Part 3

In the month of May a like notice was given respecting the redemption or continuance of the $439,841,350 of 5 per cent bonds then outstanding, and of these $401,504,900 were continued at 3-1/3 per cent per annum and $38,336,450 redeemed.

The 6 per cent bonds of the loan of February 8, 1861, and of the Oregon war debt, amounting together to $14,125,800, having matured during the year, the Secretary of the Treasury gave notice of his intention to redeem the same, and such as have been presented have been paid from the surplus revenues. There have also been redeemed at par $16,179,100 of the 3-1/2 per cent "continued" bonds, making a total of bonds redeemed or which have ceased to bear interest during the year of $123,969,650.

The reduction of the annual interest on the public debt through these transactions is as follows:

By reduction of interest to 3-1/2 per cent. $10,473,952.25 By redemption of bonds 6,352,340.00 _____________ Total 16,826,292.25

The 3-1/2 per cent bonds, being payable at the pleasure of the Government, are available for the investment of surplus revenues without the payment of premiums.

Unless these bonds can be funded at a much lower rate of interest than they now bear, I agree with the Secretary of the Treasury that no legislation respecting them is desirable.

It is a matter for congratulation that the business of the country has been so prosperous during the past year as to yield by taxation a large surplus of income to the Government. If the revenue laws remain unchanged, this surplus must year by year increase, on account of the reduction of the public debt and its burden of interest and because of the rapid increase of our population. In 1860, just prior to the institution of our internal-revenue system, our population but slightly exceeded 30,000,000; by the census of 1880 it is now found to exceed 50,000,000. It is estimated that even if the annual receipts and expenditures should continue as at present the entire debt could be paid in ten years.

In view, however, of the heavy load of taxation which our people have already borne, we may well consider whether it is not the part of wisdom to reduce the revenues, even if we delay a little the payment of the debt.

It seems to me that the time has arrived when the people may justly demand some relief from their present onerous burden, and that by due economy in the various branches of the public service this may readily be afforded.

I therefore concur with the Secretary in recommending the abolition of all internal-revenue taxes except those upon tobacco in its various forms and upon distilled spirits and fermented liquors, and except also the special tax upon the manufacturers of and dealers in such articles. The retention of the latter tax is desirable as affording the officers of the Government a proper supervision of these articles for the prevention of fraud. I agree with the Secretary of the Treasury that the law imposing a stamp tax upon matches, proprietary articles, playing cards, checks, and drafts may with propriety be repealed, and the law also by which banks and bankers are assessed upon their capital and deposits. There seems to be a general sentiment in favor of this course.

In the present condition of our revenues the tax upon deposits is especially unjust. It was never imposed in this country until it was demanded by the necessities of war, and was never exacted, I believe, in any other country even in its greatest exigencies. Banks are required to secure their circulation by pledging with the Treasurer of the United States bonds of the General Government. The interest upon these bonds, which at the time when the tax was imposed was 6 per cent, is now in most instances 3-1/2 per cent. Besides, the entire circulation was originally limited by law and no increase was allowable. When the existing banks had practically a monopoly of the business, there was force in the suggestion that for the franchise to the favored grantees the Government might very properly exact a tax on circulation; but for years the system has been free and the amount of circulation regulated by the public demand.

The retention of this tax has been suggested as a means of reimbursing the Government for the expense of printing and furnishing the circulating notes. If the tax should be repealed, it would certainly seem proper to require the national banks to pay the amount of such expense to the Comptroller of the Currency.

It is perhaps doubtful whether the immediate reduction of the rate of taxation upon liquors and tobacco is advisable, especially in view of the drain upon the Treasury which must attend the payment of arrears of pensions. A comparison, however, of the amount of taxes collected under the varying rates of taxation which have at different times prevailed suggests the intimation that some reduction may soon be made without material diminution of the revenue.

The tariff laws also need revision; but, that a due regard may be paid to the conflicting interests of our citizens, important changes should be made with caution. If a careful revision can not be made at this session, a commission such as was lately approved by the Senate and is now recommended by the Secretary of the Treasury would doubtless lighten the labors of Congress whenever this subject shall be brought to its consideration.

The accompanying report of the Secretary of War will make known to you the operations of that Department for the past year.

He suggests measures for promoting the efficiency of the Army without adding to the number of its officers, and recommends the legislation necessary to increase the number of enlisted men to 30,000, the maximum allowed by law.

This he deems necessary to maintain quietude on our ever-shifting frontier; to preserve peace and suppress disorder and marauding in new settlements; to protect settlers and their property against Indians, and Indians against the encroachments of intruders; and to enable peaceable immigrants to establish homes in the most remote parts of our country.

The Army is now necessarily scattered over such a vast extent of territory that whenever an outbreak occurs reenforcements must be hurried from many quarters, over great distances, and always at heavy cost for transportation of men, horses, wagons, and supplies.

I concur in the recommendations of the Secretary for increasing the Army to the strength of 30,000 enlisted men.

It appears by the Secretary's report that in the absence of disturbances on the frontier the troops have been actively employed in collecting the Indians hitherto hostile and locating them on their proper reservations; that Sitting Bull and his adherents are now prisoners at Fort Randall; that the Utes have been moved to their new reservation in Utah; that during the recent outbreak of the Apaches it was necessary to reenforce the garrisons in Arizona by troops withdrawn from New Mexico; and that some of the Apaches are now held prisoners for trial, while some have escaped, and the majority of the tribe are now on their reservation.

There is need of legislation to prevent intrusion upon the lands set apart for the Indians. A large military force, at great expense, is now required to patrol the boundary line between Kansas and the Indian Territory. The only punishment that can at present be inflicted is the forcible removal of the intruder and the imposition of a pecuniary fine, which in most cases it is impossible to collect. There should be a penalty by imprisonment in such cases.

The separate organization of the Signal Service is urged by the Secretary of War, and a full statement of the advantages of such permanent organization is presented in the report of the Chief Signal Officer. A detailed account of the useful work performed by the Signal Corps and the Weather Bureau is also given in that report.

I ask attention to the statements of the Secretary of War regarding the requisitions frequently made by the Indian Bureau upon the Subsistence Department of the Army for the casual support of bands and tribes of Indians whose appropriations are exhausted. The War Department should not be left, by reason of inadequate provision for the Indian Bureau, to contribute for the maintenance of Indians.

The report of the Chief of Engineers furnishes a detailed account of the operations for the improvement of rivers and harbors.

I commend to your attention the suggestions contained in this report in regard to the condition of our fortifications, especially our coast defenses, and recommend an increase of the strength of the Engineer Battalion, by which the efficiency of our torpedo system would be improved.

I also call your attention to the remarks upon the improvement of the South Pass of the Mississippi River, the proposed free bridge over the Potomac River at Georgetown, the importance of completing at an early day the north wing of the War Department building, and other recommendations of the Secretary of War which appear in his report.

The actual expenditures of that Department for the fiscal year ending June 30, 1881, were $42,122,201.39. The appropriations for the year 1882 were $44,889,725.42. The estimates for 1883 are $44,541,276.91.

The report of the Secretary of the Navy exhibits the condition of that branch of the service and presents valuable suggestions for its improvement. I call your especial attention also to the appended report of the Advisory Board which he convened to devise suitable measures for increasing the efficiency of the Navy, and particularly to report as to the character and number of vessels necessary to place it upon a footing commensurate with the necessities of the Government.

I can not too strongly urge upon you my conviction that every consideration of national safety, economy, and honor imperatively demands a thorough rehabilitation of our Navy.

With a full appreciation of the fact that compliance with the suggestions of the head of that Department and of the Advisory Board must involve a large expenditure of the public moneys, I earnestly recommend such appropriations as will accomplish an end which seems to me so desirable.

Nothing can be more inconsistent with true public economy than withholding the means necessary to accomplish the objects intrusted by the Constitution to the National Legislature. One of those objects, and one which is of paramount importance, is declared by our fundamental law to be the provision for the "common defense." Surely nothing is more essential to the defense of the United States and of all our people than the efficiency of our Navy.

We have for many years maintained with foreign governments the relations of honorable peace, and that such relations may be permanent is desired by every patriotic citizen of the Republic. But if we heed the teachings of history we shall not forget that in the life of every nation emergencies may arise when a resort to arms can alone save it from dishonor.

No danger from abroad now threatens this people, nor have we any cause to distrust the friendly professions of other governments. But for avoiding as well as for repelling dangers that may threaten us in the future we must be prepared to enforce any policy which we think wise to adopt.

We must be ready to defend our harbors against aggression; to protect, by the distribution of our ships of war over the highways of commerce, the varied interests of our foreign trade and the persons and property of our citizens abroad; to maintain everywhere the honor of our flag and the distinguished position which we may rightfully claim among the nations of the world.

The report of the Postmaster-General is a gratifying exhibit of the growth and efficiency of the postal service.

The receipts from postage and other ordinary sources during the past fiscal year were $36,489,816.58. The receipts from the money-order business were $295,581.39, making a total of $36,785,397.97. The expenditure for the fiscal year was $39,251,736.46. The deficit supplied out of the general Treasury was $2,481,129.35, or 6.3 per cent of the amount expended. The receipts were $3,469,918.63 in excess of those of the previous year, and $4,575,397.97 in excess of the estimate made two years ago, before the present period of business prosperity had fairly begun.

The whole number of letters mailed in this country in the last fiscal year exceeded 1,000,000,000.

The registry system is reported to be in excellent condition, having been remodeled during the past four years with good results. The amount of registration fees collected during the last fiscal year was $712,882.20, an increase over the fiscal year ending June 30, 1877, of $345,443.40.

The entire number of letters and packages registered during the year was 8,338,919, of which only 2,061 were lost or destroyed in transit.

The operations of the money-order system are multiplying yearly under the impulse of immigration, of the rapid development of the newer States and Territories, and the consequent demand for additional means of intercommunication and exchange.

During the past year 338 additional money-order offices have been established, making a total of 5,499 in operation at the date of this report.

During the year the domestic money orders aggregated in value $105,075,769.35

A modification of the system is suggested, reducing the fees for money orders not exceeding $5 from 10 cents to 5 cents and making the maximum limit $100 in place of $50.

Legislation for the disposition of unclaimed money orders in the possession of the Post-Office Department is recommended, in view of the fact that their total value now exceeds $1,000,000.

The attention of Congress is again invited to the subject of establishing a system of savings depositories in connection with the Post-Office Department.

The statistics of mail transportation show that during the past year railroad routes have been increased in length 6,249 miles and in cost $1,114,382, while steamboat routes have been decreased in length 2,182 miles and in cost $134,054. The so-called star routes have been decreased in length 3,949 miles and in cost $364,144.

Nearly all of the more expensive routes have been superseded by railroad service. The cost of the star service must therefore rapidly decrease in the Western States and Territories.

The Postmaster-General, however, calls attention to the constantly increasing cost of the railway mail service as a serious difficulty in the way of making the Department self-sustaining.

Our postal intercourse with foreign countries has kept pace with the growth of the domestic service. Within the past year several countries and colonies have declared their adhesion to the Postal Union. It now includes all those which have an organized postal service except Bolivia, Costa Rica, New Zealand, and the British colonies in Australia.

As has been already stated, great reductions have recently been made in the expense of the star-route service. The investigations of the Department of Justice and the Post-Office Department have resulted in the presentation of indictments against persons formerly connected with that service, accusing them of offenses against the United States. I have enjoined upon the officials who are charged with the conduct of the cases on the part of the Government, and upon the eminent counsel who before my accession to the Presidency were called to their assistance, the duty of prosecuting with the utmost vigor of the law all persons who may be found chargeable with frauds upon the postal service.

The Acting Attorney-General calls attention to the necessity of modifying the present system of the courts of the United States--a necessity due to the large increase of business, especially in the Supreme Court. Litigation in our Federal tribunals became greatly expanded after the close of the late war. So long as that expansion might be attributable to the abnormal condition in which the community found itself immediately after the return of peace, prudence required that no change be made in the constitution of our judicial tribunals. But it has now become apparent that an immense increase of litigation has directly resulted from the wonderful growth and development of the country. There is no ground for belief that the business of the United States courts will ever be less in volume than at present. Indeed, that it is likely to be much greater is generally recognized by the bench and bar.

In view of the fact that Congress has already given much consideration to this subject, I make no suggestion as to detail, but express the hope that your deliberations may result in such legislation as will give early relief to our overburdened courts.

The Acting Attorney-General also calls attention to the disturbance of the public tranquillity during the past year in the Territory of Arizona. A band of armed desperadoes known as "Cowboys," probably numbering from fifty to one hundred men, have been engaged for months in committing acts of lawlessness and brutality which the local authorities have been unable to repress. The depredations of these "Cowboys" have also extended into Mexico, which the marauders reach from the Arizona frontier. With every disposition to meet the exigencies of the case, I am embarrassed by lack of authority to deal with them effectually. The punishment of crimes committed within Arizona should ordinarily, of course, be left to the Territorial authorities; but it is worthy consideration whether acts which necessarily tend to embroil the United States with neighboring governments should not be declared crimes against the United States. Some of the incursions alluded to may perhaps be within the scope of the law (U.S. Revised Statutes, sec. 5286) forbidding "military expeditions or enterprises" against friendly states; but in view of the speedy assembling of your body I have preferred to await such legislation as in your wisdom the occasion may seem to demand.

It may perhaps be thought proper to provide that the setting on foot within our own territory of brigandage and armed marauding expeditions against friendly nations and their citizens shall be punishable as an offense against the United States.

I will add that in the event of a request from the Territorial government for protection by the United States against "domestic violence" this Government would be powerless to render assistance.

The act of 1795, chapter 36, passed at a time when Territorial governments received little attention from Congress, enforced this duty of the United States only as to the State governments. But the act of 1807, chapter 39, applied also to Territories. This law seems to have remained in force until the revision of the statutes, when the provision for the Territories was dropped. I am not advised whether this alteration was intentional or accidental; but as it seems to me that the Territories should be offered the protection which is accorded to the States by the Constitution, I suggest legislation to that end.

It seems to me, too, that whatever views may prevail as to the policy of recent legislation by which the Army has ceased to be a part of the _posse comitatus_, an exception might well be made for permitting the military to assist the civil Territorial authorities in enforcing the laws of the United States. This use of the Army would not seem to be within the alleged evil against which that legislation was aimed. From sparseness of population and other circumstances it is often quite impracticable to summon a civil posse in places where officers of justice require assistance and where a military force is within easy reach.

The report of the Secretary of the Interior, with accompanying documents, presents an elaborate account of the business of that Department. A summary of it would be too extended for this place. I ask your careful attention to the report itself.

Prominent among the matters which challenge the attention of Congress at its present session is the management of our Indian affairs. While this question has been a cause of trouble and embarrassment from the infancy of the Government, it is but recently that any effort has been made for its solution at once serious, determined, consistent, and promising success.

It has been easier to resort to convenient makeshifts for tiding over temporary difficulties than to grapple with the great permanent problem, and accordingly the easier course has almost invariably been pursued.

It was natural, at a time when the national territory seemed almost illimitable and contained many millions of acres far outside the bounds of civilized settlements, that a policy should have been initiated which more than aught else has been the fruitful source of our Indian complications.

I refer, of course, to the policy of dealing with the various Indian tribes as separate nationalities, of relegating them by treaty stipulations to the occupancy of immense reservations in the West, and of encouraging them to live a savage life, undisturbed by any earnest and well-directed efforts to bring them under the influences of civilization.

The unsatisfactory results which have sprung from this policy are becoming apparent to all.

As the white settlements have crowded the borders of the reservations, the Indians, sometimes contentedly and sometimes against their will, have been transferred to other hunting grounds, from which they have again been dislodged whenever their new-found homes have Keen desired by the adventurous settlers.

These removals and the frontier collisions by which they have often been preceded have led to frequent and disastrous conflicts between the races.

It is profitless to discuss here which of them has been chiefly responsible for the disturbances whose recital occupies so large a space upon the pages of our history.

We have to deal with the appalling fact that though thousands of lives have been sacrificed and hundreds of millions of dollars expended in the attempt to solve the Indian problem, it has until within the past few years seemed scarcely nearer a solution than it was half a century ago. But the Government has of late been cautiously but steadily feeling its way to the adoption of a policy which has already produced gratifying results, and which, in my judgment, is likely, if Congress and the Executive accord in its support, to relieve us ere long from the difficulties which have hitherto beset us.

For the success of the efforts now making to introduce among the Indians the customs and pursuits of civilized life and gradually to absorb them into the mass of our citizens, sharing their rights and holden to their responsibilities, there is imperative need for legislative action.

My suggestions in that regard will be chiefly such as have been already called to the attention of Congress and have received to some extent its consideration.

First. I recommend the passage of an act making the laws of the various States and Territories applicable to the Indian reservations within their borders and extending the laws of the State of Arkansas to the portion of the Indian Territory not occupied by the Five Civilized Tribes.

The Indian should receive the protection of the law. He should be allowed to maintain in court his rights of person and property. He has repeatedly begged for this privilege. Its exercise would be very valuable to him in his progress toward civilization.