State of the Union (SOTU) Corpus

sotu.csv

Good afternoon:  At the beginning of each new year, as we reflect on the state of our American Union, we seek again a definition of what America means. Carl Sandburg came close to capturing its real meaning in three simple words that became the title for one of his greatest poems: "The People, Yes."  America has risen to greatness because again and again when the chips were down, the American people have said yes--yes to the challenge of freedom, yes to the dare of progress, and yes to the hope of peace---even when defending the peace has meant paying the price of war.  America's greatness will endure in the future only if our institutions continually rededicate themselves to saying yes to the people--yes to human needs and aspirations, yes to democracy and the consent of the governed, yes to equal opportunity and unlimited horizons of achievement for every American.  It is in this spirit of rededication that I will send to the Congress in the next few days the fourth section of my 1973 State of the Union report--a message on the progress we have made, the steps we now must take, in helping people to help themselves through our Federal programs for human resources.  Nineteen hundred seventy-three is a year full of opportunity for great advances on this front. After more than 10 years of war, we have successfully completed one of the most unselfish missions ever undertaken by one nation in the defense of another, and now the coming of peace permits us to turn our attention more fully to the works of compassion, concern, and social progress at home.  The seriousness of your Government's commitment to make the most of this opportunity is evidenced by the record level of funding for human resources programs proposed in our new budget--$125 billion-nearly twice the amount that was being spent on such programs when I took office in 1969.  Let us look behind this impersonal label, "human resources," let us see some examples of the way these programs are helping to provide a better life for the American people.  Social security cash benefits for the elderly and the disabled in fiscal year 1974 will be twice what they were 4 years ago.  Next year, 5 million additional poor, aged, and disabled persons will receive increased health benefits.  Hundreds of counties which previously had no food programs to assure nutrition for the needy have them now--hunger is being eliminated from American life.  Hundreds of school districts which were giving black or brown children inferior educations in separate school systems at the time we took office now give all their children an equal chance to learn together in the same schools.  A new student assistance system is being established to bring higher education within reach of every qualified student in America.  We have launched a national drive for the conquest of cancer. We have advanced a workable proposal to provide comprehensive health insurance for every American family.  Health and education benefits for our veterans have been substantially increased. High-priority job programs have decreased the unemployment rate among Vietnam-era veterans by almost one-third during the past year alone.  Sweeping reforms have been set in motion to assure our senior citizens of quality nursing home care and of a better chance to live with dignity in homes of their own.  Legislative proposals to increase self-determination and economic opportunity for the American Indian have been laid before the Congress. They will be resubmitted to the Congress this year.  Outlays for civil rights activities in 1974 will be more than $3 billion--that's 3 1/2 times what they were at the beginning of this Administration. With this support, we are closer today than ever before to the realization of a truly just society, where all men--and all women--are equal in the eyes of the law.  These achievements, and others that I will outline in my message to the Congress, constitute a record to be proud of, a good beginning to build on.  But there are certain other aspects of the state of our Union's human resources which urgently need reform.  During the 1960's, the Federal Government undertook ambitious, sometimes almost utopian, commitments in one area of social policy after another, elbowing aside the State and local governments and the private sector and establishing literally hundreds of new programs based on the assumption that any human problem could be solved simply by throwing enough Federal dollars at it.  The intention of this effort was laudable, but the results in case after case amounted to dismal failure. The money which left Washington in a seemingly inexhaustible flood was reduced to a mere trickle by the time it had filtered through all the layers of bureaucrats, consultants, and social workers, and finally reached those whom it was supposed to help. Too much money has been going to those who were supposed to help the needy and too little to the needy themselves. Those who make a profession out of poverty got fat, the taxpayer got stuck with the bill, and the disadvantaged themselves got little but broken promises.  We must do better than this. The American people deserve compassion that works--not simply compassion that means well. They deserve programs that say yes to human needs by saying no to paternalism, social exploitation, and waste.  In order to bring our programs up to this standard, we have carefully reviewed each of them with three questions in mind:  How can we reform the decisionmaking process to bring it closer to the people whom these decisions will affect?  How can we get more value and productivity out of every tax dollar devoted to human resources?  How can we reform our approach to the delivery of services so as to give people the assistance they need without taking away their freedom or decreasing their self-reliance and their self-respect?  Here are some of the reforms we propose:  To give the people served a better and greater voice in education and manpower training programs, we propose to convert them from narrow, fragmented, categorical programs--closely controlled from Washington--into new special revenue sharing programs which will provide Federal funds to 'be used within broad areas as each State and community judges best to meet its own special needs.  To make the Federal health care dollar go further, we propose to eliminate programs whose job is done---such as hospital construction subsidies which if continued would only worsen the national oversupply of hospital beds and further inflate medical costs. The savings achieved would help to make possible increases in other areas--such as over $100 million more next year in cancer and heart disease research.  To make the economic opportunity dollar go further, we propose to transfer most of the antipoverty programs now conducted by the Office of Economic Opportunity into the appropriate Cabinet departments, thereby making them more efficient by linking them with other related Federal activities.  To ensure that all of our people are provided with a decent income under circumstances that will increase human dignity rather than eroding such basic values as the family structure and the dignity of work, we will work with the Congress to improve the welfare system. A system which penalizes a person for going to work and rewards a person for going on welfare is totally alien to the American tradition of self-reliance and self-respect. That is why reforming the present welfare system has been, and will continue to be, one of our major goals.  The overall effect of these reforms will be the elimination of programs that are wasteful so that we can concentrate on programs that work. They will make possible the continued growth of Federal efforts to meet human needs--while at the same time helping to prevent a ballooning budget deficit that could lead to higher taxes, higher prices, higher interest rates for all Americans.  Despite what some people say, fiscal responsibility is not just a rich man's concern. If we were to spend our economy into a tailspin in the name of social welfare, we would only be punishing those we sought to help. Over the course of our history, the free American economy has done more to combat poverty and to raise our standard of living than any government program imaginable. The stable, healthy growth of our economy must remain the cornerstone of all of our human resources policies in the 1970's.  To our great credit we Americans are a restless and impatient people--we are a nation of idealists. We dream of eradicating poverty and hunger, discrimination, ignorance, disease, and fear, and we would like to do it all today. But in order to reach these goals, we need to connect this warmhearted impatience of ours with another equally American trait--and that is levelheaded common sense.  We need to forge a new approach to human services in this country--an approach which will treat people as more than just statistics--an approach which recognizes that problems like poverty and unemployment, health care and the costs of education are more than cold abstractions in a government file drawer.  I know how tough these problems are, because I grew up with them. But I also know that with the right kind of help and the right kind of spirit they can be overcome.  I believe that no American family should be denied good health care because of inability to pay. But I also believe that no family should be deprived of the freedom to make its own health care arrangements without bureaucratic meddling.  I believe that no boy or girl should be denied a quality education. But I also believe that no child should have to ride a bus miles away from his neighborhood school in order to achieve an arbitrary racial balance.  I believe that no American family should have to suffer for lack of income or to break up because the welfare regulations encourage it. But I also believe that we should never make it more comfortable or more profitable to live on a welfare check than on a paycheck.  I believe that government must be generous and humane. But I also believe that government must be economically responsible. We must reform or end programs that do not work. We must discontinue those programs that have served their purpose, so that our limited resources can be applied to programs that produce 100 cents worth of human benefits for every tax dollar spent.  Working together to meet human needs and unlock human potential is the greatest adventure upon which any people can embark. I pledge continued, strong Federal leadership in this work. But we have learned the hard way that Washington cannot do the whole job by itself. State and local governments, private institutions, and each individual American must do their part as well.  Let us give all our citizens the help they need. But let us also remember that each of us bears a basic obligation to help ourselves and to help our fellow man, and no one else can assume that obligation for us--least of all the Federal Government.  If we shirk our individual responsibility, the American dream will never be more than a dream. But if the people say yes to this challenge, and if government says yes to the people, we can make that dream come true in the lives of all Americans.  Thank you and good afternoon. 	R
The Senate and House of Representatives of the United States:  Circumstances [see APP Note], fellow citizens, which seriously threatened the peace of our country have made it a duty to convene you at an earlier period than usual. The love of peace so much cherished in the bosoms of our citizens, which has so long guided the proceedings of their public councils and induced forbearance under so many wrongs, may not insure our continuance in the quiet pursuits of industry. The many injuries and depredations committed on our commerce and navigation upon the high seas for years past, the successive innovations on those principles of public law which have been established by the reason and usage of nations as the rule of their intercourse and the umpire and security of their rights and peace, and all the circumstances which induced the extraordinary mission to London are already known to you.  The instructions given to our ministers were framed in the sincerest spirit of amity and moderation. They accordingly proceeded, in conformity therewith, to propose arrangements which might embrace and settle all the points in difference between us, which might bring us to a mutual understanding on our neutral and national rights and provide for a commercial intercourse on conditions of some equality. After long and fruitless endeavors to effect the purposes of their mission and to obtain arrangements within the limits of their instructions, they concluded to sign such as could be obtained and to send them for consideration, candidly declaring to the other negotiators at the same time that they were acting against their instructions, and that their Government, therefore, could not be pledged for ratification.  Some of the articles proposed might have been admitted on a principle of compromise, but others were too highly disadvantageous, and no sufficient provision was made against the principal source of the irritations and collisions which were constantly endangering the peace of the two nations. The question, therefore, whether a treaty should be accepted in that form could have admitted but of one decision, even had no declarations of the other party impaired our confidence in it. Still anxious not to close the door against friendly adjustment, new modifications were framed and further concessions authorized than could before have been supposed necessary; and our ministers were instructed to resume their negotiations on these grounds.  On this new reference to amicable discussion we were reposing in confidence, when on the 22nd day of June last by a formal order from a British admiral the frigate Chesapeake, leaving her port for a distant service, was attacked by one of those vessels which had been lying in our harbors under the indulgences of hospitality, was disabled from proceeding, had several of her crew killed and 4 taken away. On this outrage no commentaries are necessary. Its character has been pronounced by the indignant voices of our citizens with an emphasis and unanimity never exceeded. I immediately, by proclamation, interdicted our harbors and waters to all British armed vessels, forbade intercourse with them, and uncertain how far hostilities were intended, and the town of Norfolk, indeed, being threatened with immediate attack, a sufficient force was ordered for the protection of that place, and such other preparations commenced and pursued as the prospect rendered proper. An armed vessel of the United States was dispatched with instructions to our ministers at London to call on that Government for the satisfaction and security required by the outrage. A very short interval ought now to bring the answer, which shall be communicated to you as soon as received; then also, or as soon after as the public interests shall be found to admit, the unratified treaty and proceedings relative to it shall be made known to you.  The aggression thus begun has been continued on the part of the British commanders by remaining within our waters in defiance of the authority of the country, by habitual violations of its jurisdiction, and at length by putting to death one of the persons whom they had forcibly taken from on board the Chesapeake. These aggravations necessarily lead to the policy either of never admitting an armed vessel into our harbors or of maintaining in every harbor such an armed force as may constrain obedience to the laws and protect the lives and property of our citizens against their armed guests; but the expense of such a standing force and its inconsistence with our principles dispense with those courtesies which would necessarily call for it, and leave us equally free to exclude the navy, as we are the army, of a foreign power from entering our limits.  To former violations of maritime rights another is now added of very extensive effect. The Government of that nation has issued an order interdicting all trade by neutrals between ports not in amity with them; and being now at war with nearly every nation on the Atlantic and Mediterranean seas, our vessels are required to sacrifice their cargoes at the first port they touch or to return home without the benefit of going to any other market. Under this new law of the ocean our trade on the Mediterranean has been swept away by seizures and condemnations, and that in other seas is threatened with the same fate.  Our differences with Spain remain still unsettled, no measure having been taken on her part since my last communications to Congress to bring them to a close. But under a state of things which may favor reconsideration they have been recently pressed, and an expectation is entertained that they may now soon be brought to an issue of some sort. With their subjects on our borders no new collisions have taken place nor seem immediately to be apprehended. To our former grounds of complaint has been added a very serious one, as you will see by the decree a copy of which is now communicated. Whether this decree, which professes to be conformable to that of the French Government of 1806 November 21, heretofore communicated to Congress, will also be conformed to that in its construction and application in relation to the United States had not been ascertained at the date of our last communications. These, however, gave reason to expect such a conformity.  With the other nations of Europe our harmony has been uninterrupted, and commerce and friendly intercourse have been maintained on their usual footing.  Our peace with the several states on the coast of Barbary appears as firm as at any former period and as likely to continue as that of any other nation.  Among our Indian neighbors in the northwestern quarter some fermentation was observed soon after the late occurrences, threatening the continuance of our peace. Messages were said to be interchanged and tokens to be passing, which usually denote a state of restlessness [see APP Note] among them, and the character of the agitators pointed to the sources of excitement. Measures were immediately taken for providing against that danger; instructions were given to require explanations, and, with assurances of our continued friendship, to admonish the tribes to remain quiet at home, taking no part in quarrels not belonging to them. As far as we are yet informed, the tribes in our vicinity, who are most advanced in the pursuits of industry, are sincerely disposed to adhere to their friendship with us and to their peace with all others, while those more remote do not present appearances sufficiently quiet to justify the intermission of military precaution on our part.  The great tribes on our southwestern quarter, much advanced beyond the others in agriculture and household arts, appear tranquil and identifying their views with ours in proportion to their advancement. With the whole of these people, in every quarter, I shall continue to inculcate peace and friendship with all their neighbors and perseverance in those occupations and pursuits which will best promote their own well-being.  The appropriations of the last session for the defense of our sea port towns and harbors were made under expectation that a continuance of our peace would permit us to proceed in that work according to our convenience. It has been thought better to apply the sums then given toward the defense of New York, Charleston, and New Orleans chiefly, as most open and most likely first to need protection, and to leave places less immediately in danger to the provisions of the present session.  The gun boats, too, already provided have on a like principle been chiefly assigned to New York, New Orleans, and the Chesapeake. Whether our movable force on the water, so material in aid of the defensive works on the land, should be augmented in this or any other form is left to the wisdom of the Legislature. For the purpose of manning these vessels in sudden attacks on our harbors it is a matter for consideration whether the sea men of the United States may not justly be formed into a special militia, to be called on for tours of duty in defense of the harbors where they shall happen to be, the ordinary militia of the place furnishing that portion which may consist of landsmen.  The moment our peace was threatened I deemed it indispensable to secure a greater provision of those articles of military stores with which our magazines were not sufficiently furnished. To have awaited a previous and special sanction by law would have lost occasions which might not be retrieved. I did not hesitate, therefore, to authorize engagements for such supplements to our existing stock as would render it adequate to the emergencies threatening us, and I trust that the Legislature, feeling the same anxiety for the safety of our country, so materially advanced by this precaution, will approve, when done, what they would have seen so important to be done if then assembled. Expenses, also unprovided for, arose out of the necessity of calling all our gun boats into actual service for the defense of our harbors; all of which accounts will be laid before you.  Whether a regular army is to be raised, and to what extent, must depend on the information so shortly expected. In the mean time I have called on the States for quotas of militia, to be in readiness for present defense, and have, moreover, encouraged the acceptance of volunteers; and I am happy to inform you that these have offered themselves with great alacrity in every part of the Union. They are ordered to be organized and ready at a momentÕs warning to proceed on any service to which they may be called, and every preparation within the Executive powers has been made to insure us the benefit of early exertions.  I informed Congress at their last session of the enterprises against the public peace which were believed to be in preparation by Aaron Burr and his associates, of the measures taken to defeat them and to bring the offenders to justice. Their enterprises were happily defeated by the patriotic exertions of the militia whenever called into action, by the fidelity of the Army, and energy of the commander in chief in promptly arranging the difficulties presenting themselves on the Sabine, repairing to meet those arising on the Mississippi, and dissipating before their explosion plots engendering there. I shall think it my duty to lay before you the proceedings and the evidence publicly exhibited on the arraignment of the principal offenders before the circuit court of Virginia.  You will be enabled to judge whether the defect was in the testimony, in the law, or in the administration of the law; and wherever it shall be found, the Legislature alone can apply or originate the remedy. The framers of our Constitution certainly supposed they had guarded as well their Government against destruction by treason as their citizens against oppression under pretense of it, and if these ends are not attained it is of importance to inquire by what means more effectual they may be secured.  The accounts of the receipts of revenue during the year ending on the 30th day of September last being not yet made up, a correct statement will be hereafter transmitted from the Treasury. In the mean time, it is ascertained that the receipts have amounted to near $16M, which, with the $5.5M in the Treasury at the beginning of the year, have enabled us, after meeting the current demands and interest incurred, to pay more than $4M of the principal of our funded debt. These payments, with those of the preceding 5.5 years, have extinguished of the funded debt $25.5M, being the whole which could be paid or purchased within the limits of the law and of our contracts, and have left us in the Treasury $8.5M.  A portion of this sum may be considered as a commencement of accumulation of the surpluses of revenue which, after paying the installments of debt as they shall become payable, will remain without any specific object. It may partly, indeed, be applied toward completing the defense of the exposed points of our country, on such a scale as shall be adapted to our principles and circumstances. This object is doubtless among the 1st entitled to attention in such a state of our finances, and it is one which, whether we have peace or war, will provide security where it is due. Whether what shall remain of this, with the future surpluses, may be usefully applied to purposes already authorized or more usefully to others requiring new authorities, or how otherwise they shall be disposed of, are questions calling for the notice of Congress, unless, indeed, they shall be superseded by a change in our public relations now awaiting the determination of others. Whatever be that determination, it is a great consolation that it will become known at a moment when the supreme council of the nation is assembled at its post, and ready to give the aids of its wisdom and authority to whatever course the good of our country shall then call us to pursue.  Matters of minor importance will be the subjects of future communications, and nothing shall be wanting on my part which may give information or dispatch to the proceedings of the Legislature in the exercise of their high duties, and at a moment so interesting to the public welfare.  TH. JEFFERSON 	DR
Mr. Speaker, Mr. President, distinguished Members of Congress, honored guests, and fellow citizens:  May I congratulate all of you who are Members of this historic 100th Congress of the United States of America. In this 200th anniversary year of our Constitution, you and I stand on the shoulders of giants—men whose words and deeds put wind in the sails of freedom. However, we must always remember that our Constitution is to be celebrated not for being old, but for being young—young with the same energy, spirit, and promise that filled each eventful day in Philadelphia's statehouse. We will be guided tonight by their acts, and we will be guided forever by their words.  Now, forgive me, but I can't resist sharing a story from those historic days. Philadelphia was bursting with civic pride in the spring of 1787, and its newspapers began embellishing the arrival of the Convention delegates with elaborate social classifications. Governors of States were called Excellency. Justices and Chancellors had reserved for them honorable with a capital "H." For Congressmen, it was honorable with a small "h." And all others were referred to as "the following respectable characters." [Laughter] Well, for this 100th Congress, I invoke special executive powers to declare that each of you must never be titled less than honorable with a capital "H." Incidentally, I'm delighted you are celebrating the 100th birthday of the Congress. It's always a pleasure to congratulate someone with more birthdays than I've had. [Laughter]  Now, there's a new face at this place of honor tonight. And please join me in warm congratulations to the Speaker of the House, Jim Wright. [Applause] Mr. Speaker, you might recall a similar situation in your very first session of Congress 32 years ago. Then, as now, the speakership had changed hands and another great son of Texas, Sam Rayburn—"Mr. Sam"—sat in your chair. I cannot find better words than those used by President Eisenhower that evening. He said, "We shall have much to do together; I am sure that we will get it done and that we shall do it in harmony and good will." Tonight I renew that pledge. To you, Mr. Speaker, and to Senate Majority Leader Robert Byrd, who brings 34 years of distinguished service to the Congress, may I say: Though there are changes in the Congress, America's interests remain the same. And I am confident that, along with Republican leaders Bob Michel and Bob Dole, this Congress can make history.  Six years ago I was here to ask the Congress to join me in America's new beginning. Well, the results are something of which we can all be proud. Our inflation rate is now the lowest in a quarter of a century. The prime interest rate has fallen from the 21 1/2 percent the month before we took office to 7 1/2 percent today. And those rates have triggered the most housing starts in 8 years. The unemployment rate—still too high—is the lowest in nearly 7 years, and our people have created nearly 13 million new jobs. Over 61 percent of everyone over the age of 16, male and female, is employed—the highest percentage on record. Let's roll up our sleeves and go to work and put America's economic engine at full throttle. We can also be heartened by our progress across the world. Most important, America is at peace tonight, and freedom is on the march. And we've done much these past years to restore our defenses, our alliances, and our leadership in the world. Our sons and daughters in the services once again wear their uniforms with pride.  But though we've made much progress, I have one major regret: I took a risk with regard to our action in Iran. It did not work, and for that I assume full responsibility. The goals were worthy. I do not believe it was wrong to try to establish contacts with a country of strategic importance or to try to save lives. And certainly it was not wrong to try to secure freedom for our citizens held in barbaric captivity. But we did not achieve what we wished, and serious mistakes were made in trying to do so. We will get to the bottom of this, and I will take whatever action is called for. But in debating the past, we must not deny ourselves the successes of the future. Let it never be said of this generation of Americans that we became so obsessed with failure that we refused to take risks that could further the cause of peace and freedom in the world. Much is at stake here, and the Nation and the world are watching to see if we go forward together in the national interest or if we let partisanship weaken us. And let there be no mistake about American policy: We will not sit idly by if our interests or our friends in the Middle East are threatened, nor will we yield to terrorist blackmail.  And now, ladies and gentlemen of the Congress, why don't we get to work? I am pleased to report that because of our efforts to rebuild the strength of America, the world is a safer place. Earlier this month I submitted a budget to defend America and maintain our momentum to make up for neglect in the last decade. Well, I ask you to vote out a defense and foreign affairs budget that says yes to protecting our country. While the world is safer, it is not safe.  Since 1970 the Soviets have invested $500 billion more on their military forces than we have. Even today, though nearly 1 in 3 Soviet families is without running hot water and the average family spends 2 hours a day shopping for the basic necessities of life, their government still found the resources to transfer $75 billion in weapons to client states in the past 5 years—clients like Syria, Vietnam, Cuba, Libya, Angola, Ethiopia, Afghanistan, and Nicaragua. With 120,000 Soviet combat and military personnel and 15,000 military advisers in Asia, Africa, and Latin America, can anyone still doubt their single-minded determination to expand their power? Despite this, the Congress cut my request for critical U.S. security assistance to free nations by 21 percent this year, and cut defense requests by $85 billion in the last 3 years.  These assistance programs serve our national interests as well as mutual interests. And when the programs are devastated, American interests are harmed. My friends, it's my duty as President to say to you again tonight that there is no surer way to lose freedom than to lose our resolve. Today the brave people of Afghanistan are showing that resolve. The Soviet Union says it wants a peaceful settlement in Afghanistan, yet it continues a brutal war and props up a regime whose days are clearly numbered. We are ready to support a political solution that guarantees the rapid withdrawal of all Soviet troops and genuine self-determination for the Afghan people.  In Central America, too, the cause of freedom is being tested. And our resolve is being tested there as well. Here, especially, the world is watching to see how this nation responds. Today over 90 percent of the people of Latin America live in democracy. Democracy is on the march in Central and South America. Communist Nicaragua is the odd man out—suppressing the church, the press, and democratic dissent and promoting subversion in the region. We support diplomatic efforts, but these efforts can never succeed if the Sandinistas win their war against the Nicaraguan people.  Our commitment to a Western Hemisphere safe from aggression did not occur by spontaneous generation on the day that we took office. It began with the Monroe Doctrine in 1823 and continues our historic bipartisan American policy. Franklin Roosevelt said we "are determined to do everything possible to maintain peace on this hemisphere." President Truman was very blunt: "International communism seeks to crush and undermine and destroy the independence of the Americas. We cannot let that happen here." And John F. Kennedy made clear that "Communist domination in this hemisphere can never be negotiated." Some in this Congress may choose to depart from this historic commitment, but I will not.  This year we celebrate the second century of our Constitution. The Sandinistas just signed theirs 2 weeks ago, and then suspended it. We won't know how my words tonight will be reported there for one simple reason: There is no free press in Nicaragua. Nicaraguan freedom fighters have never asked us to wage their battle, but I will fight any effort to shut off their lifeblood and consign them to death, defeat, or a life without freedom. There must be no Soviet beachhead in Central America.  You know, we Americans have always preferred dialog to conflict, and so, we always remain open to more constructive relations with the Soviet Union. But more responsible Soviet conduct around the world is a key element of the U.S.-Soviet agenda. Progress is also required on the other items of our agenda as well—real respect for human rights and more open contacts between our societies and, of course, arms reduction.  In Iceland, last October, we had one moment of opportunity that the Soviets dashed because they sought to cripple our Strategic Defense Initiative, SDI. I wouldn't let them do it then; I won't let them do it now or in the future. This is the most positive and promising defense program we have undertaken. It's the path, for both sides, to a safer future—a system that defends human life instead of threatening it. SDI will go forward. The United States has made serious, fair, and far-reaching proposals to the Soviet Union, and this is a moment of rare opportunity for arms reduction. But I will need, and American negotiators in Geneva will need, Congress' support. Enacting the Soviet negotiating position into American law would not be the way to win a good agreement. So, I must tell you in this Congress I will veto any effort that undercuts our national security and our negotiating leverage.  Now, today, we also find ourselves engaged in expanding peaceful commerce across the world. We will work to expand our opportunities in international markets through the Uruguay round of trade negotiations and to complete an historic free trade arrangement between the world's two largest trading partners, Canada and the United States. Our basic trade policy remains the same: We remain opposed as ever to protectionism, because America's growth and future depend on trade. But we would insist on trade that is fair and free. We are always willing to be trade partners but never trade patsies.  Now, from foreign borders let us return to our own, because America in the world is only as strong as America at home. This 100th Congress has high responsibilities. I begin with a gentle reminder that many of these are simply the incomplete obligations of the past. The American people deserve to be impatient, because we do not yet have the public house in order. We've had great success in restoring our economic integrity, and we've rescued our nation from the worst economic mess since the Depression. But there's more to do. For starters, the Federal deficit is outrageous. For years I've asked that we stop pushing onto our children the excesses of our government. And what the Congress finally needs to do is pass a constitutional amendment that mandates a balanced budget and forces government to live within its means. States, cities, and the families of America balance their budgets. Why can't we?  Next, the budget process is a sorry spectacle. The missing of deadlines and the nightmare of monstrous continuing resolutions packing hundreds of billions of dollars of spending into one bill must be stopped. We ask the Congress once again: Give us the same tool that 43 Governors have—a lineitem veto so we can carve out the boondoggles and pork, those items that would never survive on their own. I will send the Congress broad recommendations on the budget, but first I'd like to see yours. Let's go to work and get this done together.  But now let's talk about this year's budget. Even though I have submitted it within the Gramm-Rudman-Hollings deficit reduction target, I have seen suggestions that we might postpone that timetable. Well, I think the American people are tired of hearing the same old excuses. Together we made a commitment to balance the budget. Now let's keep it. As for those suggestions that the answer is higher taxes, the American people have repeatedly rejected that shop-worn advice. They know that we don't have deficits because people are taxed too little. We have deficits because big government spends too much.  Now, next month I'll place two additional reforms before the Congress. We've created a welfare monster that is a shocking indictment of our sense of priorities. Our national welfare system consists of some 59 major programs and over 6,000 pages of Federal laws and regulations on which more than $132 billion was spent in 1985. I will propose a new national welfare strategy, a program of welfare reform through State-sponsored, community-based demonstration projects. This is the time to reform this outmoded social dinosaur and finally break the poverty trap. Now, we will never abandon those who, through no fault of their own, must have our help. But let us work to see how many can be freed from the dependency of welfare and made self-supporting, which the great majority of welfare recipients want more than anything else. Next, let us remove a financial specter facing our older Americans: the fear of an illness so expensive that it can result in having to make an intolerable choice between bankruptcy and death. I will submit legislation shortly to help free the elderly from the fear of catastrophic illness.  Now let's turn to the future. It's widely said that America is losing her competitive edge. Well, that won't happen if we act now. How well prepared are we to enter the 21st century? In my lifetime, America set the standard for the world. It is now time to determine that we should enter the next century having achieved a level of excellence unsurpassed in history. We will achieve this, first, by guaranteeing that government does everything possible to promote America's ability to compete. Second, we must act as individuals in a quest for excellence that will not be measured by new proposals or billions in new funding. Rather, it involves an expenditure of American spirit and just plain American grit. The Congress will soon receive my comprehensive proposals to enhance our competitiveness, including new science and technology centers and strong new funding for basic research. The bill will include legal and regulatory reforms and weapons to fight unfair trade practices. Competitiveness also means giving our farmers a shot at participating fairly and fully in a changing world market.  Preparing for the future must begin, as always, with our children. We need to set for them new and more rigorous goals. We must demand more of ourselves and our children by raising literacy levels dramatically by the year 2000. Our children should master the basic concepts of math and science, and let's insist that students not leave high school until they have studied and understood the basic documents of our national heritage. There's one more thing we can't let up on: Let's redouble our personal efforts to provide for every child a safe and drug-free learning environment. If our crusade against drugs succeeds with our children, we will defeat that scourge all over the country.  Finally, let's stop suppressing the spiritual core of our national being. Our nation could not have been conceived without divine help. Why is it that we can build a nation with our prayers, but we can't use a schoolroom for voluntary prayer? The 100th Congress of the United States should be remembered as the one that ended the expulsion of God from America's classrooms.  The quest for excellence into the 21st century begins in the schoolroom but must go next to the workplace. More than 20 million new jobs will be created before the new century unfolds, and by then, our economy should be able to provide a job for everyone who wants to work. We must also enable our workers to adapt to the rapidly changing nature of the workplace. And I will propose substantial, new Federal commitments keyed to retraining and job mobility.  Over the next few weeks, I'll be sending the Congress a complete series of these special messages—on budget reform, welfare reform, competitiveness, including education, trade, worker training and assistance, agriculture, and other subjects. The Congress can give us these tools, but to make these tools work, it really comes down to just being our best. And that is the core of American greatness. The responsibility of freedom presses us towards higher knowledge and, I believe, moral and spiritual greatness. Through lower taxes and smaller government, government has its ways of freeing people's spirits. But only we, each of us, can let the spirit soar against our own individual standards. Excellence is what makes freedom ring. And isn't that what we do best?  We're entering our third century now, but it's wrong to judge our nation by its years. The calendar can't measure America because we were meant to be an endless experiment in freedom—with no limit to our reaches, no boundaries to what we can do, no end point to our hopes. The United States Constitution is the impassioned and inspired vehicle by which we travel through history. It grew out of the most fundamental inspiration of our existence: that we are here to serve Him by living free—that living free releases in us the noblest of impulses and the best of our abilities; that we would use these gifts for good and generous purposes and would secure them not just for ourselves and for our children but for all mankind.  Over the years—I won't count if you don't—nothing has been so heartwarming to me as speaking to America's young, and the little ones especially, so fresh-faced and so eager to know. Well, from time to time I've been with them—they will ask about our Constitution. And I hope you Members of Congress will not deem this a breach of protocol if you'll permit me to share these thoughts again with the young people who might be listening or watching this evening. I've read the constitutions of a number of countries, including the Soviet Union's. Now, some people are surprised to hear that they have a constitution, and it even supposedly grants a number of freedoms to its people. Many countries have written into their constitution provisions for freedom of speech and freedom of assembly. Well, if this is true, why is the Constitution of the United States so exceptional?  Well, the difference is so small that it almost escapes you, but it's so great it tells you the whole story in just three words: We the people. In those other constitutions, the Government tells the people of those countries what they're allowed to do. In our Constitution, we the people tell the Government what it can do, and it can do only those things listed in that document and no others. Virtually every other revolution in history has just exchanged one set of rulers for another set of rulers. Our revolution is the first to say the people are the masters and government is their servant. And you young people out there, don't ever forget that. Someday you could be in this room, but wherever you are, America is depending on you to reach your highest and be your best—because here in America, we the people are in charge.  Just three words: We the people—those are the kids on Christmas Day looking out from a frozen sentry post on the 38th parallel in Korea or aboard an aircraft carrier in the Mediterranean. A million miles from home, but doing their duty.  We the people—those are the warmhearted whose numbers we can't begin to count, who'll begin the day with a little prayer for hostages they will never know and MIA families they will never meet. Why? Because that's the way we are, this unique breed we call Americans.  We the people—they're farmers on tough times, but who never stop feeding a hungry world. They're the volunteers at the hospital choking back their tears for the hundredth time, caring for a baby struggling for life because of a mother who used drugs. And you'll forgive me a special memory—it's a million mothers like Nelle Reagan who never knew a stranger or turned a hungry person away from her kitchen door.  We the people—they refute last week's television commentary downgrading our optimism and our idealism. They are the entrepreneurs, the builders, the pioneers, and a lot of regular folks—the true heroes of our land who make up the most uncommon nation of doers in history. You know they're Americans because their spirit is as big as the universe and their hearts are bigger than their spirits.  We the people—starting the third century of a dream and standing up to some cynic who's trying to tell us we're not going to get any better. Are we at the end? Well, I can't tell it any better than the real thing—a story recorded by James Madison from the final moments of the Constitutional Convention, September 17th, 1787. As the last few members signed the document, Benjamin Franklin—the oldest delegate at 81 years and in frail health—looked over toward the chair where George Washington daily presided. At the back of the chair was painted the picture of a Sun on the horizon. And turning to those sitting next to him, Franklin observed that artists found it difficult in their painting to distinguish between a rising and a setting Sun.  Well, I know if we were there, we could see those delegates sitting around Franklin-leaning in to listen more closely to him. And then Dr. Franklin began to share his deepest hopes and fears about the outcome of their efforts, and this is what he said: "I have often looked at that picture behind the President without being able to tell whether it was a rising or setting Sun: But now at length I have the happiness to know that it is a rising and not a setting Sun." Well, you can bet it's rising because, my fellow citizens, America isn't finished. Her best days have just begun.  Thank you, God bless you, and God bless America. 	R
Fellow-Citizens of the Senate and House of Representatives:  The public buildings being advanced to a stage to afford accommodation for Congress, I offer you my sincere congratulations on the recommencement of your duties in the Capitol.  In bringing you to view the incidents most deserving attention which have occurred since your last session, I regret to have to state that several of our principal cities have suffered by sickness, that an unusual drought has prevailed in the Middle and Western States, and that a derangement has been felt in some of our moneyed institutions which has proportionably affected their credit. I am happy, however, to have it in my power to assure you that the health of our cities is now completely restored; that the produce of the year, though less abundant than usual, will not only be amply sufficient for home consumption, but afford a large surplus for the supply of the wants of other nations, and that the derangement in the circulating paper medium, by being left to those remedies which its obvious causes suggested and the good sense and virtue of our fellow citizens supplied, has diminished.  Having informed Congress, on the 27th of February last, that a treaty of amity, settlement, and limits had been concluded in this city between the United States and Spain, and ratified by the competent authorities of the former, full confidence was entertained that it would have been ratified by His Catholic Majesty with equal promptitude and a like earnest desire to terminate on the conditions of that treaty the differences which had so long existed between the two countries. Every view which the subject admitted of was thought to have justified this conclusion.  Great losses had been sustained by citizens of the United States from Spanish cruisers more than 20 years before, which had not been redressed. These losses had been acknowledged and provided for by a treaty as far back as the year 1802, which, although concluded at Madrid, was not then ratified by the Government of Spain, nor since, until the last year, when it was suspended by the late treaty, a more satisfactory provision to both parties, as was presumed, having been made for them. Other differences had arisen in this long interval, affecting their highest interests, which were likewise provided for by this last treaty.  The treaty itself was formed on great consideration and a thorough knowledge of all circumstances, the subject matter of every article having been for years under discussion and repeated references having been made by the minister of Spain to his Government on the points respecting which the greatest difference of opinion prevailed. It was formed by a minister duly authorized for the purpose, who had represented his Government in the United States and been employed in this long- protracted negotiation several years, and who, it is not denied, kept strictly within the letter of his instructions. The faith of Spain was therefore pledged, under circumstances of peculiar force and solemnity, for its ratification.  On the part of the United States this treaty was evidently acceded to in a spirit of conciliation and concession. The indemnity for injuries and losses so long before sustained, and now again acknowledged and provided for, was to be paid by them without becoming a charge on the treasury of Spain. for territory ceded by Spain other territory of great value, to which our claim was believed to be well founded, was ceded by the United States, and in a quarter more interesting to her. This cession was nevertheless received as the means of indemnifying our citizens in a considerable sum, the presumed amount of their losses.  Other considerations of great weight urged the cession of this territory by Spain. It was surrounded by the Territories of the United States on every side except on that of the ocean. Spain had lost her authority over it, and, falling into the hands of adventurers connected with the savages, it was made the means of unceasing annoyance and injury to our Union in many of its most essential interests. By this cession, then, Spain ceded a territory in reality of no value to her and obtained concessions of the highest importance by the settlement of long- standing differences with the United States affecting their respective claims and limits, and likewise relieved herself from the obligation of a treaty relating to it which she had failed to fulfill, and also from the responsibility incident to the most flagrant and pernicious abuses of her rights where she could not support her authority.  It being known that the treaty was formed under these circumstances, not a doubt was entertained that His Catholic Majesty would have ratified it without delay. I regret to have to state that this reasonable expectation has been disappointed; that the treaty was not ratified within the time stipulated and has not since been ratified. As it is important that the nature and character of this unexpected occurrence should be distinctly understood, I think it my duty to communicate to you all the facts and circumstances in my possession relating to it.  Anxious to prevent all future disagreement with Spain by giving the most prompt effect to the treaty which had been thus concluded, and particularly by the establishment of a Government in Florida which should preserve order there, the minister of the United States who had been recently appointed to His Catholic Majesty, and to whom the ratification by his Government had been committed to be exchanged for that of Spain, was instructed to transmit the latter to the Department of State as soon as obtained, by a public ship subjected to his order for the purpose.  Unexpected delay occurring in the ratification by Spain, he requested to be informed of the cause. It was stated in reply that the great importance of the subject, and a desire to obtain explanations on certain points which were not specified, had produced the delay, and that an envoy would be dispatched to the United States to obtain such explanations of this Government. The minister of the United States offered to give full explanation on any point on which it might be desired, which proposal was declined. Having communicated this result to the Department of State in August last, he was instructed, notwithstanding the disappointment and surprise which it produced, to inform the Government of Spain that if the treaty should be ratified and transmitted here at any time before the meeting of Congress it would be received and have the same effect as if it had been ratified in due time.  This order was executed, the authorized communication was made to the Government of Spain, and by its answer, which has just been received, we are officially made acquainted for the first time with the causes which have prevented the ratification of the treaty by His Catholic Majesty. It is alleged by the minister of Spain that his Government had attempted to alter one of the principal articles of the treaty by a declaration which the minister of the United States had been ordered to present when he should deliver the ratification by his Government in exchange for that of Spain, and of which he gave notice, explanatory of the sense in which that article was understood. It is further alleged that this Government had recently tolerated or protected an expedition from the United States against the Province of Texas. These two imputed acts are stated as the reasons which have induced His Catholic Majesty to withhold his ratification from the treaty, to obtain explanations respecting which it is repeated that an envoy would be forthwith dispatched to the United States. How far these allegations will justify the conduct of the Government of Spain will appear on a view of the following facts and the evidence which supports them:  It will be seen by the documents transmitted herewith that the declaration mentioned relates to a clause in the 8th article concerning certain grants of land recently made by His Catholic Majesty in Florida, which it was understood had conveyed all the lands which until then had been ungranted; it was the intention of the parties to annul these latter grants, and that clause was drawn for that express purpose and for none other. The date of these grants was unknown, but it was understood to be posterior to that inserted in the article; indeed, it must be obvious to all that if that provision in the treaty had not the effect of annulling these grants, it would be altogether nugatory. Immediately after the treaty was concluded and ratified by this Government an intimation was received that these grants were of anterior date to that fixed on by the treaty and that they would not, of course, be affected by it. The mere possibility of such a case, so inconsistent with the intention of the parties and the meaning of the article, induced this Government to demand an explanation on the subject, which was immediately granted, and which corresponds with this statement.  WRT the other act alleged, that this Government had tolerated or protected an expedition against Texas, it is utterly without foundation. Every discountenance has invariably been given to any such attempt within the limits of the United States, as is fully evinced by the acts of the Government and the proceedings of the courts. There being cause, however, to apprehend, in the course of the last summer, that some adventurers entertained views of the kind suggested, the attention of the constituted authorities in that quarter was immediately drawn to them, and it is known that the project, whatever it might be, has utterly failed.  These facts will, it is presumed, satisfy every impartial mind that the Government of Spain had no justifiable cause for declining to ratify the treaty. A treaty concluded in conformity with instructions is obligatory, in good faith, in all its stipulations, according to the true intent and meaning of the parties. Each party is bound to ratify it. If either could set it aside without the consent of the other, there would be no longer any rules applicable to such transactions between nations.  By this proceeding the Government of Spain has rendered to the United States a new and very serious injury. It has been stated that a minister would be sent to ask certain explanations of this Government; but if such were desired, why were they not asked within the time limited for the ratification?  Is it contemplated to open a new negotiation respecting any of the articles or conditions of the treaty? If that were done, to what consequences might it not lead? At what time and in what manner would a new negotiation terminate? By this proceeding Spain has formed a relation between the two countries which will justify any measures on the part of the United States which a strong sense of injury and a proper regard for the rights and interests of the nation may dictate.  In the course to be pursued these objects should be constantly held in view and have their due weight. Our national honor must be maintained, and a new and a distinguished proof be afforded of that regard for justice and moderation which has invariably governed the councils of this free people. It must be obvious to all that if the United States had been desirous of making conquests, or had been even willing to aggrandize themselves in that way, they could have had no inducement to form this treaty. They would have much cause for gratulation at the course which has been pursued by Spain. An ample field for ambition is open before them, but such a career is not consistent with the principles of their Government nor the interests of the nation.  From a full view of all circumstances, it is submitted to the consideration of Congress whether it will not be proper for the United States to carry the conditions of the treaty into effect in the same manner as if it had been ratified by Spain, claiming on their part all its advantages and yielding to Spain those secured to her. By pursuing this course we shall rest on the sacred ground of right, sanctioned in the most solemn manner by Spain herself by a treaty which she was bound to ratify, for refusing to do which she must incur the censure of other nations, even those most friendly to her, while by confining ourselves within that limit we can not fail to obtain their well-merited approbation.  We must have peace on a frontier where we have been so long disturbed; our citizens must be indemnified for losses so long since sustained, and for which indemnity has been so unjustly withheld from them. Accomplishing these great objects, we obtain all that is desirable.  But His Catholic Majesty has twice declared his determination to send a minister to the United States to ask explanations on certain points and to give them respecting his delay to ratify the treaty. Shall we act by taking the ceded territory and proceeding to execute the other conditions of the treaty before this minister arrives and is heard?  This is a case which forms a strong appeal to the candor, the magnanimity, and the honor of this people. Much is due to courtesy between nations. By a short delay we shall lose nothing, for, resting on the ground of immutable truth and justice, we can not be diverted from our purpose.  It ought to be presumed that the explanations which may be given to the minister of Spain will be satisfactory, and produce the desired result. In any event, the delay for the purpose mentioned, being a further manifestation of the sincere desire to terminate in the most friendly manner all differences with Spain, can not fail to be duly appreciated by His Catholic Majesty as well as by other powers. It is submitted, therefore, whether it will not be proper to make the law proposed for carrying the conditions of the treaty into effect, should it be adopted, contingent; to suspend its operation, upon the responsibility of the Executive, in such manner as to afford an opportunity for such friendly explanations as may be desired during the present session of Congress.  I communicate to Congress a copy of the treaty and of the instructions to the minister of the United States at Madrid respecting it; of his correspondence with the minister of Spain, and of such other documents as may be necessary to give a full view of the subject.  In the course which the Spanish Government have on this occasion thought proper to pursue it is satisfactory to know that they have not been countenanced by any other European power. On the contrary, the opinion and wishes both of France and Great Britain have not been withheld either from the United States or from Spain, and have been unequivocal in favor of the ratification. There is also reason to believe that the sentiments of the Imperial Government of Russia have been the same, and that they have also been made known to the cabinet of Madrid.  In the civil war existing between Spain and the Spanish Provinces in this hemisphere the greatest care has been taken to enforce the laws intended to preserve an impartial neutrality. Our ports have continued to be equally open to both parties and on the same conditions, and our citizens have been equally restrained from interfering in favor of either to the prejudice of the other. The progress of the war, however has operated manifestly in favor of the colonies. Buenos Ayres still maintains unshaken the independence which it declared in 1816, and has enjoyed since 1810. Like success has also lately attended Chili and the Provinces north of the La Plata bordering on it, and likewise Venezuela.  This contest has from its commencement been very interesting to other powers, and to none more so than to the United States. A virtuous people may and will confine themselves within the limit of a strict neutrality; but it is not in their power to behold a conflict so vitally important to their neighbors without the sensibility and sympathy which naturally belong to such a case. It has been the steady purpose of this Government to prevent that feeling leading to excess, and it is very gratifying to have it in my power to state that so strong has been the sense throughout the whole community of what was due to the character and obligations of the nation that very few examples of a contrary kind have occurred.  The distance of the colonies from the parent country and the great extent of their population and resources gave them advantages which it was anticipated at a very early period would be difficult for Spain to surmount. The steadiness, consistency, and success with which they have pursued their object, as evinced more particularly by the undisturbed sovereignty which Buenos Ayres has so long enjoyed, evidently give them a strong claim to the favorable consideration of other nations. These sentiments on the part of the United States have not been withheld from other powers, with whom it is desirable to act in concert. Should it become manifest to the world that the efforts of Spain to subdue these Provinces will be fruitless, it may be presumed that the Spanish Government itself will give up the contest. In producing such a determination it can not be doubted that the opinion of friendly powers who have taken no part in the controversy will have their merited influence.  It is of the highest importance to our national character and indispensable to the morality of our citizens that all violations of our neutrality should be prevented. No door should be left open for the evasion of our laws, no opportunity afforded to any who may be disposed to take advantage of it to compromit the interest or the honor of the nation. It is submitted, therefore, to the consideration of Congress whether it may not be advisable to revise the laws with a view to this desirable result.  It is submitted also whether it may not be proper to designate by law the several ports or places along the coast at which only foreign ships of war and privateers may be admitted. The difficulty of sustaining the regulations of our commerce and of other important interests from abuse without such designation furnishes a strong motive for this measure.  At the time of the negotiation for the renewal of the commercial convention between the United States and Great Britain a hope had been entertained that an article might have been agreed upon mutually satisfactory to both countries, regulating upon principles of justice and reciprocity the commercial intercourse between the United States and the British possessions as well in the West Indies as upon the continent of North America. The plenipotentiaries of the two Governments not having been able to come to an agreement on this important interest, those of the United States reserved for the consideration of this Government the proposals which had been presented to them as the ultimate offer on the part of the British Government, and which they were not authorized to accept. On their transmission here they were examined with due deliberation, the result of which was a new effort to meet the views of the British Government. The minister of the United States was instructed to make a further proposal, which has not been accepted. It was, however, declined in an amicable manner. I recommend to the consideration of Congress whether further prohibitory provisions in the laws relating to this intercourse may not be expedient. It is seen with interest that although it has not been practicable as yet to agree in any arrangement of this important branch of their commerce, such is the disposition of the parties that each will view any regulations which the other may make respecting it in the most friendly light.  By the 5th article of the convention concluded on [1818-10-20], it was stipulated that the differences which have arisen between the two Governments with respect to the true intent and meaning of the 5th article of the treaty of Ghent, in relation to the carrying away by British officers of slaves from the United States after the exchange of the ratifications of the treaty of peace, should be referred to the decision of some friendly sovereign or state to be named for that purpose. The minister of the United States has been instructed to name to the British Government a foreign sovereign, the common friend to both parties, for the decision of this question. The answer of that Government to the proposal when received will indicate the further measures to be pursued on the part of the United States.  Although the pecuniary embarrassments which affected various parts of the Union during the latter part of the preceding year have during the present been considerably augmented, and still continue to exist, the receipts into the Treasury to the 30th of September last have amounted to $19M. After defraying the current expenses of the Government, including the interest and reimbursement of the public debt payable to that period, amounting to $18.2M, there remained in the Treasury on that day more than $2.5M, which, with the sums receivable during the remainder of the year, will exceed the current demands upon the Treasury for the same period.  The causes which have tended to diminish the public receipts could not fail to have a corresponding effect upon the revenue which has accrued upon imposts and tonnage during the three first quarters of the present year. It is, however, ascertained that the duties which have been secured during that period exceed $18M, and those of the whole year will probably amount to $23M.  For the probably receipts of the next year I refer you to the statements which will be transmitted from the Treasury, which will enable you to judge whether further provision be necessary.  The great reduction in the price of the principal articles of domestic growth which has occurred during the present year, and the consequent fall in the price of labor, apparently so favorable to the success of domestic manufactures, have not shielded them against other causes adverse to their prosperity. The pecuniary embarrassments which have so deeply affected the commercial interests of the nation have been no less adverse to our manufacturing establishments in several sections of the Union.  The great reduction of the currency which the banks have been constrained to make in order to continue specie payments, and the vitiated character of it where such reductions have not been attempted, instead of placing within the reach of these establishments the pecuniary aid necessary to avail themselves of the advantages resulting from the reduction in the prices of the raw materials and of labor, have compelled the banks to withdraw from them a portion of the capital heretofore advanced to them. That aid which has been refused by the banks has not been obtained from other sources, owing to the loss of individual confidence from the frequent failures which have recently occurred in some of our principal commercial cities.  An additional cause for the depression of these establishments may probably be found in the pecuniary embarrassments which have recently affected those countries with which our commerce has been principally prosecuted. Their manufactures, for the want of a ready or profitable market at home, have been shipped by the manufacturers to the United States, and in many instances sold at a price below their current value at the place of manufacture. Although this practice may from its nature be considered temporary or contingent, it is not on that account less injurious in its effects. Uniformity in the demand and price of an article is highly desirable to the domestic manufacturer.  It is deemed of great importance to give encouragement to our domestic manufacturers. In what manner the evils which have been adverted to may be remedied, and how far it may be practicable in other respects to afford to them further encouragement, paying due regard to the other great interests of the nation, is submitted to the wisdom of Congress.  The survey of the coast for the establishment of fortifications is now nearly completed, and considerable progress has been made in the collection of materials for the construction of fortifications in the Gulf of Mexico and in the Chesapeake Bay. The works on the eastern bank of the Potomac below Alexandria and on the Pea Patch, in the Delaware, are much advanced, and it is expected that the fortifications at the Narrows, in the harbor of NY, will be completed the present year. To derive all the advantages contemplated from these fortifications it was necessary that they should be judiciously posted, and constructed with a view to permanence. The progress hitherto has therefore been slow; but as the difficulties in parts heretofore the least explored and known are surmounted, it will in future be more rapid. As soon as the survey of the coast is completed, which it is expected will be done early in the next spring, the engineers employed in it will proceed to examine for like purposes the northern and northwestern frontiers.  The troops intended to occupy a station at the mouth of the St. Peters, on the Mississippi, have established themselves there, and those who were ordered to the mouth of the Yellow Stone, on the Missouri, have ascended that river to the Council Bluff, where they will remain until the next spring, when they will proceed to the place of their destination. I have the satisfaction to state that this measure has been executed in amity with the Indian tribes, and that it promises to produce, in regard to them, all the advantages which were contemplated by it.  Much progress has likewise been made in the construction of ships of war and in the collection of timber and other materials for ship building. It is not doubted that our Navy will soon be augmented to the number and placed in all respects on the footing provided for by law.  The Board, consisting of engineers and naval officers, have not yet made their final report of sites for two naval depots, as instructed according to the resolutions of [1818-03-18] and [1818-04-20], but they have examined the coast therein designated, and their report is expected in the next month.  For the protection of our commerce in the Mediterranean, along the southern Atlantic coast, in the Pacific and Indian oceans, it has been found necessary to maintain a strong naval force, which it seems proper for the present to continue. There is much reason to believe that if any portion of the squadron heretofore stationed in the Mediterranean should be withdrawn our intercourse with the powers bordering on that sea would be much interrupted, if not altogether destroyed. Such, too, has been the growth of a spirit of piracy in the other quarters mentioned, by adventurers from every country, in abuse of the friendly flags which they have assumed, that not to protect our commerce there would be to abandon it has a prey to their rapacity.  Due attention has likewise been paid to the suppression of the slave trade, in compliance with a law of the last session. Orders have been given to the commanders of all our public ships to seize all vessels navigated under our flag engaged in that trade, and to bring them in to be proceeded against in the manner prescribed by the law. It is hoped that these vigorous measures, supported by like acts by other nations, will soon terminate a commerce so disgraceful to the civilized world.  In the execution of the duty imposed by these acts, and of a high trust connected with it, it is with deep regret I have to state the loss which has been sustained by the death of Commodore Perry. His gallantry in a brilliant exploit in the late war added to the renown of his country. His death is deplored as a national misfortune.      JAMES MONROE   	DR
Fellow Citizens of the Senate and of the House of Representatives:  On your assembling to perform the high trusts which the people of the United States have confided to you, of legislating for their common welfare, it gives me pleasure to congratulate you upon the happy condition of our beloved country. By the favor of Divine Providence health is again restored to us, peace reigns within our borders, abundance crowns the labors of our fields, commerce and domestic industry flourish and increase, and individual happiness rewards the private virtue and enterprise of our citizens.  Our condition abroad is no less honorable than it is prosperous at home. Seeking nothing that is not right and determined to submit to nothing that is wrong, but desiring honest friendships and liberal intercourse with all nations, the United States have gained throughout the world the confidence and respect which are due to a policy so just and so congenial to the character of the American people and to the spirit of their institutions.  In bringing to your notice the particular state of our foreign affairs, it affords me high gratification to inform you that they are in a condition which promises the continuance of friendship with all nations.  With Great Britain the interesting question of our North East boundary remains still undecided. A negotiation, however, upon that subject has been renewed since the close of the last Congress, and a proposition has been submitted to the British Government with the view of establishing, in conformity with the resolution of the Senate, the line designated by the treaty of 1783. Though no definitive answer has been received, it may be daily looked for, and I entertain a hope that the overture may ultimately lead to a satisfactory adjustment of this important matter.  I have the satisfaction to inform you that a negotiation which, by desire of the House of Representatives, was opened some years ago with the British Government, for the erection of light houses on the Bahamas, has been successful. Those works, when completed, together with those which the United States have constructed on the western side of the Gulf of Florida, will contribute essentially to the safety of navigation in that sea. This joint participation in establishments interesting to humanity and beneficial to commerce is worthy of two enlightened nations, and indicates feelings which can not fail to have a happy influence upon their political relations. It is gratifying to the friends of both to perceive that the intercourse between the two people is becoming daily more extensive, and that sentiments of mutual good will have grown up befitting their common origin and justifying the hope that by wise counsels on each side not only unsettled questions may be satisfactorily terminated, but new causes of misunderstanding prevented.  Not withstanding that I continue to receive the most amicable assurances from the Government of France, and that in all other respects the most friendly relations exist between the United States and that Government, it is to be regretted that the stipulations of the convention concluded on 1831-07-04 remain in some important parts unfulfilled.  By the second article of that convention it was stipulated that the sum payable to the United States should be paid at Paris, in 6 annual installments, into the hands of such person or persons as should be authorized by the Government of the United States to receive it, and by the same article the first installment was payable on 1833-02-02. By the act of Congress of 1832-07-13 it was made the duty of the Secretary of the Treasury to cause the several installments, with the interest thereon, to be received from the French Government and transferred to the United States in such manner as he may deem best; and by the same act of Congress the stipulations on the part of the United States in the convention were in all respects fulfilled. Not doubting that a treaty thus made and ratified by the two Governments, and faithfully executed by the United States, would be promptly complied with by the other party, and desiring to avoid the risk and expense of intermediate agencies, the Secretary of the Treasury deemed it advisable to receive and transfer the first installment by means of a draft upon the French minister of finance.  A draft for this purpose was accordingly drawn in favor of the cashier of the Bank of the United States for the amount accruing to the United States out of the first installment, and the interest payable with it. This bill was not drawn at Washington until 5 days after the installment was payable at Paris, and was accompanied by a special authority from the President authorizing the cashier or his assigns to receive the amount. The mode thus adopted of receiving the installment was officially made known to the French Government by the American chargé d'affaires at Paris, pursuant to instructions from the Department of State. The bill, however, though not presented for payment until 1833-03-23, was not paid, and for the reason assigned by the French minister of finance that no appropriation had been made by the French Chambers. It is not known to me that up to that period any appropriation had been required of the Chambers, and although a communication was subsequently made to the Chambers by direction of the King, recommending that the necessary provision should be made for carrying the convention into effect, it was at an advanced period of the session, and the subject was finally postponed until the next meeting of the Chambers.  Not withstanding it has been supposed by the French ministry that the financial stipulations of the treaty can not be carried into effect without an appropriation by the Chambers, it appears to me to be not only consistent with the character of France, but due to the character of both Governments, as well as to the rights of our citizens, to treat the convention, made and ratified in proper form, as pledging the good faith of the French Government for its execution, and as imposing upon each department an obligation to fulfill it; and I have received assurances through our chargé d'affaires at Paris and the French minister plenipotentiary at Washington, and more recently through the minister of the United States at Paris, that the delay has not proceeded from any indisposition on the part of the King and his ministers to fulfill their treaty, and that measures will be presented at the next meeting of the Chambers, and with a reasonable hope of success, to obtain the necessary appropriation.  It is necessary to state, however, that the documents, except certain lists of vessels captured, condemned, or burnt at sea, proper to facilitate the examination and liquidation of the reclamations comprised in the stipulations of the convention, and which by the 6th article France engaged to communicate to the United States by the intermediary of the legation, though repeatedly applied for by the American chargé d'affaires under instructions from this Government, have not yet been communicated; and this delay, it is apprehended, will necessarily prevent the completion of the duties assigned to the commissioners within the time at present prescribed by law.  The reasons for delaying to communicate these documents have not been explicitly stated, and this is the more to be regretted as it is not understood that the interposition of the Chambers is in any manner required for the delivery of those papers.  Under these circumstances, in a case so important to the interests of our citizens and to the character of our country, and under disappointments so unexpected, I deemed it my duty, however I might respect the general assurances to which I have adverted, no longer to delay the appointment of a minister plenipotentiary to Paris, but to dispatch him in season to communicate the result of his application to the French Government at an early period of your session. I accordingly appointed a distinguished citizen for this purpose, who proceeded on his mission in August last and was presented to the King early in the month of October. He is particularly instructed as to all matters connected with the present posture of affairs, and I indulge the hope that with the representations he is instructed to make, and from the disposition manifested by the King and his ministers in their recent assurances to our minister at Paris, the subject will be early considered, and satisfactorily disposed of at the next meeting of the Chambers.  As this subject involves important interests and has attracted a considerable share of the public attention, I have deemed it proper to make this explicit statement of its actual condition, and should I be disappointed in the hope now entertained the subject will be again brought to the notice of Congress in such manner as the occasion may require.  The friendly relations which have always been maintained between the United States and Russia have been further extended and strengthened by the treaty of navigation and commerce concluded on 1832-12-06, and sanctioned by the Senate before the close of its last session. The ratifications having been since exchanged, the liberal provisions of the treaty are now in full force, and under the encouragement which they have secured a flourishing and increasing commerce, yielding its benefits to the enterprise of both nations, affords to each the just recompense of wise measures, and adds new motives for that mutual friendship which the two countries have hitherto cherished toward each other.  It affords me peculiar satisfaction to state that the Government of Spain has at length yielded to the justice of the claims which have been so long urged in behalf of our citizens, and has expressed a willingness to provide an indemnification as soon as the proper amount can be agreed upon. Upon this latter point it is probable an understanding had taken place between the minister of the United States and the Spanish Government before the decease of the late King of Spain; and, unless that event may have delayed its completion, there is reason to hope that it may be in my power to announce to you early in your present session the conclusion of a convention upon terms not less favorable than those entered into for similar objects with other nations. That act of justice would well accord with the character of Spain, and is due to the United States from their ancient friend. It could not fail to strengthen the sentiments of amity and good will between the two nations which it is so much the wish of the United States to cherish and so truly the interest of both to maintain.  By the first section of an act of Congress passed on 1832-07-13 the tonnage duty on Spanish ships arriving from the ports of Spain previous to 1817-10-20, being 5 cents per ton. That act was intended to give effect on our side to an arrangement made with the Spanish Government by which discriminating duties of tonnage were to be abolished in the ports of the United States and Spain on he vessels of the two nations. Pursuant to that arrangement, which was carried into effect on the part of Spain on 1832-05-20, by a royal order dated 1832-04-29, American vessels in the ports of Spain have paid 5 cents per ton, which rate of duty is also paid in those ports by Spanish ships; but as American vessels pay no tonnage duty in the ports of the United States, the duty of 5 cents payable in our ports by Spanish vessels under the act above mentioned is really a discriminating duty, operating to the disadvantage of Spain.  Though no complaint has yet been made on the part of Spain, we are not the less bound by the obligations of good faith to remove the discrimination, and I recommend that the act be amended accordingly. As the royal order above alluded to includes the ports of the Balearic and Canary islands as well as those of Spain, it would seem that the provisions of the act of Congress should be equally extensive, and that for the repayments of such duties as may have been improperly received an addition should be made to the sum appropriated at the last session of Congress for refunding discriminating duties.  As the arrangement referred to, however, did not embrace the islands of Cuba and Puerto Rico, discriminating duties to the prejudice of American shipping continue to be levied there. From the extent of the commerce carried on between the United States and those islands, particularly the former, this discrimination causes serious injury to one of those great national interests which it has been considered an essential part of our policy to cherish, and has given rise to complaints on the part of our merchants. Under instructions given to our minister at Madrid, earnest representations have been made by him to the Spanish Government upon this subject, and there is reason to expect, from the friendly disposition which is entertained toward this country, that a beneficial change will be produced.  The disadvantage, however, to which our shipping is subjected by the operation of these discriminating duties requires that they be met by suitable countervailing duties during your present session, power being at the same time vested in the President to modify or discontinue them as the discriminating duties on American vessels or their cargoes may be modified or discontinued at those islands. Intimations have been given to the Spanish Government that the United States may be obliged to resort to such measures as are of necessary self-defense, and there is no reason to apprehend that it would be unfavorably received. The proposed proceeding if adopted would not be permitted, however, in any degree to induce a relaxation in the efforts of our minister to effect a repeal of this irregularity by friendly negotiation, and it might serve to give force to his representations by showing the dangers to which that valuable trade is exposed by the obstructions and burdens which a system of discriminating and countervailing duties necessarily produces.  The selection and preparation of the Florida archives for the purpose of being delivered over to the United States, in conformity with the royal order as mentioned in my last annual message, though in progress, has not yet been completed. This delay has been produced partly by causes which were unavoidable, particularly the prevalence of the cholera at Havana; but measures have been taken which it is believed will expedite the delivery of those important records.  Congress were informed at the opening of the last session that "owing, as was alleged, to embarrassments in the finances of Portugal, consequent upon the civil war in which that nation was engaged", payment had been made of only one installment of the amount which the Portuguese Government had stipulated to pay for indemnifying our citizens for property illegally captured in the blockade of Terceira. Since that time a postponement for two years, with interest, of the 2 remaining installments was requested by the Portuguese Government, and as a consideration it offered to stipulate that rice of the United States should be admitted into Portugal at the same duties as Brazilian rice. Being satisfied that no better arrangement could be made, my consent was given, and a royal order of the King of Portugal was accordingly issued on 1833-02-04 for the reduction of the duty on rice of the United States. It would give me great pleasure if in speaking of that country, in whose prosperity the United States are so much interested, and with whom a long- subsisting, extensive, and mutually advantageous commercial intercourse has strengthened the relation of friendship, I could announce to you the restoration of its internal tranquillity.  Subsequently to the commencement of the last session of Congress the final installment payable by Denmark under the convention of 1830-03-28 was received. The commissioners for examining the claims have since terminated their labors, and their awards have been paid at the Treasury as they have been called for. The justice rendered to our citizens by that Government is thus completed, and a pledge is thereby afforded for the maintenance of that friendly intercourse becoming the relations that the two nations mutually bear to each other.  It is satisfactory to inform you that the Danish Government have recently issued an ordinance by which the commerce with the island of St. Croix is placed on a more liberal footing than heretofore. This change can not fail to prove beneficial to the trade between the United States and that colony, and the advantages likely to flow from it may lead to greater relaxations in the colonial systems of other nations.  The ratifications of the convention with the King of the two Sicilies have been duly exchanged, and the commissioners appointed for examining the claims under it have entered upon the duties assigned to them by law. The friendship that the interests of the two nations require of them being now established, it may be hoped that each will enjoy the benefits which a liberal commerce should yield to both.  A treaty of amity and commerce between the United States and Belgium was concluded during the last winter and received the sanction of the Senate, but the exchange of the ratifications has been hitherto delayed, in consequence, in the first instance, of some delay in the reception of the treaty at Brussels, and, subsequently, of the absence of the Belgian minister of foreign affairs at the important conferences in which his Government is engaged at London. That treaty does but embody those enlarged principles of friendly policy which it is sincerely hoped will always regulate the conduct of the two nations having such strong motives to maintain amicable relations toward each other and so sincerely desirous to cherish them.  With all the other European powers with whom the United States have formed diplomatic relations and with the Sublime Porte the best understanding prevails. From all I continue to receive assurances of good will toward the United States -- assurances which it gives me no less pleasure to reciprocate than to receive. With all, the engagements which have been entered into are fulfilled with good faith on both sides. Measures have also been taken to enlarge our friendly relations and extend our commercial intercourse with other States. The system we have pursued of aiming at no exclusive advantages, of dealing with all on terms of fair and equal reciprocity, and of adhering scrupulously to all our engagements is well calculated to give success to efforts intended to be mutually beneficial.  The wars of which the southern part of this continent was so long the theater, and which were carried on either by the mother country against the States which had formerly been her colonies or by the States against each other, having terminated, and their civil dissensions having so far subsided as with few exceptions no longer to disturb the public tranquillity, it is earnestly hoped those States will be able to employ themselves without interruption in perfecting their institutions, cultivating the arts of peace, and promoting by wise councils and able exertions the public and private prosperity which their patriotic struggles so well entitle them to enjoy.  With those States our relations have under-gone but little change during the present year. No reunion having yet taken place between the States which composed the Republic of Colombia, our chargé d'affaires at Bogota has been accredited to the Government of New Grenada, and we have, therefore, no diplomatic relations with Venezuela and Equator, except as they may be included in those heretofore formed with the Colombian Republic.  It is understood that representatives from the three stattes were about to assemble at Bogota to confer on the subject of their mutual interests, particularly that of their union, and if the result should render it necessary, measures will be taken on our part to preserve with each that friendship and those liberal commercial connections which it has been the constant desire of the United States to cultivate with their sister Republics of this hemisphere. Until the important question of reunion shall be settled, however, the different matters which have been under discussion between the United States and the Republic of Colombia, or either of the States which composed it, are not likely to be brought to a satisfactory issue.  In consequence of the illness of the chargé d'affaires appointed to Central America at the last session of Congress, he was prevented from proceeding on his mission until the month of October. It is hoped, however, that he is by this time at his post, and that the official intercourse, unfortunately so long interrupted, has been thus renewed on the part of the two nations so amicably and advantageously connected by engagements founded on the most enlarged principles of commercial reciprocity.  It is gratifying to state that since my last annual message some of the most important claims of our fellow citizens upon the Government of Brazil have been satisfactorily adjusted, and a reliance is placed on the friendly dispositions manifested by it that justice will also be done in others. No new causes of complaint have arisen, and the trade between the two countries flourishes under the encouragement secured to it by the liberal provisions of the treaty.  It is cause of regret that, owing, probably, to the civil dissensions which have occupied the attention of the Mexican Government, the time fixed by the treaty of limits with the United States for the meeting of the commissioners to define the boundaries between the two nations has been suffered to expire without the appointment of any commissioners on the part of that Government. While the true boundary remains in doubt by either party it is difficult to give effect to those measures which are necessary to the protection and quiet of our numerous citizens residing near that frontier. The subject is one of great solicitude to the United States, and will not fail to receive my earnest attention.  The treaty concluded with Chili and approved by the Senate at its last session was also ratified by the Chilian Government, but with certain additional and explanatory articles of a nature to have required it to be again submitted to the Senate. The time limited for the exchange of the ratification, however, having since expired, the action of both Governments on the treaty will again become necessary.  The negotiations commenced with the Argentine Republic relative to the outrages committed on our vessels engaged in the fisheries at the Falkland Islands by persons acting under the color of its authority, as well as the other matters in controversy between the two Governments, have been suspended by the departure of the chargé d'affaires of the United States from Buenos Ayres. It is understood, however, that a minister was subsequently appointed by that Government to renew the negotiation in the United States, but though daily expected he has not yet arrived in this country.  With Peru no treaty has yet been formed, and with Bolivia no diplomatic intercourse has yet been established. It will be my endeavor to encourage those sentiments of amity and that liberal commerce which belong to the relations in which all the independent States of this continent stand toward each other.  I deem it proper to recommend to your notice the revision of our consular system. This has become an important branch of the public service, in as much as it is intimately connected with the preservation of our national character abroad, with the interest of our citizens in foreign countries, with the regulation and care of our commerce, and with the protection of our sea men. At the close of the last session of Congress I communicated a report from the Secretary of State upon the subject, to which I now refer, as containing information which may be useful in any inquiries that Congress may see fit to institute with a view to a salutary reform of the system.  It gives me great pleasure to congratulate you upon the prosperous condition of the finances of the country, as will appear from the report which the Secretary of the Treasury will in due time lay before you. The receipts into the Treasury during the present year will amount to more than $32,000,000. The revenue derived from customs will, it is believed, be more than $28,000,000, and the public lands will yield about $3,0900,000. The expenditures within the year for all objects, including $2,572,240.99 on account of the public debt, will not amount to $25,000,000, and a large balance will remain in the Treasury after satisfying all the appropriations chargeable on the revenue for the present year.  The measures taken by the Secretary of the Treasury will probably enable to pay off in the course of the present year the residue of the exchanged 4.5% stock, redeemable on 1834-01-01. It has therefore been included in the estimated expenditures of this year, and forms a part of the sum above stated to have been paid on account of the public debt. The payment of this stock will reduce the whole debt of the United States, funded and unfunded, to the sum of $4,760,082.08, and as provision has already been made for the 4.5% stocks above mentioned, and charged in the expenses of the present year, the sum last stated is all that now remains of the national debt; and the revenue of the coming year, together with the balance now in the Treasury, will be sufficient to discharge it, after meeting the current expenses of the Government. Under the power given to the commissioners of the sinking fund, it will, I have no doubt, be purchased on favorable terms within the year.  From this view of the state of the finances and the public engagements yet to be fulfilled you will perceive that if Providence permits me to meet you at another session I shall have the high gratification of announcing to you that the national debt is extinguished. I can not refrain from expressing the pleasure I feel at the near approach of that desirable event. The short period of time within which the public debt will have been discharged is strong evidence of the abundant resources of the country and of the prudence and economy with which the Government has heretofore been administered. We have waged two wars since we became a nation, with one of the most powerful kingdoms in the world, both of them undertaken in defense of our dearest rights, been successfully prosecuted and honorably terminated; and many of those who partook in the first struggle as well as in the second will have lived to see the last item of the debt incurred in these necessary but expensive conflicts faithfully and honestly discharged. And we shall have the proud satisfaction of bequeathing to the public servants who follow us in the administration of the Government the rare blessing of a revenue sufficiently abundant, raised without injustice or oppression to our citizens, and unencumbered with any burdens but what they themselves shall think proper to impose upon it.  The flourishing state of the finances ought not, however, to encourage us to indulge in a lavish expenditure of the public treasure. The receipts of the present year do not furnish the test by which we are to estimate the income of the next. The changes made in our revenue system by the acts of Congress of 1832 and 1833, and more especially by the former, have swelled the receipts of the present year far beyond the amount to be expected in future years upon the reduced tariff of duties. The shortened credits on revenue bonds and the cash duties on woolens which were introduced by the act of 1832, and took effect on 1832-03-04, have brought large sums into the Treasury in 1833, which, according to the credits formerly given, would not have been payable until 1834, and would have formed a part of the income of that year. These causes would of themselves produce a great diminution of the receipts in the year 1834 as compared with the present one, and they will be still more diminished by the reduced rates of duties which take place on 1834-01-01 on some of the most important and productive articles.  Upon the best estimates that can be made the receipts of the next year, with the aid of the unappropriated amount now in the Treasury, will not be much more than sufficient to meet the expenses of the year and pay the small remnant of the national debt which yet remains unsatisfied. I can not, therefore, recommend to you any alteration in the present tariff of duties. The rate as now fixed by law on the various articles was adopted at the last session of Congress, as a matter of compromise, with unusual unanimity, and unless it is found to produce more than the necessities of the Government call for there would seem to be no reason at this time to justify a change.  But while I forbear to recommend any further reduction of the duties beyond that already provided for by the existing laws, I must earnestly and respectfully press upon Congress the importance of abstaining from all appropriations which are not absolutely required for the public interest and authorized by the powers clearly delegated to the United States. We are beginning a new era in our Government. The national debt, which has so long been a burden on the Treasury, will be finally discharged in the course of the ensuing year. No more memory will afterwards be needed than what may be necessary to meet the ordinary expenses of the Government. Now, then, is the proper moment to fix our system of expenditure on firm and durable principles, and I can not too strongly urge the necessity of a rigid economy and an inflexible determination not to enlarge the income beyond the real necessities of the Government and not to increase the wants of the Government by unnecessary and profuse expenditures.  If a contrary course should be pursued, it may happen that the revenue of 1834 will fall short of the demands upon it, and after reducing the tariff in order to lighten the burdens of the people, and providing for a still further reduction to take effect hereafter, it would be much to be deplored if at the end of another year we should find ourselves obliged to retrace our steps and impose additional taxes to meet unnecessary expenditures.  It is my duty on this occasion to call your attention to the destruction of the public building occupied by the Treasury Department, which happened since the last adjournment of Congress. A thorough inquiry into the causes of this loss was directed and made at the time, the result of which will be duly communicated to you. I take pleasure, however, in stating here that by the laudable exertions of the officers of the Department and many of the citizens of the District but few papers were lost, and none that will materially affect the public interest.  The public convenience requires that another building should be erected as soon as practicable, and in providing for it it will be advisable to enlarge in some manner the accommodations for the public officers of the several Departments, and to authorize the erection of suitable depositories for the safe-keeping of the public documents and records.  Since the last adjournment of Congress the Secretary of the Treasury has directed the money of the United States to be deposited in certain State banks designated by him, and he will immediately lay before you his reasons for this direction. I concur with him entirely in the view he has taken on the subject, and some months before the removal I urged upon the Department the propriety of taking that step. The near approach of the day on which the charter [see APP Note] will expire, as well as the conduct of the bank, appeared to me to call for this measure upon the high considerations of public interest and public duty. The extent of its misconduct, however, although known to be great, was not at that time fully developed by proof. It was not until late in the month of August that I received from the Government directors an official report establishing beyond question that this great and powerful institution had been actively engaged in attempting to influence the elections of the public officers by means of its money, and that, in violation of the express provisions of its charter, it had by a formal resolution placed its funds at the disposition of its president to be employed in sustaining the political power of the bank. A copy of this resolution is contained in the report of the Government directors before referred to, and how ever the object may be disguised by cautious language, no one can doubt that this money was in truth intended for electioneering purposes, and the particular uses to which it was proved to have been applied abundantly show that it was so understood. Not only was the evidence complete as to the past application of the money and power of the bank to electioneering purposes, but that the resolution of the board of directors authorized the same course to be pursued in future.  It being thus established by unquestionable proof that the Bank of the United States was converted into a permanent electioneering engine, it appeared to me that the path of duty which the executive department of the Government ought to pursue was not doubtful. As by the terms of the bank charter no officer but the Secretary of the Treasury could remove the deposits, it seemed to me that this authority ought to be at once exerted to deprive that great corporation of the support and countenance of the Government in such an use of its funds [see APP Note] and such an exertion of its power. In this point of the case the question is distinctly presented whether the people of the United States are to govern through representatives chosen by their unbiased suffrages or whether the money and power of a great corporation are to be secretly exerted to influence their judgment and control their decisions. It must now be determined whether the bank is to have its candidates for all offices in the country, from the highest to the lowest, or whether candidates on both sides of political questions shall be brought forward as heretofore and supported by the usual means.  At this time the efforts of the bank to control public opinion, through the distresses of some and the fears of others, are equally apparent, and, if possible, more objectionable. By a curtailment of its accommodations more rapid than any emergency requires, and even while it retains specie to an almost unprecedented amount in its vaults, it is attempting to produce great embarrassment in one portion of the community, while through presses known to have been sustained by its money it attempts by unfounded alarms to create a panic in all.  These are the means by which it seems to expect that it can force a restoration of the deposits, and as a necessary consequence extort from Congress a renewal of its charter. I am happy to know that through the good sense of our people the effort to get up a panic has hitherto failed, and that through the increased accommodations which the State banks have been enabled to afford, no public distress has followed the exertions of the bank, and it can not be doubted that the exercise of its power and the expenditure of its money, as well as its efforts to spread groundless alarm, will be met and rebuked as they deserve. In my own sphere of duty I should feel myself called on by the facts disclosed to order a scire facias against the bank, with a view to put an end to the chartered rights it has so palpably violated, were it not that the charter itself will expire as soon as a decision would probably be obtained from the court of last resort.  I called the attention of Congress to this subject in my last annual message, and informed them that such measures as were within the reach of the Secretary of the Treasury had been taken to enable him to judge whether the public deposits in the Bank of the United States were entirely safe; but that as his single powers might be inadequate to the object, I recommended the subject to Congress as worthy of their serious investigation, declaring it as my opinion that an inquiry into the transactions of that institution, embracing the branches as well as the principal bank, was called for by the credit which was given throughout the country to many serious charges impeaching their character, and which, if true, might justly excite the apprehension that they were no longer a safe depository for the public money. The extent to which the examination thus recommended was gone into is spread upon your journals, and is too well known to require to be stated. Such as was made resulted in a report from a majority of the Committee of Ways and Means touching certain specified points only, concluding with a resolution that the Government deposits might safely be continued in the Bank of the United States. This resolution was adopted at the close of the session by the vote of a majority of the House of Representatives.  Although I may not always be able to concur in the views of the public interest or the duties of its agents which may be taken by the other departments of the Government or either of its branches, I am, not withstanding, wholly incapable of receiving otherwise than with the most sincere respect all opinions or suggestions proceeding from such a source, and in respect to none am I more inclined to do so than to the House of Representatives. But it will be seen from the brief views at this time taken of the subject by myself, as well as the more ample ones presented by the Secretary of the Treasury, that the change in the deposits which has been ordered has been deemed to be called for by considerations which are not affected by the proceedings referred to, and which, if correctly viewed by that Department, rendered its act a matter of imperious duty.  Coming as you do, for the most part, immediately from the people and the States by election, and possessing the fullest opportunity to know their sentiments, the present Congress will be sincerely solicitous to carry into full and fair effect the will of their constituents in regard to this institution. It will be for those in whose behalf we all act to decide whether the executive department of the Government, in the steps which it has taken on this subject, has been found in the line of its duty.  The accompanying report of the Secretary of War, with the documents annexed to it, exhibits the operations of the War Department for the past year and the condition of the various subjects intrusted to its administration.  It will be seen from them that the Army maintains the character it has heretofore acquired for efficiency and military knowledge. Nothing has occurred since your last session to require its services beyond the ordinary routine duties which upon the sea-board and the in-land frontier devolve upon it in a time of peace. The system so wisely adopted and so long pursued of constructing fortifications at exposed points and of preparing and collecting the supplies necessary for the military defense of the country, and thus providently furnishing in peace the means of defense in war, has been continued with the usual results. I recommend to your consideration the various subjects suggested in the report of the Secretary of War. Their adoption would promote the public service and meliorate the condition of the Army.  Our relations with the various Indian tribes have been undisturbed since the termination of the difficulties growing out of the hostile aggressions of the Sac and Fox Indians. Several treaties have been formed for the relinquishment of territory to the United States and for the migration of the occupants to [see APP Note] the region assigned for their residence West of the Mississippi. Should these treaties be ratified by the Senate, provision will have been made for the removal of almost all the tribes remaining E of that river and for the termination of many difficult and embarrassing questions arising out of their anomalous political condition.  It is to be hoped that those portions of two of the Southern tribes, which in that event will present the only remaining difficulties, will realize the necessity of emigration, and will speedily resort to it. My original convictions upon this subject have been confirmed by the course of events for several years, and experience is every day adding to their strength. That those tribes can not exist surrounded by our settlements and in continual contact with our citizens is certain. They have neither the intelligence, the industry, the moral habits, nor the desire of improvement which are essential to any favorable change in their condition. Established in the midst of another and a superior race, and without appreciating the causes of their inferiority or seeking to control them, they must necessarily yield to the force of circumstances and ere long disappear.  Such has been their fate heretofore, and if it is to be averted -- and it is -- it can only be done by a general removal beyond our boundary and by the reorganization of their political system upon principles adapted to the new relations in which they will be placed. The experiment which has been recently made has so far proved successful. The emigrants generally are represented to be prosperous and contented, the country suitable to their wants and habits, and the essential articles of subsistence easily procured. When the report of the commissioners now engaged in investigating the condition and prospects of these Indians and in devising a plan for their intercourse and government is received, I trust ample means of information will be in possession of the Government for adjusting all the unsettled questions connected with this interesting subject.  The operations of the Navy during the year and its present condition are fully exhibited in the annual report from the Navy Department.  Suggestions are made by the Secretary of various improvements, which deserve careful consideration, and most of which, if adopted, bid fair to promote the efficiency of this important branch of the public service. Among these are the new organization of the Navy Board, the revision of the pay to officers, and a change in the period of time or in the manner of making the annual appropriations, to which I beg leave to call your particular attention.  The views which are presented on almost every portion of our naval concerns, and especially on the amount of force and the number of officers, and the general course of policy appropriate in the present state of our country for securing the great and useful purposes of naval protection in peace and due preparation for the contingencies of war, meet with my entire approbation.  It will be perceived from the report referred to that the fiscal concerns of the establishment are in an excellent condition, and it is hoped that Congress may feel disposed to make promptly every suitable provision desired either for preserving or improving the system.  The general Post Office Department has continued, upon the strength of its own resources, to facilitate the means of communication between the various portions of the Union with increased activity. The method, however, in which the accounts of the transportation of the mail have always been kept appears to have presented an imperfect view of its expenses. It has recently been discovered that from the earliest records of the Department the annual statements have been calculated to exhibit an amount considerably short of the actual expense incurred for that service. These illusory statements, together with the expense of carrying into effect the law of the last session of Congress establishing new mail routes, and a disposition on the part of the head of the Department to gratify the wishes of the public in the extension of mail facilities, have induced him to incur responsibilities for their improvement beyond what the current resources of the Department would sustain. As soon as he had discovered the imperfection of the method he caused an investigation to be made of its results and applied the proper remedy to correct the evil. It became necessary for him to withdraw some of the improvements which he had made to bring the expenses of the Department within its own resources. These expenses were incurred for the public good, and the public have enjoyed their benefit. They are now but partially suspended, and that where they may be discontinued with the least inconvenience to the country.  The progressive increase in the income from postages has equaled the highest expectations, and it affords demonstrative evidence of the growing importance and great utility of this Department. The details are exhibited in the accompanying report of the PostMaster General.  The many distressing accidents which have of late occurred in that portion of our navigation carried on by the use of steam power deserve the immediate and unremitting attention of the constituted authorities of the country. The fact that the number of those fatal disasters is constantly increasing, not withstanding the great improvements which are every where made in the machinery employed and in the rapid advances which have made in that branch of science, shows very clearly that they are in a great degree the result of criminal negligence on the part of those by whom the vessels are navigated and to whose care and attention the lives and property of our citizens are so extensively intrusted.  That these evils may be greatly lessened, if not substantially removed, by means of precautionary and penal legislation seems to be highly probable [see APP Note]. So far, therefore, as the subject can be regarded as within the constitutional purview of Congress I earnestly recommend it to your prompt and serious consideration.  I would also call your attention to the views I have heretofore expressed of the propriety of amending the Constitution in relation to the mode of electing the President and the Vice-President of the United States. Regarding it as all important to the future quiet and harmony of the people that every intermediate agency in the election of these officers should be removed and that their eligibility should be limited to one term of either 4 or 6 years, I can not too earnestly invite your consideration of the subject.  Trusting that your deliberations on all the topics of general interest to which I have adverted, and such others as your more extensive knowledge of the wants of our beloved country may suggest, may be crowned with success, I tender you in conclusion the cooperation which it may be in my power to afford them.  ANDREW JACKSON 	D
To the Congress of the United States:  As you assemble for the discharge of the duties you have assumed as the representatives of a free and generous people, your meeting is marked by an interesting and impressive incident. With the expiration of the present session of the Congress the first century of our constitutional existence as a nation will be completed.  Our survival for one hundred years is not sufficient to assure us that we no longer have dangers to fear in the maintenance, with all its promised blessings, of a government rounded upon the freedom of the people. The time rather admonishes us to soberly inquire whether in the past we have always closely kept in the course of safety, and whether we have before us a way plain and clear which leads to happiness and perpetuity.  When the experiment of our Government was undertaken, the chart adopted for our guidance was the Constitution. Departure from the lines there laid down is failure. It is only by a strict adherence to the direction they indicate and by restraint within the limitations they fix that we can furnish proof to the world of the fitness of the American people for self-government.  The equal and exact justice of which we boast as the underlying principle of our institutions should not be confined to the relations of our citizens to each other. The Government itself is under bond to the American people that in the exercise of its functions and powers it will deal with the body of our citizens in a manner scrupulously honest and fair and absolutely just. It has agreed that American citizenship shall be the only credential necessary to justify the claim of equality before the law, and that no condition in life shall give rise to discrimination in the treatment of the people by their Government.  The citizen of our Republic in its early days rigidly insisted upon full compliance with the letter of this bond, and saw stretching out before him a clear field for individual endeavor. His tribute to the support of his Government was measured by the cost of its economical maintenance, and he was secure in the enjoyment of the remaining recompense of his steady and contented toil. In those days the frugality of the people was stamped upon their Government, and was enforced by the free, thoughtful, and intelligent suffrage of the citizen. Combinations, monopolies, and aggregations of capital were either avoided or sternly regulated and restrained. The pomp and glitter of governments less free offered no temptation and presented no delusion to the plain people who, side by side, in friendly competition, wrought for the ennoblement and dignity of man, for the solution of the problem of free government, and for the achievement of the grand destiny awaiting the land which God had given them.  A century has passed. Our cities are the abiding places of wealth and luxury; our manufactories yield fortunes never dreamed of by the fathers of the Republic; our business men are madly striving in the race for riches, and immense aggregations of capital outrun the imagination in the magnitude of their undertakings.  We view with pride and satisfaction this bright picture of our country's growth and prosperity, while only a closer scrutiny develops a somber shading. Upon more careful inspection we find the wealth and luxury of our cities mingled with poverty and wretchedness and unremunerative toil. A crowded and constantly increasing urban population suggests the impoverishment of rural sections and discontent with agricultural pursuits. The farmer's son, not satisfied with his father's simple and laborious life, joins the eager chase for easily acquired wealth.  We discover that the fortunes realized by our manufacturers are no longer solely the reward of sturdy industry and enlightened foresight, but that they result from the discriminating favor of the Government and are largely built upon undue exactions from the masses of our people. The gulf between employers and the employed is constantly widening, and classes are rapidly forming, one comprising the very rich and powerful, while in another are found the toiling poor.  As we view the achievements of aggregated capital, we discover the existence of trusts, combinations, and monopolies, while the citizen is struggling far in the rear or is trampled to death beneath an iron heel. Corporations, which should be the carefully restrained creatures of the law and the servants of the people, are fast becoming the people's masters.  Still congratulating ourselves upon the wealth and prosperity of our country and complacently contemplating every incident of change inseparable from these conditions, it is our duty as patriotic citizens to inquire at the present stage of our progress how the bond of the Government made with the people has been kept and performed.  Instead of limiting the tribute drawn from our citizens to the necessities of its economical administration, the Government persists in exacting from the substance of the people millions which, unapplied and useless, lie dormant in its Treasury. This flagrant injustice and this breach of faith and obligation add to extortion the danger attending the diversion of the currency of the country from the legitimate channels of business.  Under the same laws by which these results are produced the Government permits many millions more to be added to the cost of the living of our people and to be taken from our consumers, which unreasonably swell the profits of a small but powerful minority.  The people must still be taxed for the support of the Government under the operation of tariff laws. But to the extent that the mass of our citizens are inordinately burdened beyond any useful public purpose and for the benefit of a favored few, the Government, under pretext of an exercise of its taxing power, enters gratuitously into partnership with these favorites, to their advantage and to the injury of a vast majority of our people.  This is not equality before the law.  The existing situation is injurious to the health of our entire body politic. It stifles in those for whose benefit it is permitted all patriotic love of country, and substitutes in its place selfish greed and grasping avarice. Devotion to American citizenship for its own sake and for what it should accomplish as a motive to our nation's advancement and the happiness of all our people is displaced by the assumption that the Government, instead of being the embodiment of equality, is but an instrumentality through which especial and individual advantages are to be gained.  The arrogance of this assumption is unconcealed. It appears in the sordid disregard of all but personal interests, in the refusal to abate for the benefit of others one iota of selfish advantage, and in combinations to perpetuate such advantages through efforts to control legislation and improperly influence the suffrages of the people.  The grievances of those not included within the circle of these beneficiaries, when fully realized, will surely arouse irritation and discontent. Our farmers, long suffering and patient, struggling in the race of life with the hardest and most unremitting toil, will not fail to see, in spite of misrepresentations and misleading fallacies, that they are obliged to accept such prices for their products as are fixed in foreign markets where they compete with the farmers of the world; that their lands are declining in value while their debts increase, and that without compensating favor they are forced by the action of the Government to pay for the benefit of others such enhanced prices for the things they need that the scanty returns of their labor fail to furnish their support or leave no margin for accumulation.  Our workingmen, enfranchised from all delusions and no longer frightened by the cry that their wages are endangered by a just revision of our tariff laws, will reasonably demand through such revision steadier employment, cheaper means of living in their homes, freedom for themselves and their children from the doom of perpetual servitude, and an open door to their advancement beyond the limits of a laboring class. Others of our citizens, whose comforts and expenditures are measured by moderate salaries and fixed incomes, will insist upon the fairness and justice of cheapening the cost of necessaries for themselves and their families.  When to the selfishness of the beneficiaries of unjust discrimination under our laws there shall be added the discontent of those who suffer from such discrimination, we will realize the fact that the beneficent purposes of our Government, dependent upon the patriotism and contentment of our people, are endangered.  Communism is a hateful thing and a menace to peace and organized government; but the communism of combined wealth and capital, the outgrowth of overweening cupidity and selfishness, which insidiously undermines the justice and integrity of free institutions, is not less dangerous than the communism of oppressed poverty and toil, which, exasperated by injustice and discontent, attacks with wild disorder the citadel of rule.  He mocks the people who proposes that the Government shall protect the rich and that they in turn will care for the laboring poor. Any intermediary between the people and their Government or the least delegation of the care and protection the Government owes to the humblest citizen in the land makes the boast of free institutions a glittering delusion and the pretended boon of American citizenship a shameless imposition.  A just and sensible revision of our tariff laws should be made for the relief of those of our countrymen who suffer under present conditions. Such a revision should receive the support of all who love that justice and equality due to American citizenship; of all who realize that in this justice and equality our Government finds its strength and its power to protect the citizen and his property; of all who believe that the contented competence and comfort of many accord better with the spirit of our institutions than colossal fortunes unfairly gathered in the hands of a few; of all who appreciate that the forbearance and fraternity among our people, which recognize the value of every American interest, are the surest guaranty of our national progress, and of all who desire to see the products of American skill and ingenuity in every market of the world, with a resulting restoration of American commerce.  The necessity of the reduction of our revenues is so apparent as to be generally conceded, but the means by which this end shall be accomplished and the sum of direct benefit which shall result to our citizens present a controversy of the utmost importance. There should be no scheme accepted as satisfactory by which the burdens of the people are only apparently removed. Extravagant appropriations of public money, with all their demoralizing consequences, should not be tolerated, either as a means of relieving the Treasury of its present surplus or as furnishing pretext for resisting a proper reduction in tariff rates. Existing evils and injustice should be honestly recognized, boldly met, and effectively remedied. There should be no cessation of the struggle until a plan is perfected, fair and conservative toward existing industries, but which will reduce the cost to consumers of the necessaries of life, while it provides for our manufacturers the advantage of freer raw materials and permits no injury to the interests of American labor.  The cause for which the battle is waged is comprised within lines clearly and distinctly defined. It should never be compromised. It is the people's cause.  It can not be denied that the selfish and private interests which are so persistently heard when efforts are made to deal in a just and comprehensive manner with our tariff laws are related to, if they are not responsible for, the sentiment largely prevailing among the people that the General Government is the fountain of individual and private aid; that it may be expected to relieve with paternal care the distress of citizens and communities, and that from the fullness of its Treasury it should, upon the slightest possible pretext of promoting the general good, apply public funds to the benefit of localities and individuals. Nor can it be denied that there is a growing assumption that, as against the Government and in favor of private claims and interests, the usual rules and limitations of business principles and just dealing should be waived.  These ideas have been unhappily much encouraged by legislative acquiescence. Relief from contracts made with the Government is too easily accorded in favor of the citizen; the failure to support claims against the Government by proof is often supplied by no better consideration than the wealth of the Government and the poverty of the claimant; gratuities in the form of pensions are granted upon no other real ground than the needy condition of the applicant, or for reasons less valid; and large sums are expended for public buildings and other improvements upon representations scarcely claimed to be related to public needs and necessities.  The extent to which the consideration of such matters subordinate and postpone action upon subjects of great public importance, but involving no special private or partisan interest, should arrest attention and lead to reformation.  A few of the numerous illustrations of this condition may be stated.  The crowded condition of the calendar of the Supreme Court, and the delay to suitors and denial of justice resulting therefrom, has been strongly urged upon the attention of the Congress, with a plan for the relief of the situation approved by those well able to judge of its merits. While this subject remains without effective consideration, many laws have been passed providing for the holding of terms of inferior courts at places to suit the convenience of localities, or to lay the foundation of an application for the erection of a new public building.  Repeated recommendations have been submitted for the amendment and change of the laws relating to our public lands so that their spoliation and diversion to other uses than as homes for honest settlers might be prevented. While a measure to meet this conceded necessity of reform remains awaiting the action of the Congress, many claims to the public lands and applications for their donation, in favor of States and individuals, have been allowed.  A plan in aid of Indian management, recommended by those well informed as containing valuable features in furtherance of the solution of the Indian problem, has thus far failed of legislative sanction, while grants of doubtful expediency to railroad corporations, permitting them to pass through Indian reservations, have greatly multiplied.  The propriety and necessity of the erection of one or more prisons for the confinement of United States convicts, and a post-office building in the national capital, are not disputed. But these needs yet remain answered, while scores of public buildings have been erected where their necessity for public purposes is not apparent.  A revision of our pension laws could easily be made which would rest upon just principles and provide for every worthy applicant. But while our general pension laws remain confused and imperfect, hundreds of private pension laws are annually passed, which are the sources of unjust discrimination and popular demoralization.  Appropriation bills for the support of the Government are defaced by items and provisions to meet private ends, and it is freely asserted by responsible and experienced parties that a bill appropriating money for public internal improvement would fail to meet with favor unless it contained items more for local and private advantage than for public benefit.  These statements can be much emphasized by an ascertainment of the proportion of Federal legislation which either bears upon its face its private character or which upon examination develops such a motive power.  And yet the people wait and expect from their chosen representatives such patriotic action as will advance the welfare of the entire country; and this expectation can only be answered by the performance of public duty with unselfish purpose. Our mission among the nations of the earth and our success in accomplishing the work God has given the American people to do require of those intrusted with the making and execution of our laws perfect devotion, above all other things, to the public good.  This devotion will lead us to strongly resist all impatience of constitutional limitations of Federal power and to persistently check the increasing tendency to extend the scope of Federal legislation into the domain of State and local jurisdiction upon the plea of subserving the public welfare. The preservation of the partitions between proper subjects of Federal and local care and regulation is of such importance under the Constitution, which is the law of our very existence, that no consideration of expediency or sentiment should tempt us to enter upon doubtful ground. We have undertaken to discover and proclaim the richest blessings of a free government, with the Constitution as our guide. Let us follow the way it points out; it will not mislead us. And surely no one who has taken upon himself the solemn obligation to support and preserve the Constitution can find justification or solace for disloyalty in the excuse that he wandered and disobeyed in search of a better way to reach the public welfare than the Constitution offers.  What has been said is deemed not inappropriate at a time when, from a century's height, we view the way already trod by the American people and attempt to discover their future path.  The seventh President of the United States--the soldier and statesman and at all times the firm and brave friend of the people--in vindication of his course as the protector of popular rights and the champion of true American citizenship, declared:      The ambition which leads me on is an anxious desire and a fixed determination to restore to the people unimpaired the sacred trust they have confided to my charge; to, heal the wounds of the Constitution and to preserve it from further violation; to persuade my countrymen, so far as I may, that it is not in a splendid government supported by powerful monopolies and aristocratical establishments that they will find happiness or their liberties protection, but in a plain system, void of pomp, protecting all and granting favors to none, dispensing its blessings like the dews of heaven, unseen and unfelt save in the freshness and beauty they contribute to produce. It is such a government that the genius of our people requires--such an one only under which our States may remain for ages to come united, prosperous, and free.    In pursuance of a constitutional provision requiring the President from time to time to give to the Congress information of the state of the Union, I have the satisfaction to announce that the close of the year finds the United States in the enjoyment of domestic tranquillity and at peace with all the nations.  Since my last annual message our foreign relations have been strengthened and improved by performance of international good offices and by new and renewed treaties of amity, commerce, and reciprocal extradition of criminals.  Those international questions which still await settlement are all reasonably within the domain of amicable negotiation, and there is no existing subject of dispute between the United States and any foreign power that is not susceptible of satisfactory adjustment by frank diplomatic treatment.  The questions between Great Britain and the United States relating to the rights of American fishermen, under treaty and international comity, in the territorial waters of Canada and Newfoundland, I regret to say, are not yet satisfactorily adjusted.  These matters were fully treated in my message to the Senate of February 20 1888, together with which a convention, concluded under my authority with Her Majesty's Government on the 15th of February last, for the removal of all causes of misunderstanding, was submitted by me for the approval of the Senate.  This treaty having been rejected by the Senate, I transmitted a message to the Congress on the 23d of August last reviewing the transactions and submitting for consideration certain recommendations for legislation concerning the important questions involved.  Afterwards, on the 12th of September, in response to a resolution of the Senate, I again communicated fully all the information in my possession as to the action of the government of Canada affecting the commercial relations between the Dominion and the United States, including the treatment of American fishing vessels in the ports and waters of British North America.  These communications have all been published, and therefore opened to the knowledge of both Houses of Congress, although two were addressed to the Senate alone.  Comment upon or repetition of their contents would be superfluous, and I am not aware that anything has since occurred which should be added to the facts therein stated. Therefore I merely repeat, as applicable to the present time, the statement which will be found in my message to the Senate of September 12 last, that--      Since March 3, 1887, no case has been reported to the Department of State wherein complaint was made of unfriendly or unlawful treatment of American fishing vessels on the part of the Canadian authorities in which reparation was not promptly and satisfactorily obtained by the United States consul-general at Halifax.    Having essayed in the discharge of my duty to procure by negotiation the settlement of a long-standing cause of dispute and to remove a constant menace to the good relations of the two countries, and continuing to be of opinion that the treaty of February last, which failed to receive the approval of the Senate, did supply "a satisfactory, practical, and final adjustment, upon a basis honorable and just to both parties, of the difficult and vexed question to which it related," and having subsequently and unavailingly recommended other legislation to Congress which I hoped would suffice to meet the exigency created by the rejection of the treaty, I now again invoke the earnest and immediate attention of the Congress to the condition of this important question as it now stands before them and the country, and for the settlement of which I am deeply solicitous.  Near the close of the month of October last occurrences of a deeply regrettable nature were brought to my knowledge, which made it my painful but imperative duty to obtain with as little delay as possible a new personal channel of diplomatic intercourse in this country with the Government of Great Britain.  The correspondence in relation to this incident will in due course be laid before you, and will disclose the unpardonable conduct of the official referred to in his interference by advice and counsel with the suffrages of American citizens in the very crisis of the Presidential election then near at hand, and also in his subsequent public declarations to justify his action, superadding impugnment of the Executive and Senate of the United States in connection with important questions now pending in controversy between the two Governments.  The offense thus committed was most grave, involving disastrous possibilities to the good relations of the United States and Great Britain, constituting a gross breach of diplomatic privilege and an invasion of the purely domestic affairs and essential sovereignty of the Government to which the envoy was accredited.  Having first fulfilled the just demands of international comity by affording full opportunity for Her Majesty's Government to act in relief of the situation, I considered prolongation of discussion to be unwarranted, and thereupon declined to further recognize the diplomatic character of the person whose continuance in such function would destroy that mutual confidence which is essential to the good understanding of the two Governments and was inconsistent with the welfare and self-respect of the Government of the United States.  The usual interchange of communication has since continued through Her Majesty's legation in this city.  My endeavors to establish by international cooperation measures for the prevention of the extermination of fur seals in Bering Sea have not been relaxed, and I have hopes of being enabled shortly to submit an effective and satisfactory conventional projet with the maritime powers for the approval of the Senate.  The coastal boundary between our Alaskan possessions and British Columbia, I regret to say, has not received the attention demanded by its importance, and which on several occasions heretofore I have had the honor to recommend to the Congress.  The admitted impracticability, if not impossibility, of making an accurate and precise survey and demarcation of the boundary line as it is recited in the treaty with Russia under which Alaska was ceded to the United States renders it absolutely requisite for the prevention of international jurisdictional complications that adequate appropriation for a reconnoissance and survey to obtain proper knowledge of the locality and the geographical features of the boundary should be authorized by Congress with as little delay as possible.  Knowledge to be only thus obtained is an essential prerequisite for negotiation for ascertaining a common boundary, or as preliminary to any other mode of settlement.  It is much to be desired that some agreement should be reached with Her Majesty's Government by which the damages to life and property on the Great Lakes may be alleviated by removing or humanely regulating the obstacles to reciprocal assistance to wrecked or stranded vessels.  The act of June 19, 1878, which offers to Canadian vessels free access to our inland waters in aid of wrecked or disabled vessels, has not yet become effective through concurrent action by Canada.  The due protection of our citizens of French origin or descent from claim of military service in the event of their returning to or visiting France has called forth correspondence which was laid before you at the last session.  In the absence of conventional agreement as to naturalization, which is greatly to be desired, this Government sees no occasion to recede from the sound position it has maintained not only with regard to France, but as to all countries with which the United States have not concluded special treaties.  Twice within the last year has the imperial household of Germany been visited by death; and I have hastened to express the sorrow of this people, and their appreciation of the lofty character of the late aged Emperor William, and their sympathy with the heroism under suffering of his son the late Emperor Frederick.  I renew my recommendation of two years ago for the passage of a bill for the refunding to certain German steamship lines of the interest upon tonnage dues illegally exacted.  On the 12th [2d] of April last I laid before the House of Representatives full information respecting our interests in Samoa; and in the subsequent correspondence on the same subject, which will be laid before you in due course, the history of events in those islands will be found.  In a message accompanying my approval, on the 1st day of October last, of a bill for the exclusion of Chinese laborers, I laid before Congress full information and all correspondence touching the negotiation of the treaty with China concluded at this capital on the 12th day of March, 1888, and which, having been confirmed by the Senate with certain amendments, was rejected by the Chinese Government. This message contained a recommendation that a sum of money be appropriated as compensation to Chinese subjects who had suffered injuries at the hands of lawless men within our jurisdiction. Such appropriation having been duly made, the fund awaits reception by the Chinese Government.  It is sincerely hoped that by the cessation of the influx of this class of Chinese subjects, in accordance with the expressed wish of both Governments, a cause of unkind feeling has been permanently removed.  On the 9th of August, 1887, notification was given by the Japanese minister at this capital of the adjournment of the conference for the revision of the treaties of Japan with foreign powers, owing to the objection of his Government to the provision in the draft jurisdictional convention which required the submission of the criminal code of the Empire to the powers in advance of its becoming operative. This notification was, however, accompanied with an assurance of Japan's intention to continue the work of revision.  Notwithstanding this temporary interruption of negotiations, it is hoped that improvements may soon be secured in the jurisdictional system as respects foreigners in Japan, and relief afforded to that country from the present undue and oppressive foreign control in matters of commerce.  I earnestly recommend that relief be provided for the injuries accidentally caused to Japanese subjects in the island Ikisima by the target practice of one of our vessels.  A diplomatic mission from Korea has been received, and the formal intercourse between the two countries contemplated by the treaty of 1882 is now established.  Legislative provision is hereby recommended to organize and equip consular courts in Korea.  Persia has established diplomatic representation at this capital, and has evinced very great interest in the enterprise and achievements of our citizens. I am therefore hopeful that beneficial commercial relations between the two countries may be brought about.  I announce with sincere regret that Hayti has again become the theater of insurrection, disorder, and bloodshed. The titular government of president Saloman has been forcibly overthrown and he driven out of the country to France, where he has since died.  The tenure of power has been so unstable amid the war of factions that has ensued since the expulsion of President Saloman that no government constituted by the will of the Haytian people has been recognized as administering responsibly the affairs of that country. Our representative has been instructed to abstain from interference between the warring factions, and a vessel of our Navy has been sent to Haytian waters to sustain our minister and for the protection of the persons and property of American citizens.  Due precautions have been taken to enforce our neutrality laws and prevent our territory from becoming the base of military supplies for either of the warring factions.  Under color of a blockade, of which no reasonable notice had been given, and which does not appear to have been efficiently maintained, a seizure of vessels under the American flag has been reported, and in consequence measures to prevent and redress any molestation of our innocent merchantmen have been adopted.  Proclamation was duly made on the 9th day of November, 1887, of the conventional extensions of the treaty of June 3, 1875, with Hawaii, under which relations of such special and beneficent intercourse have been created.  In the vast field of Oriental commerce now unfolded from our Pacific borders no feature presents stronger recommendations for Congressional action than the establishment of communication by submarine telegraph with Honolulu.  The geographical position of the Hawaiian group in relation to our Pacific States creates a natural interdependency and mutuality of interest which our present treaties were intended to foster, and which make close communication a logical and commercial necessity.  The wisdom of concluding a treaty of commercial reciprocity with Mexico has been heretofore stated in my messages to Congress, and the lapse of time and growth of commerce with that close neighbor and sister Republic confirm the judgment so expressed.  The precise relocation of our boundary line is needful, and adequate appropriation is now recommended.  It is with sincere satisfaction that I am enabled to advert to the spirit of good neighborhood and friendly cooperation and conciliation that has marked the correspondence and action of the Mexican authorities in their share of the task of maintaining law and order about the line of our common boundary.  The long-pending boundary dispute between Costa Rica and Nicaragua was referred to my arbitration, and by an award made on the 22d of March last the question has been finally settled to the expressed satisfaction of both of the parties in interest.  The Empire of Brazil, in abolishing the last vestige of slavery among Christian nations, called forth the earnest congratulations of this Government in expression of the cordial sympathies of our people.  The claims of nearly all other countries against Chile growing out of her late war with Bolivia and Peru have been disposed of, either by arbitration or by a lump settlement. Similar claims of our citizens will continue to be urged upon the Chilean Government, and it is hoped will not be subject to further delays.  A comprehensive treaty of amity and commerce with Peru was proclaimed on November 7 last, and it is expected that under its operation mutual prosperity and good understanding will be promoted.  In pursuance of the policy of arbitration, a treaty to settle the claim of Santos, an American citizen, against Ecuador has been concluded under my authority, and will be duly submitted for the approval of the Senate.  Like disposition of the claim of Carlos Butterfield against Denmark and of Van Bokkelen against Hayti will probably be made, and I trust the principle of such settlements may be extended in practice under the approval of the Senate.  Through unforeseen causes, foreign to the will of both Governments, the ratification of the convention of December 5, 1885, with Venezuela, for the rehearing of claims of citizens of the United States under the treaty of 1866, failed of exchange within the term provided, and a supplementary convention, further extending the time for exchange of ratifications and explanatory of an ambiguous provision of the prior convention, now awaits the advice and consent of the Senate.  Although this matter, in the stage referred to, concerns only the concurrent treaty-making power of one branch of Congress, I advert to it in view of the interest repeatedly and conspicuously shown by you in your legislative capacity in favor of a speedy and equitable adjustment of the questions growing out of the discredited judgments of the previous mixed commission of Caracas. With every desire to do justice to the representations of Venezuela in this regard, the time seems to have come to end this matter, and I trust the prompt confirmation by both parties of the supplementary action referred to will avert the need of legislative or other action to prevent the longer withholding of such rights of actual claimants as may be shown to exist.  As authorized by the Congress, preliminary steps have been taken for the assemblage at this capital during the coming year of the representatives of South and Central American States, together with those of Mexico, Hayti, and San Domingo, to discuss sundry important monetary and commercial topics.  Excepting in those cases where, from reasons of contiguity of territory and the existence of a common border line incapable of being guarded, reciprocal commercial treaties may be found expedient, it is believed that commercial policies inducing freer mutual exchange of products can be most advantageously arranged by independent but cooperative legislation.  In the mode last mentioned the control of our taxation for revenue will be always retained in our own hands unrestricted by conventional agreements with other governments.  In conformity also with Congressional authority, the maritime powers have been invited to confer in Washington in April next upon the practicability of devising uniform rules and measures for the greater security of life and property at sea. A disposition to accept on the part of a number of the powers has already been manifested, and if the cooperation of the nations chiefly interested shall be secured important results may be confidently anticipated.  The act of June 26, 1884, and the acts amendatory thereof, in relation to tonnage duties, have given rise to extended correspondence with foreign nations with whom we have existing treaties of navigation and commerce, and have caused wide and regrettable divergence of opinion in relation to the imposition of the duties referred to. These questions are important, and I shall make them the subject of a special and more detailed communication at the present session.  With the rapid increase of immigration to our shores and the facilities of modern travel, abuses of the generous privileges afforded by our naturalization laws call for their careful revision.  The easy and unguarded manner in which certificates of American citizenship can now be obtained has induced a class, unfortunately large, to avail themselves of the opportunity to become absolved from allegiance to their native land, and yet by a foreign residence to escape any just duty and contribution of service to the country of their proposed adoption. Thus, while evading the duties of citizenship to the United States, they may make prompt claim for its national protection and demand its intervention in their behalf. International complications of a serious nature arise, and the correspondence of the State Department discloses the great number and complexity of the questions which have been raised.  Our laws regulating the issue of passports should be carefully revised, and the institution of a central bureau of registration at the capital is again strongly recommended. By this means full particulars of each case of naturalization in the United States would be secured and properly indexed and recorded, and thus many cases of spurious citizenship would be detected and unjust responsibilities would be avoided.  The reorganization of the consular service is a matter of serious importance to our national interests. The number of existing principal consular offices is believed to be greater than is at all necessary for the conduct of the public business. It need not be our policy to maintain more than a moderate number of principal offices, each supported by a salary sufficient to enable the incumbent to live in comfort, and so distributed as to secure the convenient supervision, through subordinate agencies, of affairs over a considerable district.  I repeat the recommendations heretofore made by me that the appropriations for the maintenance of our diplomatic and consular service should be recast; that the so-called notarial or unofficial fees, which our representatives abroad are now permitted to treat as personal perquisites, should be forbidden; that a system of consular inspection should be instituted, and that a limited number of secretaries of legation at large should be authorized.  Preparations for the centennial celebration, on April 30, 1889, of the inauguration of George Washington as President of the United States, at the city of New York, have been made by a voluntary organization of the citizens of that locality, and believing that an opportunity should be afforded for the expression of the interest felt throughout the country in this event, I respectfully recommend fitting and cooperative action by Congress on behalf of the people of the United States.  The report of the Secretary of the Treasury exhibits in detail the condition of our national finances and the operations of the several branches of the Government related to his Department.  The total ordinary revenues of the Government for the fiscal year ended June 30, 1888, amounted to $379,266,074.76, of which $219,091,173.63 was received from customs duties and $124,296,871.98 from internal revenue taxes.  The total receipts from all sources exceeded those for the fiscal year ended June 30, 1887, by $7,862,797.10.  The ordinary expenditures of the Government for the fiscal year ending June 30, 1888, were $259,653,958.67, leaving a surplus of $119,612,116.09.  The decrease in these expenditures as compared with the fiscal year ended June 30, 1887, was $8,278,221.30, notwithstanding the payment of more than $5,000,000 for pensions in excess of what was paid for that purpose in the latter-mentioned year.  The revenues of the Government for the year ending June 30, 1889, ascertained for the quarter ended September 30, 1888, and estimated for the remainder of the time, amount to $377,000,000, and the actual and estimated ordinary expenditures for the same year are $273,000,000, leaving an estimated surplus of $104,000,000.  The estimated receipts for the year ending June 30, 1890, are $377,000,000, and the estimated ordinary expenditures for the same time are $275,767,488.34, showing a surplus of $101,232,511.66.  The foregoing statements of surplus do not take into account the sum necessary to be expended to meet the requirements of the sinking-fund act, amounting to more than $47,000,000 annually.  The cost of collecting the customs revenues for the last fiscal year was 2.44 per cent; for the year 1885 it was 3.77 per cent.  The excess of internal-revenue taxes collected during the last fiscal year over those collected for the year ended June 30, 1887, was $5,489,174.26, and the cost of collecting this revenue decreased from 3.4 per cent in 1887 to less than 3.2 per cent for the last year. The tax collected on oleomargarine was $723,948.04 for the year ending June 30, 1887, and $864,139.88 for the following year.  The requirements of the sinking-fund act have been met for the year ended June 30, 1888, and for the current year also, by the purchase of bonds. After complying with this law as positively required, and bonds sufficient for that purpose had been bought at a premium, it was not deemed prudent to further expend the surplus in such purchases until the authority to do so should be more explicit. A resolution, however, having been passed by both Houses of Congress removing all doubt as to Executive authority, daily purchases of bonds were commenced on the 23d day of April, 1888, and have continued until the present time. By this plan bonds of the Government not yet due have been purchased up to and including the 30th day of November, 1888, amounting to $94,700,400, the premium paid thereon amounting to $17,508,613.08.  The premium added to the principal of these bonds represents an investment yielding about 2 per cent interest for the time they still had to run, and the saving to the Government represented by the difference between the amount of interest at 2 per cent upon the sum paid for principal and premium and what it would have paid for interest at the rate specified in the bonds if they had run to their maturity is about $27,165,000.  At first sight this would seem to be a profitable and sensible transaction on the part of the Government, but, as suggested by the Secretary of the Treasury, the surplus thus expended for the purchase of bonds was money drawn from the people in excess of any actual need of the Government and was so expended rather than allow it to remain idle in the Treasury. If this surplus, under the operation of just and equitable laws, had been left in the hands of the people, it would have been worth in their business at least 6 per cent per annum. Deducting from the amount of interest upon the principal and premium of these bonds for the time they had to run at the rate of 6 per cent the saving of 2 per cent made for the people by the purchase of such bonds, the loss will appear to be $55,760,000.  This calculation would seem to demonstrate that if excessive and unnecessary taxation is continued and the Government is forced to pursue this policy of purchasing its own bonds at the premiums which it will be necessary to pay, the loss to the people will be hundreds of millions of dollars.  Since the purchase of bonds was undertaken as mentioned nearly all that have been offered were at last accepted. It has been made quite apparent that the Government was in danger of being subjected to combinations to raise their price, as appears by the instance cited by the Secretary of the offering of bonds of the par value of only $326,000 so often that the aggregate of the sums demanded for their purchase amounted to more than $ 19,700,000.  Notwithstanding the large sums paid out in the purchase of bonds, the surplus in the Treasury on the 30th day of November, 1888, was $52,234,610.01, after deducting about $20,000,000 just drawn out for the payment of pensions.  At the close of the fiscal year ended June 30, 1887, there had been coined under the compulsory silver-coinage act $266,988,280 in silver dollars, $55,504,310 of which were in the hands of the people.  On the 30th day of June, 1888, there had been coined $299,708,790; and of this $55,829,303 was in circulation in coin, and $200,387,376 in silver certificates, for the redemption of which silver dollars to that amount were held by the Government.  On the 30th day of November, 1888, $312,570,990 had been coined, $60,970,990 of the silver dollars were actually in circulation, and $237,418,346 in certificates.  The Secretary recommends the suspension of the further coinage of silver, and in such recommendation I earnestly concur.  For further valuable information and timely recommendations I ask the careful attention of the Congress to the Secretary's report.  The Secretary of War reports that the Army at the date of the last consolidated returns consisted of 2,189 officers and 24,549 enlisted men.  The actual expenditures of the War Department for the fiscal year ended June 30, 1888, amounted to $41,165,107.07, of which sum $9,158,516.63 was expended for public works, including river and harbor improvements.  "The Board of Ordnance and Fortifications" provided for under the act approved September 22 last was convened October 30, 1888, and plans and specifications for procuring forgings for 8, 10, and 12 inch guns, under provisions of section 4, and also for procuring 12-inch breech-loading mortars, cast iron, hooped with steel, under the provisions of section 5 of the said act, were submitted to the Secretary of War for reference to the board, by the Ordnance Department, on the same date.  These plans and specifications having been promptly approved by the board and the Secretary of War, the necessary authority to publish advertisements inviting proposals in the newspapers throughout the country was granted by the Secretary on November 12, and on November 13 the advertisements were sent out to the different newspapers designated. The bids for the steel forgings are to be opened on December 20, 1888, and for the mortars on December 15, 1888.  A board of ordnance officers was convened at the Watervliet Arsenal on October 4, 1888, to prepare the necessary plans and specifications for the establishment of an army gun factory at that point. The preliminary report of this board, with estimates for shop buildings and officers' quarters, was approved by the Board of Ordnance and Fortifications November 6 and 8. The specifications and form of advertisement and instructions to bidders have been prepared, and advertisements inviting proposals for the excavations for the shop building and for erecting the two sets of officers' quarters have been published. The detailed drawings and specifications for the gun-factory building are well in hand, and will be finished within three or four months, when bids will be invited for the erection of the building. The list of machines, etc., is made out, and it is expected that the plans for the large lathes, etc., will be completed within about four months, and after approval by the Board of Ordnance and Fortifications bids for furnishing the same will be invited. The machines and other fixtures will be completed as soon as the shop is in readiness to receive them, probably about July, 1890.  Under the provisions of the Army bill for the procurement of pneumatic dynamite guns, the necessary specifications are now being prepared, and advertisements for proposals will issue early in December. The guns will probably be of 15 inches caliber and fire a projectile that will carry a charge each of about 500 pounds of explosive gelatine with full-caliber projectiles. The guns will probably be delivered in from six to ten months from the date of the contract, so that all the guns of this class that can be procured under the provisions of the law will be purchased during the year 1889.  I earnestly request that the recommendations contained in the Secretary's report, all of which are, in my opinion, calculated to increase the usefulness and discipline of the Army, may receive the consideration of the Congress. Among these the proposal that there should be provided a plan for the examination of officers to test their fitness for promotion is of the utmost importance. This reform has been before recommended in the reports of the Secretary, and its expediency is so fully demonstrated by the argument he presents in its favor that its adoption should no longer be neglected.  The death of General Sheridan in August last was a national affliction. The Army then lost the grandest of its chiefs. The country lost a brave and experienced soldier, a wise and discreet counselor, and a modest and sensible man. Those who in any manner came within the range of his personal association will never fail to pay deserved and willing homage to his greatness and the glory of his career, but they will cherish with more tender sensibility the loving memory of his simple, generous, and considerate nature.  The Apache Indians, whose removal from their reservation in Arizona followed the capture o£ those of their number who engaged in a bloody and murderous raid during a part of the years 1885 and 1886, are now held as prisoners of war at Mount Vernon Barracks, in the State of Alabama. They numbered on the 31st day of October, the date of the last report, 83 men, 170 women, 70 boys, and 59 girls; in all, 382 persons. The commanding officer states that they are in good health and contented, and that they are kept employed as fully as is possible in the circumstances. The children, as they arrive at a suitable age, are sent to the Indian schools at Carlisle and Hampton.  Last summer some charitable and kind people asked permission to send two teachers to these Indians for the purpose of instructing the adults as well as such children as should be found there. Such permission was readily granted, accommodations were provided for the teachers, and some portions of the buildings at the barracks were made available for school purposes. The good work contemplated has been commenced, and the teachers engaged are paid by the ladies with whom the plan originated.  I am not at all in sympathy with those benevolent but injudicious people who are constantly insisting that these Indians should be returned to their reservation. Their removal was an absolute necessity if the lives and property of citizens upon the frontier are to be at all regarded by the Government. Their continued restraint at a distance from the scene of their repeated and cruel murders and outrages is still necessary. It is a mistaken philanthropy, every way injurious, which prompts the desire to see these savages returned to their old haunts. They are in their present location as the result of the best judgment of those having official responsibility in the matter, and who are by no means lacking in kind consideration for the Indians. A number of these prisoners have forfeited their lives to outraged law and humanity. Experience has proved that they are dangerous and can not be trusted. This is true not only of those who on the warpath have heretofore actually been guilty of atrocious murder, but of their kindred and friends, who, while they remained upon their reservation, furnished aid and comfort to those absent with bloody intent.  These prisoners should be treated kindly and kept in restraint far from the locality of their former reservation; they should be subjected to efforts calculated to lead to their improvement and the softening of their savage and cruel instincts, but their return to their old home should be persistently resisted.  The Secretary in his report gives a graphic history of these Indians, and recites with painful vividness their bloody deeds and the unhappy failure of the Government to manage them by peaceful means. It will be amazing if a perusal of this history will allow the survival of a desire for the return of these prisoners to their reservation upon sentimental or any other grounds.  The report of the Secretary of the Navy demonstrates very intelligent management in that important Department, and discloses the most satisfactory progress in the work of reconstructing the Navy made during the past year. Of the ships in course of construction five, viz, the Charleston, Baltimore, Yorktown, Vesuvius, and the Petrel, have in that time been launched and are rapidly approaching completion; and in addition to the above, the Philadelphia, the San Francisco, the Newark, the Bennington, the Concord, and the Herreshoff torpedo boat are all under contract for delivery to the Department during the next year. The progress already made and being made gives good ground for the expectation that these eleven vessels will be incorporated as part of the American Navy within the next twelve months.  The report shows that notwithstanding the large expenditures for new construction and the additional labor they involve the total ordinary or current expenditures of the Department for the three years ending June 30, 1888, are less by more than 20 per cent than such expenditures for the three years ending June 30, 1884.  The various steps which have been taken to improve the business methods of the Department are reviewed by the Secretary. The purchasing of supplies has been consolidated and placed under a responsible bureau head. This has resulted in the curtailment of open purchases, which in the years 1884 and 1885 amounted to over 50 per cent of all the purchases of the Department, to less than 11 per cent; so that at the present time about 90 per cent of the total departmental purchases are made by contract and after competition. As the expenditures on this account exceed an average of $2,000,000 annually, it is evident that an important improvement in the system has been inaugurated and substantial economies introduced.  The report of the Postmaster-General shows a marked increase of business in every branch of the postal service.  The number of post-offices on July 1, 1888, was 57,376, an increase of 6,124 in three years and of 2,219 for tthe last fiscal year. The latter-mentioned increase is classified as follows:                      New England States                          Middle States                    181                        Southern States and Indian Territory (41)                    1,406                        The States and Territories of the Pacific Coast                    190                        The ten States and Territories of the West and Northwest                    435                        District of Columbia                    2                          Total          2,219              Free-delivery offices have increased from 189 in the fiscal year ended June 30, 1887, to 358 in the year ended June 30, 1888.  In the Railway Mail Service there has been an increase in one year of 168 routes, and in the number of miles traveled per annum an increase of 15,795,917.48. The estimated increase of railroad service for the year was 6,000 miles, but the amount of new railroad service actually put on was 12,764.50 miles.  The volume of business in the Money-Order Division, including transactions in postal notes, reached the sum of upward of $143,000,000 for the year.  During the past year parcel-post conventions have been concluded with Barbados, the Bahamas, British Honduras, and Mexico, and are now under negotiation with all the Central and South American States. The increase of correspondence with foreign countries during the past three years is gratifying, and is especially notable and exceptional with the Central and South American States and with Mexico. As the greater part of mail matter exchanged with these countries is commercial in its character, this increase is evidence of the improved business relations with them. The practical operation of the parcel-post conventions, so far as negotiated, has served to fulfill the most favorable predictions as to their benefits. In January last a general postal convention was negotiated with the Dominion of Canada, which went into operation on March 1, and which practically makes one postal territory of the United States and Canada. Under it merchandise parcels may now be transmitted through the mails at fourth-class rates of postage.  It is not possible here to touch even the leading heads of the great postal establishment to illustrate the enormous and rapid growth of its business and the needs for legislative readjustment of much of its machinery that it has outgrown. For these and valuable recommendations of the Postmaster-General attention is earnestly invited to his report.  A Department whose revenues have increased from $19,772,000 in 1870 to $52,700,000 in 1888, despite reductions of postage which have enormously reduced rates of revenue while greatly increasing its business, demands the careful consideration of the Congress as to all matters suggested by those familiar with its operations, and which are calculated to increase its efficiency and usefulness.  A bill proposed by the Postmaster-General was introduced at the last session of the Congress by which a uniform standard in the amount of gross receipts would fix the right of a community to a public building to be erected by the Government for post-office purposes. It was demonstrated that, aside from the public convenience and the promotion of harmony among citizens, invariably disturbed by change of leasings and of site, it was a measure of the highest economy and of sound business judgment. It was found that the Government was paying in rents at the rate of from 7 to 10 per cent per annum on what the cost of such public buildings would be. A very great advantage resulting from such a law would be the prevention of a large number of bills constantly introduced for the erection of public buildings at places, and involving expenditures not justified by public necessity. I trust that this measure will become a law at the present session of Congress.  Of the total number of postmasters 54,874 are of the fourth class. These, of course, receive no allowances whatever for expenses in the service, and their compensation is fixed by percentages on receipts at their respective offices. This rate of compensation may have been, and probably was, at some time just, but the standard has remained unchanged through the several reductions in the rates of postage. Such reductions have necessarily cut down the compensation of these officials, while it undoubtedly increased the business performed by them. Simple justice requires attention to this subject, to the end that fourth-class postmasters may receive at least an equivalent to that which the law itself, fixing the rate, intended for them.  Another class of postal employees whose condition seems to demand legislation is that of clerks in post-offices, and I call especial attention to the repeated recommendations of the Postmaster-General for their classification. Proper legislation of this character for the relief of carriers in the free-delivery service has been frequent. Provision is made for their promotion; for substitutes for them on vacation; for substitutes for holidays, and limiting their hours of labor. Seven million dollars has been appropriated for the current year to provide for them, though the total number of offices where they are employed is but 358 for the past fiscal year, with an estimated increase for the current year of but 40, while the total appropriation for all clerks in offices throughout the United States is $5,950,000.  The legislation affecting the relations of the Government with railroads is in need of revision. While for the most part the railroad companies throughout the country have cordially cooperated with the Post-Office Department in rendering excellent service, yet under the law as it stands, while the compensation to them for carrying the mail is limited and regulated, and although railroads are made post-roads by law, there is no authority reposed anywhere to compel the owner of a railroad to take and carry the United States mails. The only alternative provided by act of Congress in case of refusal is for the Postmaster-General to send mail forward by pony express. This is but an illustration of ill-fitting legislation, reasonable and proper at the time of its enactment, but long since outgrown and requiring readjustment.  It is gratifying to note from the carefully prepared statistics accompanying the Postmaster-General's report that notwithstanding the great expansion of the service the rate of expenditure has been lessened and efficiency has been improved in every branch; that fraud and crime have decreased; that losses from the mails have been reduced, and that the number of complaints of the service made to postmasters and to the Department are far less than ever before.  The transactions of the Department of Justice for the fiscal year ended June 30, 1888, are contained in the report of the Attorney-General, as well as a number of valuable recommendations, the most part of which are repetitions of those previously made, and ought to receive consideration.  It is stated in this report that though judgments in civil suits amounting to $552,021.08 were recovered in favor of the Government during the year, only the sum of $132,934 was collected thereon; and that though fines, penalties, and forfeitures were imposed amounting to $541,808.43, only $109,648.42 of that sum was paid on account thereof. These facts may furnish an illustration of the sentiment which extensively prevails that a debt due the Government should cause no inconvenience to the citizen.  It also appears from this report that though prior to March, 1885, there had been but 6 convictions in the Territories of Utah and Idaho under the laws of 1862 and 1882, punishing polygamy and unlawful cohabitation as crimes, there have been since that date nearly 600 convictions under these laws and the statutes of 1887; and the opinion is expressed that under such a firm and vigilant execution of these laws and the advance of ideas opposed to the forbidden practices polygamy within the United States is virtually at an end.  Suits instituted by the Government under the provisions of the act of March 3, 1887, for the termination of the corporations known as the Perpetual Emigrating Fund Company and the Church of Jesus Christ of Latter-day Saints have resulted in a decree favorable to the Government, declaring the charters of these corporations forfeited and escheating their property. Such property, amounting in value to more than $800,000, is in the hands of a receiver pending further proceedings, an appeal having been taken to the Supreme Court of the United States.  In the report of the Secretary of the Interior, which will be laid before you, the condition of the various branches of our domestic affairs connected with that Department and its operations during the past year are fully exhibited. But a brief reference to some of the subjects discussed in this able and interesting report can here be made; but I commend the entire report to the attention of the Congress, and trust that the sensible and valuable recommendations it contains will secure careful consideration.  I can not too strenuously insist upon the importance of proper measures to insure a right disposition of our public lands, not only as a matter of present justice, but in forecast of the consequences to future generations. The broad, rich acres of our agricultural plains have been long preserved by nature to become her untrammeled gift to a people civilized and free, upon which should rest in well-distributed ownership the numerous homes of enlightened, equal, and fraternal citizens. They came to national possession with the warning example in our eyes of the entail of iniquities in landed proprietorship which other countries have permitted and still suffer. We have no excuse for the violation of principles cogently taught by reason and example, nor for the allowance of pretexts which have sometimes exposed our lands to colossal greed. Laws which open a door to fraudulent acquisition, or administration which permits favor to rapacious seizure by a favored few of expanded areas that many should enjoy, are accessory to offenses against our national welfare and humanity not to be too severely condemned or punished.  It is gratifying to know that something has been done at last to redress the injuries to our people and check the perilous tendency of the reckless waste of the national domain. That over 80,000,000 acres have been arrested from illegal usurpation, improvident grants, and fraudulent entries and claims, to be taken for the homesteads of honest industry--although less than the greater areas thus unjustly lost--must afford a profound gratification to right-feeling citizens, as it is a recompense for the labors and struggles of the recovery. Our dear experience ought sufficiently to urge the speedy enactment of measures of legislation which will confine the future disposition of our remaining agricultural lands to the uses of actual husbandry and genuine homes.  Nor should our vast tracts of so-called desert lands be yielded up to the monopoly of corporations or grasping individuals, as appears to be much the tendency under the existing statute. These lands require but the supply of water to become fertile and productive. It is a problem of great moment how most wisely for the public good that factor shall be furnished. I can not but think it perilous to suffer either these lands or the sources of their irrigation to fall into the hands of monopolies, which by such means may exercise lordship over the areas dependent on their treatment for productiveness. Already steps have been taken to secure accurate and scientific information of the conditions, which is the prime basis of intelligent action. Until this shall be gained the course of wisdom appears clearly to lie in a suspension of further disposal, which only promises to create rights antagonistic to the common interest. No harm can follow this cautionary conduct. The land will remain, and the public good presents no demand for hasty dispossession of national ownership and control.  I commend also the recommendations that appropriate measures be taken to complete the adjustment of the various grants made to the States for internal improvements and of swamp and overflowed lands, as well as to adjudicate and finally determine the validity and extent of the numerous private land claims. All these are elements of great injustice and peril to the settlers upon the localities affected; and now that their existence can not be avoided, no duty is more pressing than to fix as soon as possible their bounds and terminate the threats of trouble which arise from uncertainty.  The condition of our Indian population continues to improve and the proofs multiply that the transforming change, so much to be desired, which shall substitute for barbarism enlightenment and civilizing education, is in favorable progress. Our relations with these people during the year have been disturbed by no serious disorders, but rather marked by a better realization of their true interests and increasing confidence and good will. These conditions testify to the value of the higher tone of consideration and humanity which has governed the later methods of dealing with them, and commend its continued observance.  Allotments in severalty have been made on some reservations until all those entitled to land thereon have had their shares assigned, and the work is still continued. In directing the execution of this duty I have not aimed so much at rapid dispatch as to secure just and fair arrangements which shall best conduce to the objects of the law by producing satisfaction with the results of the allotments made. No measure of general effect has ever been entered on from which more may be fairly hoped if it shall be discreetly administered. It proffers opportunity and inducement to that independence of spirit and life which the Indian peculiarly needs, while at the same time the inalienability of title affords security against the risks his inexperience of affairs or weakness of character may expose him to in dealing with others. Whenever begun upon any reservation it should be made complete, so that all are brought to the same condition, and as soon as possible community in lands should cease by opening such as remain unallotted to settlement. Contact with the ways of industrious and successful farmers will perhaps add a healthy emulation which will both instruct and stimulate.  But no agency for the amelioration of this people appears to me so promising as the extension, urged by the Secretary, of such complete facilities of education as shall at the earliest possible day embrace all teachable Indian youth, of both sexes, and retain them with a kindly and beneficent hold until their characters are formed and their faculties and dispositions trained to the sure pursuit of some form of useful industry. Capacity of the Indian no longer needs demonstration. It is established. It remains to make the most of it, and when that shall be done the curse will be lifted, the Indian race saved, and the sin of their oppression redeemed. The time of its accomplishment depends upon the spirit and justice with which it shall be prosecuted. It can not be too soon for the Indian nor for the interests and good name of the nation.  The average attendance of Indian pupils on the schools increased by over 900 during the year, and the total enrollment reached 15,212. The cost of maintenance was not materially raised. The number of teachable Indian youth is now estimated at 40,000, or nearly three times the enrollment of the schools. It is believed the obstacles in the way of instructing are all surmountable, and that the necessary expenditure would be a measure of economy.  The Sioux tribes on the great reservation of Dakota refused to assent to the act passed by the Congress at its last session for opening a portion of their lands to settlement, notwithstanding modification of the terms was suggested which met most of their objections. Their demand is for immediate payment of the full price of $1.25 per acre for the entire body of land the occupancy of which they are asked to relinquish.  The manner of submission insured their fair understanding of the law, and their action was undoubtedly as thoroughly intelligent as their capacity admitted. It is at least gratifying that no reproach of overreaching can in any manner lie against the Government, however advisable the favorable completion of the negotiation may have been esteemed.  I concur in the suggestions of the Secretary regarding the Turtle Mountain Indians, the two reservations in California, and the Crees. They should, in my opinion, receive immediate attention.  The number of pensioners added to the rolls during the fiscal year ended June 30, 1888, is 60,252, and increase of pensions was granted in 45,716 cases. The names of 15,730 pensioners were dropped from the rolls during the year from various causes, and at the close of the year the number of persons of all classes receiving pensions was 452,557. Of these there were 806 survivors of the War of 1812, 10,787 widows of those who served in that war, 16,060 soldiers of the Mexican War, and 5,104 widows of said soldiers.  One hundred and two different rates of pensions are paid to these beneficiaries, ranging from $2 to $416.66 per month.  The amount paid for pensions during the fiscal year was $78,775,861.92, being an increase over the preceding year of $5,308,280.22. The expenses attending the maintenance and operation of the Pension Bureau during that period was $3,262,524.67, making the entire expenditures of the Bureau $82,038,386.57, being 21 1/2 per cent of the gross income and nearly 31 per cent of the total expenditures of the Government during the year.  I am thoroughly convinced that our general pension laws should be revised and adjusted to meet as far as possible, in the light of our experience, all meritorious cases. The fact that 102 different rates of pensions are paid can not, in my opinion, be made consistent with justice to the pensioners or to the Government; and the numerous private pension bills that are passed, predicated upon the imperfection of general laws, while they increase in many cases existing inequality and injustice, lend additional force to the recommendation for a revision of the general laws on this subject.  The laxity of ideas prevailing among a large number of our people regarding pensions is becoming every day more marked. The principles upon which they should be granted are in danger of being altogether ignored, and already pensions are often claimed because the applicants are as much entitled as other successful applicants, rather than upon any disability reasonably attributable to military service. If the establishment of vicious precedents be continued, if the granting of pensions be not divorced from partisan and other unworthy and irrelevant considerations, and if the honorable name of veteran unfairly becomes by these means but another term for one who constantly clamors for the aid of the Government, there is danger that injury will be done to the fame and patriotism of many whom our citizens all delight to honor, and that a prejudice will be aroused unjust to meritorious applicants for pensions.  The Department of Agriculture has continued, with a good measure of success, its efforts to develop the processes, enlarge the results, and augment the profits of American husbandry. It has collected and distributed practical information, introduced and tested new plants, checked the spread of contagious diseases of farm animals, resisted the advance of noxious insects and destructive fungous growths, and sought to secure to agricultural labor the highest reward of effort and the fullest immunity from loss. Its records of the year show that the season of 1888 has been one of medium production. A generous supply of the demands of consumption has been assured, and a surplus for exportation, moderate in certain products and bountiful in others, will prove a benefaction alike to buyer and grower.  Four years ago it was found that the great cattle industry of the country was endangered, and those engaged in it were alarmed at the rapid extension of the European lung plague of pleuro-pneumonia. Serious outbreaks existed in Illinois, Missouri, and Kentucky, and in Tennessee animals affected were held in quarantine. Five counties in New York and from one to four counties in each of the States of New Jersey, Pennsylvania, Delaware, and Maryland were almost equally affected.  With this great danger upon us and with the contagion already in the channels of commerce, with the enormous direct and indirect losses already being caused by it, and when only prompt and energetic action could be successful, there were in none of these States any laws authorizing this Department to eradicate the malady or giving the State officials power to cooperate with it for this purpose. The Department even lacked both the requisite appropriation and authority.  By securing State cooperation in connection with authority from Congress the work of eradication has been pressed successfully, and this dreaded disease has been extirpated from the Western States and also from the Eastern States, with the exception of a few restricted areas, which are still under supervision. The danger has thus been removed, and trade and commerce have been freed from the vexatious State restrictions which were deemed necessary for a time.  During the past four years the process of diffusion, as applied to the manufacture of sugar from sorghum and sugar cane, has been introduced into this country and fully perfected by the experiments carried on by the Department of Agriculture. This process is now universally considered to be the most economical one, and it is through it that the sorghum-sugar industry has been established upon a firm basis and the road to its future success opened. The adoption of this diffusion process is also extending in Louisiana and other sugar-producing parts of the country, and will doubtless soon be the only method employed for the extraction of sugar from the cane.  An exhaustive study has also within the same period been undertaken of the subject of food adulteration and the best analytical methods for detecting it. A part of the results of this work has already been published by the Department, which, with the matter in course of preparation, will make the most complete treatise on that subject that has ever been published in any country.  The Department seeks a progressive development. It would combine the discoveries of science with the economics and amelioration of rural practice. A supervision of the endowed experimental-station system recently provided for is a proper function of the Department, and is now in operation. This supervision is very important, and should be wisely and vigilantly directed, to the end that the pecuniary aid of the Government in favor of intelligent agriculture should be so applied as to result in the general good and to the benefit of all our people, thus justifying the appropriations made from the public Treasury.  The adjustment of the relations between the Government and the railroad companies which have received land grants and the guaranty of the public credit in aid of the construction of their roads should receive early attention. The report of a majority of the commissioners appointed to examine the affairs and indebtedness of these roads, in which they favor an extension of the time for the payment of such indebtedness in at least one case where the corporation appears to be able to comply with well-guarded and exact terms of such extension, and the reenforcement of their opinion by gentlemen of undoubted business judgment and experience, appointed to protect the interests of the Government as directors of said corporation, may well lead to the belief that such an extension would be to the advantage of the Government.  The subject should be treated as a business proposition with a view to a final realization of its indebtedness by the Government, rather than as a question to be decided upon prejudice or by way of punishment for previous wrongdoing.  The report of the Commissioners of the District of Columbia, with its accompanying documents, gives in detail the operations of the several departments of the District government, and furnishes evidence that the financial affairs of the District are at present in such satisfactory condition as to justify the Commissioners in submitting to the Congress estimates for desirable and needed improvements.  The Commissioners recommend certain legislation which in their opinion is necessary to advance the interests of the District.  I invite your special attention to their request for such legislation as will enable the Commissioners without delay to collect, digest, and properly arrange the laws by which the District is governed, and which are now embraced in several collections, making them available only with great difficulty and labor. The suggestions they make touching desirable amendments to the laws relating to licenses granted for carrying on the retail traffic in spirituous liquors, to the observance of Sunday, to the proper assessment and collection of taxes, to the speedy punishment of minor offenders, and to the management and control of the reformatory and charitable institutions supported by Congressional appropriations are commended to careful consideration.  I again call attention to the present inconvenience and the danger to life and property attending the operation of steam railroads through and across the public streets and roads of the District. The propriety of such legislation as will properly guard the use of these railroads and better secure the convenience and safety of citizens is manifest.  The consciousness that I have presented but an imperfect statement of the condition of our country and its wants occasions no fear that anything omitted is not known and appreciated by the Congress, upon whom rests the responsibility of intelligent legislation in behalf of a great nation and a confiding people.  As public servants we shall do our duty well if we constantly guard the rectitude of our intentions, maintain unsullied our love of country, and with unselfish purpose strive for the public good.      GROVER CLEVELAND   	D
To the Senate and House of Representatives:  Since the convening of Congress one year ago the nation has undergone a prostration in business and industries such as has not been witnessed with us for many years. Speculation as to the causes for this prostration might be indulged in without profit, because as many theories would be advanced as there would be independent writers--those who expressed their own views without borrowing--upon the subject. Without indulging in theories as to the cause of this prostration, therefore, I will call your attention only to the fact, and to some plain questions as to which it would seem there should be no disagreement.  During this prostration two essential elements of prosperity have been most abundant--labor and capital. Both have been largely unemployed. Where security has been undoubted, capital has been attainable at very moderate rates. Where labor has been wanted, it has been found in abundance, at cheap rates compared with what--of necessaries and comforts of life--could be purchased with the wages demanded. Two great elements of prosperity, therefore, have not been denied us. A third might be added: Our soil and climate are unequaled, within the limits of any contiguous territory under one nationality, for its variety of products to feed and clothe a people and in the amount of surplus to spare to feed less favored peoples. Therefore, with these facts in view, it seems to me that wise statesmanship, at this session of Congress, would dictate legislation ignoring the past; directing in proper channels these great elements of prosperity to any people. Debt, debt abroad, is the only element that can, with always a sound currency, enter into our affairs to cause any continued depression in the industries and prosperity of our people.  A great conflict for national existence made necessary, for temporary purposes, the raising of large sums of money from whatever source attainable. It made it necessary, in the wisdom of Congress--and I do not doubt their wisdom in the premises, regarding the necessity of the times--to devise a system of national currency which it proved to be impossible to keep on a par with the recognized currency of the civilized world. This begot a spirit of speculation involving an extravagance and luxury not required for the happiness or prosperity of a people, and involving, both directly and indirectly, foreign indebtedness. The currency, being of fluctuating value, and therefore unsafe to hold for legitimate transactions requiring money, became a subject of speculation within itself. These two causes, however, have involved us in a foreign indebtedness, contracted in good faith by borrower and lender, which should be paid in coin, and according to the bond agreed upon when the debt was contracted--gold or its equivalent. The good faith of the Government can not be violated toward creditors without national disgrace. But our commerce should be encouraged; American shipbuilding and carrying capacity increased; foreign markets sought for products of the soil and manufactories, to the end that we may be able to pay these debts. Where a new market can be created for the sale of our products, either of the soil, the mine, or the manufactory, a new means is discovered of utilizing our idle capital and labor to the advantage of the whole people. But, in my judgment, the first step toward accomplishing this object is to secure a currency of fixed, stable value; a currency good wherever civilization reigns; one which, if it becomes superabundant with one people, will find a market with some other; a currency which has as its basis the labor necessary to produce it, which will give to it its value. Gold and silver are now the recognized medium of exchange the civilized world over, and to this we should return with the least practicable delay. In view of the pledges of the American Congress when our present legal-tender system was adopted, and debt contracted, there should be no delay--certainly no unnecessary delay--in fixing by legislation a method by which we will return to specie. To the accomplishment of this end I invite your special attention. I believe firmly that there can be no prosperous and permanent revival of business and industries until a policy is adopted--with legislation to carry it out--looking to a return to a specie basis. It is easy to conceive that the debtor and speculative classes may think it of value to them to make so-called money abundant until they can throw a portion of their burdens upon others. But even these, I believe, would be disappointed in the result if a course should be pursued which will keep in doubt the value of the legal-tender medium of exchange. A revival of productive industry is needed by all classes; by none more than the holders of property, of whatever sort, with debts to liquidate from realization upon its sale. But admitting that these two classes of citizens are to be benefited by expansion, would it be honest to give it? Would not the general loss be too great to justify such relief? Would it not be just as honest and prudent to authorize each debtor to issue his own legal-tenders to the extent of his liabilities? Than to do this, would it not be safer, for fear of overissues by unscrupulous creditors, to say that all debt obligations are obliterated in the United States, and now we commence anew, each possessing all he has at the time free from incumbrance? These propositions are too absurd to be entertained for a moment by thinking or honest people. Yet every delay in preparation for final resumption partakes of this dishonesty, and is only less in degree as the hope is held out that a convenient season will at last arrive for the good work of redeeming our pledges to commence. It will never come, in my opinion, except by positive action by Congress, or by national disasters which will destroy, for a time at least, the credit of the individual and the State at large. A sound currency might be reached by total bankruptcy and discredit of the integrity of the nation and of individuals. I believe it is in the power of Congress at this session to devise such legislation as will renew confidence, revive all the industries, start us on a career of prosperity to last for many years and to save the credit of the nation and of the people. Steps toward the return to a specie basis are the great requisites to this devoutly to be sought for end. There are others which I may touch upon hereafter.  A nation dealing in a currency below that of specie in value labors under two great disadvantages: First, having no use for the world's acknowledged medium of exchange, gold and silver, these are driven out of the country because there is no need for their use; second, the medium of exchange in use being of a fluctuating value--for, after all, it is only worth just what it will purchase of gold and silver, metals having an intrinsic value just in proportion to the honest labor it takes to produce them--a larger margin must be allowed for profit by the manufacturer and producer. It is months from the date of production to the date of realization. Interest upon capital must be charged, and risk of fluctuation in the value of that which is to be received in payment added. Hence high prices, acting as a protection to the foreign producer, who receives nothing in exchange for the products of his skill and labor except a currency good, at a stable value, the world over It seems to me that nothing is clearer than that the greater part of the burden of existing prostration, for the want of a sound financial system, falls upon the working man, who must after all produce the wealth, and the salaried man, who superintends and conducts business. The burden falls upon them in two ways--by the deprivation of employment and by the decreased purchasing power of their salaries. It is the duty of Congress to devise the method of correcting the evils which are acknowledged to exist, and not mine. But I will venture to suggest two or three things which seem to me as absolutely necessary to a return to specie payments, the first great requisite in a return to prosperity. The legal-tender clause to the law authorizing the issue of currency by the National Government should be repealed, to take effect as to all contracts entered into after a day fixed in the repealing act--not to apply, however, to payments of salaries by Government, or for other expenditures now provided by law to be paid in currency, in the interval pending between repeal and final resumption. Provision should be made by which the Secretary of the Treasury can obtain gold as it may become necessary from time to time from the date when specie redemption commences. To this might and should be added a revenue sufficiently in excess of expenses to insure an accumulation of gold in the Treasury to sustain permanent redemption.  I commend this subject to your careful consideration, believing that a favorable solution is attainable, and if reached by this Congress that the present and future generations will ever gratefully remember it as their deliverer from a thraldom of evil and disgrace.  With resumption, free banking may be authorized with safety, giving the same full protection to bill holders which they have under existing laws. Indeed, I would regard free banking as essential. It would give proper elasticity to the currency. As more currency should be required for the transaction of legitimate business, new banks would be started, and in turn banks would wind up their business when it was found that there was a superabundance of currency. The experience and judgment of the people can best decide just how much currency is required for the transaction of the business of the country. It is unsafe to leave the settlement of this question to Congress, the Secretary of the Treasury, or the Executive. Congress should make the regulation under which banks may exist, but should not make banking a monopoly by limiting the amount of redeemable paper currency that shall be authorized. Such importance do I attach to this subject, and so earnestly do I commend it to your attention, that I give it prominence by introducing it at the beginning of this message.  During the past year nothing has occurred to disturb the general friendly and cordial relations of the United States with other powers.  The correspondence submitted herewith between this Government and its diplomatic representatives, as also with the representatives of other countries, shows a satisfactory condition of all questions between the United States and the most of those countries, and with few exceptions, to which reference is hereafter made, the absence of any points of difference to be adjusted.  The notice directed by the resolution of Congress of June 17, 1874, to be given to terminate the convention of July 17, 1858, between the United States and Belgium has been given, and the treaty will accordingly terminate on the 1st day of July, 1875. This convention secured to certain Belgian vessels entering the ports of the United States exceptional privileges which are not accorded to our own vessels. Other features of the convention have proved satisfactory, and have tended to the cultivation of mutually beneficial commercial intercourse and friendly relations between the two countries. I hope that negotiations which have been invited will result in the celebration of another treaty which may tend to the interests of both countries.  Our relations with China continue to be friendly. During the past year the fear of hostilities between China and Japan, growing out of the landing of an armed force upon the island of Formosa by the latter, has occasioned uneasiness. It is earnestly hoped, however, that the difficulties arising from this cause will be adjusted, and that the advance of civilization in these Empires may not be retarded by a state of war. In consequence of the part taken by certain citizens of the United States in this expedition, our representatives in those countries have been instructed to impress upon the Governments of China and Japan the firm intention of this country to maintain strict neutrality in the event of hostilities, and to carefully prevent any infraction of law on the part of our citizens.  In connection with this subject I call the attention of Congress to a generally conceded fact--that the great proportion of the Chinese immigrants who come to our shores do not come voluntarily, to make their homes with us and their labor productive of general prosperity, but come under contracts with headmen, who own them almost absolutely. In a worse form does this apply to Chinese women. Hardly a perceptible percentage of them perform any honorable labor, but they are brought for shameful purposes, to the disgrace of the communities where settled and to the great demoralization of the youth of those localities. If this evil practice can be legislated against, it will be my pleasure as well as duty to enforce any regulation to secure so desirable an end.  It is hoped that negotiations between the Government of Japan and the treaty powers, looking to the further opening of the Empire and to the removal of various restrictions upon trade and travel, may soon produce the results desired, which can not fail to inure to the benefit of all the parties. Having on previous occasions submitted to the consideration of Congress the propriety of the release of the Japanese Government from the further payment of the indemnity under the convention of October 22, 1864, and as no action had been taken thereon, it became my duty to regard the obligations of the convention as in force; and as the other powers interested had received their portion of the indemnity in full, the minister of the United States in Japan has, in behalf of this Government, received the remainder of the amount due to the United States under the convention of Simonosaki. I submit the propriety of applying the income of a part, if not of the whole, of this fund to the education in the Japanese language of a number of young men to be under obligations to serve the Government for a specified time as interpreters at the legation and the consulates in Japan. A limited number of Japanese youths might at the same time be educated in our own vernacular, and mutual benefits would result to both Governments. The importance of having our own citizens, competent and familiar with the language of Japan, to act as interpreters and in other capacities connected with the legation and the consulates in that country can not readily be overestimated.  The amount awarded to the Government of Great Britain by the mixed commission organized under the provisions of the treaty of Washington in settlement of the claims of British subjects arising from acts committed between April 13, 1861, and April 9, 1865, became payable, under the terms of the treaty, within the past year, and was paid upon the 21st day of September, 1874. In this connection I renew my recommendation, made at the opening of the last session of Congress, that a special court be created to hear and determine all claims of aliens against the United States arising from acts committed against their persons or property during the insurrection. It appears equitable that opportunity should be offered to citizens of other states to present their claims, as well as to those British subjects whose claims were not admissible under the late commission, to the early decision of some competent tribunal. To this end I recommend the necessary legislation to organize a court to dispose of all claims of aliens of the nature referred to in an equitable and satisfactory manner, and to relieve Congress and the Departments from the consideration of these questions.  The legislation necessary to extend to the colony of Newfoundland certain articles of the treaty of Washington of the 8th day of May, 1871, having been had, a protocol to that effect was signed in behalf of the United States and of Great Britain on the 28th day of May last, and was duly proclaimed on the following day. A copy of the proclamation is submitted herewith.  A copy of the report of the commissioner appointed under the act of March 19, 1872, for surveying and marking the boundary between the United States and the British possessions from the Lake of the Woods to the summit of the Rocky Mountains is herewith transmitted. I am happy to announce that the field work of the commission has been completed, and the entire line from the northwest corner of the Lake of the Woods to the summit of the Rocky Mountains has been run and marked upon the surface of the earth. It is believed that the amount remaining unexpended of the appropriation made at the last session of Congress will be sufficient to complete the office work. I recommend that the authority of Congress be given to the use of the unexpended balance of the appropriation in the completion of the work of the commission in making its report and preparing the necessary maps.  The court known as the Court of Commissioners of Alabama Claims, created by an act of Congress of the last session, has organized and commenced its work, and it is to be hoped that the claims admissible under the provisions of the act may be speedily ascertained and paid.  It has been deemed advisable to exercise the discretion conferred upon the Executive at the last session by accepting the conditions required by the Government of Turkey for the privilege of allowing citizens of the United States to hold real estate in the former country, and by assenting to a certain change in the jurisdiction of courts in the latter. A copy of the proclamation upon these subjects is herewith communicated.  There has been no material change in our relations with the independent States of this hemisphere which were formerly under the dominion of Spain. Marauding on the frontiers between Mexico and Texas still frequently takes place, despite the vigilance of the civil and military authorities in that quarter. The difficulty of checking such trespasses along the course of a river of such length as the Rio Grande, and so often fordable, is obvious. It is hoped that the efforts of this Government will be seconded by those of Mexico to the effectual suppression of these acts of wrong.  From a report upon the condition of the business before the American and Mexican Joint Claims Commission, made by the agent on the part of the United States, and dated October 28, 1874, it appears that of the 1,017 claims filed on the part of citizens of the United States, 483 had been finally decided and 75 were in the hands of the umpire, leaving 462 to be disposed of; and of the 998 claims filed against the United States, 726 had been finally decided, I was before the umpire, and 271 remained to be disposed of. Since the date of such report other claims have been disposed of, reducing somewhat the number still pending; and others have been passed upon by the arbitrators. It has become apparent, in view of these figures and of the fact that the work devolving on the umpire is particularly laborious, that the commission will be unable to dispose of the entire number of claims pending prior to the 1st day of February, 1875--the date fixed for its expiration. Negotiations are pending looking to the securing of the results of the decisions which have been reached and to a further extension of the commission for a limited time, which it is confidently hoped will suffice to bring all the business now before it to a final close.  The strife in the Argentine Republic is to be deplored, both on account of the parties thereto and from the probable effects on the interests of those engaged in the trade to that quarter, of whom the United States are among the principal. As yet, so far as I am aware, there has been no violation of our neutrality rights, which, as well as our duties in that respect, it shall be my endeavor to maintain and observe.  It is with regret I announce that no further payment has been received from the Government of Venezuela on account of awards in favor of citizens of the United States. Hopes have been entertained that if that Republic could escape both foreign and civil war for a few years its great natural resources would enable it to honor its obligations. Though it is now understood to be at peace with other countries, a serious insurrection is reported to be in progress in an important region of that Republic. This may be taken advantage of as another reason to delay the payment of the dues of our citizens.  The deplorable strife in Cuba continues without any marked change in the relative advantages of the contending forces. The insurrection continues, but Spain has gained no superiority. Six years of strife give to the insurrection a significance which can not be denied. Its duration and the tenacity of its adherence, together with the absence of manifested power of suppression on the part of Spain, can not be controverted, and may make some positive steps on the part of other powers a matter of self-necessity. I had confidently hoped at this time to be able to announce the arrangement of some of the important questions between this Government and that of Spain, but the negotiations have been protracted. The unhappy intestine dissensions of Spain command our profound sympathy, and must be accepted as perhaps a cause of some delay. An early settlement, in part at least, of the questions between the Governments is hoped. In the meantime, awaiting the results of immediately pending negotiations, I defer a further and fuller communication on the subject of the relations of this country and Spain.  I have again to call the attention of Congress to the unsatisfactory condition of the existing laws with reference to expatriation and the election of nationality. Formerly, amid conflicting opinions and decisions, it was difficult to exactly determine how far the doctrine of perpetual allegiance was applicable to citizens of the United States. Congress by the act of the 27th of July, 1868, asserted the abstract right of expatriation as a fundamental principle of this Government. Notwithstanding such assertion and the necessity of frequent application of the principle, no legislation has been had defining what acts or formalities shall work expatriation or when a citizen shall be deemed to have renounced or to have lost his citizenship. The importance of such definition is obvious. The representatives of the United States in foreign countries are continually called upon to lend their aid and the protection of the United States to persons concerning the good faith or the reality of whose citizenship there is at least great question. In some cases the provisions of the treaties furnish some guide; in others it seems left to the person claiming the benefits of citizenship, while living in a foreign country, contributing in no manner to the performance of the duties of a citizen of the United States, and without intention at any time to return and undertake those duties, to use the claims to citizenship of the United States simply as a shield from the performance of the obligations of a citizen elsewhere.  The status of children born of American parents residing in a foreign country, of American women who have married aliens, of American citizens residing abroad where such question is not regulated by treaty, are all sources of frequent difficulty and discussion. Legislation on these and similar questions, and particularly defining when and under what circumstances expatriation can be accomplished or is to be presumed, is especially needed. In this connection I earnestly call the attention of Congress to the difficulties arising from fraudulent naturalization. The United States wisely, freely, and liberally offers its citizenship to all who may come in good faith to reside within its limits on their complying with certain prescribed reasonable and simple formalities and conditions. Among the highest duties of the Government is that to afford firm, sufficient, and equal protection to all its citizens, whether native born or naturalized. Care should be taken that a right carrying with it such support from the Government should not be fraudulently obtained, and should be bestowed only upon full proof of a compliance with the law; and yet frequent instances are brought to the attention of the Government of illegal and fraudulent naturalization and of the unauthorized use of certificates thus improperly obtained. In some cases the fraudulent character of the naturalization has appeared upon the face of the certificate itself; in others examination discloses that the holder had not complied with the law, and in others certificates have been obtained where the persons holding them not only were not entitled to be naturalized, but had not even been within the United States at the time of the pretended naturalization. Instances of each of these classes of fraud are discovered at our legations, where the certificates of naturalization are presented either for the purpose of obtaining passports or in demanding the protection of the legation. When the fraud is apparent on the face of such certificates, they are taken up by the representatives of the Government and forwarded to the Department of State. But even then the record of the court in which the fraudulent naturalization occurred remains, and duplicate certificates are readily obtainable. Upon the presentation of these for the issue of passports or in demanding protection of the Government, the fraud sometimes escapes notice, and such certificates are not infrequently used in transactions of business to the deception and injury of innocent parties. Without placing any additional obstacles in the way of the obtainment of citizenship by the worthy and well-intentioned foreigner who comes in good faith to cast his lot with ours, I earnestly recommend further legislation to punish fraudulent naturalization and to secure the ready cancellation of the record of every naturalization made in fraud.  Since my last annual message the exchange has been made of the ratification of treaties of extradition with Belgium, Ecuador, Peru, and Salvador; also of a treaty of commerce and navigation with Peru, and one of commerce and consular privileges with Salvador; all of which have been duly proclaimed, as has also a declaration with Russia with reference to trade-marks.  The report of the Secretary of the Treasury, which by law is made directly to Congress, and forms no part of this message, will show the receipts and expenditures of the Government for the last fiscal year, the amount received from each source of revenue, and the amount paid out for each of the Departments of Government. It will be observed from this report that the amount of receipts over expenditures has been but $2,344,882.30 for the fiscal year ending June 30, 1874, and that for the current fiscal year the estimated receipts over expenditures will not much exceed $9,000,000. In view of the large national debt existing and the obligation to add 1 per cent per annum to the sinking fund, a sum amounting now to over $34,000,000 per annum, I submit whether revenues should not be increased or expenditures diminished to reach this amount of surplus. Not to provide for the sinking fund is a partial failure to comply with the contracts and obligations of the Government. At the last session of Congress a very considerable reduction was made in rates of taxation and in the number of articles submitted to taxation; the question may well be asked, whether or not, in some instances, unwisely. In connection with this subject, too, I venture the opinion that the means of collecting the revenue, especially from imports, have been so embarrassed by legislation as to make it questionable whether or not large amounts are not lost by failure to collect, to the direct loss of the Treasury and to the prejudice of the interests of honest importers and taxpayers.  The Secretary of the Treasury in his report favors legislation looking to an early return to specie payments, thus supporting views previously expressed in this message. He also recommends economy in appropriations; calls attention to the loss of revenue from repealing the tax on tea and coffee, without benefit to the consumer; recommends an increase of 10 cents a gallon on whisky, and, further, that no modification be made in the banking and currency bill passed at the last session of Congress, unless modification should become necessary by reason of the adoption of measures for returning to specie payments. In these recommendations I cordially join.  I would suggest to Congress the propriety of readjusting the tariff so as to increase the revenue, and at the same time decrease the number of articles upon which duties are levied. Those articles which enter into our manufactures and are not produced at home, it seems to me, should be entered free. Those articles of manufacture which we produce a constituent part of, but do not produce the whole, that part which we do not produce should enter free also. I will instance fine wool, dyes, etc. These articles must be imported to form a part of the manufacture of the higher grades of woolen goods. Chemicals used as dyes, compounded in medicines, and used in various ways in manufactures come under this class. The introduction free of duty of such wools as we do not produce would stimulate the manufacture of goods requiring the use of those we do produce, and therefore would be a benefit to home production. There are many articles entering into "home manufactures" which we do not produce ourselves the tariff upon which increases the cost of producing the manufactured article. All corrections in this regard are in the direction of bringing labor and capital in harmony with each other and of supplying one of the elements of prosperity so much needed.  The report of the Secretary of War herewith attached, and forming a part of this message, gives all the information concerning the operations, wants, and necessities of the Army, and contains many suggestions and recommendations which I commend to your special attention.  There is no class of Government employees who are harder worked than the Army--officers and men; none who perform their tasks more cheerfully and efficiently and under circumstances of greater privations and hardships.  Legislation is desirable to render more efficient this branch of the public service. All the recommendations of the Secretary of War I regard as judicious, and I especially commend to your attention the following: The consolidation of Government arsenals; the restoration of mileage to officers traveling under orders; the exemption of money received from the sale of subsistence stores from being covered into the Treasury; the use of appropriations for the purchase of subsistence stores without waiting for the beginning of the fiscal year for which the appropriation is made; for additional appropriations for the collection of torpedo material; for increased appropriations for the manufacture of arms; for relieving the various States from indebtedness for arms charged to them during the rebellion; for dropping officers from the rolls of the Army without trial for the offense of drawing pay more than once for the same period; for the discouragement of the plan to pay soldiers by cheek, and for the establishment of a professorship of rhetoric and English literature at West Point. The reasons for these recommendations are obvious, and are set forth sufficiently in the reports attached. I also recommend that the status of the staff corps of the Army be fixed, where this has not already been done, so that promotions may be made and vacancies filled as they occur in each grade when reduced below the number to be fixed by law. The necessity for such legislation is specially felt now in the Pay Department. The number of officers in that department is below the number adequate to the performance of the duties required of them by law.  The efficiency of the Navy has been largely increased during the last year. Under the impulse of the foreign complications which threatened us at the commencement of the last session of Congress, most of our efficient wooden ships were put in condition for immediate service, and the repairs of our ironclad fleet were pushed with the utmost vigor. The result is that most of these are now in an effective state and need only to be manned and put in commission to go at once into service.  Some of the new sloops authorized by Congress are already in commission, and most of the remainder are launched and wait only the completion of their machinery to enable them to take their places as part of our effective force.  Two iron torpedo ships have been completed during the last year, and four of our large double-turreted ironclads are now undergoing repairs. When these are finished, everything that is useful of our Navy, as now authorized, will be in condition for service, and with the advance in the science of torpedo warfare the American Navy, comparatively small as it is, will be found at any time powerful for the purposes of a peaceful nation.  Much has been accomplished during the year in aid of science and to increase the sum of general knowledge and further the interests of commerce and civilization. Extensive and much-needed soundings have been made for hydrographic purposes and to fix the proper routes of ocean telegraphs. Further surveys of the great Isthmus have been undertaken and completed, and two vessels of the Navy are now employed, in conjunction with those of England, France, Germany, and Russia, in observations connected with the transit of Venus, so useful and interesting to the scientific world.  The estimates for this branch of the public service do not differ materially from those of last year, those for the general support of the service being somewhat less and those for permanent improvements at the various stations rather larger than the corresponding estimate made a year ago. The regular maintenance and a steady increase in the efficiency of this most important arm in proportion to the growth of our maritime intercourse and interests is recommended to the attention of Congress.  The use of the Navy in time of peace might be further utilized by a direct authorization of the employment of naval vessels in explorations and surveys of the supposed navigable waters of other nationalities on this continent, especially the tributaries of the two great rivers of South America, the Orinoco and the Amazon. Nothing prevents, under existing laws, such exploration, except that expenditures must be made in such expeditions beyond those usually provided for in the appropriations. The field designated is unquestionably one of interest and one capable of large development of commercial interests--advantageous to the peoples reached and to those who may establish relations with them.  Education of the people entitled to exercise the right of franchise I regard essential to general prosperity everywhere, and especially so in republics, where birth, education, or previous condition does not enter into account in giving suffrage. Next to the public school, the post-office is the great agent of education over our vast territory. The rapidity with which new sections are being settled, thus increasing the carrying of mails in a more rapid ratio than the increase of receipts, is not alarming. The report of the Postmaster-General herewith attached shows that there was an increase of revenue in his Department in 1873 over the previous year of $1,674,411, and an increase of cost of carrying the mails and paying employees of $3,041,468.91. The report of the Postmaster-General gives interesting statistics of his Department, and compares them with the corresponding statistics of a year ago, showing a growth in every branch of the Department.  A postal convention has been concluded with New South Wales, an exchange of postal cards established with Switzerland, and the negotiations pending for several years past with France have been terminated in a convention with that country, which went into effect last August.  An international postal congress was convened in Berne, Switzerland, in September last, at which the United States was represented by an officer of the Post-Office Department of much experience and of qualification for the position. A convention for the establishment of an international postal union was agreed upon and signed by the delegates of the countries represented, subject to the approval of the proper authorities of those countries.  I respectfully direct your attention to the report of the Postmaster-General and to his suggestions in regard to an equitable adjustment of the question of compensation to railroads for carrying the mails.  Your attention will be drawn to the unsettled condition of affairs in some of the Southern States.  On the 14th of September last the governor of Louisiana called upon me, as provided by the Constitution and laws of the United States, to aid in suppressing domestic violence in that State. This call was made in view of a proclamation issued on that day by D. B. Penn, claiming that he was elected lieutenant-governor in 1872, and calling upon the militia of the State to arm, assemble, and drive from power the usurpers, as he designated the officers of the State government. On the next day I issued my proclamation commanding the insurgents to disperse within five days from the date thereof, and subsequently learned that on that day they had taken forcible possession of the statehouse. Steps were taken by me to support the existing and recognized State government, but before the expiration of the five days the insurrectionary movement was practically abandoned, and the officers of the State government, with some minor exceptions, resumed their powers and duties. Considering that the present State administration of Louisiana has been the only government in that State for nearly two years; that it has been tacitly acknowledged and acquiesced in as such by Congress, and more than once expressly recognized by me, I regarded it as my clear duty, when legally called upon for that purpose, to prevent its overthrow by an armed mob under pretense of fraud and irregularity in the election of 1872. I have heretofore called the attention of Congress to this subject, stating that on account of the frauds and forgeries committed at said election, and because it appears that the returns thereof were never legally canvassed, it was impossible to tell thereby who were chosen; but from the best sources of information at my command I have always believed that the present State officers received a majority of the legal votes actually cast at that election. I repeat what I said in my special message of February 23, 1873, that in the event of no action by Congress I must continue to recognize the government heretofore recognized by me.  I regret to say that with preparations for the late election decided indications appeared in some localities in the Southern States of a determination, by acts of violence and intimidation, to deprive citizens of the freedom of the ballot because of their political opinions. Bands of men, masked and armed, made their appearance; White Leagues and other societies were formed; large quantities of arms and ammunition were imported and distributed to these organizations; military drills, with menacing demonstrations, were held, and with all these murders enough were committed to spread terror among those whose political action was to be suppressed, if possible, by these intolerant and criminal proceedings. In some places colored laborers were compelled to vote according to the wishes of their employers, under threats of discharge if they acted otherwise; and there are too many instances in which, when these threats were disregarded, they were remorselessly executed by those who made them. I understand that the fifteenth amendment to the Constitution was made to prevent this and a like state of things, and the act of May 31, 1870, with amendments, was passed to enforce its provisions, the object of both being to guarantee to all citizens the right to vote and to protect them in the free enjoyment of that right. Enjoined by the Constitution "to take care that the laws be faithfully executed," and convinced by undoubted evidence that violations of said act had been committed and that a widespread and flagrant disregard of it was contemplated, the proper officers were instructed to prosecute the offenders, and troops were stationed at convenient points to aid these officers, if necessary, in the performance of their official duties. Complaints are made of this interference by Federal authority; but if said amendment and act do not provide for such interference under the circumstances as above stated, then they are without meaning, force, or effect, and the whole scheme of colored enfranchisement is worse than mockery and little better than a crime. Possibly Congress may find it due to truth and justice to ascertain, by means of a committee, whether the alleged wrongs to colored citizens for political purposes are real or the reports thereof were manufactured for the occasion.  The whole number of troops in the States of Louisiana, Alabama, Georgia, Florida, South Carolina, North Carolina, Kentucky, Tennessee, Arkansas, Mississippi, Maryland, and Virginia at the time of the election was 4,082. This embraces the garrisons of all the forts from the Delaware to the Gulf of Mexico.  Another trouble has arisen in Arkansas. Article 13 of the constitution of that State (which was adopted in 1868, and upon the approval of which by Congress the State was restored to representation as one of the States of the Union) provides in effect that before any amendments proposed to this constitution shall become a part thereof they shall be passed by two successive assemblies and then submitted to and ratified by a majority of the electors of the State voting thereon. On the 11th of May, 1874, the governor convened an extra session of the general assembly of the State, which on the 18th of the same month passed an act providing for a convention to frame a new constitution. Pursuant to this act, and at an election held on the 30th of June, 1874, the convention was approved, and delegates were chosen thereto, who assembled on the 14th of last July and framed a new constitution, the schedule of which provided for the election of an entire new set of State officers in a manner contrary to the then existing election laws of the State. On the 13th of October, 1874, this constitution, as therein provided, was submitted to the people for their approval or rejection, and according to the election returns was approved by a large majority of those qualified to vote thereon; and at the same election persons were chosen to fill all the State, county, and township offices. The governor elected in 1872 for the term of four years turned over his office to the governor chosen under the new constitution, whereupon the lieutenant-governor, also elected in 1872 for a term of four years, claiming to act as governor, and alleging that said proceedings by which the new constitution was made and a new set of officers elected were unconstitutional, illegal, and void, called upon me, as provided in section 4, Article IV, of the Constitution, to protect the State against domestic violence. As Congress is now investigating the political affairs of Arkansas, I have declined to interfere.  The whole subject of Executive interference with the affairs of a State is repugnant to public opinion, to the feelings of those who, from their official capacity, must be used in such interposition, and to him or those who must direct. Unless most clearly on the side of law, such interference becomes a crime; with the law to support it, it is condemned without a heating. I desire, therefore, that all necessity for Executive direction in local affairs may become unnecessary and obsolete. I invite the attention, not of Congress, but of the people of the United States, to the causes and effects of these unhappy questions. Is there not a disposition on one side to magnify wrongs and outrages, and on the other side to belittle them or justify them? If public opinion could be directed to a correct survey of what is and to rebuking wrong and aiding the proper authorities in punishing it, a better state of feeling would be inculcated, and the sooner we would have that peace which would leave the States free indeed to regulate their own domestic affairs. I believe on the part of our citizens of the Southern States--the better part of them--there is a disposition to be law abiding, and to do no violence either to individuals or to the laws existing. But do they do right in ignoring the existence of violence and bloodshed in resistance to constituted authority? I sympathize with their prostrate condition, and would do all in my power to relieve them, acknowledging that in some instances they have had most trying governments to live under, and very oppressive ones in the way of taxation for nominal improvements, not giving benefits equal to the hardships imposed. But can they proclaim themselves entirely irresponsible for this condition? They can not. Violence has been rampant in some localities, and has either been justified or denied by those who could have prevented it. The theory is even raised that there is to be no further interference on the part of the General Government to protect citizens within a State where the State authorities fail to give protection. This is a great mistake. While I remain Executive all the laws of Congress and the provisions of the Constitution, including the recent amendments added thereto, will be enforced with rigor, but with regret that they should have added one jot or tittle to Executive duties or powers. Let there be fairness in the discussion of Southern questions, the advocates of both or all political parties giving honest, truthful reports of occurrences, condemning the wrong and upholding the tight, and soon all will be well. Under existing conditions the negro votes the Republican ticket because he knows his friends are of that party. Many a good citizen votes the opposite, not because he agrees with the great principles of state which separate parties, but because, generally, he is opposed to negro rule. This is a most delusive cry. Treat the negro as a citizen and a voter, as he is and must remain, and soon parties will be divided, not on the color line, but on principle. Then we shall have no complaint of sectional interference.  The report of the Attorney-General contains valuable recommendations relating to the administration of justice in the courts of the United States, to which I invite your attention.  I respectfully suggest to Congress the propriety of increasing the number of judicial districts in the United States to eleven (the present number being nine) and the creation of two additional judgeships. The territory to be traversed by the circuit judges is so great and the business of the courts so steadily increasing that it is growing more and more impossible for them to keep up with the business requiring their attention. Whether this would involve the necessity of adding two more justices of the Supreme Court to the present number I submit to the judgment of Congress.  The attention of Congress is invited to the report of the Secretary of the Interior and to the legislation asked for by him. The domestic interests of the people are more intimately connected with this Department than with either of the other Departments of Government. Its duties have been added to from time to time until they have become so onerous that without the most perfect system and order it will be impossible for any Secretary of the Interior to keep trace of all official transactions having his sanction and done in his name, and for which he is held personally responsible.  The policy adopted for the management of Indian affairs, known as the peace policy, has been adhered to with most beneficial results. It is confidently hoped that a few years more will relieve our frontiers from danger of Indian depredations.  I commend the recommendation of the Secretary for the extension of the homestead laws to the Indians and for some sort of Territorial government for the Indian Territory. A great majority of the Indians occupying this Territory are believed yet to be incapable of maintaining their rights against the more civilized and enlightened white man. Any Territorial form of government given them, therefore, should protect them in their homes and property for a period of at least twenty years, and before its final adoption should be ratified by a majority of those affected.  The report of the Secretary of the Interior herewith attached gives much interesting statistical information, which I abstain from giving an abstract of, but refer you to the report itself.  The act of Congress providing the oath which pensioners must subscribe to before drawing their pensions cuts off from this bounty a few survivors of the War of 1812 residing in the Southern States. I recommend the restoration of this bounty to all such. The number of persons whose names would thus be restored to the list of pensioners is not large. They are all old persons, who could have taken no part in the rebellion, and the services for which they were awarded pensions were in defense of the whole country.  The report of the Commissioner of Agriculture herewith contains suggestions of much interest to the general public, and refers to the sly approaching Centennial and the part his Department is ready to take in it. I feel that the nation at large is interested in having this exposition a success, and commend to Congress such action as will secure a greater general interest in it. Already many foreign nations have signified their intention to be represented at it, and it may be expected that every civilized nation will be represented.  The rules adopted to improve the civil service of the Government have been adhered to as closely as has been practicable with the opposition with which they meet. The effect, I believe, has been beneficial on the whole, and has tended to the elevation of the service. But it is impracticable to maintain them without direct and positive support of Congress. Generally the support which this reform receives is from those who give it their support only to find fault when the rules are apparently departed from. Removals from office without preferring charges against parties removed are frequently cited as departures from the rules adopted, and the retention of those against whom charges are made by irresponsible persons and without good grounds is also often condemned as a violation of them. Under these circumstances, therefore, I announce that if Congress adjourns without positive legislation on the subject of "civil-service reform" I will regard such action as a disapproval of the system, and will abandon it, except so far as to require examinations for certain appointees, to determine their fitness. Competitive examinations will be abandoned.  The gentlemen who have given their services, without compensation, as members of the board to devise rules and regulations for the government of the civil service of the country have shown much zeal and earnestness in their work, and to them, as well as to myself, it will be a source of mortification if it is to be thrown away. But I repeat that it is impossible to carry this system to a successful issue without general approval and assistance and positive law to support it.  I have stated that three elements of prosperity to the nation--capital, labor, skilled and unskilled, and products of the soil--still remain with us. To direct the employment of these is a problem deserving the most serious attention of Congress. If employment can be given to all the labor offering itself, prosperity necessarily follows. I have expressed the opinion, and repeat it, that the first requisite to the accomplishment of this end is the substitution of a sound currency in place of one of a fluctuating value. This secured, there are many interests that might be fostered to the great profit of both labor and capital. How to induce capital to employ labor is the question. The subject of cheap transportation has occupied the attention of Congress. Much new light on this question will without doubt be given by the committee appointed by the last Congress to investigate and report upon this subject.  A revival of shipbuilding, and particularly of iron steamship building, is of vast importance to our national prosperity. The United States is now paying over $100,000,000 per annum for freights and passage on foreign ships--to be carried abroad and expended in the employment and support of other peoples--beyond a fair percentage of what should go to foreign vessels, estimating on the tonnage and travel of each respectively. It is to be regretted that this disparity in the carrying trade exists, and to correct it I would be willing to see a great departure from the usual course of Government in supporting what might usually be termed private enterprise. I would not suggest as a remedy direct subsidy to American steamship lines, but I would suggest the direct offer of ample compensation for carrying the mails between Atlantic Seaboard cities and the Continent on American-owned and American-built steamers, and would extend this liberality to vessels carrying the mails to South American States and to Central America and Mexico, and would pursue the same policy from our Pacific seaports to foreign seaports on the Pacific. It might be demanded that vessels built for this service should come up to a standard fixed by legislation in tonnage, speed, and all other qualities, looking to the possibility of Government requiring them at some time for war purposes. The right also of taking possession of them in such emergency should be guarded.  I offer these suggestions, believing them worthy of consideration, in all seriousness, affecting all sections and all interests alike. If anything better can be done to direct the country into a course of general prosperity, no one will be more ready than I to second the plan.  Forwarded herewith will be found the report of the commissioners appointed under an act of Congress approved June 20, 1874, to wind up the affairs of the District government. It will be seen from the report that the net debt of the District of Columbia, less securities on hand and available, is:        Bonded debt issued prior to July 1, 1874    $8,883,940.93      3.65 bonds, act of Congress June 20, 1874    2,088,168.73      Certificates of the board of audit    4,770,558.45                        15,742,667.61      Less special-improvement assesments        (chargeable to private property) in excess of any        demand against such assessments  $1,614,054.37        Less Chesapeake and Ohio Canal bonds  75,000.00        And Washington and Alexandria Railroad bonds  59,000.00                      In the hands of the commissioners of the sinking fund    1,748,054.37                    Leaving actual debt, less said assets    13,994,613.24          In addition to this there are claims preferred against the government of the District amounting, in the estimated aggregate reported by the board of audit, to $3,147,787.48, of which the greater part will probably be rejected. This sum can with no more propriety be included in the debt account of the District government than can the thousands of claims against the General Government be included as a portion of the national debt. But the aggregate sum thus stated includes something more than the funded debt chargeable exclusively to the District of Columbia. The act of Congress of June 20, 1874, contemplates an apportionment between the United States Government and the District of Columbia in respect of the payment of the principal and interest of the 3.65 bonds. Therefore in computing with precision the bonded debt of the District the aggregate sums above stated as respects 3.65 bonds now issued, the outstanding certificates of the board of audit, and the unadjusted claims pending before that board should be reduced to the extent of the amount to be apportioned to the United States Government in the manner indicated in the act of Congress of June 20, 1874.  I especially invite your attention to the recommendations of the commissioners of the sinking fund relative to the ambiguity of the act of June 20, 1874, the interest on the District bonds, and the consolidation of the indebtedness of the District.  I feel much indebted to the gentlemen who consented to leave their private affairs and come from a distance to attend to the business of this District, and for the able and satisfactory manner in which it has been conducted. I am sure their services will be equally appreciated by the entire country.  It will be seen from the accompanying full report of the board of health that the sanitary condition of the District is very satisfactory.  In my opinion the District of Columbia should be regarded as the grounds of the national capital, in which the entire people are interested. I do not allude to this to urge generous appropriations to the District, but to draw the attention of Congress, in framing a law for the government of the District, to the magnificent scale on which the city was planned by the founders of the Government; the manner in which, for ornamental purposes, the reservations, streets, and avenues were laid out, and the proportion of the property actually possessed by the General Government. I think the proportion of the expenses of the government and improvements to be borne by the General Government, the cities of Washington and Georgetown, and the county should be carefully and equitably defined.  In accordance with section 3, act approved June 23, 1874, I appointed a board to make a survey of the mouth of the Mississippi River with a view to determine the best method of obtaining and maintaining a depth of water sufficient for the purposes of commerce, etc.; and in accordance with an act entitled "An act to provide for the appointment of a commission of engineers to investigate and report a permanent plan for the reclamation of the alluvial basin of the Mississippi River subject to inundation," I appointed a commission of engineers. Neither board has yet completed its labors. When their reports are received, they will be forwarded to Congress without delay.      U. S. GRANT   	R
Fellow-Citizens of the Senate and House of Representatives:  Throughout the year since our last meeting the country has been eminently prosperous in all its material interests. The general health has been excellent, our harvests have been abundant, and plenty smiles throughout the laud. Our commerce and manufactures have been prosecuted with energy and industry, and have yielded fair and ample returns. In short, no nation in the tide of time has ever presented a spectacle of greater material prosperity than we have done until within a very recent period.  Why is it, then, that discontent now so extensively prevails, and the Union of the States, which is the source of all these blessings, is threatened with destruction?  The long-continued and intemperate interference of the Northern people with the question of slavery in the Southern States has at length produced its natural effects. The different sections of the Union are now arrayed against each other, and the time has arrived, so much dreaded by the Father of his Country, when hostile geographical parties have been formed.  I have long foreseen and often forewarned my countrymen of the now impending danger. This does not proceed solely from the claim on the part of Congress or the Territorial legislatures to exclude slavery from the Territories, nor from the efforts of different States to defeat the execution of the fugitive-slave law. All or any of these evils might have been endured by the South without danger to the Union (as others have been) in the hope that time and reflection might apply the remedy. The immediate peril arises not so much from these causes as from the fact that the incessant and violent agitation of the slavery question throughout the North for the last quarter of a century has at length produced its malign influence on the slaves and inspired them with vague notions of freedom. Hence a sense of security no longer exists around the family altar. This feeling of peace at home has given place to apprehensions of servile insurrections. Many a matron throughout the South retires at night in dread of what may befall herself and children before the morning. Should this apprehension of domestic danger, whether real or imaginary, extend and intensify itself until it shall pervade the masses of the Southern people, then disunion will become inevitable. Self-preservation is the first law of nature, and has been implanted in the heart of man by his Creator for the wisest purpose; and no political union, however fraught with blessings and benefits in all other respects, can long continue if the necessary consequence be to render the homes and the firesides of nearly half the parties to it habitually and hopelessly insecure. Sooner or later the bonds of such a union must be severed. It is my conviction that this fatal period has not yet arrived, and my prayer to God is that He would preserve the Constitution and the Union throughout all generations.  But let us take warning in time and remove the cause of danger. It can not be denied that for five and twenty years the agitation at the North against slavery has been incessant. In 1835 pictorial handbills and inflammatory appeals were circulated extensively throughout the South of a character to excite the passions of the slaves, and, in the language of General Jackson, "to stimulate them to insurrection and produce all the horrors of a servile war." This agitation has ever since been continued by the public press, by the proceedings of State and county conventions and by abolition sermons and lectures. The time of Congress has been occupied in violent speeches on this never-ending subject, and appeals, in pamphlet and other forms, indorsed by distinguished names, have been sent forth from this central point and spread broadcast over the Union.  How easy would it be for the American people to settle the slavery question forever and to restore peace and harmony to this distracted country!  They, and they alone, can do it. All that is necessary to accomplish the object, and all for which the slave States have ever contended, is to be let alone and permitted to manage their domestic institutions in their own way. As sovereign States, they, and they alone, are responsible before God and the world for the slavery existing among them. For this the people of the North are not more responsible and have no more right to interfere than with similar institutions in Russia or in Brazil.  Upon their good sense and patriotic forbearance I confess I still greatly rely. Without their aid it is beyond the power of any President, no matter what may be his own political proclivities, to restore peace and harmony among the States. Wisely limited and restrained as is his power under our Constitution and laws, he alone can accomplish but little for good or for evil on such a momentous question.  And this brings me to observe that the election of any one of our fellow-citizens to the office of President does not of itself afford just cause for dissolving the Union. This is more especially true if his election has been effected by a mere plurality, and not a majority of the people, and has resulted from transient and temporary causes, which may probably never again occur. In order to justify a resort to revolutionary resistance, the Federal Government must be guilty of "a deliberate, palpable, and dangerous exercise" of powers not granted by the Constitution.  The late Presidential election, however, has been held in strict conformity with its express provisions. How, then, can the result justify a revolution to destroy this very Constitution? Reason, justice, a regard for the Constitution, all require that we shall wait for some overt and dangerous act on the part of the President elect before resorting to such a remedy. It is said, however, that the antecedents of the President-elect have been sufficient to justify the fears of the South that he will attempt to invade their constitutional rights. But are such apprehensions of contingent danger in the future sufficient to justify the immediate destruction of the noblest system of government ever devised by mortals? From the very nature of his office and its high responsibilities he must necessarily be conservative. The stern duty of administering the vast and complicated concerns of this Government affords in itself a guaranty that he will not attempt any violation of a clear constitutional right.  After all, he is no more than the chief executive officer of the Government. His province is not to make but to execute the laws. And it is a remarkable fact in our history that, notwithstanding the repeated efforts of the antislavery party, no single act has ever passed Congress, unless we may possibly except the Missouri compromise, impairing in the slightest degree the rights of the South to their property in slaves; and it may also be observed, judging from present indications, that no probability exists of the passage of such an act by a majority of both Houses, either in the present or the next Congress. Surely under these circumstances we ought to be restrained from present action by the precept of Him who spake as man never spoke, that "sufficient unto the day is the evil thereof." The day of evil may never come unless we shall rashly bring it upon ourselves.  It is alleged as one cause for immediate secession that the Southern States are denied equal rights with the other States in the common Territories. But by what authority are these denied? Not by Congress, which has never passed, and I believe never will pass, any act to exclude slavery from these Territories; and certainly not by the Supreme Court, which has solemnly decided that slaves are property, and, like all other property, their owners have a right to take them into the common Territories and hold them there under the protection of the Constitution.  So far then, as Congress is concerned, the objection is not to anything they have already done, but to what they may do hereafter. It will surely be admitted that this apprehension of future danger is no good reason for an immediate dissolution of the Union. It is true that the Territorial legislature of Kansas, on the 23d February, 1860, passed in great haste an act over the veto of the governor declaring that slavery "is and shall be forever prohibited in this Territory." Such an act, however, plainly violating the rights of property secured by the Constitution, will surely be declared void by the judiciary whenever it shall be presented in a legal form.  Only three days after my inauguration the Supreme Court of the United States solemnly adjudged that this power did not exist in a Territorial legislature. Yet such has been the factious temper of the times that the correctness of this decision has been extensively impugned before the people, and the question has given rise to angry political conflicts throughout the country. Those who have appealed from this judgment of our highest constitutional tribunal to popular assemblies would, if they could, invest a Territorial legislature with power to annul the sacred rights of property. This power Congress is expressly forbidden by the Federal Constitution to exercise. Every State legislature in the Union is forbidden by its own constitution to exercise it. It can not be exercised in any State except by the people in their highest sovereign capacity, when framing or amending their State constitution. In like manner it can only be exercised by the people of a Territory represented in a convention of delegates for the purpose of framing a constitution preparatory to admission as a State into the Union. Then, and not until then, are they invested with power to decide the question whether slavery shall or shall not exist within their limits. This is an act of sovereign authority, and not of subordinate Territorial legislation. Were it otherwise, then indeed would the equality of the States in the Territories be destroyed, and the rights of property in slaves would depend not upon the guaranties of the Constitution, but upon the shifting majorities of an irresponsible Territorial legislature. Such a doctrine, from its intrinsic unsoundness, can not long influence any considerable portion of our people, much less can it afford a good reason for a dissolution of the Union.  The most palpable violations of constitutional duty which have yet been committed consist in the acts of different State legislatures to defeat the execution of the fugitive-slave law. It ought to be remembered, however, that for these acts neither Congress nor any President can justly be held responsible. Having been passed in violation of the Federal Constitution, they are therefore null and void. All the courts, both State and national, before whom the question has arisen have from the beginning declared the fugitive-slave law to be constitutional. The single exception is that of a State court in Wisconsin, and this has not only been reversed by the proper appellate tribunal, but has met with such universal reprobation that there can be no danger from it as a precedent. The validity of this law has been established over and over again by the Supreme Court of the United States with perfect unanimity. It is rounded upon an express provision of the Constitution, requiring that fugitive slaves who escape from service in one State to another shall be "delivered up" to their masters. Without this provision it is a well-known historical fact that the Constitution itself could never have been adopted by the Convention. In one form or other, under the acts of 1793 and 1850, both being substantially the same, the fugitive-slave law has been the law of the land from the days of Washington until the present moment. Here, then, a clear case is presented in which it will be the duty of the next President, as it has been my own, to act with vigor in executing this supreme law against the conflicting enactments of State legislatures. Should he fail in the performance of this high duty, he will then have manifested a disregard of the Constitution and laws, to the great injury of the people of nearly one-half of the States of the Union. But are we to presume in advance that he will thus violate his duty? This would be at war with every principle of justice and of Christian charity. Let us wait for the overt act. The fugitive-slave law has been carried into execution in every contested case since the commencement of the present Administration, though Often, it is to be regretted, with great loss and inconvenience to the master and with considerable expense to the Government. Let us trust that the State legislatures will repeal their unconstitutional and obnoxious enactments. Unless this shall be done without unnecessary delay, it is impossible for any human power to save the Union.  The Southern States, standing on the basis of the Constitution, have right to demand this act of justice from the States of the North. Should it be refused, then the Constitution, to which all the States are parties, will have been willfully violated by one portion of them in a provision essential to the domestic security and happiness of the remainder. In that event the injured States, after having first used all peaceful and constitutional means to obtain redress, would be justified in revolutionary resistance to the Government of the Union.  I have purposely confined my remarks to revolutionary resistance, because it has been claimed within the last few years that any State, whenever this shall be its sovereign will and pleasure, may secede from the Union in accordance with the Constitution and without any violation of the constitutional rights of the other members of the Confederacy; that as each became parties to the Union by the vote of its own people assembled in convention, so any one of them may retire from the Union in a similar manner by the vote of such a convention.  In order to justify secession as a constitutional remedy, it must be on the principle that the Federal Government is a mere voluntary association of States, to be dissolved at pleasure by any one of the contracting parties. If this be so, the Confederacy is a rope of sand, to be penetrated and dissolved by the first adverse wave of public opinion in any of the States. In this manner our thirty-three States may resolve themselves into as many petty, jarring, and hostile republics, each one retiring from the Union without responsibility whenever any sudden excitement might impel them to such a course. By this process a Union might be entirely broken into fragments in a few weeks which cost our forefathers many years of toil, privation, and blood to establish.  Such a principle is wholly inconsistent with the history as well as the character of the Federal Constitution. After it was framed with the greatest deliberation and care it was submitted to conventions of the people of the several States for ratification. Its provisions were discussed at length in these bodies, composed of the first men of the country. Its opponents contended that it conferred powers upon the Federal Government dangerous to the rights of the States, whilst its advocates maintained that under a fair construction of the instrument there was no foundation for such apprehensions. In that mighty struggle between the first intellects of this or any other country it never occurred to any individual, either among its opponents or advocates, to assert or even to intimate that their efforts were all vain labor, because the moment that any State felt herself aggrieved she might secede from the Union. What a crushing argument would this have proved against those who dreaded that the rights of the States would be endangered by the Constitution! The truth is that it was not until many years after the origin of the Federal Government that such a proposition was first advanced. It was then met and refuted by the conclusive arguments of General Jackson, who in his message of the 16th of January, 1833, transmitting the nullifying ordinance of South Carolina to Congress, employs the following language:  The right of the people of a single State to absolve themselves at will and without the consent of the other States from their most solemn obligations, and hazard the liberties and happiness of the millions composing this Union, can not be acknowledged. Such authority is believed to be utterly repugnant both to the principles upon which the General Government is constituted and to the objects which it is expressly formed to attain.  It is not pretended that any clause in the Constitution gives countenance to such a theory. It is altogether rounded upon inference; not from any language contained in the instrument itself, but from the sovereign character of the several States by which it was ratified. But is it beyond the power of a State, like an individual, to yield a portion of its sovereign rights to secure the remainder? In the language of Mr. Madison, who has been called the father of the Constitution--  It was formed by the States; that is, by the people in each of the States acting in their highest sovereign capacity, and formed, consequently, by the same authority which formed the State constitutions. Nor is the Government of the United States, created by the Constitution, less a government, in the strict sense of the term, within the sphere of its powers than the governments created by the constitutions of the States are within their several spheres. It is, like them, organized into legislative, executive, and judiciary departments. It operates, like them directly on persons and things, and, like them, it has at command a physical force for executing the powers committed to it.  It was intended to be perpetual, and not to be annulled at the pleasure of any one of the contracting parties. The old Articles of Confederation were entitled "Articles of Confederation and Perpetual Union between the States," and by the thirteenth article it is expressly declared that "the articles of this Confederation shall be inviolably observed by every State, and the Union shall be perpetual." The preamble to the Constitution of the United States, having express reference to the Articles of Confederation, recites that it was established "in order to form a more perfect union." And yet it is contended that this "more perfect union" does not include the essential attribute of perpetuity.  But that the Union was designed to be perpetual appears conclusively from the nature and extent of the powers conferred by the Constitution on the Federal Government. These powers embrace the very highest attributes of national sovereignty. They place both the sword and the purse under its control. Congress has power to make war and to make peace, to raise and support armies and navies, and to conclude treaties with foreign governments. It is invested with the power to coin money and to regulate the value thereof, and to regulate commerce with foreign nations and among the several States. It is not necessary to enumerate the other high powers which have been conferred upon the Federal Government. In order to carry the enumerated powers into effect, Congress possesses the exclusive right to lay and collect duties on imports, and, in common with the States, to lay and collect all other taxes.  But the Constitution has not only conferred these high powers upon Congress, but it has adopted effectual means to restrain the States from interfering with their exercise. For that purpose it has in strong prohibitory language expressly declared that--  No State shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts.  Moreover--No State shall without the consent of the Congress lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws.  And if they exceed this amount the excess shall belong, to the United States. And--No State shall without the consent of Congress lay any duty of tonnage, keep troops or ships of war in time of peace, enter into any agreement or compact with another State or with a foreign power, or engage in war, unless actually invaded or in such imminent danger as will not admit of delay.  In order still further to secure the uninterrupted exercise of these high powers against State interposition, it is provided that--This Constitution and the laws of the United States which shall be made in pursuance thereof, and all treaties made or which shall be made under the authority of the United States, shall be the supreme law of the land, and the judges in every State shall be bound thereby, anything in the constitution or laws of any State to the contrary notwithstanding.  The solemn sanction of religion has been superadded to the obligations of official duty, and all Senators and Representatives of the United States, all members of State legislatures, and all executive and judicial officers, "both of the United States and of the several States, shall be bound by oath or affirmation to support this Constitution."  In order to carry into effect these powers, the Constitution has established a perfect Government in all its forms--legislative, executive, and judicial; and this Government to the extent of its powers acts directly upon the individual citizens of every State, and executes its own decrees by the agency of its own officers. In this respect it differs entirely from the Government under the old Confederation, which was confined to making requisitions on the States in their sovereign character. This left it in the discretion of each whether to obey or to refuse, and they often declined to comply with such requisitions. It thus became necessary for the purpose of removing this barrier and "in order to form a more perfect union" to establish a Government which could act directly upon the people and execute its own laws without the intermediate agency of the States. This has been accomplished by the Constitution of the United States. In short, the Government created by the Constitution, and deriving its authority from the sovereign people of each of the several States, has precisely the same right to exercise its power over the people of all these States in [see APP Note] the enumerated cases that each one of them possesses over subjects not delegated to the United States, but "reserved to the States respectively or to the people."  To the extent of the delegated powers the Constitution of the United States is as much a part of the constitution of each State and is as binding upon its people as though it had been textually inserted therein.  This Government, therefore, is a great and powerful Government, invested with all the attributes of sovereignty over the special subjects to which its authority extends. Its framers never intended to implant in its bosom the seeds of its own destruction, nor were they at its creation guilty of the absurdity of providing for its own dissolution. It was not intended by its framers to be the baseless fabric of a vision, which at the touch of the enchanter would vanish into thin air, but a substantial and mighty fabric, capable of resisting the slow decay of time and of defying the storms of ages. Indeed, well may the jealous patriots of that day have indulged fears that a Government of such high powers might violate the reserved rights of the States, and wisely did they adopt the rule of a strict construction of these powers to prevent the danger. But they did not fear, nor had they any reason to imagine, that the Constitution would ever be so interpreted as to enable any State by her own act, and without the consent of her sister States, to discharge her people from all or any of their federal obligations.  It may be asked, then, Are the people of the States without redress against the tyranny and oppression of the Federal Government? By no means. The right of resistance on the part of the governed against the oppression of their governments can not be denied. It exists independently of all constitutions, and has been exercised at all periods of the world's history. Under it old governments have been destroyed and new ones have taken their place. It is embodied in strong and express language in our own Declaration of Independence. But the distinction must ever be observed that this is revolution against an established government, and not a voluntary secession from it by virtue of an inherent constitutional right. In short, let us look the danger fairly in the face. Secession is neither more nor less than revolution. It may or it may not be a justifiable revolution, but still it is revolution.  What, in the meantime, is the responsibility and true position of the Executive? He is bound by solemn oath, before God and the country, "to take care that the laws be faithfully executed," and from this obligation he can not be absolved by any human power. But what if the performance of this duty, in whole or in part, has been rendered impracticable by events over which he could have exercised no control? Such at the present moment is the case throughout the State of South Carolina so far as the laws of the United States to secure the administration of justice by means of the Federal judiciary are concerned. All the Federal officers within its limits through whose agency alone these laws can be carried into execution have already resigned. We no longer have a district judge, a district attorney, or a marshal in South Carolina. In fact, the whole machinery of the Federal Government necessary for the distribution of remedial justice among the people has been demolished, and it would be difficult, if not impossible, to replace it.  The only acts of Congress on the statute book bearing upon this subject are those of February 28, 1795, and March 3, 1807. These authorize the President, after he shall have ascertained that the marshal, with his posse comitatus, is unable to execute civil or criminal process in any particular case, to call forth the militia and employ the Army and Navy to aid him in performing this service, having first by proclamation commanded the insurgents "to disperse and retire peaceably to their respective abodes within a limited time" This duty can not by possibility be performed in a State where no judicial authority exists to issue process, and where there is no marshal to execute it, and where, even if there were such an officer, the entire population would constitute one solid combination to resist him.  The bare enumeration of these provisions proves how inadequate they are without further legislation to overcome a united opposition in a single State, not to speak of other States who may place themselves in a similar attitude. Congress alone has power to decide whether the present laws can or can not be amended so as to carry out more effectually the objects of the Constitution.  The same insuperable obstacles do not lie in the way of executing the laws for the collection of the customs. The revenue still continues to be collected as heretofore at the custom-house in Charleston, and should the collector unfortunately resign a successor may be appointed to perform this duty.  Then, in regard to the property of the United States in South Carolina. This has been purchased for a fair equivalent, "by the consent of the legislature of the State," "for the erection of forts, magazines, arsenals," etc., and over these the authority "to exercise exclusive legislation" has been expressly granted by the Constitution to Congress. It is not believed that any attempt will be made to expel the United States from this property by force; but if in this I should prove to be mistaken, the officer in command of the forts has received orders to act strictly on the defensive. In such a contingency the responsibility for consequences would rightfully rest upon the heads of the assailants.  Apart from the execution of the laws, so far as this may be practicable, the Executive has no authority to decide what shall be the relations between the Federal Government and South Carolina. He has been invested with no such discretion. He possesses no power to change the relations heretofore existing between them, much less to acknowledge the independence of that State. This would be to invest a mere executive officer with the power of recognizing the dissolution of the confederacy among our thirty-three sovereign States. It bears no resemblance to the recognition of a foreign de facto government, involving no such responsibility. Any attempt to do this would, on his part, be a naked act of usurpation. It is therefore my duty to submit to Congress the whole question in all its bearings [see APP Note]. The course of events is so rapidly hastening forward that the emergency may soon arise when you may be called upon to decide the momentous question whether you possess the power by force of arms to compel a State to remain in the Union. I should feel myself recreant to my duty were I not to express an opinion on this important subject.  The question fairly stated is, Has the Constitution delegated to Congress the power to coerce a State into submission which is attempting to withdraw or has actually withdrawn from the Confederacy? If answered in the affirmative, it must be on the principle that the power has been conferred upon Congress to declare and to make war against a State. After much serious reflection I have arrived at the conclusion that no such power has been delegated to Congress or to any other department of the Federal Government. It is manifest upon an inspection of the Constitution that this is not among the specific and enumerated powers granted to Congress, and it is equally apparent that its exercise is not "necessary and proper for carrying into execution" any one of these powers. So far from this power having been delegated to Congress, it was expressly refused by the Convention which framed the Constitution.  It appears from the proceedings of that body that on the 31st May, 1787, the clause "authorizing an exertion of the force of the whole against a delinquent State" came up for consideration. Mr. Madison opposed it in a brief but powerful speech, from which I shall extract but a single sentence. He observed:  The use of force against a State would look more like a declaration of war than an infliction of punishment, and would probably be considered by the party attacked as a dissolution of all previous compacts by which it might be bound.  Upon his motion the clause was unanimously postponed, and was never, I believe, again presented. Soon afterwards, on the 8th June, 1787, when incidentally adverting to the subject, he said: "Any government for the United States formed on the supposed practicability of using force against the unconstitutional proceedings of the States would prove as visionary and fallacious as the government of Congress," evidently meaning the then existing Congress of the old Confederation.  Without descending to particulars, it may be safely asserted that the power to make war against a State is at variance with the whole spirit and intent of the Constitution. Suppose such a war should result in the conquest of a State; how are we to govern it afterwards? Shall we hold it as a province and govern it by despotic power? In the nature of things, we could not by physical force control the will of the people and compel them to elect Senators and Representatives to Congress and to perform all the other duties depending upon their own volition and required from the free citizens of a free State as a constituent member of the Confederacy.  But if we possessed this power, would it be wise to exercise it under existing circumstances? The object would doubtless be to preserve the Union. War would not only present the most effectual means of destroying it, but would vanish all hope of its peaceable reconstruction. Besides, in the fraternal conflict a vast amount of blood and treasure would be expended, rendering future reconciliation between the States impossible. In the meantime, who can foretell what would be the sufferings and privations of the people during its existence?  The fact is that our Union rests upon public opinion, and can never be cemented by the blood of its citizens shed in civil war. If it can not live in the affections of the people, it must one day perish. Congress possesses many means of preserving it by conciliation, but the sword was not placed in their hand to preserve it by force.  But may I be permitted solemnly to invoke my countrymen to pause and deliberate before they determine to destroy this the grandest temple which has ever been dedicated to human freedom since the world began? It has been consecrated by the blood of our fathers, by the glories of the past, and by the hopes of the future. The Union has already made us the most prosperous, and ere long will, if preserved, render us the most powerful, nation on the face of the earth. In every foreign region of the globe the title of American citizen is held in the highest respect, and when pronounced in a foreign land it causes the hearts of our countrymen to swell with honest pride. Surely when we reach the brink of the yawning abyss we shall recoil with horror from the last fatal plunge.  By such a dread catastrophe the hopes of the friends of freedom throughout the world would be destroyed, and a long night of leaden despotism would enshroud the nations. Our example for more than eighty years would not only be lost, but it would be quoted as a conclusive proof that man is unfit for self-government.  It is not every wrong--nay, it is not every grievous wrong--which can justify a resort to such a fearful alternative. This ought to be the last desperate remedy of a despairing people, after every other constitutional means of conciliation had been exhausted. We should reflect that under this free Government there is an incessant ebb and flow in public opinion. The slavery question, like everything human, will have its day. I firmly believe that it has reached and passed the culminating point. But if in the midst of the existing excitement the Union shall perish, the evil may then become irreparable.  Congress can contribute much to avert it by proposing and recommending to the legislatures of the several States the remedy for existing evils which the Constitution has itself provided for its own preservation. This has been tried at different critical periods of our history, and always with eminent success. It is to be found in the fifth article, providing for its own amendment. Under this article amendments have been proposed by two-thirds of both Houses of Congress, and have been "ratified by the legislatures of three-fourths of the several States," and have consequently become parts of the Constitution. To this process the country is indebted for the clause prohibiting Congress from passing any law respecting an establishment of religion or abridging the freedom of speech or of the press or of the right of petition. To this we are also indebted for the bill of rights which secures the people against any abuse of power by the Federal Government. Such were the apprehensions justly entertained by the friends of State rights at that period as to have rendered it extremely doubtful whether the Constitution could have long survived without those amendments.  Again the Constitution was amended by the same process, after the election of President Jefferson by the House of Representatives, in February, 1803. This amendment was rendered necessary to prevent a recurrence of the dangers which had seriously threatened the existence of the Government during the pendency of that election. The article for its own amendment was intended to secure the amicable adjustment of conflicting constitutional questions like the present which might arise between the governments of the States and that of the United States. This appears from contemporaneous history. In this connection I shall merely call attention to a few sentences in Mr. Madison's justly celebrated report, in 1799, to the legislature of Virginia. In this he ably and conclusively defended the resolutions of the preceding legislature against the strictures of several other State legislatures. These were mainly rounded upon the protest of the Virginia legislature against the "alien and sedition acts," as "palpable and alarming infractions of the Constitution." In pointing out the peaceful and constitutional remedies--and he referred to none other--to which the States were authorized to resort on such occasions, he concludes by saying that--  The legislatures of the States might have made a direct representation to Congress with a view to obtain a rescinding of the two offensive acts, or they might have represented to their respective Senators in Congress their wish that two-thirds thereof would propose an explanatory amendment to the Constitution; or two-thirds of themselves, if such had been their option, might by an application to Congress have obtained a convention for the same object.  This is the very course which I earnestly recommend in order to obtain an "explanatory amendment" of the Constitution on the subject of slavery. This might originate with Congress or the State legislatures, as may be deemed most advisable to attain the object. The explanatory amendment might be confined to the final settlement of the true construction of the Constitution on three special points:  1. An express recognition of the right of property in slaves in the States where it now exists or may hereafter exist.  2. The duty of protecting this right in all the common Territories throughout their Territorial existence, and until they shall be admitted as States into the Union, with or without slavery, as their constitutions may prescribe.  3. A like recognition of the right of the master to have his slave who has escaped from one State to another restored and "delivered up" to him, and of the validity of the fugitive-slave law enacted for this purpose, together with a declaration that all State laws impairing or defeating this right are violations of the Constitution, and are consequently null and void. It may be objected that this construction of the Constitution has already been settled by the Supreme Court of the United States, and what more ought to be required? The answer is that a very large proportion of the people of the United States still contest the correctness of this decision, and never will cease from agitation and admit its binding force until clearly established by the people of the several States in their sovereign character. Such an explanatory amendment would, it is believed, forever terminate the existing dissensions, and restore peace and harmony among the States.  It ought not to be doubted that such an appeal to the arbitrament established by the Constitution itself would be received with favor by all the States of the Confederacy. In any event, it ought to be tried in a spirit of conciliation before any of these States shall separate themselves from the Union.  When I entered upon the duties of the Presidential office, the aspect neither of our foreign nor domestic affairs was at all satisfactory. We were involved in dangerous complications with several nations, and two of our Territories were in a state of revolution against the Government. A restoration of the African slave trade had numerous and powerful advocates. Unlawful military expeditions were countenanced by many of our citizens, and were suffered, in defiance of the efforts of the Government, to escape from our shores for the purpose of making war upon the unoffending [see APP Note] people of neighboring republics with whom we were at peace. In addition to these and other difficulties, we experienced a revulsion in monetary affairs soon after my advent to power of unexampled severity and of ruinous consequences to all the great interests of the country. When we take a retrospect of what was then our condition and contrast this with its material prosperity at the time of the late Presidential election, we have abundant reason to return our grateful thanks to that merciful Providence which has never forsaken us as a nation in all our past trials.  Our relations with Great Britain are of the most friendly character. Since the commencement of my Administration the two dangerous questions arising from the Clayton and Bulwer treaty and from the right of search claimed by the British Government have been amicably and honorably adjusted.  The discordant constructions of the Clayton and Bulwer treaty between the two Governments, which at different periods of the discussion bore a threatening aspect, have resulted in a final settlement entirely satisfactory to this Government. In my last annual message I informed Congress that the British Government had not then "completed treaty arrangements with the Republics of Honduras and Nicaragua in pursuance of the understanding between the two Governments. It is, nevertheless, confidently expected that this good work will ere long be accomplished." This confident expectation has since been fulfilled. Her Britannic Majesty concluded a treaty with Honduras on the 28th November, 1859, and with Nicaragua on the 28th August, 1860, relinquishing the Mosquito protectorate. Besides, by the former the Bay Islands are recognized as a part of the Republic of Honduras. It may be observed that the stipulations of these treaties conform in every "important particular to the amendments adopted by the Senate of the United States to the treaty concluded at London on the 17th October, 1856, between the two Governments. It will be recollected that this treaty was rejected by the British Government because of its objection to the just and important amendment of the Senate to the article relating to Ruatan and the other islands in the Bay of Honduras.  It must be a source of sincere satisfaction to all classes of our fellow-citizens, and especially to those engaged in foreign commerce, that the claim on the part of Great Britain forcibly to visit and search American merchant vessels on the high seas in time of peace has been abandoned. This was by far the most dangerous question to the peace of the two countries which has existed since the War of 1812. Whilst it remained open they might at any moment have been precipitated into a war. This was rendered manifest by the exasperated state of public feeling throughout our entire country produced by the forcible search of American merchant vessels by British cruisers on the coast of Cuba in the spring of 1858. The American people hailed with general acclaim the orders of the Secretary of the Navy to our naval force in the Gulf of Mexico "to protect all vessels of the United States on the high seas from search or detention by the vessels of war of any other nation." These orders might have produced an immediate collision between the naval forces of the two countries. This was most fortunately prevented by an appeal to the justice of Great Britain and to the law of nations as expounded by her own most eminent jurists.  The only question of any importance which still remains open is the disputed title between the two Governments to the island of San Juan, in the vicinity of Washington Territory. As this question is still under negotiation, it is not deemed advisable at the present moment to make any other allusion to the subject.  The recent visit of the Prince of Wales, in a private character, to the people of this country has proved to be a most auspicious event. In its consequences it can not fail to increase the kindred and kindly feelings which I trust may ever actuate the Government and people of both countries in their political and social intercourse with each other.  With France, our ancient and powerful ally, our relations continue to be of the most friendly character. A decision has recently been made by a French judicial tribunal, with the approbation of the Imperial Government, which can not fail to foster the sentiments of mutual regard that have so long existed between the two countries. Under the French law no person can serve in the armies of France unless he be a French citizen. The law of France recognizing the natural right of expatriation, it follows as a necessary consequence that a Frenchman by the fact of having become a citizen of the United States has changed his allegiance and has lost his native character. He can not therefore be compelled to serve in the French armies in case he should return to his native country. These principles were announced in 1852 by the French minister of war and in two late cases have been confirmed by the French judiciary. In these, two natives of France have been discharged from the French army because they had become American citizens. To employ the language of our present minister to France, who has rendered good service on this occasion. "I do not think our French naturalized fellow-citizens will hereafter experience much annoyance on this subject."  I venture to predict that the time is not far distant when the other continental powers will adopt the same wise and just policy which has done so much honor to the enlightened Government of the Emperor. In any event, our Government is bound to protect the rights of our naturalized citizens everywhere to the same extent as though they had drawn their first breath in this country. We can recognize no distinction between our native and naturalized citizens.  Between the great Empire of Russia and the United States the mutual friendship and regard which has so long existed still continues to prevail, and if possible to increase. Indeed, our relations with that Empire are all that we could desire. Our relations with Spain are now of a more complicated, though less dangerous, character than they have been for many years. Our citizens have long held and continue to hold numerous claims against the Spanish Government. These had been ably urged for a series of years by our successive diplomatic representatives at Madrid, but without obtaining redress. The Spanish Government finally agreed to institute a joint commission for the adjustment of these claims, and on the 5th day of March, 1860, concluded a convention for this purpose with our present minister at Madrid.  Under this convention what have been denominated the "Cuban claims," amounting to $128,635.54, in which more than 100 of our fellow-citizens are interested, were recognized, and the Spanish Government agreed to pay $100,000 of this amount "within three months following the exchange of ratifications." The payment of the remaining $28,635.54 was to await the decision of the commissioners for or against the Amistad claim; but in any event the balance was to be paid to the claimants either by Spain or the United States. These terms, I have every reason to know, are highly satisfactory to the holders of the Cuban claims. Indeed, they have made a formal offer authorizing the State Department to settle these claims and to deduct the amount of the Amistad claim from the sums which they are entitled to receive from Spain. This offer, of course, can not be accepted. All other claims of citizens of the United States against Spain, or the subjects of the Queen of Spain against the United States, including the Amistad claim, were by this convention referred to a board of commissioners in the usual form. Neither the validity of the Amistad claim nor of any other claim against either party, with the single exception of the Cuban claims, was recognized by the convention. Indeed, the Spanish Government did not insist that the validity of the Amistad claim should be thus recognized, notwithstanding its payment had been recommended to Congress by two of my predecessors, as well as by myself, and an appropriation for that purpose had passed the Senate of the United States.  They were content that it should be submitted to the board for examination and decision like the other claims. Both Governments were bound respectively to pay the amounts awarded to the several claimants "at such times and places as may be fixed by and according to the tenor of said awards."  I transmitted this convention to the Senate for their constitutional action on the 3d of May, 1860, and on the 27th of the succeeding June they determined that they would "not advise and consent" to its ratification.  These proceedings place our relations with Spain in an awkward and embarrassing position. It is more than probable that the final adjustment of these claims will devolve upon my successor.  I reiterate the recommendation contained in my annual message of December, 1858, and repeated in that of December, 1859, in favor of the acquisition of Cuba from Spain by fair purchase. I firmly believe that such an acquisition would contribute essentially to the well-being and prosperity of both countries in all future time, as well as prove the certain means of immediately abolishing the African slave trade throughout the world. I would not repeat this recommendation upon the present occasion if I believed that the transfer of Cuba to the United States upon conditions highly favorable to Spain could justly tarnish the national honor of the proud and ancient Spanish monarchy. Surely no person ever attributed to the first Napoleon a disregard of the national honor of France for transferring Louisiana to the United States for a fair equivalent, both in money and commercial advantages.  With the Emperor of Austria and the remaining continental powers of Europe, including that of the Sultan, our relations continue to be of the most friendly character.  The friendly and peaceful policy pursued by the Government of the United States toward the Empire of China has produced the most satisfactory results. The treaty of Tien-tsin of the 18th June, 1858, has been faithfully observed by the Chinese authorities. The convention of the 8th November, 1858, supplementary to this treaty, for the adjustment and satisfaction of the claims of our citizens on China referred to in my last annual message, has been already carried into effect so far as this was practicable. Under this convention the sum of 500,000 taels, equal to about $700,000, was stipulated to be paid in satisfaction of the claims of American citizens out of the one-fifth of the receipts for tonnage, import, and export duties on American vessels at the ports of Canton, Shanghai, and Fuchau, and it was "agreed that this amount shall be in full liquidation of all claims of American citizens at the various ports to this date." Debentures for this amount, to wit, 300,000 taels for Canton, 100,000 for Shanghai, and 100,000 for Fuchau, were delivered, according to the terms of the convention, by the respective Chinese collectors of the customs of these ports to the agent selected by our minister to receive the same. Since that time the claims of our citizens have been adjusted by the board of commissioners appointed for that purpose under the act of March 3, 1859, and their awards, which proved satisfactory to the claimants, have been approved by our minister. In the aggregate they amount to the sum of $498,694.78. The claimants have already received a large proportion of the sums awarded to them out of the fund provided, and it is confidently expected that the remainder will ere long be entirely paid. After the awards shall have been satisfied there will remain a surplus of more than $200,000 at the disposition of Congress. As this will, in equity, belong to the Chinese Government, would not justice require its appropriation to some benevolent object in which the Chinese may be specially interested?  Our minister to China, in obedience to his instructions, has remained perfectly neutral in the war between Great Britain and France and the Chinese Empire, although, in conjunction with the Russian minister, he was ever ready and willing, had the opportunity offered, to employ his good offices in restoring peace between the parties. It is but an act of simple justice, both to our present minister and his predecessor, to state that they have proved fully equal to the delicate, trying, and responsible positions in which they have on different occasions been placed.  The ratifications of the treaty with Japan concluded at Yeddo on the 29th July, 1858, were exchanged at Washington on the 22d May last, and the treaty itself was proclaimed on the succeeding day. There is good reason to expect that under its protection and influence our trade and intercourse with that distant and interesting people will rapidly increase.  The ratifications of the treaty were exchanged with unusual solemnity. For this purpose the Tycoon had accredited three of his most distinguished subjects as envoys extraordinary and ministers plenipotentiary, who were received and treated with marked distinction and kindness, both by the Government and people of the United States. There is every reason to believe that they have returned to their native land entirely satisfied with their visit and inspired by the most friendly feelings for our country. Let us ardently hope, in the language of the treaty itself, that "there shall henceforward be perpetual peace and friendship between the United States of America and His Majesty the Tycoon of Japan and his successors."  With the wise, conservative, and liberal Government of the Empire of Brazil our relations continue to be of the most amicable character.  The exchange of the ratifications of the convention with the Republic of New Granada signed at Washington on the 10th of September, 1857, has been long delayed from accidental causes for which neither party is censurable. These ratifications were duly exchanged in this city on the 5th of November last. Thus has a controversy been amicably terminated which had become so serious at the period of my inauguration as to require me, on the 17th of April, 1857, to direct our minister to demand his passports and return to the United States.  Under this convention the Government of New Granada has specially acknowledged itself to be responsible to our citizens "for damages which were caused by the riot at Panama on the 15th April, 1856." These claims, together with other claims of our citizens which had been long urged in vain, are referred for adjustment to a board of commissioners. I submit a copy of the convention to Congress, and recommend the legislation necessary to carry it into effect.  Persevering efforts have been made for the adjustment of the claims of American citizens against the Government of Costa Rica, and I am happy to inform you that these have finally prevailed. A convention was signed at the city of San Jose on the 2d July last, between the minister resident of the United States in Costa Rica and the plenipotentiaries of that Republic, referring these claims to a board of commissioners and providing for the payment of their awards. This convention will be submitted immediately to the Senate for their constitutional action.  The claims of our citizens upon the Republic of Nicaragua have not yet been provided for by treaty, although diligent efforts for this purpose have been made by our minister resident to that Republic. These are still continued, with a fair prospect of success.  Our relations with Mexico remain in a most unsatisfactory condition. In my last two annual messages I discussed extensively the subject of these relations, and do not now propose to repeat at length the facts and arguments then presented. They proved conclusively that our citizens residing in Mexico and our merchants trading thereto had suffered a series of wrongs and outrages such as we have never patiently borne from any other nation. For these our successive ministers, invoking the faith of treaties, had in the name of their country persistently demanded redress and indemnification, but without the slightest effect. Indeed, so confident had the Mexican authorities become of our patient endurance that they universally believed they might commit these outrages upon American citizens with absolute impunity. Thus wrote our minister in 1856, and expressed the opinion that "nothing but a manifestation of the power of the Government and of its purpose to punish these wrongs will avail."  Afterwards, in 1857, came the adoption of a new constitution for Mexico, the election of a President and Congress under its provisions, and the inauguration of the President. Within one short month, however, this President was expelled from the capital by a rebellion in the army, and the supreme power of the Republic was assigned to General Zuloaga. This usurper was in his turn soon compelled to retire and give place to General Miramon.  Under the constitution which had thus been adopted Senor Juarez, as chief justice of the supreme court, became the lawful President of the Republic, and it was for the maintenance of the constitution and his authority derived from it that the civil war commenced and still continues to be prosecuted.  Throughout the year 1858 the constitutional party grew stronger and stronger. In the previous history of Mexico a successful military revolution at the capital had almost universally been the signal for submission throughout the Republic. Not so on the present occasion. A majority of the citizens persistently sustained the constitutional Government. When this was recognized, in April, 1859, by the Government of the United States, its authority extended over a large majority of the Mexican States and people, including Vera Cruz and all the other important seaports of the Republic. From that period our commerce with Mexico began to revive, and the constitutional Government has afforded it all the protection in its power.  Meanwhile the Government of Miramon still held sway at the capital and over the surrounding country, and continued its outrages against the few American citizens who still had the courage to remain within its power. To cap the climax, after the battle of Tacubaya, in April, 1859, General Marquez ordered three citizens of the United States, two of them physicians, to be seized in the hospital at that place, taken out and shot, without crime and without trial. This was done, notwithstanding our unfortunate countrymen were at the moment engaged in the holy cause of affording relief to the soldiers of both parties who had been wounded in the battle, without making any distinction between them.  The time had arrived, in my opinion, when this Government was bound to exert its power to avenge and redress the wrongs of our citizens and to afford them protection in Mexico. The interposing obstacle was that the portion of the country under the sway of Miramon could not be reached without passing over territory under the jurisdiction of the constitutional Government. Under these circumstances I deemed it my duty to recommend to Congress in my last annual message the employment of a sufficient military force to penetrate into the interior, where the Government of Miramon was to be found, with or, if need be, without the consent of the Juarez Government, though it was not doubted that this consent could be obtained. Never have I had a clearer conviction on any subject than of the justice as well as wisdom of such a policy. No other alternative was left except the entire abandonment of our fellow-citizens who had gone to Mexico under the faith of treaties to the systematic injustice, cruelty, and oppression of Miramon's Government. Besides, it is almost certain that the simple authority to employ this force would of itself have accomplished all our objects without striking a single blow. The constitutional Government would then ere this have been established at the City of Mexico, and would have been ready and willing to the extent of its ability to do us justice.  In addition--and I deem this a most important consideration--European Governments would have been deprived of all pretext to interfere in the territorial and domestic concerns of Mexico. We should thus have been relieved from the obligation of resisting, even by force should this become necessary, any attempt by these Governments to deprive our neighboring Republic of portions of her territory--a duty from which we could not shrink without abandoning the traditional and established policy of the American people. I am happy to observe that, firmly relying upon the justice and good faith of these Governments, there is no present danger that such a contingency will happen.  Having discovered that my recommendations would not be sustained by Congress, the next alternative was to accomplish in some degree, if possible, the same objects by treaty stipulations with the constitutional Government. Such treaties were accordingly concluded by our late able and excellent minister to Mexico, and on the 4th of January last were submitted to the Senate for ratification. As these have not yet received the final action of that body, it would be improper for me to present a detailed statement of their provisions. Still, I may be permitted to express the opinion in advance that they are calculated to promote the agricultural, manufacturing, and commercial interests of the country and to secure our just influence with an adjoining Republic as to whose fortunes and fate we can never feel indifferent, whilst at the same time they provide for the payment of a considerable amount toward the satisfaction of the claims of our injured fellow-citizens.  At the period of my inauguration I was confronted in Kansas by a revolutionary government existing under what is called the "Topeka constitution." Its avowed object was to subdue the Territorial government by force and to inaugurate what was called the "Topeka government" in its stead. To accomplish this object an extensive military organization was formed, and its command intrusted to the most violent revolutionary leaders. Under these circumstances it became my imperative duty to exert the whole constitutional power of the Executive to prevent the flames of civil war from again raging in Kansas, which in the excited state of the public mind, both North and South, might have extended into the neighboring States. The hostile parties in Kansas had been inflamed against each other by emissaries both from the North and the South to a degree of malignity without parallel in our history. To prevent actual collision and to assist the civil magistrates in enforcing the laws, a strong detachment of the Army was stationed in the Territory, ready to aid the marshal and his deputies when lawfully called upon as a posse comitatus in the execution of civil and criminal process. Still, the troubles in Kansas could not have been permanently settled without an election by the people.  The ballot box is the surest arbiter of disputes among freemen. Under this conviction every proper effort was employed to induce the hostile parties to vote at the election of delegates to frame a State constitution, and afterwards at the election to decide whether Kansas should be a slave or free State.  The insurgent party refused to vote at either, lest this might be considered a recognition on their part of the Territorial government established by Congress. A better spirit, however, seemed soon after to prevail, and the two parties met face to face at the third election, held on the first Monday of January, 1858, for members of the legislature and State officers under the Lecompton constitution. The result was the triumph of the antislavery party at the polls. This decision of the ballot box proved clearly that this party were in the majority, and removed the danger of civil war. From that time we have heard little or nothing of the Topeka government, and all serious danger of revolutionary troubles in Kansas was then at an end.  The Lecompton constitution, which had been thus recognized at this State election by the votes of both political parties in Kansas, was transmitted to me with the request that I should present it to Congress. This I could not have refused to do without violating my clearest and strongest convictions of duty. The constitution and all the proceedings which preceded and followed its formation were fair and regular on their face. I then believed, and experience has proved, that the interests of the people of Kansas would have been best consulted by its admission as a State into the Union, especially as the majority within a brief period could have amended the constitution according to their will and pleasure. If fraud existed in all or any of these proceedings, it was not for the President but for Congress to investigate and determine the question of fraud and what ought to be its consequences. If at the first two elections the majority refused to vote, it can not be pretended that this refusal to exercise the elective franchise could invalidate an election fairly held under lawful authority, even if they had not subsequently voted at the third election. It is true that the whole constitution had not been submitted to the people, as I always desired; but the precedents are numerous of the admission of States into the Union without such submission. It would not comport with my present purpose to review the proceedings of Congress upon the Lecompton constitution. It is sufficient to observe that their final action has removed the last vestige of serious revolutionary troubles. The desperate band [see APP Note] recently assembled under a notorious outlaw in the southern portion of the Territory to resist the execution of the laws and to plunder peaceful citizens will, I doubt not be speedily subdued and brought to justice.  Had I treated the Lecompton constitution as a nullity and refused to transmit it to Congress, it is not difficult to imagine, whilst recalling the position of the country at that moment, what would have been the disastrous consequences, both in and out of the Territory, from such a dereliction of duty on the part of the Executive.  Peace has also been restored within the Territory of Utah, which at the commencement of my Administration was in a state of open rebellion. This was the more dangerous, as the people, animated by a fanatical spirit and intrenched within their distant mountain fastnesses, might have made a long and formidable resistance. Cost what it might, it was necessary to bring them into subjection to the Constitution and the laws. Sound policy, therefore, as well as humanity, required that this object should if possible be accomplished without the effusion of blood. This could only be effected by sending a military force into the Territory sufficiently strong to convince the people that resistance would be hopeless, and at the same time to offer them a pardon for past offenses on condition of immediate submission to the Government. This policy was pursued with eminent success, and the only cause for regret is the heavy expenditure required to march a large detachment of the Army to that remote region and to furnish it subsistence.  Utah is now comparatively peaceful and quiet, and the military force has been withdrawn, except that portion of it necessary to keep the Indians in check and to protect the emigrant trains on their way to our Pacific possessions.  In my first annual message I promised to employ my best exertions in cooperation with Congress to reduce the expenditures of the Government within the limits of a wise and judicious economy. An overflowing Treasury had produced habits of prodigality and extravagance which could only be gradually corrected. The work required both time and patience. I applied myself diligently to this task from the beginning and was aided by the able and energetic efforts of the heads of the different Executive Departments. The result of our labors in this good cause did not appear in the sum total of our expenditures for the first two years, mainly in consequence of the extraordinary expenditure necessarily incurred in the Utah expedition and the very large amount of the contingent expenses of Congress during this period. These greatly exceeded the pay and mileage of the members. For the year ending June 30, 1858, whilst the pay and mileage amounted to $1,490,214, the contingent expenses rose to $2,093,309.79; and for the year ending June 30, 1859, whilst the pay and mileage amounted to $859,093.66, the contingent expenses amounted to $1,431,565.78. I am happy, however, to be able to inform you that during the last fiscal year, ending June 30, 1860, the total expenditures of the Government in all its branches--legislative, executive, and judicial--exclusive of the public debt, were reduced to the sum of $55,402,465.46. This conclusively appears from the books of the Treasury. In the year ending June 30, 1858, the total expenditure, exclusive of the public debt, amounted to $71,901,129.77, and that for the year ending June 30, 1859, to $66,346,226.13. Whilst the books of the Treasury show an actual expenditure of $59,848,474.72 for the year ending June 30, 1860, including $1,040,667.71 for the contingent expenses of Congress, there must be deducted from this amount the sum of $4,296,009.26, with the interest upon it of $150,000, appropriated by the act of February 15, 1860, "for the purpose of supplying the deficiency in the revenues and defraying the expenses of the Post-Office Department for the year ending June 30, 1859." This sum therefore justly chargeable to the year 1859, must be deducted from the sum of $59,848,474.72 in order to ascertain the expenditure for the year ending June 30, 1860, which leaves a balance for the expenditures of that year of $55,402,465.46. The interest on the public debt, including Treasury notes, for the same fiscal year, ending June 30, 1860, amounted to $3,177,314.62, which, added to the above sum of $55,402,465.46, makes the aggregate of $58,579,780.08.  It ought in justice to be observed that several of the estimates from the Departments for the year ending June 30, 1860, were reduced by Congress below what was and still is deemed compatible with the public interest. Allowing a liberal margin of $2,500,000 for this reduction and for other causes, it may be safely asserted that the sum of $61,000,000, or, at the most, $62,000,000, is amply sufficient to administer the Government and to pay the interest on the public debt, unless contingent events should hereafter render extraordinary expenditures necessary.  This result has been attained in a considerable degree by the care exercised by the appropriate Departments in entering into public contracts. I have myself never interfered with the award of any such contract, except in a single case, with the Colonization Society, deeming it advisable to cast the whole responsibility in each case on the proper head of the Department, with the general instruction that these contracts should always be given to the lowest and best bidder. It has ever been my opinion that public contracts are not a legitimate source of patronage to be conferred upon personal or political favorites, but that in all such cases a public officer is bound to act for the Government as a prudent individual would act for himself.  It is with great satisfaction I communicate the fact that since the date of my last annual message not a single slave has been imported into the United States in violation of the laws prohibiting the African slave trade. This statement is rounded upon a thorough examination and investigation of the subject. Indeed, the spirit which prevailed some time since among a portion of our fellow-citizens in favor of this trade seems to have entirely subsided.  I also congratulate you upon the public sentiment which now exists against the crime of setting on foot military expeditions within the limits of the United States to proceed from thence and make war upon the people of unoffending States with whom we are at peace. In this respect a happy change has been effected since the commencement of my Administration. It surely ought to be the prayer of every Christian and patriot that such expeditions may never again receive countenance in our country or depart from our shores.  It would be a useless repetition to do more than refer with earnest commendation to my former recommendations in favor of the Pacific railroad; of the grant of power to the President to employ the naval force in the vicinity for the protection of the lives and property of our fellow-citizens passing in transit over the different Central American routes against sudden and lawless outbreaks and depredations, and also to protect American merchant vessels, their crews and cargoes, against violent and unlawful seizure and confiscation in the ports of Mexico and the South American Republics when these may be in a disturbed and revolutionary condition. It is my settled conviction that without such a power we do not afford that protection to those engaged in the commerce of the country which they have a right to demand.  I again recommend to Congress the passage of a law, in pursuance of the provisions of the Constitution, appointing a day certain previous to the 4th March in each year of an odd number for the election of Representatives throughout all the States. A similar power has already been exercised, with general approbation, in the appointment of the same day throughout the Union for holding the election of electors for President and Vice-President of the United States. My attention was earnestly directed to this subject from the fact that the Thirty-fifth Congress terminated on the 3d March, 1859, without making the necessary appropriation for the service of the Post-Office Department. I was then forced to consider the best remedy for this omission, and an immediate call of the present Congress was the natural resort. Upon inquiry, however, I ascertained that fifteen out of the thirty-three States composing the Confederacy were without Representatives, and that consequently these fifteen States would be disfranchised by such a call. These fifteen States will be in the same condition on the 4th March next. Ten of them can not elect Representatives, according to existing State laws, until different periods, extending from the beginning of August next until the months of October and November. In my last message I gave warning that in a time of sudden and alarming danger the salvation of our institutions might depend upon the power of the President immediately to assemble a full Congress to meet the emergency.  It is now quite evident that the financial necessities of the Government will require a modification of the tariff during your present session for the purpose of increasing the revenue. In this aspect, I desire to reiterate the recommendation contained in my last two annual messages in favor of imposing specific instead of ad valorem duties on all imported articles to which these can be properly applied. From long observation and experience I am convinced that specific duties are necessary, both to protect the revenue and to secure to our manufacturing interests that amount of incidental encouragement which unavoidably results from a revenue tariff.  As an abstract proposition it may be admitted that ad valorem duties would in theory be the most just and equal. But if the experience of this and of all other commercial nations has demonstrated that such duties can not be assessed and collected without great frauds upon the revenue, then it is the part of wisdom to resort to specific duties. Indeed, from the very nature of an ad valorem duty this must be the result. Under it the inevitable consequence is that foreign goods will be entered at less than their true value. The Treasury will therefore lose the duty on the difference between their real and fictitious value, and to this extent we are defrauded.  The temptations which ad valorem duties present to a dishonest importer are irresistible. His object is to pass his goods through the custom-house at the very lowest valuation necessary to save them from confiscation. In this he too often succeeds in spite of the vigilance of the revenue officers. Hence the resort to false invoices, one for the purchaser and another for the custom-house, and to other expedients to defraud the Government. The honest importer produces his invoice to the collector, stating the actual price at which he purchased the articles abroad. Not so the dishonest importer and the agent of the foreign manufacturer. And here it may be observed that a very large proportion of the manufactures imported from abroad are consigned for sale to commission merchants, who are mere agents employed by the manufacturers. In such cases no actual sale has been made to fix their value. The foreign manufacturer, if he be dishonest, prepares an invoice of the goods, not at their actual value, but at the very lowest rate necessary to escape detection. In this manner the dishonest importer and the foreign manufacturer enjoy a decided advantage over the honest merchant. They are thus enabled to undersell the fair trader and drive him from the market. In fact the operation of this system has already driven from the pursuits of honorable commerce many of that class of regular and conscientious merchants whose character throughout the world is the pride of our country.  The remedy for these evils is to be found in specific duties, so far as this may be practicable. They dispense with any inquiry at the custom-house into the actual cost or value of the article, and it pays the precise amount of duty previously fixed by law. They present no temptations to the appraisers of foreign goods, who receive but small salaries, and might by undervaluation in a few cases render themselves independent.  Besides, specific duties best conform to the requisition in the Constitution that "no preference shall be given by any regulation of commerce or revenue to the ports of one State over those of another." Under our ad valorem system such preferences are to some extent inevitable, and complaints have often been made that the spirit of this provision has [p.3183] been violated by a lower appraisement of the same articles at one port than at another.  An impression strangely enough prevails to some extent that specific duties are necessarily protective duties. Nothing can be more fallacious. Great Britain glories in free trade, and yet her whole revenue from imports is at the present moment collected under a system of specific duties. It is a striking fact in this connection that in the commercial treaty of January 23, 1860, between France and England one of the articles provides that the ad valorem duties which it imposes shall be converted into specific duties within six months from its date, and these are to be ascertained by making an average of the prices for six months previous to that time. The reverse of the propositions would be nearer to the truth, because a much larger amount of revenue would be collected by merely converting the ad valorem duties of a tariff into equivalent specific duties. To this extent the revenue would be increased, and in the same proportion the specific duty might be diminished.  Specific duties would secure to the American manufacturer the incidental protection to which he is fairly entitled under a revenue tariff, and to this surely no person would object. The framers of the existing tariff have gone further, and in a liberal spirit have discriminated in favor of large and useful branches of our manufactures, not by raising the rate of duty upon the importation of similar articles from abroad, but, what is the same in effect, by admitting articles free of duty which enter into the composition of their fabrics.  Under the present system it has been often truly remarked that this incidental protection decreases when the manufacturer needs it most and increases when he needs it least, and constitutes a sliding scale which always operates against him. The revenues of the country are subject to similar fluctuations. Instead of approaching a steady standard, as would be the case under a system of specific duties, they sink and rise with the sinking and rising prices of articles in foreign countries. It would not be difficult for Congress to arrange a system of specific duties which would afford additional stability both to our revenue and our manufactures and without injury or injustice to any interest of the country. This might be accomplished by ascertaining the average value of any given article for a series of years at the place of exportation and by simply converting the rate of ad valorem duty upon it which might be deemed necessary for revenue purposes into the form of a specific duty. Such an arrangement could not injure the consumer. If he should pay a greater amount of duty one year, this would be counterbalanced by a lesser amount the next, and in the end the aggregate would be the same.  I desire to call your immediate attention to the present condition of the Treasury, so ably and clearly presented by the Secretary in his report to [p.3184] Congress, and to recommend that measures be promptly adopted to enable it to discharge its pressing obligations. The other recommendations of the report are well worthy of your favorable consideration.  I herewith transmit to Congress the reports of the Secretaries of War, of the Navy, of the Interior, and of the Postmaster-General. The recommendations and suggestions which they contain are highly valuable and deserve your careful attention.  The report of the Postmaster-General details the circumstances under which Cornelius Vanderbilt, on my request, agreed in the month of July last to carry the ocean mails between our Atlantic and Pacific coasts. Had he not thus acted this important intercommunication must have been suspended, at least for a season. The Postmaster-General had no power to make him any other compensation than the postages on the mail matter which he might carry. It was known at the time that these postages would fall far short of an adequate compensation, as well as of the sum which the same service had previously cost the Government. Mr. Vanderbilt, in a commendable spirit, was willing to rely upon the justice of Congress to make up the deficiency, and I therefore recommend that an appropriation may be granted for this purpose.  I should do great injustice to the Attorney-General were I to omit the mention of his distinguished services in the measures adopted and prosecuted by him for the defense of the Government against numerous and unfounded claims to land in California purporting to have been made by the Mexican Government previous to the treaty of cession. The successful opposition to these claims has saved the United States public property worth many millions of dollars and to individuals holding title under them to at least an equal amount.  It has been represented to me from sources which I deem reliable that the inhabitants in several portions of Kansas have been reduced nearly to a state of starvation on account of the almost total failure of their crops, whilst the harvests in every other portion of the country have been abundant. The prospect before them for the approaching winter is well calculated to enlist the sympathies of every heart. The destitution appears to be so general that it can not be relieved by private contributions, and they are in such indigent circumstances as to be unable to purchase the necessaries of life for themselves. I refer the subject to Congress. If any constitutional measure for their relief can be devised, I would recommend its adoption.  I cordially commend to your favorable regard the interests of the people of this District. They are eminently entitled to your consideration, especially since, unlike the people of the States, they can appeal to no government except that of the Union.  JAMES BUCHANAN. 	D
To the Congress:  This Nation in the past two years has become an active partner in the world's greatest war against human slavery.  We have joined with like-minded people in order to defend ourselves in a world that has been gravely threatened with gangster rule.  But I do not think that any of us Americans can be content with mere survival. Sacrifices that we and our allies are making impose upon us all a sacred obligation to see to it that out of this war we and our children will gain something better than mere survival.  We are united in determination that this war shall not be followed by another interim which leads to new disaster- that we shall not repeat the tragic errors of ostrich isolationism—that we shall not repeat the excesses of the wild twenties when this Nation went for a joy ride on a roller coaster which ended in a tragic crash.  When Mr. Hull went to Moscow in October, and when I went to Cairo and Teheran in November, we knew that we were in agreement with our allies in our common determination to fight and win this war. But there were many vital questions concerning the future peace, and they were discussed in an atmosphere of complete candor and harmony.  In the last war such discussions, such meetings, did not even begin until the shooting had stopped and the delegates began to assemble at the peace table. There had been no previous opportunities for man-to-man discussions which lead to meetings of minds. The result was a peace which was not a peace.That was a mistake which we are not repeating in this war.  And right here I want to address a word or two to some suspicious souls who are fearful that Mr. Hull or I have made "commitments" for the future which might pledge this Nation to secret treaties, or to enacting the role of Santa Claus.  To such suspicious souls—using a polite terminology—I wish to say that Mr. Churchill, and Marshal Stalin, and Generalissimo Chiang Kai-shek are all thoroughly conversant with the provisions of our Constitution. And so is Mr. Hull. And so am I.  Of course we made some commitments. We most certainly committed ourselves to very large and very specific military plans which require the use of all Allied forces to bring about the defeat of our enemies at the earliest possible time.  But there were no secret treaties or political or financial commitments.  The one supreme objective for the future, which we discussed for each Nation individually, and for all the United Nations, can be summed up in one word: Security.  And that means not only physical security which provides safety from attacks by aggressors. It means also economic security, social security, moral security—in a family of Nations.  In the plain down-to-earth talks that I had with the Generalissimo and Marshal Stalin and Prime Minister Churchill, it was abundantly clear that they are all most deeply interested in the resumption of peaceful progress by their own peoples—progress toward a better life. All our allies want freedom to develop their lands and resources, to build up industry, to increase education and individual opportunity, and to raise standards of living.  All our allies have learned by bitter experience that real development will not be possible if they are to be diverted from their purpose by repeated wars—or even threats of war.  China and Russia are truly united with Britain and America in recognition of this essential fact:  The best interests of each Nation, large and small, demand that all freedom-loving Nations shall join together in a just and durable system of peace. In the present world situation, evidenced by the actions of Germany, Italy, and Japan, unquestioned military control over disturbers of the peace is as necessary among Nations as it is among citizens in a community. And an equally basic essential to peace is a decent standard of living for all individual men and women and children in all Nations. Freedom from fear is eternally linked with freedom from want.  There are people who burrow through our Nation like unseeing moles, and attempt to spread the suspicion that if other Nations are encouraged to raise their standards of living, our own American standard of living must of necessity be depressed.  The fact is the very contrary. It has been shown time and again that if the standard of living of any country goes up, so does its purchasing power- and that such a rise encourages a better standard of living in neighboring countries with whom it trades. That is just plain common sense—and it is the kind of plain common sense that provided the basis for our discussions at Moscow, Cairo, and Teheran.  Returning from my journeyings, I must confess to a sense of "let-down" when I found many evidences of faulty perspective here in Washington. The faulty perspective consists in overemphasizing lesser problems and thereby underemphasizing the first and greatest problem.  The overwhelming majority of our people have met the demands of this war with magnificent courage and understanding. They have accepted inconveniences; they have accepted hardships; they have accepted tragic sacrifices. And they are ready and eager to make whatever further contributions are needed to win the war as quickly as possible- if only they are given the chance to know what is required of them.  However, while the majority goes on about its great work without complaint, a noisy minority maintains an uproar of demands for special favors for special groups. There are pests who swarm through the lobbies of the Congress and the cocktail bars of Washington, representing these special groups as opposed to the basic interests of the Nation as a whole. They have come to look upon the war primarily as a chance to make profits for themselves at the expense of their neighbors- profits in money or in terms of political or social preferment.  Such selfish agitation can be highly dangerous in wartime. It creates confusion. It damages morale. It hampers our national effort. It muddies the waters and therefore prolongs the war.  If we analyze American history impartially, we cannot escape the fact that in our past we have not always forgotten individual and selfish and partisan interests in time of war—we have not always been united in purpose and direction. We cannot overlook the serious dissensions and the lack of unity in our war of the Revolution, in our War of 1812, or in our War Between the States, when the survival of the Union itself was at stake.  In the first World War we came closer to national unity than in any previous war. But that war lasted only a year and a half, and increasing signs of disunity began to appear during the final months of the conflict.  In this war, we have been compelled to learn how interdependent upon each other are all groups and sections of the population of America.  Increased food costs, for example, will bring new demands for wage increases from all war workers, which will in turn raise all prices of all things including those things which the farmers themselves have to buy. Increased wages or prices will each in turn produce the same results. They all have a particularly disastrous result on all fixed income groups.  And I hope you will remember that all of us in this Government represent the fixed income group just as much as we represent business owners, workers, and farmers. This group of fixed income people includes: teachers, clergy, policemen, firemen, widows and minors on fixed incomes, wives and dependents of our soldiers and sailors, and old-age pensioners. They and their families add up to one-quarter of our one hundred and thirty million people. They have few or no high pressure representatives at the Capitol. In a period of gross inflation they would be the worst sufferers.  If ever there was a time to subordinate individual or group selfishness to the national good, that time is now. Disunity at home—bickerings, self-seeking partisanship, stoppages of work, inflation, business as usual, politics as usual, luxury as usual these are the influences which can undermine the morale of the brave men ready to die at the front for us here.  Those who are doing most of the complaining are not deliberately striving to sabotage the national war effort. They are laboring under the delusion that the time is past when we must make prodigious sacrifices- that the war is already won and we can begin to slacken off. But the dangerous folly of that point of view can be measured by the distance that separates our troops from their ultimate objectives in Berlin and Tokyo—and by the sum of all the perils that lie along the way.  Overconfidence and complacency are among our deadliest enemies. Last spring—after notable victories at Stalingrad and in Tunisia and against the U-boats on the high seas—overconfidence became so pronounced that war production fell off. In two months, June and July, 1943, more than a thousand airplanes that could have been made and should have been made were not made. Those who failed to make them were not on strike. They were merely saying, "The war's in the bag- so let's relax."  That attitude on the part of anyone—Government or management or labor—can lengthen this war. It can kill American boys.  Let us remember the lessons of 1918. In the summer of that year the tide turned in favor of the allies. But this Government did not relax. In fact, our national effort was stepped up. In August, 1918, the draft age limits were broadened from 21-31 to 18-45. The President called for "force to the utmost," and his call was heeded. And in November, only three months later, Germany surrendered.  That is the way to fight and win a war—all out—and not with half-an-eye on the battlefronts abroad and the other eye-and-a-half on personal, selfish, or political interests here at home.  Therefore, in order to concentrate all our energies and resources on winning the war, and to maintain a fair and stable economy at home, I recommend that the Congress adopt:  (1) A realistic tax law—which will tax all unreasonable profits, both individual and corporate, and reduce the ultimate cost of the war to our sons and daughters. The tax bill now under consideration by the Congress does not begin to meet this test.  (2) A continuation of the law for the renegotiation of war contracts—which will prevent exorbitant profits and assure fair prices to the Government. For two long years I have pleaded with the Congress to take undue profits out of war.  (3) A cost of food law—which will enable the Government (a) to place a reasonable floor under the prices the farmer may expect for his production; and (b) to place a ceiling on the prices a consumer will have to pay for the food he buys. This should apply to necessities only; and will require public funds to carry out. It will cost in appropriations about one percent of the present annual cost of the war.  (4) Early reenactment of the stabilization statute of October, 1942. This expires June 30, 1944, and if it is not extended well in advance, the country might just as well expect price chaos by summer.  We cannot have stabilization by wishful thinking. We must take positive action to maintain the integrity of the American dollar.  (5) A national service law- which, for the duration of the war, will prevent strikes, and, with certain appropriate exceptions, will make available for war production or for any other essential services every able-bodied adult in this Nation.  These five measures together form a just and equitable whole. I would not recommend a national service law unless the other laws were passed to keep down the cost of living, to share equitably the burdens of taxation, to hold the stabilization line, and to prevent undue profits.  The Federal Government already has the basic power to draft capital and property of all kinds for war purposes on a basis of just compensation.  As you know, I have for three years hesitated to recommend a national service act. Today, however, I am convinced of its necessity. Although I believe that we and our allies can win the war without such a measure, I am certain that nothing less than total mobilization of all our resources of manpower and capital will guarantee an earlier victory, and reduce the toll of suffering and sorrow and blood.  I have received a joint recommendation for this law from the heads of the War Department, the Navy Department, and the Maritime Commission. These are the men who bear responsibility for the procurement of the necessary arms and equipment, and for the successful prosecution of the war in the field. They say:  "When the very life of the Nation is in peril the responsibility for service is common to all men and women. In such a time there can be no discrimination between the men and women who are assigned by the Government to its defense at the battlefront and the men and women assigned to producing the vital materials essential to successful military operations. A prompt enactment of a National Service Law would be merely an expression of the universality of this responsibility."  I believe the country will agree that those statements are the solemn truth.  National service is the most democratic way to wage a war. Like selective service for the armed forces, it rests on the obligation of each citizen to serve his Nation to his utmost where he is best qualified.  It does not mean reduction in wages. It does not mean loss of retirement and seniority rights and benefits. It does not mean that any substantial numbers of war workers will be disturbed in their present jobs. Let these facts be wholly clear.  Experience in other democratic Nations at war—Britain, Canada, Australia, and New Zealand- has shown that the very existence of national service makes unnecessary the widespread use of compulsory power. National service has proven to be a unifying moral force based on an equal and comprehensive legal obligation of all people in a Nation at war.  There are millions of American men and women who are not in this war at all. It is not because they do not want to be in it. But they want to know where they can best do their share. National service provides that direction. It will be a means by which every man and woman can find that inner satisfaction which comes from making the fullest possible contribution to victory.  I know that all civilian war workers will be glad to be able to say many years hence to their grandchildren: "Yes, I, too, was in service in the great war. I was on duty in an airplane factory, and I helped make hundreds of fighting planes. The Government told me that in doing that I was performing my most useful work in the service of my country."  It is argued that we have passed the stage in the war where national service is necessary. But our soldiers and sailors know that this is not true. We are going forward on a long, rough road- and, in all journeys, the last miles are the hardest. And it is for that final effort—for the total defeat of our enemies-that we must mobilize our total resources. The national war program calls for the employment of more people in 1944 than in 1943.  It is my conviction that the American people will welcome this win-the-war measure which is based on the eternally just principle of "fair for one, fair for all."  It will give our people at home the assurance that they are standing four-square behind our soldiers and sailors. And it will give our enemies demoralizing assurance that we mean business -that we, 130,000,000 Americans, are on the march to Rome, Berlin, and Tokyo.  I hope that the Congress will recognize that, although this is a political year, national service is an issue which transcends politics. Great power must be used for great purposes.  As to the machinery for this measure, the Congress itself should determine its nature—but it should be wholly nonpartisan in its make-up.  Our armed forces are valiantly fulfilling their responsibilities to our country and our people. Now the Congress faces the responsibility for taking those measures which are essential to national security in this the most decisive phase of the Nation's greatest war.  Several alleged reasons have prevented the enactment of legislation which would preserve for our soldiers and sailors and marines the fundamental prerogative of citizenship—the right to vote. No amount of legalistic argument can becloud this issue in the eyes of these ten million American citizens. Surely the signers of the Constitution did not intend a document which, even in wartime, would be construed to take away the franchise of any of those who are fighting to preserve the Constitution itself.  Our soldiers and sailors and marines know that the overwhelming majority of them will be deprived of the opportunity to vote, if the voting machinery is left exclusively to the States under existing State laws—and that there is no likelihood of these laws being changed in time to enable them to vote at the next election. The Army and Navy have reported that it will be impossible effectively to administer forty-eight different soldier voting laws. It is the duty of the Congress to remove this unjustifiable discrimination against the men and women in our armed forces- and to do it as quickly as possible.  It is our duty now to begin to lay the plans and determine the strategy for the winning of a lasting peace and the establishment of an American standard of living higher than ever before known. We cannot be content, no matter how high that general standard of living may be, if some fraction of our people—whether it be one-third or one-fifth or one-tenth- is ill-fed, ill-clothed, ill housed, and insecure.  This Republic had its beginning, and grew to its present strength, under the protection of certain inalienable political rights—among them the right of free speech, free press, free worship, trial by jury, freedom from unreasonable searches and seizures. They were our rights to life and liberty.  As our Nation has grown in size and stature, however—as our industrial economy expanded—these political rights proved inadequate to assure us equality in the pursuit of happiness.  We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. "Necessitous men are not free men." People who are hungry and out of a job are the stuff of which dictatorships are made.  In our day these economic truths have become accepted as self-evident. We have accepted, so to speak, a second Bill of Rights under which a new basis of security and prosperity can be established for all regardless of station, race, or creed.  Among these are:  The right to a useful and remunerative job in the industries or shops or farms or mines of the Nation;  The right to earn enough to provide adequate food and clothing and recreation;  The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;  The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;  The right of every family to a decent home;  The right to adequate medical care and the opportunity to achieve and enjoy good health;  The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;  The right to a good education.  All of these rights spell security. And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being.  America's own rightful place in the world depends in large part upon how fully these and similar rights have been carried into practice for our citizens. For unless there is security here at home there cannot be lasting peace in the world.  One of the great American industrialists of our day—a man who has rendered yeoman service to his country in this crisis-recently emphasized the grave dangers of "rightist reaction" in this Nation. All clear-thinking businessmen share his concern. Indeed, if such reaction should develop—if history were to repeat itself and we were to return to the so-called "normalcy" of the 1920's—then it is certain that even though we shall have conquered our enemies on the battlefields abroad, we shall have yielded to the spirit of Fascism here at home.  I ask the Congress to explore the means for implementing this economic bill of rights- for it is definitely the responsibility of the Congress so to do. Many of these problems are already before committees of the Congress in the form of proposed legislation. I shall from time to time communicate with the Congress with respect to these and further proposals. In the event that no adequate program of progress is evolved, I am certain that the Nation will be conscious of the fact.  Our fighting men abroad- and their families at home- expect such a program and have the right to insist upon it. It is to their demands that this Government should pay heed rather than to the whining demands of selfish pressure groups who seek to feather their nests while young Americans are dying.  The foreign policy that we have been following—the policy that guided us at Moscow, Cairo, and Teheran—is based on the common sense principle which was best expressed by Benjamin Franklin on July 4, 1776: "We must all hang together, or assuredly we shall all hang separately."  I have often said that there are no two fronts for America in this war. There is only one front. There is one line of unity which extends from the hearts of the people at home to the men of our attacking forces in our farthest outposts. When we speak of our total effort, we speak of the factory and the field, and the mine as well as of the battleground -- we speak of the soldier and the civilian, the citizen and his Government.  Each and every one of us has a solemn obligation under God to serve this Nation in its most critical hour—to keep this Nation great -- to make this Nation greater in a better world. 	R
Fellow-Citizens of the Senate and House of Representatives:  Our deep and heartfelt gratitude is due to that Almighty Power which has bestowed upon us such varied and numerous blessings throughout the past year. The general health of the country has been excellent, our harvests have been unusually plentiful, and prosperity smiles throughout the land. Indeed, notwithstanding our demerits, we have much reason to believe from the past events in our history that we have enjoyed the special protection of Divine Providence ever since our origin as a nation. We have been exposed to many threatening and alarming difficulties in our progress, but on each successive occasion the impending cloud has been dissipated at the moment it appeared ready to burst upon our head, and the danger to our institutions has passed away. May we ever be under the divine guidance and protection. Whilst it is the duty of the President "from time to time to give to Congress information of the state of the Union," I shall not refer in detail to the recent sad and bloody occurrences at Harpers Ferry. Still, it is proper to observe that these events, however bad and cruel in themselves, derive their chief importance from the apprehension that they are but symptoms of an incurable disease in the public mind, which may break out in still more dangerous outrages and terminate at last in an open war by the North to abolish slavery in the South. Whilst for myself I entertain no such apprehension, they ought to afford a solemn warning to us all to beware of the approach of danger. Our Union is a stake of such inestimable value as to demand our constant and watchful vigilance for its preservation. In this view, let me implore my countrymen, North and South, to cultivate the ancient feelings of mutual forbearance and good will toward each other and strive to allay the demon spirit of sectional hatred and strife now alive in the land. This advice proceeds from the heart of an old public functionary whose service commenced in the last generation, among the wise and conservative statesmen of that day, now nearly all passed away, and whose first and dearest earthly wish is to leave his country tranquil, prosperous, united, and powerful.  We ought to reflect that in this age, and especially in this country, there is an incessant flux and reflux of public opinion. Questions which in their day assumed a most threatening aspect have now nearly gone from the memory of men. They are "volcanoes burnt out, and on the lava and ashes and squalid scoria of old eruptions grow the peaceful olive, the cheering vine, and the sustaining corn." Such, in my opinion, will prove to be the fate of the present sectional excitement should those who wisely seek to apply the remedy continue always to confine their efforts within the pale of the Constitution. If this course be pursued, the existing agitation on the subject of domestic slavery, like everything human, will have its day and give place to other and less threatening controversies. Public opinion in this country is all-powerful, and when it reaches a dangerous excess upon any question the good sense of the people will furnish the corrective and bring it back within safe limits. Still, to hasten this auspicious result at the present crisis we ought to remember that every rational creature must be presumed to intend the natural consequences of his own teachings. Those who announce abstract doctrines subversive of the Constitution and the Union must not be surprised should their heated partisans advance one step further and attempt by violence to carry these doctrines into practical effect. In this view of the subject, it ought never to be forgotten that however great may have been the political advantages resulting from the Union to every portion of our common country, these would all prove to be as nothing should the time ever arrive when they can not be enjoyed without serious danger to the personal safety of the people of fifteen members of the Confederacy. If the peace of the domestic fireside throughout these States should ever be invaded, if the mothers of families within this extensive region should not be able to retire to rest at night without suffering dreadful apprehensions of what may be their own fate and that of their children before the morning, it would be vain to recount to such a people the political benefits which result to them from the Union. Self-preservation is the first instinct of nature, and therefore any state of society in which the sword is all the time suspended over the heads of the people must at last become intolerable. But I indulge in no such gloomy forebodings. On the contrary, I firmly believe that the events at Harpers Ferry, by causing the people to pause and reflect upon the possible peril to their cherished institutions, will be the means under Providence of allaying the existing excitement and preventing further outbreaks of a similar character. They will resolve that the Constitution and the Union shall not be endangered by rash counsels, knowing that should "the silver cord be loosed or the golden bowl be broken at the fountain" human power could never reunite the scattered and hostile fragments.  I cordially congratulate you upon the final settlement by the Supreme Court of the United States of the question of slavery in the Territories, which had presented an aspect so truly formidable at the commencement of my Administration. The right has been established of every citizen to take his property of any kind, including slaves, into the common Territories belonging equally to all the States of the Confederacy, and to have it protected there under the Federal Constitution. Neither Congress nor a Territorial legislature nor any human power has any authority to annul or impair this vested right. The supreme judicial tribunal of the country, which is a coordinate branch of the Government, has sanctioned and affirmed these principles of constitutional law, so manifestly just in themselves and so well calculated to promote peace and harmony among the States. It is a striking proof of the sense of justice which is inherent in our people that the property in slaves has never been disturbed, to my knowledge, in any of the Territories. Even throughout the late troubles in Kansas there has not been any attempt, as I am credibly informed, to interfere in a single instance with the right of the master. Had any such attempt been made, the judiciary would doubtless have afforded an adequate remedy. Should they fail to do this hereafter, it will then be time enough to strengthen their hands by further legislation. Had it been decided that either Congress or the Territorial legislature possess the power to annul or impair the right to property in slaves, the evil would be intolerable. In the latter event there would be a struggle for a majority of the members of the legislature at each successive election, and the sacred rights of property held under the Federal Constitution would depend for the time being on the result. The agitation would thus be rendered incessant whilst the Territorial condition remained, and its baneful influence would keep alive a dangerous excitement among the people of the several States.  Thus has the status of a Territory during the intermediate period from its first settlement until it shall become a State been irrevocably fixed by the final decision of the Supreme Court. Fortunate has this been for the prosperity of the Territories, as well as the tranquillity of the States. Now emigrants from the North and the South, the East and the West, will meet in the Territories on a common platform, having brought with them that species of property best adapted, in their own opinion, to promote their welfare. From natural causes the slavery question will in each case soon virtually settle itself, and before the Territory is prepared for admission as a State into the Union this decision, one way or the other, will have been a foregone conclusion. Meanwhile the settlement of the new Territory will proceed without serious interruption, and its progress and prosperity will not be endangered or retarded by violent political struggles.  When in the progress of events the inhabitants of any Territory shall have reached the number required to form a State, they will then proceed in a regular manner and in the exercise of the rights of popular sovereignty to form a constitution preparatory to admission into the Union. After this has been done, to employ the language of the Kansas and Nebraska act, they "shall be received into the Union with or without slavery, as their constitution may prescribe at the time of their admission." This sound principle has happily been recognized in some form or other by an almost unanimous vote of both Houses of the last Congress.  All lawful means at my command have been employed, and shall continue to be employed, to execute the laws against the African slave trade. After a most careful and rigorous examination of our coasts and a thorough investigation of the subject, we have not been able to discover that any slaves have been imported into the United States except the cargo by the Wanderer, numbering between three and four hundred. Those engaged in this unlawful enterprise have been rigorously prosecuted, but not with as much success as their crimes have deserved. A number of them are still under prosecution.  Our history proves that the fathers of the Republic, in advance of all other nations, condemned the African slave trade. It was, notwithstanding, deemed expedient by the framers of the Constitution to deprive Congress of the power to prohibit "the migration or importation of such persons as any of the States now existing shall think proper to admit" "prior to the year 1808." It will be seen that this restriction on the power of Congress was confined to such States only as might think proper to admit the importation of slaves. It did not extend to other States or to the trade carried on abroad. Accordingly, we find that so early as the 22d March, 1794, Congress passed an act imposing severe penalties and punishments upon citizens and residents of the United States who should engage in this trade between foreign nations. The provisions of this act were extended and enforced by the act of 10th May, 1800.  Again, the States themselves had a clear right to waive the constitutional privilege intended for their benefit, and to prohibit by their own laws this trade at any time they thought proper previous to 1808. Several of them exercised this right before that period, and among them some containing the greatest number of slaves. This gave to Congress the immediate power to act in regard to all such States, because they themselves had removed the constitutional barrier. Congress accordingly passed an act on 28th February, 1803, "to prevent the importation of certain persons into certain States where by the laws thereof their admission is prohibited." In this manner the importation of African slaves into the United States was to a great extent prohibited some years in advance of 1808.  As the year 1808 approached Congress determined not to suffer this trade to exist even for a single day after they had the power to abolish it. On the 2d of March, 1807, they passed an act, to take effect "from and after the 1st day of January, 1808," prohibiting the importation of African slaves into the United States. This was followed by subsequent acts of a similar character, to which I need not specially refer. Such were the principles and such the practice of our ancestors more than fifty years ago in regard to the African slave trade. It did not occur to the revered patriots who had been delegates to the Convention, and afterwards became members of Congress, that in passing these laws they had violated the Constitution which they had framed with so much care and deliberation. They supposed that to prohibit Congress in express terms from exercising a specified power before an appointed day necessarily involved the right to exercise this power after that day had arrived.  If this were not the case, the framers of the Constitution had expended much labor in vain. Had they imagined that Congress would possess no power to prohibit the trade either before or after 1808, they would not have taken so much care to protect the States against the exercise of this power before that period. Nay, more, they would not have attached such vast importance to this provision as to have excluded it from the possibility of future repeal or amendment, to which other portions of the Constitution were exposed. It would, then, have been wholly unnecessary to ingraft on the fifth article of the Constitution, prescribing the mode of its own future amendment, the proviso "that no amendment which may be made prior to the year 1808 shall in any manner affect" the provision in the Constitution securing to the States the right to admit the importation of African slaves previous to that period. According to the adverse construction, the clause itself, on which so much care and discussion had been employed by the members of the Convention, was an absolute nullity from the beginning, and all that has since been done under it a mere usurpation.  It was well and wise to confer this power on Congress, because had it been left to the States its efficient exercise would have been impossible. In that event any one State could have effectually continued the trade, not only for itself, but for all the other slave States, though never so much against their will. And why? Because African slaves, when once brought within the limits of any one State in accordance with its laws, can not practically be excluded from any State where slavery exists. And even if all the States had separately passed laws prohibiting the importation of slaves, these laws would have failed of effect for want of a naval force to capture the slavers and to guard the coast. Such a force no State can employ in time of peace without the consent of Congress.  These acts of Congress, it is believed, have, with very rare and insignificant exceptions, accomplished their purpose. For a period of more than half a century there has been no perceptible addition to the number of our domestic slaves. During this period their advancement in civilization has far surpassed that of any other portion of the African race. The light and the blessings of Christianity have been extended to them, and both their moral and physical condition has been greatly improved.  Reopen the trade and it would be difficult to determine whether the effect would be more deleterious on the interests of the master or on those of the native-born slave. Of the evils to the master, the one most to be dreaded would be the introduction of wild, heathen, and ignorant barbarians among the sober, orderly, and quiet slaves whose ancestors have been on the soil for several generations. This might tend to barbarize, demoralize, and exasperate the whole mass and produce most deplorable consequences.  The effect upon the existing slave would, if possible, be still more deplorable. At present he is treated with kindness and humanity. He is well fed, well clothed, and not overworked. His condition is incomparably better than that of the coolies which modern nations of high civilization have employed as a substitute for African slaves. Both the philanthropy and the self-interest of the master have combined to produce this humane result. But let this trade be reopened and what will be the effect? The same to a considerable extent as on a neighboring island, the only spot now on earth where the African slave trade is openly tolerated, and this in defiance of solemn treaties with a power abundantly able at any moment to enforce their execution. There the master, intent upon present gain, extorts from the slave as much labor as his physical powers are capable of enduring, knowing that when death comes to his relief his place can be supplied at a price reduced to the lowest point by the competition of rival African slave traders. Should this ever be the case in our country, which I do not deem possible, the present useful character of the domestic institution, wherein those too old and too young to work are provided for with care and humanity and those capable of labor are not overtasked, would undergo an unfortunate change. The feeling of reciprocal dependence and attachment which now exists between master and slave would be converted into mutual distrust and hostility.  But we are obliged as a Christian and moral nation to consider what would be the effect upon unhappy Africa itself if we should reopen the slave trade. This would give the trade an impulse and extension which it has never had, even in its palmiest days. The numerous victims required to supply it would convert the whole slave coast into a perfect pandemonium, for which this country would be held responsible in the eyes both of God and man. Its petty tribes would then be constantly engaged in predatory wars against each other for the purpose of seizing slaves to supply the American market. All hopes of African civilization would thus be ended.  On the other hand, when a market for African slaves shall no longer be furnished in Cuba, and thus all the world be closed against this trade,we may then indulge a reasonable hope for the gradual improvement of Africa. The chief motive of war among the tribes will cease whenever there is no longer any demand for slaves. The resources of that fertile but miserable country might then be developed by the hand of industry and afford subjects for legitimate foreign and domestic commerce. In this manner Christianity and civilization may gradually penetrate the existing gloom.  The wisdom of the course pursued by this Government toward China has been vindicated by the event. Whilst we sustained a neutral position in the war waged by Great Britain and France against the Chinese Empire, our late minister, in obedience to his instructions, judiciously cooperated with the ministers of these powers in all peaceful measures to secure by treaty the just concessions demanded by the interests of foreign commerce. The result is that satisfactory treaties have been concluded with China by the respective ministers of the United States, Great Britain, France, and Russia. Our "treaty, or general convention, of peace, amity, and commerce" with that Empire was concluded at Tien-tsin on the 18th June, 1858, and was ratified by the President, by and with the advice and consent of the Senate, on the 21st December following. On the 15th December, 1858, John E. Ward, a distinguished citizen of Georgia, was duly commissioned as envoy extraordinary and minister plenipotentiary to China.  He left the United States for the place of his destination on the 5th of February, 1859, bearing with him the ratified copy of this treaty, and arrived at Shanghai on the 28th May. From thence he proceeded to Peking on the 16th June, but did not arrive in that city until the 27th July. According to the terms of the treaty, the ratifications were to be exchanged on or before the 18th June, 1859. This was rendered impossible by reasons and events beyond his control, not necessary to detail; but still it is due to the Chinese authorities at Shanghai to state that they always assured him no advantage should be taken of the delay, and this pledge has been faithfully redeemed.  On the arrival of Mr. Ward at Peking he requested an audience of the Emperor to present his letter of credence. This he did not obtain, in consequence of his very proper refusal to submit to the humiliating ceremonies required by the etiquette of this strange people in approaching their sovereign. Nevertheless, the interviews on this question were conducted in the most friendly spirit and with all due regard to his personal feelings and the honor of his country. When a presentation to His Majesty was found to be impossible, the letter of credence from the President was received with peculiar honors by Kweiliang, "the Emperor's prime minister and the second man in the Empire to the Emperor himself." The ratifications of the treaty were afterwards, on the 16th of August, exchanged in proper form at Peit-sang. As the exchange did not take place until after the day prescribed by the treaty, it is deemed proper before its publication again to submit it to the Senate. It is but simple justice to the Chinese authorities to observe that throughout the whole transaction they appear to have acted in good faith and in a friendly spirit toward the United States. It is true this has been done after their own peculiar fashion; but we ought to regard with a lenient eye the ancient customs of an empire dating back for thousands of years, so far as this may be consistent with our own national honor. The conduct of our minister on the occasion has received my entire approbation.  In order to carry out the spirit of this treaty and to give it full effect it became necessary to conclude two supplemental conventions, the one for the adjustment and satisfaction of the claims of our citizens and the other to fix the tariff on imports and exports and to regulate the transit duties and trade of our merchants with China. This duty was satisfactorily performed by our late minister. These conventions bear date at Shanghai on the 8th November, 1858. Having been considered in the light of binding agreements subsidiary to the principal treaty, and to be carried into execution without delay, they do not provide for any formal ratification or exchange of ratifications by the contracting parties. This was not deemed necessary by the Chinese, who are already proceeding in good faith to satisfy the claims of our citizens and, it is hoped, to carry out the other provisions of the conventions. Still, I thought it was proper to submit them to the Senate by which they were ratified on the 3d of March, 1859. The ratified copies, however, did not reach Shanghai until after the departure of our minister to Peking, and these conventions could not, therefore, be exchanged at the same time with the principal treaty. No doubt is entertained that they will be ratified and exchanged by the Chinese Government should this be thought advisable; but under the circumstances presented I shall consider them binding engagements from their date on both parties, and cause them to be published as such for the information and guidance of our merchants trading with the Chinese Empire.  It affords me much satisfaction to inform you that all our difficulties with the Republic of Paraguay have been satisfactorily adjusted. It happily did not become necessary to employ the force for this purpose which Congress had placed at my command under the joint resolution of 2d June, 1858. On the contrary, the President of that Republic, in a friendly spirit, acceded promptly to the just and reasonable demands of the Government of the United States. Our commissioner arrived at Assumption, the capital of the Republic, on the 25th of January, 1859, and left it on the 17th of February, having in three weeks ably and successfully accomplished all the objects of his mission. The treaties which he has concluded will be immediately submitted to the Senate.  In the view that the employment of other than peaceful means might become necessary to obtain "just satisfaction" from Paraguay, a strong naval force was concentrated in the waters of the La Plata to await contingencies whilst our commissioner ascended the rivers to Assumption. The Navy Department is entitled to great credit for the promptness, efficiency, and economy with which this expedition was fitted out and conducted. It consisted of 19 armed vessels, great and small, carrying 200 guns and 2,500 men, all under the command of the veteran and gallant Shubrick. The entire expenses of the expedition have been defrayed out of the ordinary appropriations for the naval service, except the sum of $289,000, applied to the purchase of seven of the steamers constituting a part of it, under the authority of the naval appropriation act of the 3d March last. It is believed that these steamers are worth more than their cost, and they are all now usefully and actively employed in the naval service.  The appearance of so large a force, fitted out in such a prompt manner, in the far-distant waters of the La Plata, and the admirable conduct of the officers and men employed in it, have had a happy effect in favor of our country throughout all that remote portion of the world. Our relations with the great Empires of France and Russia, as well as with all other governments on the continent of Europe, unless we may except that of Spain, happily continue to be of the most friendly character. In my last annual message I presented a statement of the unsatisfactory condition of our relations with Spain, and I regret to say that this has not materially improved.  Without special reference to other claims, even the "Cuban claims," the payment of which has been ably urged by our ministers, and in which more than a hundred of our citizens are directly interested, remain unsatisfied, notwithstanding both their justice and their amount ($128,635.54) had been recognized and ascertained by the Spanish Government itself.  I again recommend that an appropriation be made "to be paid to the Spanish Government for the purpose of distribution among the claimants in the Amistad case." In common with two of my predecessors, I entertain no doubt that this is required by our treaty with Spain of the 27th October, 1795. The failure to discharge this obligation has been employed by the cabinet of Madrid as a reason against the settlement of our claims.  I need not repeat the arguments which I urged in my last annual message in favor of the acquisition of Cuba by fair purchase. My opinions on that measure remain unchanged. I therefore again invite the serious attention of Congress to this important subject. Without a recognition of this policy on their part it will be almost impossible to institute negotiations with any reasonable prospect of success. Until a recent period there was good reason to believe that I should be able to announce to you on the present occasion that our difficulties with Great Britain arising out of the Clayton and Bulwer treaty had been finally adjusted in a manner alike honorable and satisfactory to both parties. From causes, however, which the British Government had not anticipated, they have not yet completed treaty arrangements with the Republics of Honduras and Nicaragua, in pursuance of the understanding between the two Governments. It is, nevertheless, confidently expected that this good work will ere long be accomplished.  Whilst indulging the hope that no other subject remained which could disturb the good understanding between the two countries, the question arising out of the adverse claims of the parties to the island of San Juan, under the Oregon treaty of the 15th June, 1846, suddenly assumed a threatening prominence. In order to prevent unfortunate collisions on that remote frontier, the late Secretary of State, on the 17th July, 1855, addressed a note to Mr. Crampton, then British minister at Washington, communicating to him a copy of the instructions which he (Mr. Marcy) had given on the 14th July to Governor Stevens, of Washington Territory, having a special reference to an "apprehended conflict between our citizens and the British subjects on the island of San Juan." To prevent this the governor was instructed "that the officers of the Territory should abstain from all acts on the disputed grounds which are calculated to provoke any conflicts, so far as it can be done without implying the concession to the authorities of Great Britain of an exclusive right over the premises. The title ought to be settled before either party should attempt to exclude the other by force or exercise complete and exclusive sovereign rights within the fairly disputed limits." In acknowledging the receipt on the next day of Mr. Marcy's note the British minister expressed his entire concurrence "in the propriety of the course recommended to the governor of Washington Territory by your [Mr. Marcy's] instructions to that officer," and stating that he had "lost no time in transmitting a copy of that document to the Governor-General of British North America" and had "earnestly recommended to His Excellency to take such measures as to him may appear best calculated to secure on the part of the British local authorities and the inhabitants of the neighborhood of the line in question the exercise of the same spirit of forbearance which is inculcated by you [Mr. Marcy] on the authorities and citizens of the United States."  Thus matters remained upon the faith of this arrangement until the 9th July last, when General Harney paid a visit to the island. He found upon it twenty-five American residents with their families, and also an establishment of the Hudsons Bay Company for the purpose of raising sheep. A short time before his arrival one of these residents had shot an animal belonging to the company whilst trespassing upon his premises, for which, however, he offered to pay twice its value, but that was refused. Soon after "the chief factor of the company at Victoria, Mr. Dalles, son-in-law of Governor Douglas, came to the island in the British sloop of war Satellite and threatened to take this American [Mr. Cutler] by force to Victoria to answer for the trespass he had committed. The American seized his rifle and told Mr. Dalles if any such attempt was made he would kill him upon the spot. The affair then ended."  Under these circumstances the American settlers presented a petition to the General "through the United States inspector of customs, Mr. Hubbs, to place a force upon the island to protect them from the Indians as well as the oppressive interference of the authorities of the Hudsons Bay Company at Victoria with their rights as American citizens." The General immediately responded to this petition, and ordered Captain George E. Pickett, Ninth Infantry, "to establish his company on Bellevue, or San Juan Island, on some suitable position near the harbor at the southeastern extremity." This order was promptly obeyed and a military post was established at the place designated. The force was afterwards increased, so that by the last return the whole number of troops then on the island amounted in the aggregate to 691 men.  Whilst I do not deem it proper on the present occasion to go further into the subject and discuss the weight which ought to be attached to the statements of the British colonial authorities contesting the accuracy of the information on which the gallant General acted, it was due to him that I should thus present his own reasons for issuing the order to Captain Pickett. From these it is quite clear his object was to prevent the British authorities on Vancouvers Island from exercising jurisdiction over American residents on the island of San Juan, as well as to protect them against the incursions of the Indians. Much excitement prevailed for some time throughout that region, and serious danger of collision between the parties was apprehended. The British had a large naval force in the vicinity, and it is but an act of simple justice to the admiral on that station to state that he wisely and discreetly forbore to commit any hostile act, but determined to refer the whole affair to his Government and await their instructions.  This aspect of the matter, in my opinion, demanded serious attention. It would have been a great calamity for both nations had they been precipitated into acts of hostility, not on the question of title to the island, but merely concerning what should be its condition during the intervening period whilst the two Governments might be employed in settling the question to which of them it belongs. For this reason Lieutenant-General Scott was dispatched, on the 17th of September last, to Washington Territory to take immediate command of the United States forces on the Pacific Coast, should he deem this necessary. The main object of his mission was to carry out the spirit of the precautionary arrangement between the late Secretary of State and the British minister, and thus to preserve the peace and prevent collision between the British and American authorities pending the negotiations between the two Governments. Entertaining no doubt of the validity of our title, I need scarcely add that in any event American citizens were to be placed on a footing at least as favorable as that of British subjects, it being understood that Captain Pickett's company should remain on the island. It is proper to observe that, considering the distance from the scene of action and in ignorance of what might have transpired on the spot before the General's arrival, it was necessary to leave much to his discretion; and I am happy to state the event has proven that this discretion could not have been intrusted to more competent hands. General Scott has recently returned from his mission, having successfully accomplished its objects, and there is no longer any good reason to apprehend a collision between the forces of the two countries during the pendency of the existing negotiations. I regret to inform you that there has been no improvement in the affairs of Mexico since my last annual message, and I am again obliged to ask the earnest attention of Congress to the unhappy condition of that Republic.  The constituent Congress of Mexico, which adjourned on the 17th February, 1857, adopted a constitution and provided for a popular election. This took place in the following July (1857), and General Comonfort was chosen President almost without opposition. At the same election a new Congress was chosen, whose first session commenced on the 16th of September (1857). By the constitution of 1857 the Presidential term was to begin on the 1st of December (1857) and continue for four years. On that day General Comonfort appeared before the assembled Congress in the City of Mexico, took the oath to support the new constitution, and was duly inaugurated as President. Within a month afterwards he had been driven from the capital and a military rebellion had assigned the supreme power of the Republic to General Zuloaga. The constitution provided that in the absence of the President his office should devolve upon the chief justice of the supreme court; and General Comonfort having left the country, this functionary, General Juarez, proceeded to form at Guanajuato a constitutional Government. Before this was officially known, however, at the capital the Government of Zuloaga had been recognized by the entire diplomatic corps, including the minister of the United States, as the de facto Government of Mexico. The constitutional President, nevertheless, maintained his position with firmness, and was soon established, with his cabinet, at Vera Cruz. Meanwhile the Government of Zuloaga was earnestly resisted in many parts of the Republic, and even in the capital, a portion of the army having pronounced against it, its functions were declared terminated, and an assembly of citizens was invited for the choice of a new President. This assembly elected General Miramort, but that officer repudiated the plan under which he was chosen, and Zuloaga was thus restored to his previous position. He assumed it, however, only to withdraw from it; and Miramon, having become by his appointment "President substitute," continues with that title at the head of the insurgent party.  In my last annual message I communicated to Congress the circumstances under which the late minister of the United States suspended his official relations with the central Government and withdrew from the country. It was impossible to maintain friendly intercourse with a government like that at the capital, under whose usurped authority wrongs were constantly committed, but never redressed. Had this been an established government, with its power extending by the consent of the people over the whole of Mexico, a resort to hostilities against it would have been quite justifiable, and, indeed, necessary. But the country was a prey to civil war, and it was hoped that the success of the constitutional President might lead to a condition of things less injurious to the United States. This success became so probable that in January last I employed a reliable agent to visit Mexico and report to me the actual condition and prospects of the contending parties. In consequence of his report and from information which reached me from other sources favorable to the prospects of the constitutional cause, I felt justified in appointing a new minister to Mexico, who might embrace the earliest suitable opportunity of restoring our diplomatic relations with that Republic. For this purpose a distinguished citizen of Maryland was selected, who proceeded on his mission on the 8th of March last, with discretionary authority to recognize the Government of President Juarez if on his arrival in Mexico he should find it entitled to such recognition according to the established practice of the United States.  On the 7th of April following Mr. McLane presented his credentials to President Juarez, having no hesitation "in pronouncing the Government of Juarez to be the only existing government of the Republic." He was cordially received by the authorities at Vera Cruz, and they have ever since manifested the most friendly disposition toward the United States.  Unhappily, however, the constitutional Government has not been able to establish its power over the whole Republic. It is supported by a large majority of the people and the States, but there are important parts of the country where it can enforce no obedience.  General Miramon maintains himself at the capital, and in some of the distant Provinces there are military governors who pay little respect to the decrees of either Government. In the meantime the excesses which always attend upon civil war, especially in Mexico, are constantly recurring. Outrages of the worst description are committed both upon persons and property. There is scarcely any form of injury which has not been suffered by our citizens in Mexico during the last few years. We have been nominally at peace with that Republic, but "so far as the interests of our commerce, or of our citizens who have visited the country as merchants, shipmasters, or in other capacities, are concerned, we might as well have been at war." Life has been insecure, property unprotected, and trade impossible except at a risk of loss which prudent men can not be expected to incur. Important contracts, involving large expenditures, entered into by the central Government, have been set at defiance by the local governments. Peaceful American residents, occupying their rightful possessions, have been suddenly expelled the country, in defiance of treaties and by the mere force of arbitrary power. Even the course of justice has not been safe from control, and a recent decree of Miramort permits the intervention of Government in all suits where either party is a foreigner. Vessels of the United States have been seized without law, and a consular officer who protested against such seizure has been fined and imprisoned for disrespect to the authorities. Military contributions have been levied in violation of every principle of right, and the American who resisted the lawless demand has had his property forcibly taken away and has been himself banished. From a conflict of authority in different parts of the country tariff duties which have been paid in one place have been exacted over again in another place. Large numbers of our citizens have been arrested and imprisoned without any form of examination or any opportunity for a hearing, and even when released have only obtained their liberty after much suffering and injury, and without any hope of redress. The wholesale massacre of Crabbe and his associates without trial in Sonora, as well as the seizure and murder of four sick Americans who had taken shelter in the house of an American upon the soil of the United States, was communicated to Congress at its last session. Murders of a still more atrocious character have been committed in the very heart of Mexico, under the authority of Miramon's Government, during the present year. Some of these were only worthy of a barbarous age, and if they had not been dearly proven would have seemed impossible in a country which claims to be civilized. Of this description was the brutal massacre in April last, by order of General Marquez, of three American physicians who were seized in the hospital at Tacubaya while attending upon the sick and the dying of both parties, and without trial, as without crime, were hurried away to speedy execution. Little less shocking was the recent fate of Ormond Chase, who was shot in Tepic on the 7th of August by order of the same Mexican general, not only without a trial, but without any conjecture by his friends of the cause of his arrest. He is represented as a young man of good character and intelligence, who had made numerous friends in Tepic by the courage and humanity which he had displayed on several trying occasions; and his death was as unexpected as it was shocking to the whole community. Other outrages might be enumerated, but these are sufficient to illustrate the wretched state of the country and the unprotected condition of the persons and property of our citizens in Mexico.  In all these cases our ministers have been constant and faithful in their demands for redress, but both they and this Government, which they have successively represented, have been wholly powerless to make their demands effective. Their testimony in this respect and in reference to the only remedy which in their judgments would meet the exigency has been both uniform and emphatic. "Nothing but a manifestation of the power of the Government of the United States," wrote our late minister in 1856, "and of its purpose to punish these wrongs will avail. I assure you that the universal belief here is that there is nothing to be apprehended from the Government of the United States, and that local Mexican officials can commit these outrages upon American citizens with absolute impunity." "I hope the President," wrote our present minister in August last, "will feel authorized to ask from Congress the power to enter Mexico with the military forces of the United States at the call of the constitutional authorities, in order to protect the citizens and the treaty rights of the United States. Unless such a power is conferred upon him, neither the one nor the other will be respected in the existing state of anarchy and disorder, and the outrages already perpetrated will never be chastised; and, as I assured you in my No. 23, all these evils must increase until every vestige of order and government disappears from the country." I have been reluctantly led to the same opinion, and in justice to my countrymen who have suffered wrongs from Mexico and who may still suffer them I feel bound to announce this conclusion to Congress.  The case presented, however, is not merely a case of individual claims, although our just claims against Mexico have reached a very large amount; nor is it merely the case of protection to the lives and property of the few Americans who may still remain in Mexico, although the life and property of every American citizen ought to be sacredly protected in every quarter of the world; but it is a question which relates to the future as well as to the present and the past, and which involves, indirectly at least, the whole subject of our duty to Mexico as a neighboring State. The exercise of the power of the United States in that country to redress the wrongs and protect the rights of our own citizens is none the less to be desired because efficient and necessary aid may thus be rendered at the same time to restore peace and order to Mexico itself. In the accomplishment of this result the people of the United States must necessarily feel a deep and earnest interest. Mexico ought to be a rich and prosperous and powerful Republic. She possesses an extensive territory, a fertile soil, and an incalculable store of mineral wealth. She occupies an important position between the Gulf and the ocean for transit routes and for commerce. Is it possible that such a country as this can be given up to anarchy and ruin without an effort from any quarter for its rescue and its safety? Will the commercial nations of the world, which have so many interests connected with it, remain wholly indifferent to such a result? Can the United States especially, which ought to share most largely in its commercial intercourse, allow their immediate neighbor thus to destroy itself and injure them? Yet without support from some quarter it is impossible to perceive how Mexico can resume her position among nations and enter upon a career which promises any good results. The aid which she requires, and which the interests of all commercial countries require that she should have, it belongs to this Government to render, not only by virtue of our neighborhood to Mexico, along whose territory we have a continuous frontier of nearly a thousand miles, but by virtue also of our established policy, which is inconsistent with the intervention of any European power in the domestic concerns of that Republic.  The wrongs which we have suffered from Mexico are before the world and must deeply impress every American citizen. A government which is either unable or unwilling to redress such wrongs is derelict to its highest duties. The difficulty consists in selecting and enforcing the remedy. We may in vain apply to the constitutional Government at Vera Cruz, although it is well disposed to do us justice, for adequate redress. Whilst its authority is acknowledged in all the important ports and throughout the seacoasts of the Republic, its power does not extend to the City of Mexico and the States in its vicinity, where nearly all the recent outrages have been committed on American citizens. We must penetrate into the interior before we can reach the offenders, and this can only be done by passing through the territory in the occupation of the constitutional Government. The most acceptable and least difficult mode of accomplishing the object will be to act in concert with that Government. Their consent and their aid might, I believe, be obtained; but if not, our obligation to protect our own citizens in their just rights secured by treaty would not be the less imperative. For these reasons I recommend to Congress to pass a law authorizing the President under such conditions as they may deem expedient, to employ a sufficient military force to enter Mexico for the purpose of obtaining indemnity for the past and security for the future. I purposely refrain from any suggestion as to whether this force shall consist of regular troops or volunteers, or both. This question may be most appropriately left to the decision of Congress. I would merely observe that should volunteers be selected such a force could be easily raised in this country among those who sympathize with the sufferings of our unfortunate fellow-citizens in Mexico and with the unhappy condition of that Republic. Such an accession to the forces of the constitutional Government would enable it soon to reach the City of Mexico and extend its power over the whole Republic. In that event there is no reason to doubt that the just claims of our citizens would be satisfied and adequate redress obtained for the injuries inflicted upon them. The constitutional Government have ever evinced a strong desire to do justice, and this might be secured in advance by a preliminary treaty.  It may be said that these measures will, at least indirectly, be inconsistent with our wise and settled policy not to interfere in the domestic concerns of foreign nations. But does not the present case fairly constitute an exception? An adjoining Republic is in a state of anarchy and confusion from which she has proved wholly unable to extricate herself. She is entirely destitute of the power to maintain peace upon her borders or to prevent the incursions of banditti into our territory. In her fate and in her fortune, in her power to establish and maintain a settled government, we have a far deeper interest, socially, commercially, and politically, than any other nation. She is now a wreck upon the ocean, drifting about as she is impelled by different factions. As a good neighbor, shall we not extend to her a helping hand to save her? If we do not, it would not be surprising should some other nation undertake the task, and thus force us to interfere at last, under circumstances of increased difficulty, for the maintenance of our established policy.  I repeat the recommendation contained in my last annual message that authority may be given to the President to establish one or more temporary military posts across the Mexican line in Sonora and Chihuahua, where these may be necessary to protect the lives and property of American and Mexican citizens against the incursions and depredations of the Indians, as well as of lawless rovers, on that remote region. The establishment of one such post at a point called Arispe, in Sonora, in a country now almost depopulated by the hostile inroads of the Indians from our side of the line, would, it is believed, have prevented much injury and many cruelties during the past season. A state of lawlessness and violence prevails on that distant frontier. Life and property are there wholly insecure. The population of Arizona, now numbering more than 10,000 souls, are practically destitute of government, of laws, or of any regular administration of justice. Murder, rapine, and other crimes are committed with impunity. I therefore again call the attention of Congress to the necessity for establishing a Territorial government over Arizona.  The treaty with Nicaragua of the 16th of February, 1857, to which I referred in my last annual message, failed to receive the ratification of the Government of that Republic, for reasons which I need not enumerate. A similar treaty has been since concluded between the parties, bearing date on the 16th March, 1859, which has already been ratified by the Nicaraguan Congress. This will be immediately submitted to the Senate for their ratification. Its provisions can not, I think, fail to be acceptable to the people of both countries.  Our claims against the Governments of Costa Rica and Nicaragua remain unredressed, though they are pressed in an earnest manner and not without hope of success.  I deem it to be my duty once more earnestly to recommend to Congress the passage of a law authorizing the President to employ the naval force at his command for the purpose of protecting the lives and property of American citizens passing in transit across the Panama, Nicaragua, and Tehuantepec routes against sudden and lawless outbreaks and depredations. I shall not repeat the arguments employed in former messages in support of this measure. Suffice it to say that the lives of many of our people and the security of vast amounts of treasure passing and repassing over one or more of these routes between the Atlantic and Pacific may be deeply involved in the action of Congress on this subject.  I would also again recommend to Congress that authority be given to the President to employ the naval force to protect American merchant vessels, their crews and cargoes, against violent and lawless seizure and confiscation in the ports of Mexico and the Spanish American States when these countries may be in a disturbed and revolutionary condition. The mere knowledge that such an authority had been conferred, as I have already stated, would of itself in a great degree prevent the evil. Neither would this require any additional appropriation for the naval service.  The chief objection urged against the grant of this authority is that Congress by conferring it would violate the Constitution; that it would be a transfer of the war-making, or, strictly speaking, the war-declaring, power to the Executive. If this were well rounded, it would, of course, be conclusive. A very brief examination, however, will place this objection at rest.  Congress possess the sole and exclusive power under the Constitution "to declare war." They alone can"raise and support armies" and "provide and maintain a navy." But after Congress shall have declared war and provided the force necessary to carry it on the President, as Commander in Chief of the Army and Navy, can alone employ this force in making war against the enemy. This is the plain language, and history proves that it was the well-known intention of the framers, of the Constitution.  It will not be denied that the general "power to declare war" is without limitation and embraces within itself not only what writers on the law of nations term a public or perfect war, but also an imperfect war, and, in short, every species of hostility, however confined or limited. Without the authority of Congress the President can not fire a hostile gun in any case except to repel the attacks of an enemy. It will not be doubted that under this power Congress could, if they thought proper, authorize the President to employ the force at his command to seize a vessel belonging to an American citizen which had been illegally and unjustly captured in a foreign port and restore it to its owner. But can Congress only act after the fact, after the mischief has been done? Have they no power to confer upon the President the authority in advance to furnish instant redress should such a case afterwards occur? Must they wait until the mischief has been done, and can they apply the remedy only when it is too late? To confer this authority to meet future cases under circumstances strictly specified is as clearly within the war-declaring power as such an authority conferred upon the President by act of Congress after the deed had been done. In the progress of a great nation many exigencies must arise imperatively requiring that Congress should authorize the President to act promptly on certain conditions which may or may not afterwards arise. Our history has already presented a number of such cases. I shall refer only to the latest. Under the resolution of June 2, 1858, "for the adjustment of difficulties with the Republic of Paraguay," the President is "authorized to adopt such measures and use such force as in his judgment may be necessary and advisable in the event of a refusal of just satisfaction by the Government of Paraguay." "Just satisfaction" for what? For "the attack on the United States steamer Water Witch" and "other matters referred to in the annual message of the President." Here the power is expressly granted upon the condition that the Government of Paraguay shall refuse to render this "just satisfaction." In this and other similar cases Congress have conferred upon the President power in advance to employ the Army and Navy upon the happening of contingent future events; and this most certainly is embraced within the power to declare war.  Now, if this conditional and contingent power could be constitutionally conferred upon the President in the case of Paraguay, why may it not be conferred for the purpose of protecting the lives and property of American citizens in the event that they may be violently and unlawfully attacked in passing over the transit routes to and from California or assailed by the seizure of their vessels in a foreign port? To deny this power is to render the Navy in a great degree useless for the protection of the lives and property of American citizens in countries where neither protection nor redress can be otherwise obtained.  The Thirty-fifth Congress terminated on the 3d of March, 1859, without having passed the "act making appropriations for the service of the Post-Office Department during the fiscal year ending the 30th of June, 1860," This act also contained an appropriation "to supply deficiencies in the revenue of the Post-Office Department for the year ending 30th June, 1859." I believe this is the first instance since the origin of the Federal Government, now more than seventy years ago, when any Congress went out of existence without having passed all the general appropriation bills necessary to carry on the Government until the regular period for the meeting of a new Congress. This event imposed on the Executive a grave responsibility. It presented a choice of evils.  Had this omission of duty occurred at the first session of the last Congress, the remedy would have been plain. I might then have instantly recalled them to complete their work, and this without expense to the Government. But on the 4th of March last there were fifteen of the thirty-three States which had not elected any Representatives to the present Congress. Had Congress been called together immediately, these States would have been virtually disfranchised. If an intermediate period had been selected, several of the States would have been compelled to hold extra sessions of their legislatures, at great inconvenience and expense, to provide for elections at an earlier day than that previously fixed by law. In the regular course ten of these States would not elect until after the beginning of August, and five of these ten not until October and November.  On the other hand, when I came to examine carefully the condition of the Post-Office Department, I did not meet as many or as great difficulties as I had apprehended. Had the bill which failed been confined to appropriations for the fiscal year ending on the 30th June next, there would have been no reason of pressing importance for the call of an extra session. Nothing would become due on contracts (those with railroad companies only excepted) for carrying the mail for the first quarter of the present fiscal year, commencing on the 1st of July, until the 1st of December--less than one week before the meeting of the present Congress. The reason is that the mail contractors for this and the current year did not complete their first quarter's service until the 30th September last, and by the terms of their contracts sixty days more are allowed for the settlement of their accounts before the Department could be called upon for payment.  The great difficulty and the great hardship consisted in the failure to provide for the payment of the deficiency in the fiscal year ending the 30th June, 1859. The Department had entered into contracts, in obedience to existing laws, for the service of that fiscal year, and the contractors were fairly entitled to their compensation as it became due. The deficiency as stated in the bill amounted to $3,838,728, but after a careful settlement of all these accounts it has been ascertained that it amounts to $4,296,009. With the scanty means at his command the Postmaster-General has managed to pay that portion of this deficiency which occurred in the first two quarters of the past fiscal year, ending on the 31st December last. In the meantime the contractors themselves, under these trying circumstances, have behaved in a manner worthy of all commendation. They had one resource in the midst of their embarrassments. After the amount due to each of them had been ascertained and finally settled according to law, this became a specific debt of record against the United States, which enabled them to borrow money on this unquestionable security. Still, they were obliged to pay interest in consequence of the default of Congress, and on every principle of justice ought to receive interest from the Government. This interest should commence from the date when a warrant would have issued for the payment of the principal had an appropriation been made for this purpose. Calculated up to the 1st December, it will not exceed $96,660--a sum not to be taken into account when contrasted with the great difficulties and embarrassments of a public and private character, both to the people and the States, which would have resulted from convening and holding a special session of Congress. For these reasons I recommend the passage of a bill at as early a day as may be practicable to provide for the payment of the amount, with interest, due to these last-mentioned contractors, as well as to make the necessary appropriations for the service of the Post-Office Department for the current fiscal year.  The failure to pass the Post-Office bill necessarily gives birth to serious reflections. Congress, by refusing to pass the general appropriation bills necessary to carry on the Government, may not only arrest its action, but might even destroy its existence. The Army, the Navy, the judiciary, in short, every department of the Government, can no longer perform their functions if Congress refuse the money necessary for their support. If this failure should teach the country the necessity of electing a full Congress in sufficient time to enable the President to convene them in any emergency, even immediately after the old Congress has expired, it will have been productive of great good. In a time of sudden and alarming danger, foreign or domestic, which all nations must expect to encounter in their progress, the very salvation of our institutions may be staked upon the assembling of Congress without delay. If under such circumstances the President should find himself in the condition in which he was placed at the close of the last Congress, with nearly half the States of the Union destitute of representatives, the consequences might he disastrous. I therefore recommend to Congress to carry into effect the provisions of the Constitution on this subject, and to pass a law appointing some day previous to the 4th March in each year of odd number for the election of Representatives throughout all the States. They have already appointed a day for the election of electors for President and Vice-President, and this measure has been approved by the country.  I would again express a most decided opinion in favor of the construction of a Pacific railroad, for the reasons stated in my two last annual messages. When I reflect upon what would be the defenseless condition of our States and Territories west of the Rocky Mountains in case of a war with a naval power sufficiently strong to interrupt all intercourse with them by the routes across the Isthmus, I am still more convinced than ever of the vast importance of this railroad. I have never doubted the constitutional competency of Congress to provide for its construction, but this exclusively under the war-making power. Besides, the Constitution expressly requires as an imperative duty that "the United States shall protect each of them [the States] against invasion." I am at a loss to conceive how this protection can be afforded to California and Oregon against such a naval power by any other means. I repeat the opinion contained in my last annual message that it would be inexpedient for the Government to undertake this great work by agents of its own appointment and under its direct and exclusive control. This would increase the patronage of the Executive to a dangerous extent and would foster a system of jobbing and corruption which no vigilance on the part of Federal officials could prevent. The construction of this road ought, therefore, to be intrusted to incorporated companies or other agencies who would exercise that active and vigilant supervision over it which can be inspired alone by a sense of corporate and individual interest. I venture to assert that the additional cost of transporting troops, munitions of war, and necessary supplies for the Army across the vast intervening plains to our possessions on the Pacific Coast would be greater in such a war than the whole amount required to construct the road. And yet this resort would after all be inadequate for their defense and protection.  We have yet scarcely recovered from the habits of extravagant expenditure produced by our overflowing Treasury during several years prior to the commencement of my Administration. The financial reverses which we have since experienced ought to teach us all to scrutinize our expenditures with the greatest vigilance and to reduce them to the lowest possible point. The Executive Departments of the Government have devoted themselves to the accomplishment of this object with considerable success, as will appear from their different reports and estimates. To these I invite the scrutiny of Congress, for the purpose of reducing them still lower, if this be practicable consistent with the great public interests of the country. In aid of the policy of retrenchment, I pledge myself to examine closely the bills appropriating lands or money, so that if any of these should inadvertently pass both Houses, as must sometimes be the case, I may afford them an opportunity for reconsideration. At the same time, we ought never to forget that true public economy consists not in withholding the means necessary to accomplish important national objects confided to us by the Constitution, but in taking care that the money appropriated for these purposes shall be faithfully and frugally expended.  It will appear from the report of the Secretary of the Treasury that it is extremely doubtful, to say the least, whether we shall be able to pass through the present and the next fiscal year without providing additional revenue. This can only be accomplished by strictly confining the appropriations within the estimates of the different Departments, without making an allowance for any additional expenditures which Congress may think proper, in their discretion, to authorize, and without providing for the redemption of any portion of the $20,000,000 of Treasury notes which have been already issued. In the event of a deficiency, which I consider probable, this ought never to be supplied by a resort to additional loans. It would be a ruinous practice in the days of peace and prosperity to go on increasing the national debt to meet the ordinary expenses of the Government. This policy would cripple our resources and impair our credit in case the existence of war should render it necessary to borrow money. Should such a deficiency occur as I apprehend, I would recommend that the necessary revenue be raised by an increase of our present duties on imports. I need not repeat the opinions expressed in my last annual message as to the best mode and manner of accomplishing this object, and shall now merely observe that these have since undergone no change. The report of the Secretary of the Treasury will explain in detail the operations of that Department of the Government. The receipts into the Treasury from all sources during the fiscal year ending June 30, 1859, including the loan authorized by the act of June 14, 1858, and the issues of Treasury notes authorized by existing laws, were $81,692,471.01, which sum, with the balance of $6,398,316.10 remaining in the Treasury at the commencement of that fiscal year, made an aggregate for the service of the year of $88,090,787.11.  The public expenditures during the fiscal year ending June 30, 1859, amounted to $83,751,511.57. Of this sum $17,405,285.44 were applied to the payment of interest on the public debt and the redemption of the issues of Treasury notes. The expenditures for all other branches of the public service during that fiscal year were therefore $66,346,226.13. The balance remaining in the Treasury on the 1st July, 1859, being the commencement of the present fiscal year, was $4,339,275.54. The receipts into the Treasury during the first quarter of the present fiscal year, commencing July 1, 1859, were $20,618,865.85. Of this amount $3,821,300 was received on account of the loan and the issue of Treasury notes, the amount of $16,797,565.85 having been received during the quarter from the ordinary sources of public revenue. The estimated receipts for the remaining three quarters of the present fiscal year, to June 30, 1860, are $50,426,400. Of this amount it is estimated that $5,756,400 will be received for Treasury notes which may be reissued under the fifth section of the act of 3d March last, and $1,170,000 on account of the loan authorized by the act of June 14, 1858, making $6,926,400 from these extraordinary sources, and $43,500,000 from the ordinary sources of the public revenue, making an aggregate, with the balance in the Treasury on the 1st July, 1859, of $75,384,541.89 for the estimated means of the present fiscal year, ending June 30, 1860.  The expenditures during the first quarter of the present fiscal year were $20,007,174.76. Four million six hundred and sixty-four thousand three hundred and sixty-six dollars and seventy-six cents of this sum were applied to the payment of interest on the public debt and the redemption of the issues of Treasury notes, and the remainder, being $15,342,808, were applied to ordinary expenditures during the quarter. The estimated expenditures during the remaining three quarters, to June 30, 1860, are $40,995,558.23, of which sum $2,886,621.34 are estimated for the interest on the public debt. The ascertained and estimated expenditures for the fiscal year ending June 30, 1860, on account of the public debt are accordingly $7,550,988.10, and for the ordinary expenditures of the Government $53,451,744.89, making an aggregate of $61,002,732.99, leaving an estimated balance in the Treasury on June 30, 1860, of $14,381,808.40.  The estimated receipts during the next fiscal year, ending June 30, 1861, are $66,225,000, which, with the balance estimated, as before stated, as remaining in the Treasury on the 30th June, 1860, will make an aggregate for the service of the next fiscal year of $80,606,808.40.  The estimated expenditures during the next fiscal year, ending 30th June, 1861, are $66,714,928.79. Of this amount $3,386,621.34 will be required to pay the interest on the public debt, leaving the sum of $63,328,307.45 for the estimated ordinary expenditures during the fiscal year ending 30th June, 1861. Upon these estimates a balance will be left in the Treasury on the 30th June, 1861, of $13,891,879.61. But this balance, as well as that estimated to remain in the Treasury on the 1st July, 1860, will be reduced by such appropriations as shall be made by law to carry into effect certain Indian treaties during the present fiscal year, asked for by the Secretary of the Interior, to the amount of $539,350; and upon the estimates of the postmaster-General for the service of his Department the last fiscal year, ending 30th June, 1859, amounting to $4,296,009, together with the further estimate of that officer for the service of the present fiscal year, ending 30th June, 1860, being $5,526,324, making an aggregate of $10,361,683.  Should these appropriations be made as requested by the proper Departments, the balance in the Treasury on the 30th June, 1861, will not, it is estimated, exceed $3,530,196.61.  I transmit herewith the reports of the Secretaries of War, of the Navy, of the Interior, and of the postmaster-General. They each contain valuable information and important recommendations well worthy of the serious consideration of Congress. It will appear from the report of the Secretary of War that the Army expenditures have been materially reduced by a system of rigid economy, which in his opinion offers every guaranty that the reduction will be permanent. The estimates of the Department for the next have been reduced nearly $2,000,000 below the estimates for the present fiscal year and $500,000 below the amount granted for this year at the last session of Congress.  The expenditures of the Post-Office Department during the past fiscal year, ending on the 30th June, 1859, exclusive of payments for mail service specially provided for by Congress out of the general Treasury, amounted to $14,964,493.33 and its receipts to $7,968,484.07, showing a deficiency to be supplied from the Treasury of $6,996,009.26, against $5,235,677.15 for the year ending 30th June, 1858. The increased cost of transportation, growing out of the expansion of the service required by Congress, explains this rapid augmentation of the expenditures. It is gratifying, however, to observe an increase of receipts for the year ending on the 30th of June, 1859, equal to $481,691.21 compared with those in the year ending on the 30th June, 1858.  It is estimated that the deficiency for the current fiscal year will be $5,988,424.04, but that for the year ending 30th June, 1861, it will not exceed $1,342,473.90 should Congress adopt the measures of reform proposed and urged by the Postmaster-General. Since the month of March retrenchments have been made in the expenditures amounting to $1,826,471 annually, which, however, did not take effect until after the commencement of the present fiscal year. The period seems to have arrived for determining the question whether this Department shall become a permanent and ever-increasing charge upon the Treasury, or shall be permitted to resume the self-sustaining policy which had so long controlled its administration. The course of legislation recommended by the Postmaster-General for the relief of the Department from its present embarrassments and for restoring it to its original independence is deserving of your early and earnest consideration.  In conclusion I would again commend to the just liberality of Congress the local interests of the District of Columbia. Surely the city bearing the name of Washington, and destined, I trust, for ages to be the capital of our united, free, and prosperous Confederacy, has strong claims on our favorable regard.      JAMES BUCHANAN   	D
To the Senate and House of Representatives:  The year that has passed since the submission of my last message to Congress has, especially during the latter part of it, been an eventful one to the country. In the midst of great national prosperity a financial crisis has occurred that has brought low fortunes of gigantic proportions; political partisanship has almost ceased to exist, especially in the agricultural regions; and, finally, the capture upon the high seas of a vessel bearing our flag has for a time threatened the most serious consequences, and has agitated the public mind from one end of the country to the other. But this, happily, now is in the course of satisfactory adjustment, honorable to both nations concerned.  The relations of the United States, however, with most of the other powers continue to be friendly and cordial. With France, Germany, Russia, Italy, and the minor European powers; with Brazil and most of the South American Republics, and with Japan, nothing has occurred during the year to demand special notice. The correspondence between the Department of State and various diplomatic representatives in or from those countries is transmitted herewith.  In executing the will of Congress, as expressed in its joint resolution of the 14th of February last, and in accordance with the provisions of the resolution, a number of "practical artisans," of "scientific men," and of "honorary commissioners" were authorized to attend the exposition at Vienna as commissioners on the part of the United States. It is believed that we have obtained the object which Congress had in view when it passed the joint resolution--" in order to enable the people of the United States to participate in the advantages of the International Exhibition of the Products of Agriculture, Manufactures, and the Fine Arts to be held at Vienna." I take pleasure in adding that the American exhibitors have received a gratifying number of diplomas and of medals.  During the exposition a conference was held at Vienna for the purpose of consultation on the systems prevailing in different countries for the protection of inventions. I authorized a representative from the Patent Office to be present at Vienna at the time when this conference was to take place, in order to aid as far as he might in securing any possible additional protection to American inventors in Europe. The report of this agent will be laid before Congress.  It is my pleasant duty to announce to Congress that the Emperor of China, on attaining his majority, received the diplomatic representatives of the Western powers in person. An account of these ceremonies and of the interesting discussions which preceded them will be found in the documents transmitted herewith. The accompanying papers show that some advance, although slight, has been made during the past year toward the suppression of the infamous Chinese cooly trade. I recommend Congress to inquire whether additional legislation be not needed on this subject.  The money awarded to the United States by the tribunal of arbitration at Geneva was paid by Her Majesty's Government a few days in advance of the time when it would have become payable according to the terms of the treaty. In compliance with the provisions of the act of March 3, 1873, it was at once paid into the Treasury, and used to redeem, so far as it might, the public debt of the United States; and the amount so redeemed was invested in a 5 per cent registered bond of the United States for $15,500,000, which is now held by the Secretary of State, subject to the future disposition of Congress.  I renew my recommendation, made at the opening of the last session of Congress, that a commission be created for the purpose of auditing and determining the amounts of the several "direct losses growing out of the destruction of vessels and their cargoes" by the Alabama, the Florida, or the Shenandoah after leaving Melbourne, for which the sufferers have received no equivalent or compensation, and of ascertaining the names of the persons entitled to receive compensation for the same, making the computations upon the basis indicated by the tribunal of arbitration at Geneva; and that payment of such losses be authorized to an extent not to exceed the awards of the tribunal at Geneva.  By an act approved on the 14th day of February last Congress made provision for completing, jointly with an officer or commissioner to be named by Her Britannic Majesty, the determination of so much of the boundary line between the territory of the United States and the possessions of Great Britain as was left uncompleted by the commissioners appointed under the act of Congress of August 11, 1856. Under the provisions of this act the northwest water boundary of the United States has been determined and marked in accordance with the award of the Emperor of Germany. A protocol and a copy of the map upon which the line was thus marked are contained in the papers submitted herewith.  I also transmit a copy of the report of the commissioner for marking the northern boundary between the United States and the British possessions west of the Lake of the Woods, of the operations of the commission during the past season. Surveys have been made to a point 497 miles west of the Lake of the Woods, leaving about 350 miles to be surveyed, the field work of which can be completed during the next season.  The mixed commission organized under the provisions of the treaty of Washington for settling and determining the claims of citizens of either power against the other arising out of acts committed against their persons or property during the period between April 13, 1861, and April 9, 1865, made its final award on the 25th day of September last. It was awarded that the Government of the United States should pay to the Government of Her Britannic Majesty, within twelve months from the date of the award, the sum of $1,929,819 in gold. The commission disallowed or dismissed all other claims of British subjects against the United States. The amount of the claims presented by the British Government, but disallowed or dismissed, is understood to be about $93,000,000. It also disallowed all the claims of citizens of the United States against Great Britain which were referred to it.  I recommend the early passage of an act appropriating the amount necessary to pay this award against the United States.  I have caused to be communicated to the Government of the King of Italy the thanks of this Government for the eminent services rendered by Count Corti as the third commissioner on this commission. With dignity, learning, and impartiality he discharged duties requiring great labor and constant patience, to the satisfaction, I believe, of both Governments. I recommend legislation to create a special court, to consist of three judges, who shall be empowered to hear and determine all claims of aliens upon the United States arising out of acts committed against their persons or property during the insurrection. The recent reference under the treaty of Washington was confined to claims of British subjects arising during the period named in the treaty; but it is understood that there are other British claims of a similar nature, arising after the 9th of April, 1865, and it is known that other claims of a like nature are advanced by citizens or subjects of other powers. It is desirable to have these claims also examined and disposed of.  Official information being received from the Dutch Government of a state of war between the King of the Netherlands and the Sultan of Acheen, the officers of the United States who were near the seat of the war were instructed to observe an impartial neutrality. It is believed that they have done so.  The joint commission under the convention with Mexico of 1868, having again been legally prolonged, has resumed its business, which, it is hoped, may be brought to an early conclusion. The distinguished representative of Her Britannic Majesty at Washington has kindly consented, with the approval of his Government, to assume the arduous and responsible duties of umpire in this commission, and to lend the weight of his character and name to such decisions as may not receive the acquiescence of both the arbitrators appointed by the respective Governments.  The commissioners appointed pursuant to the authority of Congress to examine into the nature and extent of the forays by trespassers from that country upon the herds of Texas have made a report, which will be submitted for your consideration.  The Venezuelan Government has been apprised of the sense of Congress in regard to the awards of the joint commission under the convention of 25th April, 1866, as expressed in the act of the 25th of February last.  It is apprehended that that Government does not realize the character of its obligations under that convention. As there is reason to believe, however, that its hesitancy in recognizing them springs, in part at least, from real difficulty in discharging them in connection with its obligations to other governments, the expediency of further forbearance on our part is believed to be worthy of your consideration.  The Ottoman Government and that of Egypt have latterly shown a disposition to relieve foreign consuls of the judicial powers which heretofore they have exercised in the Turkish dominions, by organizing other tribunals. As Congress, however, has by law provided for the discharge of judicial functions by consuls of the United States in that quarter under the treaty of 1830, I have not felt at liberty formally to accept the proposed change without the assent of Congress, whose decision upon the subject at as early a period as may be convenient is earnestly requested.  I transmit herewith, for the consideration and determination of Congress, an application of the Republic of Santo Domingo to this Government to exercise a protectorate over that Republic.  Since the adjournment of Congress the following treaties with foreign powers have been proclaimed: A naturalization convention with Denmark; a convention with Mexico for renewing the Claims Commission; a convention of friendship, commerce, and extradition with the Orange Free State, and a naturalization convention with Ecuador.  I renew the recommendation made in my message of December, 1870, that Congress authorize the Postmaster-General to issue all commissions to officials appointed through his Department.  I invite the earnest attention of Congress to the existing laws of the United States respecting expatriation and the election of nationality by individuals. Many citizens of the United States reside permanently abroad with their families. Under the provisions of the act approved February 10, 1855, the children of such persons are to be deemed and taken to be citizens of the United States, but the rights of citizenship are not to descend to persons whose fathers never resided in the United States.  It thus happens that persons who have never resided within the United States have been enabled to put forward a pretension to the protection of the United States against the claim to military service of the government under whose protection they were born and have been reared. In some cases even naturalized citizens of the United States have returned to the land of their birth, with intent to remain there, and their children, the issue of a marriage contracted there after their return, and who have never been in the United States, have laid claim to our protection when the lapse of many years had imposed upon them the duty of military service to the only government which had ever known them personally.  Until the year 1868 it was left, embarrassed by conflicting opinions of courts and of jurists, to determine how far the doctrine of perpetual allegiance derived from our former colonial relations with Great Britain was applicable to American citizens. Congress then wisely swept these doubts away by enacting that--      Any declaration, instruction, opinion, order, or decision of any officer of this Government which denies, restricts, impairs, or questions the right of expatriation is inconsistent with the fundamental principles of this Government.    But Congress did not indicate in that statute, nor has it since done so, what acts are to be deemed to work expatriation. For my own guidance in determining such questions I required (under the provisions of the Constitution) the opinion in writing of the principal officer in each of the Executive Departments upon certain questions relating to this subject. The result satisfies me that further legislation has become necessary. I therefore commend the subject to the careful consideration of Congress, and I transmit herewith copies of the several opinions of the principal officers of the Executive Departments, together with other correspondence and pertinent information on the same subject.  The United States, who led the way in the overthrow of the feudal doctrine of perpetual allegiance, are among the last to indicate how their own citizens may elect another nationality. The papers submitted herewith indicate what is necessary to place us on a par with other leading nations in liberality of legislation on this international question. We have already in our treaties assented to the principles which would need to be embodied in laws intended to accomplish such results. We have agreed that citizens of the United States may cease to be citizens and may voluntarily render allegiance to other powers. We have agreed that residence in a foreign land, without intent to return, shall of itself work expatriation. We have agreed in some instances upon the length of time necessary for such continued residence to work a presumption of such intent. I invite Congress now to mark out and define when and how expatriation can be accomplished; to regulate by law the condition of American women marrying foreigners; to fix the status of children born in a foreign country of American parents residing more or less permanently abroad, and to make rules for determining such other kindred points as may seem best to Congress.  In compliance with the request of Congress, I transmitted to the American minister at Madrid, with instructions to present it to the Spanish Government, the joint resolution approved on the 3d of March last, tendering to the people of Spain, in the name and on the behalf of the American people, the congratulations of Congress upon the efforts to consolidate in Spain the principles of universal liberty in a republican form of government.  The existence of this new Republic was inaugurated by striking the fetters from the slaves in Porto Rico. This beneficent measure was followed by the release of several thousand persons illegally held as slaves in Cuba. Next, the Captain-General of that colony was deprived of the power to set aside the orders of his superiors at Madrid, which had pertained to the office since 1825. The sequestered estates of American citizens, which had been the cause of long and fruitless correspondence, were ordered to be restored to their owners. All these liberal steps were taken in the face of a violent opposition directed by the reactionary slave-holders of Havana, who are vainly striving to stay the march of ideas which has terminated slavery in Christendom, Cuba only excepted. Unhappily, however, this baneful influence has thus far succeeded in defeating the efforts of all liberal-minded men in Spain to abolish slavery in Cuba, and in preventing the promised reform in that island. The struggle for political supremacy continues there.  The proslavery and aristocratic party in Cuba is gradually arraigning itself in more and more open hostility and defiance of the home government, while it still maintains a political connection with the Republic in the peninsula; and although usurping and defying the authority of the home government whenever such usurpation or defiance tends in the direction of oppression or of the maintenance of abuses, it is still a power in Madrid, and is recognized by the Government. Thus an element more dangerous to continued colonial relations between Cuba and Spain than that which inspired the insurrection at Yara--an element opposed to granting any relief from misrule and abuse, with no aspirations after freedom, commanding no sympathies in generous breasts, aiming to rivet still stronger the shackles of slavery and oppression--has seized many of the emblems of power in Cuba, and, under professions of loyalty to the mother country, is exhausting the resources of the island, and is doing acts which are at variance with those principles of justice, of liberality, and of right which give nobility of character to a republic. In the interests of humanity, of civilization, and of progress, it is to be hoped that this evil influence may be soon averted.  The steamer Virginius was on the 26th day of September, 1870, duly registered at the port of New York as a part of the commercial marine of the United States. On the 4th of October, 1870, having received the certificate of her register in the usual legal form, she sailed from the port of New York and has not since been within the territorial jurisdiction of the United States. On the 31st day of October last, while sailing under the flag of the United States on the high seas, she was forcibly seized by the Spanish gunboat Tornado, and was carried into the port of Santiago de Cuba, where fifty-three of her passengers and crew were inhumanly, and, so far at least as relates to those who were citizens of the United States, without due process of law, put to death.  It is a well-established principle, asserted by the United States from the beginning of their national independence, recognized by Great Britain and other maritime powers, and stated by the Senate in a resolution passed unanimously on the 16th of June, 1858, that--      American vessels on the high seas in time of peace, bearing the American flag, remain under the jurisdiction of the country to which they belong, and therefore any visitation, molestation, or detention of such vessel by force, or by the exhibition of force, on the part of a foreign power is in derogation of the sovereignty of the United States.    In accordance with this principle, the restoration of the Virginius and the surrender of the survivors of her passengers and crew, and a due reparation to the flag, and the punishment of the authorities who had been guilty of the illegal acts of violence, were demanded. The Spanish Government has recognized the justice of the demand, and has arranged for the immediate delivery of the vessel, and for the surrender of the survivors of the passengers and crew, and for a salute to the flag, and for proceedings looking to the punishment of those who may be proved to have been guilty of illegal acts of violence toward citizens of the United States, and also toward indemnifying those who may be shown to be entitled to indemnity. A copy of a protocol of a conference between the Secretary of State and the Spanish minister, in which the terms of this arrangement were agreed to, is transmitted herewith.  The correspondence on this subject with the legation of the United States in Madrid was conducted in cipher and by cable, and needs the verification of the actual text of the correspondence. It has seemed to me to be due to the importance of the case not to submit this correspondence until the accurate text can be received by mail. It is expected shortly, and will be submitted when received.  In taking leave of this subject for the present I wish to renew the expression of my conviction that the existence of African slavery in Cuba is a principal cause of the lamentable condition of the island. I do not doubt that Congress shares with me the hope that it will soon be made to disappear, and that peace and prosperity may follow its abolition.  The embargoing of American estates in Cuba, cruelty to American citizens detected in no act of hostility to the Spanish Government, the murdering of prisoners taken with arms in their hands, and, finally, the capture upon the high seas of a vessel sailing under the United States flag and bearing a United States registry have culminated in an outburst of indignation that has seemed for a time to threaten war. Pending negotiations between the United States and the Government of Spain on the subject of this capture, I have authorized the Secretary of the Navy to put our Navy on a war footing, to the extent, at least, of the entire annual appropriation for that branch of the service, trusting to Congress and the public opinion of the American people to justify my action.  Assuming from the action of the last Congress in appointing a Committee on Privileges and Elections to prepare and report to this Congress a constitutional amendment to provide a better method of electing the President and Vice-President of the United States, and also from the necessity of such an amendment, that there will be submitted to the State legislatures for ratification such an improvement in our Constitution, I suggest two others for your consideration:  First. To authorize the Executive to approve of so much of any measure passing the two Houses of Congress as his judgment may dictate, without approving the whole, the disapproved portion or portions to be subjected to the same rules as now, to wit, to be referred back to the House in which the measure or measures originated, and, if passed by a two-thirds vote of the two Houses, then to become a law without the approval of the President. I would add to this a provision that there should be no legislation by Congress during the last twenty-four hours of its sitting, except upon vetoes, in order to give the Executive an opportunity to examine and approve or disapprove bills understandingly.  Second. To provide by amendment that when an extra session of Congress is convened by Executive proclamation legislation during the continuance of such extra session shall be confined to such subjects as the Executive may bring before it from time to time in writing.  The advantages to be gained by these two amendments are too obvious for me to comment upon them. One session in each year is provided for by the Constitution, in which there are no restrictions as to the subjects of legislation by Congress. If more are required, it is always in the power of Congress, during their term of office, to provide for sessions at any time. The first of these amendments would protect the public against the many abuses and waste of public moneys which creep into appropriation bills and other important measures passing during the expiring hours of Congress, to which otherwise due consideration can not be given.    TREASURY DEPARTMENT.    The receipts of the Government from all sources for the last fiscal year were $333,738,204, and expenditures on all accounts $290,345,245, thus showing an excess of receipts over expenditures of $43,392,959. But it is not probable that this favorable exhibit will be shown for the present fiscal year. Indeed, it is very doubtful whether, except with great economy on the part of Congress in making appropriations and the same economy in administering the various Departments of Government, the revenues will not fall short of meeting actual expenses, including interest on the public debt.  I commend to Congress such economy, and point out two sources where It seems to me it might commence, to wit, in the appropriations for public buildings in the many cities where work has not yet been commenced; in the appropriations for river and harbor improvement in those localities where the improvements are of but little benefit to general commerce, and for fortifications.  There is a still more fruitful source of expenditure, which I will point out later in this message. I refer to the easy method of manufacturing claims for losses incurred in suppressing the late rebellion.  I would not be understood here as opposing the erection of good, substantial, and even ornamental buildings by the Government wherever such buildings are needed. In fact, I approve of the Government owning its own buildings in all sections of the country, and hope the day is not far distant when it will not only possess them, but will erect in the capital suitable residences for all persons who now receive commutation for quarters or rent at Government expense, and for the Cabinet, thus setting an example to the States which may induce them to erect buildings for their Senators. But I would have this work conducted at a time when the revenues of the country would abundantly justify it.  The revenues have materially fallen off for the first five months of the present fiscal year from what they were expected to produce, owing to the general panic now prevailing, which commenced about the middle of September last. The full effect of this disaster, if it should not prove a "blessing in disguise," is yet to be demonstrated. In either event it is your duty to heed the lesson and to provide by wise and well-considered legislation, as far as it lies in your power, against its recurrence, and to take advantage of all benefits that may have accrued.  My own judgment is that, however much individuals may have suffered, one long step has been taken toward specie payments; that we can never have permanent prosperity until a specie basis is reached: and that a specie basis can not be reached and maintained until our exports, exclusive of gold, pay for our imports, interest due abroad, and other specie obligations, or so nearly so as to leave an appreciable accumulation of the precious metals in the country from the products of our mines.  The development of the mines of precious metals during the past year and the prospective development of them for years to come are gratifying in their results. Could but one-half of the gold extracted from the mines be retained at home, our advance toward specie payments would be rapid.  To increase our exports sufficient currency is required to keep all the industries of the country employed. Without this national as well as individual bankruptcy must ensue. Undue inflation, on the other hand, while it might give temporary relief, would only lead to inflation of prices, the impossibility of competing in our own markets for the products of home skill and labor, and repeated renewals of present experiences. Elasticity to our circulating medium, therefore, and just enough of it to transact the legitimate business of the country and to keep all industries employed, is what is most to be desired. The exact medium is specie, the recognized medium of exchange the world over. That obtained, we shall have a currency of an exact degree of elasticity. If there be too much of it for the legitimate purposes of trade and commerce, it will flow out of the country. If too little, the reverse will result. To hold what we have and to appreciate our currency to that standard is the problem deserving of the most serious consideration of Congress.  The experience of the present panic has proven that the currency of the country, based, as it is, upon the credit of the country, is the best that has ever been devised. Usually in times of such trials currency has become worthless, or so much depreciated in value as to inflate the values of all the necessaries of life as compared with the currency. Everyone holding it has been anxious to dispose of it on any terms. Now we witness the reverse. Holders of currency hoard it as they did gold in former experiences of a like nature.  It is patent to the most casual observer that much more currency, or money, is required to transact the legitimate trade of the country during the fall and winter months, when the vast crops are being removed, than during the balance of the year. With our present system the amount in the country remains the same throughout the entire year, resulting in an accumulation of all the surplus capital of the country in a few centers when not employed in the moving of crops, tempted there by the offer of interest on call loans. Interest being paid, this surplus capital must earn this interest paid with a profit. Being subject to "call," it can not be loaned, only in part at best, to the merchant or manufacturer for a fixed term. Hence, no matter how much currency there might be in the country, it would be absorbed, prices keeping pace with the volume, and panics, stringency, and disasters would ever be recurring with the autumn. Elasticity in our monetary system, therefore, is the object to be attained first, and next to that, as far as possible, a prevention of the use of other people's money in stock and other species of speculation. To prevent the latter it seems to me that one great step would be taken by prohibiting the national banks from paying interest on deposits, by requiring them to hold their reserves in their own vaults, and by forcing them into resumption, though it would only be in legal-tender notes. For this purpose I would suggest the establishment of clearing houses for your consideration.  To secure the former many plans have been suggested, most, if not all, of which look to me more like inflation on the one hand, or compelling the Government, on the other, to pay interest, without corresponding benefits, upon the surplus funds of the country during the seasons when otherwise unemployed.  I submit for your consideration whether this difficulty might not be overcome by authorizing the Secretary of the Treasury to issue at any time to national banks of issue any amount of their own notes below a fixed percentage of their issue (say 40 per cent), upon the banks' depositing with the Treasurer of the United States an amount of Government bonds equal to the amount of notes demanded, the banks to forfeit to the Government, say, 4 per cent of the interest accruing on the bonds so pledged during the time they remain with the Treasurer as security for the increased circulation, the bonds so pledged to be redeemable by the banks at their pleasure, either in whole or in part, by returning their own bills for cancellation to an amount equal to the face of the bonds withdrawn. I would further suggest for your consideration the propriety of authorizing national banks to diminish their standing issue at pleasure, by returning for cancellation their own bills and withdrawing so many United States bonds as are pledged for the bills returned.  In view of the great actual contraction that has taken place in the currency and the comparative contraction continuously going on, due to the increase of population, increase of manufactories and all the industries, I do not believe there is too much of it now for the dullest period of the year. Indeed, if clearing houses should be established, thus forcing redemption, it is a question for your consideration whether banking should not be made free, retaining all the safeguards now required to secure bill holders. In any modification of the present laws regulating national banks, as a further step toward preparing for resumption of specie payments, I invite your attention to a consideration of the propriety of exacting from them the retention as a part of their reserve either the whole or a part of the gold interest accruing upon the bonds pledged as security for their issue. I have not reflected enough on the bearing this might have in producing a scarcity of coin with which to pay duties on imports to give it my positive recommendation. But your attention is invited to the subject.  During the last four years the currency has been contracted, directly, by the withdrawal of 3 per cent certificates, compound-interest notes, and "seven-thirty" bonds outstanding on the 4th of March, 1869, all of which took the place of legal-tenders in the bank reserves to the extent of $63,000,000.  During the same period there has been a much larger comparative contraction of the currency. The population of the country has largely increased. More than 25,000 miles of railroad have been built, requiring the active use of capital to operate them. Millions of acres of land have been opened to cultivation, requiring capital to move the products. Manufactories have multiplied beyond all precedent in the same period of time, requiring capital weekly for the payment of wages and for the purchase of material; and probably the largest of all comparative contraction arises from the organizing of free labor in the South. Now every laborer there receives his wages, and, for want of savings banks, the greater part of such wages is carried in the pocket or hoarded until required for use.  These suggestions are thrown out for your consideration, without any recommendation that they shall be adopted literally, but hoping that the best method may be arrived at to secure such an elasticity of the currency as will keep employed all the industries of the country and prevent such an inflation as will put off indefinitely the resumption of specie payments, an object so devoutly to be wished for by all, and by none more earnestly than the class of people most directly interested--those who "earn their bread by the sweat of their brow." The decisions of Congress on this subject will have the hearty support of the Executive.  In previous messages I have called attention to the decline in American shipbuilding and recommended such legislation as would secure to us our proportion of the carrying trade. Stimulated by high rates and abundance of freight, the progress for the last year in shipbuilding has been very satisfactory. There has been an increase of about 3 per cent in the amount transported in American vessels over the amount of last year. With the reduced cost of material which has taken place, it may reasonably be hoped that this progress will be maintained, and even increased. However, as we pay about $80,000,000 per annum to foreign vessels for the transportation to a market of our surplus products, thus increasing the balance of trade against us to this amount, the subject is one worthy of your serious consideration.  "Cheap transportation" is a subject that has attracted the attention of both producers and consumers for the past few years, and has contributed to, if it has not been the direct cause of, the recent panic and stringency.  As Congress, at its last session, appointed a special committee to investigate this whole subject during the vacation and report at this session, I have nothing to recommend until their report is read.  There is one work, however, of a national character, in which the greater portion of the East and the West, the North and the South, are equally interested, to which I will invite your attention.  The State of New York has a canal connecting Lake Erie with tide water on the Hudson River. The State of Illinois has a similar work connecting Lake Michigan with navigable water on the Illinois River, thus making water communication inland between the East and the West and South. These great artificial water courses are the property of the States through which they pass, and pay toll to those States. Would it not be wise statesmanship to pledge these States that if they will open these canals for the passage of large vessels the General Government will look after and keep in navigable condition the great public highways with which they connect, to wit, the Overslaugh on the Hudson, the St. Clair Flats, and the Illinois and Mississippi rivers? This would be a national work; one of great value to the producers of the West and South in giving them cheap transportation for their produce to the seaboard and a market, and to the consumers in the East in giving them cheaper food, particularly of those articles of food which do not find a foreign market, and the prices of which, therefore, are not regulated by foreign demands. The advantages of such a work are too obvious for argument. I submit the subject to you, therefore, without further comment.  In attempting to regain our lost commerce and carrying trade I have heretofore called attention to the States south of us offering a field where much might be accomplished. To further this object I suggest that a small appropriation be made, accompanied with authority for the Secretary of the Navy to fit out a naval vessel to ascend the Amazon River to the mouth of the Madeira; thence to explore that river and its tributaries into Bolivia, and to report to Congress at its next session, or as soon as practicable, the accessibility of the country by water, its resources, and the population so reached. Such an exploration would cost but little; it can do no harm, and may result in establishing a trade of value to both nations.  In further connection with the Treasury Department I would recommend a revision and codification of the tariff laws and the opening of more mints for coining money, with authority to coin for such nations as may apply.    WAR DEPARTMENT.    The attention of Congress is invited to the recommendations contained in the report of the Secretary of War herewith accompanying.  The apparent great cost of supporting the Army is fully explained by this report, and I hope will receive your attention.  While inviting your general attention to all the recommendations made by the Secretary of War, there are two which I would especially invite you to consider: First, the importance of preparing for war in time of peace by providing proper armament for our seacoast defenses. Proper armament is of vastly more importance than fortifications. The latter can be supplied very speedily for temporary purposes when needed; the former can not. The second is the necessity of reopening promotion in the staff corps of the Army. Particularly is this necessity felt in the Medical, Pay, and Ordnance departments.  At this time it is necessary to employ "contract surgeons" to supply the necessary medical attendance required by the Army.  With the present force of the Pay Department it is now difficult to make the payments to troops provided for by law. Long delays in payments are productive of desertions and other demoralization, and the law prohibits the payment of troops by other than regular army paymasters.  There are now sixteen vacancies in the Ordnance Department, thus leaving that branch of the service without sufficient officers to conduct the business of the different arsenals on a large scale if ever required.    NAVY DEPARTMENT.    During the past year our Navy has been depleted by the sale of some vessels no longer fit for naval service and by the condemnation of others not yet disposed of. This, however, has been more than compensated for by the repair of six of the old wooden ships and by the building of eight new sloops of war, authorized by the last Congress. The building of these latter has occurred at a doubly fortunate time. They are about being completed at a time when they may possibly be much needed, and the work upon them has not only given direct employment to thousands of men, but has no doubt been the means of keeping open establishments for other work at a time of great financial distress.  Since the commencement of the last month, however, the distressing occurrences which have taken place in the waters of the Caribbean Sea, almost on our very seaboard, while they illustrate most forcibly the necessity always existing that a nation situated like ours should maintain in a state of possible efficiency a navy adequate to its responsibilities, has at the same time demanded that all the effective force we really have shall be put in immediate readiness for warlike service. This has been and is being done promptly and effectively, and I am assured that all the available ships and every authorized man of the American Navy will be ready for whatever action is required for the safety of our citizens or the maintenance of our honor. This, of course, will require the expenditure in a short time of some of the appropriations which were calculated to extend through the fiscal year, but Congress will, I doubt not, understand and appreciate the emergency, and will provide adequately not only for the present preparation, but for the future maintenance of our naval force. The Secretary of the Navy has during the past year been quietly putting some of our most effective monitors in condition for service, and thus the exigency finds us in a much better condition for work than we could possibly have been without his action.    POST-OFFICE DEPARTMENT.    A complete exhibit is presented in the accompanying report of the postmaster-General of the operations of the Post-Office Department during the year. The ordinary postal revenues for the fiscal year ended June 30, 1873, amounted to $22,996,741.57, and the expenditures of all kinds to $29,084,945.67. The increase of revenues over 1872 was $1,081,315.20, and the increase of expenditures $2,426,753.36.  Independent of the payments made from special appropriations for mail steamship lines, the amount drawn from the General Treasury to meet deficiencies was $5,265,475. The constant and rapid extension of our postal service, particularly upon railways, and the improved facilities for the collection, transmission, distribution, and delivery of the mails which are constantly being provided account for the increased expenditures of this popular branch of the public service.  The total number of post-offices in operation on June 30, 1873, was 33,244, a net increase of 1,381 over the number reported the preceding year. The number of Presidential offices was 1,363, an increase of 163 during the year. The total length of railroad mail routes at the close of the year was 63,457 miles, an increase of 5,546 miles over the year 1872. Fifty-nine railway post-office lines were in operation June 30, 1873, extending over 14,866 miles of railroad routes and performing an aggregate service of 34,925 miles daily.  The number of letters exchanged with foreign countries was 27,459,185, an increase of 3,096,685 over the previous year, and the postage thereon amounted to $2,021,310.86. The total weight of correspondence exchanged in the mails with European countries exceeded 912 tons, an increase of 92 tons over the previous year. The total cost of the United States ocean steamship service, including $725,000 paid from special appropriations to subsidized lines of mail steamers, was $1,047,271.35.  New or additional postal conventions have been concluded with Sweden, Norway, Belgium, Germany, Canada, Newfoundland, and Japan, reducing postage rates on correspondence exchanged with those countries; and further efforts have been made to conclude a satisfactory postal convention with France, but without success.  I invite the favorable consideration of Congress to the suggestions and recommendations of the Postmaster-General for an extension of the free-delivery system in all cities having a population of not less than 10,000; for the prepayment of postage on newspapers and other printed matter of the second class; for a uniform postage and limit of weight on miscellaneous matter; for adjusting the compensation of all postmasters not appointed by the President, by the old method of commissions on the actual receipts of the office, instead of the present mode of fixing the salary in advance upon special returns; and especially do I urge favorable action by Congress on the important recommendations of the Postmaster-General for the establishment of United States postal savings depositories.  Your attention is also again called to a consideration of the question of postal telegraphs and the arguments adduced in support thereof, in the hope that you may take such action in connection therewith as in your judgment will most contribute to the best interests of the country.    DEPARTMENT OF JUSTICE.    Affairs in Utah require your early and special attention. The Supreme Court of the United States, in the case of Clinton vs. Englebrecht, decided that the United States marshal of that Territory could not lawfully summon jurors for the district courts; and those courts hold that the Territorial marshal can not lawfully perform that duty, because he is elected by the legislative assembly, and not appointed as provided for in the act organizing the Territory. All proceedings at law are practically abolished by these decisions, and there have been but few or no jury trials in the district courts of that Territory since the last session of Congress. Property is left without protection by the courts, and crimes go unpunished. To prevent anarchy there it is absolutely necessary that Congress provide the courts with some mode of obtaining jurors, and I recommend legislation to that end, and also that the probate courts of the Territory, now assuming to issue writs of injunction and habeas corpus and to try criminal cases and questions as to land titles, be denied all jurisdiction not possessed ordinarily by courts of that description.  I have become impressed with the belief that the act approved March 2, 1867, entitled "An act to establish a uniform system of bankruptcy throughout the United States," is productive of more evil than good at this time. Many considerations might be urged for its total repeal, but, if this is not considered advisable, I think it will not be seriously questioned that those portions of said act providing for what is called involuntary bankruptcy operate to increase the financial embarrassments of the country. Careful and prudent men very often become involved in debt in the transaction of their business, and though they may possess ample property, if it could be made available for that purpose, to meet all their liabilities, yet, on account of the extraordinary scarcity of money, they may be unable to meet all their pecuniary obligations as they become due, in consequence of which they are liable to be prostrated in their business by proceedings in bankruptcy at the instance of unrelenting creditors. People are now so easily alarmed as to monetary matters that the mere filing of a petition in bankruptcy by an unfriendly creditor will necessarily embarrass, and oftentimes accomplish the financial ruin, of a responsible business man. Those who otherwise might make lawful and just arrangements to relieve themselves from difficulties produced by the present stringency in money are prevented by their constant exposure to attack and disappointment by proceedings against them in bankruptcy, and, besides, the law is made use of in many cases by obdurate creditors to frighten or force debtors into a compliance with their wishes and into acts of injustice to other creditors and to themselves. I recommend that so much of said act as provides for involuntary bankruptcy on account of the suspension of payment be repealed.  Your careful attention is invited to the subject of claims against the Government and to the facilities afforded by existing laws for their prosecution. Each of the Departments of State, Treasury, and War has demands for many millions of dollars upon its files, and they are rapidly accumulating. To these may be added those now pending before Congress, the Court of Claims, and the Southern Claims Commission, making in the aggregate an immense sum. Most of these grow out of the rebellion, and are intended to indemnify persons on both sides for their losses during the war; and not a few of them are fabricated and supported by false testimony. Projects are on foot, it is believed, to induce Congress to provide for new classes of claims, and to revive old ones through the repeal or modification of the statute of limitations, by which they are now barred. I presume these schemes, if proposed, will be received with little favor by Congress, and I recommend that persons having claims against the United States cognizable by any tribunal or Department thereof be required to present them at an early day, and that legislation be directed as far as practicable to the defeat of unfounded and unjust demands upon the Government; and I would suggest, as a means of preventing fraud, that witnesses be called upon to appear in person to testify before those tribunals having said claims before them for adjudication. Probably the largest saving to the National Treasury can be secured by timely legislation on these subjects of any of the economic measures that will be proposed.  You will be advised of the operations of the Department of Justice by the report of the Attorney-General, and I invite your attention to the amendments of existing laws suggested by him, with the view of reducing the expenses of that Department.    DEPARTMENT OF THE INTERIOR.    The policy inaugurated toward the Indians at the beginning of the last Administration has been steadily pursued, and, I believe, with beneficial results. It will be continued with only such modifications as time and experience may demonstrate as necessary.  With the encroachment of civilization upon the Indian reservations and hunting grounds, disturbances have taken place between the Indians and whites during the past year, and probably will continue to do so until each race appreciates that the other has rights which must be respected.  The policy has been to collect the Indians as rapidly as possible on reservations, and as far as practicable within what is known as the Indian Territory, and to teach them the arts of civilization and self-support. Where found off their reservations, and endangering the peace and safety of the whites, they have been punished, and will continue to be for like offenses.  The Indian Territory south of Kansas and west of Arkansas is sufficient in area and agricultural resources to support all the Indians east of the Rocky Mountains. In time, no doubt, all of them, except a few who may elect to make their homes among white people, will be collected there. As a preparatory step for this consummation, I am now satisfied that a Territorial form of government should be given them, which will secure the treaty rights of the original settlers and protect their homesteads from alienation for a period of twenty years.  The operations of the Patent Office are growing to such a magnitude and the accumulation of material is becoming so great that the necessity of more room is becoming more obvious day by day. I respectfully invite your attention to the reports of the Secretary of the Interior and Commissioner of Patents on this subject.  The business of the General Land Office exhibits a material increase in all its branches during the last fiscal year. During that time there were disposed of out of the public lands 13,030,606 acres, being an amount greater by 1,165,631 acres than was disposed of during the preceding year. Of the amount disposed of, 1,626,266 acres were sold for cash, 214,940 acres were located with military land warrants, 3,793,612 acres were taken for homesteads, 653,446 acres were located with agricultural-college scrip, 6,083,536 acres were certified by railroads, 76,576 acres were granted to wagon roads, 238,548 acres were approved to States as swamp lands, 138,681 acres were certified for agricultural colleges, common schools, universities, and seminaries, 190,775 acres were approved to States for internal improvements, and 14,222 acres were located with Indian scrip. The cash receipts during the same time were $3,408,515.50, being $190,415.50 in excess of the receipts of the previous year. During the year 30,488,132 acres of public land were surveyed, an increase over the amount surveyed the previous year of 1,037,193 acres, and, added to the area previously surveyed, aggregates 616,554,895 acres which have been surveyed, leaving 1,218,443,505 acres of the public land still unsurveyed.  The increased and steadily increasing facilities for reaching our unoccupied public domain and for the transportation of surplus products enlarge the available field for desirable homestead locations, thus stimulating settlement and extending year by year in a gradually increasing ratio the area of occupation and cultivation.  The expressed desire of the representatives of a large colony of citizens of Russia to emigrate to this country, as is understood, with the consent of their Government, if certain concessions can be made to enable them to settle in a compact colony, is of great interest, as going to show the light in which our institutions are regarded by an industrious, intelligent, and wealthy people, desirous of enjoying civil and religious liberty; and the acquisition of so large an immigration of citizens of a superior class would without doubt be of substantial benefit to the country. I invite attention to the suggestion of the Secretary of the Interior in this behalf.  There was paid during the last fiscal year for pensions, including the expense of disbursement, $29,185,289.62, being an amount less by $984,050.98 than was expended for the same purpose the preceding year. Although this statement of expenditures would indicate a material reduction in amount compared with the preceding year, it is believed that the changes in the pension laws at the last session of Congress will absorb that amount the current year. At the close of the last fiscal year there were on the pension rolls 99,804 invalid military pensioners and 112,088 widows, orphans, and dependent relatives of deceased soldiers, making a total of that class of 211,892; 18,266 survivors of the War of 1812 and 5,058 widows of soldiers of that war pensioned under the act of Congress of February 14, 1871, making a total of that class of 23,319; 1,480 invalid navy pensioners and 1,770 widows, orphans, and dependent relatives of deceased officers, sailors, and marines of the Navy, making a total of navy pensioners of 3,200, and a grand total of pensioners of 311 classes of 238,411, showing a net increase during the last fiscal year of 6,182. During the last year the names of 16,405 pensioners were added to the rolls, and 10,223 names were dropped therefrom for various causes.  The system adopted for the detection of frauds against the Government in the matter of pensions has been productive of satisfactory results, but legislation is needed to provide, if possible, against the perpetration of such frauds in future.  The evidently increasing interest in the cause of education is a most encouraging feature in the general progress and prosperity of the country, and the Bureau of Education is earnest in its efforts to give proper direction to the new appliances and increased facilities which are being offered to aid the educators of the country in their great work.  The Ninth Census has been completed, the report thereof published and distributed, and the working force of the Bureau disbanded. The Secretary of the Interior renews his recommendation for a census to be taken in 1875, to which subject the attention of Congress is invited. The original suggestion in that behalf has met with the general approval of the country; and even if it be not deemed advisable at present to provide for a regular quinquennial census, a census taken in 1875, the report of which could be completed and published before the one hundredth anniversary of our national independence, would be especially interesting and valuable, as showing the progress of the country during the first century of our national existence. It is believed, however, that a regular census every five years would be of substantial benefit to the country, inasmuch as our growth hitherto has been so rapid that the results of the decennial census are necessarily unreliable as a basis of estimates for the latter years of a decennial period.    DISTRICT OF COLUMBIA.    Under the very efficient management of the governor and the board of public works of this District the city of Washington is rapidly assuming the appearance of a capital of which the nation may well be proud. From being a most unsightly place three years ago, disagreeable to pass through in summer in consequence of the dust arising from unpaved streets, and almost impassable in the winter from the mud, it is now one of the most sightly cities in the country, and can boast of being the best paved.  The work has been done systematically, the plans, grades, location of sewers, water and gas mains being determined upon before the work was commenced, thus securing permanency when completed. I question whether so much has ever been accomplished before in any American city for the same expenditures. The Government having large reservations in the city, and the nation at large having an interest in their capital, I recommend a liberal policy toward the District of Columbia, and that the Government should bear its just share of the expense of these improvements. Every citizen visiting the capital feels a pride in its growing beauty, and that he too is part owner in the investments made here.  I would suggest to Congress the propriety of promoting the establishment in this District of an institution of learning, or university of the highest class, by the donation of lands. There is no place better suited for such an institution than the national capital. There is no other place in which every citizen is so directly interested.    CIVIL-SERVICE REFORM.    In three successive messages to Congress I have called attention to the subject of "civil-service reform."  Action has been taken so far as to authorize the appointment of a board to devise rules governing methods of making appointments and promotions, but there never has been any action making these rules, or any rules, binding, or even entitled to observance, where persons desire the appointment of a friend or the removal of an official who may be disagreeable to them.  To have any rules effective they must have the acquiescence of Congress as well as of the Executive. I commend, therefore, the subject to your attention, and suggest that a special committee of Congress might confer with the Civil-Service Board during the present session for the purpose of devising such rules as can be maintained, and which will secure the services of honest and capable officials, and which will also protect them in a degree of independence while in office.  Proper rules will protect Congress, as well as the Executive, from much needless persecution, and will prove of great value to the public at large.  I would recommend for your favorable consideration the passage of an enabling act for the admission of Colorado as a State in the Union. It possesses all the elements of a prosperous State, agricultural and mineral, and, I believe, has a population now to justify such admission. In connection with this I would also recommend the encouragement of a canal for purposes of irrigation from the eastern slope of the Rocky Mountains to the Missouri River. As a rule I am opposed to further donations of public lands for internal improvements owned and controlled by private corporations, but in this instance I would make an exception. Between the Missouri River and the Rocky Mountains there is an arid belt of public land from 300 to 500 miles in width, perfectly valueless for the occupation of man, for the want of sufficient rain to secure the growth of any product. An irrigating canal would make productive a belt as wide as the supply of water could be made to spread over across this entire country, and would secure a cordon of settlements connecting the present population of the mountain and mining regions with that of the older States. All the land reclaimed would be clear gain. If alternate sections are retained by the Government, I would suggest that the retained sections be thrown open to entry under the homestead laws, or sold to actual settlers for a very low price.  I renew my previous recommendation to Congress for general amnesty. The number engaged in the late rebellion yet laboring under disabilities is very small, but enough to keep up a constant irritation. No possible danger can accrue to the Government by restoring them to eligibility to hold office.  I suggest for your consideration the enactment of a law to better secure the civil rights which freedom should secure, but has not effectually secured, to the enfranchised slave.      U. S. GRANT   	R
To the Congress of the United States:  You are confronted at the threshold of your legislative duties with a condition of the national finances which imperatively demands immediate and careful consideration.  The amount of money annually exacted, through the operation of present laws, from the industries and necessities of the people largely exceeds the sum necessary to meet the expenses of the Government.  When we consider that the theory of our institutions guarantees to every citizen the full enjoyment of all the fruits of his industry and enterprise, with only such deduction as may be his share toward the careful and economical maintenance of the Government which protects him, it is plain that the exaction of more than this is indefensible extortion and a culpable betrayal of American fairness and justice. This wrong inflicted upon those who bear the burden of national taxation, like other wrongs, multiplies a brood of evil consequences. The public Treasury, which should only exist as a conduit conveying the people's tribute to its legitimate objects of expenditure, becomes a hoarding place for money needlessly withdrawn from trade and the people's use, thus crippling our national energies, suspending our country's development, preventing investment in productive enterprise, threatening financial disturbance, and inviting schemes of public plunder.  This condition of our Treasury is not altogether new, and it has more than once of late been submitted to the people's representatives in the Congress, who alone can apply a remedy. And yet the situation still continues, with aggravated incidents, more than ever presaging financial convulsion and widespread disaster.  It will not do to neglect this situation because its dangers are not now palpably imminent and apparent. They exist none the less certainly, and await the unforeseen and unexpected occasion when suddenly they will be precipitated upon us.  On the 30th day of June, 1885, the excess of revenues over public expenditures, after complying with the annual requirement of the sinking-fund act, was $17,859,735.84; during the year ended June 30, 1886, such excess amounted to $49,405,545.20, and during the year ended June 30, 1887, it reached the sum of $55,567,849.54.  The annual contributions to the sinking fund during the three years above specified, amounting in the aggregate to $138,058,320.94, and deducted from the surplus as stated, were made by calling in for that purpose outstanding 3 per cent bonds of the Government. During the six months prior to June 30, 1887, the surplus revenue had grown so large by repeated accumulations, and it was feared the withdrawal of this great sum of money needed by the people would so affect the business of the country, that the sum of $79,864,100 of such surplus was applied to the payment of the principal and interest of the 3 per cent bonds still outstanding, and which were then payable at the option of the Government. The precarious condition of financial affairs among the people still needing relief, immediately after the 30th day of June, 1887, the remainder of the 3 per cent bonds then outstanding, amounting with principal and interest to the sum of $18,877,500, were called in and applied to the sinking-fund contribution for the current fiscal year. Notwithstanding these operations of the Treasury Department, representations of distress in business circles not only continued, but increased, and absolute peril seemed at hand. In these circumstances the contribution to the sinking fund for the current fiscal year was at once completed by the expenditure of $27,684,283.55 in the purchase of Government bonds not yet due bearing 4 and 41/2 per cent interest, the premium paid thereon averaging about 24 per cent for the former and 8 per cent for the latter. In addition to this, the interest accruing during the current year upon the outstanding bonded indebtedness of the Government was to some extent anticipated, and banks selected as depositories of public money were permitted to somewhat increase their deposits.  While the expedients thus employed to release to the people the money lying idle in the Treasury served to avert immediate danger, our surplus revenues have continued to accumulate, the excess for the present year amounting on the 1st day of December to $55,258,701.19, and estimated to reach the sum of $113,000,000 on the 30th of June next, at which date it is expected that this sum, added to prior accumulations, will swell the surplus in the Treasury to $140,000,000.  There seems to be no assurance that, with such a withdrawal from use of the people's circulating medium, our business community may not in the near future be subjected to the same distress which was quite lately produced from the same cause. And while the functions of our National Treasury should be few and simple, and while its best condition would be reached, I believe, by its entire disconnection with private business interests, yet when, by a perversion of its purposes, it idly holds money uselessly subtracted from the channels of trade, there seems to be reason for the claim that some legitimate means should be devised by the Government to restore in an emergency, without waste or extravagance, such money to its place among the people.  If such an emergency arises, there now exists no clear and undoubted executive power of relief. Heretofore the redemption of 3 per cent bonds, which were payable at the option of the Government, has afforded a means for the disbursement of the excess of our revenues; but these bonds have all been retired, and there are no bonds outstanding the payment of which we have a right to insist upon. The contribution to the sinking fund which furnishes the occasion for expenditure in the purchase of bonds has been already made for the current year, so that there is no outlet in that direction.  In the present state of legislation the only pretense of any existing executive power to restore at this time any part of our surplus revenues to the people by its expenditure consists in the supposition that the Secretary of the Treasury may enter the market and purchase the bonds of the Government not yet due, at a rate of premium to be agreed upon. The only provision of law from which such a power could be derived is found in an appropriation bill passed a number of years ago, and it is subject to the suspicion that it was intended as temporary and limited in its application, instead of conferring a continuing discretion and authority. No condition ought to exist which would justify the grant of power to a single official, upon his judgment of its necessity, to withhold from or release to the business of the people, in an unusual manner, money held in the Treasury, and thus affect at his will the financial situation of the country; and if it is deemed wise to lodge in the Secretary of the Treasury the authority in the present juncture to purchase bonds, it should be plainly vested, and provided, as far as possible, with such checks and limitations as will define this official's right and discretion and at the same time relieve him from undue responsibility.  In considering the question of purchasing bonds as a means of restoring to circulation the surplus money accumulating in the Treasury, it should be borne in mind that premiums must of course be paid upon such purchase, that there may be a large part of these bonds held as investments which can not be purchased at any price, and that combinations among holders who are willing to sell may unreasonably enhance the cost of such bonds to the Government.  It has been suggested that the present bonded debt might be refunded at a less rate of interest and the difference between the old and new security paid in cash, thus finding use for the surplus in the Treasury. The success of this plan, it is apparent, must depend upon the volition of the holders of the present bonds; and it is not entirely certain that the inducement which must be offered them would result in more financial benefit to the Government than the purchase of bonds, while the latter proposition would reduce the principal of the debt by actual payment instead of extending it.  The proposition to deposit the money held by the Government in banks throughout the country for use by the people is, it seems to me, exceedingly objectionable in principle, as establishing too close a relationship between the operations of the Government Treasury and the business of the country and too extensive a commingling of their money, thus fostering an unnatural reliance in private business upon public funds. If this scheme should be adopted, it should only be done as a temporary expedient to meet an urgent necessity. Legislative and executive effort should generally be in the opposite direction, and should have a tendency to divorce, as much and as fast as can be safely done, the Treasury Department from private enterprise.  Of course it is not expected that unnecessary and extravagant appropriations will be made for the purpose of avoiding the accumulation of an excess of revenue. Such expenditure, besides the demoralization of all just conceptions of public duty which it entails, stimulates a habit of reckless improvidence not in the least consistent with the mission of our people or the high and beneficent purposes of our Government.  I have deemed it my duty to thus bring to the knowledge of my countrymen, as well as to the attention of their representatives charged with the responsibility of legislative relief, the gravity of our financial situation. The failure of the Congress heretofore to provide against the dangers which it was quite evident the very nature of the difficulty must necessarily produce caused a condition of financial distress and apprehension since your last adjournment which taxed to the utmost all the authority and expedients within executive control; and these appear now to be exhausted. If disaster results from the continued inaction of Congress, the responsibility must rest where it belongs.  Though the situation thus far considered is fraught with danger which should be fully realized, and though it presents features of wrong to the people as well as peril to the country, it is but a result growing out of a perfectly palpable and apparent cause, constantly reproducing the same alarming circumstances--a congested National Treasury and a depleted monetary condition in the business of the country. It need hardly be stated that while the present situation demands a remedy, we can only be saved from a like predicament in the future by the removal of its cause.  Our scheme of taxation, by means of which this needless surplus is taken from the people and put into the public Treasury, consists of a tariff or duty levied upon importations from abroad and internal-revenue taxes levied upon the consumption of tobacco and spirituous and malt liquors. It must be conceded that none of the things subjected to internal-revenue taxation are, strictly speaking, necessaries. There appears to be no just complaint of this taxation by the consumers of these articles, and there seems to be nothing so well able to bear the burden without hardship to any portion of the people.  But our present tariff laws, the vicious, inequitable, and illogical source of unnecessary taxation, ought to be at once revised and amended. These laws, as their primary and plain effect, raise the price to consumers of all articles imported and subject to duty by precisely the sum paid for such duties. Thus the amount of the duty measures the tax paid by those who purchase for use these imported articles. Many of these things, however, are raised or manufactured in our own country, and the duties now levied upon foreign goods and products are called protection to these home manufactures, because they render it possible for those of our people who are manufacturers to make these taxed articles and sell them for a price equal to that demanded for the imported goods that have paid customs duty. So it happens that while comparatively a few use the imported articles, millions of our people, who never used and never saw any of the foreign products, purchase and use things of the same kind made in this country, and pay therefor nearly or quite the same enhanced price which the duty adds to the imported articles. Those who buy imports pay the duty charged thereon into the public Treasury, but the great majority of our citizens, who buy domestic articles of the same class, pay a sum at least approximately equal to this duty to the home manufacturer. This reference to the operation of our tariff laws is not made by way of instruction, but in order that we may be constantly reminded of the manner in which they impose a burden upon those who consume domestic products as well as those who consume imported articles, and thus create a tax upon all our people.  It is not proposed to entirely relieve the country of this taxation. It must be extensively continued as the source of the Government's income; and in a readjustment of our tariff the interests of American labor engaged in manufacture should be carefully considered, as well as the preservation of our manufacturers. It may be called protection or by any other name, but relief from the hardships and dangers of our present tariff laws should be devised with especial precaution against imperiling the existence of our manufacturing interests. But this existence should not mean a condition which, without regard to the public welfare or a national exigency, must always insure the realization of immense profits instead of moderately profitable returns. As the volume and diversity of our national activities increase, new recruits are added to those who desire a continuation of the advantages which they conceive the present system of tariff taxation directly affords them. So stubbornly have all efforts to reform the present condition been resisted by those of our fellow-citizens thus engaged that they can hardly complain of the suspicion, entertained to a certain extent, that there exists an organized combination all along the line to maintain their advantage.  We are in the midst of centennial celebrations, and with becoming pride we rejoice in American skill and ingenuity, in American energy and enterprise, and in the wonderful natural advantages and resources developed by a century's national growth. Yet when an attempt is made to justify a scheme which permits a tax to be laid upon every consumer in the land for the benefit of our manufacturers, quite beyond a reasonable demand for governmental regard, it suits the purposes of advocacy to call our manufactures infant industries still needing the highest and greatest degree of favor and fostering care that can be wrung from Federal legislation.  It is also said that the increase in the price of domestic manufactures resulting from the present tariff is necessary in order that higher wages may be paid to our workingmen employed in manufactories than are paid for what is called the pauper labor of Europe. All will acknowledge the force of an argument which involves the welfare and liberal compensation of our laboring people. Our labor is honorable in the eyes of every American citizen; and as it lies at the foundation of our development and progress, it is entitled, without affectation or hypocrisy, to the utmost regard. The standard of our laborers' life should not be measured by that of any other country less favored, and they are entitled to their full share of all our advantages.  By the last census it is made to appear that of the 17,392,099 of our population engaged in all kinds of industries 7,670,493 are employed in agriculture, 4,074,238 in professional and personal service (2,934,876 of whom are domestic servants and laborers), while 1,810,256 are employed in trade and transportation and 3,837,112 are classed as employed in manufacturing and mining.  For present purposes, however, the last number given should be considerably reduced. Without attempting to enumerate all, it will be conceded that there should be deducted from those which it includes 375,143 carpenters and joiners, 285,401 milliners, dressmakers, and seamstresses, 172,726 blacksmiths, 133,756 tailors and tailoresses, 102,473 masons, 76,241 butchers, 41,309 bakers, 22,083 plasterers, and 4,891 engaged in manufacturing agricultural implements, amounting in the aggregate to 1,214,023, leaving 2,623,089 persons employed in such manufacturing industries as are claimed to be benefited by a high tariff.  To these the appeal is made to save their employment and maintain their wages by resisting a change. There should be no disposition to answer such suggestions by the allegation that they are in a minority among those who labor, and therefore should forego an advantage in the interest of low prices for the majority. Their compensation, as it may be affected by the operation of tariff laws, should at all times be scrupulously kept in view; and yet with slight reflection they will not overlook the fact that they are consumers with the rest; that they too have their own wants and those of their families to supply from their earnings, and that the price of the necessaries of life, as well as the amount of their wages, will regulate the measure of their welfare and comfort.  But the reduction of taxation demanded should be so measured as not to necessitate or justify either the loss of employment by the workingman or the lessening of his wages; and the profits still remaining to the manufacturer after a necessary readjustment should furnish no excuse for the sacrifice of the interests of his employees, either in their opportunity to work or in the diminution of their compensation. Nor can the worker in manufactures fail to understand that while a high tariff is claimed to be necessary to allow the payment of remunerative wages, it certainly results in a very large increase in the price of nearly all sorts of manufactures, which, in almost countless forms, he needs for the use of himself and his family. He receives at the desk of his employer his wages, and perhaps before he reaches his home is obliged, in a purchase for family use of an article which embraces his own labor, to return in the payment of the increase in price which the tariff permits the hard-earned compensation of many days of toil.  The farmer and the agriculturist, who manufacture nothing, but who pay the increased price which the tariff imposes upon every agricultural implement, upon all he wears, and upon all he uses and owns, except the increase of his flocks and herds and such things as his husbandry produces from the soil, is invited to aid in maintaining the present situation; and he is told that a high duty on imported wool is necessary for the benefit of those who have sheep to shear, in order that the price of their wool may be increased. They, of course, are not reminded that the farmer who has no sheep is by this scheme obliged, in his purchases of clothing and woolen goods, to pay a tribute to his fellow-farmer as well as to the manufacturer and merchant, nor is any mention made of the fact that the sheep owners themselves and their households must wear clothing and use other articles manufactured from the wool they sell at tariff prices, and thus as consumers must return their share of this increased price to the tradesman.  I think it may be fairly assumed that a large proportion of the sheep owned by the farmers throughout the country are found in small flocks, numbering from twenty-five to fifty. The duty on the grade of imported wool which these sheep yield is 10 cents each pound if of the value of 30 cents or less and 12 cents if of the value of more than 30 cents. If the liberal estimate of 6 pounds be allowed for each fleece, the duty thereon would be 60 or 72 cents; and this may be taken as the utmost enhancement of its price to the farmer by reason of this duty. Eighteen dollars would thus represent the increased price of the wool from twenty-five sheep and $36 that from the wool of fifty sheep; and at present values this addition would amount to about one-third of its price. If upon its sale the farmer receives this or a less tariff profit, the wool leaves his hands charged with precisely that sum, which in all its changes will adhere to it until it reaches the consumer. When manufactured into cloth and other goods and material for use, its cost is not only increased to the extent of the farmer's tariff profit, but a further sum has been added for the benefit of the manufacturer under the operation of other tariff laws. In the meantime the day arrives when the farmer finds it necessary to purchase woolen goods and material to clothe himself and family for the winter. When he faces the tradesman for that purpose, he discovers that he is obliged not only to return in the way of increased prices his tariff profit on the wool he sold, and which then perhaps lies before him in manufactured form, but that he must add a considerable sum thereto to meet a further increase in cost caused by a tariff duty on the manufacture. Thus in the end he is aroused to the fact that he has paid upon a moderate purchase, as a result of the tariff scheme, which when he sold his wool seemed so profitable, an increase in price more than sufficient to sweep away all the tariff profit he received upon the wool he produced and sold.  When the number of farmers engaged in wool raising is compared with all the farmers in the country and the small proportion they bear to our population is considered; when it is made apparent that in the case of a large part of those who own sheep the benefit of the present tariff on wool is illusory; and, above all, when it must be conceded that the increase of the cost of living caused by such tariff becomes a burden upon those with moderate means and the poor, the employed and unemployed, the sick and well, and the young and old, and that it constitutes a tax which with relentless grasp is fastened upon the clothing of every man, woman, and child in the land, reasons are suggested why the removal or reduction of this duty should be included in a revision of our tariff laws.  In speaking of the increased cost to the consumer of our home manufactures resulting from a duty laid upon imported articles of the same description, the fact is not ever looked that competition among our domestic producers sometimes has the effect of keeping the price of their products below the highest limit allowed by such duty. But it is notorious that this competition is too often strangled by combinations quite prevalent at this time, and frequently called trusts, which have for their object the regulation of the supply and price of commodities made and sold by members of the combination. The people can hardly hope for any consideration in the operation of these selfish schemes.  If, however, in the absence of such combination, a healthy and free competition reduces the price of any particular dutiable article of home production below the limit which it might otherwise reach under our tariff laws, and if with such reduced price its manufacture continues to thrive, it is entirely evident that one thing has been discovered which should be carefully scrutinized in an effort to reduce taxation.  The necessity of combination to maintain the price of any commodity to the tariff point furnishes proof that someone is willing to accept lower prices for such commodity and that such prices are remunerative; and lower prices produced by competition prove the same thing. Thus where either of these conditions exists a case would seem to be presented for an easy reduction of taxation.  The considerations which have been presented touching our tariff laws are intended only to enforce an earnest recommendation that the surplus revenues of the Government be prevented by the reduction of our customs duties, and at the same time to emphasize a suggestion that in accomplishing this purpose we may discharge a double duty to our people by granting to them a measure of relief from tariff taxation in quarters where it is most needed and from sources where it can be most fairly and justly accorded.  Nor can the presentation made of such considerations be with any degree of fairness regarded as evidence of unfriendliness toward our manufacturing interests or of any lack of appreciation of their value and importance.  These interests constitute a leading and most substantial element of our national greatness and furnish the proud proof of our country's progress. But if in the emergency that presses upon us our manufacturers are asked to surrender something for the public good and to avert disaster, their patriotism, as well as a grateful recognition of advantages already afforded, should lead them to willing cooperation. No demand is made that they shall forego all the benefits of governmental regard; but they can not fail to be admonished of their duty, as well as their enlightened self-interest and safety, when they are reminded of the fact that financial panic and collapse, to which the present condition tends, afford no greater shelter or protection to our manufactures than to other important enterprises. Opportunity for safe, careful, and deliberate reform is now offered; and none of us should be unmindful of a time when an abused and irritated people, heedless of those who have resisted timely and reasonable relief, may insist upon a radical and sweeping rectification of their wrongs.  The difficulty attending a wise and fair revision of our tariff laws is not underestimated. It will require on the part of the Congress great labor and care, and especially a broad and national contemplation of the subject and a patriotic disregard of such local and selfish claims as are unreasonable and reckless of the welfare of the entire country.  Under our present laws more than 4,000 articles are subject to duty. Many of these do not in any way compete with our own manufactures, and many are hardly worth attention as subjects of revenue. A considerable reduction can be made in the aggregate by adding them to the free list. The taxation of luxuries presents no features of hardship; but the necessaries of life used and consumed by all the people, the duty upon which adds to the cost of living in every home, should be greatly cheapened.  The radical reduction of the duties imposed upon raw material used in manufactures, or its free importation, is of course an important factor in any effort to reduce the price of these necessaries. It would not only relieve them from the increased cost caused by the tariff on such material, but the manufactured product being thus cheapened that part of the tariff now laid upon such product, as a compensation to our manufacturers for the present price of raw material, could be accordingly modified. Such reduction or free importation would serve besides to largely reduce the revenue. It is not apparent how such a change can have any injurious effect upon our manufacturers. On the contrary, it would appear to give them a better chance in foreign markets with the manufacturers of other countries, who cheapen their wares by free material. Thus our people might have the opportunity of extending their sales beyond the limits of home consumption, saving them from the depression, interruption in business, and loss caused by a glutted domestic market and affording their employees more certain and steady labor, with its resulting quiet and contentment.  The question thus imperatively presented for solution should be approached in a spirit higher than partisanship and considered in the light of that regard for patriotic duty which should characterize the action of those intrusted with the weal of a confiding people. But the obligation to declared party policy and principle is not wanting to urge prompt and effective action. Both of the great political parties now represented in the Government have by repeated and authoritative declarations condemned the condition of our laws which permit the collection from the people of unnecessary revenue, and have in the most solemn manner promised its correction; and neither as citizens nor partisans are our countrymen in a mood to condone the deliberate violation of these pledges.  Our progress toward a wise conclusion will not be improved by dwelling upon the theories of protection and free trade. This savors too much of bandying epithets. It is a condition which confronts us, not a theory. Relief from this condition may involve a slight reduction of the advantages which we award our home productions, but the entire withdrawal of such advantages should not be contemplated. The question of free trade is absolutely irrelevant, and the persistent claim made in certain quarters that all the efforts to relieve the people from unjust and unnecessary taxation are schemes of so-called free traders is mischievous and far removed from any consideration for the public good.  The simple and plain duty which we owe the people is to reduce taxation to the necessary expenses of an economical operation of the Government and to restore to the business of the country the money which we hold in the Treasury through the perversion of governmental powers. These things can and should be done with safety to all our industries, without danger to the opportunity for remunerative labor which our workingmen need, and with benefit to them and all our people by cheapening their means of subsistence and increasing the measure of their comforts.  The Constitution provides that the President "shall from time to time give to the Congress information of the state of the Union." It has been the custom of the Executive, in compliance with this provision, to annually exhibit to the Congress, at the opening of its session, the general condition of the country, and to detail with some particularity the operations of the different Executive Departments. It would be especially agreeable to follow this course at the present time and to call attention to the valuable accomplishments of these Departments during the last fiscal year; but I am so much impressed with the paramount importance of the subject to which this communication has thus far been devoted that I shall forego the addition of any other topic, and only urge upon your immediate consideration the "state of the Union" as shown in the present condition of our Treasury and our general fiscal situation, upon which every element of our safety and prosperity depends.  The reports of the heads of Departments, which will be submitted, contain full and explicit information touching the transaction of the business intrusted to them and such recommendations relating to legislation in the public interest as they deem advisable. I ask for these reports and recommendations the deliberate examination and action of the legislative branch of the Government.  There are other subjects not embraced in the departmental reports demanding legislative consideration, and which I should be glad to submit. Some of them, however, have been earnestly presented in previous messages, and as to them I beg leave to repeat prior recommendations.  As the law makes no provision for any report from the Department of State, a brief history of the transactions of that important Department, together with other matters which it may hereafter be deemed essential to commend to the attention of the Congress, may furnish the occasion for a future communication.      GROVER CLEVELAND   	D
Mr. President, Mr. Speaker, Members of the House and the Senate, distinguished Americans here as visitors in this Chamber, as am I. It is nice to have a fresh excuse for giving a long speech. [Laughter]  When Presidents speak to Congress and the Nation from this podium, typically they comment on the full range in challenges and opportunities that face the United States. But this is not an ordinary time, and for all the many tasks that require our attention, I believe tonight one calls on us to focus, to unite, and to act. And that is our economy. For more than anything else, our task tonight as Americans is to make our economy thrive again.  Let me begin by saying that it has been too long, at least three decades, since a President has come and challenged Americans to join him on a great national journey, not merely to consume the bounty of today but to invest for a much greater one tomorrow.  Like individuals, nations must ultimately decide how they wish to conduct themselves, how they wish to be thought of by those with whom they live, and later, how they wish to be judged by history. Like every individual man and woman, nations must decide whether they are prepared to rise to the occasions history presents them.  We have always been a people of youthful energy and daring spirit. And at this historic moment, as communism has fallen, as freedom is spreading around the world, as a global economy is taking shape before our eyes, Americans have called for change. And now it is up to those of us in this room to deliver for them.  Our Nation needs a new direction. Tonight I present to you a comprehensive plan to set our Nation on that new course. I believe we will find our new direction in the basic old values that brought us here over the last two centuries: a commitment to opportunity, to individual responsibility, to community, to work, to family, and to faith. We must now break the habits of both political parties and say there can be no more something for nothing and admit frankly that we are all in this together.  The conditions which brought us as a nation to this point are well-known: two decades of low productivity, growth, and stagnant wages; persistent unemployment and underemployment; years of huge Government deficits and declining investment in our future; exploding health care costs and lack of coverage for millions of Americans; legions of poor children; education and job training opportunities inadequate to the demands of this tough, global economy. For too long we have drifted without a strong sense of purpose or responsibility or community.  And our political system so often has seemed paralyzed by special interest groups, by partisan bickering, and by the sheer complexity of our problems. I believe we can do better because we remain the greatest nation on Earth, the world's strongest economy, the world's only military superpower. If we have the vision, the will, and the heart to make the changes we must, we can still enter the 21st century with possibilities our parents could not even have imagined and enter it having secured the American dream for ourselves and for future generations.  I well remember 12 years ago President Reagan stood at this very podium and told you and the American people that if our national debt were stacked in thousand-dollar bills, the stack would reach 67 miles into space. Well, today that stack would reach 267 miles. I tell you this not to assign blame for this problem. There is plenty of blame to go around in both branches of the Government and both parties. The time has come for the blame to end. I did not seek this office to place blame. I come here tonight to accept responsibility, and I want you to accept responsibility with me. And if we do right by this country, I do not care who gets the credit for it.  The plan I offer you has four fundamental components. First, it shifts our emphasis in public and private spending from consumption to investment, initially by jumpstarting the economy in the short term and investing in our people, their jobs, and their incomes over the long run. Second, it changes the rhetoric of the past into the actions of the present by honoring work and families in every part of our public decision-making. Third, it substantially reduces the Federal deficit honestly and credibly by using in the beginning the most conservative estimates of Government revenues, not, as the executive branch has done so often in the past, using the most optimistic ones. And finally, it seeks to earn the trust of the American people by paying for these plans first with cuts in Government waste and efficiency; second, with cuts, not gimmicks, in Government spending; and by fairness, for a change, in the way additional burdens are borne.  Tonight I want to talk with you about what Government can do because I believe Government must do more. But let me say first that the real engine of economic growth in this country is the private sector, and second, that each of us must be an engine of growth and change. The truth is that as Government creates more opportunity in this new and different time, we must also demand more responsibility in turn.  Our immediate priority must be to create jobs, create jobs now. Some people say, "Well, we're in a recovery, and we don't have to do that." Well, we all hope we're in a recovery, but we're sure not creating new jobs. And there's no recovery worth its salt that doesn't put the American people back to work.  To create jobs and guarantee a strong recovery, I call on Congress to enact an immediate package of jobs investments of over $30 billion to put people to work now, to create a half a million jobs: jobs to rebuild our highways and airports, to renovate housing, to bring new life to rural communities, and spread hope and opportunity among our Nation's youth. Especially I want to emphasize, after the events of last year in Los Angeles and the countless stories of despair in our cities and in our poor rural communities, this proposal will create almost 700,000 new summer jobs for displaced, unemployed young people alone this summer. And tonight I invite America's business leaders to join us in this effort so that together we can provide over one million summer jobs in cities and poor rural areas for our young people.  Second, our plan looks beyond today's business cycle because our aspirations extend into the next century. The heart of this plan deals with the long term. It is an investment program designed to increase public and private investment in areas critical to our economic future. And it has a deficit reduction program that will increase the savings available for the private sector to invest, will lower interest rates, will decrease the percentage of the Federal budget claimed by interest payments, and decrease the risk of financial market disruptions that could adversely affect our economy.  Over the long run, all this will bring us a higher rate of economic growth, improved productivity, more high-quality jobs, and an improved economic competitive position in the world. In order to accomplish both increased investment and deficit reduction, something no American Government has ever been called upon to do at the same time before, spending must be cut and taxes must be raised.  The spending cuts I recommend were carefully thought through in a way to minimize any adverse economic impact, to capture the peace dividend for investment purposes, and to switch the balance in the budget from consumption to more investment. The tax increases and the spending cuts were both designed to assure that the cost of this historic program to face and deal with our problems will be borne by those who could readily afford it the most. Our plan is designed, furthermore, and perhaps in some ways most importantly, to improve the health of American business through lower interest rates, more incentives to invest, and better trained workers.  Because small business has created such a high percentage of all the new jobs in our Nation over the last 10 or 15 years, our plan includes the boldest targeted incentives for small business in history. We propose a permanent investment tax credit for the smallest firms in this country, with revenues of under $5 million. That's about 90 percent of the firms in America, employing about 40 percent of the work force but creating a big majority of the net new jobs for more than a decade. And we propose new rewards for entrepreneurs who take new risks. We propose to give small business access to all the new technologies of our time. And we propose to attack this credit crunch which has denied small business the credit they need to flourish and prosper.  With a new network of community development banks and $1 billion to make the dream of enterprise zones real, we propose to bring new hope and new jobs to storefronts and factories from south Boston to south Texas to south central Los Angeles. This plan invests in our roads, our bridges, our transit systems, in high-speed railways and high-tech information systems. And it provides the most ambitious environmental cleanup in partnership with State and local government of our time, to put people to work and to preserve the environment for our future.  Standing as we are on the edge of a new century, we know that economic growth depends as never before on opening up new markets overseas and expanding the volume of world trade. And so, we will insist on fair trade rules in international markets as a part of a national economic strategy to expand trade, including the successful completion of the latest round of world trade talks and the successful completion of a North American Free Trade Agreement with appropriate safeguards for our workers and for the environment.  At the same time—and I say this to you in both parties and across America tonight, all the people who are listening—it is not enough to pass a budget or even to have a trade agreement. This world is changing so fast that we must have aggressive, targeted attempts to create the high-wage jobs of the future. That's what all our competitors are doing. We must give special attention to those critical industries that are going to explode in the 21st century but that are in trouble in America today, like aerospace. We must provide special assistance to areas and to workers displaced by cuts in the defense budget and by other unavoidable economic dislocations.  And again I will say we must do this together. I pledge to you that I will do my best to see that business and labor and Government work together for a change.  But all of our efforts to strengthen the economy will fail—let me say this again; I feel so strongly about this—all of our efforts to strengthen the economy will fail unless we also take this year, not next year, not 5 years from now but this year, bold steps to reform our health care system.  In 1992, we spent 14 percent of our income on health care, more than 30 percent more than any other country in the world, and yet we were the only advanced nation that did not provide a basic package of health care benefits to all of its citizens. Unless we change the present pattern, 50 percent of the growth in the deficit between now and the year 2000 will be in health care costs. By the year 2000 almost 20 percent of our income will be in health care. Our families will never be secure, our businesses will never be strong, and our Government will never again be fully solvent until we tackle the health care crisis. We must do it this year.  The combination of the rising cost of care and the lack of care and the fear of losing care are endangering the security and the very lives of millions of our people. And they are weakening our economy every day. Reducing health care costs can liberate literally hundreds of billions of dollars for new investment in growth and jobs. Bringing health costs in line with inflation would do more for the private sector in this country than any tax cut we could give and any spending program we could promote. Reforming health care over the long run is critically essential to reducing not only our deficit but to expanding investment in America.  Later this spring, after the First Lady and the many good people who are helping her all across the country complete their work, I will deliver to Congress a comprehensive plan for health care reform that finally will bring costs under control and provide security to all of our families, so that no one will be denied the coverage they need but so that our economic future will not be compromised either. We'll have to root out fraud and overcharges and make sure that paperwork no longer chokes your doctor. We'll have to maintain the highest American standards and the right to choose in a system that is the world's finest for all those who can access it. But first we must make choices. We must choose to give the American people the quality they demand and deserve with a system that will not bankrupt the country or further drive more Americans into agony.  Let me further say that I want to work with all of you on this. I realize this is a complicated issue. But we must address it. And I believe if there is any chance that Republicans and Democrats who disagree on taxes and spending or anything else could agree on one thing, surely we can all look at these numbers and go home and tell our people the truth. We cannot continue these spending patterns in public or private dollars for health care for less and less and less every year. We can do better. And I will work to do better.  Perhaps the most fundamental change the new direction I propose offers is its focus on the future and its investment which I seek in our children. Each day we delay really making a commitment to our children carries a dear cost. Half of the 2-year-olds in this country today don't receive the immunizations they need against deadly diseases. Our plan will provide them for every eligible child. And we know now that we will save $10 later for every $1 we spend by eliminating preventable childhood diseases. That's a good investment no matter how you measure it.  I recommend that the women, infants, and children's nutrition program be expanded so that every expectant mother who needs the help gets it. We all know that Head Start, a program that prepares children for school, is a success story. We all know that it saves money. But today it just reaches barely over one-third of all the eligible children. Under this plan, every eligible child will be able to get a head start. This is not just the right thing to do; it is the smart thing to do. For every dollar we invest today, we'll save $3 tomorrow. We have to start thinking about tomorrow. I've heard that somewhere before. [Laughter]  We have to ask more in our schools of our students, our teachers, our principals, our parents. Yes, we must give them the resources they need to meet high standards, but we must also use the authority and the influence and the funding of the Education Department to promote strategies that really work in learning. Money alone is not enough. We have to do what really works to increase learning in our schools.  We have to recognize that all of our high school graduates need some further education in order to be competitive in this global economy. So we have to establish a partnership between businesses and education and the Government for apprenticeship programs in every State in this country to give our people the skills they need. Lifelong learning must benefit not just young high school graduates but workers, too, throughout their career. The average 18-year-old today will change jobs seven times in a lifetime. We have done a lot in this country on worker training in the last few years, but the system is too fractured. We must develop a unified, simplified, sensible, streamlined worker-training program so that workers receive the training they need regardless of why they lost their jobs or whether they simply need to learn something new to keep them. We have got to do better on this.  And finally, I propose a program that got a great response from the American people all across this country last year: a program of national service to make college loans available to all Americans and to challenge them at the same time to give something back to their country as teachers or police officers or community service workers; to give them the option to pay the loans back, but at tax time so they can't beat the bill, but to encourage them instead to pay it back by making their country stronger and making their country better and giving us the benefit of their knowledge.  A generation ago when President Kennedy proposed and the United States Congress embraced the Peace Corps, it defined the character of a whole generation of Americans committed to serving people around the world. In this national service program, we will provide more than twice as many slots for people before they go to college to be in national service than ever served in the Peace Corps. This program could do for this generation of Members of Congress what the land grant college act did and what the GI bill did for former Congressmen. In the future, historians who got their education through the national service loan will look back on you and thank you for giving America a new lease on life, if you meet this challenge.  If we believe in jobs and we believe in learning, we must believe in rewarding work. If we believe in restoring the values that make America special, we must believe that there is dignity in all work, and there must be dignity for all workers. To those who care for our sick, who tend our children, who do our most difficult and tiring jobs, the new direction I propose will make this solemn, simple commitment: By expanding the refundable earned-income tax credit, we will make history. We will reward the work of millions of working poor Americans by realizing the principle that if you work 40 hours a week and you've got a child in the house, you will no longer be in poverty.  Later this year, we will offer a plan to end welfare as we know it. I have worked on this issue for the better part of a decade. And I know from personal conversations with many people that no one, no one wants to change the welfare system as badly as those who are trapped in it. I want to offer the people on welfare the education, the training, the child care, the health care they need to get back on their feet, but say after 2 years they must get back to work, too, in private business if possible, in public service if necessary. We have to end welfare as a way of life and make it a path to independence and dignity.  Our next great goal should be to strengthen our families. I compliment the Congress for passing the Family and Medical Leave Act as a good first step, but it is time to do more. This plan will give this country the toughest child support enforcement system it has ever had. It is time to demand that people take responsibility for the children they bring in this world.  And I ask you to help to protect our families against the violent crime which terrorizes our people and which tears our communities apart. We must pass a tough crime bill. I support not only the bill which didn't quite make it to the President's desk last year but also an initiative to put 100,000 more police officers on the street, to provide boot camps for first-time nonviolent offenders for more space for the hardened criminals in jail. And I support an initiative to do what we can to keep guns out of the hands of criminals. Let me say this. I will make you this bargain: If you will pass the Brady bill, I'll sure sign it.  Let me say now, we should move to the harder parts.  I think it is clear to every American, including every Member of Congress of both parties, that the confidence of the people who pay our bills in our institutions in Washington is not high. We must restore it. We must begin again to make Government work for ordinary taxpayers, not simply for organized interest groups. And that beginning must start with real political reform. I am asking the United States Congress to pass a real campaign finance reform bill this year. I ask you to increase the participation of the American people by passing the motor voter bill promptly. I ask you to deal with the undue influence of special interests by passing a bill to end the tax deduction for lobbying and to act quickly to require all the people who lobby you to register as lobbyists by passing the lobbying registration bill.  Believe me, they were cheering that last section at home. I believe lobby reform and campaign finance reform are a sure path to increased popularity for Republicans and Democrats alike because it says to the voters back home, "This is your House. This is your Senate. We're your hired hands, and every penny we draw is your money."  Next, to revolutionize Government we have to ensure that we live within our means, and that should start at the top and with the White House. In the last few days I have announced a cut in the White House staff of 25 percent, saving approximately $10 million. I have ordered administrative cuts in budgets of agencies and departments. I have cut the Federal bureaucracy, or will over the next 4 years, by approximately 100,000 positions, for a combined savings of $9 billion. It is time for Government to demonstrate, in the condition we're in, that we can be as frugal as any household in America.  And that's why I also want to congratulate the Congress. I noticed the announcement of the leadership today that Congress is taking similar steps to cut its costs. I think that is important. I think it will send a very clear signal to the American people.  But if we really want to cut spending, we're going to have to do more, and some of it will be difficult. Tonight I call for an across-the-board freeze in Federal Government salaries for one year. And thereafter, during this 4-year period, I recommend that salaries rise at one point lower than the cost of living allowance normally involved in Federal pay increases.  Next, I recommend that we make 150 specific budget cuts, as you know, and that all those who say we should cut more be as specific as I have been.  Finally, let me say to my friends on both sides of the aisle, it is not enough simply to cut Government; we have to rethink the whole way it works. When I became President I was amazed at just the way the White House worked, in ways that added lots of money to what taxpayers had to pay, outmoded ways that didn't take maximum advantage of technology and didn't do things that any business would have done years ago to save taxpayers' money.  So I want to bring a new spirit of innovation into every Government Department. I want to push education reform, as I said, not just to spend more money but to really improve learning. Some things work, and some things don't. We ought to be subsidizing the things that work and discouraging the things that don't. I'd like to use that Superfund to clean up pollution for a change and not just pay lawyers.  In the aftermath of all the difficulties with the savings and loans, we must use Federal bank regulators to protect the security and safety of our financial institutions, but they should not be used to continue the credit crunch and to stop people from making sensible loans.  I'd like for us to not only have welfare reform but to reexamine the whole focus of all of our programs that help people, to shift them from entitlement programs to empowerment programs. In the end we want people not to need us anymore. I think that's important.  But in the end we have to get back to the deficit. For years there's been a lot of talk about it but very few credible efforts to deal with it. And now I understand why, having dealt with the real numbers for 4 weeks. But I believe this plan does; it tackles the budget deficit seriously and over the long term. It puts in place one of the biggest deficit reductions and one of the biggest changes in Federal priorities, from consumption to investment, in the history of this country at the same time over the next 4 years.  Let me say to all the people watching us tonight who will ask me these questions beginning tomorrow as I go around the country and who've asked it in the past: We're not cutting the deficit just because experts say it's the thing to do or because it has some intrinsic merit. We have to cut the deficit because the more we spend paying off the debt, the less tax dollars we have to invest in jobs and education and the future of this country. And the more money we take out of the pool of available savings, the harder it is for people in the private sector to borrow money at affordable interest rates for a college loan for their children, for a home mortgage, or to start a new business.  That's why we've got to reduce the debt, because it is crowding out other activities that we ought to be engaged in and that the American people ought to be engaged in. We cut the deficit so that our children will be able to buy a home, so that our companies can invest in the future and in retraining their workers, so that our Government can make the kinds of investments we need to be a stronger and smarter and safer nation.  If we don't act now, you and I might not even recognize this Government 10 years from now. If we just stay with the same trends of the last 4 years, by the end of the decade the deficit will be $635 billion a year, almost 80 percent of our gross domestic product. And paying interest on that debt will be the costliest Government program of all. We'll still be the world's largest debtor. And when Members of Congress come here, they'll be devoting over 20 cents on the dollar to interest payments, more than half of the budget to health care and to other entitlements. And you'll come here and deliberate and argue over 6 or 7 cents on the dollar, no matter what America's problems are. We will not be able to have the independence we need to chart the future that we must. And we'll be terribly dependent on foreign funds for a large portion of our investment.  This budget plan, by contrast, will by 1997 cut $140 billion in that year alone from the deficit, a real spending cut, a real revenue increase, a real deficit reduction, using the independent numbers of the Congressional Budget Office. [Laughter] Well, you can laugh, my fellow Republicans, but I'll point out that the Congressional Budget Office was normally more conservative in what was going to happen and closer to right than previous Presidents have been.  I did this so that we could argue about priorities with the same set of numbers. I did this so that no one could say I was estimating my way out of this difficulty. I did this because if we can agree together on the most prudent revenues we're likely to get if the recovery stays and we do right things economically, then it will turn out better for the American people than we say. In the last 12 years, because there were differences over the revenue estimates, you and I know that both parties were given greater elbow room for irresponsibility. This is tightening the rein on the Democrats as well as the Republicans. Let's at least argue about the same set of numbers so the American people will think we're shooting straight with them.  As I said earlier, my recommendation makes more than 150 difficult reductions to cut the Federal spending by a total of $246 billion. We are eliminating programs that are no longer needed, such as nuclear power research and development. We're slashing subsidies and canceling wasteful projects. But many of these programs were justified in their time, and a lot of them are difficult for me to recommend reductions in, some really tough ones for me personally. I recommend that we reduce interest subsidies to the Rural Electric Administration. That's a difficult thing for me to recommend. But I think that I cannot exempt the things that exist in my State or in my experience, if I ask you to deal with things that are difficult for you to deal with. We're going to have to have no sacred cows except the fundamental abiding interest of the American people.  I have to say that we all know our Government has been just great at building programs. The time has come to show the American people that we can limit them too; that we can not only start things, that we can actually stop things.  About the defense budget, I raise a hope and a caution. As we restructure our military forces to meet the new threats of the post-cold-war world, it is true that we can responsibly reduce our defense budget. And we may all doubt what that range of reductions is, but let me say that as long as I am President, I will do everything I can to make sure that the men and women who serve under the American flag will remain the best trained, the best prepared, the best equipped fighting force in the world. And every one of you should make that solemn pledge. We still have responsibilities around the world. We are the world's only superpower. This is still a dangerous and uncertain time, and we owe it to the people in uniform to make sure that we adequately provide for the national defense and for their interests and needs. Backed by an effective national defense and a stronger economy, our Nation will be prepared to lead a world challenged as it is everywhere by ethnic conflict, by the proliferation of weapons of mass destruction, by the global democratic revolution, and by challenges to the health of our global environment.  I know this economic plan is ambitious, but I honestly believe it is necessary for the continued greatness of the United States. And I think it is paid for fairly, first by cutting Government, then by asking the most of those who benefited the most in the past, and by asking more Americans to contribute today so that all of us can prosper tomorrow.  For the wealthiest, those earning more than $180,000 per year, I ask you all who are listening tonight to support a raise in the top rate for Federal income taxes from 31 to 36 percent. We recommend a 10 percent surtax on incomes over $250,000 a year, and we recommend closing some loopholes that let some people get away without paying any tax at all.  For businesses with taxable incomes in excess of $10 million, we recommend a raise in the corporate tax rate, also to 36 percent, as well as a cut in the deduction for business entertainment expenses. Our plan seeks to attack tax subsidies that actually reward companies more for shutting their operations down here and moving them overseas than for staying here and reinvesting in America. I say that as someone who believes that American companies should be free to invest around the world and as a former Governor who actively sought investment of foreign companies in my State. But the Tax Code should not express a preference to American companies for moving somewhere else, and it does in particular cases today.  We will seek to ensure that, through effective tax enforcement, foreign corporations who do make money in America simply pay the same taxes that American companies make on the same income.  To middle class Americans who have paid a great deal for the last 12 years and from whom I ask a contribution tonight, I will say again as I did on Monday night: You're not going alone any more, you're certainly not going first, and you're not going to pay more for less as you have too often in the past. I want to emphasize the facts about this plan: 98.8 percent of America's families will have no increase in their income tax rates, only 1.2 percent at the top.  Let me be clear: There will also be no new cuts in benefits for Medicare. As we move toward the 4th year, with the explosion in health care costs, as I said, projected to account for 50 percent of the growth of the deficit between now and the year 2000, there must be planned cuts in payments to providers, to doctors, to hospitals, to labs, as a way of controlling health care costs. But I see these only as a stopgap until we can reform the entire health care system. If you'll help me do that, we can be fair to the providers and to the consumers of health care. Let me repeat this, because I know it matters to a lot of you on both sides of the aisle. This plan does not make a recommendation for new cuts in Medicare benefits for any beneficiary.  Secondly, the only change we are making in Social Security is one that has already been publicized. The plan does ask older Americans with higher incomes, who do not rely solely on Social Security to get by, to contribute more. This plan will not affect the 80 percent of Social Security recipients who do not pay taxes on Social Security now. Those who do not pay tax on Social Security now will not be affected by this plan.  Our plan does include a broad-based tax on energy, and I want to tell you why I selected this and why I think it's a good idea. I recommend that we adopt a Btu tax on the heat content of energy as the best way to provide us with revenue to lower the deficit because it also combats pollution, promotes energy efficiency, promotes the independence, economically, of this country as well as helping to reduce the debt, and because it does not discriminate against any area. Unlike a carbon tax, that's not too hard on the coal States; unlike a gas tax, that's not too tough on people who drive a long way to work; unlike an ad valorem tax, it doesn't increase just when the price of an energy source goes up. And it is environmentally responsible. It will help us in the future as well as in the present with the deficit.  Taken together, these measures will cost an American family with an income of about $40,000 a year less than $17 a month. It will cost American families with incomes under $30,000 nothing because of other programs we propose, principally those raising the earned-income tax credit.  Because of our publicly stated determination to reduce the deficit, if we do these things, we will see the continuation of what's happened just since the election. Just since the election, since the Secretary of the Treasury, the Director of the Office of Management and Budget, and others who have begun to speak out publicly in favor of a tough deficit reduction plan, interest rates have continued to fall long-term. That means that for the middle class who will pay something more each month, if they had any credit needs or demands, their increased energy costs will be more than offset by lower interest costs for mortgages, consumer loans, credit cards. This can be a wise investment for them and their country now.  I would also point out what the American people already know, and that is, because we're a big, vast country where we drive long distances, we have maintained far lower burdens on energy than any other advanced country. We will still have far lower burdens on energy than any other advanced country. And these will be spread fairly, with real attempts to make sure that no cost is imposed on families with incomes under $30,000 and that the costs are very modest until you get into the higher income groups where the income taxes trigger in.  Now, I ask all of you to consider this: Whatever you think of the tax program, whatever you think of the spending cuts, consider the cost of not changing. Remember the numbers that you all know. If we just keep on doing what we're doing, by the end of the decade we'll have a $650-billion-a-year deficit. If we just keep on doing what we're doing, by the end of the decade 20 percent of our national income will go to health care every year, twice as much as any other country on the face of the globe. If we just keep on doing what we're doing, over 20 cents on the dollar will have to go to service the debt.  Unless we have the courage now to start building our future and stop borrowing from it, we're condemning ourselves to years of stagnation interrupted by occasional recessions, to slow growth in jobs, to no more growth in income, to more debt, to more disappointment. Worse, unless we change, unless we increase investment and reduce the debt to raise productivity so that we can generate both jobs and incomes, we will be condemning our children and our children's children to a lesser life than we enjoyed. Once Americans looked forward to doubling their living standards every 25 years. At present productivity rates, it will take 100 years to double living standards, until our grandchildren's grandchildren are born. I say that is too long to wait.  Tonight the American people know we have to change. But they're also likely to ask me tomorrow and all of you for the weeks and months ahead whether we have the fortitude to make the changes happen in the right way. They know that as soon as I leave this Chamber and you go home, various interest groups will be out in force lobbying against this or that piece of this plan, and that the forces of conventional wisdom will offer a thousand reasons why we well ought to do this but we just can't do it.  Our people will be watching and wondering, not to see whether you disagree with me on a particular issue but just to see whether this is going to be business as usual or a real new day, whether we're all going to conduct ourselves as if we know we're working for them. We must scale the walls of the people's scepticisms, not with our words but with our deeds. After so many years of gridlock and indecision, after so many hopeful beginnings and so few promising results, the American people are going to be harsh in their judgments of all of us if we fail to seize this moment.  This economic plan can't please everybody. If the package is picked apart, there will be something that will anger each of us, won't please anybody. But if it is taken as a whole, it will help all of us. So I ask you all to begin by resisting the temptation to focus only on a particular spending cut you don't like or some particular investment that wasn't made. And nobody likes the tax increases, but let's just face facts. For 20 years, through administrations of both parties, incomes have stalled and debt has exploded and productivity has not grown as it should. We cannot deny the reality of our condition. We have got to play the hand we were dealt and play it as best we can.  My fellow Americans, the test of this plan cannot be "what is in it for me." It has got to be "what is in it for us." If we work hard and if we work together, if we rededicate ourselves to creating jobs, to rewarding work, to strengthening our families, to reinventing our Government, we can lift our country's fortunes again.  Tonight I ask everyone in this Chamber and every American to look simply into your heart, to spark your own hopes, to fire your own imagination. There is so much good, so much possibility, so much excitement in this country now that if we act boldly and honestly, as leaders should, our legacy will be one of prosperity and progress. This must be America's new direction. Let us summon the courage to seize it.  Thank you. God bless America. 	D
Fellow Citizens of the Senate and of the House of Representatives:  It gives me pleasure to congratulate you upon your return to the seat of Government for the purpose of discharging your duties to the people of the United States. Although the pestilence which had traversed the Old World has entered our limits and extended its ravages over much of our land, it has pleased Almighty God to mitigate its severity and lessen the number of its victims compared with those who have fallen in most other countries over which it has spread its terrors. Not with standing this visitation, our country presents on every side marks of prosperity and happiness unequaled, perhaps, in any other portion of the world. If we fully appreciate our comparative condition, existing causes of discontent will appear unworthy of attention, and, with hearts of thankfulness to that divine Being who has filled our cup of prosperity, we shall feel our resolution strengthened to preserve and hand down to our posterity that liberty and that union which we have received from our fathers, and which constitute the sources and the shield of all our blessings.  The relations of our country continue to present the same picture of amicable intercourse that I had the satisfaction to hold up to your view at the opening of your last session. The same friendly professions, the same desire to participate in our flourishing commerce, the same dispositions, evinced by all nations with whom we have any intercourse. This desirable state of things may be mainly ascribed to our undeviating practice of the rule which has long guided our national policy, to require no exclusive privileges in commerce and to grant none. It is daily producing its beneficial effect in the respect shown to our flag, the protection of our citizens and their property abroad, and in the increase of our navigation and the extension of our mercantile operations. The returns which have been made out since we last met will show an increase during the last preceding year of more than 80K tons in our shipping and of near $40,000,000 in the aggregate of our imports and exports.  Nor have we less reason to felicitate ourselves on the position of our political than of our commercial concerns. They remain in the state in which they were when I last addressed you -- a state of prosperity and peace, the effect of a wise attention to the parting advice of the revered Father of his Country on this subject, condensed into a maxim for the use of posterity by one of his most distinguished successors -- to cultivate free commerce and honest friendship with all nations, but to make entangling alliances with none. A strict adherence to this policy has kept us aloof from the perplexing questions that now agitate the European world and have more than once deluged those countries with blood. Should those scenes unfortunately recur, the parties to the contest may count on a faithful performance of the duties incumbent on us as a neutral nation, and our own citizens may equally rely on the firm assertion of their neutral rights.  With the nation that was our earliest friend and ally in the infancy of our political existence the most friendly relations have subsisted through the late revolutions of its Government, and, from the events of the last, promise a permanent duration. It has made an approximation in some of its political institutions to our own, and raised a monarch to the throne who preserves, it is said, a friendly recollection of the period during which he acquired among our citizens the high consideration that could then have been produced by his personal qualifications alone.  Our commerce with that nation is gradually assuming a mutually beneficial character, and the adjustment of the claims of our citizens has removed the only obstacle there was to an intercourse not only lucrative, but productive of literary and scientific improvement.  From Great Britain I have the satisfaction to inform you that I continue to receive assurances of the most amicable disposition, which have on my part on all proper occasions been promptly and sincerely reciprocated. The attention of that Government has latterly been so much engrossed by matters of a deeply interesting domestic character that we could not press upon it the renewal of negotiations which had been unfortunately broken off by the unexpected recall of our minister, who had commenced them with some hopes of success. My great object was the settlement of questions which, though now dormant, might here-after be revived under circumstances that would endanger the good understanding which it is the interest of both parties to preserve inviolate, cemented as it is by a community of language, manners, and social habits, and by the high obligations we owe to our British ancestors for many of our most valuable institutions and for that system of representative government which has enabled us to preserve and improve them.  The question of our North-East boundary still remains unsettled. In my last annual message I explained to you the situation in which I found that business on my coming into office, and the measures I thought it my duty to pursue for asserting the rights of the United States before the sovereign who had been chosen by my predecessor to determine the question, and also the manner in which he had disposed of it. A special message to the Senate in their executive capacity afterwards brought before them to the question whether they would advise a submission to the opinion of the sovereign arbiter. That body having considered the award as not obligatory and advised me to open a further negotiation, the proposition was immediately made to the British Government, but the circumstances to which I have alluded have hitherto prevented any answer being given to the overture. Early attention, however, has been promised to the subject, and every effort on my part will be made for a satisfactory settlement of this question, interesting to the Union generally, and particularly so to one of its members.  The claims of our citizens on Spain are not yet acknowledged. On a closer investigation of them than appears to have heretofore taken place it was discovered that some of these demands, however strong they might be upon the equity of that Government, were not such as could be made the subject of national interference; and faithful to the principle of asking nothing but what was clearly right, additional instructions have been sent to modify our demands so as to embrace those only on which, according to the laws of nations, we had a strict right to insist. An inevitable delay in procuring the documents necessary for this review of the merits of these claims retarded this operation until an unfortunate malady which has afflicted His Catholic Majesty prevented an examination of them. Being now for the first time presented in an unexceptionable form, it is confidently hoped that the application will be successful.  I have the satisfaction to inform you that the application I directed to be made for the delivery of a part of the archives of Florida, which had been carried to The Havannah, has produced a royal order for their delivery, and that measures have been taken to procure its execution.  By the report of the Secretary of State communicated to you on [1832-06-25] you were informed of the conditional reduction obtained by the minister of the United States at Madrid of the duties on tonnage levied on American shipping in the ports of Spain. The condition of that reduction having been complied with on our part by the act passed [1832-07-13], I have the satisfaction to inform you that our ships now pay no higher nor other duties in the continental ports of Spain than are levied on their national vessels.  The demands against Portugal for illegal captures in the blockade of Terceira have been allowed to the full amount of the accounts presented by the claimants, and payment was promised to be made in three installments. The first of these has been paid; the second, although due, had not at the date of our last advices been received, owing, it was alleged, to embarrassments in the finances consequent on the civil war in which that nation is engaged.  The payments stipulated by the convention with Denmark have been punctually made, and the amount is ready for distribution among the claimants as soon as the board, now sitting, shall have performed their functions.  I regret that by the last advices from our chargé d'affaires at Naples that Government had still delayed the satisfaction due to our citizens, but at that date the effect of the last instructions was not known. Dispatches from thence are hourly expected, and the result will be communicated to you without delay.  With the rest of Europe our relations, political and commercial, remain unchanged. Negotiations are going on to put on a permanent basis the liberal system of commerce now carried on between us and the Empire of Russia. The treaty concluded with Austria is executed by His Imperial Majesty with the most perfect good faith, and as we have no diplomatic agent at his Court he personally inquired into and corrected a proceeding of some of his subaltern officers to the injury of our consul in one of his ports.  Our treaty with the Sublime Porte is producing its expected effects on our commerce. New markets are opening for our commodities and a more extensive range for the employment of our ships. A slight augmentation of the duties on our commerce, inconsistent with the spirit of the treaty, had been imposed, but on the representation of our chargé d'affaires it has been promptly withdrawn, and we now enjoy the trade and navigation of the Black Sea and of all the ports belonging to the Turkish Empire and Asia on the most perfect equality with all foreign nations.  I wish earnestly that in announcing to you the continuance of friendship and the increase of a profitable commercial intercourse with Mexico, with Central America, and the States of the South I could accompany it with the assurance that they all are blessed with that internal tranquillity and foreign peace which their heroic devotion to the cause of their independence merits. In Mexico a sanguinary struggle is now carried on, which has caused some embarrassment to our commerce, but both parties profess the most friendly disposition toward us. To the termination of this contest we look for the establishment of that secure intercourse so necessary to nations whose territories are contiguous. How important it will be to us we may calculate from the fact that even in this unfavorable state of things our maritime commerce has increased, and an internal trade by caravans from St. Louis to Santa Fe, under the protection of escorts furnished by the Government, is carried on to great advantage and is daily increasing. The agents provided for by the treaty, with this power to designate the boundaries which it established, have been named on our part, but one of the evils of the civil war now raging there has been that the appointment of those with whom they were to cooperate has not yet been announced to us.  The Government of Central America has expelled from its territory the party which some time since disturbed its peace. Desirous of fostering a favorable disposition toward us, which has on more than one occasion been evinced by this interesting country, I made a second attempt in this year to establish a diplomatic intercourse with them; but the death of the distinguished citizen whom I had appointed for that purpose has retarded the execution of measures from which I hoped much advantage to our commerce. The union of the three States which formed the Republic of Colombia has been dissolved, but they all, it is believed, consider themselves as separately bound by the treaty which was made in their federal capacity. The minister accredited to the federation continues in that character near the Government of New Grenada, and hopes were entertained that a new union would be formed between the separate States, at least for the purposes of foreign intercourse. Our minister has been instructed to use his good offices, when ever they shall be desired, to produce the reunion so much to be wished for, the domestic tranquillity of the parties, and the security and facility of foreign commerce.  Some agitations naturally attendant on an infant reign have prevailed in the Empire of Brazil, which have had the usual effect upon commercial operations, and while they suspended the consideration of claims created on similar occasions, they have given rise to new complaints on the part of our citizens. A proper consideration for calamities and difficulties of this nature has made us less urgent and peremptory in our demands for justice than duty to our fellow citizens would under other circumstances have required. But their claims are not neglected, and will on all proper occasions be urged, and it is hoped with effect.  I refrain from making any communication on the subject of our affairs with Buenos Ayres, because the negotiation communicated to you in my last annual message was at the date of our last advices still pending and in a state that would render a publication of the details inexpedient.  A treaty of amity and commerce has been formed with the Republic of Chili, which, if approved by the Senate, will be laid before you. That Government seems to be established, and at peace with its neighbors; and its ports being the resorts of our ships which are employed in the highly important trade of the fisheries, this commercial convention can not but be of great advantage to our fellow citizens engaged in that perilous but profitable business.  Our commerce with the neighboring State of Peru, owing to the onerous duties levied on our principal articles of export, has been on the decline, and all endeavors to procure an alteration have hitherto proved fruitless. With Bolivia we have yet no diplomatic intercourse, and the continual contests carried on between it and Peru have made me defer until a more favorable period the appointment of any agent for that purpose.  An act of atrocious piracy having been committed on one of our trading ships by the inhabitants of a settlement on the west coast of Sumatra, a frigate was dispatched with orders to demand satisfaction for the injury if those who committed it should be found to be members of a regular government, capable of maintaining the usual relations with foreign nations; but if, as it was supposed and as they proved to be, they were a band of lawless pirates, to inflict such a chastisement as would deter them and others from like aggressions. This last was done, and the effect has been an increased respect for our flag in those distant seas and additional security for our commerce.  In the view I have given of our connection with foreign powers allusions have been made to their domestic disturbances or foreign wars, to their revolutions or dissensions. It may be proper to observe that this is done solely in cases where those events affect our political relations with them, or to show their operation on our commerce. Further than this it is neither our policy nor our right to interfere. Our best wishes on all occasions, our good offices when required, will be afforded to promote the domestic tranquillity and foreign peace of all nations with whom we have any intercourse. Any intervention in their affairs further than this, even by the expression of an official opinion, is contrary to our principles of international policy, and will always be avoided.  The report which the Secretary of the Treasury will in due time lay before you will exhibit the national finances in a highly prosperous state. Owing to the continued success of our commercial enterprise, which has enabled the merchants to fulfill their engagements with the Government, the receipts from customs during the year will exceed the estimate presented at the last session, and with the other means of the Treasury will prove fully adequate not only to meet the increased expenditures resulting from the large appropriations made by Congress, but to provide for the payment of all the public debt which is at present redeemable.  It is now estimated that the customs will yield to the Treasury during the present year upward of $28,000,000. The public lands, however, have proved less productive than was anticipated, and according to present information will not much exceed $2,000,000. The expenditures for all objects other than the public debt are estimated to amount during the year to about $16,500,000, while a still larger sum, viz, $18,000,000, will have been applied to the principal and interest of the public debt.  It is expected, however, that in consequence of the reduced rates of duty which will take effect after [1833-03-03] there will be a considerable falling off in the revenue from customs in the year 1833. It will never the less be amply sufficient to provide for all the wants of the public service, estimated even upon a liberal scale, and for the redemption and purchase of the remainder of the public debt. On [1833-01-01] the entire public debt of the United States, funded and unfunded, will be reduced to within a fraction of $7,000,000, of which $2,227,363 are not of right redeemable until [1834-01-01] and $4,735,296 not until [1835-01-02]. The commissioners of the sinking funds, however, being invested with full authority to purchase the debt at the market price, and the means of the Treasury being ample, it may be hoped that the whole will be extinguished within the year 1833.  I can not too cordially congratulate Congress and my fellow citizens on the near approach of that memorable and happy event -- the extinction of the public debt of this great and free nation.  Faithful to the wise and patriotic policy marked out by the legislation of the country for this object, the present Administration has devoted to it all the means which a flourishing commerce has supplied and a prudent economy preserved for the public Treasury. Within the four years for which the people have confided the Executive power to my charge $58,000,000 will have been applied to the payment of the public debt. That this has been accomplished without stinting the expenditures for all other proper objects will be seen by referring to the liberal provision made during the same period for the support and increase of our means of maritime and military defense, for internal improvements of a national character, for the removal and preservation of the Indians, and, lastly, for the gallant veterans of the Revolution.  The final removal of this great burthen from our resources affords the means of further provision for all the objects of general welfare and public defense which the Constitution authorizes, and presents the occasion for such further reductions in the revenue as may not be required for them. From the report of the Secretary of the Treasury it will be seen that after the present year such a reduction may be made to a considerable extent, and the subject is earnestly recommended to the consideration of Congress in the hope that the combined wisdom of the representatives of the people will devise such means of effecting that salutary object as may remove those burthens which shall be found to fall unequally upon any and as may promote all the great interests of the community.  Long and patient reflection has strengthened the opinions I have heretofore expressed to Congress on this subject, and I deem it my duty on the present occasion again to urge them upon the attention of the Legislature. The soundest maxims of public policy and the principals upon which our republican institutions are founded recommend a proper adaptation of the revenue to the expenditure, and they also require that the expenditure shall be limited to what, by an economical administration, shall be consistent with the simplicity of the Government and necessary to an efficient public service.  In effecting this adjustment it is due, in justice to the interests of the different States, and even to the preservation of the Union itself, that the protection afforded by existing laws to any branches of the national industry should not exceed what may be necessary to counteract the regulations of foreign nations and to secure a supply of those articles of manufacture essential to the national independence and safety in time of war. If upon investigation it shall be found, as it is believed it will be, that the legislative protection granted to any particular interest is greater than is indispensably requisite for these objects, I recommend that it be gradually diminished, and that as far as may be consistent with these objects the whole scheme of duties be reduced to the revenue standard as soon as a just regard to the faith of the Government and to the preservation of the large capital invested in establishments of domestic industry will permit.  That manufactures adequate to the supply of our domestic consumption would in the abstract be beneficial to our country there is no reason to doubt, and to effect their establishment there is perhaps no American citizen who would not for a while be willing to pay a higher price for them. But for this purpose it is presumed that a tariff of high duties, designed for perpetual protection, which they maintain has the effect to reduce the price by domestic competition below that of the foreign article. Experience, however, our best guide on this as on other subjects, makes it doubtful whether the advantages of this system are not counter-balanced by many evils, and whether it does not tend to beget in the minds of a large portion of our country-men a spirit of discontent and jealousy dangerous to the stability of the Union.  What, then, shall be done? Large interests have grown up under the implied pledge of our national legislation, which it would seem a violation of public faith suddenly to abandon. Nothing could justify it but the public safety, which is the supreme law. But those who have vested their capital in manufacturing establishments can not expect that the people will continue permanently to pay high taxes for their benefit, when the money is not required for any legitimate purpose in the administration of the Government. Is it not enough that the high duties have been paid as long as the money arising from them could be applied to the common benefit in the extinguishment of the public debt?  Those who take an enlarged view of the condition of our country must be satisfied that the policy of protection must be ultimately limited to those articles of domestic manufacture which are indispensable to our safety in time of war. Within this scope, on a reasonable scale, it is recommended by every consideration of patriotism and duty, which will doubtless always secure to it a liberal and efficient support. But beyond this object we have already seen the operation of the system productive of discontent. In some sections of the Republic its influence is deprecated as tending to concentrate wealth into a few hands, and as creating those germs of dependence and vice which in other countries have characterized the existence of monopolies and proved so destructive of liberty and the general good. A large portion of the people in one section of the Republic declares it not only inexpedient on these grounds, but as disturbing the equal relations of property by legislation, and therefore unconstitutional and unjust.  Doubtless these effects are in a great degree exaggerated, and may be ascribed to a mistaken view of the considerations which led to the adoption of the tariff system; but they are never the less important in enabling us to review the subject with a more thorough knowledge of all its bearings upon the great interests of the Republic, and with a determination to dispose of it so that none can with justice complain.  It is my painful duty to state that in one quarter of the United States opposition to the revenue laws has arisen to a height which threatens to thwart their execution, if not to endanger the integrity of the Union. What ever obstructions may be thrown in the way of the judicial authorities of the General Government, it is hoped they will be able peaceably to overcome them by the prudence of their own officers and the patriotism of the people. But should this reasonable reliance on the moderation and good sense of all portions of our fellow citizens be disappointed, it is believed that the laws themselves are fully adequate to the suppression of such attempts as may be immediately made. Should the exigency arise rendering the execution of the existing laws impracticable from any cause what ever, prompt notice of it will be given to Congress, with a suggestion of such views and measures as may be deemed necessary to meet it.  In conformity with principles heretofore explained, and with the hope of reducing the General Government to that simple machine which the Constitution created and of withdrawing from the States all other influence than that of its universal beneficence in preserving peace, affording an uniform currency, maintaining the inviolability of contracts, diffusing intelligence, and discharging unfelt its other super-intending functions, I recommend that provision be made to dispose of all stocks now held by it in corporations, whether created by the General or State Governments, and placing the proceeds in the Treasury. As a source of profit these stocks are of little or no value; as a means of influence among the States they are adverse to the purity of our institutions. The whole principle on which they are based is deemed by many unconstitutional, and to persist in the policy which they indicate is considered wholly inexpedient.  It is my duty to acquaint you with an arrangement made by the Bank of the United States with a portion of the holders of the 3% stock, by which the Government will be deprived of the use of the public funds longer than was anticipated. By this arrangement, which will be particularly explained by the Secretary of the Treasury, a surrender of the certificates of this stock may be postponed until [1833 October], and thus may be continued by the failure of the bank to perform its duties.  Such measures as are within the reach of the Secretary of the Treasury have been taken to enable him to judge whether the public deposits in that institution may be regarded as entirely safe; but as his limited power may prove inadequate to this object, I recommend the subject to the attention of Congress, under the firm belief that it is worthy of their serious investigation. An inquiry into the transactions of the institution, embracing the branches as well as the principal bank, seems called for by the credit which is given throughout the country to many serious charges impeaching its character, and which if true may justly excite the apprehension that it is no longer a safe depository of the money of the people.  Among the interests which merit the consideration of Congress after the payment of the public debt, one of the most important, in my view, is that of the public lands. Previous to the formation of our present Constitution it was recommended by Congress that a portion of the waste lands owned by the States should be ceded to the United States for the purposes of general harmony and as a fund to meet the expenses of the war. The recommendation was adopted, and at different periods of time the States of Massachusetts, New York, Virginia, North and South Carolina, and Georgia granted their vacant soil for the uses for which they had been asked. As the lands may now be considered as relieved from this pledge, it is in the discretion of Congress to dispose of them in such way as best to conduce to the quiet, harmony, and general interest of the American people. In examining this question all local and sectional feelings should be discarded and the whole United States regarded as one people, interested alike in the prosperity of their common country.  It can not be doubted that the speedy settlement of these lands constitutes the true interest of the Republic. The wealth and strength of a country are its population, and the best part of that population are cultivators of the soil. Independent farmers are every where the basis of society and true friends of liberty.  In addition to these considerations questions have already arisen, and may be expected hereafter to grow out of the public lands, which involve the rights of the new States and the powers of the General Government, and unless a liberal policy be now adopted there is danger that these questions may speedily assume an importance not now generally anticipated. The influence of a great sectional interest, when brought into full action, will be found more dangerous to the harmony and union of the States than any other cause of discontent, and it is the part of wisdom and sound policy to foresee its approaches and endeavor if possible to counteract them.  Of the various schemes which have been hitherto proposed in regard to the disposal of the public lands, none has yet received the entire approbation of the National Legislature. Deeply impressed with the importance of a speedy and satisfactory arrangement of the subject, I deem it my duty on this occasion to urge it upon your consideration, and to the propositions which have been heretofore suggested by others to contribute those reflections which have occurred to me, in the hope that they may assist you in your future deliberations.  It seems to me to be our policy that the public lands shall cease as soon as practicable to be a source of revenue, and that they be sold to settlers in limited parcels at a price barely sufficient to reimburse to the United States the expense of the present system and the cost arising under our Indian compacts. The advantages of accurate surveys and undoubted titles now secured to purchasers seem to forbid the abolition of the present system, because none can be substituted which will more perfectly accomplish these important ends. It is desirable, however, that in convenient time this machinery be withdrawn from the States, and that the right of soil and the future disposition of it be surrendered to the States respectively in which it lies.  The adventurous and hardy population of the West, besides contributing their equal share of taxation under our impost system, have in the progress of our Government, for the lands they occupy, paid into the Treasury a large proportion of $40,000,000, and of the revenue received therefrom but a small part has been expended among them. When to the disadvantage of their situation in this respect we add the consideration that it is their labor alone which gives real value to the lands, and that the proceeds arising from their sale are distributed chiefly among States which had not originally any claim to them, and which have enjoyed the undivided emolument arising from the sale of their own lands, it can not be expected that the new States will remain longer contented with the present policy after the payment of the public debt. To avert the consequences which may be apprehended from this cause, to pub an end for ever to all partial and interested legislation on the subject, and to afford to every American citizen of enterprise the opportunity of securing an independent freehold, it seems to me, therefore, best to abandon the idea of raising a future revenue out of the public lands.  In former messages I have expressed my conviction that the Constitution does not warrant the application of the funds of the General Government to objects of internal improvement which are not national in their character, and, both as a means of doing justice to all interests and putting an end to a course of legislation calculated to destroy the purity of the Government, have urged the necessity of reducing the whole subject to some fixed and certain rule. As there never will occur a period, perhaps, more propitious than the present to the accomplishment of this object, I beg leave to press the subject again upon your attention.  Without some general and well-defined principles ascertaining those objects of internal improvement to which the means of the nation may be constitutionally applied, it is obvious that the exercise of the power can never be satisfactory. Besides the danger to which it exposes Congress of making hasty appropriations to works of the character of which they may be frequently ignorant, it promotes a mischievous and corrupting influence upon elections by holding out to the people the fallacious hope that the success of a certain candidate will make navigable their neighboring creek or river, bring commerce to their doors, and increase the value of their property. It thus favors combinations to squander the treasure of the country upon a multitude of local objects, as fatal to just legislation as to the purity of public men.  If a system compatible with the Constitution can not be devised which is free from such tendencies, we should recollect that that instrument provides within itself the mode of its amendment, and that there is, therefore, no excuse for the assumption of doubtful powers by the General Government. If those which are clearly granted shall be found incompetent to the ends of its creation, it can at any time apply for their enlargement; and there is no probability that such an application, if founded on the public interest, will ever be refused. If the propriety of the proposed grant be not sufficiently apparent to command the assent of 3/4 of the States, the best possible reason why the power should not be assumed on doubtful authority is afforded; for if more than one quarter of the States are unwilling to make the grant its exercise will be productive of discontents which will far over-balance any advantages that could be derived from it. All must admit that there is nothing so worthy of the constant solicitude of this Government as the harmony and union of the people.  Being solemnly impressed with the conviction that the extension of the power to make internal improvements beyond the limit I have suggested, even if it be deemed constitutional, is subversive of the best interests of our country, I earnestly recommend to Congress to refrain from its exercise in doubtful cases, except in relation to improvements already begun, unless they shall first procure from the States such an amendment of the Constitution as will define its character and prescribe its bounds. If the States feel themselves competent to these objects, why should this Government wish to assume the power? If they do not, then they will not hesitate to make the grant. Both Governments are the Governments of the people; improvements must be made with the money of the people, and if the money can be collected and applied by those more simple and economical political machines, the State governments, it will unquestionably be safer and better for the people than to add to the splendor, the patronage, and the power of the General Government. But if the people of the several States think otherwise they will amend the Constitution, and in their decision all ought cheerfully to acquiesce.  For a detailed and highly satisfactory view of the operations of the War Department I refer you to the accompanying report of the Secretary of War.  The hostile incursions of the Sac and Fox Indians necessarily led to the interposition of the Government. A portion of the troops, under Generals Scott and Atkinson, and of the militia of the State of Illinois were called into the field. After a harassing warfare, prolonged by the nature of the country and by the difficulty of procuring subsistence, the Indians were entirely defeated, and the disaffected band dispersed or destroyed. The result has been creditable to the troops engaged in the service. Severe as is the lesson to the Indians, it was rendered necessary by their unprovoked aggressions, and it is to be hoped that its impression will be permanent and salutary.  This campaign has evinced the efficient organization of the Army and its capacity for prompt and active service. Its several departments have performed their functions with energy and dispatch, and the general movement was satisfactory.  Our fellow citizens upon the frontiers were ready, as they always are, in the tender of their services in the hour of danger. But a more efficient organization of our militia system is essential to that security which is one of the principal objects of all governments. Neither our situation nor our institutions require or permit the maintenance of a large regular force. History offers too many lessons of the fatal result of such a measure not to warn us against its adoption here. The expense which attends it, the obvious tendency to employ it because it exists and thus to engage in unnecessary wars, and its ultimate danger to public liberty will lead us, I trust, to place our principal dependence for protection upon the great body of the citizens of the Republic. If in asserting rights or in repelling wrongs war should come upon us, our regular force should be increased to an extent proportional to the emergency, and our present small Army is a nucleus around which such force could be formed and embodied. But for the purposes of defense under ordinary circumstances we must rely upon the electors of the country. Those by whom and for whom the Government was instituted and is supported will constitute its protection in the hour of danger as they do its check in the hour of safety.  But it is obvious that the militia system is imperfect. Much time is lost, much unnecessary expense incurred, and much public property wasted under the present arrangement. Little useful knowledge is gained by the musters and drills as now established, and the whole subject evidently requires a thorough examination. Whether a plan of classification remedying these defects and providing for a system of instruction might not be adopted is submitted to the consideration of Congress. The Constitution has vested in the General Government an independent authority upon the subject of the militia which renders its action essential to the establishment or improvement of the system, and I recommend the matter to your consideration in the conviction that the state of this important arm of the public defense requires your attention.  I am happy to inform you that the wise and humane policy of transferring from the eastern to the western side of the Mississippi the remnants of our aboriginal tribes, with their own consent and upon just terms, has been steadily pursued, and is approaching, I trust, its consummation. By reference to the report of the Secretary of War and to the documents submitted with it you will see the progress which has been made since your last session in the arrangement of the various matters connected with our Indian relations. With one exception every subject involving any question of conflicting jurisdiction or of peculiar difficulty has been happily disposed of, and the conviction evidently gains ground among the Indians that their removal to the country assigned by the United States for their permanent residence furnishes the only hope of their ultimate prosperity.  With that portion of the Cherokees, however, living within the State of Georgia it has been found impracticable as yet to make a satisfactory adjustment. Such was my anxiety to remove all the grounds of complaint and to bring to a termination the difficulties in which they are involved that I directed the very liberal propositions to be made to them which accompany the documents herewith submitted. They can not but have seen in these offers the evidence of the strongest disposition on the part of the Government to deal justly and liberally with them. An ample indemnity was offered for their present possessions, a liberal provision for their future support and improvement, and full security for their private and political rights. What ever difference of opinion may have prevailed respecting the just claims of these people, there will probably be none respecting the liberality of the propositions, and very little respecting the expediency of their immediate acceptance. They were, however, rejected, and thus the position of these Indians remains unchanged, as do the views communicated in my message to the Senate of [1831-02-22].  I refer you to the annual report of the Secretary of the Navy, which accompanies this message, for a detail of the operations of that branch of the service during the present year.  Besides the general remarks on some of the transactions of our Navy presented in the view which has been taken of our foreign relations, I seize this occasion to invite to your notice the increased protection which it has afforded to our commerce and citizens on distant seas without any augmentation of the force in commission. In the gradual improvement of its pecuniary concerns, in the constant progress in the collection of materials suitable for use during future emergencies, and in the construction of vessels and the buildings necessary to their preservation and repair, the present state of this branch of the service exhibits the fruits of that vigilance and care which are so indispensable to its efficiency. Various new suggestions, contained in the annexed report, as well as others heretofore to Congress, are worthy of your attention, but none more so than that urging the renewal for another term of 6 years of the general appropriation for the gradual improvement of the Navy.  From the accompanying report of the PostMaster General you will also perceive that that Department continues to extend its usefulness without impairing its resources or lessening the accommodations which it affords in the secure and rapid transportation of the mail.  I beg leave to call the attention of Congress to the views heretofore expressed in relation to the mode of choosing the President and Vice- President of the United States, and to those respecting the tenure of office generally. Still impressed with the justness of those views and with the belief that the modifications suggested on those subjects if adopted will contribute to the prosperity and harmony of the country, I earnestly recommend them to your consideration at this time.  I have heretofore pointed out defects in the law for punishing official frauds, especially within the District of Columbia. It has been found almost impossible to bring notorious culprits to punishment, and, according to a decision of the court for this District, a prosecution is barred by a lapse of two years after the fraud has been committed. It may happen again, as it has already happened, that during the whole 2 years all the evidences of the fraud may be in the possession of the culprit himself. However proper the limitation may be in relation to private citizens, it would seem that it ought not to commence running in favor of public officers until they go out of office.  The judiciary system of the United States remains imperfect. Of the 9 Western and South Western States, three only enjoy the benefits of a circuit court. Ohio, Kentucky, and Tennessee are embraced in the general system, but Indiana, Illinois, Missouri, Alabama, Mississippi, and Louisian have only district courts. If the existing system be a good one, why should it not be extended? If it be a bad one, why is it suffered to exist? The new States were promised equal rights and privileges when they came into the Union, and such are the guaranties of the Constitution. Nothing can be more obvious than the obligation of the General Government to place all the States on the same footing in relation to the administration of justice, and I trust this duty will be neglected no longer.  On many of the subjects to which your attention is invited in this communication it is a source of gratification to reflect that the steps to be now adopted are uninfluenced by the embarrassments entailed upon the country by the wars through which it has passed. In regard to most of our great interests we may consider ourselves as just starting in our career, and after a salutary experience about to fix upon a permanent basis the policy best calculated to promote the happiness of the people and facilitate their progress toward the most complete enjoyment of civil liberty. On an occasion so interesting and important in our history, and of such anxious concern to the friends of freedom throughout the world, it is our imperious duty to lay aside all selfish and local considerations and be guided by a lofty spirit of devotion to the great principles on which our institutions are founded.  That this Government may be so administered as to preserve its efficiency in promoting and securing these general objects should be the only aim of our ambition, and we can not, therefore, too carefully examine its structure, in order that we may not mistake its powers or assume those which the people have reserved to themselves or have preferred to assign to other agents. We should bear constantly in mind the fact that the considerations which induced the framers of the Constitution to withhold from the General Government the power to regulate the great mass of the business and concerns of the people have been fully justified by experience, and that it can not now be doubted that the genius of all our institutions prescribes simplicity and economy as the characteristics of the reform which is yet to be effected in the present and future execution of the functions bestowed upon us by the Constitution.  Limited to a general superintending power to maintain peace at home and abroad, and to prescribe laws on a few subjects of general interest not calculated to restrict human liberty, but to enforce human rights, this Government will find its strength and its glory in the faithful discharge of these plain and simple duties. Relieved by its protecting shield from the fear of war and the apprehension of oppression, the free enterprise of our citizens, aided by the State sovereignties, will work out improvements and ameliorations which can not fail to demonstrate that the great truth that the people can govern themselves is not only realized in our example, but that it is done by a machinery in government so simple and economical as scarcely to be felt. That the Almighty Ruler of the Universe may so direct our deliberations and over-rule our acts as to make us instrumental in securing a result so dear to mankind is my most earnest and sincere prayer.  ANDREW JACKSON 	D
[Read before a joint session by a clerk of the House of Representatives]  To the Congress of the United States:  The opening of this new year must arouse in us all grateful thanks to a kind Providence whose protection has been ever present and whose bounty has been manifold and abundant. The State of the Union today demonstrates what can be accomplished under God by a free people; by their vision, their understanding of national problems, their initiative, their self-reliance, their capacity for work--and by their willingness to sacrifice whenever sacrifice is needed.  In the past three years, responding to what our people want their Government to do, the Congress and the Executive have done much in building a stronger, better America. There has been broad progress in fostering the energies of our people, in providing greater opportunity for the satisfaction of their need, s, and in fulfilling their demands for the strength and security of the Republic.  Our country is at peace. Our security posture commands respect. A spiritual vigor marks our national life. Our economy, approaching the 400 billion dollar mark, is at an unparalleled level of prosperity. The national income is more widely and fairly distributed than ever before. The number of Americans at work has reached an all-time high. As a people, we are achieving ever higher standards of living--earning more, producing more, consuming more, building more and investing more than ever before.  Virtually all sectors of our society are sharing in these good times. Our farm families, if we act wisely, imaginatively and promptly to strengthen our present farm programs, can also look forward to sharing equitably in the prosperity they have helped to create.  War in Korea ended two and a half years ago. The collective security system has been powerfully strengthened. Our defenses have been reinforced at sharply reduced costs. Programs to expand world trade and to harness the atom for the betterment of mankind have been carried forward. Our economy has been freed from governmental wage and price controls. Inflation has been halted; the cost of living stabilized.  Government spending has been cut by more than ten billion dollars. Nearly three hundred thousand positions have been eliminated from the Federal payroll. Taxes have been substantially reduced. A balanced budget is in prospect. Social security has been extended to ten million more Americans and unemployment insurance to four million more. Unprecedented advances in civil rights have been made. The long-standing and deep-seated problems of agriculture have been forthrightly attacked.  This record of progress has been accomplished with a self imposed caution against unnecessary and unwise interference in the private affairs of our people, of their communities and of the several States.  If we of the Executive and Legislative Branches, keeping this caution ever in mind, address ourselves to the business of the year before us--and to the unfinished business of last year--with resolution, the outlook is bright with promise.  Many measures of great national importance recommended last year to the Congress still demand immediate attention legislation for school and highway construction; health and immigration legislation; water resources legislation; legislation to complete the implementation of our foreign economic policy; such labor legislation as amendments of the Labor-Management Relations Act, extension of the Fair Labor Standards Act to additional groups not now covered, and occupational safety legislation; and legislation for construction of an atomic-powered exhibit vessel.  Many new items of business likewise require our attention-measures that will further promote the release of the energies of our people; that will broaden opportunity for all of them; that will advance the Republic in its leadership toward a just peace; measures, in short, that are essential to the building of an everstronger, ever-better America.  Every political and economic guide supports a valid confidence that wise effort will be rewarded by an even more plentiful harvest of human benefit than we now enjoy. Our resources are too many, our principles too dynamic, our purposes too worthy and the issues at stake too immense for us to entertain doubt or fear. But our responsibilities require that we approach this year's business with a sober humility.  A heedless pride in our present strength and position would blind us to the facts of the past, to the pitfalls of the future. We must walk ever in the knowledge that we are enriched by a heritage earned in the labor and sacrifice of our forebears; that, for our children's children, we are trustees of a great Republic and a time-tested political system; that we prosper as a cooperating member of the family of nations.  In this light the Administration has continued work on its program for the Republic, begun three years ago. Because the. vast spread of national and human interests is involved within it, I shall not in this Message attempt its detailed delineation. Instead, from time to time during this Session, there will be submitted to the Congress specific recommendations within specific fields. In the comprehensive survey required for their preparation, the Administration is guided by enduring objectives. The first is:  THE DISCHARGE OF OUR WORLD RESPONSIBILITY  Our world policy and our actions are dedicated to the achievement of peace with justice for all nations.  With this purpose, we move in a wide variety of ways and through many agencies to remove the pall of fear; to strengthen the ties with our partners and to improve the cooperative cohesion of the free world; to reduce the burden of armaments, and to stimulate and inspire action among all nations for a world of justice and prosperity and peace. These national objectives are fully supported by both our political parties.  In the past year, our search for a more stable and just peace has taken varied forms. Among the most important were the two Conferences at Geneva, in July and in the fall of last year. We explored the possibilities of agreement on critical issues that jeopardize the peace.  The July meeting of Heads of Government held out promise to the world of moderation in the bitterness, of word and action, which tends to generate conflict and war. All were in agreement that a nuclear war would be an intolerable disaster which must not be permitted to occur. But in October, when the Foreign Ministers met again, the results demonstrated conclusively that the Soviet leaders are not yet willing to create the indispensable conditions for a secure and lasting peace.  Nevertheless, it is clear that the conflict between international communism and freedom has taken on a new complexion.  We know the Communist leaders have often practiced the tactics of retreat and zigzag. We know that Soviet and Chinese communism still poses a serious threat to the free world. And in the Middle East recent Soviet moves are hardly compatible with the reduction of international tension.  Yet Communist tactics against the free nations have shifted in emphasis from reliance on violence and the threat of violence to reliance on division, enticement and duplicity. We must be well prepared to meet the current tactics which pose a dangerous though less obvious threat. At the same time, our policy must be dynamic as well as flexible, designed primarily to forward the achievement of our own objectives rather than to meet each shift and change on the Communist front. We must act in the firm assurance that the fruits of freedom are more attractive and desirable to mankind in the pursuit of happiness than the record of Communism.  In the face of Communist military power, we must, of course, continue to maintain an effective system of collective security. This involves two things--a system which gives clear warning that armed aggression will be met by joint action of the free nations, and deterrent military power to make that warning effective. Moreover, the awesome power of the atom must be made to serve as a guardian of the free community and of the peace.  In the last year, the free world has seen major gains for the system of collective security: the accession to the North Atlantic Treaty Organization and Western European Union of the sovereign Federal German Republic; the developing cooperation under the Southeast Asia Collective Defense Treaty; and the formation in the Middle East of the Baghdad Pact among Turkey, Iraq, Iran, Pakistan and the United Kingdom. In our own hemisphere, the inter-American system has continued to show its vitality in maintaining peace and a common approach to world problems. We now have security pacts with more than 40 other nations.  In the pursuit of our national purposes, we have been steadfast in our support of the United Nations, now entering its second decade with a wider membership and ever-increasing influence and usefulness. In the release of our fifteen fliers from Communist China, an essential prelude was the world opinion mobilized by the General Assembly, which condemned their imprisonment and demanded their liberation. The successful Atomic Energy Conference held in Geneva under United Nations auspices and our Atoms for Peace program have been practical steps toward the world-wide use of this new energy source. Our sponsorship of such use has benefited our relations with other countries. Active negotiations are now in progress to create an International Agency to foster peaceful uses of atomic energy.  During the past year the crucial problem of disarmament has moved to the forefront of practical political endeavor. At Geneva, I declared the readiness of the United States to exchange blueprints of the military establishments of our nation and the USSR, to be confirmed by reciprocal aerial reconnaissance. By this means, I felt mutual suspicions could be allayed and an atmosphere developed in which negotiations looking toward limitation of arms would have improved chances of success.  In the United Nations Subcommittee on Disarmament last fall, this proposal was explored and the United States also declared itself willing to include reciprocal ground inspection of key points. By the overwhelming vote of 56 to 7, the United Nations on December 16 endorsed these proposals and gave them a top priority. Thereby, the issue is placed squarely before the bar of world opinion. We shall persevere in seeking a general reduction of armaments under effective inspection and control which are essential safeguards to ensure reciprocity and protect the security of all.  In the coming year much remains to be done.  While maintaining our military deterrent, we must intensify our efforts to achieve a just peace. In Asia we shall continue to give help to nations struggling to maintain their freedom against the threat of Communist coercion or subversion. In Europe we shall endeavor to increase not only the military strength of the North Atlantic Alliance but also its political cohesion and unity of purpose. We shall give such assistance as is feasible to the recently renewed effort of Western European nations to achieve a greater measure of integration, such as in the field of peaceful uses of atomic energy.  In the Near East we shall spare no effort in seeking to promote a fair solution of the tragic dispute between the Arab States and Israel, all of whom we want as our friends. The United States is ready to do its part to assure enduring peace in that area. We hope that both sides will make the contributions necessary to achieve that purpose. In Latin America, we shall continue to cooperate vigorously in trade and other measures designed to assist economic progress in the area.  Strong economic ties are an essential element in our free world partnership. Increasing trade and investment help all of us prosper together. Gratifying progress has been made in this direction, most recently by the three-year extension of our trade agreements legislation.  I most earnestly request that the Congress approve our membership in the Organization for Trade Cooperation, which would assist the carrying out of the General Agreement on Tariffs and Trade to which we have been a party since 1948. Our membership in the OTC will provide the most effective and expeditious means for removing discriminations and restrictions against American exports and in making our trade agreements truly reciprocal. United States membership in the Organization will evidence our continuing desire to cooperate in promoting an expanded trade among the free nations. Thus the Organization, as proposed, is admirably suited to our own interests and to those of like-minded nations in working for steady expansion of trade and closer economic cooperation. Being strictly an administrative entity, the Organization for Trade Cooperation cannot, of course, alter the control by Congress of the tariff, import, and customs policies of the United States.  We need to encourage investment overseas by avoiding unfair tax duplications, and to foster foreign trade by further simplification and improvement of our customs legislation.  We must sustain and fortify our Mutual Security Program. Because the conditions of poverty and unrest in less developed areas make their people a special target of international communism, there is a need to help them achieve the economic growth and stability necessary to preserve their independence against communist threats and enticements.  In order that our friends may better achieve the greater strength that is our common goal, they need assurance of continuity in economic assistance for development projects and programs which we approve and which require a period of years for planning and completion. Accordingly, I ask Congress to grant limited authority to make longer-term commitments for assistance to such projects, to be fulfilled from appropriations to be made in future fiscal years.  These various steps will powerfully strengthen the economic foundation of our foreign policy. Together with constructive action abroad, they will maintain the present momentum toward general economic progress and vitality of the free world.  In all things, change is the inexorable law of life. In much of the world the ferment of change is working strongly; but grave injustices are still uncorrected. We must not, by any sanction of ours, help to perpetuate these wrongs. I have particularly in mind the oppressive division of the German people, the bondage of millions elsewhere, and the exclusion of Japan from United Nations membership.  We shall keep these injustices in the forefront of human consciousness and seek to maintain the pressure of world opinion to fight these vast wrongs in the interest both of justice and secure peace.  Injustice thrives on ignorance. Because an understanding of the truth about America is one of our most powerful forces, I am recommending a substantial increase in budgetary support of the United States Information Agency.  The sum of our international effort should be this: the waging of peace, with as much resourcefulness, with as great a sense of dedication and urgency, as we have ever mustered in defense of our country in time of war. In this effort, our weapon is not force. Our weapons are the principles and ideas embodied in our historic traditions, applied with the same vigor that in the past made America a living promise of freedom for all mankind.  To accomplish these vital tasks, all of us should be concerned with the strength, effectiveness and morale .of our State Department and our Foreign Service.  Another guide in the preparation of the Administration's program is:  THE CONSTANT IMPROVEMENT OF OUR NATIONAL SECURITY  Because peace is the keystone of our national policy, our defense program emphasizes an effective flexible type of power calculated to deter or repulse any aggression and to preserve the peace. Short of war, we have never had military strength better adapted to our needs with improved readiness for emergency use. The maintenance of this strong military capability for the indefinite future will continue to call for a large share of our national budget. Our military programs must meet the needs of today. To build less would expose the nation to aggression. To build excessively, under the influence of fear, could defeat our purposes and impair or destroy the very freedom and economic system our military defenses are designed to protect.  We have improved the effectiveness and combat readiness of our forces by developing and making operational new weapons and by integrating the latest scientific developments, including new atomic weapons, into our military plans. We continue to push the production of the most modern military aircraft. The development of long-range missiles has been on an accelerated basis for some time. We are moving as rapidly as practicable toward nuclear-powered aircraft and ships. Combat capability, especially in terms of firepower, has been substantially increased. We have made the adjustments in personnel permitted by the cessation of the Korean War, the buildup of our allies and the introduction of new weapons. The services are all planning realistically on a long-term basis.  To strengthen our continental defenses the United States and Canada, in the closest cooperation, have substantially augmented early warning networks. Great progress is being made in extending surveillance of the Arctic, the Atlantic and the Pacific approaches to North America.  In the last analysis our real strength lies in the caliber of the men and women in our Armed Forces, active and Reserve. Much has been done to attract and hold capable military personnel, but more needs to be done. This year, I renew my request of last year for legislation to provide proper medical care for military dependents and a more equitable survivors' benefit program. The Administration will prepare additional recommendations designed to achieve the same objectives, including career incentives for medical and dental officers and nurses, and increases in the proportion of regular officers.  Closely related to the mission of the Defense Department is the task of the Federal Civil Defense Administration. A particular point of relationship arises from the fact that the key to civil defense is the expanded continental defense program, including the distant early warning system. Our Federal civil defense authorities have made progress in their program, and now comprehensive studies are being conducted jointly by the Federal Civil Defense Administration, the States, and critical target cities to determine the best procedures that can be adopted in case of an atomic attack. We must strengthen Federal assistance to the States and cities in devising the most effective common defense.  We have a broad and diversified mobilization base. We have the facilities, materials, skills and knowledge rapidly to expand the production of things we need for our defense whenever they are required. But mobilization base requirements change with changing technology and strategy. We must maintain flexibility to meet new requirements. I am requesting, therefore, that the Congress once again extend the Defense Production Act.  Of great importance to our nation's security is a continuing alertness to internal subversive activity within or without our government. This Administration will not relax its efforts to deal forthrightly and vigorously in protection of this government and its citizens against subversion, at the same time fully protecting the constitutional rights of all citizens.  A third objective of the Administration is:  FISCAL INTEGRITY  A public office is, indeed, a public trust. None of its aspects is more demanding than the proper management of the public finances. I refer now not only to the indispensable virtues of plain honesty and trustworthiness but also to the prudent, effective and conscientious use of tax money. I refer also to the attitude of mind that makes efficient and economical service to the people a watchword in our government.  Over the long term, a balanced budget is a sure index to thrifty management--in a home, in a business or in the Federal Government. When achievement of a balanced budget is for long put off in a business or home, bankruptcy is the result. But in similar circumstances a government resorts to inflation of the money supply. This inevitably results in depreciation of the value of the money, and an increase in the cost of living. Every investment in personal security is threatened by this process of inflation, and the real values of the people's savings, whether in the form of insurance, bonds, pension and retirement funds or savings accounts are thereby shriveled.  We have made long strides these past three years in bringing our Federal finances under control. The deficit for fiscal year 1953 was almost 9-1/2 billion dollars. Larger deficits seemed certain--deficits which would have depreciated the value of the dollar and pushed the cost of living still higher. But government waste and extravagance were searched out. Nonessential activities were dropped. Government expenses were carefully scrutinized. Total spending was cut by 14 billion dollars below the amount planned by the previous Administration for the fiscal year 1954.  This made possible--and it was appropriate in the existing circumstances of transition to a peacetime economy--the largest tax cut in any year in our history. Almost 7-½ billion dollars were released and every taxpayer in the country benefited. Almost two-thirds of the savings went directly to individuals. This tax cut also helped to build up the economy, to make jobs in industry and to increase the production .of the many things desired to improve the scale of living for the great majority of Americans.  The strong expansion of the economy, coupled with a constant care for efficiency in government operations and an alert guard against waste and duplication, has brought us to a prospective balance between income and expenditure. This is being done while we continue to strengthen our military security.  I expect the budget to be in balance during the fiscal year ending June 30, 1956.  I shall propose a balanced budget for the next fiscal year ending June 30, 1957.  But the balance we are seeking cannot be accomplished without the continuing every-day effort of the Executive and Legislative Branches to keep expenditures under control. It will also be necessary to continue all of the present excise taxes without any reduction and the corporation income taxes at their present rates for another year beyond next April 1st.  It is unquestionably true that our present tax level is very burdensome and, in the interest of long term and continuous economic growth, should be reduced when we prudently can. It is essential, in the sound management of the Government's finances, that we be mindful of our enormous national debt and of the obligation we have toward future Americans to reduce that debt whenever we can appropriately do so. Under conditions of high peacetime prosperity, such as now exist, we can never justify going further into debt to give ourselves a tax cut at the expense of our children. So, in the present state of our financial affairs, I earnestly believe that a tax cut can be deemed justifiable only when it will not unbalance the budget, a budget which makes provision for some reduction, even though modest, in our national debt. In this way we can best maintain fiscal integrity.  A fourth aim of our program is:  TO FOSTER A STRONG ECONOMY  Our competitive enterprise system depends on the energy of free human beings, limited by prudent restraints in law, using free markets to plan, organize and distribute production, and spurred by the prospect of reward for successful effort. This system has developed our resources. It has marvelously expanded our productive capacity. Against the record of all other economic systems devised through the ages, this competitive system has proved the most creative user of human skills in the development of physical resources, and the richest rewarder of human effort.  This is still true in this era when improved living standards and rising national requirements are accompanied by swift advances in technology and rapid obsolescence in machines and methods. Typical of these are the strides made in construction of plants to produce electrical energy from atomic power and of laboratories and installations for the application of this new force in industry, agriculture and the healing arts. These developments make it imperative--to assure effective functioning of our enterprise system--that the Federal Government concern itself with certain broad areas of our economic life. Most important of these is:  Agriculture  Our farm people are not sharing as they should in the general prosperity. They alone of all major groups have seen their incomes decline rather than rise. They are caught between two millstones--rising production costs and declining prices. Such harm to a part of the national economy so vitally important to everyone is of great concern to us all. No other resource is so indispensable as the land that feeds and clothes us. No group is more fundamental to our national life than our farmers.  In successful prosecution of the war, the nation called for the utmost effort of its farmers. Their response was superb, their contribution unsurpassed. Farmers are not now to be blamed for the mountainous, price-depressing surpluses produced in response to wartime policies and laws that were too long continued. War markets are not the markets of peacetime. Failure to recognize that basic fact by a timely adjustment of wartime legislation brought its inevitable result in peacetime--surpluses, lower prices and lower incomes for our farmers.  The dimensions of government responsibility are as broad and complex as the farm problem itself. We are here concerned not only with our essential continuing supplies of food and fiber, but also with a way of life. Both are indispensable to the well-being and strength of the nation. Consideration of these matters must be above and beyond politics. Our national farm policy, so vital to the welfare of farm people and all of us, must not become a field for political warfare. Too much is at stake.  Our farm people expect of us, who have responsibility for their government, understanding of their problems and the will to help solve them. Our objective must be to help bring production into balance with existing and new markets, at prices that yield farmers a return for their work in line with what other Americans get.  To reach this goal, deep-seated problems must be subjected to a stepped-up attack. There is no single easy solution. Rather, there must be a many-sided assault on the stubborn problems of surpluses, prices, costs, and markets; and a steady, persistent, imaginative advance in the relationship between farmers and their government.  In a few days, by special message, I shall lay before the Congress my detailed recommendations for new steps that should be taken promptly to speed the transition in agriculture and thus assist our farmers to achieve their fair share of the national income.  Basic to this program will be a new attack on the surplus problem-for even the best-conceived farm program cannot work under a multi-billion dollar weight of accumulated stocks.  I shall urge authorization of a soil bank program to alleviate the problem of diverted acres and an overexpanded agricultural plant. This will include an acreage reserve to reduce current and accumulated surpluses of crops in most serious difficulty, and a conservation reserve to achieve other needed adjustments in the use of agricultural resources. I shall urge measures to strengthen our surplus disposal activities.  I shall propose measures to strengthen individual commodity programs, to remove controls where possible, to reduce carryovers, and to stop further accumulations of surpluses. I shall ask the Congress to provide substantial new funds for an expanded drive on the research front, to develop new markets, new crops, and new uses. The Rural Development Program to better the lot of low-income farm families deserves full Congressional support. The Great Plains Program must go forward vigorously. Advances on these and other fronts will pull down the pricedepressing surpluses and raise farm income.  In this time of testing in agriculture, we should all together, regardless of party, carry forward resolutely with a sound and forward looking program on which farm people may confidently depend, now and for years to come.  I shall briefly mention four other subjects directly related to the well-being of the economy, preliminary to their fuller discussion in the Economic Report and later communications.  Resources Conservation  I wish to re-emphasize the critical importance of the wise use and conservation of our great natural resources of land, forests, minerals and water and their long-range development consistent with our agricultural policy. Water in particular now plays an increasing role in industrial processes, in the irrigation of land, in electric power, as well as in domestic uses. At the same time, it has the potential of damage and disaster.  A comprehensive legislative program for water conservation will be submitted to the Congress during the Session. The development of our water resources cannot be accomplished overnight. The need is such that we must make faster progress and without delay. Therefore, I strongly recommend that action be taken at this Session on such wholly Federal projects as the Colorado River Storage Project and the Fryingpan-Arkansas Project; on the John Day partnership project, and other projects which provide for cooperative action between the Federal Government and non-Federal interests; and on legislation, which makes provision for Federal participation in small projects under the primary sponsorship of agencies of State and local government.  During the past year the areas of our National Parks have been expanded, and new wildlife refuges have been created. The visits of our people to the Parks have increased much more rapidly than have the facilities to care for them. The Administration will submit recommendations to provide more adequate facilities to keep abreast of the increasing interest of our people in the great outdoors.  Disaster Assistance  A modern community is a complex combination of skills, specialized buildings, machines, communications and homes. Most importantly, it involves human lives. Disaster in many forms--by flood, frost, high winds, for instance--can destroy on a massive scale in a few hours the labor of many years.  Through the past three years the Administration has repeatedly moved into action wherever disaster struck. The extent of State participation in relief activities, however, has been far from uniform and, in many cases, has been either inadequate or nonexistent. Disaster assistance legislation requires overhauling and an experimental program of flood-damage indemnities should be undertaken. The Administration will make detailed recommendations on these subjects.  Area Redevelopment  We must help deal with the pockets of chronic unemployment that here and there mar the nation's general industrial prosperity. Economic changes in recent years have been often so rapid and far-reaching that areas committed to a single local resource or industrial activity have found themselves temporarily deprived of their markets and their livelihood.  Such conditions mean severe hardship for thousands of people as the slow process of adaptation to new circumstances goes on. This process can be speeded up. Last year I authorized a major study of the problem to find additional steps to supplement existing programs for the redevelopment of areas of chronic unemployment. Recommendations will be submitted, designed to supplement, with Federal technical and loan assistance local efforts to get on with this vital job. Improving such communities must, of course, remain the primary responsibility of the people living there and of their States. But a soundly conceived Federal partnership program can be of real assistance to them in their efforts.  Highway Legislation.  Legislation to provide a modern, interstate highway system is even more urgent this year than last, for 12 months have now passed in which we have fallen further behind in road construction needed for the personal safety, the general prosperity, the national security of the American people. During the year, the number of motor vehicles has increased from 58 to 61 million. During the past year over 38,000 persons lost their lives in highway accidents, while the fearful toll of injuries and property damage has gone on unabated.  In my message of February 22, 1955, I urged that measures be taken to complete the vital 40,000 mile interstate system over a period of 10 years at an estimated Federal cost of approximately 25 billion dollars. No program was adopted.  If we are ever to solve our mounting traffic problem, the whole interstate system must be authorized as one project, to be completed approximately within the specified time. Only in this way can industry efficiently gear itself to the job ahead. Only in this way can the required planning and engineering be accomplished without the confusion and waste unavoidable a piecemeal approach. Furthermore, as I pointed out last year, the pressing nature of this problem must not lead us to solutions outside the bounds of sound fiscal management. As in the case of other pressing problems, there must be an adequate plan of financing. To continue the drastically needed improvement in other national highway systems, I recommend the continuation of the Federal Aid Highway Program.  Aside from agriculture and the four subjects specifically mentioned, an integral part of our efforts to foster a strong and expanding free economy is keeping open the door of opportunity to new and small enterprises, checking monopoly, and preserving a competitive environment. In this past year the steady improvement in the economic health of small business has reinforced the vitality of our competitive economy. We shall continue to help small business concerns to obtain access to adequate financing and to competent counsel on management, production, and marketing problems.  Through measures already taken, opportunities for smallbusiness participation in government procurement programs, including military procurement, are greatly improved. The effectiveness of these measures will become increasingly apparent. We shall continue to make certain that small business has a fair opportunity to compete and has an economic environment in which it may prosper.  In my message last year I referred to the appointment of an advisory committee to appraise and report to me on the deficiencies as well as the effectiveness of existing Federal transportation policies. I have commended the fundamental purposes and objectives of the committee's report. I earnestly recommend that the Congress give prompt attention to the committee's proposals.  Essential to a prosperous economic environment for all business, small and large--for agriculture and industry and commerce-is efficiency in Government. To that end, exhaustive studies of the entire governmental structure were made by the Commission on Intergovernmental Relations and the Commission on the Organization of the Executive Branch of the Government--the reports of these Commissions are now under intensive review and already in the process of implementation in important areas.  One specific and most vital governmental function merits study and action by the Congress. As part of our program of promoting efficiency in Government and getting the fiscal situation in hand, the Post Office Department in the past three years has been overhauled. Nearly one thousand new post offices have been provided. Financial practices have been modernized, and transportation and operating methods are being constantly improved. A new wage and incentive plan for the half million postal employees has been established. Never before has the postal system handled so much mail so quickly and so economically.  The Post Office Department faces two serious problems. First, much of its physical plant--post offices and other buildings-is obsolete and inadequate. Many new buildings and the modernization of present ones are essential if we are to have improved mail service. The second problem is the Department's fiscal plight. It now faces an annual deficit of one-half billion dollars.  Recommendations on postal facilities and on additional postal revenues will be submitted to the Congress.  A final consideration in our program planning is:  THE RESPONSE TO HUMAN CONCERNS  A fundamental belief shines forth in this Republic. We believe in the worth and dignity of the individual. We know that if we are to govern ourselves wisely--in the tradition of America--we must have the opportunity to develop our individual capacities to the utmost.  To fulfill the individual's aspirations in the American way of life, good education is fundamental. Good education is the outgrowth of good homes, good communities, good churches, and good schools. Today our schools face pressing problems--problems which will not yield to swift and easy solutions, or to any single action. They will yield only to a continuing, active, formed effort by the people toward achieving better schools.  This kind of effort has been spurred by the thousands of conferences held in recent months by half a million citizens and educators in all parts of the country, culminating in the White House Conference on Education. In that Conference, some two thousand delegates, broadly representative of the nation, studied together the problems of the nation's schools.  They concluded that the people of the United States must make a greater effort through their local, State, and Federal Governments to improve the education of our youth. This expression from the people must now be translated into action at all levels of government.  So far as the Federal share of responsibility is concerned, I urge that the Congress move promptly to enact an effective program of Federal assistance to help erase the existing deficit of school classrooms. Such a program, which should be limited to a five-year period, must operate to increase rather than decrease local and State support of schools and to give the greatest help to the States and localities with the least financial resources. Federal aid should in no way jeopardize the freedom of local school systems. There will be presented to the Congress a recommended program of Federal assistance for school construction.  Such a program should be accompanied by action to increase services to the nation's schools by the Office of Education and by legislation to provide continuation of payments to school districts where Federal activities have impaired the ability of those districts to provide adequate schools.  Under the 1954 Amendments to the old-age and survivors' insurance program, protection was extended to some 10 million additional workers and benefits were increased. The system now helps protect 9 out of 10 American workers and their families against loss of income in old age or on the death of the breadwinner. The system is sound. It must be kept so. In developing improvements in the system, we must give the most careful consideration to population and social trends, and to fiscal requirements. With these considerations in mind, the Administration will present its recommendations for further expansion of coverage and other steps which can be taken wisely at this time.  Other needs in the area of social welfare include increased child welfare services, extension of the program of aid to dependent children, intensified attack on juvenile delinquency, and special attention to the problems of mentally retarded children. The training of more skilled workers for these fields and the quest for new knowledge through research in social welfare are essential. Similarly the problems of our aged people need our attention.  The nation has made dramatic progress in conquering disease--progress of profound human significance which can be greatly accelerated by an intensified effort in medical research. A well-supported, well-balanced program of research, including basic research, can open new frontiers of knowledge, prevent and relieve suffering, and prolong life. Accordingly I shall recommend a substantial increase in Federal funds for the support of such a program. As an integral part of this effort, I shall recommend a new plan to aid construction of non-Federal medical research and teaching facilities and to help provide more adequate support for the training of medical research manpower.  Finally, we must aid in cushioning the heavy and rising costs of illness and hospitalization to individuals and families. Provision should be made, by Federal reinsurance or otherwise, to foster extension of voluntary health insurance coverage to many more persons, especially older persons and those in rural areas. Plans should be evolved to improve protection against the costs of prolonged or severe illness. These measures will help reduce the dollar barrier between many Americans and the benefits of modern medical care.  The Administration health program will be submitted to the Congress in detail.  The response of government to human concerns embraces, of course, other measures of broad public interest, and of special interest to our working men and women. The need still exists for improvement of the Labor Management Relations Act. The recommendations I submitted to the Congress last year take into account not only the interests of labor and management but also the public welfare. The needed amendments should be enacted without further delay.  We must also carry forward the job of improving the wagehour law. Last year I requested the Congress to broaden the coverage of the minimum wage. I repeat that recommendation, and I pledge the full resources of the Executive Branch to assist the Congress in finding ways to attain this goal. Moreover, as requested last year, legislation should be passed to clarify and strengthen the eight-hour laws for the benefit of workers who are subject to Federal wage standards on Federal and Federally assisted construction and other public works.  The Administration will shortly propose legislation to assure adequate disclosure of the financial affairs of each employee pension and welfare plan and to afford substantial protection to their beneficiaries in accordance with the objectives outlined in my message of January 11, 1954. Occupational safety still demands attention, as I pointed out last year, and legislation to improve the Longshoremen's and Harbor Workers' Compensation Act is still needed. The improvement of the District of Columbia Unemployment Insurance Law and legislation to provide employees in the District with non-occupational disability insurance are no less necessary now than 12 months ago. Legislation to apply the principle of equal pay for equal work without discrimination because of sex is a matter of simple justice. I earnestly urge the Congress to move swiftly to implement these needed labor measures.  In the field of human needs, we must carry forward the housing program, which is contributing so greatly to the well-being of our people and the prosperity of our economy. Home ownership is now advanced to the point where almost three of every five families in our cities, towns, and suburbs own the houses they live in.  For the housing program, most of the legislative authority already exists. However, a firm program of public housing is essential until the private building industry has found ways to provide more adequate housing for low-income families. The Administration will propose authority to contract for 35 thousand additional public housing units in each of the next 2 fiscal years for communities which will participate in an integrated attack on slums and blight.  To meet the needs of the growing number of older people, several amendments to the National Housing Act will be proposed to assist the private homebuilding industry as well as charitable and non-profit organizations.  With so large a number of the American people desiring to modernize and improve existing dwellings, I recommend that the Title 1 program for permanent improvements in the home be liberalized.  I recommend increases in the general FHA mortgage insurance authority; the extension of the FHA military housing program; an increase in the authorization for Urban Planning grants; in the special assistance authority of the Federal National Mortgage Association; and continued support of the college housing program in a way that will not discourage private capital from helping to meet the needs of our colleges.  The legislation I have recommended for workers in private industry should be accompanied by a parallel effort for the welfare of Government employees. We have accomplished much in this field, including a contributory life insurance program; equitable pay increases and a fringe benefits program, covering many needed personnel policy changes, from improved premium pay to a meaningful incentive award program.  Additional personnel management legislation is needed in this Session. As I stated last year, an executive pay increase is essential to efficient governmental management. Such an increase, together with needed adjustments in the pay for the top career positions, is also necessary to the equitable completion of the Federal pay program initiated last year. Other legislation will be proposed, including legislation for prepaid group health insurance for employees and their dependents and to effect major improvements in the Civil Service retirement system.  All of us share a continuing concern for those who have served this nation in the Armed Forces. The Commission on Veterans Pensions is at this time conducting a study of the entire field of veterans' benefits and will soon submit proposed improvements.  We are proud of the progress our people have made in the field of civil rights. In Executive Branch operations throughout the nation, elimination of discrimination and segregation is all but completed. Progress is also being made among contractors engaged in furnishing Government services and requirements. Every citizen now has the opportunity to fit himself for and to hold a position of responsibility in the service of his country. In the District of Columbia, through the voluntary cooperation of the people, discrimination and segregation are disappearing from hotels, theaters, restaurants and other facilities.  It is disturbing that in some localities allegations persist that Negro citizens are being deprived of their right to vote and are likewise being subjected to unwarranted economic pressures. I recommend that the substance of these charges be thoroughly examined by a Bipartisan Commission created by the Congress. It is hoped that such a commission will be established promptly so that it may arrive at findings which can receive early consideration.  The stature of our leadership in the free world has increased through the past three years because we have made more progress than ever before in a similar period to assure our citizens equality in justice, in opportunity and in civil rights. We must expand this effort on every front. We must strive to have every person judged and measured by what he is, rather than by his color, race or religion. There will soon be recommended to the Congress a program further to advance the efforts of the Government, within the area of Federal responsibility, to accomplish these objectives.  One particular challenge confronts us. In the Hawaiian Islands, East meets West. To the Islands, Asia and Europe and the Western Hemisphere, all the continents, have contributed their peoples and their cultures to display a unique example of a community that is a successful laboratory in human brotherhood.  Statehood, supported by the repeatedly expressed desire of the Islands' people and by our traditions, would be a shining example of the American way to the entire earth. Consequently, I urgently request this Congress to grant statehood for Hawaii. Also, in harmony with the provisions I last year communicated to the Senate and House Committees on Interior and Insular Affairs, I trust that progress toward statehood for Alaska can be made in this Session.  Progress is constant toward full integration of our Indian citizens into normal community life. During the past two years the Administration has provided school facilities for thousands of Indian children previously denied this opportunity. We must continue to meet the needs of increased numbers of Indian children. Provision should also be made for the education of adult Indians whose schooling in earlier years was neglected.  In keeping with our responsibility of world leadership and in our own self interest, I again point out to the Congress the urgent need for revision of the immigration and nationality laws. Our nation has always welcomed immigrants to our shores. The wisdom of such a policy is clearly shown by the fact that America has been built by immigrants and the descendants of immigrants. That policy must be continued realistically with present day conditions in mind.  I recommend that the number of persons admitted to this country annually be based not on the 1920 census but on the latest, the 1950 census. Provision should be made to allow for greater flexibility in the use of quotas so if one country does not use its share, the vacancies may be made available for the use of qualified individuals from other countries.  The law should be amended to permit the Secretary of State and the Attorney General to waive the requirements of fingerprinting on a reciprocal basis for persons coming to this country for temporary visits. This and other changes in the law are long overdue and should be taken care of promptly. Detailed recommendations for revision of the immigration laws will be submitted to the Congress.  I am happy to report substantial progress in the flow of immigrants under the Refugee Relief Act of 1953; however, I again request this Congress to approve without further delay the urgently needed amendments to that act which I submitted in the last Session. Because of the high prosperity in Germany and Austria, the number of immigrants from those countries will be reduced. This will make available thousands of unfilled openings which I recommend be distributed to Greece and Italy and to escapees from behind the Iron Curtain.  Once again I ask the Congress to join with me in demonstrating our belief in the right of suffrage. I renew my request that the principle of self-government be extended and the right of suffrage granted to the citizens of the District of Columbia.  To conclude: the vista before us is bright. The march of science, the expanding economy, the advance in collective security toward a just peace--in this threefold movement our people are creating new standards by which the future of the Republic may be judged.  Progress, however, will be realized only as it is more than matched by a continuing growth in the spiritual strength of the nation. Our dedication to moral values must be complete in our dealings abroad and in our relationships among ourselves. We have single-minded devotion to the common good of America. Never must we forget that this means the well-being, the prosperity, the security of all Americans in every walk of life.  To the attainment of these objectives, I pledge full energies of the Administration, as in the Session ahead, it works on a program for submission to you, the Congress of the United States.  DWIGHT D. EISENHOWER 	R
Fellow-Citizens of the Senate and House of Representatives:  The auspicious circumstances under which you will commence the duties of the present session will lighten the burdens inseparable from the high trust committed to you. The fruits of the earth have been unusually abundant, commerce has flourished, the revenue has exceeded the most favorable anticipation, and peace and amity are preserved with foreign nations on conditions just and honorable to our country. For these inestimable blessings we can not but be grateful to that Providence which watches over the destiny of nations.  As the term limited for the operation of the commercial convention with Great Britain will expire early in the month of July next, and it was deemed important that there should be no interval during which that portion of our commerce which was provided for by that convention should not be regulated, either by arrangement between the two Governments or by the authority of Congress, the minister of the United States at London was instructed early in the last summer to invite the attention of the British Government to the subject, with a view to that object. He was instructed to propose also that the negotiation which it was wished to open might extend to the general commerce of the two countries, and to every other interest and unsettled difference between them in the hope that an arrangement might be made on principles of reciprocal advantage which might comprehend and provide in a satisfactory manner for all these high concerns.  I have the satisfaction to state that the proposal was received by the British Government in the spirit which prompted it, and that a negotiation has been opened at London embracing all these objects. On full consideration of the great extent and magnitude of the trust it was thought proper to commit it to not less than two of our distinguished citizens, and in consequence the envoy extraordinary and minister plenipotentiary of the United States at Paris has been associated with our envoy extraordinary and minister plenipotentiary at London, to both of whom corresponding instructions have been given, and they are now engaged in the discharge of its duties. It is proper to add that to prevent any inconvenience resulting from the delay incident to a negotiation on so many important subjects it was agreed before entering on it that the existing convention should be continued for a term not less than eight years.  Our relations with Spain remain nearly in the state in which they were at the close of the last session. The convention of 1802, providing for the adjustment of a certain portion of the claims of our citizens for injuries sustained by spoliation, and so long suspended by the Spanish Government, has at length been ratified by it, but no arrangement has yet been made for the payment of another portion of like claims, not less extensive or well founded, or for other classes of claims, or for the settlement of boundaries. These subjects have again been brought under consideration in both countries, but no agreement has been entered into respecting them.  In the mean time events have occurred which clearly prove the ill effect of the policy which that Government has so long pursued on the friendly relations of the two countries, which it is presumed is at least of as much importance to Spain as to the United States to maintain. A state of things has existed in the Floridas the tendency of which has been obvious to all who have paid the slightest attention to the progress of affairs in that quarter. Throughout the whole of those Provinces to which the Spanish title extends the Government of Spain has scarcely been felt. Its authority has been confined almost exclusively to the walls of Pensacola and St. Augustine, within which only small garrisons have been maintained. Adventurers from every country, fugitives from justice, and absconding slaves have found an asylum there. Several tribes of Indians, strong in the # of their warriors, remarkable for their ferocity, and whose settlements extend to our limits, inhabit those Provinces.  These different hordes of people, connected together, disregarding on the one side the authority of Spain, and protected on the other by an imaginary line which separates Florida from the United States, have violated our laws prohibiting the introduction of slaves, have practiced various frauds on our revenue, and committed every kind of outrage on our peaceable citizens which their proximity to us enabled them to perpetrate.  The invasion of Amelia Island last year by a small band of adventurers, not exceeding 150 in number, who wrested it from the inconsiderable Spanish force stationed there, and held it several months, during which a single feeble effort only was made to recover it, which failed, clearly proves how completely extinct the Spanish authority had become, as the conduct of those adventurers while in possession of the island as distinctly shows the pernicious purposes for which their combination had been formed.  This country had, in fact, become the theater of every species of lawless adventure. With little population of its own, the Spanish authority almost extinct, and the colonial governments in a state of revolution, having no pretension to it, and sufficiently employed in their own concerns, it was in great measure derelict, and the object of cupidity to every adventurer. A system of buccaneering was rapidly organizing over it which menaced in its consequences the lawful commerce of every nation, and particularly the United States, while it presented a temptation to every people, on whose seduction its success principally depended.  In regard to the United States, the pernicious effect of this unlawful combination was not confined to the ocean; the Indian tribes have constituted the effective force in Florida. With these tribes these adventurers had formed at an early period a connection with a view to avail themselves of that force to promote their own projects of accumulation and aggrandizement. It is to the interference of some of these adventurers, in misrepresenting the claims and titles of the Indians to land and in practicing on their savage propensities, that the Seminole war is principally to be traced. Men who thus connect themselves with savage communities and stimulate them to war, which is always attended on their part with acts of barbarity the most shocking, deserve to be viewed in a worse light than the savages. They would certainly have no claim to an immunity from the punishment which, according to the rules of warfare practiced by the savages, might justly be inflicted on the savages themselves.  If the embarrassments of Spain prevented her from making an indemnity to our citizens for so long a time from her treasury for their losses by spoliation and otherwise, it was always in her power to have provided it by the cession of this territory. Of this her Government has been repeatedly apprised, and the cession was the more to have been anticipated as Spain must have known that in ceding it she would likewise relieve herself from the important obligation secured by the treaty of 1795 and all other compromitments respecting it. If the United States, from consideration of these embarrassments, declined pressing their claims in a spirit of hostility, the motive ought at least to have been duly appreciated by the Government of Spain. It is well known to her Government that other powers have made to the United States an indemnity for like losses sustained by their citizens at the same epoch.  There is nevertheless a limit beyond which this spirit of amity and forbearance can in no instance be justified. If it was proper to rely on amicable negotiation for an indemnity for losses, it would not have been so to have permitted the inability of Spain to fulfill her engagements and to sustain her authority in the Floridas to be perverted by foreign adventurers and savages to purposes so destructive to the lives of our fellow citizens and the highest interests of the United States.  The right of self defense never ceases. It is among the most sacred, and alike necessary to nations and to individuals, and whether the attack be made by Spain herself or by those who abuse her power, its obligation is not the less strong.  The invaders of Amelia Island had assumed a popular and respected title under which they might approach and wound us. As their object was distinctly seen, and the duty imposed on the Executive by an existing law was profoundly felt, that mask was not permitted to protect them. It was thought incumbent on the United States to suppress the establishment, and it was accordingly done. The combination in Florida for the unlawful purposes stated, the acts perpetrated by that combination, and, above all, the incitement of the Indians to massacre our fellow citizens of every age and of both sexes, merited a like treatment and received it.  In pursuing these savages to an imaginary line in the woods it would have been the height of folly to have suffered that line to protect them. Had that been done the war could never cease. Even if the territory had been exclusively that of Spain and her power complete over it, we had a right by the law of nations to follow the enemy on it and to subdue him there. But the territory belonged, in a certain sense at least, to the savage enemy who inhabited it; the power of Spain had ceased to exist over it, and protection was sought under her title by those who had committed on our citizens hostilities which she was bound by treaty to have prevented, but had not the power to prevent. To have stopped at that line would have given new encouragement to these savages and new vigor to the whole combination existing there in the prosecution of all its pernicious purposes.  In suppressing the establishment at Amelia Island no unfriendliness was manifested toward Spain, because the post was taken from a force which had wrested it from her. The measure, it is true, was not adopted in concert with the Spanish Government or those in authority under it, because in transactions connected with the war in which Spain and the colonies are engaged it was thought proper in doing justice to the United States to maintain a strict impartiality toward both the belligerent parties without consulting or acting in concert with either. It gives me pleasure to state that the Governments of Buenos Ayres and Venezuela, whose names were assumed, have explicitly disclaimed all participation in those measures, and even the knowledge of them until communicated by this Government, and have also expressed their satisfaction that a course of proceedings had been suppressed which if justly imputable to them would dishonor their cause.  In authorizing Major-General Jackson to enter Florida in pursuit of the Seminoles care was taken not to encroach on the rights of Spain. I regret to have to add that in executing this order facts were disclosed respecting the conduct of the officers of Spain in authority there in encouraging the war, furnishing munitions of war and other supplies to carry it on, and in other acts not less marked which evinced their participation in the hostile purposes of that combination and justified the confidence with which it inspired the savages that by those officers they would be protected.  A conduct so incompatible with the friendly relations existing between the two countries, particularly with the positive obligations of the 5th article of the treaty of 1795, by which Spain was bound to restrain, even by force, those savages from acts of hostility against the United States, could not fail to excite surprise. The commanding general was convinced that he should fail in his object, that he should in effect accomplish nothing, if he did not deprive those savages of the resource on which they had calculated and of the protection on which they had relied in making the war. As all the documents relating to this occurrence will be laid before Congress, it is not necessary to enter into further detail respecting it.  Although the reasons which induced Major-General Jackson to take these posts were duly appreciated, there was nevertheless no hesitation in deciding on the course which it became the Government to pursue. As there was reason to believe that the commanders of these posts had violated their instructions, there was no disposition to impute to their Government a conduct so unprovoked and hostile. An order was in consequence issued to the general in command there to deliver the posts - Pensacola unconditionally to any person duly authorized to receive it, and St. Marks, which is in the heart of the Indian country, on the arrival of a competent force to defend it against those savages and their associates.  In entering Florida to suppress this combination no idea was entertained of hostility to Spain, and however justifiable the commanding general was, in consequence of the misconduct of the Spanish officers, in entering St. Marks and Pensacola to terminate it by proving to the savages and their associates that they should not be protected even there, yet the amicable relations existing between the United States and Spain could not be altered by that act alone. By ordering the restitution of the posts those relations were preserved. To a change of them the power of the Executive is deemed incompetent; it is vested in Congress only.  By this measure, so promptly taken, due respect was shown to the Government of Spain. The misconduct of her officers has not been imputed to her. She was enabled to review with candor her relations with the United States and her own situation, particularly in respect to the territory in question, with the dangers inseparable from it, and regarding the losses we have sustained for which indemnity has been so long withheld, and the injuries we have suffered through that territory, and her means of redress, she was likewise enabled to take with honor the course best calculated to do justice to the United States and to promote her own welfare.  Copies of the instructions to the commanding general, of his correspondence with the Secretary of War, explaining his motives and justifying his conduct, with a copy of the proceedings of the courts- martial in the trial of Arbuthnot and Ambristie, and of the correspondence between the Secretary of State and the minister plenipotentiary of Spain near this Government, and of the minister plenipotentiary of the United States at Madrid with the Government of Spain, will be laid before Congress.  The civil war which has so long prevailed between Spain and the Provinces in South America still continues, without any prospect of its speedy termination. The information respecting the condition of those countries which has been collected by the commissioners recently returned from thence will be laid before Congress in copies of their reports, with such other information as has been received from other agents of the United States.  It appears from these communications that the Government at Buenos Ayres declared itself independent in 1816 July, having previously exercised the power of an independent Government, though in the name of the King of Spain, from the year 1810; that the Banda Oriental, Entre Rios, and Paraguay, with the city of Santa Fee, all of which are also independent, are unconnected with the present Government of Buenos Ayres; that Chili has declared itself independent and is closely connected with Buenos Ayres; that Venezuela has also declared itself independent, and now maintains the conflict with various success; and that the remaining parts of South America, except Monte Video and such other portions of the eastern bank of the La Plata as are held by Portugal, are still in the possession of Spain or in a certain degree under her influence.  By a circular note addressed by the ministers of Spain to the allied powers, with whom they are respectively accredited, it appears that the allies have undertaken to mediate between Spain and the South American Provinces, and that the manner and extent of their interposition would be settled by a congress which was to have met at Aix-la-Chapelle in September last. From the general policy and course of proceeding observed by the allied powers in regard to this contest it is inferred that they will confine their interposition to the expression of their sentiments, abstaining from the application of force. I state this impression that force will not be applied with the greater satisfaction because it is a course more consistent with justice and likewise authorizes a hope that the calamities of the war will be confined to the parties only, and will be of shorter duration.  From the view taken of this subject, founded on all the information that we have been able to obtain, there is good cause to be satisfied with the course heretofore pursued by the United States in regard to this contest, and to conclude that it is proper to adhere to it, especially in the present state of affairs.  I have great satisfaction in stating that our relations with France, Russia, and other powers continue on the most friendly basis.  In our domestic concerns we have ample cause of satisfaction. The receipts into the Treasury during the three first quarters of the year have exceeded $17M.  After satisfying all the demands which have been made under existing appropriations, including the final extinction of the old 6% stock and the redemption of a moiety of the Louisiana debt, it is estimated that there will remain in the Treasury on the 1st day of January next more than $2M.  It is ascertained that the gross revenue which has accrued from the customs during the same period amounts to $21M, and that the revenue of the whole year may be estimated at not less than $26M. The sale of the public lands during the year has also greatly exceeded, both in quantity and price, that of any former year, and there is just reason to expect a progressive improvement in that source of revenue.  It is gratifying to know that although the annual expenditure has been increased by the act of the last session of Congress providing for Revolutionary pensions to an amount about equal to the proceeds of the internal duties which were then repealed, the revenue for the ensuing year will be proportionally augmented, and that whilst the public expenditure will probably remain stationary, each successive year will add to the national resources by the ordinary increase of our population and by the gradual development of our latent sources of national prosperity.  The strict execution of the revenue laws, resulting principally from the salutary provisions of the act of the 20th of April last amending the several collection laws, has, it is presumed, secured to domestic manufactures all the relief that can be derived from the duties which have been imposed upon foreign merchandise for their protection. Under the influence of this relief several branches of this important national interest have assumed greater activity, and although it is hoped that others will gradually revive and ultimately triumph over every obstacle, yet the expediency of granting further protection is submitted to your consideration.  The measures of defense authorized by existing laws have been pursued with the zeal and activity due to so important an object, and with all the dispatch practicable in so extensive and great an undertaking. The survey of our maritime and inland frontiers has been continued, and at the points where it was decided to erect fortifications the work has been commenced, and in some instances considerable progress has been made. In compliance with resolutions of the last session, the Board of Commissioners were directed to examine in a particular manner the parts of the coast therein designated and to report their opinion of the most suitable sites for two naval depots. This work is in a train of execution. The opinion of the Board on this subject, with a plan of all the works necessary to a general system of defense so far as it has been formed, will be laid before Congress in a report from the proper department as soon as it can be prepared.  In conformity with the appropriations of the last session, treaties have been formed with the Quapaw tribe of Indians, inhabiting the country on the Arkansaw, and the Great and Little Osages north of the White River; with the tribes in the State of Indiana; with the several tribes within the State of Ohio and the Michigan Territory, and with the Chickasaws, by which very extensive cessions of territory have been made to the United States. Negotiations are now depending with the tribes in the Illinois Territory and with the Choctaws, by which it is expected that other extensive cessions will be made. I take great interest in stating that the cessions already made, which are considered so important to the United States, have been obtained on conditions very satisfactory to the Indians.  With a view to the security of our inland frontiers, it has been thought expedient to establish strong posts at the mouth of Yellow Stone River and at the Mandan village on the Missouri, and at the mouth of St. Peters on the Mississippi, at no great distance from our northern boundaries. It can hardly be presumed while such posts are maintained in the rear of the Indian tribes that they will venture to attack our peaceable inhabitants. A strong hope is entertained that this measure will likewise be productive of much good to the tribes themselves, especially in promoting the great object of their civilization.  Experience has clearly demonstrated that independent savage communities can not long exist within the limits of a civilized population. The progress of the latter has almost invariably terminated in the extinction of the former, especially of the tribes belonging to our portion of this hemisphere, among whom loftiness of sentiment and gallantry in action have been conspicuous. To civilize them, and even to prevent their extinction, it seems to be indispensable that their independence as communities should cease, and that the control of the United States over them should be complete and undisputed. The hunter state will then be more easily abandoned, and recourse will be had to the acquisition and culture of land and to other pursuits tending to dissolve the ties which connect them together as a savage community and to give a new character to every individual. I present this subject to the consideration of Congress on the presumption that it may be found expedient and practicable to adopt some benevolent provisions, having these objects in view, relative to the tribes within our settlements.  It has been necessary during the present year to maintain, a strong naval force in the Mediterranean and in the Gulf of Mexico, and to send some public ships along the southern coast and to the Pacific Ocean. By these means amicable relations with the Barbary Powers have been preserved, our commerce has been protected, and our rights respected. The augmentation of our Navy is advancing with a steady progress toward the limit contemplated by law.  I communicate with great satisfaction the accession of another State (Illinois) to our Union, because I perceive from the proof afforded by the additions already made the regular progress and sure consummation of a policy of which history affords no example, and of which the good effect can not be too highly estimated. By extending our Government on the principles of our Constitution over the vast territory within our limits, on the Lakes and the Mississippi and its numerous streams, new life and vigor are infused into every part of our system. By increasing the number of the States the confidence of the State governments in their own security is increased and their jealousy of the National Government proportionally diminished.  The impracticability of one consolidated Government for this great and growing nation will be more apparent and will be universally admitted. Incapable of exercising local authority except for general purposes, the General Government will no longer be dreaded. In those cases of a local nature and for all the great purposes for which it was instituted its authority will be cherished. Each Government will acquire new force and a greater freedom of action within its proper sphere.  Other inestimable advantages will follow. Our produce will be augmented to an incalculable amount in articles of the greatest value for domestic use and foreign commerce. Our navigation will in like degree be increased, and as the shipping of the Atlantic States will be employed in the transportation of the vast produce of the Western country, even those parts of the United States which are most remote from each other will be further bound together by the strongest ties which mutual interest can create.  The situation of this District, it is thought, requires the attention of Congress. By the Constitution the power of legislation is exclusively vested in the Congress of the United States. In the exercise of this power, in which the people have no participation, Congress legislate in all cases directly on the local concerns of the District. As this is a departure, for a special purpose, from the general principles of our system, it may merit consideration whether an arrangement better adapted to the principles of our Government and to the particular interests of the people may not be devised which will neither infringe the Constitution nor affect the object which the provision in question was intended to secure. The growing population, already considerable, and the increasing business of the District, which it is believed already interferes with the deliberations of Congress on great national concerns, furnish additional motives for recommending this subject to your consideration.  When we view the great blessings with which our country has been favored, those which we now enjoy, and the means which we possess of handing them down unimpaired to our latest posterity, our attention is irresistibly drawn to the source from whence they flow. Let us, then, unite in offering our most grateful acknowledgments for these blessings to the Divine Author of All Good.      JAMES MONROE   	DR
The Senate and House of Representatives of the United States:  It would have given me, fellow citizens, great satisfaction to announce in the moment of your meeting that the difficulties in our foreign relations existing at the time of your last separation had been amicably and justly terminated. I lost no time in taking those measures which were most likely to bring them to such a termination - by special missions charged with such powers and instructions as in the event of failure could leave no imputation on either our moderation or forbearance. The delays which have since taken place in our negotiations with the British Government appear to have proceeded from causes which do not forbid the expectation that during the course of the session I may be enabled to lay before you their final issue. What will be that of the negotiations for settling our differences with Spain nothing which had taken place at the date of the last dispatches enables us to pronounce. On the western side of the Mississippi she advanced in considerable force, and took post at the settlement of Bayou Pierre, on the Red River. This village was originally settled by France, was held by her as long as she held Louisiana, and was delivered to Spain only as a part of Louisiana. Being small, insulated, and distant, it was not observed at the moment of redelivery to France and the United States that she continued a guard of half a dozen men which had been stationed there. A proposition, however, having been lately made by our commander in chief to assume the Sabine River as a temporary line of separation between the troops of the two nations until the issue of our negotiations shall be known, this has been referred by the Spanish commandant to his superior, and in the mean time he has withdrawn his force to the western side of the Sabine River. The correspondence on this subject now communicated will exhibit more particularly the present state of things in that quarter.  The nature of that country requires indispensably that an unusual proportion of the force employed there should be cavalry or mounted infantry. In order, therefore, that the commanding officer might be enabled to act with effect, I had authorized him to call on the governors of Orleans and Mississippi for a corps of 500 volunteer cavalry. The temporary arrangement he has proposed may perhaps render this unnecessary; but I inform you with great pleasure of the promptitude with which the inhabitants of those Territories have tendered their services in defense of their country. It has done honor to themselves, entitled them to the confidence of their fellow citizens in every part of the Union, and must strengthen the general determination to protect them efficaciously under all circumstances which may occur.  Having received information that in another part of the United States a great number of private individuals were combining together, arming and organizing themselves contrary to law, to carry on a military expedition against the territories of Spain, I thought it necessary, by proclamation as well as by special orders, to take measures for preventing and suppressing this enterprise, for seizing the vessels, arms, and other means provided for it, and for arresting and bringing to justice its authors and abettors. It was due to that good faith which ought ever to be the rule of action in public as well as in private transactions, it was due to good order and regular government, that while the public force was acting strictly on defensive and merely to protect our citizens from aggression the criminal attempts of private individuals to decide for their country the question of peace or war by commencing active and unauthorized hostilities should be promptly and efficaciously suppressed.  Whether it will be necessary to enlarge our regular forces will depend on the result of our negotiations with Spain; but as it is uncertain when that result will be known, the provisional measures requisite for that, and to meet any pressure intervening in that quarter, will be a subject for your early consideration.  The possession of both banks of the Mississippi reducing to a single point the defense of that river, its waters, and the country adjacent, it becomes highly necessary to provide for that point a more adequate security. Some position above its mouth, commanding the passage of the river, should be rendered sufficiently strong to cover the armed vessels which may be stationed there for defense, and in conjunction with them to present an insuperable obstacle to any force attempting to pass. The approaches to the city of New Orleans from the eastern quarter also will require to be examined and more effectually guarded. For the internal support of the country the encouragement of a strong settlement on the western side of the Mississippi, within reach of New Orleans, will be worthy the consideration of the Legislature.  The gun boats authorized by an act of the last session are so advanced that they will be ready for service in the ensuing spring. Circumstances permitted us to allow the time necessary for their more solid construction. As a much larger number will still be wanting to place our sea port towns and waters in that state of defense to which we are competent and they entitled, a similar appropriation for a further provision for them is recommended for the ensuing year.  A further appropriation will also be necessary for repairing fortifications already established and the erection of such other works as may have real effect in obstructing the approach of an enemy to our sea port towns, or their remaining before them.  In a country whose constitution is derived from the will of the people, directly expressed by their free suffrages; where the principal executive functionaries and those of the legislature are renewed by them at short periods; where under the character of jurors they exercise in person the greatest portion of the judiciary powers; where the laws are consequently so formed and administered as to bear with equal weight and favor on all, restraining no man in the pursuits of honest industry and securing to everyone the property which that acquires, it would not be supposed that any safe-guards could be needed against insurrection or enterprise on the public peace or authority. The laws, however, aware that these should not be trusted to moral restraints only, have wisely provided punishment for these crimes when committed. But would it not be salutary to give also the means of preventing their commission? Where an enterprise is meditated by private individuals against a foreign nation in amity with the United States, powers of prevention to a certain extent are given by the laws. Would they not be as reasonable and useful where the enterprise preparing is against the United States? While adverting to this branch of law it is proper to observe that in enterprises meditated against foreign nations the ordinary process of binding to the observance of the peace and good behavior, could it be extended to acts to be done out of the jurisdiction of the United States, would be effectual in some cases where the offender is able to keep out of sight every indication of his purpose which could draw on him the exercise of the powers now given by law.  The States on the coast of Barbary seem generally disposed at present to respect our peace and friendship; with Tunis alone some uncertainty remains. Persuaded that it is our interest to maintain our peace with them on equal terms or not at all, I propose to send in due time a reenforcement into the Mediterranean unless previous information shall show it to be necessary.  We continue to receive proofs of the growing attachment of our Indian neighbors and of their dispositions to place all their interests under the patronage of the United States. These dispositions are inspired by their confidence in our justice and in the sincere concern we feel for their welfare; and as long as we discharge these high and honorable functions with the integrity and good faith which alone can entitle us to their continuance we may expect to reap the just reward in their peace and friendship.  The expedition of Messrs. Lewis and Clarke for exploring the river Missouri and the best communication from that to the Pacific Ocean has had all the success which could have been expected. They have traced the Missouri nearly to its source, descended the Columbia to the Pacific Ocean, ascertained with accuracy the geography of that interesting communication across our continent, learnt the character of the country, of its commerce and inhabitants; and it is but justice to say that Messrs. Lewis and Clarke and their brave companions have by this arduous service deserved well of their country.  The attempt to explore the Red River, under the direction of Mr. Freeman, though conducted with a zeal and prudence meriting entire approbation, has not been equally successful. After proceeding up it about 600 miles, nearly as far as the French settlements had extended while the country was in their possession, our geographers were obliged to return without completing their work.  Very useful additions have also been made to our knowledge of the Mississippi by Lieutenant Pike, who has ascended it to its source, and whose journal and map, giving the details of his journey, will shortly be ready for communication to both Houses of Congress. Those of Messrs. Lewis, Clarke, and Freeman will require further time to be digested and prepared. These important surveys, in addition to those before possessed, furnish materials for commencing an accurate map of the Mississippi and its western waters. Some principal rivers, however, remain still to be explored, toward which the authorization of Congress by moderate appropriations will be requisite.  I congratulate you, fellow citizens, on the approach of the period at which you may interpose your authority constitutionally to withdraw the citizens of the United States from all further participation in those violations of human rights which have been so long continued on the unoffending inhabitants of Africa, and which the morality, the reputation, and the best of our country have long been eager to proscribe. Although no law you may pass can take prohibitory effect Ôtil the 1st day of the year 1808, yet the intervening period is not too long to prevent by timely notice expeditions which can not be completed before that day.  The receipts at the Treasury during the year ending on the 30th day of September last have amounted to near $15M, which have enabled us, after meeting the current demands, to pay $2.7M of the American claims in part of the price of Louisiana; to pay of the funded debt upward of $3M of principal and nearly $4M of interest, and, in addition, to reimburse in the course of the present month near $2M of 5.5% stock. These payments and reimbursements of the funded debt, with those which had been made in the 4 years and a half preceding, will at the close of the present year have extinguished upward of $23M of principal.  The duties composing the Mediterranean fund will cease by law at the end of the present session. Considering, however, that they are levied chiefly on luxuries and that we have an impost on salt, a necessary of life, the free use of which otherwise is so important, I recommend to your consideration the suppression of the duties on salt and the continuation of the Mediterranean fund instead thereof for a short time, after which that also will become unnecessary for any purpose now within contemplation.  When both of these branches of revenue shall in this way be relinquished there will still ere long be an accumulation of moneys in the Treasury beyond the installments of public debt which we are permitted by contract to pay. They can not then, without a modification assented to by the public creditors, be applied to the extinguishment of this debt and the complete liberation of our revenues, the most desirable of all objects. Nor, if our peace continues, will they be wanting for any other existing purpose. The question therefore now comes forward, To what other objects shall these surpluses be appropriated, and the whole surplus of impost, after the entire discharge of the public debt, and during those intervals when the purposes of war shall not call for them? Shall we suppress the impost and give that advantage to foreign over domestic manufactures? On a few articles of more general and necessary use the suppression in due season will doubtless be right, but the great mass of the articles on which impost is paid are foreign luxuries, purchased by those only who are rich enough to afford themselves the use of them.  Their patriotism would certainly prefer its continuance and application to the great purposes of the public education, roads, rivers, canals, and such other objects of public improvement as it may be thought proper to add to the constitutional enumeration of Federal powers. By these operations new channels of communications will be opened between the States, the lines of separation will disappear, their interests will be identified, and their union cemented by new and indissoluble ties. Education is here placed among the articles of public care, not that it would be proposed to take its ordinary branches out of the hands of private enterprise, which manages so much better all the concerns to which it is equal, but a public institution can alone supply those sciences which though rarely called for are yet necessary to complete the circle, all the parts of which contribute to the improvement of the country and some of them to its preservation.  The subject is now proposed for the consideration of Congress, because if approved by the time the State legislatures shall have deliberated on this extension of the Federal trusts, and the laws shall be passed and other arrangements made for their execution, the necessary funds will be on hand and without employment.  I suppose an amendment to the Constitution, by consent of the States, necessary, because the objects now recommended are not among those enumerated in the Constitution, and to which it permits the public moneys to be applied.  The present consideration of a national establishment for education particularly is rendered proper by this circumstance also, that if Congress, approving the proposition, shall yet think it more eligible to found it on a donation of lands, they have it now in their power to endow it with those which will be among the earliest to produce the necessary income. This foundation would have the advantage of being independent of war, which may suspend other improvements by requiring for its own purposes the resources destined for them.  This, fellow citizens, is the state of the public interests at the present moment and according to the information now possessed. But such is the situation of the nations of Europe and such, too, the predicament is which we stand with some of them that we can not rely with certainty on the present aspect of our affairs, that may change from moment to moment during the course of your session or after you shall have separated.  Our duty is, therefore, to act upon things as they are and to make a reasonable provision for whatever they may be. Were armies to be raised whenever a speck of war is visible in our horizon, we never should have been without them. Our resources would have been exhausted on dangers which have never happened, instead of being reserved for what is really to take place. A steady, perhaps a quickened, pace in preparation for the defense of our sea port towns and waters; an early settlement of the most exposed and vulnerable parts of our country; a militia so organized that its effective portions can be [see APP Note] called to any point in the Union, or volunteers instead of them to serve a sufficient time, are means which may always be ready, yet never preying on our resources until actually called into use. They will maintain the public interests while a more permanent force shall be in course of preparation. But much will depend on the promptitude with which these means can be brought into activity. If war be forced upon us, in spite of our long and vain appeals to the justice of nations, rapid and vigorous movements in its outset will go far toward securing us in its course and issue, and toward throwing its burthens on those who render necessary the resort from reason to force.  The result of our negotiations, or such incidents in their course as may enable us to infer their probable [see APP Note] issue; such further movements also on our western frontiers as may shew whether war is to be pressed there while negotiation is protracted elsewhere, shall be communicated to you from time to time as they become known to me, with whatever other information I possess or may receive, which may aid your deliberations on the great national interests committed to your charge.  TH. JEFFERSON 	DR
Thank you. Mr. Speaker, Mr. Vice President, Members of Congress, my fellow Americans: Tonight marks the eighth year that I've come here to report on the State of the Union. And for this final one, I'm going to try to make it a little shorter. I know some of you are antsy to get back to Iowa. [Laughter] I've been there. I'll be shaking hands afterwards if you want some tips. [Laughter]  Now, I understand that because it's an election season, expectations for what we will achieve this year are low. But, Mr. Speaker, I appreciate the constructive approach that you and other leaders took at the end of last year to pass a budget and make tax cuts permanent for working families. So I hope we can work together this year on some bipartisan priorities like criminal justice reform and helping people who are battling prescription drug abuse and heroin abuse. So, who knows, we might surprise the cynics again.  But tonight I want to go easy on the traditional list of proposals for the year ahead. Don't worry, I've got plenty—[laughter]—from helping students learn to write computer code to personalizing medical treatments for patients. And I will keep pushing for progress on the work that I believe still needs to be done: fixing a broken immigration system, protecting our kids from gun violence, equal pay for equal work, paid leave, raising the minimum wage. All these things still matter to hard-working families. They're still the right thing to do. And I won't let up until they get done.  But for my final address to this Chamber, I don't want to just talk about next year. I want to focus on the next 5 years, the next 10 years, and beyond. I want to focus on our future.  We live in a time of extraordinary change, change that's reshaping the way we live, the way we work, our planet, our place in the world. It's change that promises amazing medical breakthroughs, but also economic disruptions that strain working families. It promises this education for girls in the most remote villages, but also connects terrorists plotting an ocean away. It's change that can broaden opportunity or widen inequality. And whether we like it or not, the pace of this change will only accelerate.  America has been through big changes before: wars and depression, the influx of new immigrants, workers fighting for a fair deal, movements to expand civil rights. Each time, there have been those who told us to fear the future; who claimed we could slam the brakes on change; who promised to restore past glory if we just got some group or idea that was threatening America under control. And each time, we overcame those fears. We did not, in the words of Lincoln, adhere to the "dogmas of the quiet past." Instead, we thought anew and acted anew. We made change work for us, always extending America's promise outward, to the next frontier, to more people. And because we did, because we saw opportunity with a—where others saw peril, we emerged stronger and better than before.  What was true then can be true now. Our unique strengths as a nation—our optimism and work ethic, our spirit of discovery, our diversity, our commitment to rule of law—these things give us everything we need to ensure prosperity and security for generations to come.  In fact, it's in that spirit that we have made progress these past 7 years. That's how we recovered from the worst economic crisis in generations. That's how we reformed our health care system and reinvented our energy sector. That's how we delivered more care and benefits to our troops coming home and our veterans. That's how we secured the freedom in every State to marry the person we love.  But such progress is not inevitable. It's the result of choices we make together. And we face such choices right now. Will we respond to the changes of our time with fear, turning inward as a nation, turning against each other as a people? Or will we face the future with confidence in who we are, in what we stand for, in the incredible things that we can do together?  So let's talk about the future and four big questions that I believe we as a country have to answer, regardless of who the next President is or who controls the next Congress. First, how do we give everyone a fair shot at opportunity and security in this new economy? Second, how do we make technology work for us and not against us, especially when it comes to solving urgent challenges like climate change? Third, how do we keep America safe and lead the world without becoming its policeman? And finally, how can we make our politics reflect what's best in us and not what's worst?  Let me start with the economy and a basic fact: The United States of America right now has the strongest, most durable economy in the world. We're in the middle of the longest streak of private sector job creation in history. More than 14 million new jobs, the strongest 2 years of job growth since the 1990s, an unemployment rate cut in half. Our auto industry just had its best year ever. That's just part of a manufacturing surge that's created nearly 900,000 new jobs in the past 6 years. And we've done all this while cutting our deficits by almost three-quarters.  Anyone claiming that America's economy is in decline is peddling fiction. Now, what is true—and the reason that a lot of Americans feel anxious—is that the economy has been changing in profound ways, changes that started long before the great recession hit, changes that have not let up.  Today, technology doesn't just replace jobs on the assembly line, but any job where work can be automated. Companies in a global economy can locate anywhere, and they face tougher competition. As a result, workers have less leverage for a raise. Companies have less loyalty to their communities. And more and more wealth and income is concentrated at the very top.  All these trends have squeezed workers, even when they have jobs, even when the economy is growing. It's made it harder for a hard-working family to pull itself out of poverty, harder for young people to start their careers, tougher for workers to retire when they want to. And although none of these trends are unique to America, they do offend our uniquely American belief that everybody who works hard should get a fair shot.  For the past 7 years, our goal has been a growing economy that also works better for everybody. We've made progress, but we need to make more. And despite all the political arguments that we've had these past few years, there are actually some areas where Americans broadly agree.  We agree that real opportunity requires every American to get the education and training they need to land a good-paying job. The bipartisan reform of No Child Left Behind was an important start, and together, we've increased early childhood education, lifted high school graduation rates to new highs, boosted graduates in fields like engineering. In the coming years, we should build on that progress, by providing pre-K for all and offering every student the hands-on computer science and math classes that make them job-ready on day one. We should recruit and support more great teachers for our kids.  And we have to make college affordable for every American. No hard-working student should be stuck in the red. We've already reduced student loan payments by—to 10 percent of a borrower's income. And that's good. But now we've actually got to cut the cost of college. Providing 2 years of community college at no cost for every responsible student is one of the best ways to do that, and I'm going to keep fighting to get that started this year. It's the right thing to do.  But a great education isn't all we need in this new economy. We also need benefits and protections that provide a basic measure of security. It's not too much of a stretch to say that some of the only people in America who are going to work the same job, in the same place, with a health and retirement package for 30 years are sitting in this Chamber. [Laughter] For everyone else, especially folks in their forties and fifties, saving for retirement or bouncing back from job loss has gotten a lot tougher. Americans understand that at some point in their careers, in this new economy, they may have to retool, they may have to retrain. But they shouldn't lose what they've already worked so hard to build in the process.  That's why Social Security and Medicare are more important than ever. We shouldn't weaken them, we should strengthen them. And for Americans short of retirement, basic benefits should be just as mobile as everything else is today. That, by the way, is what the Affordable Care Act is all about. It's about filling the gaps in employer-based care so that when you lose a job or you go back to school or you strike out and launch that new business, you'll still have coverage. Nearly 18 million people have gained coverage so far. And in the process, health care inflation has slowed. And our businesses have created jobs every single month since it became law.  Now, I'm guessing we won't agree on health care anytime soon, but—[laughter]—a little applause back there. [Laughter] Just a guess. But there should be other ways parties can work together to improve economic security. Say a hard-working American loses his job. We shouldn't just make sure that he can get unemployment insurance, we should make sure that program encourages him to retrain for a business that's ready to hire him. If that new job doesn't pay as much, there should be a system of wage insurance in place so that he can still pay his bills. And even if he's going from job to job, he should still be able to save for retirement and take his savings with him. That's the way we make the new economy work better for everybody.  I also know Speaker Ryan has talked about his interest in tackling poverty. America is about giving everybody willing to work a chance, a hand up. And I'd welcome a serious discussion about strategies we can all support, like expanding tax cuts for low-income workers who don't have children.  But there are some areas where—we just have to be honest—it has been difficult to find agreement over the last 7 years. And a lot of them fall under the category of what role the Government should play in making sure the system's not rigged in favor of the wealthiest and biggest corporations. And it's an honest disagreement, and the American people have a choice to make.  I believe a thriving private sector is the lifeblood of our economy. I think there are outdated regulations that need to be changed. There is redtape that needs to be cut. [Applause] There you go! Yes! See? But after years now of record corporate profits, working families won't get more opportunity or bigger paychecks just by letting big banks or big oil or hedge funds make their own rules at everybody else's expense. Middle class families are not going to feel more secure because we allowed attacks on collective bargaining to go unanswered. Food stamp recipients did not cause the financial crisis; recklessness on Wall Street did. Immigrants aren't the principal reason wages haven't gone up; those decisions are made in the boardrooms that all too often put quarterly earnings over long-term returns. It's sure not the average family watching tonight that avoids paying taxes through offshore accounts. [Laughter]  The point is, I believe that in this new economy, workers and startups and small businesses need more of a voice, not less. The rules should work for them. And I'm not alone in this. This year, I plan to lift up the many businesses who have figured out that doing right by their workers or their customers or their communities ends up being good for their shareholders. And I want to spread those best practices across America. That's part of a brighter future.  In fact, it turns, out many of our best corporate citizens are also our most creative. And this brings me to the second big question we as a country have to answer: How do we reignite that spirit of innovation to meet our biggest challenges?  Sixty years ago, when the Russians beat us into space, we didn't deny Sputnik was up there. [Laughter] We didn't argue about the science or shrink our research and development budget. We built a space program almost overnight. And 12 years later, we were walking on the Moon.  Now, that spirit of discovery is in our DNA. America is Thomas Edison and the Wright Brothers and George Washington Carver. America is Grace Hopper and Katherine Johnson and Sally Ride. America is every immigrant and entrepreneur from Boston to Austin to Silicon Valley, racing to shape a better future. That's who we are.  And over the past 7 years, we've nurtured that spirit. We've protected an open Internet and taken bold new steps to get more students and low-income Americans online. We've launched next-generation manufacturing hubs and online tools that give an entrepreneur everything he or she needs to start a business in a single day. But we can do so much more.  Last year, Vice President Biden said that with a new moonshot, America can cure cancer. Last month, he worked with this Congress to give scientists at the National Institutes of Health the strongest resources that they've had in over a decade. Well—so tonight I'm announcing a new national effort to get it done. And because he's gone to the mat for all of us on so many issues over the past 40 years, I'm putting Joe in charge of mission control. For the loved ones we've all lost, for the families that we can still save, let's make America the country that cures cancer once and for all. What do you say, Joe? Let's make it happen.  Now, medical research is critical. We need the same level of commitment when it comes to developing clean energy sources. Look, if anybody still wants to dispute the science around climate change, have at it. [Laughter] You will be pretty lonely, because you'll be debating our military, most of America's business leaders, the majority of the American people, almost the entire scientific community, and 200 nations around the world who agree it's a problem and intend to solve it. But even if the planet wasn't at stake, even if 2014 wasn't the warmest year on record—until 2015 turned out to be even hotter—why would we want to pass up the chance for American businesses to produce and sell the energy of the future? Listen, 7 years ago, we made the single biggest investment in clean energy in our history. Here are the results. In fields from Iowa to Texas, wind power is now cheaper than dirtier, conventional power. On rooftops from Arizona to New York, solar is saving Americans tens of millions of dollars a year on their energy bills and employs more Americans than coal in jobs that pay better than average. We're taking steps to give homeowners the freedom to generate and store their own energy, something, by the way, that environmentalists and Tea Partiers have teamed up to support. And meanwhile, we've cut our imports of foreign oil by nearly 60 percent and cut carbon pollution more than any other country on Earth. Gas under 2 bucks a gallon ain't bad either. [Laughter]  Now we've got to accelerate the transition away from old, dirtier energy sources. Rather than subsidize the past, we should invest in the future, especially in communities that rely on fossil fuels. We do them no favor when we don't show them where the trends are going. And that's why I'm going to push to change the way we manage our oil and coal resources so that they better reflect the costs they impose on taxpayers and our planet. And that way, we put money back into those communities and put tens of thousands of Americans to work building a 21st-century transportation system.  Now, none of this is going to happen overnight. And yes, there are plenty of entrenched interests who want to protect the status quo. But the jobs we'll create, the money we'll save, the planet we'll preserve—that is the kind of future our kids and our grandkids deserve. And it's within our grasp.  Now, climate change is just one of many issues where our security is linked to the rest of the world. And that's why the third big question that we have to answer together is how to keep America safe and strong without either isolating ourselves or trying to nation-build everywhere there's a problem.  Now, I told you earlier all the talk of America's economic decline is political hot air. Well, so is all the rhetoric you hear about our enemies getting stronger and America getting weaker. Let me tell you something: The United States of America is the most powerful nation on Earth. Period. [Applause] Period. It's not even close. [Applause] It's not even close. It's not even close. We spend more on our military than the next eight nations combined. Our troops are the finest fighting force in the history of the world. [Applause] All right. No nation attacks us directly, or our allies, because they know that's the path to ruin. Surveys show our standing around the world is higher than when I was elected to this office, and when it comes to every important international issue, people of the world do not look to Beijing or Moscow to lead. They call us. So I think it's useful to level set here, because when we don't, we don't make good decisions.  Now, as someone who begins every day with an intelligence briefing, I know this is a dangerous time. But that's not primarily because of some looming superpower out there, and it's certainly not because of diminished American strength. In today's world, we're threatened less by evil empires and more by failing states.  The Middle East is going through a transformation that will play out for a generation, rooted in conflicts that date back millennia. Economic headwinds are blowing in from a Chinese economy that is in significant transition. Even as their economy severely contracts, Russia is pouring resources in to prop up Ukraine and Syria, client states that they saw slipping away from their orbit. And the international system we built after World War II is now struggling to keep pace with this new reality. It's up to us, the United States of America, to help remake that system. And to do that well, it means that we've got to set priorities. Priority number one is protecting the American people and going after terrorist networks. Both Al Qaida and now ISIL pose a direct threat to our people, because in today's world, even a handful of terrorists who place no value on human life, including their own, can do a lot of damage. They use the Internet to poison the minds of individuals inside our country. Their actions undermine and destabilize our allies. We have to take them out.  But as we focus on destroying ISIL, over-the-top claims that this is world war III just play into their hands. Masses of fighters on the back of pickup trucks, twisted souls plotting in apartments or garages, they pose an enormous danger to civilians; they have to be stopped. But they do not threaten our national existence. That is the story ISIL wants to tell. That's the kind of propaganda they use to recruit. We don't need to build them up to show that we're serious, and we sure don't need to push away vital allies in this fight by echoing the lie that ISIL is somehow representative of one of the world's largest religions. We just need to call them what they are: killers and fanatics who have to be rooted out, hunted down, and destroyed.  And that's exactly what we're doing. For more than a year, America has led a coalition of more than 60 countries to cut off ISIL's financing, disrupt their plots, stop the flow of terrorist fighters, and stamp out their vicious ideology. With nearly 10,000 airstrikes, we're taking out their leadership, their oil, their training camps, their weapons. We're training, arming, and supporting forces who are steadily reclaiming territory in Iraq and Syria.  If this Congress is serious about winning this war and wants to send a message to our troops and the world, authorize the use of military force against ISIL. Take a vote. [Applause] Take a vote. But the American people should know that with or without congressional action, ISIL will learn the same lessons as terrorists before them. If you doubt America's commitment—or mine—to see that justice is done, just ask Usama bin Laden. Ask the leader of Al Qaida in Yemen, who was taken out last year, or the perpetrator of the Benghazi attacks, who sits in a prison cell. When you come after Americans, we go after you. And it may take time, but we have long memories, and our reach has no limits.  Our foreign policy has to be focused on the threat from ISIL and Al Qaida, but it can't stop there. For even without ISIL, even without Al Qaida, instability will continue for decades in many parts of the world: in the Middle East, in Afghanistan and parts of Pakistan, in parts of Central America, in Africa and Asia. Some of these places may become safe havens for new terrorist networks. Others will just fall victim to ethnic conflict or famine, feeding the next wave of refugees. The world will look to us to help solve these problems, and our answer needs to be more than tough talk or calls to carpet-bomb civilians. That may work as a TV sound bite, but it doesn't pass muster on the world stage.  We also can't try to take over and rebuild every country that falls into crisis, even if it's done with the best of intentions. That's not leadership; that's a recipe for quagmire, spilling American blood and treasure that ultimately will weaken us. It's the lesson of Vietnam; it's the lesson of Iraq. And we should have learned it by now.  Now, fortunately there is a smarter approach: a patient and disciplined strategy that uses every element of our national power. It says America will always act, alone if necessary, to protect our people and our allies, but on issues of global concern, we will mobilize the world to work with us and make sure other countries pull their own weight. That's our approach to conflicts like Syria, where we're partnering with local forces and leading international efforts to help that broken society pursue a lasting peace. That's why we built a global coalition, with sanctions and principled diplomacy, to prevent a nuclear-armed Iran. And as we speak, Iran has rolled back its nuclear program, shipped out its uranium stockpile, and the world has avoided another war.  That's how we stopped the spread of Ebola in West Africa. Our military, our doctors, our development workers—they were heroic; they set up the platform that then allowed other countries to join in behind us and stamp out that epidemic. Hundreds of thousands, maybe a couple million, lives were saved.  That's how we forged a Trans-Pacific Partnership to open markets and protect workers and the environment and advance American leadership in Asia. It cuts 18,000 taxes on products made in America, which will then support more good jobs here in America. With TPP, China does not set the rules in that region, we do. You want to show our strength in this new century? Approve this agreement. Give us the tools to enforce it. It's the right thing to do.  Let me give you another example. Fifty years of isolating Cuba had failed to promote democracy. It set us back in Latin America. That's why we restored diplomatic relations, opened the door to travel and commerce, positioned ourselves to improve the lives of the Cuban people. So if you want to consolidate our leadership and credibility in the hemisphere, recognize that the cold war is over. Lift the embargo.  The point is, American leadership in the 21st century is not a choice between ignoring the rest of the world—except when we kill terrorists—or occupying and rebuilding whatever society is unraveling. Leadership means a wise application of military power and rallying the world behind causes that are right. It means seeing our foreign assistance as a part of our national security, not something separate, not charity.  When we lead nearly 200 nations to the most ambitious agreement in history to fight climate change, yes, that helps vulnerable countries, but it also protects our kids. When we help Ukraine defend its democracy or Colombia resolve a decades-long war, that strengthens the international order we depend on. When we help African countries feed their people and care for the sick, it's the right thing to do, and it prevents the next pandemic from reaching our shores. Right now we're on track to end the scourge of HIV/AIDS. That's within our grasp. And we have the chance to accomplish the same thing with malaria, something I'll be pushing this Congress to fund this year.  That's American strength. That's American leadership. And that kind of leadership depends on the power of our example. That's why I will keep working to shut down the prison at Guantanamo. It is expensive, it is unnecessary, and it only serves as a recruitment brochure for our enemies. There's a better way.  And that's why we need to reject any politics—any politics—that targets people because of race or religion. Let me just say this. This is not a matter of political correctness, this is a matter of understanding just what it is that makes us strong. The world respects us not just for our arsenal, it respects us for our diversity and our openness and the way we respect every faith.  His Holiness Pope Francis told this body from the very spot that I'm standing on tonight that "to imitate the hatred and violence of tyrants and murderers is the best way to take their place." When politicians insult Muslims, whether abroad or our fellow citizens, when a mosque is vandalized or a kid is called names, that doesn't make us safer. That's not telling it what—telling it like it is. It's just wrong. It diminishes us in the eyes of the world. It makes it harder to achieve our goals. It betrays who we are as a country. "We the People." Our Constitution begins with those three simple words, words we've come to recognize mean all the people, not just some; words that insist we rise and fall together, that that's how we might perfect our Union. And that brings me to the fourth and maybe most important thing that I want to say tonight.  The future we want—all of us want—opportunity and security for our families, a rising standard of living, a sustainable, peaceful planet for our kids—all that is within our reach. But it will only happen if we work together. It will only happen if we can have rational, constructive debates. It will only happen if we fix our politics.  A better politics doesn't mean we have to agree on everything. This is a big country: different regions, different attitudes, different interests. That's one of our strengths too. Our Founders distributed power between States and branches of government and expected us to argue, just as they did, fiercely, over the size and shape of government, over commerce and foreign relations, over the meaning of liberty and the imperatives of security.  But democracy does require basic bonds of trust between its citizens. It doesn't work if we think the people who disagree with us are all motivated by malice. It doesn't work if we think that our political opponents are unpatriotic or trying to weaken America. Democracy grinds to a halt without a willingness to compromise or when even basic facts are contested or when we listen only to those who agree with us. Our public life withers when only the most extreme voices get all the attention. And most of all, democracy breaks down when the average person feels their voice doesn't matter, that the system is rigged in favor of the rich or the powerful or some special interest.  Too many Americans feel that way right now. It's one of the few regrets of my Presidency: that the rancor and suspicion between the parties has gotten worse instead of better. I have no doubt, a President with the gifts of Lincoln or Roosevelt might have better bridged the divide, and I guarantee, I'll keep trying to be better so long as I hold this office.  But, my fellow Americans, this cannot be my task—or any President's—alone. There are a whole lot of folks in this Chamber, good people, who would like to see more cooperation, would like to see a more elevated debate in Washington, but feel trapped by the imperatives of getting elected, by the noise coming out of your base. I know; you've told me. It's the worst kept secret in Washington. And a lot of you aren't enjoying being trapped in that kind of rancor.  But that means if we want a better politics—and I'm addressing the American people now—if we want a better politics, it's not enough just to change a Congressman or change a Senator or even change a President. We have to change the system to reflect our better selves.  I think we've got to end the practice of drawing our congressional districts so that politicians can pick their voters and not the other way around. Let a bipartisan group do it.  I believe we've got to reduce the influence of money in our politics so that a handful of families or hidden interests can't bankroll our elections. And if our existing approach to campaign finance reform can't pass muster in the courts, we need to work together to find a real solution. Because it's a problem. And most of you don't like raising money. [Laughter] I know. I've done it.  We've got to make it easier to vote, not harder. We need to modernize it for the way we live now. This is America: We want to make it easier for people to participate. And over the course of this year, I intend to travel the country to push for reforms that do just that. But I can't do these things on my own. Changes in our political process—in not just who gets elected, but how they get elected—that will only happen when the American people demand it. It depends on you. That's what's meant by a government of, by, and for the people.  What I'm suggesting is hard. It's a lot easier to be cynical; to accept that change is not possible and politics is hopeless and the problem is, all the folks who are elected don't care; and to believe that our voices and our actions don't matter. But if we give up now, then we forsake a better future. Those with money and power will gain greater control over the decisions that could send a young soldier to war or allow another economic disaster or roll back the equal rights and voting rights that generations of Americans have fought, even died, to secure. And then, as frustration grows, there will be voices urging us to fall back into our respective tribes, to scapegoat fellow citizens who don't look like us or pray like us or vote like we do or share the same background.  We can't afford to go down that path. It won't deliver the economy we want. It will not produce the security we want. But most of all, it contradicts everything that makes us the envy of the world.  So, my fellow Americans, whatever you may believe, whether you prefer one party or no party, whether you supported my agenda or fought as hard as you could against it, our collective futures depends on your willingness to uphold your duties as a citizen. To vote. To speak out. To stand up for others, especially the weak, especially the vulnerable, knowing that each of us is only here because somebody, somewhere, stood up for us. We need every American to stay active in our public life—and not just during election time—so that our public life reflects the goodness and the decency that I see in the American people every single day.  It is not easy. Our brand of democracy is hard. But I can promise that a little over a year from now, when I no longer hold this office, I will be right there with you as a citizen, inspired by those voices of fairness and vision, of grit and good humor and kindness, that have helped America travel so far. Voices that help us see ourselves not, first and foremost, as Black or White or Asian or Latino, not as gay or straight, immigrant or native born, not Democrat or Republican, but as Americans first, bound by a common creed. Voices Dr. King believed would have the final word: voices of "unarmed truth and unconditional love."  And they're out there, those voices. They don't get a lot of attention; they don't seek a lot of fanfare; but they're busy doing the work this country needs doing. I see them everywhere I travel in this incredible country of ours. I see you, the American people. And in your daily acts of citizenship, I see our future unfolding.  I see it in the worker on the assembly line who clocked extra shifts to keep his company open and the boss who pays him higher wages instead of laying him off. I see it in the dreamer who stays up late at night to finish her science project and the teacher who comes in early, maybe with some extra supplies that she bought because she knows that that young girl might someday cure a disease.  I see it in the American who served his time, made bad mistakes as a child, but now is dreaming of starting over. And I see it in the business owner who gives him that second chance. The protester determined to prove that justice matters and the young cop walking the beat, treating everybody with respect, doing the brave, quiet work of keeping us safe.  I see it in the soldier who gives almost everything to save his brothers, the nurse who tends to him till he can run a marathon, the community that lines up to cheer him on. It's the son who finds the courage to come out as who he is and the father whose love for that son overrides everything he's been taught.  I see it in the elderly woman who will wait in line to cast her vote as long as she has to, the new citizen who casts his vote for the first time, the volunteers at the polls who believe every vote should count. Because each of them, in different ways, know how much that precious right is worth.  That's the America I know. That's the country we love: clear eyed, big hearted, undaunted by challenge. Optimistic that unarmed truth and unconditional love will have the final word. That's what makes me so hopeful about our future. I believe in change because I believe in you, the American people. And that's why I stand here as confident as I have ever been that the state of our Union is strong.  Thank you. God bless you. God bless the United States of America. Thank you. 	D
To the Congress of the United States:  We enter 1974 not at the beginning of an historical cycle, but in the middle of one. Beginnings have been made in many vital areas, beginnings which we now must build upon. New needs have arisen which we are in the process of addressing. Opportunities are coalescing which give us a chance to make historic progress toward a stable peace and expanding prosperity.  In looking at the agenda for 1974, we cannot consider the work of this or of any one year in isolation. What we select as our tasks in 1974 must build on the work of the years before, and anticipate needs of those ahead. Indeed, one of the continuing challenges facing us in the legislative process is that of the timing and pacing of our initiatives.  It would be as false to pretend that we could do--or afford to do everything at once, as it would be to maintain that we can do nothing. Therefore, we must strive to maintain steady progress, selecting each year among many worthy projects those that are ripe for action at that time, and that can be accommodated within the constraints of our budget--but pressing to ensure that the most that can be done is clone.  In discussing my legislative recommendations for this Congressional session, therefore, I shall do so in the context of the advances that have already been made, the problems that remain, and the special opportunities we have in 1974 to make further progress.  I have started with certain basic premises:  --The basic tax burden on the American taxpayer should not be increased.  --Our new initiatives, therefore, should be scaled to what can prudently be spent given the level of revenues that would be generated by the existing tax structure at full utilization of our resources.  --Increases in Federal spending should be kept to a minimum, but the budget should be flexible enough to be used, if necessary, to maintain jobs and prosperity.  --It is essential that we break the old habit of regarding any Federal program, once established, as permanent; we must learn to scrap old programs that are no longer effective or needed in favor of new ones that are. This is the only way we can afford to do what must be done.  Within these guidelines, there are a number of major new initiatives which are ripe for action in 1974--several of which can be milestones on our march to a life of greater freedom, greater opportunity and greater prosperity for all.  In particular, 1974 can be the year in which:  --First, we not only break the back of the energy crisis, but also, through Project Independence, lay the foundation for our future capacity to meet America's energy needs from America's own resources--at reasonable prices and with adequate environmental protection.  --Second, we take another giant stride toward lasting peace in the world--not only by continuing our policy of negotiation rather than confrontation where the great powers are concerned, but also by helping toward the achievement of a just and lasting settlement in the Middle East.  --Third, we will check the rise in prices, without administering the harsh medicine of recession, and move the economy into a period of steady growth at a sustainable level.  --Fourth, we establish a new system of comprehensive health insurance that makes high quality health care available to every American in a dignified manner and at a price he or she can afford.  --Fifth, we continue to build a new era of achievement and responsiveness in State and local government, by cutting the strings of too tight Federal control that have bound the hands of State and local officials in community and economic development programs.  --Sixth, we make a crucial breakthrough toward better transportation by strengthening the ability of local communities to deal with their transportation problems.  --Seventh, we reform our system of Federal aid to education to provide it when it is needed, where it is needed, and so that it will do the most for those who need it most.  --Eighth, we make an historic beginning on the task of defining and protecting the right of personal privacy.  --Ninth, we start on a new road toward reform of a welfare system that bleeds the taxpayer, corrodes the community and demeans those it is meant to assist.  --And tenth, together with the other nations of the world, we establish the economic framework within which Americans will share more fully in an expanding world trade and prosperity in the years ahead, with more open access to both markets and supplies.  MEETING OUR ENERGY NEEDS  At the start of this Congressional session, the number one legislative concern must be the energy crisis.  The cooperative efforts of the American people, together with measures already taken by the Administration, have significantly reduced the immediate impact of the energy crisis. There has been some economic dislocation and some individual hardships, but these have been minimized by our policy of encouraging broad conservation measures and allocating scarce energy resources so as to do the least possible harm to jobs and the economy. The object has been to keep our farms and factories producing, to keep our workers on the job, and to keep our goods and services flowing, even if this means that we must live and work in somewhat less comfortable surroundings and drive fewer miles at slower speeds.  Even with the full cooperation of most Americans, however, we will still face real challenges--and genuine shortages--in the months and years immediately ahead. To meet these challenges, we must change our patterns of energy consumption and production, we must press forward with the development of reliable new energy sources, and we must adjust to the fact that the age of unlimited supplies of cheap energy is ended.  The immediate energy crisis began with the oil embargo imposed in the Middle East last fall. But the embargo only hastened a shortage that was already anticipated. For a number of years our fuel consumption had been climbing while our production of domestic energy supplies declined. We became more and more heavily dependent on oil imports and, consequently, more vulnerable to any interruption or reduction in those imports, as well as to sudden increases in foreign prices. Today, we have an interruption in supplies and we face sharply increased prices for those supplies when they are restored.  Irrespective of the possibility of restoring the flow of Middle East oil, we must act now to ensure that we are never again dependent on foreign sources of supply for our energy needs. We must continue to slow the rise in our rate of consumption, and we must sharply increase our domestic production.  The effects of energy conservation can be felt at once. Already the responsiveness of the American people to the recent crisis has proved to be the major factor in helping to avoid the serious consequences that the winter might have brought. That conservation must continue.  The required increase in domestic supplies cannot be achieved so rapidly. It will involve the development of entirely new sources of energy as well as the expanded development of oil and coal resources; it will require a significant expansion of our research and development efforts; it will require a shift from the use of scarce fuels to those which are more plentiful but also more expensive than the cheap energy to which we have been accustomed; it will require that we encourage both exploration and production; it will mean that as we act to prevent the energy industry from making unconscionable windfall profits, we must also avoid crippling that industry with punitive legislation; and finally, it will require that we make some difficult decisions as we sort out our economic and environmental priorities.  As we seek to act domestically to increase fuel supplies, we will act internationally in an effort to obtain oil at reasonable prices. Unreasonable increases in the cost of so vital a commodity as oil poses a threat to the entire structure of international economic relations. Not only U.S. jobs, prices and incomes are at stake, but the general pattern of international cooperation is at stake as well. It is our hope that we can work out cooperative efforts with our friends abroad so that we eau all meet our energy needs without disrupting our economies and without disrupting our economic relationships.  Last week I sent to the Congress a comprehensive special message setting forth our energy situation, our energy prospects, our energy needs, and the legislative measures I consider necessary for meeting those needs. I shall not repeat that analysis nor the full list of those recommendations today.  I do want to urge, however, that the critical energy measures which I have proposed be made the first order of legislative business in this session of the Congress, and that work go forward expeditiously on the others. Those measures which I request be given the highest priority are the following:  --A special energy act which would permit additional restrictions on energy consumption and would postpone temporarily certain Clean Air Act requirements for power plants and automotive emissions;  --A windfall profits tax which would prevent private profiteering at the expense of public sacrifice;  --Unemployment insurance for people in areas impacted by serious economic dislocation; and  --Mandatory reporting by major energy companies on their inventories, their production and their reserves.  I am also asking that the Congress quickly establish the Federal Energy Administration and the Energy Research and Development Administration to provide the appropriate organizational structure for administering the national energy policy, as we work toward the establishment of a Department of Energy and Natural Resources.  The 13 other energy measures I requested last week deal with longer-term needs, extending beyond the present emergency. But these also require expeditious action if we are to achieve the goal of Project Independence--a capacity for energy self-sufficiency by 1980. The success of Project Independence is essential to the continued strength of our position in world trade, and also to our independence of action as a great power.  I hope that our joint efforts now to resolve the energy crisis and to move toward a capacity for self-sufficiency in energy will enable the President who addresses the 98th Congress a decade from now to look back and say we made it possible for America to enjoy continued peace and prosperity in the 1980s.  THE NATION'S ECONOMY  THE WORLD ECONOMY  During the past three years the United States has reached an unprecedented level of material prosperity. Industrial output has set new records. Trade has flourished. Consumption has risen to the highest levels in history. Even our inflation rate-the most serious economic problem we now face--has been one of the lowest in the industrialized free world.  The major policy decisions we took in 1971 contributed significantly to this prosperity--both here and in other countries. It was clear, for example, as we moved into the 1970s that the international monetary system adopted after World War II needed major adjustments. Unsustainable imbalances had developed, threatening a resurgence of protectionism and a disruption of world trade. This is why I decided to take some very strong measures in August of 1971, measures that have resulted in a major realignment of world currency values, progress toward new and more flexible international monetary management, and negotiations toward a more open and equitable trading system.  These adjustments, while essential, were not easy. But now we have finally entered into a more flexible and realistic international financial system. Much remains to be done to complete the transition, but its beneficial results are already clear.  The realignment of currency values helped produce an increase of 80 percent--or more than $50 billion in the rate of U.S. exports during the past two years, along with a major improvement in our trade balance. This improvement was good not only for us, but also for the rest of the world. In addition, the shocks to the world economy arising from reduced food supplies in 1972 and 1973, and in recent months from the oil embargo and the arbitrary increases in the price of oil, all were managed without panic under the new arrangements. Indeed, world trade has continued to expand, despite these temporary difficulties.  INTERNATIONAL TRADE BARRIERS  A vigorous international trade is vital to the American economy. Jobs for American workers depend on our ability to develop foreign markets. Moreover, American consumers deserve access to foreign-made products that might be less expensive, or more interesting, or unavailable in the United States. But if trade is to be advantageous over the long run, it must be conducted on a basis which is fair to all participants.  There are still many unnecessary barriers to trade which need to be lowered or removed. While improvements have been made in this situation during the last 10 years, we need now to build on this progress and to negotiate for more open access both to markets and supplies. This is why I call upon the Congress with special urgency to complete action on my proposed Trade Reform Act, in order to provide the authority we will need to negotiate effectively for reductions in barriers to trade, to improve the trading system, and to manage trade problems at home more effectively.  As the Senate considers this legislation, I would draw its attention particularly to provisions added in the House which would seriously impede our efforts to achieve more harmonious international relationships. These provisions would effectively prevent both the extension of nondiscriminatory tariff treatment and of credits to certain Communist countries unless they followed a policy which allowed unrestricted emigration. I am convinced that such a prohibition would only make more difficult the kind of cooperative effort between the United States and other governments which is necessary if we are to work together for peace in the Middle East and throughout the world. I am confident that by working with the Congress we can find a solution to this problem that will avoid a major setback in our peacemaking efforts.  At the same time, we must move forward with current negotiations to reform the international payments system under the auspices of the International Monetary Fund. These negotiations are designed to increase the opportunities for all nations to trade and invest profitably. The U.S. has already presented proposals for deterring the growth of significant imbalances in international monetary affairs while preserving for each nation a wide freedom in choosing how necessary adjustments can best be accomplished. In addition, the system will also have to accommodate the increased payments flow and prospective reserve accumulations occasioned by higher oil prices. If, however, other nations share with us the will to preserve a healthy and growing world economy, I am confident that a mutually acceptable solution to this problem will be achieved.  In practice, this means that our markets must increasingly be open to imports from developing countries--a condition that would be significantly facilitated by enactment of the Trade Reform Act. It also means that the Congress must continue to authorize and appropriate our fair share of both bilateral and multilateral economic assistance, including a substantial contribution to the International Development Association which helps the poorest countries. In 1973 we successfully negotiated a reduction of the United States share from 40 percent to one-third of IDA funds. We cannot let the action of the House in voting against IDA stand as our final answer. We will work hard with the Congress to ensure that this country continues to play a leadership role, consistent with our own economic situation, so that long-term economic development can continue to be planned in an orderly manner.  Along with trade and monetary problems, new international agreements on investment policies and new mechanisms for dispute settlement are high on our negotiating agenda for the coming year. We must continue to work for economic arrangements which permit the beneficial flow of international investment so that all may derive the maximum benefit from their own resources. To that end, I am glad to be able to note that this week the United States completed the phaseout of controls on flows of capital from this country.  The recent oil embargo and especially arbitrary increases in the price of oil have created major economic problems for many countries, including the United States. If continued, these policies would require enormous transfers of goods and assets from oil importing nations, transfers which would represent a serious burden for even the wealthiest countries and which would be virtually unbearable for the less developed countries.  Our objectives are clear--we must get world oil prices down from levels that are arbitrary and exploitative. We must also cooperate to ensure that the international and domestic economic policies of the advanced countries do not compound the economic disturbances created by the current emergency but rather that we do all that can be done to contain and limit those disturbances.  THE DOMESTIC ECONOMY  Despite our general prosperity, inflation remains a most serious economic problem, not only in the United States but also for the rest of the world. We see clear evidence of this problem at every hand. World oil prices have gone up recently at dramatic rates. World food, metals and other commodities prices are also up sharply. Because domestic prices cannot be isolated from international prices, worldwide inflationary pressures have helped to drive up prices here at home.  Inflation has been a continuous problem for nearly a decade, and it got worse in 1973. The result has been that people have come to expect continuing price increases--and to behave accordingly in their own economic life. Their behavior, in turn, adds further to inflationary pressures, contributing to a vicious inflationary spiral which is difficult to break.  Some people have said that the best way to wring these inflationary expectations out of our economy is by taking the economy into a recession. I disagree. It is true that a lower level of economic activity would reduce demand and thus lower the pressure for higher prices. However, the cost of such a policy in terms of increased unemployment would simply be unacceptable.  By the same token, I also reject the notion that we should totally ignore inflation and concentrate solely on stimulating higher levels of employment. This policy would also involve too high a cost since it would unleash a further acceleration of the inflation rate.  In developing my economic policy for 1974, I have chosen what I believe is a sound middle road: to cushion the economic slowdown we expect during 1974 without providing additional stimulus for inflation. We expect this policy to reduce the rate of inflation by the end of the year. Should there appear to be a serious threat of a severe slowdown, then we will act promptly and vigorously to support the economy.  As we cope with the challenge of inflation, we must recognize the clear lesson of recent years: While direct controls over prices and wages can help fight inflation in the short-run, they have a very limited useful life. Inevitably, their eventual effect is to create or aggravate significant distortions in production and distribution. Accordingly, I will continue to watch the wage-price situation closely and to pursue a policy of gradual, selective decontrol except in particularly troublesome areas.  At the same time, those Federal programs that will help reduce inflation by increasing the supply of scarce resources will be strengthened. One key area where we can look forward to expanded supplies is that of food. With a new national farm policy that encourages rather than discourages output, we achieved a record harvest in 1973 and another record harvest now appears likely in 1974. Increased agricultural output is the only sure way to bring food prices down--and increased output is what our new policies are producing.  Rapid inflation is not inevitable and it must not be tolerated. To regain control of inflation, however, will require patience and persistence over the long course. My Administration is dedicated to achieving this objective and we are confident that with the help of the American people we will succeed.  Another most pressing economic problem-and a major contributor to inflation-is the energy crisis. As the cost of using our own fuel resources came to exceed the cost of imports in the 1960's, it became increasingly attractive for us to import oil and petroleum products. Unfortunately, our growing dependence on imports made our entire economy more vulnerable to outside forces. That vulnerability has been tested in recent months--as has the even greater vulnerability of the developed countries of Western Europe and Japan and the less developed countries which have no oil. Every American has learned the consequences of this vulnerability: short fuel supplies and higher fuel prices.  To a large extent, our flexible, adaptable economy will solve the longer run energy problem through the normal workings of the marketplace. As energy prices reach somewhat higher levels than the bargain rates of the past, conservation will be encouraged while domestic energy production will be expanded. One example of normal market forces at work has been the recent shift to smaller cars with better gas mileage. Over the next few years we can also expect to see an expansion of coal production and new output of oil and natural gas.  Nevertheless, we will still have to import some of the oil we will need in the immediate future. It is essential, therefore, that we seek a more reasonable price for oil in the world market.  It is also imperative that we review our current and prospective supplies of other basic commodities. I have therefore directed that a comprehensive report and policy analysis be made concerning this crucial matter so that governmental actions can properly anticipate and help avoid other damaging shortages.  Even with the inflation and energy problems, 1973 was a year of many important economic gains for American people.  First, employment in 1973 increased by 2.7 million persons; this 3.3 percent rise in employment was the largest since 1955. New job opportunities greatly benefitted all categories of workers, including women, non-whites, teenagers, and Vietnam veterans. Unemployment reached low levels, especially for skilled workers.  Second, the purchasing power of the American people reached new highs last year. Even after allowing for price increases, people are now consuming more goods and services than they did a year ago, or in any other year in the entire history of the United States.  Not everyone's purchasing power went up, of course. Inflation took its toll on many families whose income did not rise as fast as that of the average American. It is for this reason that we continue to regard inflation as a very serious enemy. At the same time, however, we should not ignore the substantial economic gains that have been made.  PERSPECTIVE ON 1974  We have known for some time that a slowdown in economic growth is inevitable in 1974. It has been clear that our economy has simply been growing at an unsustainable rate. Shortages of skilled workers, full utilization of plant and equipment in key industries, and short supplies of a number of essential raw materials have all provided clear indications that our rate of growth would have to taper off. Unfortunately, the very mild slowdown which we anticipated for 1974 now threatens to be somewhat more pronounced because of the oil embargo, the resulting shortages, and the oil price increase.  We expect, therefore, that during the early part of this year output will rise little if at all, unemployment will rise somewhat and inflation will be high. Our objective, however, is to turn this situation around so that later in the year output will be rising more rapidly, while unemployment will stop rising and will then decline, and the rate of inflation will slow.  ROLE OF THE FEDERAL BUDGET  The budget that I will recommend to the Congress next week will help us achieve our goals for this period. It will support the economy, resisting a major slowdown, but it will not provide a degree of stimulation that could accelerate inflation. If future events suggest that a change in fiscal policy is desirable, I will promptly recommend the appropriate changes. In particular, I will not hesitate to use the stimulus of fiscal policy if it becomes necessary to preserve jobs in the face of an unexpected slackening in economic activity.  For fiscal year 1975, my budget recommends total spending of $304.4 billion, an increase of $29.7 billion over the current year. The increase is being held to the minimum level necessary--nearly 90 percent of the increase is unavoidable under existing law. The budgeted increase in relatively controllable outlays is only 4.2 percent.  Federal receipts should reach $295 billion during fiscal year 1975, an increase of $25 billion. The projected budget deficit is $9.4 billion. Under conditions of full employment, however, Federal receipts would be substantially higher and there would instead be a moderate budget surplus.  The Federal budget remains an essential tool in the fight against inflation. With the energy supply limitations we are experiencing and the price pressures they create, budget discipline is still required.  I have noted with satisfaction that most Members of the Congress have also recognized the need for budgetary discipline, and that work is going forward to establish a more systematic budgeting procedure. The Congress devoted considerable effort in 1973 to developing a mechanism for coordinating its individual spending decisions with the budget as a whole. I continue to support this effort, although I have been troubled by some of the extraneous amendments which have been added to some of the measures for achieving this goal. I urge the Congress to enact workable budget reform in this legislative session.  TAX REFORM  Our entire economy is affected by the incentives for job-creating investments that are embodied in our tax laws. Major steps have been taken to reform our tax laws in the past five years, but much remains to be done.  Since 1969--primarily through the Tax Reform Act of 1969 and the Revenue Act of 1971--major changes have been introduced to make the personal income tax system conform more nearly to contemporary standards of fairness. Both the higher level of personal exemptions and the low income allowance have worked to free more than eight million low income families from their entire Federal income tax burden. The difference in the tax liability for single and married taxpayers has also been reduced. As a result of these and other tax changes, individual income taxes will be about $25 billion less in 1974 than they would have been under the old tax laws. The saving in the tax burden for a typical family will be more than $270, or the equivalent of two weekly take-home paychecks for the average worker.  I look forward to working with the Congress during the next few months not only to simplify our tax laws themselves, but also to simplify the tax forms that individuals fill out and to distribute the income tax burden more equitably.  Last April, the Secretary of the Treasury presented to the Congress a set of Administration proposals for major and fundamental tax reform. Included in these proposals were the establishment of a minimum taxable income so that no one could avoid paying a fair share of the tax burden, the establishment of new rules for taxing income from foreign sources, and also a limitation on artificial accounting losses to eliminate so-called "tax shelters." I urge the Congress to consider the Administration's tax reform proposals early in the year.  I have also been concerned about the excessive burdens imposed on our low income elderly families by State and local property taxes. To deal with this problem, I have proposed a refundable tax credit for those low income elderly persons whose property taxes exceed five percent of their income. The proposal would also provide equivalent relief for the low income elderly individual who pays rent. I again urge the Congress to enact this very important proposal.  FINANCIAL REFORM  The health of our economy depends upon an efficient and flexible private financial system--commercial banks, thrift institutions, credit unions, and a host of other institutions and individuals that comprise the financial sector of our economy. The average family depends on these institutions, both to provide a fair and reliable return on its savings and to provide credit on reasonable terms when needed to buy homes, automobiles and other purchases. There have been occasions recently when this financial system has not worked as well as it should--occasions, for example, when mortgage lending has been very difficult to obtain. In large part these problems have been the result of legislation, regulations and institutional arrangements which were suited to an earlier time but which are now obsolete.  To remedy this problem I submitted draft legislation last year which reflected the results of careful study by a Presidential commission and Government experts. I again urge the Congress to act promptly on this matter so that American families, businessmen, and local governments can be served by a financial system suited to the economic conditions of the 1970s.  The Administration is also studying the competitive position of foreign banks within this country and of American banks abroad to make sure that discriminatory regulations do not prevent American banks and other financial institutions from doing business they are entitled to do. I will be following the results of this study with considerable interest and will submit to the Congress any proposals resulting from the study which seem desirable.  A HEALTHY AGRICULTURAL ECONOMY  Abundance is the primary goal of our farm policy--abundance that can guarantee lower food prices for every American and higher incomes for all American farmers.  Five years ago, agriculture was a troubled industry:  --Government controls were reducing incentives for production and costing the taxpayers over $3 billion a year in farm subsidies designed to hold down production.  --Farm income was low ($14.7 billion) and the long hours worked by farmers earned them an average income that was 26 percent below the nonfarm average. Farm families had been leaving the farm at an average rate of over 100,000 a year.  Today, that picture has been dramatically altered:  --Farm markets have expanded dramatically. Farm exports have set new records in each of the last four years, becoming the largest single factor in the Nation's balance of payments and strengthening the dollar in international money markets.  --Farm production has reached new record levels in each of the last three years, and a new record harvest should be forthcoming in 1974.  --The billions of tax dollars which used to go for farm price support payments for basic commodities every year will be reduced to nearly zero.  --Farm income has reached record levels. By 1973, the gap between farm income and nonfarm income had closed from 26 to 7 percent. Net farm income was up from $14.7 billion to $26.1 billion.  We are making this progress not through more Government regulation but less. One of the proudest achievements of this Administration was the enactment of the Agriculture and Consumer Protection Act of 1973, which places production decisions where they belong--with farmers, not with the Government.  A primary challenge for Federal agricultural policies now is to encourage greater production of agricultural goods-which will mean more income for the farmer, greater international trading benefits for the Nation, and reasonable food prices for the consumer. I am therefore asking the Congress to revamp the programs which still require restrictive Federal control over the production of some remaining farm commodities--especially rice, peanuts, tobacco, sugar, and extra long staple cotton.  To further enhance agricultural activity, the Administration will also:  --Promote longer-run soil and water conservation practices.  --Consolidate the locations of local offices of Federal agricultural agencies-specifically, the Agricultural Stabilization and Conservation Service, the Soil Conservation Service, the Farmers Home Administration, and the Federal Crop Insurance Corporation--creating one-stop agricultural service centers on the local level to make things easier for the farmer and less costly for the Government.  --Place high priority on directing agricultural research into those areas which will assure plentiful agricultural goods at reasonable prices, maintain our competitive advantage in world agricultural production, and protect the land.  At my direction, Secretary Kissinger recently proposed to the United Nations that it convene a World Food Conference, a concern made urgent by acute food shortages in many parts of the world. This conference, to be held in November of 1974, should prove of particular importance to the American farmer, whose extraordinary productivity has made this Nation the world's leading food exporter and whose own prosperity will continue to increase as we help to meet the needs of a hungry world.  Our farm policy must of course address not only the needs of the farmer but also those of the consumer. During 1973, we experienced a period of rapidly increasing food prices. Those prices leveled off in late 1973, but now we appear to be heading into a period of increasing food prices for at least the next few months. It is our intention to hold these increases to the smallest possible rate through executive actions such as lifting the quota on wheat imports, an action that I took last week. But the most significant force in the battle against higher food prices is higher production. This summer and fall, the large 1974 harvest should be coming on the market, serving as the best possible damper on higher prices.  ECONOMIC SECURITY  One of the most significant legislative achievements of 1973 was the enactment of the Comprehensive Employment and Training Act (CETA). A form of manpower revenue sharing, this bill transfers from the Federal Government to States and localities significant control over the design and operation of programs to improve the employability of the unemployed and the underemployed. CETA is a landmark of the New Federalism. It is also a landmark on the way to better manpower programs.  Under this legislation, State and local governments will be able to use Federal funds to meet locally-determined needs and to devote special attention to employment problems with particular local impact-as, for example, those that might arise in certain areas as a result of the present energy shortage. In my new budget, I am including an additional $250 million for CETA in the current fiscal year, and $350 million in the year beginning July I, for distribution to areas with high unemployment. Overall, I am requesting more than $2 billion to fund our training and employment programs in the coming year.  Other proposals related to economic security that I made to the Congress last year, and on which I again urge action, include:  --The establishment of minimum vesting, funding and fiduciary standards for private pension programs, so that workers could have greater assurance of receiving the pensions they expect and deserve when they retire. I urge that we work together to resolve speedily the remaining disagreements and to enact responsible legislation which increases employee protection without burdening employers to such an extent that existing plans are jeopardized or new ones discouraged.  --Extension to State and local governments of the law forbidding employment discrimination against older workers.  --Improvement of the Federal-State unemployment insurance program in several ways: by increasing the State limits that keep some unemployed workers from receiving a reasonable proportion of their normal wage, by extending coverage to farmworkers, and by prohibiting payment of benefits to strikers while assuring benefits to non-participants unemployed as a result of a strike.  These general improvements in unemployment insurance should be augmented by a special extension of present benefits for those specific areas of the country which experience particularly high levels of unemployment over the next 12 months. In addition, basic coverage should be provided for those in these areas who do not at present have any unemployment insurance. I will submit special legislation to achieve this purpose.  I also continue to support legislation to raise the minimum wage. Higher prices have eroded the purchasing power of workers receiving the current minimum wage. But we must be careful to guard against enacting a bill which includes sharp increases or coverage extensions that would keep low income workers from being employed or a bill with a minimum wage for youths so high that we unwittingly deny them jobs.  Finally, we must attack one of the most troublesome problems faced by both rural and urban areas; the existence of persistent and often severe unemployment or low incomes in areas whose character has been altered by changes in our economy and technology. Within the next several weeks, I will propose an Economic Adjustment Assistance program to help States and communities in overcoming problems caused by structural changes in their economies. This program would replace the present Economic Development Administration and the Regional Action Planning Commissions after a period of orderly transition.  INCOME SECURITY  One measure of a nation's character is the respect it accords to its elderly. Another is the way it helps those in need. We can be proud of the efforts we have made, but it is time to reassess where we are and what direction we should take in the future.  We can take pride in the fact that:  --Cash benefits under social security have risen from $26 billion in fiscal year 1969 to $63 billion in fiscal year 1975, primarily as the result of five benefit increases totaling almost 70 percent and reaching 19 million persons.  --A program of Supplemental Security Income has been initiated and will soon be providing benefits to more than 5 million of the low-income aged, blind, and disabled, on a uniform, nationwide basis in a way that respects their dignity.  But our income security programs need more than improved benefits.  Over the past thirty-five years, a multitude of federally funded programs has grown up whose primary purpose is income security for those in need. Each of these efforts reflects a humane attempt to respond to a worthy goal. However, as cash, in-kind and service programs have rapidly expanded in the past few years, two things have become painfully clear:  --First, the result is an extremely costly set of generally unrelated, uncoordinated programs with many unintended and undesirable consequences; and  --Second, these efforts neither efficiently nor equitably accomplish the overall objective of assisting lower income families and individuals to achieve greater economic independence.  The fact that a third of the new Federal budget--$100 billion--will be spent on income security programs in fiscal year 1975, compared to the $38 billion, or one-fifth of the budget, which they received just five years ago, highlights the need to rationalize and integrate our income assistance programs.  As long ago as 1969, I called for a complete overhaul of our discredited welfare programs. I said then that "whether measured by the anguish of the poor themselves, or by the drastically mounting burden on the taxpayer, the present welfare system has to be judged a colossal failure."  At that time, I proposed the Family Assistance Plan. Neither the Congress nor the country, accepted that proposal. I do not intend to resubmit a new version of the Family Assistance Plan.  Since then, we have made a concerted effort to improve the administration of the existing programs. In 1973, for the first time in recent years, because of vigorous new Federal and State initiatives to enforce the rules more strictly, growth in the Aid to Families With Dependent Children case load was halted. But, in their overall impact, the welfare programs remain a failure and an outrage. As an example of the failure, recent studies have shown that fully 40 percent of the AFDC benefits being paid are either going to ineligible persons or are incorrect in amount. This performance is not just the result of fraud, although there is some of that. It is primarily and overwhelmingly the result of a system which is so complex and so riddled with obscure, obsolete and incomprehensible regulations that it defies fair and efficient administration.  I plan to make a major new effort to replace the current maze of welfare programs with a system that works. This task will be difficult, but we have no other alternative, save further waste--both of lives and dollars. I welcome the evidence that thoughtful Members of the Congress, after careful study, have reached the same conclusion.  While this effort goes forward, I will make every possible effort to improve the operation of the existing programs through administrative reforms, recognizing that a replacement system cannot be developed, enacted, and put into operation overnight. But, unless we move urgently to the development of a new system, efforts to improve the administration of the present programs wilt eventually be undermined by their basic structural flaws.  In the development of my proposal, I will be guided by five principles:  (1) All Americans who are able to work should find it more rewarding to work than to go on welfare. Americans would strongly prefer to have good jobs rather than a Federal handout. While we should provide cash assistance to those in need, we must always encourage complete self-support for those who are capable of it.  (2) Cash assistance is what low-income people need most from the Federal Government. The people themselves, not the Federal Government, know their own needs best.  (3) We need to focus Federal help on those who need it most. People in need should receive equal treatment from the Federal Government regardless of their place of residence.  (4) The new system should be as simple as possible to administer with rules that are clear and understandable. It should be based on objective criteria rather than the personal judgment of administering officials. And it should be efficient.  (5) This new approach should not require an increased tax burden for any of us. Too much of the income of all of us now goes to support Government. We help no one--certainly not those in poverty-by weakening our free enterprise system by even higher taxation.  Starting from these basic principles, I believe we can develop a new system which would ensure that those who can help themselves do help themselves, and which would allow those who cannot help themselves to live with dignity and self-respect.  IMPROVING OUR PEOPLE'S HEALTH  In February of 1971, I outlined to the Congress a new national health strategy to assure that no American would be denied access to high quality medical care because of an inability to pay. Much has already been accomplished toward meeting that objective.  A little over two years ago, I took special satisfaction in signing into law the National Cancer Act, which enabled us to launch an accelerated effort to conquer this dread disease. Considerable progress has been made in our attack on cancer and there is much hope that additional knowledge can be developed in the future. In the budget that I will submit to the Congress next Monday I plan to ask for an additional $100 million above last year's request of $500 million for the expanded attack on cancer. In addition, biomedical research in other areas, including heart disease, has been intensified--and the total 1975 budget for biomedical research will exceed $2 billion, more than double the total in fiscal year 1969.  We are also making headway toward increasing the Nation's supply of health manpower. During the last ten years, first year medical school enrollments have grown by more than 55 percent. The number of other health professionals also can be expected to grow dramatically. Just last month, I approved legislation along the lines I requested in 1971 to permit the Federal Government to support the demonstration of health maintenance organizations across the Nation. During both 1974 and 1975, $125 million will be provided through health maintenance organizations to demonstrate the benefits of prepaid health care to our citizens.  Federal programs to finance health services for the aged, for the disabled, and for low income persons have been greatly expanded. Since 1969, Medicare and Medicaid coverage has been extended to an additional 21 million aged, disabled, and low-income Americans. The range of services covered under Medicare and Medicaid has also increased.  Consumer safety programs--to assure safe foods, drugs, cosmetics, and other consumer products--have received almost a fourfold increase in Federal funding since 1969.  Despite all these advances, however, too many Americans still fail to receive needed health care because of its costs. And too often the costs of health care threaten our citizens with bankruptcy while the services that can prevent or cure disease are not fully utilized.  As one of my major new initiatives for 1974, I shall soon submit to the Congress a comprehensive health insurance proposal which would:  --Make available health insurance protection to millions of Americans who currently cannot obtain or afford the private health insurance coverage they need.  --Provide all Americans with vastly improved protection against catastrophic illness.  --Place a new emphasis on preventive health care.  --Provide State and Federal subsidies for low-income families, and for those whose special health risks would otherwise make them uninsurable or insurable only at exorbitant expense.  My comprehensive health insurance proposal will build upon the strengths of the existing health system, rather than destroying it. It will maintain the high quality of medical care without requiring higher taxes. It will be based on partnership, not on paternalism. And most importantly, it will. require doctors to work for their patients, not for the Federal Government.  This plan would require that employers offer a comprehensive health insurance plan to all their full-time employees, with the employer paying a share of its costs. The role of private health insurance in financing health care would be expanded and the consumer's opportunity to choose between competing health insurance plans would be enhanced.  In addition to this plan, there are a number of other health-related measures that I urge the Congress to enact this year. These include:  --A Health Resources Planning Act, to help States and localities improve their planning and use of health resources;  --New and expanded national health service scholarship legislation, to increase the number of Federal scholarships available to students in health professions, and also to help ensure that the Federal Government can meet its needs for physicians; and,  --A general expansion of the guaranteed student loan program, to provide adequate financial assistance to all professional and graduate students, including health professionals.  IMPROVING EDUCATION  The Federal Government should provide strong leadership in assuring equal access to a high quality education for all Americans and in bringing about renewal and reform of all of our education programs.  Since 1969, we have raised Federal spending for education from $4.3 billion to $7.6 billion--an increase of 76 percent.  In special messages to the Congress on education in the past, I set forth five major proposals to improve American education. They were:  --A new program of student assistance to help to ensure--for the first time in the Nation's history--that no qualified person is barred from attending college by lack of money.  --A National Institute of Education, to be the focal point for educational research and development aimed at increasing our knowledge of how to help students learn.  --A National Foundation for Higher Education, to encourage innovation in learning beyond high school.  --An Emergency School Aid program to assist desegregating school districts.  --A thorough reform of the programs for Federal support of elementary and secondary education, consolidating the myriad separate categorical grant programs in order to transfer educational decisions back to the State and local levels where they belong.  The first four of these basic proposals have been enacted, in whole or in part, and a great deal has already been accomplished through them. As for the fifth, reform of Federal funding for elementary and secondary education, I believe that 1974 should be the year of its enactment.  COLLEGE STUDENT ASSISTANCE  The Basic Educational Opportunity Grant Program is the primary vehicle in my effort to ensure that no qualified student be denied a college education because of lack of funds. In my new budget, I am asking Congressional approval to strengthen this program by providing grants of up to $1,400 a year for needy students. Altogether, when combined with other student funding efforts, the Federal Government in the coming fiscal year would provide an estimated $2.2 billion of financial aid to post-secondary students, an increase of over $900 million from the level of five years ago.  Since the present student assistance programs are targeted to help the neediest, and because the costs of higher education have risen dramatically, many middle income students are now finding it increasingly difficult to make ends meet. I therefore also recommend that the limit on total borrowing be increased so that professional and other graduate students will be able to find adequate student loans.  EDUCATIONAL RESEARCH AND DEVELOPMENT  When I originally proposed the creation of a National Institute of Education, I suggested that providing equal opportunity for quality education means, in part, increasing our knowledge about the ways that students learn and then changing the way we teach them. For too long we have followed the belief that bigger educational programs are necessarily better educational programs and that money alone can solve our educational problems. But now we are beginning to see that the quality of our thinking about education can be as important as the size of our educational budget.  The National Institute of Education can help us to marshal our educational resources in ways which will produce the best results. It has already begun to provide the kind of leadership in educational research and development which I have long believed was needed.  EDUCATIONAL INNOVATION BEYOND HIGH  SCHOOL  While the National Foundation for Higher Education which I proposed in 1970 has not been established, the Fund for the Improvement of Post-secondary education was set up by the Congress. The fund is now providing support for the development and demonstration of more effective approaches to college level education. Our initial assessment leads me to believe that the fund will, in the years to come, become the primary focal point for innovation in higher education.  ASSISTING SCHOOL DESEGREGATION  Under the Emergency School Aid Act of 1972, an estimated $467 million in Federal funds will have been provided to local school districts by the end of 1975 to assist in the process of elementary and secondary school desegregation, to encourage voluntary programs to overcome minority group isolation, and to assist in meeting the educational needs of children who, because of racial isolation, have not had an equal educational opportunity.  By the 1975-1976 school year, the bulk of the problems incident to "de jure" segregation should have passed. However, to provide assistance to those other school districts which may still be required to take special desegregation measures as the result of court rulings, I have budgeted an additional $75 million for fiscal year 1975. In addition, the Federal Government will continue to provide civil rights education advisory activities to local districts to assist them in meeting any remaining problems.  BUSING  I have often .expressed my opposition to the use of forced busing for purposes of achieving racial balance. I have also proposed legislation which would dictate reasonable limits on the use of forced busing, and I have opposed the consolidation of school districts in an effort to achieve racial balance in the larger district. Such consolidation plans have only led to more busing and the eventual disappearance of the neighborhood school. The end result of an excessive reliance on forced busing and the imposition of arbitrary ratios has frequently been an increasing concentration of the poor and minorities in our central cities and the serious weakening of the very school systems which must serve them. In some cases, the education of minority children has actually suffered, not benefitted, from such plans.  I shall continue to support the passage of legislation which makes busing only a last resort tightly circumscribed even then. I will also continue to work with the Congress to revise my proposals in light of unfolding events in this area.  FUNDING ELEMENTARY AND SECONDARY  EDUCATION  I am encouraged by the interest the Congress has continued to show in legislation which follows the concepts put forward in my proposed Better Schools Act. I believe that meaningful compromise is now possible, and that we can at last reform and consolidate Federal grants for elementary and secondary education, vocational programs and adult education.  I hope that the Congress will include four basic elements in this reform:  --Consolidation of existing categorical grant programs.  --Granting greater decision-making authority to State and local educational agencies.  --Greater equity in the distribution of Federal funds to the States for the education of disadvantaged children.  --Reform of the impact aid program to concentrate support in those districts where the Federal presence has substantially decreased the tax base, rather than those in which it has increased the tax base.  Upon enactment of legislative authorities that accomplish these goals for elementary and secondary education, vocational programs and adult education, I will propose special supplemental appropriations to provide funding for the 1974-1975 school year. This funding would place most elementary and secondary education grant programs on a "forward funded" basis, letting State and local agencies know how much they will receive while plans for the next school year are being made. "Forward funding" is an important concept in the financing of education, and it merits the full support of the Federal Government.  As I noted in my message sent to the Congress on education policy last week, I also recommend additional support for several other educational programs-some old and some new. These include:  --An additional increase in aid to black colleges and other developing institutions during fiscal year 1975, thus quadrupling Federal funds for these important educational institutions since I took office.  --Continuation and extension of the Head Start program, our single largest child development program. In 1975, Head Start will reach 282,000 disadvantaged youths year-round, as well as some 78,000 pre-schoolers during the summer-and it will extend its activities to include handicapped youth.  --The consolidation of eight separate authorities for education of the handicapped into four broader and more flexible programs.  NON-PUBLIC SCHOOLS  I remain firmly committed to the principle of educational diversity. The continued health of the Nation's non-public schools is essential to this concept. Although governmental efforts aimed at supporting these schools have encountered difficulty in the courts, I believe we must continue our efforts to find ways to keep these schools open.  For that reason, I continue to support legislation which permits tax credits for parents who pay to send their children to non-public schools.  HELPING OUR VETERANS  Twenty-nine million Americans living today have given military service to their country. As a group, veterans are among our most productive citizens. Studies show that they generally have higher incomes, more education, and better health than non-veterans of the same age.  We can be proud of the veterans' contributions, but we must also be concerned for those veterans and veterans' families who remain in need.  The assistance provided to veterans and their families in recent years has been substantial:  --Total compensation payments for veterans disabled or killed in military service have been increased from $2.7 billion in 1969 to $3.9 billion in the coming fiscal year.  --Medical care in VA hospitals and clinics has been greatly improved and expanded, with ten new or replacement hospitals now in service and five more in preparation.  --Educational benefits per trainee have more than doubled since 1969.  --Last year two key measures--one expanding health care and the other improving the national cemetery system for veterans--were passed and signed into law.  --Of vital importance, the unemployment rate for Vietnam era veterans has been sliced from 11 percent in early 1871 to 4 percent by late 1973. As a result, Vietnam era veterans have a higher employment rate than others of their same age, a significant achievement that is well deserved.  Earlier this week, in a special message to the Congress, I proposed additional legislation to help veterans in two crucial areas in 1974--pensions and education.  My pension proposals would benefit some I million veterans and 1.3 million veterans' survivors who are in economic need because of disability, age, or the loss of a breadwinner. VA pensions already go a long way toward meeting such needs, but the pension structure itself is fraught with inequities and anomalies that are technical in nature but tragic in consequence. My proposals would correct these deficiencies.  Veterans now in training require additional help if their GI bill allowances are to keep pace with rising costs. I shall therefore propose that GI bill benefits be raised by an average of 8 percent.  I have also set a 1974 goal for the Government of placing an additional 1.2 million veterans in jobs or job training. There remain sizable numbers of educationally disadvantaged veterans and service-disabled veterans who have never taken advantage of Federal training opportunities and are now unemployed. I have directed that, as a matter of high priority, the Federal Government's efforts to reach these veterans be intensified and that they be counselled and encouraged to use the available services.  EQUAL OPPORTUNITY FOR ALL  AMERICANS  This Administration has made a determined effort to secure equal opportunity for those who have been previously denied such opportunity. I am personally very proud of the success those efforts have already achieved, and I am committed to building on that success in the future.  PROGRESS FOR MINORITY GROUPS  Members of racial minority groups have made considerable strides toward equal opportunity in recent years. The following are among the more notable benchmarks of this progress:  --Setting an example as an Equal Opportunity Employer in the past five years, the Federal Government has added more than 35,000 minority group members to its civilian employee roles.  --In the Armed Forces, more than 850 minority-group cadets are now enrolled in the military academies; and whereas prior to 1971 only four minority group members had ever achieved general or flag rank in the armed forces, now sixteen serve on active duty as generals and admirals.  --Federal aid to minority business enterprises-- one of the cornerstones of the Administration's effort to open new economic horizons for minority group members-has nearly tripled since 1970.  --Civil rights enforcement activities have continued at a vigorous level, with their funding substantially increased.  --Since 1969, combined Federal expenditures on civil rights activities and minority economic development programs have grown from less than $1 billion to $3.5 billion.  --Five years ago 68 percent of all black children in the South were still attending all-black schools. Now that figure has been reduced to 8 percent, and the dual school system has been virtually eliminated.  --The Government has also sought to expand job opportunities through legal actions of its own against those who may be engaged in discriminatory practices. During 1972 and 1973 the Department of Justice initiated 34 pattern and practice lawsuits against approximately 207 defendants. These suits directly covered more than 248,803 employees. During the same period of time, approximately 37 cases were fully resolved by entry of decrees and an additional six were partially resolved by the entry of decrees. The decrees entered in those two years alone covered more than 217,000 employees and provide specific goals for the hiring of more than 21,800 minorities and women in traditionally white and male jobs. In addition, those decrees provide new transfer of seniority rights for approximately 12,700 minorities and women and provide for back pay awards which are estimated to amount to well over $6,000,000.  The real story lies not in these figures themselves, but in the facts and the attitudes they represent. They do not represent a flamboyant promise, but rather a quiet determination to work not only toward the symbols but also toward the substance of equal opportunity. They represent an effort to build foundations that will last--in particular, the foundation of economic independence, and of a basic faith in the equal dignity of mankind.  JUSTICE FOR AMERICAN INDIANS  For too many years the American Indians-the first Americans--have been the last Americans to receive the rights and opportunities to which they are entitled. This Administration has taken the initiative to change this picture.  For its part, the Federal Government must put behind it the role of autocratic manager of Indian reservations. We shall continue to encourage Indians and their tribal governments to play an increasing role in determining their own future. We are also particularly determined to defend the natural resources rights of Indian people.  The last five years have been historic steps in Federal Indian policy. In 1971, we worked closely with Indian leaders to achieve a settlement of Alaska Native claims, a settlement consistent with America's sense of fairness and also indispensable to the growth and development of all of Alaska.  We also returned lands taken away long ago from the Taos Pueblo at Blue Lake. We returned lands wrongfully taken from the Yakima people. Because the Menominee people have seen their tribal states involuntarily terminated but had nevertheless kept their land and their tribal structure together, the Congress enacted and I signed the bill which restored the Menominee tribe to trust status. In the courts, we are forcefully asserting Indian natural resources rights, as we have done in protecting Indian rights in Pyramid Lake.  One measure of our attempt to foster a better, more humane policy is the level of Federal funding benefitting American Indians--over twice what it was five years ago or about $ 1.6 billion.  I am especially encouraged by the fact that the rate of infant deaths, pneumonia, influenza, and tuberculosis is significantly lower among Indians than ever before. Although we have not yet achieved our full goals of health and educational services for the Indian people that are fully compatible with those of the general population, this progress demonstrates our continuing commitment.  The Congress has shared in these accomplishments in a spirit of bipartisan cooperation. I hope that I will soon have on my desk two more enactments on which Congressional action is progressing: measures to speed Indian economic development and to upgrade the position of the Commissioner of Indian Affairs to the Assistant Secretary level. Also still awaiting Congressional action are four other proposals I have submitted previously: to permit turning over to Indian tribal governments the management and control of Indian programs; to create an Indian Trust Counsel with authority to safeguard Indian natural resources rights; to help ensure that funds for Indian education actually reach Indian children; and to provide greater local control over federally assisted reservation programs through a program of tribal grants.  Looking forward, I shall ask that the Bureau of Indian Affairs make specific plans to accelerate the transfer of significant portions of its programs to Indian tribal management, although I repeat my assurance that, while accelerated, these transfers will not be forced on Indian tribes not willing to accept them.  THE SPANISH-SPEAKING  The Spanish-speaking citizens of our Nation face special problems in obtaining equal opportunities because of language and cultural barriers. For that reason, my Administration has made a special effort to expand those opportunities.  Our progress on this front is reflected in many ways. Nearly 3,800 Spanish surnamed Americans have been employed by the Federal Government, despite an overall reduction in Federal jobs. The Small Business Administration has also increased its loans to Hispanic businessmen, reaching a total of $109 million in fiscal year 1973.  In 1969, the Cabinet Committee on Opportunities for the Spanish-speaking people was created. The Cabinet Committee has both made the Government more aware of the needs and the talents of Spanish-speaking citizens and helped to expand Federal employment of the Spanish-speaking. Since the authorization for this organization expires this year, I am asking the Congress to extend its life through June 30, 1975. The Cabinet Committee on Opportunities for the Spanish-speaking serves to focus the Administration's continuing efforts in this important area of concern.  THE RIGHTS OF WOMEN  Both men and women have become increasingly aware of the pattern of sometimes blatant but often subtle discrimination to which women are subjected. Some of this discrimination can be erased by existing law; some requires new law; some would be rectified by the Equal Rights Amendment, now nearing ratification by the required three-fourths of the States. It is my hope that the Equal Rights Amendment will be ratified speedily so that equal justice under our laws will become a reality for every American.  One of the primary goals of this Administration is to ensure full equal employment opportunity for women by striving to open to women jobs that previously were reserved for men, often simply by habit or custom. Specifically, we have moved vigorously both to enforce the law and to lead by example---by insisting on equal employment and promotion opportunities within the Federal service, by promoting more women into the professionally critical areas of middle management and by continuing our special recruiting drive to bring more women into the highest levels of Government.  To help advance these goals I have appointed the first woman Counsellor to the President, and she, in turn, has set up a new Office of Women's Programs within my executive office. We are particularly proud that this Administration is the first to have women as heads of three independent Federal agencies--the Atomic Energy Commission, the Federal Maritime Commission, and the United States Tariff Commission.  The effort to improve the economic status of women outside the Government is also continuing. The Equal Employment Opportunity Commission, which has been given enforcement power in the Federal Courts, has reported a marked increase in its activities to end sex discrimination in employment.  We will continue to pursue all these efforts with vigor. This emphasis is especially appropriate as we approach 1975, which has been declared International Women's Year by the United Nations.  One especially invidious form of sex discrimination in particular is ripe for correction now through new legislation: the discrimination that often denies women equal access to credit. In an economy that increasingly operates on credit, this is a particularly grievous practice.  The Congress already has before it a proposal to ensure that credit is extended to all persons on an equitable basis, without regard to their sex or marital status. This Administration strongly supports this proposal and is sending to the Congress amendments which we believe will strengthen it even further. I urge prompt consideration and passage of this vital legislation.  PROTECTION AGAINST CRIME AND INVASIONS OF PRIVACY  Over the past five years I have had no higher domestic priority than rolling back the tide of crime and violence which rose in the 1960s. I am therefore especially pleased with the progress we are making on this front:  --After 17 years of continuous and often dramatic increases, crime in 1972 registered its first overall decline. Although in 1973 it again registered a slight increase, it still held below the level of  1971. Now that the momentum of increase has been broken, I am confident that we can look forward to further reductions in crime rates in the years ahead.  --Serious crime in our largest cities was actually reduced by 13 percent between 1971 and 1973.  --In Washington, D.C., where the Federal Government has special law enforcement responsibilities, crime has been cut in half since 1969.  Indictments and convictions of organized crime racketeers have more than tripled since 1969, thanks in large measure to the 1970 Organized Crime Control Act and to expanded Federal interagency strike forces. In addition, of course, the riots, urban terrorism and burnings of the 1960s have now become a thing of the past.  These indications of success do not mean that we should slacken our anti-crime effort, but that we should intensify it. Key elements of our strategy to do so--most of which will require the assistance of the Congress--include:  --Comprehensive reform of the Federal Criminal Code. Last year I submitted a proposal which was based upon the work of the Justice Department and a five-year study completed by the National Commission on Reform of Federal Criminal Laws. The Federal criminal code has not been completely revised in a quarter century and the need for reform is urgent. I call upon the Congress to act expeditiously in reforming our criminal code, to make it both more workable and more responsive to the demands of our complex society.  --Restoration of the death penalty under the Federal Criminal Code for several especially heinous specific crimes which result in the death of innocent victims. Examples of such crimes are hijacking, kidnapping, or bombing.  --Increased Federal assistance to State and local law enforcement agencies. For the next fiscal year, I propose funding through the Law Enforcement Assistance Administration of $886 million--up from only $60 million in 1969.  --Increasing the resources available to the U.S. Attorneys' offices throughout the Nation----offices which have, in the last three years, increased the number of criminal convictions by 28 percent.  --Creation of additional Federal judgeships to assure speedier disposition of criminal cases. Legislation to accomplish this goal is now before the Congress.  --Comprehensive improvement of Federal correctional programs. Already 15 additional correctional institutions have been built, acquired or begun. My 1975 budget request would represent a tripling of 1969's budget levels.  --A new effort to deal more effectively with employment problems caused by the increase in the number of illegal aliens entering this country. Legislation to achieve this objective is also before the Congress.  PROTECTING THE RIGHT OF PRIVACY  One of the basic rights we cherish most in America is the right of privacy. With the advance of technology, that right has been increasingly threatened. The problem is not simply one of setting effective curbs on invasions of privacy, but even more fundamentally one of limiting the uses to which essentially private information is put, and of recognizing the basic proprietary rights each individual has in information concerning himself.  Privacy, of course, is not absolute; it may conflict, for example, with the need to pursue justice. But where conflicts occur, an intelligent balance must be struck.  One part of the current problem is that as technology has increased the ability of government and private organizations to gather and disseminate information about individuals, the safeguards needed to protect the privacy of individuals and communications have not kept pace. Another part of the problem is that clear definitions and standards concerning the right of privacy have not been developed and agreed upon.  I have therefore ordered an extensive Cabinet-level review--which will be undertaken this year--of both government and industry practices as they relate to the right of privacy, of the conflicts that arise and the balances that must be struck between legitimate needs for information and the right of privacy, and of those measures--including appropriate legislation-that can be taken to ensure that these balances are properly struck.  ENDING DRUG ABUSE  During the decade of the '60s, increasing numbers of Americans--including a high percentage of young people--each year turned to heroin and other drugs in search of "new highs" and "synthetic solutions" to the problems of life. In this retreat from reality, the Nation's drug problem grew dramatically. Residents of our proudest cities were gripped by fear as addicts turned to crime to support their habits, and thousands of families suffered devastating personal tragedies.  I am pleased to be able to report that since then, Federal spending on drug treatment and enforcement have increased tenfold, and progress has been made. We have indeed turned the corner on hard drugs:  --Better drug law enforcement, at home and abroad, has caused an acute heroin shortage throughout much of the country.  --Enough treatment capacity has now been created so that virtually all addicts who want medical help and counselling can get it.  --Our drug abuse indicators all suggest that we have at last succeeded in reducing both the total number of heroin addicts and the number of new addicts.  Nevertheless, the drug battle is far from over.  For the sake of the next generation, I am determined to keep the pressure on-to ensure that the heartening progress made to date is translated into a lasting victory over heroin and other drugs.  As enforcement efforts meet with success in one area of the world, pressure increases on other trafficking routes. To meet these new threats, we will step up our support of joint drug enforcement programs. I have also directed that plans for increased vigilance at our own borders be put into effect.  In the treatment area, we are intensifying our efforts to encourage hard-core addicts to undergo treatment.  To provide added incentive for those not motivated to seek help on their own, I have directed Federal agencies to expand their support for local programs which direct addicts charged with crimes into treatment pending trial and sentencing.  Continued progress will also require help from the Congress:  --I will shortly recommend severe new penalties for both heroin traffickers and those engaged in illegal distribution of other illicit drugs. This legislation will supplement my proposals currently pending before the Congress.  --The Psychotropic Convention, a key international treaty regulating manufactured drugs worldwide, has--after 2 1/2 years--still to be ratified. Affirmative action in this session is of the utmost importance.  I will continue to pursue a balanced approach to the drug problem in the next year by emphasizing both vigorous law enforcement, and treatment and rehabilitation programs to help speed the return of ex-addicts to productive lives in society.  ENHANCING THE ENVIRONMENT  Both our Nation and the world have made imposing strides during recent years in coping with the problems of our natural environment. Building upon well-justified concerns, we have created institutions, developed policies and strategies, and deepened public understanding of the problems that face us.  Now we are entering the second phase of environmental action. It may prove to be a more difficult period.  In this second phase, we will be looking at our environmental problems in new ways which are more complex and far-reaching than those to which we have been accustomed. We must be concerned not only with clean air, clean water and wise land use but also with the interaction of these environmental efforts with our need to expand our energy supplies and to maintain general prosperity.  In facing up to these tough, new problems, we can draw strength from the progress we have already made and from the knowledge that there can be no turning back from our general commitment to preserve and enhance the environment in which we live.  Our record over these past five years includes the vigorous enforcement of air quality legislation and of strengthened water quality and pesticide control legislation, the enactment of new authorities to control noise and ocean dumping, regulations to prevent oil and other spills in our ports and waterways, and legislation establishing major new parks, recreation and wilderness areas.  We have also tried to reorganize the Federal structure in ways that are more responsive to environmental needs. The National Environmental Policy Act, passed in 1969, has provided a basis for reform in our Federal agencies and has given citizens a greater opportunity to contribute to environmental decisions. In 1970, I established the Environmental Protection Agency and National Oceanic and Atmospheric Administration to provide more coordinated and vigorous environmental management. Also in that year, I appointed the first Council on Environmental Quality.  PRODUCING RESULTS  The results of our vigorous anti-pollution efforts are now being seen and felt. In our major cities, levels of dangerous sulfur oxides and particulates have declined, and pollutants from automobiles have been reduced. Water pollution is being conquered, assisted by a massive Federal commitment of over $14 billion in municipal treatment plants during this Administration. Major misuses of pesticides are now under control, and major sources of noise are being regulated for the first time.  During these five years, Federal agencies have acquired over 800,000 additional acres for preservation for future generations, many of them near our heavily populated urban centers such as New York and San Francisco. In addition, the Legacy of Parks program, which I initiated in 1971, has made massive strides in bringing parks to the people. To date, 400 separate parcels covering almost 60,000 acres of under-utilized Federal lands in all 50 States have been turned over to State and local governments for park and recreational use. Many of them are near congested urban areas. We will continue to expedite transfer of additional surplus properties to State and local governments for park and recreation use.  IMPROVING THE WORLD ENVIRONMENT  On our small planet, pollution knows no boundaries. World concern for the environment is as necessary as it is encouraging. Many significant international actions have been taken in recent years, and the United States can be proud of its leadership.  These actions have included the signing of international conventions to protect endangered Species of wildlife, to regulate ocean dumping, to extend the national park concept to the world, and to control marine pollution.  A United Nations Environment Program was established last year. With it, the UN Environment Program Fund came into being, fulfilling a proposal I had made in 1972.  Under the US-USSR Environment Agreement, which I signed in Moscow in May, 1972, Soviet and American scientists and environmentalists have been actively working together on serious environmental problems.  THE CHALLENGE AHEAD  As part of this Administration's continuing effort to conserve outdoor recreation areas, my new, budget will propose full funding of the Land and Water Conservation Fund for 1975. Nearly two-thirds will aid State and local governments in acquiring their own recreation lands and facilities. Coupled with the change I have proposed in the formula for allocating funds to the States, this measure would encourage the development of more recreational sites closer to the places where people live and work.  This year we have the unique opportunity and responsibility to determine the future use of enormous land areas in America's last great frontier--Alaska. Last month, in accordance with the Alaska Native Claims Settlement Act, I transmitted to the Congress recommendations that would add 83.47 million acres in Alaska to the National Park, National Forest, Wildlife Refuge and Wild and Scenic Rivers Systems. If the Alaska frontier is thoughtlessly developed, it will be gone forever. But we now have the opportunity to make considered judgments as to the appropriate uses of these outstanding Alaskan lands for the American people of all future generations.  This session of the Congress has before it 17 major natural resources and environment proposals that I have previously submitted, and on which I again recommend action. These include:  --Department of Energy and Natural Resources: While I discuss this new department elsewhere in this message, I want to reemphasize that I consider it of cardinal importance in ensuring that complex, interrelated environmental and natural resource issues receive an appropriately wide policy overview and administrative coordination.  ---National Land Use Policy: Adoption of the National Land Use Policy Act, first proposed in 1971, remains a high priority of my Administration. This legislation would reaffirm that the basic responsibility for land use decisions rests with States and localities--and would provide funds to encourage them to meet their responsibility. I am pleased that the Senate has passed legislation incorporating some of the policies that I proposed. I urge the Congress to pass legislation which would assist States and localities, but which does not inject the Federal Government into their specific land use decisions.  --Coastal Wetlands: These environmentally vital wetlands are increasingly threatened by development. My proposed Environmental Protection Tax Act would amend Federal tax laws to discourage the unwise use of these areas, and to enhance our opportunities for sound land use planning within the coastal zone.  --Wilderness: Traditionally, we have looked westward for our wilderness areas. Last year, however, I proposed that 16 Eastern areas be designated as "wilderness" and that 37 others be studied for possible wilderness designation.  --Historic Preservation: Because we have an irreplaceable historic and architectural heritage, I have proposed an Environmental Protection Tax Act to discourage the demolition of historic structures and to encourage their rehabilitation.  --Big Thicket National Biological Reserve: The Big Thicket area of east Texas is a biological crossroads unique in the United States. I am gratified that the House has acted and I urge the Senate promptly to consider my proposal to preserve key segments of the Thicket in a Big Thicket National Biological Reserve.  --Big Cypress National Fresh Water Reserve: Protection of the Big Cypress Swamp in Florida is essential to the preservation of the water supply in the Everglades National Park. I have recommended legislation which would authorize the acquisition of over 500,000 acres, enabling us to protect this vital water supply.  --Public Land Management: The Secretary of the Interior needs additional authority to protect the environmental values of our public domain lands. I again urge that he be given that authority.  --Controlling Pollution: Three of my legislative proposals aimed at controlling pollution have not yet received final Congressional action:  --Toxic Substances: New chemicals with unknown environmental effects come into use each year. Authority to test these substances and to restrict their use in the event of danger, while still permitting the orderly marketing of needed chemicals in a timely fashion, is highly desirable.  --Hazardous Wastes: Disposal of wastes on land is increasing due to advances in industry and technology and because of our stringent controls on air and water pollution. These wastes can be hazardous to human health and other forms of life. My proposal provides for national standards for treatment and disposal of hazardous waste with primary regulatory responsibility resting with State governments.  --Safe Drinking Water: The water we use in our homes should not endanger our health. Under my proposal on safe drinking water, Federal standards would provide health protection by requiring strict limitation of any contaminants in drinking water, but primary enforcement responsibilities would be left to the States. Alternative legislation is now being seriously considered by the Congress which would require unnecessary Federal standards on operating treatment plants, generate a domineering Federal enforcement role, and create several new categorical subsidy programs.  COMMUNITY DEVELOPMENT  Although American communities share many of the challenges of our age, the relative intensity and the particular nature of these challenges vary sharply from one community to another.  The current way of providing most Federal aid to our communities--with each dollar tied to a string pulled and manipulated by a Federal planner--is wrong. Much of the money that pays the Federal planners could better be spent in the local community; the decisions made by the planners could better be made by the people who live on the scene.  In these past few years, we have sought to change the old system. We have recognized that the Federal policy that will work best is one that helps the people of a particular community define their own needs and meet those needs in the way which they consider best. While in this Administration we have tried to be generous, we have also tried to grant communities greater freedom to set their own priorities. Since 1969, we have:  --Spent twice as much money on community development programs as the Federal Government had spent for this purpose in the entire previous history of the Nation.  --Reduced the red tape and arbitrary restrictions on local action that were so much a part of these programs in the past.  --Moved authority for administering community development programs from Washington to the field, where administrators are more accessible to local officials, and where they can become more familiar with local problems.  --Stepped up Federal support for State and local planning and management, again spending more for this purpose than had been spent in all previous years combined.  As a result, not only have cities received more Federal dollars, but they have been able to accomplish more with each dollar than before.  Despite this progress, we need a much more sweeping reform than has been possible under existing laws. Therefore, I once again urge passage of The Better Communities Act, a $2.3 billion bill which would give local officials new flexibility and provide greater effectiveness in the expenditure of Federal community development funds. This legislation would consolidate seven categorical grant programs into a single program. Funds would be distributed on the basis of need, and then local communities could decide for themselves what projects should come first. Thus we could eliminate a mountainous volume of red tape and allow local government to play a larger role in determining their own destinies.  Two Congresses have now addressed community development legislation. Both of them have agreed, for the most part, with the basic principles and approaches that the Better Communities Act represents. But we have still had no action. Cities and towns that have counted on having this legislation in effect in the next fiscal year now face an uncertain future. I urge the Congress to move ahead as quickly as possible with the Better Communities Act--and I pledge every effort to work out our remaining differences so that our cities and towns can benefit from this program as soon as possible.  I also urged the 93rd Congress to pass the Responsive Government Act that I submitted last year. This measure would enable State and local officials to improve their planning, decision-making and managerial capabilities through broadbased, flexible grants.  RURAL DEVELOPMENT  Over $12 billion has been invested in rural development through Agriculture Department programs alone during the five years of this Administration. Annual Federal funding for these rural development programs has been tripled during that time. These funds have been spent for:  --Rural housing, where more than $6.4 billion has been provided through 487,000 housing loans.  --Electrification and telephone systems, where over $3 billion has been spent to bring service to 177,000 new rural consumers.  --Water and waste disposal, where some 8,500 loans and grants totaling $1.4 billion have been provided to rural communities for water and waste disposal systems.  --Loans to farmers, who received more than 489,000 loans totaling over $4.2 billion.  In addition to these efforts under Department of Agriculture programs, almost 200 other Federal programs have had a significant impact on rural areas. As a result, rural residents receive as much Federal support per capita as residents of urban areas.  During the past year we have markedly increased our activity on behalf of the Nation's rural residents:  --During 1973, the Rural Development Act was funded for the first time to provide over $750 million in loans and grants to States under procedures which give them a new flexibility in promoting rural industrialization and in improving the quality of rural life.  --An interim rural housing policy was developed, placing greater emphasis on more effectively utilizing existing housing and making Farmers Home Administration programs more responsive to those with the greatest housing needs.  --To ensure continuing Government attention to rural development needs, this Administration has also created both a special Cabinet-level Rural Development Committee and the new post of Assistant Secretary of Agriculture for Rural Development.  As we look to the future patterns of national growth, we must never forget that the prosperity, the vitality and the character of rural America are essential cornerstones of our Nation's balanced growth. It is essential that rural America receive its proper share of our attention--and I am determined that this shall be the case.  HELPING DISASTER VICTIMS  Seldom is swift and effective Government action needed so urgently as when a natural disaster strikes.  Since taking office, I have had to declare over 160 major disasters in 42 States and in 3 territories. In recent years, the amount of Federal assistance given to disaster victims has been greatly expanded, and we have also pressed an intensive effort to provide this aid more equitably and expeditiously.  Since more than 90 percent of all property damage resulting from natural disasters is caused by floods, I was especially pleased by the Congress approval last year of our proposed Flood Disaster Protection Act, which significantly expands and improves the national flood insurance program.  More remains to be done, however, if we are to meet our basic humanitarian responsibility to those who fall helpless and innocent victims to nature on the rampage. Therefore, I have also proposed a Disaster Preparedness and Assistance Act, which places new emphasis on the essential element of preparedness, while also increasing the role of State and local officials in allocating Federal disaster funds and cutting the tangle of red tape. It also provides for the automatic use of Federal resources when major disasters strike, and it includes generous grant features for those individual disaster victims unable to repay Government loans, as well as for communities faced with the task of restoring damaged public facilities.  That natural disasters will continue to strike is certain; the only uncertainty is how well prepared we will be. As a generous and compassionate Nation, we should be prepared to give the victims of these disasters the prompt and effective help they so desperately need.  BETTER HOUSING FOR ALL  As I have stated many times, this Administration will not waver from the Federal commitment first outlined in the Housing Act of 1949: "a decent home and a suitable living environment for every American family."  The state of America's housing will continue to depend on the state of America's economy more than on any other factor. The forces of the marketplace are the forces that count the most-families with sufficient real income and sufficient confidence to create an effective demand for better housing on the one hand, and builders and credit institutions able to respond to that demand on the other.  The Federal Government must play a major supporting role through its actions in the mortgage credit market and its help for low income families who need assistance in obtaining adequate housing.  Last September, as credit for housing was becoming increasingly scarce, the Administration acted to make more credit available to home buyers. Recently, mortgage market conditions have begun to improve. However, to assure continuing improvement, I recently authorized a reduction in the maximum allowable interest rate for mortgages insured by the FHA, the Farmer's Home Administration and VA--a more than $6 billion mortgage insurance program that will assist in financing the construction of up to 200,000 housing units.  These actions should have a favorable impact on housing production. If the anticipated results are not fully achieved I will recommend further action to ensure a reasonable level of production.  In the last five years a substantial effort has been made to address the country's housing problems:  --Largely because of a general upswing in the economy, housing production has occurred at record levels.  --FHA mortgage insurance has enabled nearly 3 1/2 million families to purchase homes.  --Over two million units of subsidized housing for low and moderate income families have been approved, more than during the previous 33 years of federally subsidized housing programs.  --Over $1.4 billion has been committed to improving and modernizing existing public housing.  --Subsidies to local housing authorities have grown from $33 million in 1969 to $350 million in 1974.  Even as good housing has become a reality for most Americans, it is clear that important problems still exist. Two are especially significant. First, our credit institutions often encounter problems in providing adequate housing credit. Second, too many low income families are unable to obtain adequate housing--even as good housing sits vacant in their community. We must help them to meet their needs.  In order to increase the availability of housing for all families, I urge passage during this session of two key measures I have already proposed:  --The Financial Institutions Act to enable savings and loan associations to compete more effectively for funds during periods of tight money, as well as to encourage increased investment in housing through a tax credit on income earned from residential mortgages.  --The Administration's proposed Housing Act which would ease the present tight mortgage credit situation and make home ownership easier in the long term by:  --Authorizing increases in the permissible mortgage amounts eligible for FHA insurance.  Permitting home buyers to pay market interest rates on FHA and VA insured mortgages, and reducing the cost of buying a home by doing away with the present system of charging points on mortgage loans.  --Authorizing on an experimental basis more flexible repayment plans on FHA insured mortgages.  --Authorizing more flexible interest rates, longer repayment terms and higher amounts for mobile homes and home improvement loans.  This legislation would extend authority for extensive experiments with a new approach--direct cash assistance--for addressing the housing problem of low income American families. Despite the commitment of over $66 billion, evidence has clearly shown that the subsidized housing programs for low income families have not worked well. Instead of programs to treat symptoms, I will continue to press for a longer term solution-which goes to the root of the problem-lack of sufficient income--and which permits the private housing market to work in as efficient a way as possible. Additionally, this legislation would improve the operation of our existing public housing projects, by helping them move to a more effective, efficient and self-sufficient basis of operation.  IMPROVING TRANSPORTATION  The energy crisis has made urgent what once seemed only necessary: the building of a transportation system that permits all Americans to travel efficiently and at reasonable cost.  While some elements of our transportation system--such as the Federal highway network--have been dramatically improved or expanded in the past decade, others--notably the railroads--have fallen into serious difficulties. It is also apparent that our public transit system must be greatly improved within our urban centers. The measures already taken and others which I shall propose this session are particularly important in helping to deal with the energy crisis by encouraging a more sensible utilization of our transportation resources.  During the past four years, several key measures have helped lay the basis for a greatly improved transportation system.  Under the Urban Mass Transportation Act of 1970, we increased annual Federal aid to urban public transportation to $I billion by 1973--8 times the level of 1968--and in 1973 another $3 billion was made available for the years immediately ahead. For the first time since World War II the downward trend in transit ridership has been reversed, and is now moving upwards. And for the first time, under the provisions of the Federal-Aid Highway Act of 1973, States and localities can now use a portion of their Federal highway funds for public transit purposes.  There has also been improvement of rail passenger service under AMTRAK, a public corporation created by the Rail Passenger Service Act of 1970. After years of steady decline in rail passenger service, the past year saw a 14 percent increase in the number of passengers carried on AMTRAK.  Just this past year, we also went to work to avoid a major rail crisis through passage of the Regional Rail Reorganization Act of 1973, which provides for the restructuring of the bankrupt railroads of the Northeast and Midwest region into a streamlined system. By 1976, we hope that the affected railroads will be able to operate profitably and can survive as producers, not consumers, of tax revenues.  Significant new initiatives have also been taken in airport and airway development, making vitally needed improvements in the merchant marine, and in promoting transportation safety, especially on our Nation's highways.  Clearly, however, there is still much to be done. It is my hope that 1974 will be the year when we make major advances by enacting two critical transportation bills.  One of these proposals, which I will send to the Congress in the near future, would give our communities not only more money but also more freedom to balance their own transportation needs--and it will mark the largest Federal commitment ever to the improvement of public transportation. This bill would increase Federal assistance for metropolitan areas by nearly 50 percent over the level of fiscal year 1974. More than two-thirds of those funds would be allocated by formula to State and local governments and those governments could better determine their own transportation priorities, choosing between construction of highways or public transit systems, or the purchase of buses or rail cars. Additional transit aid would also be made available to rural communities for the first time.  Under this bill resources would also be available for the first time to augment the operating funds for public transportation systems in both urban and rural areas. By permitting Federal resources to be used for operating purposes, this proposal should make it unnecessary to establish a new categorical grant program for transit operating subsidies, as is now contemplated in bills before the Congress.  As a second major transportation initiative this year, I shall propose that we modernize the regulatory system governing railroad operations. This legislation would make it easier for railroads to consolidate service on a sustainable basis. It would make changes in the system of rate regulation to allow rail carriers to compete more effectively with one another and with alternative modes of freight transportation. Discriminatory State and local taxation of interstate carriers would be barred. It would also provide $2 billion in Federal loan guarantee authority to finance improvements in rights-of-way, terminal and rail plant facilities, and rolling stock, where necessary, which would be a major step in our effort to improve the Nation's railroad system.  Additional transportation measures I shall soon propose will include:  --Improvements in highway safety through the earmarking of approximately $250 million of the 1975 Federal highway program for the elimination of death traps from the highways--by, for example, improving high-hazard intersections and replacing dangerous bridges. New bonus grants to the States will also be initiated to encourage the adoption of improved safety legislation and to reward States for outstanding safety accomplishments.  --A restructuring of the airport and airway financing system to allocate costs more equitably among the users of our airways and to provide more flexibility in the use of funds.  DISTRICT OF COLUMBIA  Last Christmas Eve, when I signed the new home rule bill into law, the Nation's Capital reached a significant milestone. If the voters of the District accept the proposal in the forthcoming referendum, the city will soon have its first elected mayor and city council in 100 years. In addition to giving the citizens of our Nation's Capital the right to elect their own officials and a greater role in decisions affecting local affairs, the act also transfers to the District functions now carried out in Federal agencies which should rightfully be under local control.  In order to accomplish this transfer of responsibilities to the local government, much work will have to be done. This Administration will make every effort to assist in that transfer and to ensure that it is both timely and effective.  While our attention to the affairs of the District of Columbia has been captured by the transition to home rule, we must not ignore another important task before us. As the city moves into a new era of self-government, it must also prepare for the Nation's celebration of the Bicentennial.  A Federal Bicentennial Task Force has been working to ensure that the Federal Government meets its financial and program commitments in the Nation's Capital. Under the leadership of the Bicentennial Coordination Center, which I established over two years ago, a number of projects are moving forward. The National Visitors' Center, Constitution Gardens, the Eisenhower Civic Center, the Fort Circle Parks, the National Air and Space Museum and other projects will contribute enormously to the celebration which takes place here in 1976. In addition, the Pennsylvania Avenue Development Corporation will soon present its plan to restore and improve this central, historically important thoroughfare.  During the coming year, I also urge the Congress to take action on pending legislation to create a District of Columbia Development Bank, which would do much to broaden the economic base of the District.  THE BICENTENNIAL  As we near the celebration of America's Bicentennial, which officially begins in March of 1975, the tempo of preparations has picked up. A sound organizational framework has now been established, with the approval by the Congress last year of a new American Revolution Bicentennial Administration. Each of the 50 States, the District of Columbia and the four territories has also established its own Bicentennial Commission to plan and coordinate local Bicentennial projects. Some 370 counties, cities, towns, villages and tribal units have been recognized as Bicentennial Communities, and some 600 applications for this designation are currently being reviewed.  On the Federal level, I have created the Domestic Council Committee on the Bicentennial. This Cabinet-level Committee has approved the goals for Federal participation in the Bicentennial, established an Interagency Bicentennial Task Force, and approved over 200 Bicentennial projects of the Departments and agencies.  The Department of the Interior will complete the development of historically significant National Park sites; the National Foundation on the Arts and the Humanities will support cultural activities relating to the Bicentennial; and many of our other national institutions, such as the Smithsonian Institution, will present special exhibitions across the Nation.  Other nations are actively responding to the "Invitation to the World" that I issued on July 4, 1972 to participate with us in this celebration which is not ours alone, but one which draws on the heritage of every nation from which people have come to our shores.  In celebrating America's Bicentennial, we shall, of course, commemorate our national achievements. We shall honor our celebrated leaders even as we remember those whose contributions were less well known. We shall take stock of our shortcomings and resolve to overcome them.  What we will celebrate most of all in 1976 will be the vitality of the American people. We have tried to ensure that Federal Bicentennial activities reflect the diversity which is ours alone, and which is appearing in community Bicentennial planning across the country.  CULTURE AND COMMUNICATIONS  When I took office in 1969, I was determined to give support to the goal of substantially strengthening the arts and humanities in the United States. The result has been the rapid growth of the National Endowment for the Arts and the National Endowment for the Humanities-which had existed before but at a very low level of activity.  In the current year, the National Endowment for the Arts will spend $60.8 million on a large scale of programs intended to enrich America's cultural present and future. A broad range of individuals as well as institutions, both public and private, are being assisted. And special support is being given to projects which will add to the celebration of our Bicentennial.  The Congress has in the past given strong bipartisan support to the Arts Endowment. That same support will be needed in the future. Increased Federal funds, eliciting greater financial support from the private sector and State and local governments, will ensure the flourishing of American arts in the years ahead.  The National Endowment for the Humanities has likewise made outstanding contributions to the stimulation of our intellectual and cultural life. One measure of the growing importance of its activities is the fact that the Humanities Endowment has a program today which is ten times as large as it was five years ago.  The Humanities Endowment will also play a major role in promoting the Bicentennial and will emphasize activities which reach large numbers of people, such as film and television productions and traveling exhibitions.  In America, television is by far the best means of communicating with the widest audience. To assure the American audience a greater range of television programming of a type not financially feasible for commercial television, we have dramatically increased our support for public television in the last five years.  Public Broadcasting matured during the past year. Both the television and radio licensees reorganized themselves in a way which encouraged a more rational relationship between them and the Corporation for Public Broadcasting, and increased the ability of each local station to provide programs uniquely tailored to their local communities.  Another aspect of electronic media that has recently become a public policy issue is cable television, a development that could lead to a vast expansion of the Nation's communications capabilities. In June of 1971, I established a Cabinet Committee to develop proposals for a comprehensive national policy on cable communications. I have recently received and am now reviewing the report which is the product of that committee. I have also asked the Director of Telecommunications Policy to prepare legislation to move toward the adoption and implementation of a national cable television policy and I expect to submit such legislation to the Congress in the near future. I encourage the Congress to review carefully the issues presented by cable television and I especially encourage a widespread national debate on this subject which could play such a major role in all of our lives during the future.  SCIENCE AND TECHNOLOGY  One of the great strengths of this Nation has been its preeminence in science and technology. In times of national peril we have turned to the men and women in the laboratories in universities, Government, and private industry to apply their knowledge to new challenges.  Once again, in the current energy crisis, we are calling upon them to respond. I have outlined, in my recent energy message to the Congress, the first step in a five-year, $10 billion research and development effort in energy: $1.8 billion for direct energy R&D for the coming fiscal year and an additional $216 million for supporting research--a total increase of 80 percent over this year.  A look at the broad scope of this energy effort tells a great deal about our confidence in the capabilities of the Nation's scientists and engineers. We are calling on them to accelerate the development of nuclear power systems, to determine how we can use our abundant supplies of coal in ways that are environmentally acceptable and to improve technology for harnessing natural energy sources such as the sun and the heat of the earth. At the same time, we are asking them to explore new ways of conserving the energy that we already use for everyday conveniences such as our automobiles.  This Administration recognizes that the need for progress in every major area of American life requires technological input. We are therefore committed to giving all our major programs a broad scientific underpinning. The new budget will call for an increase of over 20 percent in civilian research and development expenditures.  In addition to a major increase for energy, research and development funds will be spread across a large number of programs for enhancing the prosperity, well-being, and health of Americans. Science will continue to be vital to our efforts to fight drug abuse, to prevent infant mortality, to combat venereal disease, and to aid in treating mental illness.  We will call upon the services of our scientists and engineers to design better forms of transportation, and to make safer the transportation we already have. We will examine ways of making our vast agricultural establishment yield more food at lower prices, and try to lessen agriculturally-related pollution. We will attempt to develop methods of mining that will not only yield greater mineral wealth but also give the miner greater safety and the landscape greater protection. We will study ways to protect our wildlife from natural and man-made attack, and we will attempt to learn how to protect ourselves from the violence of nature in the form of floods, landslides, earthquakes, tornadoes, and other natural calamities.  This Administration recognizes the vital role which the social sciences must play in America's growth. Money will be made available for studying the social effects of various Government income distribution and redistribution plans, such as social security, welfare benefits, health insurance, and varied and experimental educational forms.  In every great area of national endeavor, the Administration will see that adequate funds for making scientific progress are spent.  That also means we will continue our important efforts in space. The exploration of space is today making a key contribution to man's understanding of his universe and to our abilities to manage our resources on earth wisely. As our Skylab astronauts have proven, space is now an acceptable working environment for man.  While we explore our planetary system, the stars, and the galaxies, we are also using space technology to monitor the earth's environment. The Earth Resources Technology Satellite is allowing us to search for scarce resources from high above the earth. Already, many of our intercontinental communications are by satellite. This year new commercial satellites will also be used for domestic telephone, telegraph, and television services. Satellite weather forecasting is now commonplace as a result of our space efforts.  Space exploration in the future should become more economical as we develop the Space Shuttle, a reusable vehicle for space transportation. A cooperative international aspect of the space program will come with the European developed Space-lab as an integral part of the Shuttle program. In addition, we are now moving full speed ahead with our plans for a joint space venture with the Soviets in 1975.  THE NEW FEDERALISM  Just as the rapidly changing and increasing demands placed upon Government have made it necessary to reorganize the Federal structure, they have made it even more imperative to make State and local government stronger and more effective.  During the last four decades, almost every major attempt by the Government to meet a major social need has resulted in a new national program administered in Washington by a new bureaucracy. Forty years ago there were more than 600,000 Federal employees; today there are more than 2.7 million. In the last decade, this problem has grown acute. In 1960 there were some 200 Federal grant-in-aid programs with outlays of $8 billion, but by 1970 there were nearly 1,000 and the total outlays had risen to $22 billion. And in the next fiscal year we expect outlays for grant-in-aid programs to reach $52 billion, even after our substantial efforts to cut their number. This growth in size, power and complexity has made the Federal Government increasingly inaccessible to the individual citizen it seeks to help.  Many of our new national social programs have actually impeded the development of effective local government. By creating a Federal categorical grant system of staggering complexity and diversity we have fostered at the State and local level:  --Overlapping and wasteful programs;  --Distorted budgets and priorities;  --Additional administrative expense;  --Delay and uncertainty; and  --A diminution in the authority and responsibilities of State and local elected officials, as Federal grants have become the special province of competing bureaucracies.  In one of the basic new directions of my Administration, I proposed in 1969 that we create a new and fundamentally different relationship between State and local government, on the one hand, and the Federal Government on the other. This new relationship has come to be known as the New Federalism. As I said in 1969, its purposes are:  --To restore to the States proper rights and roles in the Federal system with a new emphasis on local responsiveness;  --To provide both the encouragement and necessary resources for local and State officials to exercise leadership in solving their own problems;  --To narrow the distance between people and the Government agencies dealing with their problems;  --To restore strength and vigor to State and local governments where elected officials know best the needs and priorities of their own constituents; and  --To shift the balance of political power away from Washington and back to the country and the people.  With the help of both the Congress and the Administration, this new relationship among local, State and Federal governments has begun to take shape:  --In 1972, the Congress enacted our General Revenue Sharing program, and already more than $11 billion of new money has been put to work in over 38,000 units of State and local government.  --Funding through the Law Enforcement Assistance program has demonstrated the flexibility of the New Federalism in leaving to State and local authorities the decisions on how best to combat crime in their jurisdictions. This program has helped to make America's streets safer for our citizens.  --The Comprehensive Employment and Training Act which I signed into law in 1973 is a landmark example of the New Federalism's broad and more flexible forms of assistance--and it represents a leading example of what can be achieved when the Executive and the Congress team up to enact solid legislation.  --New authorities under the Rural Development Act are being exercised this year in a way which is supportive of State and local development plans and priorities.  --In addition, within the limits of law, we have moved administratively to strengthen the role of State and local governments by simplifying and streamlining Federal grant systems--including procedures for State and local review of project proposals affecting their jurisdictions, opportunities for grant integration and joint funding, and the decentralization of many Federal activities to ten Federal Regional Councils.  In the remaining three years of this term I shall continue to take every sound administrative action within the authorities available to me to support and strengthen State and local government, but we must have the support of the Congress to maintain the progress which has begun. Proposals for furthering the New Federalism now before this body and for which I urge your support include:  --Federal education reforms to consolidate support for elementary and secondary schools as well as vocational and adult programs, and to promote better planning on the local level through advance funding.  --The Better Communities Act, to replace several ineffective and restrictive urban programs with a flexible approach that would allow local officials to make essential decisions on the way community development funds would be spent.  --The Responsive Governments Act, to provide needed Federal assistance for improving State and local planning, decision-making and management capabilities. This would help to strengthen the capacity of State and local governments to assume greater responsibility for the administration of their own programs, whether federally assisted or not.  --The Disaster Preparedness Act, to increase the role of State and local officials in allocating Federal disaster funds and to cut the tangle of Federal red tape.  In addition to these proposals now pending, a number of the new initiatives that I describe elsewhere in this message also reflect the principles of New Federalism. These include:  --A new public transportation initiative that would permit States and localities-both urban and rural--to allocate highway and mass transit funds in accordance with local conditions and priorities.  --An economic adjustment assistance program, that would help States and communities to create employment opportunities where they have been affected by structural changes in their economies which has brought about persistent unemployment or depressed incomes.  --In the field of health, a comprehensive health insurance plan which would bring protection against medical expenses within the reach of all our citizens.  MAKING GOVERNMENT WORK BETTER  On taking office five years ago, one of the first needs I sought to address was the organization of the executive branch of Government--for the plain fact is that the only way Government gets anything done is through its organizational structure, and how well it can perform depends in large measure on how well it is organized.  Because the needs of the Nation continue to change, and because the activities of Government must respond to those changes, the patterns of Government organization that might have been fine in the 1930s or even in the 1960s, may be hopelessly out of date in the 1970s. Therefore, early in my first term I established an expert commission to survey the organization of the executive branch and to recommend improvements to meet present-day needs. The reports of this commission contributed significantly to the reorganizations that I ordered and that I recommended, including the proposal I put forward three years ago for a sweeping reorganization of the executive branch, consolidating seven of the present Cabinet departments into four new units.  Although this basic restructuring has not been enacted by the Congress, other progress of a substantial nature has been made in modernizing the Government. For example, we have established:  --The United States Postal Service, taking the post office out of politics;  --The Office of Management and Budget, providing a strong management arm to assist in coordinating the functions of the executive branch;  --A restructured National Security Council;  --The Domestic Council to coordinate domestic policy formulation;  --The Council on Environmental Quality, the Environmental Protection Agency, and the National Oceanic and Atmospheric Administration, all to provide leadership in meeting our vital environmental needs;  --The Special Action Office for Drug Abuse Prevention and the Drug Enforcement Administration;  --The Council on Economic Policy, to facilitate the formation and execution of overall economic policy;  --The Council on International Economic Policy, to focus on an area increasingly important both to our foreign relations and to our domestic economy;  --ACTION, to provide stronger coordination and incentives for volunteer activities;  --The Cost of Living Council, to help stabilize prices; and,  --The Federal Disaster Assistance Administration, to help individuals and communities struck by natural disasters.  Each of these reorganization steps was designed to meet a specific need more effectively, or to respond to newly urgent needs. Several were accomplished under the reorganization plan authority which has been available to every President in the last 25 years, but which expired last March. This authority--which is utilized only with the concurrence of the Congress-continues to be necessary in order to keep abreast of changing needs, and I urge that it be reinstituted.  Of special concern today is the reorganization of the Government to meet the energy crisis. I have by Executive Order already established the Federal Energy Office to serve as a focal point for energy actions taken by the Government.  But that office lacks a statutory base and does not have sufficient authority to do the full job. That is why I have asked the Congress to establish the Federal Energy Administration and I once again urge it to act on this matter. Recognizing that this country should no longer remain dependent upon foreign energy sources, I have also urged the creation of an Energy Research and Development Administration to develop the necessary technology to tap new domestic sources of energy and a separate Nuclear Energy Commission to carry on the regulatory activities presently assigned to the Atomic Energy Commission.  While these organizational initiatives are needed now, the best organization to knit together the future energy and natural resource programs of the Federal Government would be a comprehensive Department of Energy and Natural Resources. This concept is consistent with the major Federal departmental reform I submitted to the Congress in 1871. Today, I again urge swift, favorable action by the Congress on this proposal so that we will have the broad organizational base that will ultimately be needed to meet many of our energy needs in the most effective manner and to balance energy and natural resource considerations in the future.  That same consolidation and reorganization of the executive branch that I proposed in 1971 would also have created new departments for community development, human resources and economic affairs. The basic problems of fractionated, sometimes overlapping and often conflicting organizations that prompted these original proposals remain acute today. I therefore urge the Congress to join with me in a serious effort to achieve an effective reorganization in these areas.  In view of the close relationship between food assistance programs and other income security programs, I will also propose new legislation to transfer the food stamp and related programs from the Department of Agriculture to the Department of Health, Education and Welfare.  Another important organizational proposal still awaiting Congressional action is the creation of an independent Legal Service Corporation. My Administration will work closely with the Congress in the weeks ahead to obtain final passage of our proposal which would provide the poor with quality legal representation, would create an organization free from political pressures, and would include safeguards to ensure its responsible operation. Legal services legislation has already passed the House. I am hopeful that reasonable legal services legislation will now be passed by the Senate.  A major new opportunity for better Federal management has been initiated at my direction by the Office of Management and Budget. Frequently termed "management by objective," it involves the identification of specific, high-priority objectives for each year for each of the departments and agencies. During the year, progress in reaching these objectives can be closely measured and reported to agency heads and to me. In the years ahead I expect this technique will help make the Government both more responsive and more accountable.  Nothing is more important to improving the efficiency of our Government than the recruiting of top flight personnel for Federal jobs--including positions in the career civil service. We will be working in the months ahead to ensure that executive compensation, career development and training all attract and hold the best possible personnel in the public service.  The compensation we provide our top officials is integral to these efforts to recruit and retain the best men and women for Government service. Salaries of Federal judges, Members of the Congress, and heads and assistant heads of executive agencies have not been adjusted for 5 years, during which time comparable pay rates in the private sector increased 30 percent and pay for other Federal employees has increased significantly. The report of the Commission on Executive, Legislative and Judicial Salaries notes that this lag in compensation also produces serious salary compression among the top ranks of career employees. I am therefore recommending a three-stage increase in executive, legislative and judicial salaries in the budget, at the rate of 7 1/2 percent annually for each of the next three years. This will make salaries within the top levels of the Federal Government more competitive with industry. And it will help us to make Government work better.  CAMPAIGN REFORM  For several years it has been clear that reforms were needed in the way we elect public officials. The intense public focus placed on the campaign abuses of 1972 has now generated sufficient support for this issue that we now have an opportunity to make a genuine breakthrough.  In a national radio address on May 16 of last year, I announced my proposal for a non-partisan commission on campaign reform. This commission would have reexamined the entire Federal election process to come up with a comprehensive set of legislative recommendations. The Commission would have filed a public report no later than December 1, 1973.  Eight months have now passed since that proposal was submitted to the Congress and the Commission is not even close to being created. If it had been created expeditiously, we would now have its report recommending meaningful reforms for Federal campaigns and as I had originally hoped, those reforms might be in place prior to the 1974 elections.  In light of the delay, I have now decided to submit a comprehensive set of Administration proposals on campaign reform for consideration by the Congress during this session. While I do not believe mine will be the only workable proposals, I do hope they will lead to meaningful debate and reform in this critical area. To that end, I look forward to working with the Congress in a long-overdue effort to clean up the Federal election process.  AMERICA AND THE WORLD  When this Administration took office, it was apparent that the world had changed in fundamental ways, and that America's foreign policy had to change in equally fundamental ways.  We needed to end our military involvement in the Vietnam war in a manner consistent with our responsibilities and commitments as a major world power.  We needed to adjust to the changes in the strategic situation between the Soviet Union and the United States which presented a unique opportunity to build a solid foundation for peace but which also threatened our own security if that foundation could not be built.  We needed to end a quarter century of hostile isolation which had kept one-fourth of the world's population outside the framework of international cooperation. The world could not afford another generation of hostility between the United States and the People's Republic of China.  We needed to adjust our partnerships with Western Europe and Japan, recognizing their increasing political and economic strength and self-reliance, and emphasizing our important common goals.  We needed to alter the world monetary system to reflect the new realities of the international economic system and America's place in it.  During the past five years we have made striking progress in meeting each of these needs.  CONTINUING RESPONSIBILITY IN  VIETNAM  The United States is at peace for the first time in more than a decade. But peace must be something more than the absence of the active engagement of American forces in conflict.  We must guard against the tendency to express relief at our military extrication from Southeast Asia by "washing our hands" of the whole affair. Men and women are still dying there. We still have a responsibility there. We must provide those ravaged lands with the economic assistance needed to stabilize the structures of their societies and make future peace more likely. We must provide, as well, the continued military aid grants required to maintain strong, self-reliant defense forces. And we will continue to insist on full compliance with the terms of the agreements reached in Paris, including a full accounting of all of our men missing in Southeast Asia.  BUILDING NEW RELATIONSHIPS  As we work through detente to reduce conflict in areas of the world where both we and the Soviet Union have important interests, we must also continue to work to reduce the potential causes of conflict between us.  We must persevere in our negotiations with the Soviet Union to place further limits on strategic arms competition and in our talks with the Warsaw Pact nations to reduce forces in Europe in a way that will increase security and stability for all.  We will pursue our relations with the Soviet Union in the climate of detente established two years ago in Moscow and reaffirmed by General Secretary Brezhnev's visit to Washington last year. During the fateful weeks of the Middle East war last October, the strength of our detente was severely tested. Since then, American diplomatic leadership and initiative have played a central role in the search for a final settlement in the long troubled Middle East. This began with the cease-fire of October 22, worked out with the Soviet Union's assistance, and was later strengthened by the Six-Point Agreement in November to consolidate the cease-fire, then by the Geneva Peace Conference--under the co-sponsorship of the United States and the Soviet Union-and most recently by the agreement on the disengagement of Egyptian and Israeli military forces, which is being implemented in cooperation with the United Nations Emergency Force. These steps are but the beginning of broadened efforts to find a lasting settlement of the area's problems.  The process of building a normal relationship with the People's Republic of China continues. Liaison offices have been established in our respective capitals and there continues to be fruitful contact between our governments at very high levels.  STRENGTHENING OUR FREE WORLD  PARTNERSHIPS  As our relationships with old adversaries are changing, so are our relationships with old friends. Western Europe and Japan have put behind them the postwar struggle to rebuild their economies, re-order their societies and re-establish their political force. Their success in these endeavors is something we helped to foster and in which we can take pride. But now times have changed and our past role in their success cannot be the sole basis for a continuing relationship. We must instead adjust our relationships to recognize their new economic capacities and their international political objectives. We must accommodate all of these within the framework of the friendship and goodwill of our allies and our whole past history of cooperation in the pursuit of our common goals. This is a cornerstone of the structure of peace we are seeking to build.  With our closest neighbors, here in the Western Hemisphere, we shall continue to seek additional ways of working cooperatively to solve the problems which face the Americas. Secretary of State Kissinger will be meeting in a few weeks with the foreign ministers of Latin America to begin a new and constructive dialogue in the family of American states.  INTERNATIONAL TRADE AND COMMERCE  As we turn from an era of confrontation to one of cooperation, trade and commerce become more important. We have moved from a position of virtual economic hegemony in the world to a new role in a more interdependent world economy. We must create an equitable and efficient system of integrating our own economy with that of the rest of the world.  Much has already been accomplished on this front. The markets of the USSR and China are now accessible, thereby providing jobs for American workers. Our major trading partners in Western Europe and Japan share our interest in further reducing international trade barriers and increasing world trade. The rigid and outmoded international monetary system which over-valued the dollar and impeded our foreign trade has been decisively altered. After two years of trade deficits, America achieved a trade surplus in 1973.  But we must persevere in our international monetary, investment and trade negotiations. The greatest tasks still lie ahead and the stakes are high. Avoiding the economic and political disruptions associated with international monetary turmoil and restrictive trade and investment practices increases in importance as international interdependence grows.  As I noted earlier in this message, prompt passage of the pending Trade Reform Act is essential to achieving the goal of a less restrictive and more equitable international economic system. In addition, we must move forward with the current negotiations to reform the international payments system under the auspices of the International Monetary Fund, reforms which will markedly increase the opportunities for nations to trade and invest profitably.  We must also strengthen our resolve as the world's most prosperous nation to help less fortunate countries. In the world of today, no nation will be fully secure or prosperous until all nations are. As in the past, we will take pride in our efforts to work with developing nations which aspire to greater economic and social well-being. The United States has called for the World Food Conference which will be held in November under the auspices of the United Nations. We will also actively observe 1974 as World Population Year, as proclaimed by the United Nations.  MAINTAINING A STRONG DEFENSE FORGE  But as we work for .peace, we must be conscious that the opportunity to build a structure of peace came because our arms have served as a deterrent to war. We must maintain that deterrent.  In the last five years, outlays for the Department of Defense have been reduced by about 1/3--measured in constant dollars--and military personnel have been cut from 3.5 million to 2.2 million.  This year, I will recommend a substantial increase in the 1975 budget for the Department of Defense. These increases are necessary to improve the readiness of our armed forces, to build up levels of essential equipment and supplies and to preserve Present force levels in the face of rising costs.  CONCLUSION  Throughout these five years, I have had one overriding aim: to establish a structure of peace in the world that can free future generations from the scourge of war. Others may have different priorities; this has been and will remain my first priority, the chief legacy that I hope to leave from the eight years of my Presidency.  As we strengthen the peace, we must also continue each year a steady strengthening of our society here at home. Our conscience requires it. Our interests require it. We must insist on it.  As we create more jobs, as we build a better health care system, and improve education; as we develop new sources of energy, as we provide more abundantly for the elderly and the poor, as we strengthen the system of private enterprise that produces our prosperity--as we do all this and more, we solidify those essential bonds that hold us together as a Nation. Even more importantly, we advance what in the final analysis government in America is all about; more freedom, more security, a better life, for each one of the 211 million individual persons who are America.  We cannot afford to neglect progress at home while pursuing peace abroad. But neither can we afford to neglect peace abroad while pursuing progress at home.  With a stable peace, all is possible; without peace, nothing is possible.  Earlier in this message, I comment that "one of the continuing challenges facing us in the legislative process is that of the timing and pacing of our initiatives . . . selecting each year among many worthy projects those that are ripe for action at that time . . ."  What is true in terms of our domestic initiatives is true also in the world. This period we now are in--these few years-presents a juncture of historic forces unique in this century, which provide an opportunity we may never have again to create a structure of peace solid enough to last a lifetime and more--not just peace in our time but peace in our children's time as well. It is on the way we respond to this opportunity, more than anything else, that history will judge whether we in America have met our responsibility.  I have full confidence that we will meet that responsibility.  RICHARD NIXON  The White House,  January 30, 1974. 	R
To the Congress of the United States:  With the opening of a new Congress and the beginning of a new Presidential term come fresh opportunities for achievement in America. To help us consider more adequately the very special challenges of this new year, I am presenting my 1973 State of the Union Message in' a number of sections.  Two weeks ago I sent the first of those sections to the Congress--an overview reporting that "the basic state of our Union today is sound, and full of promise."  Today I wish to report to the Congress on the state of our natural resources and environment. It is appropriate that this topic be first of our substantive policy discussions in the State of the Union presentation, since nowhere in our national affairs do we have more gratifying progress--nor more urgent, remaining problems.  There was a time when Americans took our natural resources largely for granted. For example, President Lincoln observed in his State of the Union message for 1862 that "A nation may be said to consist of its territory, its people, and its laws. The territory is the only part which is of certain durability."  In recent years, however, we have come to realize that our "territory"--that is, our land, air, water, minerals, and the like--is not of "certain durability" after all. We have learned that these natural resources are fragile and finite, and that many have been seriously damaged or despoiled.  When we came to office in 1969, we tackled this problem with all the power at our command. Now there is encouraging evidence that the United States has moved away from the environmental crisis that could have been and toward a new era of restoration and renewal. Today, in 1973, I can report to the Congress that we are well on the way to winning the war against environmental degradation-well on the way to making our peace with nature.  YEARS OF PROGRESS  While I am disappointed that the 92nd Congress failed to act upon 19 of my key natural resources and environment proposals, I am pleased to have signed many of the proposals I supported into law during the past four years. They have included air quality legislation, strengthened water quality and pesticide control legislation, new authorities to control noise and ocean dumping, regulations to prevent oil and other spills in our ports and waterways, and legislation establishing major national recreation areas at America's Atlantic and Pacific gateways, New York and San Francisco.  On the organizational front, the National Environmental Policy Act of 1969 has reformed programs and decision-making processes in our Federal agencies and has given citizens a greater opportunity to contribute as decisions are made. In 1970 I appointed the first Council on Environmental Quality--a group which has provided active leadership in environmental policies. In the same year, I established the Environmental Protection Agency and the National Oceanic and Atmospheric Administration to provide more coordinated and vigorous environmental management. Our natural resource programs still need to be consolidated, however, and I will again submit legislation to the Congress to meet this need.  The results of these efforts are tangible and measurable. Day by day, our air is getting cleaner; in virtually every one of our major cities the levels of air pollution are declining. Month by month, our water pollution problems are also being conquered, our noise and pesticide problems are coming under control, our parklands and protected wilderness areas are increasing.  Year by year, our commitment of public funds for environmental programs continues to grow; it has increased four-fold in the last four years. In the area of water quality alone, it has grown fifteen-fold. In fact, we are now buying new facilities nearly as fast as the construction industry can build them. Spending still more money would not buy us more pollution control facilities but only more expensive ones.  In addition to what Government is doing in the battle against pollution, our private industries are assuming a steadily growing share of responsibility in this field. Last year industrial spending for pollution control jumped by 50 percent, and this year it could reach as much as $5 billion.  All nations, regardless of their economic systems, share to some extent in the environmental problem--but with vigorous United States leadership, joint efforts to solve this global problem are showing results. The United Nations has adopted the American proposal for a special U.N. environmental fund to coordinate and support international environmental programs.  Some 92 nations have concluded an international convention to control the ocean dumping of wastes. An agreement is now being forged in the Intergovernmental Maritime Consultative Organization to end the intentional discharge of oil from ships into the ocean..This objective, first recommended by my Administration, was adopted by the NATO Committee on the Challenges of Modern Society.  Representatives of almost 70 countries are meeting in Washington this week at our initiative to draft a treaty to protect endangered species of plant and animal wildlife. The U.S.-USSR environmental cooperation agreement which I signed in Moscow last year makes two of the world's greatest industrial powers allies against pollution. Another agreement which we concluded last year with Canada will help to clean up the Great Lakes.  Domestically, we can also be proud of the steady progress being made in improving the quality of life in rural and agricultural America. We are beginning to break away from the old rigid system of controls which eroded the farmer's freedom through Government intrusion in the marketplace. The new flexibility permitted by the Agricultural Act of 1970 has enabled us to help expand farm markets and take advantage of the opportunity to increase exports by almost 60 percent in just three years. Net farm income is at an all-time high, up from $16.1 billion in 1971 to $19 billion in 1972.  PRINCIPLES TO GUIDE US  A record is not something to stand on; it is something to build on. And in this field of natural resources and the environment, we intend to build diligently and well.  As we strive to transform our concern into action, our efforts will be guided by five basic principles:  The first principle is that we must strike a balance so that the protection of our irreplaceable heritage becomes as important as its use. The price of economic growth need not and will not be deterioration in the quality of our lives and our surroundings.  Second, because there are no local or State boundaries to the problems of our environment, the Federal Government must play an active, positive role. We can and will set standards and exercise leadership. We are providing necessary funding support. And we will provide encouragement and incentive for others to help with the job. But Washington must not displace State and local initiative, and we shall expect the State and local governments-along with the private sector--to play the central role in making the difficult, particular decisions which lie ahead.  Third, the costs of pollution should be more fully met in the free marketplace, not in the Federal budget. For example, the price of pollution control devices for automobiles should be borne by the owner and the user and not by the general taxpayer. The costs of eliminating pollution should be reflected in the ,costs of goods and services.  Fourth, we must realize that each individual must take the responsibility for 'looking after his own home and workplace. These daily surroundings are the environment where most Americans spend most of their time. They reflect people's pride in themselves and their consideration for their communities. A person's backyard is not the domain of the Federal Government.  Finally, we must remain confident that America's technological and economic ingenuity will be equal to our environmental challenges. We will not look upon these challenges as insurmountable obstacles.  Instead, we shall convert the so-called crisis of the environment into an opportunity for unprecedented progress.  CONTROLLING POLLUTION  We have made great progress in developing the laws and institutions to clean up pollution. We now have formidable new tools to protect against air, water and noise pollution and the special problem of pesticides. But to protect ourselves fully from harmful contaminants, we must still close several gaps in governmental authority.  I was keenly disappointed when the last Congress failed to take action on many of my legislative requests related to our natural resources and environment. In the coming weeks I shall once again send these urgently needed proposals to the Congress so that the unfinished environmental business of the 92nd Congress can become the environmental achievements of the 93rd.  Among these 19 proposals are eight whose passage would give us much greater control over the sources of pollution:  --Toxic Substances. Many new chemicals can pose hazards to humans and the environment and are not well regulated. Authority is now needed to provide adequate testing standards for chemical substances and to restrict or prevent their distribution if testing confirms a hazard.  --Hazardous Wastes. Land disposal of hazardous wastes has always been widely practiced but is now becoming more prevalent because of strict air and water pollution control programs. The disposal of the extremely hazardous wastes which endanger the health of humans and other organisms is a problem requiring direct Federal regulation. For other hazardous wastes, Federal standards should be established with guidelines for State regulatory programs to carry them out.  --Safe Drinking Water. Federal action is also needed to stimulate greater State and local action to ensure high standards for our drinking water. We should establish national drinking water standards, with primary enforcement and monitoring powers retained by the State and local agencies, as well as a Federal requirement that suppliers notify their customers of the quality of their water.  -Sulfur Oxides Emissions Charge. We now have national standards to help curtail sulfur emitted into the atmosphere from combustion, refining, smelting and other processes, but sulfur oxides continue to be among our most harmful air pollutants. For that reason, I favor legislation which would allow the Federal Government to impose a special financial charge on those who produce sulfur oxide emissions. This legislation would also help to ensure that low-sulfur fuels are allocated to areas where they are most urgently needed to protect the public health.  --Sediment Control. Sediment from soil erosion and runoff continues to be a pervasive pollutant of our waters. Legislation is needed to ensure that the States make the control of sediment from new construction a vital part of their water quality programs.  --Controlling Environmental Impacts of Transportation. As we have learned in recent years, we urgently need a mass transportation system not only to relieve urban congestion but also to reduce the concentrations of pollution that are too often the result of our present methods of transportation. Thus I will continue to place high priority upon my request to permit use of the Highway Trust Fund for mass transit purposes and to help State and local governments achieve air quality, conserve energy, and meet other environmental objectives.  --United Nations Environmental Fund. Last year the United Nations adopted my proposal to establish a fund to coordinate and support international environmental programs. My 1974 budget includes a request for $10 million as our initial contribution toward the Fund's five-year goal of $100 million, and I recommend authorizing legislation for this purpose.  --Ocean Dumping Convention. Along with 91 other nations, the United States recently concluded an international convention calling for regulation of ocean dumping. I am most anxious to obtain the advice and consent of the Senate for this convention as soon as possible. Congressional action is also needed on several other international conventions and amendments to control oil pollution from ships in the oceans.  MANAGING THE LAND  AS we steadily bring our pollution problems under control, more effective and sensible use of our land is rapidly emerging as among the highest of our priorities. The land is our Nation's basic natural resource, and our stewardship of this resource today will affect generations to come.  America's land once seemed inexhaustible. There was always more of it beyond the horizon. Until the twentieth century we displayed a carelessness about our land, born of our youthful innocence and desire to expand. But our land is no longer an open frontier.  Americans not only need, but also very much want to preserve diverse and beautiful landscapes, to maintain essential farm lands, to save wetlands and wildlife habitats, to keep open recreational space near crowded population centers, and to protect our shorelines and beaches. Our goal is to harmonize development with environmental quality and to add creatively to the beauty and long-term worth of land already being used.  Land use policy is a basic responsibility of State and local governments. They are closer to the problems and closer to the people. Some localities are already reforming land use regulation--a trend I hope will accelerate. But because land is a national heritage, the Federal Government must exercise leadership in land use decision processes, and I am today again proposing that we provide it. In the coming weeks, I will ask the Congress to enact a number of legislative initiatives which will help us achieve this goal:  --National Land Use Policy. Our greatest need is for comprehensive new legislation to stimulate State land use controls. We especially need a National Land Use Policy Act authorizing Federal assistance to encourage the States, in cooperation with local governments, to protect lands of critical environmental concern and to regulate the siting of key facilities such as airports, highways and major private developments. Appropriate Federal funds should be withheld from States that fail to act.  --Power plant Siting. An open, long-range planning process is needed to help meet our power needs while also protecting the environment. We can avoid unnecessary delays with a power plant siting law which assures that electric power facilities are constructed on a timely basis, but with early and thorough review of long-range plans and specific provisions to protect the environment.  --Protection of Wetlands. Our coastal wetlands are increasingly threatened by residential and commercial development. To increase their protection, I believe we should use the Federal tax laws to discourage unwise development in wetlands.  --Historic Preservation and Rehabilitation. An important part of our national heritage are those historic structures in our urban areas which should be rehabilitated and preserved, not demolished. To help meet this goal, our tax laws should be revised to encourage rehabilitation of older buildings, and we should provide Federal insurance of loans to restore historic buildings for residential purposes.  --Management of Public Lands. Approximately one-fifth of the Nation's land is considered "public domain", and lacks the protection of an overall management policy with environmental safeguards. Legislation is required to enable the Secretary of the Interior to protect our environmental interest on those lands.  --Legacy of Parks. Under the Legacy of Parks program which I initiated in 1971, 257 separate parcels of parklands and underused Federal lands in all 50 States have been turned over to local control for park and recreational purposes. Most of these parcels are near congested urban areas, so that millions of citizens can now have easy access to parklands. I am pleased to announce today that 16 more parcels of Federal land will soon be made available under this same program 1  1A list of the 16 properties was issued by the White House on the same day. Included were lands in California, Colorado, Indiana, Kansas, Michigan, New York, Ohio, Rhode Island, Texas, and Washington.  We must not be content, however, with just the Legacy of Parks program. New authority is needed to revise the formula for allocating grant funds to the States from the Land and Water Conservation Fund. More of these funds should be channelled to States with large urban populations.  --Mining on Public Lands. Under a statute now over a century old, public lands must be transferred to private ownership at the request of any person who discovers minerals on them. We thus have no effective control over mining on these properties. Because the public lands belong to all Americans, this 1872 Mining Act should be repealed and replaced with new legislation which I shall send to the Congress.  --Mined Area Protection. Surface and underground mining can too often cause serious air and water pollution as well as unnecessary destruction of wildlife habitats and aesthetic and recreational areas. New legislation with stringent performance standards is required to regulate abuses of surface and underground mining in a manner compatible with the environment.  AMERICAN AGRICULTURE A BASIC NATIONAL RESOURCE  Nearly three-fifths of America's land is in the stewardship of the farmer and the rancher. We can be grateful that farmers have been among our best conservationists over the years. Farmers know better than most that sound conservation means better long-term production and improved land values. More importantly, no one respects and understands our soil and land better than those who make their living by the land.  But Americans know their farmers and ranchers best for all they have done to keep us the best-fed and best-clothed people in the history of mankind. A forward-looking agricultural economy is not only essential for environmental progress, but also to provide for our burgeoning food and fiber needs.  My Administration is not going to express its goal for farmers in confusing terms. Our goal, instead, is very simple. The farmer wants, has earned, and deserves more freedom to make his own decisions. The Nation wants and needs expanded supplies of reasonably priced goods and commodities.  These goals are complementary. Both have been advanced by the basic philosophy of the Agricultural Act of 1970. They must be further advanced by Congressional action this year.  The Agricultural Act of 1970 expires with the 1973 crop. We now face the fundamental challenge of developing legislation appropriate to the economy of the 1970'S. Over the next several months, the future direction of the farm program must he discussed, debated and written into law. The outcome of this process will be crucial not only to farmers and ranchers, but to consumers and taxpayers as well.  My Administration's fundamental approach to farm policy is to build on the forward course set by the 1970 Act. These principles should guide us in enacting new farm legislation:  --Farmers must be provided with greater freedom to make production and marketing decisions. I have never known anyone in Washington who knows better than a farmer what is in his own best interest.  --Government influence in the farm commodity marketplace must be reduced. Old fashioned Federal intrusion is as inappropriate to today's farm economy as the old McCormick reaper would be on a highly sophisticated modern farm.  --We must allow farmers the opportunity to produce for expanding domestic demands and to continue our vigorous competition in export markets. We will not accomplish that goal by telling the farmer how much he can grow or the rancher how much livestock he can raise. Fidelity to this principle will have the welcome effect of encouraging both fair food prices for consumers and growing income from the marketplace for farmers.  --We must reduce the farmer's dependence on Government payments through increased returns from sales of farm products at home and abroad. Because some of our current methods of handling farm problems are outmoded, the farmer has been unfairly saddled with the unflattering image of drinking primarily at the Federal well. Let us remember that more than 93 percent of gross farm income comes directly through the marketplace. Farmers and ranchers are strong and independent businessmen; we should expand their opportunity to exercise their strength and independence.  --Finally, we need a program that will put the United States in a good posture for forthcoming trade negotiations.  In pursuing all of these goals, we will work closely through the Secretary of Agriculture with the Senate Committee on Agriculture and Forestry and the House Committee on Agriculture to formulate and enact new legislation in areas where it is needed.  I believe, for example, that dairy support systems, wheat, feed grains and cotton allotments and bases--some established decades ago---are drastically outdated. They tend to be discriminatory for many farm operators.  It would be desirable to establish, after a reasonable transition period, a more equitable basis for production adjustment in the agricultural economy should such adjustment be needed in the years ahead. Direct Federal payments should, at the end of the transition period, be limited to the amounts necessary to compensate farmers for withholding unneeded land from crop production.  As new farm legislation is debated in the months ahead, I hope the Congress will address this important subject with a deep appreciation of the need to keep the Government off the farm as well as keeping the farmer on.  PROTECTING, OUR NATURAL HERITAGE  An important measure of our true commitment to environmental quality is our dedication to protecting the wilderness and its inhabitants. We must recognize their ecological significance and preserve them as sources of inspiration and education. And we need them as places of quiet refuge and reflection.  Important progress has been made in recent years, but still further action is needed in the Congress. Specifically, I will ask the 93rd Congress to direct its attention to the following areas of concern:  --Endangered Species. The limited scope of existing laws requires new authority to identify and protect endangered species before they are so depleted that it is too late. New legislation must also make the taking of an endangered animal a Federal offense.  --Predator Control. The widespread use of highly toxic poisons to kill coyotes and other predatory animals has spread persistent poisons to range and forest lands without adequate foresight of environmental effects. I believe Federal assistance is now required so that we can find better means of controlling predators without endangering other wildlife.  --Wilderness Areas. Historically, Americans have always looked westward to enjoy wilderness areas. Today we realize that we must also preserve the remaining areas of wilderness in the East, if the majority of our people are to have the full benefit of our natural glories. Therefore I will ask the Congress to amend the legislation that established the Wilderness Preservation System so that more of our Eastern lands can be included.  --Wild and Scenic Rivers. New legislation is also needed to continue our expansion of the national system of wild and scenic rivers. Funding authorization must be increased by $20 million to complete acquisitions in seven areas, and we must extend the moratorium on Federal licensing for water resource projects on those rivers being considered for inclusion in the system.  --Big Cypress National Fresh Water Preserve. It is our great hope that we can create a reserve of Florida's Big Cypress Swamp in order to protect the outstanding wildlife in that area, preserve the water supply of Everglades National Park and provide the Nation with an outstanding recreation area. Prompt passage of Federal legislation would allow the Interior Department to forestall private or commercial development and inflationary pressures that will build if we delay.  --Protecting Marine Fisheries. Current regulation of fisheries off U.S. coasts is inadequate to conserve and manage these resources. Legislation is needed to authorize U.S. regulation of foreign fishing off U.S. coasts to the fullest extent authorized by international agreements. In addition, domestic fishing should be regulated in the U.S. fisheries zone and in the high seas beyond that zone.  --World Heritage Trust. The United States has endorsed an international convention for a World Heritage Trust embodying our proposals to accord special recognition and protection to areas of the world which are of such unique natural, historical, or cultural value that they are a part of the heritage of all mankind. I am hopeful that this convention will be ratified early in 1973.  --Weather Modification. Our capacity to affect the weather has grown considerably in sophistication and predictability, but with this advancement has also come a new potential for endangering lives and property and causing adverse environmental effects. With additional Federal regulations, I believe that we can minimize these dangers.  MEETING OUR ENERGY NEEDS  One of the highest priorities of my Administration during the coming year will be a concern for energy supplies--a concern underscored this winter by occasional fuel shortages. We must face up to a stark fact in America: we are now consuming more energy than we produce.  A year and a half ago I sent to the Congress the first Presidential message ever devoted to the energy question. I shall soon submit a new and far more comprehensive energy message containing wide-ranging initiatives to ensure necessary supplies of energy at acceptable economic and environmental costs. In the meantime, to help meet immediate needs, I have temporarily suspended import quotas on home heating oil east of the Rocky Mountains.  As we work to expand our supplies of energy, we should also recognize that we must balance those efforts with our concern to preserve our environment. In the past, as we have sought new energy sources, we have too often damaged or despoiled our land. Actions to avoid such damage will probably aggravate our energy problems to some extent and may lead to higher prices. But all development and use of energy sources carry environmental risks, and we must find ways to minimize those risks while also providing adequate supplies of energy. I am fully confident that we can satisfy both of these imperatives.  GOING FORWARD IN CONFIDENCE  The environmental awakening of recent years has triggered substantial progress in the fight to preserve and renew the great legacies of nature. Unfortunately, it has also triggered a certain tendency to despair. Some people have moved from complacency to the opposite extreme of alarmism, suggesting that our pollution problems were hopeless and predicting impending ecological disaster. Some have suggested that we could never reconcile environmental protection with continued economic growth.  I reject this doomsday mentality--and I hope the Congress will also reject it. I believe that we can meet our environmental challenges without turning our back on progress. What we must do is to stop the hand-wringing, roll up our sleeves and get on with the job.  The advocates of defeatism warn us of all that is wrong. But I believe they underestimate this Nation's genius for responsive adaptability and its enormous reservoir of spirit.  I believe there is always a sensible middle ground between the Cassandras and the Pollyannas. We must take our stand upon that ground.  I have profound respect for the enormous challenge ahead, but I have even stronger respect for the capacity and character of the American people. Many of us have heard the adage that the last letters of the word, "American," say "I can." I am confident that we can, and we will, meet our natural resource challenges.  RICHARD NIXON  The White House,  February 15, 1973. 	R