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and the management of the affairs of the imperial legation has passed into the hands of a gentleman entirely unobjectionable.

With Japan we continue to maintain intimate relations. The cabinet of the Mikado has, since the close of the last session of Congress, selected citizens of the United States to serve in offices of importance in several departments of government. I have reason to think that this selection is due to an appreciation of the disinterestedness of the policy which the United States have pursued toward Japan. It is our desire to continue to maintain this disinterested and just policy with China as well as Japan. The correspondence transmitted herewith shows that there is no disposition on the part of this Government to swerve from its established course.

Prompted by a desire to put an end to the barbarous treatment of our shipwrecked sailors on the Corean coast, I instructed our minister at Peking to endeavor to conclude a convention with Corea for securing the safety and humane treatment of such mariners.

Admiral Rodgers was instructed to accompany him, with a sufficient force to protect him in case of need.

A small surveying party sent out, on reaching the coast, was treacherously attacked at a disadvantage. Ample opportunity was given for explanation and apology for the insult. Neither came. A force was then landed. After an arduous march over a rugged and difficult country, the forts from which the outrages had been committed were reduced by a gallant assault and were destroyed. Having thus punished the criminals, and having vindicated the honor of the flag, the expedition returned, finding it impracticable, under the circumstances, to conclude the desired convention. I respectfully refer to the correspondence relating thereto, herewith submitted, and leave the subject for such action as Congress may see fit to take.

The republic of Mexico has not yet repealed the very objectionable laws establishing what is known as the "Free Zone," on the frontier of the United States. It is hoped that this may yet be done, and also that more stringent measures may be taken by that republic for restraining lawless persons on its frontiers. I hope that Mexico, by its own action, will soon relieve this Government of the difficulties experienced from these causes. Our relations with the various republics of Central and South America continue, with one exception, to be cordial and friendly.

I recommend some action by Congress regarding the overdue installments under the award of the Venezuelan claims commission of 1866. The internal dissensions of this government present no justification for the absence of effort to meet their solemn treaty obligations.

The ratification of an extradition treaty with Nicaragua has been ex changed.

It is a subject for congratulation that the great empire of Brazil has taken the initiatory step toward the abolition of slavery. Our relations

with that empire, always cordial, will naturally be made more so by this act. It is not too much to hope that the government of Brazil may hereafter find it for its interest as well as intrinsically right to advance toward entire emancipation more rapidly than the present act contemplates.

The true prosperity and greatness of a nation is to be found in the elevation and education of its laborers.

It is a subject for regret that the reforms in this direction, which were voluntarily promised by the statesmen of Spain, have not been carried out in its West India colonies. The laws and regulations for the apparent abolition of slavery in Cuba and Porto Rico leave most of the laborers in bondage, with no hope of release until their lives become a burden to their employers.

I desire to direct your attention to the fact that citizens of the United States, or persons claiming to be citizens of the United States, are large holders, in foreign lands, of this species of property, forbidden by the fundamental law of their alleged country. I recommend to Congress to provide, by stringent legislation, a suitable remedy against the holding, owning, or dealing in slaves, or being interested in slave property in foreign lands, either as owners, hirers, or mortgagers, by citizens of the United States.

It is to be regretted that the disturbed condition of the island of Cuba continues to be a source of annoyance and of anxiety. The exist ence of a protracted struggle in such close proximity to our own territory, without apparent prospect of an early termination, cannot be other than an object of concern to a people who, while abstaining from interference in the affairs of other powers, naturally desire to see every country in the undisturbed enjoyment of peace, liberty, and the blessings of free institutions.

Our naval commanders in Cuban waters have been instructed, in case it should become necessary, to spare no effort to protect the lives and property of bona fide American citizens, and to maintain the dignity of the flag.

It is hoped that all pending questions with Spain growing out of the affairs in Cuba may be adjusted in the spirit of peace and conciliation which has hitherto guided the two powers in their treatment of such questions.

To give importance, and to add to the efficiency of our diplomatic relations with Japan and China, and to further aid in retaining the good opinion of those peoples, and to secure to the United States its share of the commerce destined to flow between those nations and the balance of the commercial world, I earnestly recommend that an appropriation be made to support at least four American youths in each of those countries, to serve as a part of the official family of our ministers there. Our representatives would not even then be placed upon an equality with the representatives of Great Britain and of some other

powers. As now situated, our representatives in Japan and China have to depend, for interpreters and translators, upon natives of those countries who know our language imperfectly, or procure for the occasion the services of employés in foreign business houses, or the interpreters to other foreign ministers.

I would also recommend liberal measures for the purpose of supporting the American lines of steamers now plying between San Francisco and Japan and China, and the Australian line-almost our only remaining lines of ocean steamers-and of increasing their services.

The national debt has been reduced to the extent of eighty-six million fifty-seven thousand one hundred and twenty-six dollars and eighty cents during the year, and by the negotiation of national bonds at a lower rate of interest, the interest on the public debt has been so far diminished that now the sum to be raised for the interest account is nearly seventeen million dollars less than on the 1st of March, 1869. It was highly desirable that this rapid diminution should take place, both to strengthen the credit of the country, and to convince its citizens of their entire ability to meet every dollar of liability without bankrupting them. But in view of the accomplishment of these desirable ends; of the rapid development of the resources of the country; its increasing ability to meet large demands, and the amount already paid, it is not desirable that the present resources of the country should continue to be taxed in order to continue this rapid payment. I therefore recommend a modification of both the tariff and internal tax laws. I recommend that all taxes from internal sources be abolished, except those collected from spirituous, vinous, and malt liquors, tobacco in its various forms, and from stamps.

In re-adjusting the tariff, I suggest that a careful estimate be made of the amount of surplus revenue collected under the present laws, after providing for the current expenses of the Government, the interest account, and a sinking fund, and that this surplus be reduced in such a manner as to afford the greatest relief to the greatest number. There are many articles not produced at home, but which enter largely into general consumption through articles which are manufactured at home, such as medicines compounded, &c., &c., from which very little revenue is derived, but which enter into general use. All such articles I recommend to be placed on the "free list." Should a further reduction prove advisable, I would then recommend that it be made upon those articles which can best bear it without disturbing home-production, or reducing the wages of American labor.

I have not entered into figures, because to do so would be to repeat what will be laid before you in the report of the Secretary of the Treas ury. The present laws for collecting revenue pay collectors of customs small salaries, but provide for moieties (shares in all seizures) which, at principal ports of entry particularly, raise the compensation of those officials to a large sum. It has always seemed to me as if this system

must, at times, work perniciously. It holds out an inducement to dis honest men, should such get possession of those offices, to be lax in their scrutiny of goods entered to enable them finally to make large seizures. Your attention is respectfully invited to this subject.

Continued fluctuations in the value of gold, as compared with the national currency, has a most damaging effect upon the increase and development of the country in keeping up prices of all articles necessary in every-day life. It fosters a spirit of gambling prejudicial alike to national morals and the national finances. If the question can be met, as to how to give a fixed value to our currency, that value constantly and uniformly approaching par with specie, a very desirable object will be gained.

For the operations of the Army in the past year, the expense of maintaining it, the estimate for the ensuing year, and for continuing seacoast and other improvements conducted under the supervision of the War Department, I refer you to the accompanying report of the Secretary of War.

I call your attention to the provisions of the act of Congress approved March 3, 1869, which discontinues promotions in the staff corps of the Army until provided for by law. I recommend that the number of officers in each grade in the staff corps be fixed, and that whenever the number in any one grade falls below the number so fixed, that the vacancy may be filled by promotion from the grade below. I also recommend that, when the office of chief of a corps becomes vacant, the place may be filled by selection from the corps in which the vacancy exists.

The report of the Secretary of the Navy shows an improvement in the number and efficiency of the naval force, without material increase in the expense of supporting it. This is due to the policy which has been adopted, and is being extended, as fast as our material will admit, of using smaller vessels as cruisers on the several stations. By this means we have been enabled to occupy at once a larger extent of cruising-ground, to visit more frequently the ports where the presence of our flag is desirable, and generally to discharge more efficiently the appropriate duties of the Navy in time of peace, without exceeding the number of men or the expenditure authorized by law.

During the past year the Navy-has, in addition to its regular service, supplied the men and officers for the vessels of the Coast Survey, and has completed the surveys authorized by Congress of the Isthmus of Darien and Tehuantepec, and under like authority has sent out an expedition completely furnished and equipped to explore the unknown ocean of the north.

The suggestions of the report as to the necessity for increasing and improving the materiel of the Navy, and the plan recommended for reducing the personnel of the service to a peace standard, by the gradual abolition of certain grades of officers, the reduction of others,

and the employment of some in the service of the commercial marine, are well considered and deserve the thoughtful attention of Congress. I also recommend that all promotions in the Navy above the rank of captain be by selection instead of by seniority. This course will secure in the higher grades greater efficiency and hold out an incentive to young officers to improve themselves in the knowledge of their profession.

The present cost of maintaining the Navy, its cost compared with that of the preceding year, and the estimates for the ensuing year, are contained in the accompanying report of the Secretary of the Navy.

The enlarged receipts of the Post-Office Department, as shown by the accompanying report of the Postmaster General, exhibits a gratifying increase in that branch of the public service. It is the index of the growth of education and of the prosperity of the people, two elements highly conducive to the vigor and stability of republics. With a vast territory like ours, much of it sparsely populated, but all requiring the services of the mail, it is not at present to be expected that this Department can be made self-sustaining. But a gradual approach to this end, from year to year, is confidently relied on, and the day is not far distant when the Post-Office Department of the Government will prove a much greater blessing to the whole people than it is now.

The suggestions of the Postmaster General for improvements in the Department presided over by him are earnestly recommended to your special attention. Especially do I recommend favorable consideration of the plan for uniting the telegraphic system of the United States with the postal system. It is believed that by such a course the cost of telegraphing could be much reduced, and the service as well, if not better, rendered. It would secure the further advantage of extending the telegraph through portions of the country where private enterprise will not construct it. Commerce, trade, and, above all, the efforts to bring a people widely separated into a community of interest, are always benefited by a rapid intercommunication. Education, the ground-work of republican institutions, is encouraged by increasing the facilities to gather speedy news from all parts of the country. The desire to reap the benefit of such improvements will stimulate education. I refer you to the report of the Postmaster General for full details of the operations of last year, and for comparative statements of results with former years.

There has been imposed upon the Executive branch of the Government the execution of the act of Congress approved April 20, 1871, and commonly known as the Ku-Klux law, in a portion of the State of South Carolina. The necessity of the course pursued will be demonstrated by the report of the Committee to Investigate Southern Outrages. Under the provisions of the above act, I issued a proclamation calling the attention of the people of the United States to the same, and declaring iny reluctance to exercise any of the extraordinary powers thereby con

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