common and equal, practically as well as formally, submission to the results of the suffrage will be accorded loyally and cheerfully, and all the departments of Government will feel the true vigor of the popular will thus expressed. No temporary or administrative interests of Government, however urgent or weighty, will ever displace the zeal of our people in defence of the primary rights of citizenship. They understand that the protection of liberty requires the maintenance, in full vigor, of the manly methods of free speech, free press, and free suffrage, and will sustain the full authority of Government to enforce the laws which are framed to preserve these inestimable rights. The material progress and welfare of the States depend on the protection afforded to their citizens. There can be no peace without such protection, no prosperity without peace, and the whole country is deeply interested in the growth and prosperity of all its parts.

While the country has not yet reached complete unity of feeling and reciprocal confidence between the communities so lately and so seriously estranged, I feel an absolute assurance that the tendencies are in that direction, and with increasing force. The power of public opinion will override all political prejudices, and all sectional or State attachments, in demanding that all over our wide territory the name and character of citizen of the United States shall mean one and the same thing, and carry with them unchallenged security and respect.

Our relations with other countries continue peaceful. Our neutrality in contests between foreign powers has been maintained and respected. The Universal Exposition held at Paris during the past summer has been attended by large numbers of our citizens. The brief period allowed for the preparation and arrangement of the contributions of our citizens to this great Exposition was well employed in energetic and judicious efforts to overcome this disadvantage. These efforts, led and directed by the Commissioner General, were remarkably successful, and the exhibition of the products of American industry was creditable and gratifying in scope and character. The reports of the United States commissioners, giving its results in detail, will be duly laid before you. Our participation in this international competition for the favor and the trade of the world may be expected to produce useful and important results, in promoting intercourse, friendship, and commerce with other nations.

In accordance with the provisions of the act of February 28, 1878, three commissioners were appointed to an international conference on the subject of adopting a common ratio between gold and silver, for the purpose of establishing, internationally, the use of bimetallic money, and securing fixity of relative value between those metals.

Invitations were addressed to the various Governments which had expressed a willingness to participate in its deliberations. The conference held its meetings in Paris, in August last. The report of the commissioners, herewith submitted, will show its results. No common

ratio between gold and silver could be agreed upon by the conference. The general conclusion was reached that it is necessary to maintain in the world the monetary functions of silver as well as of gold, leaving the selection of the use of one or the other of these two metals, or of both, to be made by each State.

Congress having appropriated at its last session the sum of $5,500,000 to pay the award of the Joint Commission at Halifax, if, after correspondence with the British Government, on the subject of the conformity of the award to the requirements of the treaty and to the terms of the question thereby submitted to the Commission, the President shall deem it his duty to make the payment, communications upon these points were addressed to the British Government through the legation of the United States at London. Failing to obtain the concurrence of the British Government in the views of this Government respecting the award, I have deemed it my duty to tender the sum named, within the year fixed by the treaty, accompanied by a notice of the grounds of the payment, and a protest against any other construction of the same. The correspondence upon this subject will be laid before you.

The Spanish Government has officially announced the termination of the insurrection in Cuba, and the restoration of peace throughout that island. Confident expectations are expressed of a revival of trade and prosperity, which it is earnestly hoped may prove well-founded. Numerous claims of American citizens for relief for injuries or restoration of property, have been among the incidents of the long-continued hostilities. Some of these claims are in process of adjustment by Spain, and the others are promised early and careful consideration.

The treaty made with Italy, in regard to reciprocal consular privileges, has been duly ratified and proclaimed.

No questions of grave importance have arisen with any other of the European powers.

The Japanese Government has been desirous of a revision of such parts of its treaties with foreign powers as relate to commerce, and, it is understood, has addressed to each of the treaty powers a request toopen negotiations with that view. The United States Government has been inclined to regard the matter favorably. Whatever restrictions upon trade with Japan are found injurious to that people cannot but affect injuriously nations holding commercial intercourse with them. Japan, after a long period of seclusion, has within the past few years. made rapid strides in the path of enlightenment and progress, and, not unreasonably, is looking forward to the time when her relations with the nations of Europe and America shall be assimilated to those which they hold with each other. A treaty looking to this end has been made, which will be submitted for the consideration of the Senate.

After an interval of several years, the Chinese Government has again sent envoys to the United States. They have been received, and a permanent legation is now established here by that Government. It is not

doubted that this step will be of advantage to both nations in promoting friendly relations and removing causes of difference.

The treaty with the Samoan Islands, having been duly ratified and accepted on the part of both Governments, is now in operation, and a survey and soundings of the harbor of Pago-Pago have been made by a naval vessel of the United States, with a view of its occupation as a naval station, if found desirable to the service.

Since the resumption of diplomatic relations with Mexico, correspondence has been opened and still continues between the two Governments upon the various questions which at one time seemed to endanger their relations. While no formal agreement has been reached as to the troubles on the border, much has been done to repress and diminish them. Thre effective force of United States troops on the Rio Grande, by a strict and faithful compliance with instructions, has done much to remove the sources of dispute, and it is now understood that a like force of Mexican troops on the other side of the river is also making an energetic movement against the marauding Indian tribes. This Government looks with the greatest satisfaction upon every evidence of strength in the national authority of Mexico, and upon every effort put forth to prevent or to punish incursions upon our territory. Reluctant to assume any action or attitude in the control of these incursions, by military movements across the border, not imperatively demanded for the protection of the lives and property of our own citizens, I shall take the earliest oppor-. tunity, consistent with the proper discharge of this plain duty, to recog nize the ability of the Mexican Government to restrain effectively violations of our territory. It is proposed to hold next year an International Exhibition in Mexico, and it is believed that the display of the agricultural and manufacturing products of the two nations will tend to better understanding and increased commercial intercourse between their peo

ple.

With Brazil and the Republics of Central and South America some steps have been taken toward the development of closer commercial intercourse. Diplomatic relations have been resumed with Columbia and with Bolivia. A boundary question between the Argentine Republic and Paraguay has been submitted by those Governments for arbitration to the President of the United States, and I have, after careful examination, given a decision upon it.

A naval expedition up the Amazon and Madeira rivers has brought back information valuable both for scientific and commercial purposes. A like expedition is about visiting the coast of Africa and the Indian Ocean. The reports of diplomatic and consular officers in relation to the development of our foreign commerce have furnished many facts that have proved of public interest, and have stimulated to practical exertion the enterprise of our people.

The report of the Secretary of the Treasury furnishes a detailed statement of the operations of that Department of the Government and of the condition of the public finances.

The ordinary revenues from all sources for the fiscal year ended June 30, 1878, were $257,763,878.70; the ordinary expenditures for the same period were $236,964,326.80, leaving a surplus revenue for the year of $20,799,551.90.

The receipts for the present fiscal year, ending June 30, 1879, actual and estimated, are as follows: Actual receipts for the first quarter commencing July 1, 1878, $73,389,743.43; estimated receipts for the remaining three-quarters of the year, $191,110,256.57; total receipts for the current fiscal year, actual and estimated, $264,500,000. The expenditures for the same period will be, actual and estimated, as follows: For the quarter' commencing July 1, 1878, actual expenditures, $73,344,573.27; and for the remaining three-quarters of the year the expenditures are estimated at $166,755,426.73, making the total expenditures $240,100,000; and leaving an estimated surplus revenue for the year ending June 30, 1879, of $24,400,000.

The total receipts during the next fiscal year, ending June 30, 1880, estimated according to existing laws, will be $264,500,000; and the estimated ordinary expenditures, for the same period, will be $236,320,412.68; leaving a surplus of $28,179,587.32 for that year.

In the foregoing statements of expenditures, actual and estimated, no amount is allowed for the sinking-fund provided for by the act approved February 25, 1862, which requires that one per cent. of the entire debt of the United States shall be purchased or paid within each fiscal year, to be set apart as a sinking-fund. There has been, however, a substantial compliance with the conditions of the law. By its terms, the public debt should have been reduced between 1862 and the close of the last fiscal year, $518,361,806.28; the actual reduction of the ascertained debt, in that period, has been $720,644,739.61; being in excess of the reduction required by the sinking-fund act-$292,282,933.33.

The amount of the public debt, less cash in the Treasury, November 1, 1878, was $2,024,200,083.18-a reduction, since the same date last year, of $23,150,617.39.

The progress made during the last year, in refunding the public debt at lower rates of interest, is very gratifying. The amount of four per cent. bonds sold during the present year prior to November 23, 1878, is $100,270,900, and six per cent. bonds, commonly known as five-twenties, to an equal amount, have been, or will be redeemed as calls mature.

It has been the policy of the Department to place the four per cent. bonds within easy reach of every citizen who desires to invest his savings, whether small or great, in these securities. The Secretary of the Treasury recommends that the law be so modified that small sums may be invested, and that through the post-offices or other agents of the Government the freest opportunity may be given in all parts of the country for such investments.

The best mode suggested is that the Department be authorized to issue certificates of deposit, of the denomination of ten dollars, bearing inter

est at the rate of 3.65 per cent. per annum, and convertible at any time within one year after their issue into the four per cent. bonds authorized by the refunding act, and to be issued only in exchange for United States notes sent to the Treasury by mail or otherwise. Such a provision of law, supported by suitable regulations, would enable any person readily, without cost or risk, to convert his money into an interest-bearing security of the United States, and the money so received could be applied to the redemption of six per cent. bonds.

The coinage of gold during the last fiscal year was $52,798,980. The coinage of silver dollars, under the act passed February 28, 1878, amounted on the 23d of November, 1878, to $19,814,550, of which amount $4,984,947 are in circulation, and the balance, $14,829,603, is still in the possession of the Government.

With views unchanged with regard to the act under which the coinage of silver proceeds, it has been the purpose of the Secretary faithfully to execute the law, and to afford a fair trial to the measure.

In the present financial condition of the country, I am persuaded that the welfare of legitimate business and industry of every description will be best promoted by abstaining from all attempts to make radical changes in the existing financial legislation. Let it be understood that during the coming year the business of the country will be undisturbed by governmental interference with the laws affecting it, and we may. confidently expect that the resumption of specie payments, which will take place at the appointed time, will be successfully and easily maintained, and that it will be followed by a healthful and enduring revival of business prosperity.

Let the healing influence of time, the inherent energies of our people, and the boundless resources of our country, have a fair opportunity, and. relief from present difficulties will surely follow.

The report of the Secretary of War shows that the Army has been well and economically supplied, that our small force has been actively employed, and has faithfully performed all the service required of it. The morale of the Army has improved, and the number of desertions has materially decreased during the year.

The Secretary recommends—

1. That a pension be granted to the widow of the late Lieutenant Henry H. Benner, 18th Infantry, who lost his life by yellow-fever while in command of the steamer "J. M. Chambers," sent with supplies for the relief. of sufferers in the South from that disease.

2. The establishment of the annuity scheme for the benefit of the heirs of deceased officers, as suggested by the Paymaster General.

3. The adoption by Congress of a plan for the publication of the records of the War of the Rebellion, now being prepared for that purpose.

4. The increase of the extra per diem of soldier-teachers employed in post-schools, and liberal appropriations for the erection of buildings for schools and libraries at the different posts.