operation. When the inability of Spain to deal successfully with the insurrection has become manifest, and it is demonstrated that her sovereignty is extinct in Cuba for all purposes of its rightful existence, and when a hopeless struggle for its reestablishment has degenerated into a strife, which means nothing more than the useless sacrifice of human life and the utter destruction of the very subject-matter of the conflict, a situation will be presented in which our obligations to the sovereignty of Spain will be superseded by higher obligations, which we can hardly hesitate to recognize and discharge. Deferring the choice of ways and methods until the time for action arrives, we should make them depend upon the precise conditions then existing, and they should not be determined upon without giving careful heed to every consideration involving our honor and interest, or the international duty we owe to Spain. Until we face the contingencies suggested, or the situation is by other incidents imperatively changed, we should continue in the line of conduct heretofore pursued, thus in all circumstances exhibiting our obedience to the requirements of public law and our regard for the duty enjoined upon us by the position we occupy in the family of nations. A contemplation of emergencies that may arise should plainly lead us to avoid their creation, either through a careless disregard of present duty or even an undue stimulation and ill-timed expression of feeling. But I have deemed it not amiss to remind the Congress that a time may arrive when a correct policy and care for our interests-as well as a regard for the interests of other nations and their citizens, joined by considerations of humanity and a desire to see a rich and fertile country, intimately related to us, saved from complete devastation-will constrain our Government to such action as will subserve the interests thus involved and at the same time promise to Cuba and its inhabitants an opportunity to enjoy the blessings of peace.

The Venezuelan boundary question has ceased to be a matter of difference between Great Britain and the United States, their respective governments having agreed upon the substantial provisions of a treaty between Great Britain and Venezuela submitting the whole controversy to arbitration. The provisions of the treaty are so eminently just and fair that the assent of Venezuela thereto may confidently be anticipated.

Negotiations for a treaty of general arbitration for all differences between Great Britain and the United States are far advanced, and promise to reach a successful consummation at an early

date.

During the past year 35 appointments have been made in the consular service, 27 of which were made to fill vacancies caused by death or resignation or to supply newly created posts, 2 to succeed incumbents removed for cause, 2 for the purpose of displacing alien consular officials by American citi zens, and 4 merely changing the official title of incumbent from commercial agent to consul. Twelve of these appointments were transfers or promotions from other positions under the Department of State; 4 of these appointed had rendered previous service under the department: 8 were made of persons who passed a satisfactory examination.

The scheme of examining applicants for certain consular positions to test their competency and fitness, adopted under an executive order issued on Sept. 20, 1895, has fully demonstrated the usefulness of this innovation. In connection with this plan of examination, promotions and transfers of deserving incumbents have been quite extensively made, with excellent results.

Seven were appointed to places not included in the order of Sept. 20, 1895, and 4 appointments, as above stated, involved no change of incumbency. The inspection of consular offices, provided for by an appropriation for that purpose at the last session of the Congress, has been productive of such wholesome effects that I hope this important work will in the future be continued. I know of nothing that can be done with the same slight expense so improving to the service. I desire to repeat the recommendation, contained in my last annual message, in favor of providing at public expense official residences for our ambassadors and ministers at foreign capitals. The reasons supporting this recommendation are strongly stated in the report of the Secretary of State, and the subject seems of such importance that I hope it may receive the early attention of the Congress.

We have during the last year labored faithfully and against unfavorable conditions to secure better preservation of seal life in the Bering Sea. Both the United States and Great Britain have lately dispatched commissioners to these waters to study the habits and condition of the seal herd and the causes of their rapid decrease. Upon the reports of these commissioners, soon to be submitted, and with the exercise of patience and good sense on the part of all interested parties, it is earnestly hoped that hearty co-operation may be secured for the protection against threatened extinction of seal life in the northern Pacific and Bering Sea.

The Secretary of the Treasury reports that during the fiscal year ended June 30, 1896, the receipts of the Government from all sources amounted to $409,475,408.78. During the same period its expenditures were $434,678,654.48, the excess of expenditures over receipts thus amounting to $25,203,245.70. The ordinary expenditures during the year were $4,015,852.21 less than during the preceding fiscal year. Of the receipts mentioned there was derived from customs the sum of $160,021,751.67, and from internal revenue $146,830,615.66. The receipts from customs show an increase of $7,863,134.22 over those from the same source for the fiscal year ended June 30, 1895, and the receipts from internal revenue an increase of $3,584,537.91.

The value of our imported dutiable merchandise during the last fiscal year was $369.757,470, and the value of free goods imported $409,967,470, being an increase of $6,523,675 in the value of dutiable goods, and $41,231,034 in the value of free goods over the preceding year. Our exports of merchandise, foreign and domestic, amounted in value to $882,606,938, being an increase over the preceding year of $75,068,773. The average ad valorem duty paid on dutiable goods imported during the year was 39-94 per cent., and on free and dutiable goods taken together 20-55 per cent.

The cost of collecting our internal revenue was 2.78 per cent., as against 2-81 per cent. for the fiscal year ended June 30, 1895. The total production of distilled spirits, exclusive of fruit brandies, was 86,588,703 taxable gallons, being an increase of 6,639,108 gallons over the preceding year. There was also an increase of 1,443,676 gallons of spirits produced from fruit, as compared with the preceding year. The number of barrels of beer produced was 35,859.250, as against 33,589,784 produced in the preceding fiscal year, being an increase of 2,269,466 barrels.

The total amount of gold exported during the last fiscal year was $112,409,947, and of silver $60.541,670, being an increase of $45,941,466 of gold and $13,246,384 of silver over the exportations of the preceding fiscal year. The imports of gold were $33,525,065, and of silver $28,777,186, being

$2,859,695 less of gold and $8,566,007 more of silver than during the preceding year.

The total stock of metallic money in the United States at the close of the last fiscal year ended on the 30th day of June, 1896, was $1,228,326,035, of which $599,597,964 was in gold and $628,728,071 in silver.

On the 1st day of November, 1896, the total stock of money of all kinds in the country was $2,285,410,590, and the amount in circulation, not including that in the Treasury holdings, was $1,627,055,641, being $22.63 per capita upon an estimated population of 71,902,000.

The production of the precious metals in the United States during the calendar year 1895 is estimated to have been 2,254,760 fine ounces of gold, of the value of $46,610,000, and 55,727,000 fine ounces of silver, of the commercial value of $36,445,000 and the coinage value of $72,051,000. The estimated production of these metals throughout the world during the same period was 9,688,821 fine ounces of gold, amounting to $200,285,700 in value, and 169,189,249 fine ounces of silver, of the commercial value of $110,654,000 and of the coinage value of $218,738,100 according to our ratio.

The coinage of these metals in the various countries of the world during the same calendar year amounted to $232,701,438 in gold and $121,996,219

in silver.

The total coinage at the mints of the United States during the fiscal year ended June 30, 1896, amounted to $71,188,468.52, of which $58,878,490 was in gold coins and $12,309,978.52 in standard silver dollars, subsidiary coins, and minor coins.

The number of national banks organized from the time the law authorizing their creation was passed up to Oct. 31, 1896, was 5,051, and of this number 3,769 were at the date last mentioned in active operation, having authorized capital stock of $650,014,895, held by 288,902 shareholders, and circulating notes amounting to $211,412,620.

The total outstanding circulating notes of all national banks on the 31st day of October, 1896, amounted to $234,553,807, including unredeemed but fully secured notes of banks insolvent and in process of liquidation. The increase in nationalbank circulation during the year ending on that day was $21,099,429. On Oct. 6, 1896, when the condition of national banks was last reported, the total resources of the 3,679 active institutions was $3.263,685,313.83, which included $1,893,268,839.31 in loans and discounts and $362,165,733.85 in money of all kinds on hand. Of their liabilities $1,597,891,058.73 was due to individual depositors, and $209,944,019 consisted of outstanding circulating

notes.

There were organized during the year preceding the date last mentioned 28 national banks, located in 15 States, of which 12 were organized in the Eastern States with a capital of $1,180,000, 6 in the Western States with a capital of $875,000, and 10 in the Southern States with a capital of $1,190,000. During the year, however, 37 banks voluntarily abandoned their franchises under the national law, and in the case of 27 others it was found necessary to appoint receivers. Therefore, as compared with the year preceding, there was a decrease of 36 in the number of active banks.

The number of existing banks organized under State laws is 5,708.

The number of immigrants arriving in the United States during the fiscal year was 343,267, of whom 340,468 were permitted to land, and 2,799 were debarred, on various grounds prescribed by law, and returned to the countries whence they came at the expense of the steamship companies by which they were brought in. The increase in immigration

over the preceding year amounted to 84,731. It is reported that with some exceptions the immigrants of the past year were of a hardy laboring class, accustomed and able to earn a support for themselves, and it is estimated that the money brought with them amounted to at least $5,000,000, though it was probably much in excess of that sum, since only those having less than $30 are required to disclose the exact amount, and it is known that many brought considerable sums of money to buy land and build homes. Including all the immigrants arriving who were over fourteen years of age, 28-63 per cent. were illiterate, as against 2037 per cent. of those of that age arriving during the preceding fiscal year. The number of immigrants over fourteen years old, the countries from which they came, and the percentage of illiterates among them, were as follow: Italy, 57,515, with 54:59 per cent.; Ireland, 37,496, with 7 per cent.; Russia, 35,188, with 4114 per cent.; Austria-Hungary and provinces, 57,053, with 38.92 per cent.; Germany, 25,334, with 2.96 per cent.; Sweden, 18,821, with 1.16 per cent.; while from Portugal there came 2,067, of whom 77.69 per cent. were illiterate. There arrived from Japan during the year only 1,110 immigrants, and it is the opinion of the immigration authorities that the apprehension heretofore existing to some extent of a large immigration from Japan to the United States is without any substantial foundation.

From the Life-Saving Service it is reported that the number of disasters to documented vessels within the limits of its operations during the year was 437. These vessels had on board 4,608 persons, of whom 4,595 were saved and 13 lost. The value of such vessels is estimated at $8.880,140, and of their cargoes $3,846,380, making the total value of property imperiled $12,726,520. Of this amount $11,292,707 was saved and $1,432,750 was lost. Sixtyseven of the vessels were totally wrecked. There were besides 243 casualties to small undocumented craft, on board of which there were 594 persons, of whom 587 were saved and 7 were lost. The value of the property involved in these latter casualties is estimated at $119,265, of which $114,915 was saved and $4,350 was lost. The life-saving crews during the year also rescued or assisted numerous other vessels and warned many from danger by signals, both by day and night. The number of disasters during the year exceeded that of any previous year in the history of the service, but the saving of both life and property was greater than ever before in proportion to the value of the property involved and to the number of persons imperiled.

The operations of the Marine-Hospital Service, the Revenue-Cutter Service, the Steamboat-Inspection Service, the Lighthouse Service, the Bureau of Navigation, and other branches of public work attached to the Treasury Department, together with various recommendations concerning their support and improvement, are fully stated in the report of the Secretary of the Treasury, to which the attention of the Congress is especially invited.

The report of the Secretary of War exhibits satisfactory conditions in the several branches of the public service intrusted to his charge.

The limit of our military force, as fixed by law, is constantly and readily maintained. The present discipline and morale of our army are excellent, and marked progress and efficiency are apparent throughout its entire organization.

With the exception of delicate duties in the suppression of slight Indian disturbances along our southwestern boundary, in which the Mexican troops co-operated, and the compulsory but peaceful return, with the consent of Great Britain, of a band of Cree Indians from Montana to the British posses

sions, no active operations have been required of the army during the year past.

Changes in methods of administration, the abandonment of unnecessary posts and consequent concentration of troops, and the exercise of care and vigilance by the various officers charged with the responsibility, in the expenditure of the appropriations, have resulted in reducing to a minimum the cost of maintenance of our military establishment. During the past year the work of constructing permanent infantry and cavalry posts has been continued at the places heretofore designated. The Secretary of War repeats his recommendation that appropriations for barracks and quarters should more strictly conform to the needs of the service as judged by the department rather than respond to the wishes and importunities of localities. It is imperative that much of the money provided for such construction should now be allotted to the erection of necessary quarters for the garrisons assigned to the coast defenses, where many men will be needed to properly care for and operate modern guns. It is essential, too, that early provision be made to supply the necessary force of artillery to meet the demands of this service.

The entire army has now been equipped with the new magazine arms, and wise policy demands that all available public and private resources should be so employed as to provide within a reasonable time a sufficient number to supply the state militia with these modern weapons and provide an ample reserve for any emergency.

The organized militia numbers 112.879 men. The appropriations for its support by the several States approximate $2,800,000 annually, and $400,000 is contributed by the General Government. Investigation shows these troops to be usually well drilled and inspired with much military interest, but in many instances they are so deficient in proper arms and equipment that a sudden call to active duty would find them inadequately prepared for field service. I therefore recommend that prompt measures be taken to remedy this condition and that every encouragement be given to this deserving body of unpaid and voluntary citizen soldiers upon whose assistance we must largely rely in time of trouble.

During the past year rapid progress has been made toward the completion of the scheme adopted for the erection and armament of fortifications along our seacoast, while equal progress has been made in improving the material for submarine defense in connection with these works.

It is peculiarly gratifying at this time to note the great advance that has been made in this important undertaking since the date of my annual message to the Fifty-third Congress at the opening of its second session in December, 1893. At that time I informed the Congress of the approaching completion of 9 12-inch, 20 10-inch, and 30 40-inch high steel guns and 75 12-inch rifled mortars. This total then seemed insignificant when compared with the great work remaining to be done. Yet it was none the less a source of satisfaction to every citizen when he reflected that it represented the first installment of the new ordnance of American design and American manufacture, and demonstrated our ability to supply from our own resources guns of unexcelled power and accuracy. At that date, however, there were practically no carriages upon which to mount these guns, and only 31 emplacements for guns and 64 for mortars. Nor were all these emplacements in condition to receive their armament. Only one high-power gun was at that time in position for the defense of the entire coast.

Since that time the number of guns actually completed has been increased to a total of 21 12-inch,

56 10-inch, 61 8-inch high-power breech-loading steel guns, 10 rapid-fire guns, and 80 12-inch rifled mortars. In addition there are in process of construction 1 16-inch type gun, 15 12-inch, 56 10-inch, 27 8-inch high-power guns, and 66 12-inch rifled mortars; in all, 428 guns and mortars.

During the same year immediately preceding the message referred to the first modern gun carriage had been completed and eleven more were in process of construction. All but one were of the nondisappearing type. These, however, were not such as to secure necessary cover for the artillery gunners against the intense fire of modern machine rapid-fire and high-power guns.

The inventive genius of ordnance and civilian experts has been taxed in designing carriages that would obviate this fault, resulting, it is believed, in the solution of this difficult problem. Since 1893 the number of gun carriages constructed or building has been raised to a total of 129, of which 90 are on the disappearing principle, and the number of mortar carriages to 152, while the 95 emplacements which were provided for prior to that time have been increased to 280 built and building. This improved situation is largely due to the recent generous response of Congress to the recommendations of the War Department. Thus we shall soon have complete about one fifth of the comprehensive system, the first step in which was noted in my message to the Congress of Dec. 4, 1893.

When it is understood that a masonry emplacement not only furnishes a platform for the heavy modern high-power gun, but also in every particular serves the purpose and takes the place of the fort of former days, the importance of the work accomplished is better comprehended.

In the hope that the work will be prosecuted with no less vigor in the future, the Secretary of War has submitted an estimate by which, if allowed, there will be provided and either built or building by the end of the next fiscal year such additional guns, mortars, gun carriages and emplacements, as will represent not far from one third of the total work to be done under the plan adopted for our coast defenses, thus affording a prospect that the entire work will be substantially completed within six years. In less time than that, however, we shall have attained a marked degree of security. The experience and results of the past year demonstrate that with a continuation of present careful methods the cost of the remaining work will be much less than the original estimate.

We should always keep in mind that of all forms of military preparation, coast defense alone is essentially pacific in its nature. While it gives the sense of security due to a consciousness of strength, it is neither the purpose nor the effect of such permanent fortification to involve us in foreign complications, but rather to guarantee us against them. They are not temptation to war, but security against it. Thus they are thoroughly in accord with all the traditions of our national diplomacy.

The Attorney-General presents a detailed and interesting statement of the work done under his supervision during the last fiscal year. The ownership and management by the Government of penitentiaries for the confinement of those convicted in United States courts for violations of Federal laws, which for many years has been a subject of executive recommendation, has at last to a slight extent been realized by the utilization of the abandoned military prison at Fort Leavenworth as a United States penitentiary.

This is certainly a movement in the right direction; but it ought to be at once supplemented by the rebuilding or extensive enlargement of this improvised prison, and the construction of at least one

interpretation of a loose statute, has been gradually given second-class rates, thus absorbing all profitable returns derived from first-class matter, which pays three or four times more than its cost, and producing a large annual loss, to be paid by general taxation. If such second-class matter paid merely the cost of its handling our deficit would disappear and a surplus result which might be used to give the people still better mail facilities or cheaper rates of letter postage. I recommend that legislation be at once enacted to correct these abuses and introduce better business ideas in the regulation of our postal

rates.

Experience and observation have demonstrated that certain improvements in the organization of the Post Office Department must be secured before we can gain the full benefit of the immense sums expended in its administration. This involves the following reforms, which I earnestly recommend: There should be a small addition to the existing inspector service, to be employed in the supervision of the carrier force, which now numbers 13,000 men and performs its service practically without the surveillance exercised over all other branches of the postal or public service. Of course such a lack of supervision and freedom from wholesome disciplinary restraints must inevitably lead to imperfect service. There should also be appointed a few inspectors who could assist the central office in necessary investigation concerning matters of postoffice leases, post-office sites, allowances for rent, fuel, and lights, and in organizing and securing the best results from the work of the 14.000 clerks now employed in first- and second-class offices.

I am convinced that the small expense attending the inauguration of these reforms would actually be a profitable investment.

I especially recommend such a recasting of the appropriations by Congress for the Post Office Department as will permit the Postmaster-General to proceed with the work of consolidating post offices. This work has already been entered upon sufficiently to fully demonstrate, by experiment and experience, that such consolidation is productive of better service, larger revenues, and less expenditures, to say nothing of the further advantage of gradually withdrawing post offices from the spoils

system.

The Universal Postal Union, which now embraces all the civilized world, and whose delegates will represent 1,000,000,000 people, will hold its fifth congress in the city of Washington in May, 1897. The United States may be said to have taken the initiative which led to the first meeting of this congress at Bern in 1874, and the formation of the Universal Postal Union, which brings the postal service of all countries to every man's neighborhood, and has wrought marvels in cheapening postal rates and securing absolutely safe mail communication throughout the world. Previous congresses have met in Bern, Paris, Lisbon, and Vienna, and the respective countries in which they have assembled have made generous provision for their accommodation and for the reception and entertainment of the delegates.

In view of the importance of this assemblage and of its deliberations, and of the honors and hospitalities accorded to our representatives by other countries on similar occasions, I earnestly hope that such an appropriation will be made for the expenses necessarily attendant upon the coming meeting in our capital city as will be worthy of our national hospitality and indicative of our appreciation of the event.

The work of the Navy Department and its present condition are fully exhibited in the report of the Secretary.

The construction of vessels for our new navy has been energetically prosecuted by the present administration upon the general lines previously adopted, the department having seen no necessity for radical changes in prior methods under which the work was found to be progressing in a manner highly satisfactory. It has been decided, however, to provide in every shipbuilding contract that the builder should pay all trial expenses, and it has also been determined to pay no speed premiums in future contracts. The premiums recently earned and some yet to be decided are features of the contracts made before this conclusion was reached.

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On March 4, 1893, there were in commission but 2 armored vessels, the double-turreted monitors 'Miantonomoh and Monterey." Since that date, of vessels theretofore authorized, there have been placed in their first commission 3 first-class and 2 second-class battle ships, 2 armored cruisers, 1 harbor-defense ram, and 5 double-turreted monitors, including_the Maine" and the "Puritan," just completed. Eight new unarmored cruisers and 2 new gunboats have also been commissioned. The "Iowa," another battle ship, will be completed about March 1, and at least 4 more gunboats will be ready for sea in the early spring.

It is gratifying to state that our ships and their outfits are believed to be equal to the best that can be manufactured elsewhere, and that such notable reductions have been made in their cost as to justify the statement that quite a number of vessels are now being constructed at rates as low as those that prevail in European shipyards.

Our manufacturing facilities are at this time ample for all possible naval contingencies. Three of our Government navy yards, those at Mare Island, Cal., Norfolk, Va., and Brooklyn, N. Y., are equipped for shipbuilding, our ordnance plant in Washington is equal to any in the world, and at the torpedo station we are successfully making the highest grades of smokeless powder. Three firstclass private shipyards, at Newport News, Philadelphia, and San Francisco, are building battle ships; 11 contractors, situated in the States of Maine, Rhode Island, Pennsylvania, New Jersey, Maryland, Virginia, and the State of Washington, are constructing gunboats or torpedo boats; 2 plants are manufacturing large quantities of first-class armor; and American factories are producing automobile torpedoes, powder, projectiles, rapid-fire guns, and everything else necessary for the complete outfit of naval vessels.

There have been authorized by Congress since March, 1893, 5 battle ships, 6 light-draught gunboats, 16 torpedo boats, and 1 submarine torpedo boat. Contracts for the building of all of them have been let. The Secretary expresses the opinion that we have for the present a sufficient supply of cruisers and gunboats, and that hereafter the construction of battle ships and torpedo boats will supply our needs.

Much attention has been given to the methods of carrying on departmental business. Important modifications in the regulations have been made, tending to unify the control of shipbuilding, as far as may be, under the Bureau of Construction and Repair, and also to improve the mode of purchasing supplies for the navy by the Bureau of Supplies and Accounts. The establishment, under recent acts of Congress, of a supply fund, with which to purchase these supplies in large quantities and other modifications of methods have tended materially to their cheapening and better quality.

The war college has developed into an institution which it is believed will be of great value to the navy in teaching the science of war as well as in stimulating professional zeal in the navy; and it