Section 9 of State of the Union Addresses by United States Presidents. 1893 to 1896. This is a LibreBox recording. All LibreBox recordings are in the public domain. For more information or to volunteer, please visit LibreBox.org. Recording by Paul Thomas. Grover Cleveland. December 2, 1895. Part 3 In this emergency, and in view of its surrounding perplexities, it became entirely apparent to those upon whom the struggle for safety was devolved, not only that our gold reserve must, for the third time in less than 13 months, be restored by another issue and sale of bonds bearing a high rate of interest and badly suited to the purpose, but that a plan must be adopted for their disposition promising better results than those realized on previous sales. An agreement was therefore made with a number of financiers and bankers, whereby it was stipulated that bonds described in the Resumption Act of 1875, payable in coin 30 years after their date, bearing interest at a rate of 4% per annum and amounting to about $62 million should be exchanged for gold, receivable by weight, amounting to a little more than $65 million. This gold was to be delivered in such installments as would complete its delivery within about 6 months from the date of the contract and at least one half of the amount was to be furnished from abroad. It was also agreed by those supplying this gold that during the continuance of the contract they would, by every means in their power, protect the government against gold withdrawals. The contract also provided that if Congress would authorize their issue, bonds payable by their terms in gold and bearing interest at the rate of 3% per annum might, within 10 days, be substituted at par for the 4% bonds described in the agreement. On the day this contract was made, its terms were communicated to Congress by a special executive message in which it was stated that more than $16 million would be saved to the government if gold bonds bearing 3% interest were authorized to be substituted for those mentioned in the contract. The Congress, having declined to grant the necessary authority to secure this saving, the contract unmodified was carried out, resulting in a gold reserve amounting to $107,571,230 on the 8th day of July 1895. The performance of this contract not only restored the reserve but checked for a time the withdrawals of gold and brought on a period of restored confidence and such peace and quiet in business circles as were of the greatest possible value to every interest that affects our people. I have never had the slightest misgiving concerning the wisdom or propriety of this arrangement and am quite willing to answer for my full share of responsibility for its promotion. I believe it averted a disaster, the imminence of which was, fortunately, not at the time, generally understood by our people. Though the contract mentioned stayed for a time, the tide of gold withdrawal, its good results could not be permanent. Recent withdrawals have reduced the reserve from $107,571,230 on the 8th day of July 1895 to $79,333,966. How long it will remain large enough to render its increase unnecessary is only a matter of conjecture, though quite large withdrawals for shipment in the immediate future are predicted in well-informed quarters. About $16 million has been withdrawn during the month of November. The foregoing statement of events and conditions develops the fact that after increasing our interest-bearing, bonded indebtedness more than $162 million to save our gold reserve, we are nearly where we started, having now in such reserve $79,333,966 as against $65,438,377 in February 1894 when the first bonds were issued. Though the amount of gold drawn from the treasury appears to be very large as gathered from the facts and figures herein presented, it actually was much larger, considerable sums having been acquired by the treasury within the several periods stated without the issue of bonds. On the 28th day of January 1895 it was reported by the Secretary of the Treasury that more than $172 million of gold had been withdrawn for hoarding or shipment during the year proceeding. He now reports that from January 1st, 1879 to July 14th, 1890, a period of more than 11 years, only a little over $28 million was withdrawn, and that between July 14th, 1890, the date of the passage of the law for an increased purchase of silver and the first day of December 1895, or within less than five and a half years, there was withdrawn nearly $375 million, making a total of more than $403 million drawn from the treasury in gold since January 1st, 1879, the date fixed in 1875 for the retirement of the United States notes. Nearly $327 million of the gold, thus withdrawn, has been paid out on these United States notes, and yet every one of the $346 million is still uncancelled and ready to do service in future gold depletions. More than $76 million in gold has, since their creation in 1890, been paid out from the treasury upon the notes given on the purchase of silver by the government, and yet the whole, amounting to $155 million, except a little more than $16 million, which has been retired by exchanges for silver at the request of the holders, remains outstanding and prepared to join their older and more experienced allies in future raids upon the treasury's gold reserve. In other words, the government has paid in gold more than nine-tenths of its United States notes and still owes them all. It has been paid in gold about one-half of its notes given for silver purchases without extinguishing, by such payment, $1 of these notes. When added to all this, we are reminded that to carry on this astound, lug financial scheme, the government has incurred a bonded indebtedness of $95,500,000 in establishing a gold reserve, and of $162,315,400 in efforts to maintain it, that the annual interest charge on such bonded indebtedness is more than $11 million, that a continuance of our present course may result in further bond issues, and that we have suffered or are threatened with all this for the sake of supplying gold for foreign shipment or facilitating its hoarding at home. A situation is exhibited which certainly ought to arrest attention and provoke immediate legislative relief. I am convinced the only thorough and practicable remedy for our troubles is found in the retirement and cancellation of our United States notes, commonly called greenbacks, and the outstanding treasury notes issued by the government in payment of silver purchases under the Act of 1890. I believe this could be quite readily accomplished by the exchange of these notes for United States bonds of small as well as large denominations bearing a low rate of interest. They should be long-term bonds, thus increasing their desirability as investments, and because their payment could be well postponed to a period far removed from present financial burdens and perplexities, when with increased prosperity and resources they would be more easily met. To further ensure the cancellation of these notes and also provide a way by which gold may be added to our currency in lieu of them, a feature in the plan should be an authority given to the Secretary of the Treasury to dispose of the bonds abroad for gold, if necessary, to complete the contemplated redemption and cancellation, permitting him to use the proceeds of such bonds to take up and cancel any of the notes that may be in the Treasury or that may be received by the government on any account. The increase of our bonded debt involved in this plan would be amply compensated by renewed activity and enterprise in all business circles, the restored confidence at home, the reinstated faith in our monetary strength abroad, and the stimulation of every interest and industry that would follow the cancellation of the gold demand obligations now afflicting us. In any event, the bonds proposed would stand for the extinguishment of a troublesome indebtedness, while in the path we now follow there lurks the menace of unending bonds, with our indebtedness still undischarged and aggravated in every feature. The obligations necessary to fund this indebtedness would not equal in amount those from which we have been relieved since 1884 by anticipation and payment beyond the requirements of the sinking fund out of our surplus revenues. The currency withdrawn by the retirement of the United States notes and Treasury notes amounting to probably less than $486 million might be supplied by such gold as would be used on their retirement or by an increase in the circulation of our national banks. Though the aggregate capital of those now in existence amounts to more than $664 million, their outstanding circulation based on bond security amounts to only about $190 million. They are authorized to issue notes amounting to 90% of the bonds deposited to secure their circulation, but in no event beyond the amount of their capital stock, and they are obliged to pay 1% tax on the circulation they issue. I think they should be allowed to issue circulation equal to the par value of the bonds they deposit to secure it, and that the tax on their circulation should be reduced to ¼ of 1%, which would undoubtedly meet all the expense the government incurs on their account. In addition, they should be allowed to substitute or deposit in lieu of the bonds now required as security for their circulation, those which would be issued for the purpose of retiring the United States notes and Treasury notes. The banks already existing, if they desired to avail themselves of the provisions of law thus modified, could issue circulation in addition to that already outstanding amounting to $478 million, which would nearly or quite equal the currency proposed to be canceled. At any rate, I should confidently expect to see the existing national banks or others to be organized avail themselves of the proposed encouragements to issue circulation and promptly fill any vacuum and supply every currency need. It has always seemed to me that the provisions of law regarding the capital of national banks, which operate as a limitation to their location, fail to make proper compensation for the suppression of state banks, which came near to the people in all sections of the country and readily furnished them with banking accommodations and facilities. Any inconvenience or embarrassment arising from these restrictions on the location of national banks might well be remedied by better adapting the present system to the creation of banks in smaller communities or by permitting banks of large capital to establish branches in such localities as would serve the people, so regulated and restrained as to secure their safe and conservative control and management. But there might not be the necessity for such an addition to the currency by new issues of bank circulation as at first glance is indicated. If we should be relieved from maintaining a gold reserve under conditions that constitute it the barometer of our solvency and if our treasury should no longer be the foolish purveyor of gold for nations abroad or for speculation and hoarding by our citizens at home, I should expect to see gold resume its natural and normal functions in the business affairs of the country and cease to be an object of attracting the timid watch of our people and exciting their sensitive imaginations. I do not overlook the fact that the cancellation of the treasury notes issued under the Silver Purchasing Act of 1890 would leave the treasury in the actual ownership of sufficient silver including signerage to coin nearly $178 million in standard dollars. It is worthy of consideration whether this might not from time to time be converted into dollars or fractional coin and slowly put into circulation as in the judgment of the secretary of the treasury the necessities of the country should require. Whatever is attempted should be entered upon fully appreciating the fact that by careless, easy dissent we have reached a dangerous depth and that our assent will not be accomplished without laborious toil and struggle. We shall be wise if we realize that we are financially ill and that our restoration to health may require heroic treatment and unpleasant remedies. In the present stage of our difficulty it is not easy to understand how the amount of our revenue receipts directly affects it. The important question is not the quantity of money received in revenue payments but the kind of money we maintain and our ability to continue in sound financial condition. We are considering the government's holdings of gold as related to the soundness of our money and as affecting our national credit and monetary strength. If our gold reserve had ever been impaired, if no bonds had ever been issued to replenish it if there had been no fear and timidity concerning our ability to continue gold payments if any part of our revenues were now paid in gold and if we could look to our gold receipts as a means of maintaining a safe reserve the amount of our revenues would be an influential factor in the problem but unfortunately all the circumstances that might lend weight to this consideration are entirely lacking. In our present predicament no gold is received by the government in payment of revenue charges nor would there be if the revenues were increased. The receipts of the treasury when not in silver certificates consist of United States notes and treasury notes issued for silver purchases. These forms of money are only useful to the government in paying its current ordinary expenses and its quantity in government possession does not in the least contribute toward giving us that kind of safe financial standing or condition which is built on gold alone. If it is said that these notes if held by the government can be used to obtain gold for our reserve the answer is easy. The people draw gold from the treasury on demand upon United States notes and treasury notes but the proposition that the treasury can on demand draw gold from the people upon them would be regarded in these days with wonder and amusement and even if this could be done there is nothing to prevent those thus parting with their gold from regaining it the next day or the next hour by the presentation of the notes they received in exchange for it. The secretary of the treasury might use such notes taken from a surplus revenue to buy gold in the market of course he could not do this without paying a premium. Private holders of gold unlike the government having no parity to maintain would not be restrained from making the best bargain possible when they furnished gold to the treasury but the moment the secretary of the treasury bought gold on any terms above par he would establish a general and universal premium upon it thus breaking down the parity between gold and silver which the government is pledged to maintain and opening the way to new and serious complications. In the meantime the premium would not remain stationary and the absurd spectacle might be presented of a dealer selling gold to the government and with United States notes or treasury notes in his hand immediately clamoring for its return and a resale at a higher premium. It may be claimed that a large revenue and redundant receipts might favorably affect the situation under discussion by affording an opportunity to retain these notes in the treasury when received and thus preventing their presentation for gold. Such retention to be useful ought to be at least measurably permanent and this is precisely what is prohibited so far as United States notes are concerned by the law of 1878 forbidding their further retirement. That statute in so many words provides that these notes when received into the treasury and belonging to the United States shall be paid out again and kept in circulation. It will moreover be readily seen that the government could not refuse to pay out United States notes and treasury notes in current transactions when demanded and insist on paying out silver alone and still maintain the parity between that metal and the currency representing gold. Besides, the accumulation in the treasury of currency of any kind exacted from the people through taxation is justly regarded as an evil and it cannot proceed far without vigorous protest against an unjustifiable retention of money from the business of the country and a denunciation of a scheme of taxation which proves itself to be unjust when it takes from the earnings and income of the citizen money so much in excess of the needs of government support that large sums can be gathered and kept in the treasury. Such a condition has heretofore in times of surplus revenue led the government to restore currency to the people by the purchase of its unmatured bonds at a large premium and by a large increase of its deposits in national banks. And we easily remember that the abuse of treasury accumulation has furnished a most persuasive argument in favor of legislation radically reducing our tariff taxation. Perhaps it is supposed that sufficient revenue receipts would in a sentimental way improve the situation by inspiring confidence in our solvency and allaying the fear of pecuniary exhaustion. And yet through all our struggles to maintain our gold reserve there never has been any apprehension as to our ready ability to pay our way with such money as we had and the question whether or not our current receipts met our current expenses has not entered into the estimate of our solvency. Of course the general state of our funds exclusive of gold was entirely immaterial to the foreign creditor and investor. His debt could only be paid in gold and his only concern was our ability to keep on hand that kind of money. On July 1st, 1892, more than a year and a half before the first bonds were issued to replenish the gold reserve there was a net balance in the treasury exclusive of such reserve of less than $13 million. But the gold reserve amounted to more than $114 million which was the quieting feature of the situation. It was when the stock of gold began rapidly to fall that fright supervened and our securities held abroad were returned for sale and debts owed abroad were pressed for payment. In the meantime extensive shipments of gold and other unfavorable indications caused restlessness and fright among our people at home. Thereupon the general state of our funds exclusive of gold became also immaterial to them and they too drew gold from the treasury for hoarding against all contingencies. This is plainly shown by the large increase in the proportion of gold withdrawn which was retained by our own people as time and threatening incidents progressed. During the fiscal year ending June 30, 1894 nearly $85 million in gold was withdrawn from the treasury and about $77 million was sent abroad while during the fiscal year ending June 30, 1895 over $117 million was drawn out of which only about $66 million was shipped leaving the large balance of such withdrawals to be accounted for by domestic hoarding. In as much as the withdrawal of our gold has resulted largely from fright there is nothing apparent that will prevent its continuance or recurrence with its natural consequences except such a change in our financial methods as will reassure the frightened and make the desire for gold less intense. It is not clear how an increase fixed revenue unless it be in gold can satisfy those whose only anxiety is to gain gold from the government store. It cannot therefore be safe to rely upon increased revenue as a cure for our present troubles. It is possible that the suggestion of increased revenue as a remedy for the difficulties we are considering may have originated in an intimation or distinct allegation that the bonds which have been issued ostensibly to replenish our gold reserve were really issued to supply insufficient revenue. Nothing can be further from the truth. Bonds were issued to obtain gold for the maintenance of our national credit. As has been shown the gold thus obtained has been drawn again from the Treasury upon United States notes and Treasury notes. This operation would have been promptly prevented if possible but these notes having thus been passed to the Treasury they became the money of the government like any other ordinary government funds and there was nothing to do but to use them in paying government expenses when needed. At no time when bonds have been issued has there been any consideration of the question of paying the expenses of government with their proceeds. There was no necessity to consider that question. At the time of each bond issue we had a safe surplus in the Treasury for ordinary operations exclusive of the gold in our reserve. In February 1894 when the first issue of bonds was made such surplus amounted to over 18 million dollars. In November when the second issue was made it amounted to more than 42 million dollars and in February 1895 when the bonds for the third time were issued such surplus amounted to more than 100 million dollars. It now amounts to 98 million 72,420 dollars 30 cents. Besides all this the Secretary of the Treasury had no authority whatever to issue bonds to increase the ordinary revenues or pay current expenses. I cannot but think that there has been some confusion of ideas regarding the effects of the issue of bonds and the results of the withdrawal of gold. It was the latter process and not the former that by substituting in the Treasury United States notes and Treasury notes for gold increased by their amount the money which was in the first instance subject to ordinary government expenditure. Although the law compelling an increased purchase of silver by the government was passed on the 14th day of July 1890 withdrawals of gold from the Treasury upon the notes given in payment on such purchases did not begin until October 1891. Immediately following that date the withdrawals upon both these notes and the United States notes increased very largely and have continued to such an extent that since the passage of that law there has been more than 13 times as much gold taken out of the Treasury upon United States notes and Treasury notes issued for silver purchases as there was withdrawn during the 11 and a half years immediately prior there too and after the first day of January 1879 when species payments were resumed. It is neither unfair nor unjust to charge a large share of our present financial perplexities and dangers to the operation of the laws of 1878 and 1890 compelling the purchase of silver by the government which not only furnished a new Treasury obligation upon which its gold could be withdrawn but so increased the fear of an overwhelming flood of silver and a forced dissent to silver payments that even the repeal of these laws did not entirely cure the evils of their existence. While I have endeavored to make a plain statement of the disordered condition of our currency and the present dangers menacing our prosperity and to suggest a way which leads to a safer financial system I have constantly had in mind the fact that many of my countrymen whose sincerity I do not doubt insist that the cure for the ills now threatening us may be found in the single and simple remedy of the free coinage of silver. They contend that our mints shall be at once thrown open to the free, unlimited and independent coinage of both gold and silver dollars of full legal tender quality regardless of the action of any other government and in full view of the fact that the ratio between the metals which they suggest calls for 100 cents worth of gold in the gold dollar at the present standard and only 50 cents an intrinsic worth of silver in the silver dollar. Were there infinitely stronger reasons that can be adduced for hoping that such action would secure us a bimetallic currency moving on lines of parity an experiment so novel and hazardous as that proposed might well stagger those who believe that stability is an imperative condition of sound money. No government, no human contrivance or act of legislation has ever been able to hold the two metals together in free coinage at a ratio appreciably different from that which is established in the markets of the world. Those who believe that our independent free coinage of silver at an artificial ratio with gold of 16 to 1 would restore the parity between the metals and, consequently between the coins, oppose an unsupported and improbable theory to the general belief and practice of other nations and to the teaching of the wisest statesmen and economists of the world, both in past and present and, what is far more conclusive, they run counter to our own actual experiences. Twice in our earlier history our lawmakers in attempting to establish a bimetallic currency undertook free coinage upon a ratio which accidentally varied from the actual relative values of the two metals, not more than 3%. In both cases, notwithstanding greater difficulties and cost of transportation than now exist, the coins whose intrinsic worth was undervalued in the ratio gradually and surely disappeared from our circulation and went to other countries where their real value was better recognized. Acts of Congress were impotent to create equality where natural causes decreed even a slight inequality. Twice in our recent history we have signally failed to raise by legislation the value of silver. Under an act of Congress passed in 1878 the government was required for more than 12 years to expend annually at least $24 million in the purchase of silver bullion for coinage. The act of July 14, 1890 in a still bolder effort increased the amount of silver the government was compelled to purchase and forced it to become the buyer annually of 54 million ounces or practically the entire product of our minds. Under both laws silver rapidly and steadily declined in value. The prophecy and the expressed hope and expectation of those in the Congress who led in the passage of the last mentioned act that it would reestablish and maintain the former parity between the two metals are still fresh in our memory. In light of these experiences which accord with the experiences of other nations, there is certainly no secure ground for the belief that an act of Congress could now bridge an inequality of 50% between gold and silver at our present ratio. Nor is there the least possibility that our country which has less than one seventh of the silver money in the world could by its action alone raise not only our own but all silver to its lost ratio with gold. Our attempt to accomplish this by the free coinage of silver at a ratio differing widely from actual relative values would be the signal for the complete departure of gold from our circulation, the immediate and large contraction of our circulating medium and a shrinkage in the real value and monetary efficiency of all other forms of currency as they settled to the level of silver monometallism. Everyone who receives a fixed salary and every worker for wages would find the dollar in his hand ruthlessly scaled down to a point of bitter disappointment, if not to pinching privation. A change in our standard to silver monometallism would also bring on a collapse of the entire system of credit which when based on a standard which is recognized and adopted by the world of business is many times more potent and useful than the entire volume of currency and is safely capable of almost indefinite expansion to meet the growth of trade and enterprise. In a self-invited struggle through darkness and uncertainty our humiliation would be increased by the consciousness that we had parted company with all the enlightened and progressive nations of the world and were desperately and hopelessly striving to meet the stress of modern commerce and competition with a debased and unsuitable currency and in association with the few weak and laggard nations which have silver alone as their standard of value. All history warns us against rash experiments which threaten violent changes in our monetary standard and the degradation of our currency. The past is full of lessons teaching not only the economic dangers but the national immorality that follow in the train of such experiments. I will not believe that the American people can be persuaded after sober deliberation to jeopardize their nation's prestige and proud standing by encouraging financial nostrums nor that they will yield to the false allurements of cheap money when they realize that it must result in the weakening of that financial integrity and rectitude which thus far in our history has been so devotedly cherished as one of the traits of true Americanism. Our country's indebtedness, whether owing by the government or individuals, has been contracted with reference to our present standard. To decree by act of Congress that these debts shall be payable in less valuable dollars than those within the contemplation and intention of the parties when contracted would operate to transfer by the fiat of law and without compensation an amount of property and a volume of rights and interests almost incalculable. Those who advocate a blind and headlong plunge to free coinage in the name of bimetalism and professing the belief, contrary to all experience that we could thus establish a double standard and a concurrent circulation of both metals in our coinage are certainly reckoning from a cloudy standpoint. Our present standard of value is the standard of the civilized world and permits the only bimetalism now possible or at least that is within the independent reach of our nation, however powerful that nation may be. While the value of gold as a standard is steadied by almost universal commercial and business use, it does not despise silver nor seek its banishment. Wherever this standard is maintained there is at its side in free and unquestioned circulation a volume of silver currency sometimes equaling and sometimes even exceeding it in amount, both maintained at a parity withstanding a depreciation or fluctuation in the intrinsic value of silver. There is a vast difference between a standard of value and a currency for monetary use. The standard must necessarily be fixed and certain. The currency may be in diverse forms and of various kinds. No silver standard country has a gold currency in circulation, but an enlightened and wise system of finance secures the benefits of both gold and silver as currency and circulating medium by keeping the standard stable and all other currency at par with it. Such a system and such a standard also give free scope for the use and expansion of safe and conservative credit, so indispensable to broad and growing commercial transactions and so well substituted for the actual use of money. If a fixed and stable standard is maintained such as the magnitude and safety of our commercial transactions and business require, the use of money itself is conveniently minimized. Every dollar of fixed and stable value has through the agency of confident credit an astonishing capacity of multiplying itself in financial work. Every unstable and fluctuating dollar fails as a basis of credit and in its use begets gambling speculation and undermines the foundations of honest enterprise. I have ventured to express myself on this subject with earnestness and plainness of speech because I cannot rid myself of the belief that their lurk in the proposition for free coinage of silver so strongly approved and so enthusiastically advocated by a multitude of my countrymen a serious menace to our prosperity and an insidious temptation of our people to wander from the allegiance they owe to public and private integrity. It is because I do not distrust the good faith and sincerity of those who press the scheme that I have imperfectly but with zeal submitted my thoughts upon this momentous subject. I cannot refrain from begging them to reexamine their views and beliefs in the light of patriotic reason and familiar experience and to weigh again and again the consequences of such legislation as their efforts have invited. Even the continued agitation of the subject adds greatly to the difficulties of a dangerous financial situation already forced upon us. In conclusion, I especially entreat the people's representatives in the Congress who are charged with the responsibility of inaugurating measures for the safety and prosperity of our common country to promptly and effectively consider the ills of our critical financial plight. I have suggested a remedy which my judgment approves. I desire, however, to assure the Congress that I am prepared to cooperate with them in perfecting any other measure, promising thorough and practical relief, and that I will gladly labor with them in every patriotic endeavor to further the interests and guard the welfare of our countrymen, whom in our respective places of duty we have undertaken to serve. End of Section 9 Recording by Paul Thomas Section 10 of State of the Union Addresses by United States Presidents 1893 to 1896 This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org State of the Union Address Grover Cleveland December 7, 1896 Part 1 To the Congress of the United States As representatives of the people in the legislative branch of their government, you have assembled at a time when the strength and excellence of our free institutions and the fitness of our citizens to enjoy popular rule have been again made manifest. A political contest involving momentous consequences fraught with feverish apprehension and creating aggressiveness so intense as to approach bitterness and passion has been waged throughout our land and determined by the decrees of free and independent suffrage without disturbance of our tranquility or the least sign of weakness in our national structure. When we consider these incidents and contemplate the peaceful obedience and manly submission which have succeeded a heated clash of political opinions, we discover abundant evidence of a determination on the part of our countrymen to abide by every verdict of the popular will and to be controlled at all times by an abiding faith in the agencies established for the direction of the affairs of their government. Thus sour people exhibit a patriotic disposition which entitles them to demand of those who undertake to make and execute their laws such faithful and unselfish service in their behalf as can only be prompted by a serious appreciation of the trust and confidence which the acceptance of public duty invites. In obedience to a constitutional requirement I herein submit to the Congress certain information concerning national affairs with the suggestion of such legislation as in my judgment is necessary and expedient. To secure brevity and avoid tiresome narration I shall omit many details concerning matters within federal control which though by no means unimportant are more profitably discussed in departmental reports. I shall also further curtail this communication by omitting a minute recital of many minor incidents connected with our foreign relations which have heretofore found a place in executive messages but are now contained in a report of the Secretary of State which is herewith submitted. At the outset of a reference to the more important matters affecting our relations with foreign powers it would afford me satisfaction if I could assure the Congress that the disturbed condition an Asiatic Turkey had during the past year assumed a less hideous and bloody aspect and that either as a consequence of the awakening of the Turkish government to the demands of humane civilization or as the result of decisive action on the part of the great nations having the right by treaty to interfere for the protection of those exposed to the rage of mad bigotry or cruel fanaticism the shocking features of the situation had been mitigated. Instead however of welcoming a softened disposition or protective intervention we have been afflicted by continued and not unfrequent reports of the wanton destruction of homes and the bloody butchery of men women and children made modders to their profession of Christian faith while none of our citizens in Turkey have thus far been killed or wounded though often in the midst of dreadful scenes of danger their safety in the future is by no means assured. Our government at home and our minister at Constantinople have left nothing undone to protect our missionaries in Ottoman territory who constitute nearly all the individuals residing there who have a right to claim our protection on the score of American citizenship. Our efforts in this direction will not be relaxed but the deep feeling and sympathy that have been aroused among our people ought not to so far blind their reason and judgment as to lead them to demand impossible things. The outbreaks of the blind fury which lead to murder and pillage in Turkey occur suddenly and without notice and an attempt on our part to force such a hostile presence there as might be effective for prevention or protection would not only be resisted by the Ottoman government but would be regarded as an interruption of their plans by the great nations who assert their exclusive right to intervene in their own time and method in the entirety of life and property in Turkey. Several naval vessels are stationed in the Mediterranean as a measure of caution and to furnish all possible relief and refuge in case of emergency. We have made claims against the Turkish government for the pillage and destruction of missionary property at Harput and Marash during uprisings at those places. Thus far the validity of these demands has not been admitted. Though our minister, prior to such outrageous and in anticipation of danger demanded protection for the persons and property of our missionary citizens in the localities mentioned and notwithstanding that strong evidence exists of actual complicity of Turkish soldiers in the work of destruction and robbery. The fact says they now appear do not permit us to doubt the justice of these claims and nothing will be omitted to bring about their prompt settlement. A number of Armenian refugees having arrived at our ports in order has lately been obtained from the Turkish government permitting the wives and children of such refugees to join them here. It is hoped that hereafter no obstacle will be interposed to prevent the escape of all those who seek to avoid the perils which threaten them in Turkish dominions. Our recently appointed consul to Erzurum is at his post and discharging the duties of his office, though for some unaccountable reason his formal exquitur from the Sultan has not been issued. I do not believe that the present somber prospect in Turkey will be long permitted to offend the sight of Christendom. It is so Mars, the humane and enlightened civilization that belongs to the clothes of the nineteenth century that it seems hardly possible that the earnest demand of good people throughout the Christian world for its corrective treatment will remain unanswered. The insurrection in Cuba still continues with all its perplexities. It is difficult to perceive that any progress has thus far been made toward the pacification of the island, or that the situation of affairs as depicted in my last annual message has in the least improved. If Spain still holds Havana and the seaports and all the considerable towns, the insurgents still roam at will over at least two-thirds of the island country. If the determination of Spain to put down the insurrection seems but to strengthen with the lapse of time and is evinced by her unhesitating devotion of largely increased military and naval forces to the task, there is much reason to believe that the insurgents have gained point of numbers and character and resources and are nonetheless inflexible in their resolve, not to succumb without practically securing the great objects for which they took up arms. If Spain has not yet re-established her authority, neither have the insurgents yet may good their title to be regarded as an independent state. Indeed, as the contest has gone on the pretense that several government exists on the island, except so far as Spain is able to maintain it, has been practically abandoned. Spain does keep on foot such a government, more or less imperfectly. In the large towns and their immediate suburbs. But that exception being made, the entire country is either given over to Anarchy or is subject to the military occupation of one or the other party. It is reported indeed on reliable authority that at the demand of the commander-in-chief of the insurgent army, the putative Cuban government has now given up all attempt to exercise its functions, leaving that government confessedly what there is the best reason for supposing it always to have been in fact a government merely on paper. Were the Spanish armies able to meet their antagonists in the open or in pitched battle, prompt and decisive results might be looked for, and the immense superiority of the Spanish forces in numbers, discipline, and equipment could hardly fail to tell greatly to their advantage. But they are called upon to face a foe that shuns general engagements, that can choose and does choose its own ground, that from the nature of the country is visible or invisible at pleasure, and that fights only from ambuscade, and when all the advantages of position and numbers are on its side. In a country where all that is indispensable to life in the way of food, clothing, and shelter is so easily obtainable, especially by those born and bred on the soil, it is obvious that there is hardly a limit to the time during which hostilities of this sort may be prolonged. Meanwhile, as in all cases of protracted civil strife, the passions of the combatants grow more and more inflamed, and decesses on both sides become more frequent and more deplorable. They are also participated in by bands of Marauders, who now in the name of one party, and now in the name of the other, as may best suit the occasion, harry the country at will, and plunder its wretched inhabitants for their own advantage. Such a condition of things would inevitably entail immense destruction of property, even if it were the policy of both parties to prevent it, as far as practicable. But while such seemed to be the original policy of the Spanish government, it has now apparently abandoned it, and is acting upon the same theory as the insurgents, namely that the exigencies of the contest require the wholesale annihilation of property that it may not prove of use and advantage to the enemy. It is to the same end that in pursuance of general orders Spanish garrisons are now being withdrawn from plantations and the rural population required to concentrate itself in the towns. The sure result would seem to be that the industrial value of the island is fast diminishing, and that unless there is a speedy and radical change in existing conditions, it will soon disappear altogether. That value consists very largely, of course, in its capacity to produce sugar, a capacity already much reduced by the interruptions to tillage which have taken place during the last two years. It is reliably asserted that should these interruptions continue during the current year and practically extend as is now threatened to the entire sugar-producing territory of the island, so much time and so much money will be required to restore the land to its normal productiveness that it is extremely doubtful if capital can be induced to even make the attempt. The spectacle of the utter ruin of an adjoining country, by nature, one of the most fertile and charming on the globe, would engage the serious attention of the government and people of the United States in any circumstances. In point of fact, they have a concern with it which is by no means of a wholly sentimental or philanthropic character. It lies so near to us as to be hardly separated from our territory. Our actual pecuniary interest in it is second only to that of the people and government of Spain. It is reasonably estimated that at least from 30 million dollars to 50 million dollars of American capital are invested in plantations and in railroad, mining and other business enterprises on the island. The volume of trade between the United States and Cuba, which in 1889 amounted to 64 million dollars, rose in 1983 to about 103 million dollars, and in 1894, the year before the present insurrection broke out, amounted to nearly 96 million dollars. Besides this large pecuniary stake in the fortunes of Cuba, the United States finds itself inextricably involved in the present context in other ways, both vexatious and costly. Many Cubans reside in this country, and indirectly promote the insurrection through the press, by public meetings, by the purchase and shipment of arms, by the raising of funds, and by other means which the spirit of our institutions and the tenor of our laws do not permit to be made the subject of criminal prosecutions. Some of them, though Cubans at heart, and in all their feelings and interests, have taken out papers as naturalized citizens of the United States, a proceeding resorted to with a view to possible protection by this government, and not unnaturally regarded with much indignation by the country of their origin. The insurgents are undoubtedly encouraged and supported by the widespread sympathy the people of this country always and instinctively feel for every struggle for better and freer government, and which in the case of the more adventurous and restless elements of our population leads in only too many instances to active and personal participation in the contest. The result is that this government is constantly called upon to protect American citizens, to claim damages for injuries to persons and property, now estimated at many millions of dollars, and to ask explanations and apologies for the acts of Spanish officials who zeal for the repression of rebellion sometimes blinds them to the immunities belonging to the unoffending citizens of a friendly power. It follows from the same causes that the United States is compelled to actively police a long line of seacoast against unlawful expeditions, the escape of which the utmost vigilance will not always suffice to prevent. These inevitable entanglements of the United States with the rebellion in Cuba, the large American property interests affected, and considerations of philanthropy and humanity in general have led to a vehement demand in various quarters for some sort of positive intervention on the part of the United States. It was at first proposed that belligerent rights should be accorded to the insurgents, a proposition no longer urged because untimely and in practical operation, dearly perilous and injurious to our own interests. It has since been and is now sometimes contended that the independence of the insurgents should be recognized, but imperfect and restricted as the Spanish government of the island may be. No other exists there unless the will of the military officer and temporary command of a particular district can be dignified as a species of government. It is now also suggested that the United States should buy the island, a suggestion possibly worthy of consideration if there were any evidence of a desire or willingness on the part of Spain to entertain such a proposal. It is urged finally that all other methods failing the existing inter-C9 strife in Cuba should be terminated by our intervention, even at the cost of war between the United States and Spain, a war which its advocates confidently prophesy could neither be large in its proportions nor doubtful in its issue. The correctness of this forecast need be neither affirmed nor denied. The United States has nevertheless a character to maintain as a nation which plainly dictates that right and not might should be the rule of its conduct. Further, though the United States is not a nation to which peace is a necessity, it is in truth the most Pacific of powers, and desires nothing so much as to live in amity with all the world. Its own ample and diversify domains satisfy all possible longings for territory, preclude all dreams of conquest, and prevent any casting of covetous eyes upon neighboring regions, however attractive. That our conduct towards Spain and her dominions has constituted no exception to this national disposition is made manifest by the course of our government. Not only thus far during the present insurrection, but during the ten years that followed the rising at Yara in 1868. No other great power it may safely be said under circumstances of similar perplexity would have manifested the same restraint and the same patient endurance. It may also be said that this persistent attitude of the United States towards Spain in connection with Cuba unquestionably evinces no slight respect and regard for Spain on the part of the American people. They in truth do not forget her connection with the discovery of the Western Hemisphere, nor do they underestimate the great qualities of the Spanish people, nor fail to fully recognize their splendid patriotism and their chivalrous devotion to the national honour. They view with wonder and admiration the cheerful resolution with which vast bodies of men are sent across thousands of miles of ocean and an enormous debt accumulated that possession of the gem of the Antilles may still hold its place in the Spanish crown. And yet neither the government nor the people of the United States have shut their eyes to the course of events in Cuba, or have failed to realize the existence of conceited grievances which have led to the present revolt from the authority of Spain. Grievances recognized by the Queen Regent and by the Cortes, voiced by the Enlightened of Spanish statesmen without regard to party and demonstrated by reforms proposed by the executive and approved by the legislative branch of the Spanish government. It is in the assumed temper and disposition of the Spanish government to remedy these grievances fortified by indications of influential public opinion in Spain that this government has hoped to discover the most promising and effective means of composing the present strife with honor and advantage to Spain and with the achievement of all the reasonable objects of the insurrection. It would seem that if Spain should offer to Cuba genuine autonomy, a measure of home rule which while preserving the sovereignty of Spain would satisfy all rational requirements of her Spanish subjects. There should be no just reason why the pacification of the island might not be affected on that basis. Such a result would appear to be in the true interest of all concerned. It would at once stop the conflict which is now consuming the resources of the island and making it worthless for which ever party may ultimately prevail. It would keep intact the possessions of Spain without touching her honor which will be consulted rather than impugned by the adequate redress of admitted grievances. It would put the prosperity of the island and the fortunes of its inhabitants within their own control without severing the natural and ancient ties which bind them to the mother country and would yet enable them to test their capacity for self-government under the most favorable conditions. It has been objected on the one side that Spain should not have autonomy until her insurgent subjects lay down their arms. On the other side that promised autonomy, however liberal, is insufficient because without assurance of the promise being fulfilled. But the reasonableness of a requirement by Spain of unconditional surrender on the part of the insurgent humans before their autonomy is conceded is not altogether apparent. It ignores important features of the situation. The stability two years duration is given to the insurrection. The feasibility of its indefinite prolongation in the nature of things and as shown by past experience the utter and imminent ruin of the island unless the present strife is speedily composed. Above all the rank abuses which all parties in Spain all branches of her government and all her leading public men concede to exist and profess a desire to remove. Facing such circumstances to withhold the proffer of needed reforms. Until the parties demanding them, put themselves at mercy by throwing down their arms has the appearance of neglecting the gravest of perils and inviting suspicion is to the sincerity of any professed willingness to grant reforms. The objection on behalf of the insurgents that promised reforms cannot be relied upon. Must of course be considered. Though we have no right to assume and no reason for assuming that anything Spain undertakes to do for the relief of Cuba will not be done according to both the spirit and the letter of the undertaking. Nevertheless, realizing that suspicions and precautions on the part of the weaker of the two combatants are always natural and not always unjustifiable being sincerely desirous in the interest of both as well as on its own account that the Cuban problem should be solved with the least possible delay it was intimated by this government to the government of Spain some months ago that if a satisfactory measure of home rule were tendered to the Cuban insurgents and would be accepted by them upon a guarantee of its execution the United States would endeavor to find a way not objectionable to Spain of furnishing such guarantee while no definite response to this intimation has yet been received from the Spanish government it is believed to be not altogether unwelcome as already suggested no reason is perceived why it should not be approved by the insurgents neither party can fail to see the importance of early action and both must realize that to prolong the present state of things for even a short period will add enormously to the time and labor and expenditure necessary to bring about the industrial recuperation of the island it is therefore feverently hoped on all grounds that earnest efforts for healing the breach between Spain and the insurgent Cubans upon the lines above indicated maybe at once inaugurated and pushed to an immediate and successful issue the friendly offices of the United States either in the manner above outlined or in any other way consistent with our constitution and laws will always be at the disposal of either party whatever circumstances may arise our policy and our interests would constrain us to object to the acquisition of the island or in interference with its control by any other power it should be added that it cannot be reasonably assumed that the hitherto expectant attitude of the United States will be indefinitely maintained while we are anxious to accord all due respect to the sovereignty of Spain we cannot view the pending conflict in all its features and properly apprehend our inevitably close relations to it and its possible results without considering that by the course of events we may be drawn into such an unusual and unprecedented condition as will fix a limit to our patient waiting for Spain to end the contest either alone and in her own way or with our friendly cooperation while the inability of Spain to deal successfully with the insurrection has become manifest and it is demonstrated that her sovereignty is extinct in Cuba for all purposes of its rightful existence and when a hopeless struggle for its re-establishment has degenerated into a strife which remains nothing more than the useful sacrifice of human life and the utter destruction of the very subject matter of the conflict a situation will be presented in which our obligations to the sovereignty of Spain will be superseded by higher obligations which we can hardly hesitate to recognize and discharge deferring the choice of ways and methods until the time for action arrives we should make them depend upon the precise conditions then existing and they should not be determined without giving careful heed to every consideration involving our honor and interest or the international duty we owe to Spain until we face the contingencies suggested where the situation is by other incidents imperatively changed we should continue in the line of conduct here to fore pursued thus in all circumstances exhibiting our obedience to the requirements of public law and our regard for the duty enjoined upon us by the position we occupy in the family of nations a contemplation of emergencies that may arise should plainly lead us to avoid their creation either through a careless disregard of present duty or even an undue stimulation and ill time expression of feeling but I have deemed it to remind the Congress that a time may arrive when a correct policy and care for our interests as well as regard for the interests of other nations and their citizens joined by considerations of humanity and a desire to see a rich and fertile country immediately related to us saved from complete devastation will constrain our government to such action as will subserve the interests of us involved and at the same time promise to Cuba and its inhabitants an opportunity to enjoy the blessings of peace the Venezuelan boundary question has ceased to be a matter of difference between Great Britain and the United States their respective governments having agreed upon the substantial provisions of a treaty between Great Britain and Venezuela submitting the whole controversy to arbitration the provisions of the treaty are so eminently just and fair that the assent of Venezuela there too may confidently be anticipated negotiations for a treaty of general arbitration for all differences between Great Britain and the United States are far advanced and promise to reach a successful consummation at an early date the scheme of examining applicants for certain consular positions to test their competency and fitness adopted under an executive order issued on the 20th of September 1895 has fully demonstrated the usefulness of this innovation in connection with this plan of examination promotions and transfers of deserving incumbents have been quite extensively made with excellent results during the past year 35 appointments have been made in the consular service 27 of which were made to fill vacancies caused by death or resignation or to supply newly created posts two to succeed incumbents removed for cause two for the purpose of displacing alien consular officials by American citizens and four merely changing the official title of incumbent from commercial agent to consul 12 of these appointments transfers or promotions from other positions under the department of state four of those appointed had rendered previous service under the department eight were made of persons who passed a satisfactory examination seven were appointed to places not included in the order of September 20 1895 and four appointments as above stated involved no change of incumbency the inspection of consular offices provided for by an appropriation for that purpose at the last session of the Congress has been productive of such wholesome effects that I hope this important work will in the future be continued I know of nothing that can be done with the same slight expense so improving to the service I desire to repeat the recommendation contained in my last annual message in favor of providing at public expense official residences for our ambassadors and ministers at foreign capitals the reasons supporting this recommendation are strongly stated in the report of the secretary of state and the subject seems of such importance that I hope it may receive the early attention of the Congress we have during the last year labored faithfully and against unfavorable conditions to secure better preservation of sea life in the Bering Sea both the United States and Great Britain have lately dispatched commissioners to these waters to study the habits and condition of the seal herd and the causes of their rapid decrease upon the reports of these commissioners soon to be submitted and with the exercise and patience and good cause on the part of all interested parties it is earnestly hoped that hardy cooperation may be secured for the protection against threatened extinction of seal life in the northern Pacific in Bering Sea End of section 10