Chapter XIII: Section 1: The right of citizens of the United States to vote shall not (10)

_Rule 4_.--The grouping heretofore made for the Executive Departments at Washington is hereby modified by striking out the words "female clerks, copyists, and counters, at $900 a year," these places being below the grade of clerkships of class 1; and all applicants for such positions shall be examined in (1) penmanship, (2) copying, (3) elements of English grammar, chiefly orthography, and (4) fundamental rules of arithmetic, except that mere counters may be examined only in the fundamental rules of arithmetic and as to their facility in counting money; and those found competent by such examination shall be reported in the order of their excellence as eligible for appointment, and selections may be made by the appointing power, at discretion, from the list of those so reported, being at liberty to give preference to such as may be justly regarded as having the highest claims to public consideration by reason of loss of support or of property occasioned by the death or disability of any person in the defense of the Union in war or in other public service of the Government. And in the notices of the examination of females to fill vacancies among those last mentioned it shall be stated as follows: "That from among all those who shall pass a satisfactory examination the head of the Department will be at liberty to select such persons for the vacancies as may be justly regarded as having the highest claims to public consideration."

_Rule 5_.--The notices to appear at any examinations other than those referred to in the fourth rule of this series, so far as practicable and necessary to prevent misapprehension, shall advise female applicants to whom they may be sent of any limitation which the law or the necessities of the public service impose upon such applicants entering the vacancies for which the examinations are to take place.

_Rule 6_.--That it shall be the duty of the respective boards of examiners, on the written request of heads of Departments, to hold examinations in anticipation of vacancies, as well as to fill vacancies, and to prepare lists showing the results of competition, so that when any such vacancy may happen there shall be those thus shown to be eligible to nomination or appointment, from whom the proper selection shall be made according to the provisions of the rules and regulations relating to competitive examination; and examinations upon like request shall be held in reference to vacancies to be filled under the fourth rule of this series.

_Rule 7._--Applicants for appointment as cashiers of collectors of customs, cashiers of assistant treasurers, cashiers of postmasters, superintendents of money-order divisions in post-offices, and other custodians of large sums of public money for whose fidelity another officer has given official bonds may be appointed at discretion; but this rule shall not apply to any appointment to a position grouped below the grade of assistant teller.

_Rule 8_.--In cases of defalcation or embezzlement of public money, or other emergency calling for immediate action, where the public service would be materially injured unless the vacancy is promptly filled without resorting to the methods of selection and appointment prescribed by the rules and regulations, or when a vacancy happens at a place remote and difficult of access and the methods prescribed for filling it can not be applied without causing delay injurious to the public service, the appointment may be made at discretion; but this rule shall not apply to any place which is provided to be filled under the rules of competitive examination.

_Rule 9_.--For the purpose of bringing the examinations for the civil service as near to the residences of those desiring to be examined as the appropriation at the command of the President will warrant, and for the further purpose of facilitating as far as practicable the making of selections for such service equably from the several portions of the Union, while at the same time preserving the principle of promoting merit as tested by fair competition, it is provided as follows:

(1) That the several States and Territories are grouped into five divisions, to be designated as civil-service districts, the said districts to be numbered consecutively from one to five, as follows:

I. The first district embraces the States of Maine, New Hampshire, Massachusetts, Vermont, Connecticut, Rhode Island, and New York; and the examinations therein shall be held alternately at the city of New York and the city of Boston, but first at the city of New York.

II. The second district embraces the States of New Jersey, Pennsylvania, Delaware, Maryland, North Carolina, Virginia, West Virginia, and the District of Columbia; and the examinations therein shall be held at Washington.

III. The third district embraces the States of Ohio, Michigan, Indiana, Wisconsin, and Kentucky; and the examinations therein shall be held alternately at Cincinnati and Detroit, but first at Cincinnati.

IV. The fourth district embraces the States of Illinois, Missouri, Minnesota, Iowa, Kansas, Nebraska, Nevada, California, and Oregon, and also all the Territories except New Mexico and the District of Columbia; and the examinations therein shall be held at St. Louis.

V. The fifth district embraces the States of South Carolina, Georgia, Florida, Alabama, Mississippi, Arkansas, Louisiana, Texas, and Tennessee, together with the Territory of New Mexico; and the examinations therein shall be held alternately at the city of Savannah and the city of Memphis, but first at the city of Savannah.

(2) That in each of said districts examinations for admission to the civil service at Washington shall be conducted as hereinafter provided; and those whose residence is within any such district at the time of filing the application for examination shall be regarded as belonging to such district in reference both to competition and to appointments; and each district shall be treated as a sphere of competition, and those so residing therein, wherever examined, shall be regarded as competing only with each other; but a person residing in any district may be allowed or notified to be examined in any other district.

(3) All applications for examination for service at Washington must be addressed to the head of the Department at that city which the applicant desires to enter, and be in conformity to the previous rules and regulations so far as the same are not modified by this series; and every such application must be dated, must give the town or municipality as well as the State or Territory where the applicant has his legal residence, and also his post-office address.

(4) Each of the heads of Departments will cause to be kept in permanent form a register of all such applicants for his Department, to be called a "Register of applicants," and will cause such applications to be preserved on file for convenient reference.

(5) The provisions of the former rules and regulations in reference to the examining boards in the Departments and in the other local offices in the various cities, so far as consistent herewith, are continued until otherwise ordered.

(6) The President will employ or designate a suitable person to be chief examiner, whose duty it will be, subject to the supervision of the Civil Service Commission, to promote uniformity in preparing for, conducting, reporting, and grading the examinations by said boards at Washington, and to prepare for, attend, supervise, and report the examinations herein provided to be held elsewhere than at Washington.

(7) The several heads of Departments must also cause to be made in permanent form and to be preserved a "Record of persons eligible for appointment," arranging under separate headings those resident in each separate district, wherein shall be entered the names of the persons who have been examined within twelve months now last past, and who are still eligible to nomination or appointment; and to such record must from time to time be added the names of those persons who shall hereafter pass an examination which shall show them to be so eligible for nomination or appointment. And such "Record of persons eligible for appointment" shall be so kept and the names therein be so classified that all those whose residences appearing as aforesaid to be in the same districts shall be tabulated together, so as to show their relative excellence in each said district, except that the names of all those examined under the fourth rule of this series shall be separately entered upon the "Record of persons eligible for appointment" for each Department, so as to show where they reside.

(8) That the officer having the power of making nomination or appointment may resort for that purpose to those so entered in the "Record of persons eligible for appointment" as residing in either of said civil-service districts; but (except in respect of those examined under said rule 4) the method of competition heretofore provided must be regarded as applying among those so registered as residing in any such district, and as requiring the nomination and appointment to be made from some one of the three persons graded as the highest on some one of said five several arrangements of persons so eligible.

(9) At a reasonable time before any examination is to take place each head of Department will furnish the chief examiner with a list of those to be examined, and ten days before any examination is to take place in any said district, elsewhere than at Washington, notice shall be sent by mail by such chief examiner to all such applicants residing or allowed to be examined in such district, stating the time and place of such examination and the other matters of which the rules and regulations require notice to be given.

(10) For the purpose of the examinations last mentioned the said chief examiner shall receive from the several heads of Departments at Washington and from the head of any local office which may request to have any examinations made of persons for said offices the names of those who are to be examined at any place outside of Washington, and shall make a list of the same, showing the date of the filing of each application, which he shall produce at the place of examination; and the examination shall be held of all those on such list who shall duly appear and submit thereto, provided the number be not so great, in the opinion of the examining board, as to render the examination of the whole impracticable, in which event only a reasonable number, to be selected in the order of the date of the filing of their applications, need be examined.

(11) For each place outside of Washington where such examination is to be held the President will designate persons, to be, when practicable, suitable officers of the United States, who, together with such chief examiner, or some substituted departmental examiner from Washington to be sent in his place when such chief examiner can not attend, shall constitute the board for such examination; and by said persons, or a majority thereof, of whom such chief examiner or said substitute shall be one, such examinations shall be held and certified in a uniform manner; and the time occupied by each person examined shall be noted on the examination papers. The questions to be put to those examined as applicants through the request of either head of Department or head of local office shall be such as may be provided and as might be put if all such examinations were, or were to be, conducted under the rules and regulations by the examining boards of any such Department in Washington or by any such local board.

(12) The chief examiner or his substitute shall make reports to each Department and local office separately in respect of all such persons as either said head of Department or of a local office requested to be examined, and said reports, respectively, shall be accompanied by the examination papers of those so separately reported; and the board of examiners in each Department or local office shall make up and state the excellence of each person so reported as examined, and such excellence, being not below the minimum grade of 70 per cent, shall be duly entered in the "Record of persons eligible for appointment" in the proper district or local office.

(13) The district examinations herein provided for shall be held not more than twice in any one year in the same district, except in Washington, where an examination may be held in respect of each Department as frequently as the head of such Department, subject to the approval of the President, may direct; and all persons so examined in Washington, wherever they may reside, shall be entered on the "Record of persons eligible for appointment" equally as if examined elsewhere.

(14) Whenever the entry of the name of any person has been on the "Record of persons eligible for appointment" during eighteen consecutive months, such entry shall be marked "Time expired," and such name shall not again be placed thereon except as the result of another examination.

(15) Persons who may be required to be examined for any custom-house, post-office, or other local office or place of service other than Washington may be notified by the head of such office to appear and be examined at any examination provided for under this rule; and the result of such examination shall be reported by the chief examiner or his substitute to the proper examining board for such office or place, or to the head of the local office; and such board shall enter the name, with the proper indication of the grade of excellence, among those who are to compete at any such place or office, and from whom selection, on the basis of competition, shall be made.

(16) But where the result of any examination aforesaid shall show the excellence of any such applicant to be below the minimum grade of 70 per cent (on the basis of l00 as perfect), the only entry thereof to be made in registers of the Department or of local office shall be of the words "Not eligible," which shall be written against the name of such person in the register of applicants; and such applicant shall not be again examined for any Department or office within six months of the date of the former examination.

(17) The provisions of this rule do not apply to examinations for promotion, nor do they apply to the State Department, in which examinations will be conducted under the provisions of the Executive order of March 14, 1873.

(18) Subject to the other provisions of this rule, the times of holding the examinations herein provided for in the first, third, fourth, and fifth districts, respectively, shall be fixed by the chief examiner after consultation with the heads of Departments at Washington. One examination, however, shall be held in each of the last-mentioned districts prior to the 1st day of November next, and the chief examiner shall on or before that date make a report in writing to the Civil Service Commission, setting forth generally the facts in regard to the examinations referred to in this rule and appropriate suggestions for increasing their usefulness.

_Rule 10_.--So many of the persons employed by the President under the ninth section of the act of March 3, 1871, as are referred to in the opinion of the Attorney-General of the date of August 31, 1871, under the name of the Civil Service Commission, and are still in such employment, together with the successors of those who have resigned, and their successors, shall hereafter be regarded as composing and shall be designated as "The Civil Service Commission;" and the use of the designation "Advisory Board," as referring to such persons, will be hereafter discontinued.

GENERAL ORDERS, No. 102.

WAR DEPARTMENT,

ADJUTANT-GENERAL'S OFFICE,

_Washington, October 10, 1873_.

The President of the United States commands it to be made known that all soldiers who have deserted their colors, and who shall, on or before the 1st day of January, 1874, surrender themselves at any military station, shall receive a full pardon, only forfeiting the pay and allowances due them at the time of desertion, and shall be restored to duty without trial or punishment on condition that they faithfully serve through the term of their enlistment.

By order of the Secretary of War:

E.D. TOWNSEND,

_Adjutant-General_.

FIFTH ANNUAL MESSAGE.

EXECUTIVE MANSION, _December 1, 1873_.

_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 slaveholders 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 coming 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.