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and that the State be fully restored to its place in the family of States. Elections were called in Mississippi and Texas, to commence on the 30th of November, 1869, and to last two days in Mississippi and four days in Texas. The elections have taken place, but the result is not known. It is to be hoped that the acts of the legislatures of these States when they meet will be such as to receive your approval and thus close the work of reconstruction.

Among the evils growing out of the rebellion, and not yet referred to, is that of an irredeemable currency. It is an evil which I hope will receive your most earnest attention. It is a duty, and one of the highest duties, of government to secure to the citizen a medium of exchange of fixed, unvarying value. This implies a return to a specie basis, and no substitute for it can be devised. It should be commenced now and reached at the earliest practicable moment consistent with a fair regard to the interests of the debtor class. Immediate resumption, if practicable, would not be desirable. It would compel the debtor class to pay, beyond their contracts, the premium on gold at the date of their purchase, and would bring bankruptcy and ruin to thousands. Fluctuation, however, in the paper value of the measure of all values (gold) is detrimental to the interests of trade. It makes the man of business an involuntary gambler, for, in all sales where future payment is to be made, both parties speculate as to what will be the value of the currency to be paid and received. I earnestly recommend to you, then, such legislation as will insure a gradual return to specie payments and put an immediate stop to fluctuations in the value of currency.

The methods to secure the former of these results are as numerous as are the speculators on political economy. To secure the latter I see but one way, and that is, to authorize the treasury to redeem its own paper, at a fixed price, whenever presented, and to withhold from circulation all currency so redeemed until sold again for gold.

The vast resources of the nation, both developed and undeveloped, ought to make our credit the best on earth. With a less burden of taxation than the citizen has endured for six years past, the entire public debt could be paid in ten years. But it is not desirable that the people should be taxed to pay it in that time. Year by year the ability to pay increases in a rapid ratio. But the burden of interest ought to be reduced as rapidly as can be done without the violation of contract. The public debt is represented in great part by bonds, having from five to twenty and from ten to forty years to run, bearing interest at the rate of six per cent, and five per cent., respectively. It is optional with the Government to pay these bonds at any period after the expiration of the least time mentioned upon their face. The time has already expired when a great part of them may be taken up, and is rapidly approaching when all maybe. It is believed that all which are now due may be replaced by bonds bearing a rate of interest not exceeding four-and-a-half per cent., and as rapidly as the remainder become due that they may be replaced in the same way. To

accomplish this it may be necessary to authorize the interest to be paid at either of three or four of the money-centers of Europe, or by any assistant treasurer of the United States, at the option of the holder of the bond. I suggest this subject for the.consideration of Congress, and also, simultaneously with this, the propriety of redeeming our currency, as before suggested, at its market value at the time the law goes into effect, increasing the rate at which currency shall be bought and sold from day to day or week to week, at the same rate of interest as Government pays upon its bonds.

The subjects of tariff and internal taxation will necessarily receive your attention. The revenues of the country are greater than the requirements, and may with safety be reduced. But, as the funding of the debt in a four or a four-and a-half per cent, loan would reduce annual current expenses largely, thus, after funding, justifying a greater reduction of taxation than would be now expedient, I suggest postponement of this question until the next meeting of Congress.

It may be advisable to modify taxation and tariff in instances where unjust or burdensome discriminations are made by the present laws; but a general revision of the laws regulating this subject I recommend the postponement of for the present. I also suggest the renewal of the tax on incomes, but at a reduced rate, say of three per cent., and this tax to expire in three j7ears.

With the funding of the national debt, as here suggested, I feel safe in saying that taxes and the revenue from imports may be reduced safely from sixty to eighty millions per annum at once, and may be still further reduced from year to year, as the resources of the country are developed.

The report of the Secretary of the Treasury shows the receipts of the Government for the fiscal year ending June 30,1869, to be $370,943,747, and the expenditures, including interest, bounties, &c, to be $321,490,597. The estimates for the ensuing year are more favorable to the Government, and will no doubt show a much larger decrease of the public debt.

The receipts in the Treasury, beyond expenditures, have exceeded the amount necessary to place to the credit of the sinking fund as provided by law. To lock up the surplus in the Treasury and withhold it from circulation would lead to such a contraction of the currency as to cripple trade and seriously affect the prosperity of the country. Under these circumstances the Secretary of the Treasury and myself heartily concurred in the propriety of using all the surplus currency in the Treasury in the purchase of government bonds, thus reducing the interestbearing indebtedness of trie country, and of submitting to Congress the question of the disposition to be made of the bonds so purchased. The bonds now held by the Treasury amount to about seventy-five millions, including those belonging to the sinking fund. I recommend that the whole be placed to the credit of the Finking fund.

Yo^r attention is respectfully invited to the recommendations of the Secretary of the Treasury for the creation of the office of commissioner of customs revenue, for the increase of salaries to certain classes of officials, the substitution of increased national bank circulation to replace to outstanding three per cent, certificates, and most especially to his recommendation for the repeal of laws allowing shares of fines, penalties, forfeitures, &c, to officers of the Government or to informers.

The office of Commissioner of Internal Revenue is one of the most arduous and responsible under the Government. It falls but little, if any, short of a cabinet position in its importance and responsibilities. I would ask for it, therefore, such legislation as in your judgment will place the office upon a footing of dignity commensurate with its importance, and with the character and qualifications of the class of men required to fill it properly.

As the United States is the freest of all nations, so, too, its people sympathize with all peoples struggling for liberty and self-government. But, while so sympathizing, it is due to our honor that we should abstain from enforcing our views upon unwilling nations, and from taking an interested part, without invitation, in the quarrels between different nations or between governments and their subjects. Our course should always be in conformity with strict justice and law, international and local. Such has been the policy of the administration in dealing with these questions. For more than a year a valuable province of Spain, and a near neighbor of ours, in whom all our people cannot but feel a deep interest, has been struggling for independence and freedom. The people and Government of the United States entertain the same warm feelings and sympathies for the people of Cuba, in their pending struggle, that they manifested throughout the previous struggles between Spain and her former colonies in behalf of the latter. But the contest has at no time assumed the conditions which amo«nt to a war in the sense of international law, or which would show the existence of a de facto political organization of the insurgents sufficient to justify a recognition of belligerency.

The principle is maintained, however, that this nation is its own judge when to accord the rights of belligerency, either to a people strug

flmg to free themselves from a government they elieve to be oppressive or to independent nations at war with each other.

The United States have no disposition to interfere with the existing relations of Spain to her colonial possessions on this continent. They believe that in due time Spain and other European powers will find their interest in terminating those relations, and establishing their present dependencies as independent powers— members of the family of nations. These dependencies are no longer regarded as subject to transfer from one European power to another. When the present relation of colonies ceases they are to become independent powers, exercising the right of choice and of self-control in the determination of their future condition and relations with other powers.

The United States, in order to put a stop to bloodshed in Cuba, and in the interest of a neighboring people, proposed their good offices to bring the existing contest to a termination. The offer, not being accepted by Spain on a basis which we

believed could be received by Cuba, was withdrawn. It is hoped that the good offices of the United States may yet prove advantageous for the settlement of this unhappy strife. Meanwhile a number of illegal expeditions against Cuba have been broken up. It has been the endeavor of the administration to execute the neutrality laws in good faith, no matter how unpleasant the task, made so by the sufferings we have endured from lack of like good faith toward us by other nations.

On the 26th of March last the United States schooner Lizzie Major was arrested on the high seas by a Spanish frigate, and two passengers taken from it and carried as prisoners to Cuba. Representations of these facts were made to the Spanish government as soon as official information of them reached Washington. The two passengers were set at liberty, and the Spanish government assured the United States that the captain of the frigate in making the capture had acted without law, that he had Deen reprimanded for the irregularity of his conduct, and that the Spanish authorities in Cuba would not sanction any act that could violate the rights or treat with disrespect the sovereignty of this nation.

The question of the seizure of the brig Mary Lowell at one of the Bahama Islands, by Spanish authorities, is now the subject of correspondence between this Government and those of Spain and Great Britain.

The captain general of Cuba, about May last, issued a proclamation authorizing search to be made of vessels on the high seas. Immediate remonstrance was made against this, whereupon the captain general issued a new proclamation limiting the right of search to vessels of the United States so far as authorized under the treaty of 1795. This proclamation, however, was immediately withdrawn.

I have always felt that the most intimate relations should be cultivated between the republic of the United States and all independent nations on this continent. It may be well worth considering whether new treaties between us and themmay not be profitably entered into, to secure more intimate relations, friendly, commercial, and otherwise.

The subject of an inter-oceanic canal to connect the Atlantic and Pacific oceans, through the Isthmus of Darien, is one in which commerce is greatly interested. Instructions have been given to our minister to the republic of the United States of Colombia to endeavor to obtain authority for a survey by this Government, in order to determine the practicability of such an undertaking, and a charter for the right of way to build, by private enterprise, such a work, it the survey proves it to be practicable.

In order to comply with the agreement of thi United States as to a mixed commission at Lima for the adjustment of claims, it became necessary to send a commissioner and secretary to Lima in August last. No appropriation having been madf by Congress for this purpose, it is now asked that one be made covering the past and future ex penses of the commission.

The good offices of the United States to brinj: about a peace between Spain and the Soutl American republics, with which she is atwai. having been accepted by Spain, Peru, and Chili a congress has heen invited to be held in Washington during the present winter.

A grant has been given to Europeans of an exclusive right of transit over the territory of Nicaragua, to which Costa Rica has given its assent, which, it is alleged, conflicts with vested rights of citizens of the United States. The Department of State has now this subject under consideration.

The minister of Peru having made representations that there was a state of war between Peru and Spain, and that Spain was constructing, in and near New York, thirty gunboats, which might be used by Spain in such a way as to relieve the naval force at Cuba, so as to operate against Peru, orders were given to prevent their departure. No further steps having heen taken by the representative of the Peruvian government to prevent the departure of these vessels, and I not feeling authorized to detain the property of a nation with which we are at peace on a mere executive order, the matter has been referred to the courts to decide.

The conduct of the war between the allies and the republic of Paraguay has made the intercourse with that country so difficult that it has been deemed advisable to withdraw our representative from there.

Toward the close of the last administration a convention was signed at London for the settlement of all outstanding claims between Great Britain and the United States, which failed to receive the advice and consent of the Senate to its ratification. The time and the circumstances attending the negotiation of that treaty were unfavorable to its acceptance by the people of the United States, and its provisions were wholly inadequate for the settlement of the grave wrongs that had been sustained by this Government as well as by its citizens. The injuries resulting to the United States by reason of the course adopted by Great Britain during our late civil war, in the increased rates of insurance, in the diminution of exports and imports, and other obstructions to domestic industry and production, in its effect upon the foreign commerce of the country, in the decrease and transfer to Great Britain of our commercial marine, in the prolongation of the war and the increased cost (both in treasure and in lives) of its suppression, could not be adjusted and satisfied as ordinary commercial claims, which continually arise between commercial nations. And yet the convention treated them simply as such ordinary claims, from which they differ more widely in the gravity of their character than in the magnitude of their amount, great even as is that difference. Not a word was found in the treaty, and not an inference could be drawn from it, to remove the sense of the unfriendliness of the course of Great Britain in our struggle for existence, which had so deeply and universally impressed itself upon the people of this country.

Believing that a convention thus misconceived in itsscppe and inadequate in its provisions would not have produced the hearty, cordial settlement of pending questions, which alone is consistent with the relations which I desire to have firmly established between the United States and Great Britian, I regarded the action of the Senate, in

rejecting the treaty, to have been wisely taken in the interest of peace, and as a necessary step in the direction ot a perfect and cordial friendship between the two countries. A sensitive people, conscious of their power, are more at ease under a great wrong, wholly unatoned, than under the restraint of a settlement which satisfies neither their ideas of justice nor their grave sense of the grievance they have sustained. The rejection of the treaty was followed by a state of public feeling, on both sides, which I thought not favorable to an immediate attempt at renewed negotiations. I accordingly so instructed the minister of the United Sraies to Great Britain, and found that my views in this regard were shared by her majesty's ministers. I hope that the time may soon arrive when the two governments can approach the solution of this momen- < tous question with an appreciation of what is due to the rights, dignity, and honor of each, and with the determination not only to remove the causes of complaint in the past, but to lay the foundation of a broad principle of public law, which will prevent future differences and tend to firm and continued peace and friendship.

This is now the only grave question which the United States has with any foreign nation.

The question of renewing a treaty for reciprocal trade between the United States and the British provinces on this continent has not been favorably considered by the administration. The advantages of such a treaty would be wholly in favor of the British producer. Except, possibly, a few engaged in the trade between the two sections, no citizen of the United States would be benefited by reciprocity. Our internal taxation would prove a protection to the British producer, almost equal to the protection which our manufacturers now. receive from the tariff. Some arrangement however, for the regulation of commercial intercourse between the United States and the Dominion of Canada may be desirable.

The commission for adjusting the claims of the "Hudson's Bay and Puget Sound Agricultural Company" upon the United States nas terminated its labors. The award of $650,000 has been made, and all rights and titles of the company on the territory of the United States have been extinguished. Deeds for the property of the company have been delivered. An appropriation by Congress to meet this sum is asked.

The commissioners for determining the northwestern land boundary between the United States and the British possessions, under the treaty of 1856, have completed their labors, and the commission has been dissolved.

In conformity with the recommendation of Congress, a proposition was early made to the British government to abolish the njjxed courts created under the treaty of April 7,1862, for the suppression of the slave trade. The subject is still under negotiation.

It having come to my knowledge that a corporate company, organized under British laws, proposed to land upon the shores of the United States and to operate there a submarine cable, under a concession from his majesty the emperor of the French, of an exclusive right, for twenty years, of telegraphic communication between the shores of France and the United States,

with the very objectionable feature of subjecting ! gers, to which no response had been given. It all messages conveyed thereby to the scrutiny ; was concluded that, to be effectual, all the mariand control of the French government, I caused time powers engaged in the trade should join in the French and British legations at Washington such a measure. Invitations have been extended to be made acquainted with the probable policy ! to the cabinets of London, Paris, Florence, Berof Congress on this subject, as foreshadowed by j lin, Brussels, The Hague, Copenhagen, and Stockthe bill which passed trie Senate in March last. ! holm, to empower their representatives atWashThis drew from the representatives of the com- I ington to simultaneously enter into negotiations, pany an agreement to accept, as the basis of and to conclude with the United States conventheir operations, the provisions of that bill, or of tions identical in form, making uniform regulasuch other enactment on the subject as might be tions as to the construction of the parts of vessels passed during the approaching session of Con- ' to be devoted to the use of emigrant passengers, gress; also, to use their influence to secure from ' as to the quality and quantity of food, as to the the French government a modification of their j medical treatment of the sick, and as to the rules concession, so as to permit the landing upon . to be observed during the voyage, in order to French soil of any cable belonging to any com- secure ventilation, to promote health, to prevent pany incorporated by the authority of the United intrusion, and to protect the females, and providStates or of any State in the Union, and, on ing for the establishment of tribunals in thesevtheir part, not to oppose the establishment of . eral countries for enforcing such regulations by any such cable. In consideration of this agree- j summary process.

ment, I directed the withdrawal of all opposition | Your attention is respectfully called to the law by the United States authorities to the landing regulating the tariff on Russian hemp, and to the of the cable, and to the working of it, until the question whether, to fix the charges on Russian meeting of Congress. I regret to say that there hemp higher than they are fixed upon Manilla, is has been no modification made in the company's : not a violation of our treaty with Russia, placing concession, nor, so far as I can learn, have they her products upon the same footing with those of attempted to secure one. Their concession ex-, j the most favored nations.

eludes the capital and the citizens of the United! Our manufactures are increasing with wonderStates from competition upon the shores of France, ful rapidity under the encouragement which they I recommend legislation to protect the rights of now receive. With the improvements in macitizens of the Lnited States, as well as the dig- ; chinery already effected and still increasing, nity and sovereignty of the nation, against such 1 causing machinery to take the place of skilled an assumption I shall also endeavor to secure labor to a large extent, our imports of many artiby negotiation an abandonment of the princi- cles must fall off largely within a very few years, pie of monopolies in ocean telegraphic cables. ; Fortunately, too, manufactures are not confined Copies of this correspondence are herewith fur- to a few localities, as formerly, and it is to be nished. j hoped will become more and more diffused, mak

The unsettled political condition of other coun- ing the interest in them equal in all sections, tries, less fortunate than our own, sometimes in- They give employment and support to hundreds duces their citizens to come to the United States of thousands of people at home, and retain with for the sole purpose of becoming naturalized, us the means which otherwise' would be shipped Having secured this, they return to their native abroad. The extension of rail»oads in Europe country and reside there, without disclosing their and the East is bringing into competition with change of allegiance. They accept official posi- our agricultural products like products of other tions of trustor honor, which can only be neld countries. Self-interest, if not self-preservation, by citizens of their native land; they journey therefore, dictates caution against disturbing any under passports describing them as such citizens; industrial interest of the country. It teaches and it is only when civil discord, after perhaps us also the necessity of looking to other markets years of quiet, threatens their persons or their for the sale of our surplus. Our neighbors south property, or when their native State drafts them of us, and China and Japan, should receive our into its military service, that the fact of their special attention. It will be the endeavor of the change of allegiance is made known. They reside administration to cultivate such relations with permanently away from the United States, they all these nations as to entitle us to their conficontribute nothing to its revenues, they avoid the dence, and make it their interest as well a.< ours duties of its citizenship, and they only make to establish better commercial relations, themselves known by a claim of protection. I Through the agency of a more enlightened have directed the diplomatic and consular officers policy than that heretofore pursued towaruChina, of the United States to scrutinize carefully all largely due to the sagacity and efforts of one of such claims for protection. The citizen of the ourowndistinguishedcitizens.theworldis about United States, whether native or adopted, who , to commence largely-increased relations with discharges his duty to his country, is entitled to that populous and hitherto exclusive nation. As its complete protection. While I have a voice in the United States have been the initiators in this the direction of affairs, I shall not consent toim- new policy, so they should be the most earnest peril this sacred right by conferring it upon ficti- in showing their good faith in making it a suctious or fraudulent claimants. j cess. In this connection I advise such legislation

On the accession of the present administration as will forever preclude the enslavement of the it was found that the minister for North Germany | Chinese upon our soil under the name of coolies, had made propositions for the negotiation of a 1 and also prevent American vessels from engagconvention for the protection of emigrant passen- | ing in the transportation of coolies to any country tolerating the system. I also recommend the frontiers and in Indian countries, I do not that the mission to China be raised to one of the hold either legislation, or the conduct of the £rst class. whites who come most in contact with the In

On my assuming the responsible duties of Chief dian, blameless for these hostilities. The past, Magistrate of the United States, it was with the however, cannot be undone, and the question conviction that three things were essential to its must be met as we now find it. I have attempted peace, prosperity, and fullest development. First a new policy toward these wards of the nation, among these is strict integrity in fulfilling all (they cannot be regarded in any other light than our obligations. Second, to secure protection to as wards,) with fair results so far as tried, and the persou and property of the citizen of the which I hope will be attended ultimately with United States in each and every portion of our great success. The Society of Friends is well eommon country, wherever he may choose to known as having succeeded in living in peace move, without reference to original nationality, j with the Indians, in the early settlement of religion, color, or politics, demanding of him only Pennsylvania, while their white neighbors of obedience to the laws and proper respect for the other sects, in other sections, were constantly rights of others. Third, union of all the States— embroiled. They are also known for their oppowith equal rights—indestructible by any consti- ' sition to all strife, violence, and war, and are tutional means. | generally noted for their strict integrity and fair

To secure the first of these, Congress has taken dealings. TheSe considerations induced me to two essential steps: first, in declaring, by joint give the management of a few reservations of resolution, that the public debt shall be paid, Indians to them, and to throw the burden of the principal and interest, in coin; and, second, by selection of agents upon the Society itself. The providing the means for paying. Providing the result has proven most satisfactory. It will be means, however, could not secure the object de- found more fully set forth in the report of the sired, without a proper administration of the Commissioner of Indian Affairs. For superinlaws for the collection of the revenues, and an tendents and Indian agents not on the reservaeconomical disbursement of them. To this sub- tions officers of the army were selected. The ject the administration has most earnestly ad- reasons for this are numerous. Where Indian pressed itself, with results, I hope, satisfactory agents are sent, there, or near there, troops must to the country. There has been no hesitation in be sent also. The agent and the commander of changing officials in order to secure an efficient troops are independent of each other, and are execution of the laws, sometimes, too, when, in a subject to orders from different departments of mere party view, undesirable political results the Government. The army officer holds a posiwere likely to follow; nor any hesitation in sus- ' tion for life; the agent one at the will of the taining efficient officials, against remonstrances President. The former is personally interested wholly political. - in living in harmony with the Indian, and in

It may be well to mention here the embarrass- establishing a permanent peace, to the end that ment possible to arise from leaving on the statute- some portion of his life may be spent within the -books the so-called "tenure-of-office acts," and limits of civilized society. The latter has no to earnestly recommend their total repeal. It such personal interest. Another reason is an could not have been the intention of the framers 'economic one; and still another, the bold which of the Constitution, when providing that appoint- the Government has upon a life officer to secure ments made by the President should receive the a faithful discharge of duties in carrying out a consent of the Senate, that the latter should have given policy.

the power to retain in office persons placed there, I The building of railroads, and the access by federal appointment, against the will of the thereby given to all the agricultural and mineral President. The law is inconsistent with a faith- regions of the country, is rapidly bringing civilful and efficient administration of the govern- ized settlements into contact with all the tribes ment. What faith can ap executive put in offi- of Indians. No matter what ought to be the cials forced upon him, and those, too, whom he relations between such Settlements and the abobas suspended for reason? How will such offi- rigines, the fact is they do not harmonize well, cials be likely to serve an administration which and one or the other has to give way in the end. they know does not trust them? A system which looks to the extinction of a race

For the second requisite to our growth and is too horrible for a nation to adopt, without prosperity, time and a firm but humane adminis- entailing upon itself the wrath of all Christentration of existing laws (amended from time to dom, and engendering in the citizen a disregard time as they may prove ineffective, or prove harsh for human life and the rights of others dangerous and unnecessary) are probably all that are re- to society. I see no substitute for such a system, quired. • , except in placing all the Indians on large reser

The third cannot be attained by special legis- vations, as rapidly as it can be done, and giving lation, but must be regarded as fixed by the them absolute protection there. As soon as they Constitution itself, and gradually acquiesced in are fitted for it, they should be induced to take by force of public opinion. i their lands in severalty, and to set up territorial

From the foundation of the Government to governments for their own protection. For full the present, the management of the original in- details on this subject I call your special attenhabitants of this continent, the Indians, has been ! tion to the reports of the Secretary of the Intea subject of embarrassment and expense, and has ! rior and the Commissioner of Indian Affairs, been attended with continuous robberies, mur- j The report of the Secretary of War shows the ders, and wars. From my own experience upon I expenditures of the War Department, for the

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