WAR DEPARTMENT, May 26, 1887.
The within recommendation approved by the President, and the Adjutant-General will prepare letters to governors of those States whose troops carried the colors and flags now in this Department, with the offer to return them as herein proposed. The history of each flag and the circumstances of its capture or recapture should be given.
HON. WILLIAM C. ENDICOTT,
Secretary of War.
WAR DEPARTMENT, ADJUTANT-GENERAL'S OFFICE,
Washington, June 7, 1887.
Honorable GOVERNOR OF ——.
SIR: The President of the United States having approved the recommendation that all the flags in the custody of the War Department be returned to the authorities of the respective States in which the regiments which bore them were organized, for such final disposition as they may determine, I am instructed by the honorable Secretary of War to make you, in the name of the War Department, a tender of the flags now in this office belonging to the late volunteer organizations of the State of ——.
In discharging this pleasant duty I beg you will please advise me of your wishes in this matter. It is the intention in returning each flag to give its history as far as it is possible to do so, stating the circumstances of its capture and recovery.
I have the honor to be, very respectfully, your obedient servant,
R.C. DRUM, Adjutant-General.
EXECUTIVE MANSION, Washington, June 16, 1887.
The SECRETARY OF WAR:
I have to-day considered with more care than when the subject was orally presented me the action of your Department directing letters to be addressed to the governors of all the States offering to return, if desired, to the loyal States the Union flags captured in the War of the Rebellion by the Confederate forces and afterwards recovered by Government troops, and to the Confederate States the flags captured by the Union forces, all of which for many years have been packed in boxes and stored in the cellar and attic of the War Department.
I am of the opinion that the return of these flags in the manner thus contemplated is not authorized by existing law nor justified as an executive act.
I request, therefore, that no further steps be taken in the matter except to examine and inventory these flags and adopt proper measures for their preservation. Any direction as to the final disposition of them should originate with Congress.
Yours, truly,
GROVER CLEVELAND.
WAR DEPARTMENT, ADJUTANT-GENERAL'S OFFICE,
Washington, June —, 1887.
Hon. —— ——,
Governor of ——.
SIR: Referring to the letter from this office dated June —, 1887, on the subject of the return to the respective States of the flags now in the custody of the War Department, I am instructed by the Secretary of War to inform you of the withdrawal of the offer made therein, as on a more careful consideration of the legal points involved in the proposed action the President of the United States is of the opinion that the return of these flags is not authorized by existing law nor justified as an executive act, and that any direction as to their final disposition should originate with Congress.
I have the honor to be, very respectfully, your obedient servant,
—— ——, Adjutant-General.
EXECUTIVE MANSION, Washington, August 25, 1887.
It appearing to me that the promoters of the International Military Encampment to be held in Chicago in October proximo, in commemoration of the fiftieth anniversary of the settlement of that city, have extended to the militia organizations of foreign countries, in behalf of the citizen soldiers of the State of Illinois, an invitation to take part in said encampment as the guests of the city of Chicago, and that representatives of the soldiery of certain foreign countries have accepted such invitation and are about to arrive in the United States:
I hereby direct the Secretary of the Treasury to instruct the collectors of customs at the several ports of entry that upon being satisfied that such visitors come as guests, in pursuance of the aforesaid invitation, they shall permit the entrance of such foreign soldiers into the United States, with their personal baggage, uniforms, arms, and equipments, without payment of customs duties thereon, and without other formality than such as may be necessary to insure the reexportation of said uniforms, baggage, arms, and equipments.
GROVER CLEVELAND.
DEPARTMENT OF STATE, Washington, October 24, 1887.
By direction of the President the undersigned is charged with the sad duty of announcing the death, on the 22d instant, at 4 o'clock p.m., at his residence, Chicago, Ill., of Elihu B. Washburne, an illustrious citizen, formerly Secretary of State of the United States.
Mr. Washburne rendered great service to the people of the United States in many and important capacities. As a Representative from the State of Illinois in the National Legislature, and subsequently as envoy extraordinary and minister plenipotentiary of the United States to France, his career was marked by eminent usefulness, in which abilities of a high order were applied with unsparing devotion and fidelity in the performance of the trusts of public power.
His private life was unstained, his public service unquestionably great, and his memory will be cherished with affection and respect by his grateful countrymen.
On the day of his funeral this Department will be closed for all public business, and be draped in mourning for ten days thereafter.
The diplomatic and consular officers of the United States in foreign countries will be directed to make proper expression of the public sorrow experienced by the death of Mr. Washburne.
T.F. BAYARD, Secretary of State.
THIRD ANNUAL MESSAGE.
WASHINGTON, December 6, 1887.
To the Congress of the United States:
You are confronted at the threshold of your legislative duties with a condition of the national finances which imperatively demands immediate and careful consideration.
The amount of money annually exacted, through the operation of present laws, from the industries and necessities of the people largely exceeds the sum necessary to meet the expenses of the Government.
When we consider that the theory of our institutions guarantees to every citizen the full enjoyment of all the fruits of his industry and enterprise, with only such deduction as may be his share toward the careful and economical maintenance of the Government which protects him, it is plain that the exaction of more than this is indefensible extortion and a culpable betrayal of American fairness and justice. This wrong inflicted upon those who bear the burden of national taxation, like other wrongs, multiplies a brood of evil consequences. The public Treasury, which should only exist as a conduit conveying the people's tribute to its legitimate objects of expenditure, becomes a hoarding place for money needlessly withdrawn from trade and the people's use, thus crippling our national energies, suspending our country's development, preventing investment in productive enterprise, threatening financial disturbance, and inviting schemes of public plunder.
This condition of our Treasury is not altogether new, and it has more than once of late been submitted to the people's representatives in the Congress, who alone can apply a remedy. And yet the situation still continues, with aggravated incidents, more than ever presaging financial convulsion and widespread disaster.
It will not do to neglect this situation because its dangers are not now palpably imminent and apparent. They exist none the less certainly, and await the unforeseen and unexpected occasion when suddenly they will be precipitated upon us.
On the 30th day of June, 1885, the excess of revenues over public expenditures, after complying with the annual requirement of the sinking-fund act, was $17,859,735.84; during the year ended June 30, 1886, such excess amounted to $49,405,545.20, and during the year ended June 30, 1887, it reached the sum of $55,567,849.54.
The annual contributions to the sinking fund during the three years above specified, amounting in the aggregate to $138,058,320.94, and deducted from the surplus as stated, were made by calling in for that purpose outstanding 3 per cent bonds of the Government. During the six months prior to June 30, 1887, the surplus revenue had grown so large by repeated accumulations, and it was feared the withdrawal of this great sum of money needed by the people would so affect the business of the country, that the sum of $79,864,100 of such surplus was applied to the payment of the principal and interest of the 3 per cent bonds still outstanding, and which were then payable at the option of the Government. The precarious condition of financial affairs among the people still needing relief, immediately after the 30th day of June, 1887, the remainder of the 3 per cent bonds then outstanding, amounting with principal and interest to the sum of $18,877,500, were called in and applied to the sinking-fund contribution for the current fiscal year. Notwithstanding these operations of the Treasury Department, representations of distress in business circles not only continued, but increased, and absolute peril seemed at hand. In these circumstances the contribution to the sinking fund for the current fiscal year was at once completed by the expenditure of $27,684,283.55 in the purchase of Government bonds not yet due bearing 4 and 4-1/2 per cent interest, the premium paid thereon averaging about 24 per cent for the former and 8 per cent for the latter. In addition to this, the interest accruing during the current year upon the outstanding bonded indebtedness of the Government was to some extent anticipated, and banks selected as depositories of public money were permitted to somewhat increase their deposits.
While the expedients thus employed to release to the people the money lying idle in the Treasury served to avert immediate danger, our surplus revenues have continued to accumulate, the excess for the present year amounting on the 1st day of December to $55,258,701.19, and estimated to reach the sum of $113,000,000 on the 30th of June next, at which date it is expected that this sum, added to prior accumulations, will swell the surplus in the Treasury to $140,000,000.
There seems to be no assurance that, with such a withdrawal from use of the people's circulating medium, our business community may not in the near future be subjected to the same distress which was quite lately produced from the same cause. And while the functions of our National Treasury should be few and simple, and while its best condition would be reached, I believe, by its entire disconnection with private business interests, yet when, by a perversion of its purposes, it idly holds money uselessly subtracted from the channels of trade, there seems to be reason for the claim that some legitimate means should be devised by the Government to restore in an emergency, without waste or extravagance, such money to its place among the people.
If such an emergency arises, there now exists no clear and undoubted executive power of relief. Heretofore the redemption of 3 per cent bonds, which were payable at the option of the Government, has afforded a means for the disbursement of the excess of our revenues; but these bonds have all been retired, and there are no bonds outstanding the payment of which we have a right to insist upon. The contribution to the sinking fund which furnishes the occasion for expenditure in the purchase of bonds has been already made for the current year, so that there is no outlet in that direction.
In the present state of legislation the only pretense of any existing executive power to restore at this time any part of our surplus revenues to the people by its expenditure consists in the supposition that the Secretary of the Treasury may enter the market and purchase the bonds of the Government not yet due, at a rate of premium to be agreed upon. The only provision of law from which such a power could be derived is found in an appropriation bill passed a number of years ago, and it is subject to the suspicion that it was intended as temporary and limited in its application, instead of conferring a continuing discretion and authority. No condition ought to exist which would justify the grant of power to a single official, upon his judgment of its necessity, to withhold from or release to the business of the people, in an unusual manner, money held in the Treasury, and thus affect at his will the financial situation of the country; and if it is deemed wise to lodge in the Secretary of the Treasury the authority in the present juncture to purchase bonds, it should be plainly vested, and provided, as far as possible, with such checks and limitations as will define this official's right and discretion and at the same time relieve him from undue responsibility.
In considering the question of purchasing bonds as a means of restoring to circulation the surplus money accumulating in the Treasury, it should be borne in mind that premiums must of course be paid upon such purchase, that there may be a large part of these bonds held as investments which can not be purchased at any price, and that combinations among holders who are willing to sell may unreasonably enhance the cost of such bonds to the Government.
It has been suggested that the present bonded debt might be refunded at a less rate of interest and the difference between the old and new security paid in cash, thus finding use for the surplus in the Treasury. The success of this plan, it is apparent, must depend upon the volition of the holders of the present bonds; and it is not entirely certain that the inducement which must be offered them would result in more financial benefit to the Government than the purchase of bonds, while the latter proposition would reduce the principal of the debt by actual payment instead of extending it.
The proposition to deposit the money held by the Government in banks throughout the country for use by the people is, it seems to me, exceedingly objectionable in principle, as establishing too close a relationship between the operations of the Government Treasury and the business of the country and too extensive a commingling of their money, thus fostering an unnatural reliance in private business upon public funds. If this scheme should be adopted, it should only be done as a temporary expedient to meet an urgent necessity. Legislative and executive effort should generally be in the opposite direction, and should have a tendency to divorce, as much and as fast as can be safely done, the Treasury Department from private enterprise.
Of course it is not expected that unnecessary and extravagant appropriations will be made for the purpose of avoiding the accumulation of an excess of revenue. Such expenditure, besides the demoralization of all just conceptions of public duty which it entails, stimulates a habit of reckless improvidence not in the least consistent with the mission of our people or the high and beneficent purposes of our Government.
I have deemed it my duty to thus bring to the knowledge of my countrymen, as well as to the attention of their representatives charged with the responsibility of legislative relief, the gravity of our financial situation. The failure of the Congress heretofore to provide against the dangers which it was quite evident the very nature of the difficulty must necessarily produce caused a condition of financial distress and apprehension since your last adjournment which taxed to the utmost all the authority and expedients within executive control; and these appear now to be exhausted. If disaster results from the continued inaction of Congress, the responsibility must rest where it belongs.
Though the situation thus far considered is fraught with danger which should be fully realized, and though it presents features of wrong to the people as well as peril to the country, it is but a result growing out of a perfectly palpable and apparent cause, constantly reproducing the same alarming circumstances—a congested National Treasury and a depleted monetary condition in the business of the country. It need hardly be stated that while the present situation demands a remedy, we can only be saved from a like predicament in the future by the removal of its cause.
Our scheme of taxation, by means of which this needless surplus is taken from the people and put into the public Treasury, consists of a tariff or duty levied upon importations from abroad and internal-revenue taxes levied upon the consumption of tobacco and spirituous and malt liquors. It must be conceded that none of the things subjected to internal-revenue taxation are, strictly speaking, necessaries. There appears to be no just complaint of this taxation by the consumers of these articles, and there seems to be nothing so well able to bear the burden without hardship to any portion of the people.
But our present tariff laws, the vicious, inequitable, and illogical source of unnecessary taxation, ought to be at once revised and amended. These laws, as their primary and plain effect, raise the price to consumers of all articles imported and subject to duty by precisely the sum paid for such duties. Thus the amount of the duty measures the tax paid by those who purchase for use these imported articles. Many of these things, however, are raised or manufactured in our own country, and the duties now levied upon foreign goods and products are called protection to these home manufactures, because they render it possible for those of our people who are manufacturers to make these taxed articles and sell them for a price equal to that demanded for the imported goods that have paid customs duty. So it happens that while comparatively a few use the imported articles, millions of our people, who never used and never saw any of the foreign products, purchase and use things of the same kind made in this country, and pay therefor nearly or quite the same enhanced price which the duty adds to the imported articles. Those who buy imports pay the duty charged thereon into the public Treasury, but the great majority of our citizens, who buy domestic articles of the same class, pay a sum at least approximately equal to this duty to the home manufacturer. This reference to the operation of our tariff laws is not made by way of instruction, but in order that we may be constantly reminded of the manner in which they impose a burden upon those who consume domestic products as well as those who consume imported articles, and thus create a tax upon all our people.
It is not proposed to entirely relieve the country of this taxation. It must be extensively continued as the source of the Government's income; and in a readjustment of our tariff the interests of American labor engaged in manufacture should be carefully considered, as well as the preservation of our manufacturers. It may be called protection or by any other name, but relief from the hardships and dangers of our present tariff laws should be devised with especial precaution against imperiling the existence of our manufacturing interests. But this existence should not mean a condition which, without regard to the public welfare or a national exigency, must always insure the realization of immense profits instead of moderately profitable returns. As the volume and diversity of our national activities increase, new recruits are added to those who desire a continuation of the advantages which they conceive the present system of tariff taxation directly affords them. So stubbornly have all efforts to reform the present condition been resisted by those of our fellow-citizens thus engaged that they can hardly complain of the suspicion, entertained to a certain extent, that there exists an organized combination all along the line to maintain their advantage.
We are in the midst of centennial celebrations, and with becoming pride we rejoice in American skill and ingenuity, in American energy and enterprise, and in the wonderful natural advantages and resources developed by a century's national growth. Yet when an attempt is made to justify a scheme which permits a tax to be laid upon every consumer in the land for the benefit of our manufacturers, quite beyond a reasonable demand for governmental regard, it suits the purposes of advocacy to call our manufactures infant industries still needing the highest and greatest degree of favor and fostering care that can be wrung from Federal legislation.
It is also said that the increase in the price of domestic manufactures resulting from the present tariff is necessary in order that higher wages may be paid to our workingmen employed in manufactories than are paid for what is called the pauper labor of Europe. All will acknowledge the force of an argument which involves the welfare and liberal compensation of our laboring people. Our labor is honorable in the eyes of every American citizen; and as it lies at the foundation of our development and progress, it is entitled, without affectation or hypocrisy, to the utmost regard. The standard of our laborers' life should not be measured by that of any other country less favored, and they are entitled to their full share of all our advantages.
By the last census it is made to appear that of the 17,392,099 of our population engaged in all kinds of industries 7,670,493 are employed in agriculture, 4,074,238 in professional and personal service (2,934,876 of whom are domestic servants and laborers), while 1,810,256 are employed in trade and transportation and 3,837,112 are classed as employed in manufacturing and mining.
For present purposes, however, the last number given should be considerably reduced. Without attempting to enumerate all, it will be conceded that there should be deducted from those which it includes 375,143 carpenters and joiners, 285,401 milliners, dressmakers, and seamstresses, 172,726 blacksmiths, 133,756 tailors and tailoresses, 102,473 masons, 76,241 butchers, 41,309 bakers, 22,083 plasterers, and 4,891 engaged in manufacturing agricultural implements, amounting in the aggregate to 1,214,023, leaving 2,623,089 persons employed in such manufacturing industries as are claimed to be benefited by a high tariff.
To these the appeal is made to save their employment and maintain their wages by resisting a change. There should be no disposition to answer such suggestions by the allegation that they are in a minority among those who labor, and therefore should forego an advantage in the interest of low prices for the majority. Their compensation, as it may be affected by the operation of tariff laws, should at all times be scrupulously kept in view; and yet with slight reflection they will not overlook the fact that they are consumers with the rest; that they too have their own wants and those of their families to supply from their earnings, and that the price of the necessaries of life, as well as the amount of their wages, will regulate the measure of their welfare and comfort.
But the reduction of taxation demanded should be so measured as not to necessitate or justify either the loss of employment by the working-man or the lessening of his wages; and the profits still remaining to the manufacturer after a necessary readjustment should furnish no excuse for the sacrifice of the interests of his employees, either in their opportunity to work or in the diminution of their compensation. Nor can the worker in manufactures fail to understand that while a high tariff is claimed to be necessary to allow the payment of remunerative wages, it certainly results in a very large increase in the price of nearly all sorts of manufactures, which, in almost countless forms, he needs for the use of himself and his family. He receives at the desk of his employer his wages, and perhaps before he reaches his home is obliged, in a purchase for family use of an article which embraces his own labor, to return in the payment of the increase in price which the tariff permits the hard-earned compensation of many days of toil.
The farmer and the agriculturist, who manufacture nothing, but who pay the increased price which the tariff imposes upon every agricultural implement, upon all he wears, and upon all he uses and owns, except the increase of his flocks and herds and such things as his husbandry produces from the soil, is invited to aid in maintaining the present situation; and he is told that a high duty on imported wool is necessary for the benefit of those who have sheep to shear, in order that the price of their wool may be increased. They, of course, are not reminded that the farmer who has no sheep is by this scheme obliged, in his purchases of clothing and woolen goods, to pay a tribute to his fellow-farmer as well as to the manufacturer and merchant, nor is any mention made of the fact that the sheep owners themselves and their households must wear clothing and use other articles manufactured from the wool they sell at tariff prices, and thus as consumers must return their share of this increased price to the tradesman.
I think it may be fairly assumed that a large proportion of the sheep owned by the farmers throughout the country are found in small flocks, numbering from twenty-five to fifty. The duty on the grade of imported wool which these sheep yield is 10 cents each pound if of the value of 30 cents or less and 12 cents if of the value of more than 30 cents. If the liberal estimate of 6 pounds be allowed for each fleece, the duty thereon would be 60 or 72 cents; and this may be taken as the utmost enhancement of its price to the farmer by reason of this duty. Eighteen dollars would thus represent the increased price of the wool from twenty-five sheep and $36 that from the wool of fifty sheep; and at present values this addition would amount to about one-third of its price. If upon its sale the farmer receives this or a less tariff profit, the wool leaves his hands charged with precisely that sum, which in all its changes will adhere to it until it reaches the consumer. When manufactured into cloth and other goods and material for use, its cost is not only increased to the extent of the farmer's tariff profit, but a further sum has been added for the benefit of the manufacturer under the operation of other tariff laws. In the meantime the day arrives when the farmer finds it necessary to purchase woolen goods and material to clothe himself and family for the winter. When he faces the tradesman for that purpose, he discovers that he is obliged not only to return in the way of increased prices his tariff profit on the wool he sold, and which then perhaps lies before him in manufactured form, but that he must add a considerable sum thereto to meet a further increase in cost caused by a tariff duty on the manufacture. Thus in the end he is aroused to the fact that he has paid upon a moderate purchase, as a result of the tariff scheme, which when he sold his wool seemed so profitable, an increase in price more than sufficient to sweep away all the tariff profit he received upon the wool he produced and sold.
When the number of farmers engaged in wool raising is compared with all the farmers in the country and the small proportion they bear to our population is considered; when it is made apparent that in the case of a large part of those who own sheep the benefit of the present tariff on wool is illusory; and, above all, when it must be conceded that the increase of the cost of living caused by such tariff becomes a burden upon those with moderate means and the poor, the employed and unemployed, the sick and well, and the young and old, and that it constitutes a tax which with relentless grasp is fastened upon the clothing of every man, woman, and child in the land, reasons are suggested why the removal or reduction of this duty should be included in a revision of our tariff laws.
In speaking of the increased cost to the consumer of our home manufactures resulting from a duty laid upon imported articles of the same description, the fact is not overlooked that competition among our domestic producers sometimes has the effect of keeping the price of their products below the highest limit allowed by such duty. But it is notorious that this competition is too often strangled by combinations quite prevalent at this time, and frequently called trusts, which have for their object the regulation of the supply and price of commodities made and sold by members of the combination. The people can hardly hope for any consideration in the operation of these selfish schemes.
If, however, in the absence of such combination, a healthy and free competition reduces the price of any particular dutiable article of home production below the limit which it might otherwise reach under our tariff laws, and if with such reduced price its manufacture continues to thrive, it is entirely evident that one thing has been discovered which should be carefully scrutinized in an effort to reduce taxation.
The necessity of combination to maintain the price of any commodity to the tariff point furnishes proof that someone is willing to accept lower prices for such commodity and that such prices are remunerative; and lower prices produced by competition prove the same thing. Thus where either of these conditions exists a case would seem to be presented for an easy reduction of taxation.
The considerations which have been presented touching our tariff laws are intended only to enforce an earnest recommendation that the surplus revenues of the Government be prevented by the reduction of our customs duties, and at the same time to emphasize a suggestion that in accomplishing this purpose we may discharge a double duty to our people by granting to them a measure of relief from tariff taxation in quarters where it is most needed and from sources where it can be most fairly and justly accorded.
Nor can the presentation made of such considerations be with any degree of fairness regarded as evidence of unfriendliness toward our manufacturing interests or of any lack of appreciation of their value and importance.
These interests constitute a leading and most substantial element of our national greatness and furnish the proud proof of our country's progress. But if in the emergency that presses upon us our manufacturers are asked to surrender something for the public good and to avert disaster, their patriotism, as well as a grateful recognition of advantages already afforded, should lead them to willing cooperation. No demand is made that they shall forego all the benefits of governmental regard; but they can not fail to be admonished of their duty, as well as their enlightened self-interest and safety, when they are reminded of the fact that financial panic and collapse, to which the present condition tends, afford no greater shelter or protection to our manufactures than to other important enterprises. Opportunity for safe, careful, and deliberate reform is now offered; and none of us should be unmindful of a time when an abused and irritated people, heedless of those who have resisted timely and reasonable relief, may insist upon a radical and sweeping rectification of their wrongs.
The difficulty attending a wise and fair revision of our tariff laws is not underestimated. It will require on the part of the Congress great labor and care, and especially a broad and national contemplation of the subject and a patriotic disregard of such local and selfish claims as are unreasonable and reckless of the welfare of the entire country.
Under our present laws more than 4,000 articles are subject to duty. Many of these do not in any way compete with our own manufactures, and many are hardly worth attention as subjects of revenue. A considerable reduction can be made in the aggregate by adding them to the free list. The taxation of luxuries presents no features of hardship; but the necessaries of life used and consumed by all the people, the duty upon which adds to the cost of living in every home, should be greatly cheapened.
The radical reduction of the duties imposed upon raw material used in manufactures, or its free importation, is of course an important factor in any effort to reduce the price of these necessaries. It would not only relieve them from the increased cost caused by the tariff on such material, but the manufactured product being thus cheapened that part of the tariff now laid upon such product, as a compensation to our manufacturers for the present price of raw material, could be accordingly modified. Such reduction or free importation would serve besides to largely reduce the revenue. It is not apparent how such a change can have any injurious effect upon our manufacturers. On the contrary, it would appear to give them a better chance in foreign markets with the manufacturers of other countries, who cheapen their wares by free material. Thus our people might have the opportunity of extending their sales beyond the limits of home consumption, saving them from the depression, interruption in business, and loss caused by a glutted domestic market and affording their employees more certain and steady labor, with its resulting quiet and contentment.
The question thus imperatively presented for solution should be approached in a spirit higher than partisanship and considered in the light of that regard for patriotic duty which should characterize the action of those intrusted with the weal of a confiding people. But the obligation to declared party policy and principle is not wanting to urge prompt and effective action. Both of the great political parties now represented in the Government have by repeated and authoritative declarations condemned the condition of our laws which permit the collection from the people of unnecessary revenue, and have in the most solemn manner promised its correction; and neither as citizens nor partisans are our countrymen in a mood to condone the deliberate violation of these pledges.
Our progress toward a wise conclusion will not be improved by dwelling upon the theories of protection and free trade. This savors too much of bandying epithets. It is a condition which confronts us, not a theory. Relief from this condition may involve a slight reduction of the advantages which we award our home productions, but the entire withdrawal of such advantages should not be contemplated. The question of free trade is absolutely irrelevant, and the persistent claim made in certain quarters that all the efforts to relieve the people from unjust and unnecessary taxation are schemes of so-called free traders is mischievous and far removed from any consideration for the public good.
The simple and plain duty which we owe the people is to reduce taxation to the necessary expenses of an economical operation of the Government and to restore to the business of the country the money which we hold in the Treasury through the perversion of governmental powers. These things can and should be done with safety to all our industries, without danger to the opportunity for remunerative labor which our workingmen need, and with benefit to them and all our people by cheapening their means of subsistence and increasing the measure of their comforts.
The Constitution provides that the President "shall from time to time give to the Congress information of the state of the Union." It has been the custom of the Executive, in compliance with this provision, to annually exhibit to the Congress, at the opening of its session, the general condition of the country, and to detail with some particularity the operations of the different Executive Departments. It would be especially agreeable to follow this course at the present time and to call attention to the valuable accomplishments of these Departments during the last fiscal year; but I am so much impressed with the paramount importance of the subject to which this communication has thus far been devoted that I shall forego the addition of any other topic, and only urge upon your immediate consideration the "state of the Union" as shown in the present condition of our Treasury and our general fiscal situation, upon which every element of our safety and prosperity depends.
The reports of the heads of Departments, which will be submitted, contain full and explicit information touching the transaction, of the business intrusted to them and such recommendations relating to legislation in the public interest as they deem advisable. I ask for these reports and recommendations the deliberate examination and action of the legislative branch of the Government.
There are other subjects not embraced in the departmental reports demanding legislative consideration, and which I should be glad to submit. Some of them, however, have been earnestly presented in previous messages, and as to them I beg leave to repeat prior recommendations.
As the law makes no provision for any report from the Department of State, a brief history of the transactions of that important Department, together with other matters which it may hereafter be deemed essential to commend to the attention of the Congress, may furnish the occasion for a future communication.
GROVER CLEVELAND.
SPECIAL MESSAGES.
EXECUTIVE MANSION, Washington, December 14, 1887.
To the Senate of the United States:
I transmit herewith, with a view to its ratification, a final protocol, signed at Paris on the 7th day of July, 1887, by the plenipotentiaries of the United States and of the other powers parties to the convention of March 14, 1884, for the protection of submarine cables, fixing the 1st day of May, 1888, as the date on which the said convention of March 14, 1884, shall take effect, provided that those of the contracting Governments that have not adopted the measures provided for by article 12 of the said convention shall have conformed to that stipulation.
GROVER CLEVELAND.
EXECUTIVE MANSION, Washington, December 14, 1887.
To the Senate of the United States:
I transmit herewith, with a view to its ratification, a convention between the United States and the Kingdom of the Netherlands for the extradition of criminals, signed at Washington on the 2d day of June, 1887.
GROVER CLEVELAND.
EXECUTIVE MANSION, December 19, 1887.
To the Senate and House of Representatives:
I transmit herewith a report from the Secretary of State, in relation to the invitation from Her Britannic Majesty to this Government to participate in the international exhibition which is to be held at Melbourne in 1888 to celebrate the centenary of the founding of New South Wales, the first Australian colony.
GROVER CLEVELAND.
EXECUTIVE MANSION, December 19, 1887.
To the Senate and House of Representatives:
I transmit herewith a report from the Secretary of State, in relation to an invitation which has been extended to this Government to appoint a delegate or delegates to the International Exposition of Labor to be held in April, 1888, at Barcelona, Spain, and commend its suggestions to the favorable attention of Congress.
GROVER CLEVELAND.
EXECUTIVE MANSION, Washington, December 20, 1887.
To the Senate and House of Representatives:
I transmit herewith a communication from the Secretary of State, accompanied by the report of Mr. Edward Atkinson, of Massachusetts, who was specially designated by me, under the provisions of successive acts of Congress in that behalf, to visit the financial centers of Europe in order to ascertain the feasibility of establishing by international arrangement a fixity of rates between the two precious metals in free coinage of both.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 4, 1888.
To the Senate and House of Representatives:
I transmit herewith a communication of 23d ultimo from the Secretary of the Interior, submitting, with accompanying papers, a draft of a bill to amend section 2148 of the Revised Statutes of the United States, relating to trespasses upon Indian lands.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 4, 1888.
To the Senate and House of Representatives:
I transmit herewith a communication of 23d ultimo from the Secretary of the Interior, submitting, with accompanying papers, a draft of a bill granting a right of way to the Jamestown and Northern Railroad Company through the Devils Lake Indian Reservation, in the Territory of Dakota.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 4, 1888.
To the Senate and House of Representatives:
I transmit herewith a communication of the 22d ultimo from the Secretary of the Interior, submitting, with accompanying papers, a draft of a bill to amend section 5388 of the Revised Statutes of the United States, relating to timber trespasses upon the public lands, so as to include Indian lands.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 4, 1888.
To the Senate and House of Representatives:
I transmit herewith a communication of 27th December, 1887, from the Secretary of the Interior, submitting, with accompanying papers, draft of a bill "to authorize the Secretary of the Interior to fix the amount of compensation to be paid for the right of way for railroads through Indian reservations in certain contingencies."
The matter is commended to the consideration of Congress.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 4, 1888.
To the Senate and House of Representatives:
I transmit herewith a communication of 22d ultimo from the Secretary of the Interior, submitting, with accompanying papers, a draft of a bill to accept and ratify an agreement made with the Indians of the Yakima Reservation, in Washington Territory, for the right of way of the Northern Pacific Railroad across said reservation, etc.
The matter is presented for the consideration and action of Congress.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 4, 1888.
To the Senate and House of Representatives:
I transmit herewith a communication of 24th ultimo from the Secretary of the Interior, submitting, with accompanying papers, a draft of a bill to accept and ratify an agreement made by the Pi-Ute Indians, and granting a right of way to the Carson and Colorado Railroad Company through the Walker River Reservation, in Nevada.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 4, 1888.
To the Senate and House of Representatives:
I transmit herewith a communication of the 24th ultimo from the Secretary of the Interior, submitting, with accompanying papers, a draft of a bill to accept and ratify an agreement made with the Sisseton and Wahpeton Indians, and to grant a right of way for the Chicago, Milwaukee and St. Paul Railway through the Lake Traverse Indian Reservation, in Dakota.
The matter is presented for the consideration and action of Congress.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 5, 1888.
To the Senate and House of Representatives:
I transmit herewith a communication of the 23d ultimo from the Secretary of the Interior, submitting a draft of a bill "to provide for the reduction of the Round Valley Indian Reservation, in the State of California, and for other purposes," with accompanying papers relating thereto. The documents thus submitted exhibit extensive and entirely unjustifiable encroachments upon lands set apart for Indian occupancy and disclose a disregard of Indian rights so long continued that the Government can not further temporize without positive dishonor. Efforts to dislodge trespassers upon these lands have in some cases been resisted upon the ground that certain moneys due from the Government for improvements have not been paid. So far as this claim is well founded the sum necessary to extinguish the same should be at once appropriated and paid. In other cases the position of these intruders is one of simple and barefaced wrongdoing, plainly questioning the inclination of the Government to protect its dependent Indian wards and its ability to maintain itself in the guaranty of such protection.
These intruders should forthwith feel the weight of the Government's power. I earnestly commend the situation and the wrongs of the Indians occupying the reservation named to the early attention of the Congress, and ask for the bill herewith transmitted careful and prompt attention.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 5, 1888.
To the Senate:
In answer to the resolution of the Senate of the 28th of February last, requesting the President of the United States to obtain certain information from the Government of Great Britain relative to the proceedings of the authorities of New Zealand concerning the titles to lands in that colony claimed by American citizens, I transmit a report of the Secretary of State, together with the accompanying documents.
GROVER CLEVELAND.
EXECUTIVE MANSION, Washington, January 5, 1888.
To the Senate of the United States:
I transmit herewith, with a view to its ratification, a treaty of friendship, commerce, and navigation between the United States and the Republic of Peru, signed at Lima on the 31st day of August, 1887.
GROVER CLEVELAND.
EXECUTIVE MANSION, Washington, January 5, 1888.
To the Senate of the United States:
I transmit, with a view to its ratification, an additional article, signed October 22, 1887, to the treaty for the extradition of criminals concluded October 11, 1870, between the United States and the Republic of Guatemala, and, for the reasons suggested by the Secretary of State in his report, request the return of the additional article to the above-mentioned treaty signed February 4, 1887, and transmitted to the Senate on February 24[*25] of the same year.15
GROVER CLEVELAND.
EXECUTIVE MANSION, January 9, 1888.
To the Senate and House of Representatives:
I transmit herewith a communication of 30th of December, 1887, from the Secretary of the Interior, submitting, with accompanying papers, two additional reports from the commission appointed to conduct negotiations with certain tribes and bands of Indians for reduction of reservations, etc., under the provisions of the act of May 15, 1886 (24 U.S. Statutes at Large, p. 44), providing therefor.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 9, 1888.
To the Senate and House of Representatives:
I transmit herewith a communication from the Secretary of State, relative to the requests which have been received from various maritime associations and chambers of commerce of this country asking that measures be taken to convoke an international conference at Washington of representatives of all maritime nations to devise measures for the greater security of life and property at sea.
I commend this important subject to the favorable consideration of Congress.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 9, 1888.
To the Senate and House of Representatives:
I transmit herewith a report from the Secretary of State, recommending that this Government take action to approve the resolutions of the Washington International Meridian Conference, held in October, 1884, in favor of fixing a prime meridian and a universal day, and to invite the powers with whom this country has diplomatic relations to accede to the same.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 9, 1888.
To the Senate and House of Representatives:
I transmit herewith a report of the Secretary of State, relative to the legislation required to carry into effect the international convention of March 14, 1884, for the protection of submarine cables, to which this country is a party.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 12, 1888.
To the Senate and House of Representatives:
I transmit herewith a report from the Secretary of State, in relation to the invitation from the Government of France to this Government to participate in the international exhibition which is to be held at Paris in 1889.
GROVER CLEVELAND.
EXECUTIVE MANSION, Washington, January 16, 1888.
To the Senate of the United States:
I transmit herewith, in response to a resolution of the Senate of the 21st ultimo, a report of the Secretary of State touching correspondence of this Government with that of Hawaii, or of any foreign country, concerning any change or proposed change in the Government of the Hawaiian Islands.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 17, 1888.
To the Senate and House of Representatives:
On the 3d day of March last an act was passed authorizing the appointment of three commissioners who should investigate the affairs of such railroads as have received aid from the United States Government. Among other things, the contemplated investigation included a history of the construction of these roads, their relations and indebtedness to the Government, and the question whether in the interest of the United States any extension of the time for the performance of the obligations of said roads to the Government should be granted; and if so, the said commissioners were directed to submit a scheme for such extension.
The commissioners were further directed by said act to report in full to the President upon all the matters submitted to them, and he was by said act required to forward said report to Congress with such recommendations or comments as he should see fit to make in the premises.
The commissioners immediately after their selection entered upon the discharge of their duties, and have prosecuted their inquiries with commendable industry, intelligence, and thoroughness. A large amount of testimony has been taken, and all the facts have been developed which appear to be necessary for the consideration of the questions arising from the condition of these aided railroads and their relations to the Government.
The commissioners have, however, been unable to agree upon the manner in which these railroads should be treated respecting their indebtedness to the United States, or to unite upon the plan best calculated to secure the payment of such indebtedness.
This disagreement has resulted in the preparation of two reports, both of which are herewith submitted to the Congress.
These reports exhibit such transactions and schemes connected with the construction of the aided roads and their management, and suggest the invention of such devices on the part of those having them in charge, for the apparent purpose of defeating any chance for the Government's reimbursement, that any adjustment or plan of settlement should be predicated upon the substantial interests of the Government rather than any forbearance or generosity deserved by the companies.
The wide publication which has already been given to the substance of the commissioners' reports obviates the necessity of detailing in this communication the facts found upon the investigation.
The majority report, while condemning the methods adopted by those who formerly had charge of the Union Pacific Railroad, declares that since its present management was inaugurated, in 1884, its affairs have been fairly and prudently conducted, and that the present administration "has devoted itself honestly and intelligently to the herculean task of rescuing the Union Pacific Railway from the insolvency which seriously threatened it at the inception of its work;" that it "has devoted itself, by rigid economy, by intelligent management, and by an application of every dollar of the earning capacity of the system to its improvement and betterment, to place that company on a sound and enduring financial foundation."
The condition of the present management of the Union Pacific Company has an important bearing upon its ability to comply with the terms of any settlement of its indebtedness which may be offered by the Government.
The majority of the commission are in favor of an extension of the time for the payment of the Government indebtedness of these companies, upon certain conditions; but the chairman of the commission, presenting the minority report, recommends, both upon principle and policy, the institution of proceedings for the forfeiture of the charters of the corporations and the winding up of their affairs.
I have been furnished with a statement or argument in defense of the transactions connected with the construction of the Central Pacific road and its branch lines, from which it may not be amiss to quote for the purpose of showing how some of the operations of the directors of such road, strongly condemned by the commissioners, are defended by the directors themselves. After speaking of a contract for the construction of one of these branch lines by a corporation called the Contract and Finance Company, owned by certain directors of the Central Pacific Railroad, this language is used:
It may be said of this contract, as of many others that were let to the different construction companies in which the directors of the Central Pacific have been stockholders, that they built the road with the moneys furnished by themselves and had the road for their outlay. In other words, they paid to the construction company the bonds and stock of the railroad so constructed, and waited until such time as they could develop sufficient business on the road built to induce the public to buy the bonds or the stock. If the country through which the railroad ran developed sufficient business, then the project was a success; if it did not, then the operation was a loss. These gentlemen took all the responsibility; any loss occurring was necessarily theirs, and of right the profit belonged to them.
But it is said that they violated a well-known rule of equity in dealing with themselves; that they were trustees, and that they were representing both sides of the contract.
The answer is that they did not find anybody else to deal with. They could not find anyone who would take the chances of building a road through what was then an almost uninhabited country and accept the bonds and stock of the road, in payment. And when it is said that they were trustees, if they did occupy such relation it was merely technical, for they represented only their own interests on both sides, there being no one else concerned in the transaction. They became the incorporators of the company that was to build the road, subscribed for its stock, and were the only subscribers; therefore it is difficult to see how anyone was wronged by their action. The rule of equity invoked, which has its origin in the injunction "No man can serve two masters," certainly did not apply to them, because they were acting in their own interests and were not charged with the duty of caring for others' rights, there being no other persons interested in the subject-matter.
In view of this statement and the facts developed in the commissioners' reports, it seems proper to recall the grants and benefits derived from the General Government by both the Union and Central Pacific companies for the purpose of aiding the construction of their roads.
By an act passed in 1862 it was provided that there should be advanced to said companies by the United States, to aid in such construction, the bonds of the Government amounting to $16,000 for every mile constructed, as often as a section of 40 miles of said roads should be built; that there should also be granted to said companies, upon the completion of every said section of 40 miles of road, five entire sections of public land for each mile so built; that the entire charges earned by said roads on account of transportation and service for the Government should be applied to the reimbursement of the bonds advanced by the United States and the interest thereon, and that to secure the repayment of the bonds so advanced, and interest, the issue and delivery to said companies of said bonds should constitute a first mortgage on the whole line of their roads and on their rolling stock, fixtures, and property of every kind and description.
The liberal donations, advances, and privileges provided for in this law were granted by the General Government for the purpose of securing the construction of these roads, which would complete the connection between our eastern and western coasts; and they were based upon a consideration of the public benefits which would accrue to the entire country from such consideration.
But the projectors of these roads were not content, and the sentiment which then seemed to pervade the Congress had not reached the limit of its generosity. Two years after the passage of this law it was supplemented and amended in various important particulars in favor of these companies by an act which provided, among other things, that the bonds, at the rate already specified, should be delivered upon the completion of sections of 20 miles in length instead of 40; that the lands to be conveyed to said companies on the completion of each section of said road should be ten sections per mile instead of five; that only half of the charges for transportation and service due from time to time from the United States should be retained and applied to the advances made to said companies by the Government, thus obliging immediate payment to its debtor of the other half of said charges, and that the lien of the United States to secure the reimbursement of the amount advanced to said companies in bonds, which lien was declared by the law of 1862 to constitute a first mortgage upon all the property of said companies, should become a junior lien and be subordinated to a mortgage which the companies were by the amendatory act authorized to execute to secure bonds which they might from time to time issue in sums not exceeding the amount of the United States bonds which should be advanced to them.
The immense advantages to the companies of this amendatory act are apparent; and in these days we may well wonder that even the anticipated public importance of the construction of these roads induced what must now appear to be a rather reckless and unguarded appropriation of the public funds and the public domain.
Under the operation of these laws the principal of the bonds which have been advanced is $64,023,512, as given in the reports of the commissioners; the interest to November 1, 1887, is calculated to be $76,024,206.58, making an aggregate at the date named of $140,047,718.58. The interest calculated to the maturity of the bonds added to the principal produces an aggregate of $178,884,759.50. Against these amounts there has been repaid by the companies the sum of $30,955,039.61.
It is almost needless to state that the companies have availed themselves to the utmost extent of the permission given them to issue their bonds and to mortgage their property to secure the payment of the same, by an incumbrance having preference to the Government's lien and precisely equal to it in amount.
It will be seen that there was available for the building of each mile of these roads $16,000 of United States bonds, due in thirty years, with 6 per cent interest; $16,000 in bonds of the companies, secured by a first mortgage on all their property, and ten sections of Government land, to say nothing of the stock of the companies.
When the relations created between the Government and these companies by the legislation referred to is considered, it is astonishing that the claim should be made that the directors of these roads owed no duty except to themselves in their construction; that they need regard no interests but their own, and that they were justified in contracting with themselves and making such bargains as resulted in conveying to their pockets all the assets of the companies. As a lienor the Government was vitally interested in the amount of the mortgage to which its security had been subordinated, and it had the right to insist that none of the bonds secured by this prior mortgage should be issued fraudulently or for the purpose of division among these stockholders without consideration.
The doctrine of complete independence on the part of the directors of these companies and their freedom from any obligation to care for other interests than their own in the construction of these roads seems to have developed the natural consequences of its application, portrayed as follows in the majority report of the commissioners:
The result is that those who have controlled and directed the construction and development of these companies have become possessed of their surplus assets through issues of bonds, stocks, and payment of dividends voted by themselves, while the great creditor, the United States, finds itself substantially without adequate security for the repayment of its loans.
The laws enacted in aid of these roads, while they illustrated a profuse liberality and a generous surrender of the Government's advantages, which it is hoped experience has corrected, were nevertheless passed upon the theory that the roads should be constructed according to the common rules of business, fairness, and duty, and that their value and their ability to pay their debts should not be impaired by unfair manipulations; and when the Government subordinated its lien to another it was in the expectation that the prior lien would represent in its amount only such bonds as should be necessarily issued by the companies for the construction of their roads at fair prices, agreed upon in an honest way between real and substantial parties. For the purpose of saving or improving the security afforded by its junior lien the Government should have the right now to purge this paramount lien of all that is fraudulent, fictitious, or unconscionable. If the transfer to innocent hands of bonds of this character secured by such first mortgage prevents their cancellation, it might be well to seek a remedy against those who issued and transferred them. If legislation is needed to secure such a remedy, the Congress can readily supply it.
I desire to call attention also to the fact that if all that was to be done on the part of the Government to fully vest in these companies the grants and advantages contemplated by the acts passed in their interest has not yet been perfected, and if the failure of such companies to perform in good faith their part of the contract justifies such a course, the power rests with the Congress to withhold further performance on the part of the Government. If donated lands are not yet granted to these companies, and if their violation of contract and of duty are such as in justice and morals forfeit their rights to such lands, Congressional action should intervene to prevent further consummation. Executive power must be exercised according to existing laws, and Executive discretion is probably not broad enough to reach such difficulties.
The California and Oregon Railroad is now a part of the Central Pacific system, and is a land-grant road. Its construction has been carried on with the same features and incidents which have characterized the other constructions of this system, as is made apparent on pages 78, 79, and 80 of the report of the majority of the commissioners. I have in my hands for approval the report of the commissioners appointed to examine two completed sections of this road. Upon such approval the company or the Central Pacific Company will be entitled to patents for a large quantity of public lands. I especially commend to the attention of Congress this condition of affairs, in order that it may determine whether or not it should intervene to save these lands for settlers, if such a course is justifiable.
It is quite time that the troublesome complications surrounding this entire subject, which has been transmitted to us as a legacy from former days, should be adjusted and settled.
No one, I think, expects that these railroad companies will be able to pay their immense indebtedness to the Government at its maturity.
Any proceeding or arrangement that would result now, or at any other time, in putting these roads, or any portion of them, in the possession and control of the Government is, in my opinion, to be rejected, certainly as long as there is the least chance for indemnification through any other means.
I suppose we are hardly justified in indulging the irritation and indignation naturally arising from a contemplation of malfeasance to such an extent as to lead to the useless destruction of these roads or loss of the advances made by the Government. I believe that our efforts should be in a more practical direction, and should tend, with no condonation of wrongdoing, to the collection by the Government, on behalf of the people, of the public money now in jeopardy.
While the plan presented by a majority of the commission appears to be well devised and gives at least partial promise of the results sought, the fact will not escape attention that its success depends upon its acceptance by the companies and their ability to perform its conditions after acceptance. It is exceedingly important that any adjustment now made should be final and effective. These considerations suggest the possibility that the remedy proposed in the majority report might well be applied to a part only of these aided railroad companies.
The settlement and determination of the questions involved are peculiarly within the province of the Congress. The subject has been made quite a familiar one by Congressional discussion. This is now supplemented in a valuable manner by the facts presented in the reports herewith submitted.
The public interest urges prompt and efficient action.
GROVER CLEVELAND.
EXECUTIVE MANSION, January 23, 1888.
To the Senate and House of Representatives:
I transmit herewith the first report of the board of control created by the act of Congress approved August 4, 1886 (24 U.S. Statutes at Large, p. 252), for the management of an industrial home in the Territory of Utah, containing a statement of the action of the board in establishing the home and an account of expenditures from the appropriation made for that purpose in the act above mentioned.
GROVER CLEVELAND.
EXECUTIVE MANSION, Washington, January 30, 1888.
To the Senate:
I transmit herewith, in response to the resolution of the Senate of the 21st of December last, a report from the Secretary of State, in relation to Midway Island.
GROVER CLEVELAND.
EXECUTIVE MANSION, Washington, February 7, 1888.
To the Senate of the United States:
I transmit, with a view to its ratification, a declaration, signed December 1, 1886, and March 23, 1887, for Germany, by the delegates of the powers signatories of the convention of March 14, 1884, for the protection of submarine cables, defining the sense of articles 2 and 4 of the said convention.
GROVER CLEVELAND.
EXECUTIVE MANSION, February 7, 1888.
To the Senate and House of Representatives: