudication. Probably the largest saving to the national Treasury can be secured by timely legislation on these subjects of any of the economic measures that will be proposed.

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officers, sailors, and marines of the navy, making a total of navy pensioners of 3,200, and a grand total of pensioners of all classes of 238,411, showing a net increase during the last fiscal year of 6,182. During the last year the names of 16.405 pensioners were added to the rolls, and 10,223 names were dropped therefrom for various causes.

There was paid during the last fiscal year for pensions, including the expense of disbursement, $29,185,289 62, being an amount less by $984,050 98 than was expended for the same purpose the preceding year. Although this statement of expenditures would indicate a material reduction in amount compared with the preceding year, it is believed that the changes in the pension laws at the last session of Congress will absorb that amount the current year. At the close of the last fiscal year there were on the pension rolls 99,804 invalid military pensioners and 112,088 The policy inaugurated toward the Indians at widows, orphans, and dependent relatives of dethe beginning of the last administration has ceased soldiers, making a total of that class of been steadily pursued, and, I believe, with bene- 211,892; 18,266 survivors of the war of 1812, ficial results. It will be continued with only and 5.053 widows of soldiers of that war pensuch modifications as time and experience may sioned under the act of Congress of February 14, demonstrate as necessary. 1871, making a total of that class of 23,319; 1,430 invalid navy pensioners, and 1,770 widThe business of the General Land Office ex-ows, orphans, and dependent relatives of deceased hibits a material increase in all its branches during the last fiscal year. During that time there were disposed of, out of the public lands, 13,030,606 acres, being an amount greater by 1,165,631 acres than was disposed of during the preceding year. Of the amount disposed of 1,626,266 acres were sold for cash; 214,940 acres were located with military land warrants; 3,793,612 acres were taken for homesteads; 653, 446 acres were located with agricultural college scrip; 6,083,536 acres were certified by railroads; 76,576 acres were granted to wagon roads; 238,548 acres were approved to States as swamp lands; 138,681 acres were certified for agricultural colleges, common schools, universities, and seminaries; 190,775 acres were approved to States for internal improvements; and 14,222 acres were located with Indian scrip. The cash receipts during the same time were $3,408,515 50, being $190,415 50 in excess of the receipts of the previous year. During the year 30,488,132 acres of public land were surveyed, an increase over the amount surveyed the previous year of 1,037,193 acres, and, added to the area previously surveyed, aggregates 616,554,895 acres which have been surveyed, leaving 1,218,443,505 acres of the public land still unsurveyed.

The increased and steadily increasing facilities for reaching our unoccupied public domain, and for the transportation of surplus products, enlarge the available field for desirable homestead locations, thus stimulating settlement and extending year by year in a gradually increasing ratio the area of occupation and cultivation.

The expressed desire of the representatives of a large colony of citizens of Russia to emigrate to this country, as is understood, with the consent of their Government, if certain concessions can be made to enable them to settle in a compact colony, is of great interest, as going to show the light in which our institutions are regarded by an industrious, intelligent, and

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The ninth census has been completed, the report thereof published and distributed, and the working force of the bureau disbanded. The Secretary of the Interior renews his recommendation for a census to be taken in 1875, to which subject the attention of Congress is invited. The original suggestion in that behalf has met with the general approval of the country, and even if it be not deemed advisable at present to provide for a regular quinquennial census, a census taken in 1875, the report of which could be completed and published before the one hundredth anniversary of our national independence, would be especially interesting and valuable, as showing the progress of the country during the first century of our national existence. It is believed, however, that a regular census every five years would be of substantial benefit to the country, inasmuch as our growth hitherto has been so rapid that the results of the decennial census are necessarily unreliable as a basis of estimates for the latter years of a decennial period.

Under the very efficient management of the Governor and the Board of Public Works of this District the city of Washington is rapidly assuming the appearance of a capital of which the nation may well be proud. From being a most unsightly place three years ago, disagreeable to pass through in summer in consequence of the dust arising from unpaved streets, and almost impassable in the winter from the mud, it is now one of the most sightly cities in the country, and can boast of being the best paved.

The work has been done systematically, the plans, grades, location of sewers, water and gas

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