Chapter 17

Through our ministers at London and at Monrovia this Government has endeavored to aid Liberia in its differences with Great Britain touching the northwestern boundary of that Republic. There is a prospect of adjustment of the dispute by the adoption of the Mannah River as the line. This arrangement is a compromise of the conflicting territorial claims and takes from Liberia no country over which it has maintained effective jurisdiction.

The rich and populous valley of the Kongo is being opened to commerce by a society called the International African Association, of which the King of the Belgians is the president and a citizen of the United States the chief executive officer. Large tracts of territory have been ceded to the association by native chiefs, roads have been opened, steamboats placed on the river, and the nuclei of states established at twenty-two stations under one flag which offers freedom to commerce and prohibits the slave trade. The objects of the society are philanthropic. It does not aim at permanent political control, but seeks the neutrality of the valley. The United States can not be indifferent to this work nor to the interests of their citizens involved in it. It may become advisable for us to cooperate with other commercial powers in promoting the rights of trade and residence in the Kongo Valley free from the interference or political control of any one nation.

In view of the frequency of invitations from foreign governments to participate in social and scientific congresses for the discussion of important matters of general concern, I repeat the suggestion of my last message that provision be made for the exercise of discretionary power by the Executive in appointing delegates to such convocations. Able specialists are ready to serve the national interests in such capacity without personal profit or other compensation than the defrayment of expenses actually incurred, and this a comparatively small annual appropriation would suffice to meet.

I have alluded in my previous messages to the injurious and vexatious restrictions suffered by our trade in the Spanish West Indies, Brazil, whose natural outlet for its great national staple, coffee, is in and through the United States, imposes a heavy export duty upon that product. Our petroleum exports are hampered in Turkey and in other Eastern ports by restrictions as to storage and by onerous taxation. For these mischiefs adequate relief is not always afforded by reciprocity treaties like that with Hawaii or that lately negotiated with Mexico and now awaiting the action of the Senate. Is it not advisable to provide some measure of equitable retaliation in our relations with governments which discriminate against our own? If, for example, the Executive were empowered to apply to Spanish vessels and cargoes from Cuba and Puerto Rico the same rules of treatment and scale of penalties for technical faults which are applied to our vessels and cargoes in the Antilles, a resort to that course might not be barren of good results.

The report of the Secretary of the Treasury gives a full and interesting exhibit of the financial condition of the country.

It shows that the ordinary revenues from all sources for the fiscal year ended June 30, 1883, amounted to $398,287,581.95, whereof there was received--

From customs $214,706,496.93 From internal revenue 144,720,368.98 From sales of public lands 7,955,864.42 From tax on circulation and deposits of national banks 9,111,008.85 From profits on coinage, bullion deposits, and assays 4,460,205.17 From other sources 17,333,637.60 ______________ Total 398,287,581.95

For the same period the ordinary expenditures were:

For civil expenses $22,343,285.76 For foreign intercourse 2,419,275.24 For Indians 7,362,590.34 For pensions $66,012,573.64 For the military establishment, including river and harbor improvements and arsenals 48,911,382.93 For the naval establishment, including vessels, machinery, and improvements at navy-yards 15,283,437.17 For miscellaneous expenditures, including public buildings, light-houses, and collecting the revenue 40,098,432.73 For expenditures on account of the District of Columbia 3,817,028.48 For interest on the public debt 59,160,131.25 ______________ Total 265,408,137.54

Leaving a surplus revenue of $132,879,444.41, which, with an amount drawn from the cash balance in the Treasury of $1,299,312.55, making $134,178,756.96, was applied to the redemption--

Of bonds for the sinking fund $44,850,700.00 Of fractional currency for the sinking fund 46,556.96 Of funded loan of 1881, continued at 3-1/2 per cent. 65,380,250.00 Of loan of July and August, 1861, continued at 3-1/2 per cent. 20,594,600.00 Of funded loan of 1907 1,418,850.00 Of funded loan of 1881 719,150.00 Of loan of February, 1861 18,000.00 Of loan of July and August, 1861 266,600.00 Of loan of March, 1863 116,850.00 Of loan of July, 1882 47,650.00 Of five-twenties of 1862 10,300.00 Of five-twenties of 1864 7,050.00 Of five-twenties of 1865 9,600.00 Of ten-forties of 1864 133,550.00 Of consols of 1865 40,800.00 Of consols of 1867 235,700.00 Of consols of 1868 154,650.00 Of Oregon War debt 5,450.00 Of refunding certificates 109,150.00 Of old demand, compound-interest, and other notes 13,300.00 ______________ Total 134,178,756.96

The revenue for the present fiscal year, actual and estimated, is as follows:

======================================================================= For the Source For the quarter remaining ended September three quarters 30, 1883 of the year (actual) (estimated)

From customs $57,402,975 67 $137,597,024 33 From internal revenue 29,662,078.60 90,337,921.40 From sales of public lands 2,932,635.17 5,067,364.83 From tax on circulation and deposits of national banks 1,557,800.88 1,542,199.12 From repayment of interest and sinking fund, Pacific Railway companies 521,059.51 1,478,940.49 From customs fees, fines, penalties, etc. 298,696.78 901,303.22 From fees--consular, letters patent, and lands 863,209.80 2,436,790.20 From proceeds of sales of Government property 112,562.23 167,437.77 From profits on coinage, etc. 950,229.46 3,149,770.54 From deposits for surveying public lands 172,461.31 327,538.69 From revenues of the District of Columbia 256,017.99 1,643,982.01 From miscellaneous sources 1,237,189.63 2,382,810.37 ____________ ____________ Total receipts 95,966,917.03 247,033,082.97 =======================================================================

The actual and estimated expenses for the same period are:

======================================================================= For the Object For the quarter remaining ended September three quarters 30, 1883 of the year (actual) (estimated)

For civil and miscellaneous expenses, including public buildings, light-houses, and collecting the revenue $15,385,799.42 $51,114,200.58 For Indians 2,623,390.54 4,126,609.46 For pensions 16,285,261.98 53,714,738.02 For military establishment, including fortifications, river and harbor improvements, and arsenals 13,512,204.33 26,487,795.67 For naval establishment, including vessels and machinery, and improvements at navy-yards 4,199,299.69 12,300,700.31 For expenditures on account of the District of Columbia 1,138,836.41 2,611,163.59 For interest on the public debt 14,797,297.96 39,702,702.04 _____________ ______________ Total ordinary expenditures 67,942,090.33 190,057,909.67 =======================================================================

Total receipts, actual and estimated $343,000,000.00 Total expenditures, actual and estimated 258,000,000.00 ______________ 85,000,000.00 Estimated amount due the sinking fund 45,816,741.07 ______________ Leaving a balance of 39,183,258.93

If the revenue for the fiscal year which will end on June 30, 1885, be estimated upon the basis of existing laws, the Secretary is of the opinion that for that year the receipts will exceed by $60,000,000 the ordinary expenditures including the amount devoted to the sinking fund.

Hitherto the surplus, as rapidly as it has accumulated, has been devoted to the reduction of the national debt.

As a result the only bonds now outstanding which are redeemable at the pleasure of the Government are the 3 percents, amounting to about $305,000,000.

The 4-1/2 percents, amounting to $250,000,000, and the $737,000,000 4 percents are not payable until 1891 and 1907, respectively.

If the surplus shall hereafter be as large as the Treasury estimates now indicate, the 3 per cent bonds may all be redeemed at least four years before any of the 4-1/2 percents can be called in. The latter at the same rate of accumulation of surplus can be paid at maturity, and the moneys requisite for the redemption of the 4 percents will be in the Treasury many years before those obligations become payable.

There are cogent reasons, however, why the national indebtedness should not be thus rapidly extinguished. Chief among them is the fact that only by excessive taxation is such rapidity attainable.

In a communication to the Congress at its last session I recommended that all excise taxes be abolished except those relating to distilled spirits and that substantial reductions be also made in the revenues from customs. A statute has since been enacted by which the annual tax and tariff receipts of the Government have been cut down to the extent of at least fifty or sixty millions of dollars.

While I have no doubt that still further reductions may be wisely made, I do not advise the adoption at this session of any measures for large diminution of the national revenues. The results of the legislation of the last session of the Congress have not as yet become sufficiently apparent to justify any radical revision or sweeping modifications of existing law.

In the interval which must elapse before the effects of the act of March 3, 1883, can be definitely ascertained a portion at least of the surplus revenues may be wisely applied to the long-neglected duty of rehabilitating our Navy and providing coast defenses for the protection of our harbors. This is a matter to which I shall again advert.

Immediately associated with the financial subject just discussed is the important question what legislation is needed regarding the national currency.

The aggregate amount of bonds now on deposit in the Treasury to support the national-bank circulation is about $350,000,000. Nearly $200,000,000 of this amount consists of 3 percents, which, as already stated, are payable at the pleasure of the Government and are likely to be called in within less than four years unless meantime the surplus revenues shall be diminished.

The probable effect of such an extensive retirement of the securities which are the basis of the national-bank circulation would be such a contraction of the volume of the currency as to produce grave commercial embarrassments.

How can this danger be obviated? The most effectual plan, and one whose adoption at the earliest practicable opportunity I shall heartily approve, has already been indicated.

If the revenues of the next four years shall be kept substantially commensurate with the expenses, the volume of circulation will not be likely to suffer any material disturbance; but if, on the other hand, there shall be great delay in reducing taxation, it will become necessary either to substitute some other form of currency in place of the national-bank notes or to make important changes in the laws by which their circulation is now controlled.

In my judgment the latter course is far preferable. I commend to your attention the very interesting and thoughtful suggestions upon this subject which appear in the Secretary's report.

The objections which he urges against the acceptance of any other securities than the obligations of the Government itself as a foundation for national-bank circulation seem to me insuperable.

For averting the threatened contraction two courses have been suggested, either of which is probably feasible. One is the issuance of new bonds, having many years to run, bearing a low rate of interest, and exchangeable upon specified terms for those now outstanding. The other course, which commends itself to my own judgment as the better, is the enactment of a law repealing the tax on circulation and permitting the banks to issue notes for an amount equal to 90 per cent of the market value instead of, as now, the face value of their deposited bonds. I agree with the Secretary in the belief that the adoption of this plan would afford the necessary relief.

The trade dollar was coined for the purpose of traffic in countries where silver passed at its value as ascertained by its weight and fineness. It never had a legal-tender quality. Large numbers of these coins entered, however, into the volume of our currency. By common consent their circulation in domestic trade has now ceased, and they have thus become a disturbing element. They should not be longer permitted to embarrass our currency system. I recommend that provision be made for their reception by the Treasury and the mints, as bullion, at a small percentage above the current market price of silver of like fineness.

The Secretary of the Treasury advises a consolidation of certain of the customs districts of the country, and suggests that the President be vested with such power in relation thereto as is now given him in respect to collectors of internal revenue by section 3141 of the Revised Statutes. The statistics upon this subject which are contained in his report furnish of themselves a strong argument in defense of his views.

At the adjournment of Congress the number of internal-revenue collection districts was 126. By Executive order dated June 25, 1883, I directed that certain of these districts be consolidated. The result has been a reduction of one-third their number, which at present is but 83.

From the report of the Secretary of War it will be seen that in only a single instance has there been any disturbance of the quiet condition of our Indian tribes. A raid from Mexico into Arizona was made in March last by a small party of Indians, which was pursued by General Crook into the mountain regions from which it had come. It is confidently hoped that serious outbreaks will not again occur and that the Indian tribes which have for so many years disturbed the West will hereafter remain in peaceable submission.

I again call your attention to the present condition of our extended seacoast, upon which are so many large cities whose wealth and importance to the country would in time of war invite attack from modern armored ships, against which our existing defensive works could give no adequate protection. Those works were built before the introduction of modern heavy rifled guns into maritime warfare, and if they are not put in an efficient condition we may easily be subjected to humiliation by a hostile power greatly inferior to ourselves. As germane to this subject, I call your attention to the importance of perfecting our submarine-torpedo defenses. The board authorized by the last Congress to report upon the method which should be adopted for the manufacture of heavy ordnance adapted to modern warfare has visited the principal iron and steel works in this country and in Europe. It is hoped that its report will soon be made, and that Congress will thereupon be disposed to provide suitable facilities and plant for the manufacture of such guns as are now imperatively needed.

On several occasions during the past year officers of the Army have at the request of the State authorities visited their militia encampments for inspection of the troops. From the reports of these officers I am induced to believe that the encouragement of the State militia organizations by the National Government would be followed by very gratifying results, and would afford it in sudden emergencies the aid of a large body of volunteers educated in the performance of military duties.

The Secretary of the Navy reports that under the authority of the acts of August 5, 1882, and March 3, 1883, the work of strengthening our Navy by the construction of modern vessels has been auspiciously begun. Three cruisers are in process of construction--the _Chicago_, of 4,500 tons displacement, and the _Boston_ and _Atlanta_, each of 2,500 tons. They are to be built of steel, with the tensile strength and ductility prescribed by law, and in the combination of speed, endurance, and armament are expected to compare favorably with the best unarmored war vessels of other nations. A fourth vessel, the _Dolphin_, is to be constructed of similar material, and is intended to serve as a fleet dispatch boat.

The double-turreted monitors _Puritan, Amphitrite,_ and _Terror_ have been launched on the Delaware River and a contract has been made for the supply of their machinery. A similar monitor, the _Monadnock_, has been launched in California.

The Naval Advisory Board and the Secretary recommend the completion of the monitors, the construction of four gunboats, and also of three additional steel vessels like the _Chicago, Boston,_ and _Dolphin_.

As an important measure of national defense, the Secretary urges also the immediate creation of an interior coast line of waterways across the peninsula of Florida, along the coast from Florida to Hampton Roads, between the Chesapeake Bay and the Delaware River, and through Cape Cod.

I feel bound to impress upon the attention of Congress the necessity of continued progress in, the reconstruction of the Navy. The condition of the public Treasury, as I have already intimated, makes the present an auspicious time for putting this branch of the service in a state of efficiency.

It is no part of our policy to create and maintain a Navy able to cope with that of the other great powers of the world.

We have no wish for foreign conquest, and the peace which we have long enjoyed is in no seeming danger of interruption.

But that our naval strength should be made adequate for the defense of our harbors, the protection of our commercial interests, and the maintenance of our national honor is a proposition from which no patriotic citizen can withhold his assent.

The report of the Postmaster-General contains a gratifying exhibit of the condition and prospects of the interesting branch of the public service committed to his care.

It appears that on June 30, 1883, the whole number of post-offices was 47,863, of which 1,632 were established during the previous fiscal year. The number of offices operating under the system of free delivery was 154.

At these latter offices the postage on local matter amounted to $4,195,230.52, a sum exceeding by $1,021,894.01 the entire cost of the carrier service of the country.

The rate of postage on drop letters passing through these offices is now fixed by law at 2 cents per half ounce or fraction thereof. In offices where the carrier system has not been established the rate is only half as large.

It will be remembered that in 1863, when free delivery was first established by law, the uniform single-rate postage upon local letters was 1 cent, and so it remained until 1872, when in those cities where carrier service was established it was increased in order to defray the expense of such service.

It seems to me that the old rate may now with propriety be restored, and that, too, even at the risk of diminishing, for a time at least, the receipts from postage upon local letters.

I can see no reason why that particular class of mail matter should be held accountable for the entire cost of not only its own collection and delivery, but the collection and delivery of all other classes; and I am confident, after full consideration of the subject, that the reduction of rate would be followed by such a growing accession of business as to occasion but slight and temporary loss to the revenues of the Post-Office. The Postmaster-General devotes much of his report to the consideration in its various aspects of the relations of the Government to the telegraph. Such reflection as I have been able to give to this subject since my last annual message has not led me to change the views which I there expressed in dissenting from the recommendation of the then Postmaster-General that the Government assume the same control over the telegraph which it has always exercised over the mail.

Admitting that its authority in the premises is as ample as has ever been claimed for it, it would not, in my judgment, be a wise use of that authority to purchase or assume the control of existing telegraph lines, or to construct others with a view of entering into general competition with private enterprise.