SECOND ANNUAL MESSAGE.

EXECUTIVE MANSION, _December 5, 1898_.

_To the Senate and House of Representatives:_

Notwithstanding the added burdens rendered necessary by the war, our

people rejoice in a very satisfactory and steadily increasing degree of

prosperity, evidenced by the largest volume of business ever recorded.

Manufacture has been productive, agricultural pursuits have yielded

abundant returns, labor in all fields of industry is better rewarded,

revenue legislation passed by the present Congress has increased the

Treasury's receipts to the amount estimated by its authors, the finances

of the Government have been successfully administered and its credit

advanced to the first rank, while its currency has been maintained at

the world's highest standard. Military service under a common flag and

for a righteous cause has strengthened the national spirit and served to

cement more closely than ever the fraternal bonds between every section

of the country.

A review of the relation of the United States to other powers, always

appropriate, is this year of primary importance in view of the momentous

issues which have arisen, demanding in one instance the ultimate

determination by arms and involving far-reaching consequences which will

require the earnest attention of the Congress.

In my last annual message[12] very full consideration was given to the

question of the duty of the Government of the United States toward Spain

and the Cuban insurrection as being by far the most important problem

with which we were then called upon to deal. The considerations then

advanced and the exposition of the views therein expressed disclosed

my sense of the extreme gravity of the situation. Setting aside as

logically unfounded or practically inadmissible the recognition of the

Cuban insurgents as belligerents, the recognition of the independence

of Cuba, neutral intervention to end the war by imposing a rational

compromise between the contestants, intervention in favor of one or the

other party, and forcible annexation of the island, I concluded it was

honestly due to our friendly relations with Spain that she should be

given a reasonable chance to realize her expectations of reform to which

she had become irrevocably committed. Within a few weeks previously she

had announced comprehensive plans which it was confidently asserted

would be efficacious to remedy the evils so deeply affecting our own

country, so injurious to the true interests of the mother country as

well as to those of Cuba, and so repugnant to the universal sentiment

of humanity.

The ensuing month brought little sign of real progress toward the

pacification of Cuba. The autonomous administrations set up in the

capital and some of the principal cities appeared not to gain the favor

of the inhabitants nor to be able to extend their influence to the large

extent of territory held by the insurgents, while the military arm,

obviously unable to cope with the still active rebellion, continued many

of the most objectionable and offensive policies of the government that

had preceded it. No tangible relief was afforded the vast numbers of

unhappy reconcentrados, despite the reiterated professions made in that

regard and the amount appropriated by Spain to that end. The proffered

expedient of zones of cultivation proved illusory. Indeed no less

practical nor more delusive promises of succor could well have been

tendered to the exhausted and destitute people, stripped of all that

made life and home dear and herded in a strange region among

unsympathetic strangers hardly less necessitous than themselves.

By the end of December the mortality among them had frightfully

increased. Conservative estimates from Spanish sources placed the deaths

among these distressed people at over 40 per cent from the time General

Weyler's decree of reconcentration was enforced. With the acquiescence

of the Spanish authorities, a scheme was adopted for relief by

charitable contributions raised in this country and distributed, under

the direction of the consul-general and the several consuls, by noble

and earnest individual effort through the organized agencies of the

American Red Cross. Thousands of lives were thus saved, but many

thousands more were inaccessible to such forms of aid.

The war continued on the old footing, without comprehensive plan,

developing only the same spasmodic encounters, barren of strategic

result, that had marked the course of the earlier ten years' rebellion

as well as the present insurrection from its start. No alternative save

physical exhaustion of either combatant, and therewithal the practical

ruin of the island, lay in sight, but how far distant no one could

venture to conjecture.

At this juncture, on the 15th of February last, occurred the destruction

of the battle ship _Maine_ while rightfully lying in the harbor of

Havana on a mission of international courtesy and good will--a

catastrophe the suspicious nature and horror of which stirred the

nation's heart profoundly. It is a striking evidence of the poise and

sturdy good sense distinguishing our national character that this

shocking blow, falling upon a generous people already deeply touched by

preceding events in Cuba, did not move them to an instant desperate

resolve to tolerate no longer the existence of a condition of danger and

disorder at our doors that made possible such a deed, by whomsoever

wrought. Yet the instinct of justice prevailed, and the nation anxiously

awaited the result of the searching investigation at once set on foot.

The finding of the naval board of inquiry established that the origin of

the explosion was external, by a submarine mine, and only halted through

lack of positive testimony to fix the responsibility of its authorship.

All these things carried conviction to the most thoughtful, even before

the finding of the naval court, that a crisis in our relations with

Spain and toward Cuba was at hand. So strong was this belief that it

needed but a brief Executive suggestion to the Congress to receive

immediate answer to the duty of making instant provision for the

possible and perhaps speedily probable emergency of war, and the

remarkable, almost unique, spectacle was presented of a unanimous vote

of both Houses, on the 9th of March, appropriating $50,000,000 "for the

national defense and for each and every purpose connected therewith,

to be expended at the discretion of the President." That this act of

prevision came none too soon was disclosed when the application of the

fund was undertaken. Our coasts were practically undefended. Our Navy

needed large provision for increased ammunition and supplies, and even

numbers to cope with any sudden attack from the navy of Spain, which

comprised modern vessels of the highest type of continental perfection.

Our Army also required enlargement of men and munitions. The details

of the hurried preparation for the dreaded contingency are told in the

reports of the Secretaries of War and of the Navy, and need not be

repeated here. It is sufficient to say that the outbreak of war when

it did come found our nation not unprepared to meet the conflict.

Nor was the apprehension of coming strife confined to our own country.

It was felt by the continental powers, which on April 6, through their

ambassadors and envoys, addressed to the Executive an expression of hope

that humanity and moderation might mark the course of this Government

and people, and that further negotiations would lead to an agreement

which, while securing the maintenance of peace, would afford all

necessary guaranties for the reestablishment of order in Cuba. In

responding to that representation I said I shared the hope the envoys

had expressed that peace might be preserved in a manner to terminate the

chronic condition of disturbance in Cuba, so injurious and menacing to

our interests and tranquillity, as well as shocking to our sentiments

of humanity; and while appreciating the humanitarian and disinterested

character of the communication they had made on behalf of the powers,

I stated the confidence of this Government, for its part, that equal

appreciation would be shown for its own earnest and unselfish endeavors

to fulfill a duty to humanity by ending a situation the indefinite

prolongation of which had become insufferable.

Still animated by the hope of a peaceful solution and obeying the

dictates of duty, no effort was relaxed to bring about a speedy

ending of the Cuban struggle. Negotiations to this object continued

actively with the Government of Spain, looking to the immediate

conclusion of a six months' armistice in Cuba, with a view to effect

the recognition of her people's right to independence. Besides this,

the instant revocation of the order of reconcentration was asked,

so that the sufferers, returning to their homes and aided by united

American and Spanish effort, might be put in a way to support

themselves and, by orderly resumption of the well-nigh destroyed

productive energies of the island, contribute to the restoration of

its tranquillity and well-being. Negotiations continued for some little

time at Madrid, resulting in offers by the Spanish Government which

could not but be regarded as inadequate. It was proposed to confide the

preparation of peace to the insular parliament, yet to be convened under

the autonomous decrees of November, 1897, but without impairment in any

wise of the constitutional powers of the Madrid Government, which to

that end would grant an armistice, if solicited by the insurgents, for

such time as the general in chief might see fit to fix. How and with

what scope of discretionary powers the insular parliament was expected

to set about the "preparation" of peace did not appear. If it were to be

by negotiation with the insurgents, the issue seemed to rest on the one

side with a body chosen by a fraction of the electors in the districts

under Spanish control, and on the other with the insurgent population

holding the interior country, unrepresented in the so-called parliament

and defiant at the suggestion of suing for peace.

Grieved and disappointed at this barren outcome of my sincere endeavors

to reach a practicable solution, I felt it my duty to remit the whole

question to the Congress. In the message of April 11, 1898,[13] I

announced that with this last overture in the direction of immediate

peace in Cuba and its disappointing reception by Spain the effort of

the Executive was brought to an end. I again reviewed the alternative

courses of action which had been proposed, concluding that the only one

consonant with international policy and compatible with our firm-set

historical traditions was intervention as a neutral to stop the war and

check the hopeless sacrifice of life, even though that resort involved

"hostile constraint upon both the parties to the contest, as well to

enforce a truce as to guide the eventual settlement." The grounds

justifying that step were the interests of humanity, the duty to protect

the life and property of our citizens in Cuba, the right to check injury

to our commerce and people through the devastation of the island, and,

most important, the need of removing at once and forever the constant

menace and the burdens entailed upon our Government by the uncertainties

and perils of the situation caused by the unendurable disturbance in

Cuba. I said:

The long trial has proved that the object for which Spain has waged

the war can not be attained. The fire of insurrection may flame or may

smolder with varying seasons, but it has not been and it is plain that

it can not be extinguished by present methods. The only hope of relief

and repose from a condition which can no longer be endured is the

enforced pacification of Cuba. In the name of humanity, in the name of

civilization, in behalf of endangered American interests which give us

the right and the duty to speak and to act, the war in Cuba must stop.

In view of all this the Congress was asked to authorize and empower the

President to take measures to secure a full and final termination of

hostilities between Spain and the people of Cuba and to secure in the

island the establishment of a stable government, capable of maintaining

order and observing its international obligations, insuring peace and

tranquillity and the security of its citizens as well as our own, and

for the accomplishment of those ends to use the military and naval

forces of the United States as might be necessary, with added authority

to continue generous relief to the starving people of Cuba.

The response of the Congress, after nine days of earnest deliberation,

during which the almost unanimous sentiment of your body was developed

on every point save as to the expediency of coupling the proposed action

with a formal recognition of the Republic of Cuba as the true and lawful

government of that island--a proposition which failed of adoption--the

Congress, after conference, on the 19th of April, by a vote of 42 to 35

in the Senate and 311 to 6 in the House of Representatives, passed the

memorable joint resolution declaring--

First. That the people of the island of Cuba are, and of right ought

to be, free and independent.

Second. That it is the duty of the United States to demand, and the

Government of the United States does hereby demand, that the Government

of Spain at once relinquish its authority and government in the island

of Cuba and withdraw its land and naval forces from Cuba and Cuban

waters.

Third. That the President of the United States be, and he hereby is,

directed and empowered to use the entire land and naval forces of the

United States and to call into the actual service of the United States

the militia of the several States to such extent as may be necessary

to carry these resolutions into effect.

Fourth. That the United States hereby disclaims any disposition or

intention to exercise sovereignty, jurisdiction, or control over

said island except for the pacification thereof, and asserts its

determination when that is accomplished to leave the government and

control of the island to its people.

This resolution was approved by the Executive on the next day, April 20.

A copy was at once communicated to the Spanish minister at this capital,

who forthwith announced that his continuance in Washington had thereby

become impossible, and asked for his passports, which were given him.

He thereupon withdrew from Washington, leaving the protection of

Spanish interests in the United States to the French ambassador and the

Austro-Hungarian minister. Simultaneously with its communication to

the Spanish minister here, General Woodford, the American minister at

Madrid, was telegraphed confirmation of the text of the joint resolution

and directed to communicate it to the Government of Spain with the

formal demand that it at once relinquish its authority and government

in the island of Cuba and withdraw its forces therefrom, coupling this

demand with announcement of the intentions of this Government as to

the future of the island, in conformity with the fourth clause of the

resolution, and giving Spain until noon of April 23 to reply.

That demand, although, as above shown, officially made known to the

Spanish envoy here, was not delivered at Madrid. After the instruction

reached General Woodford on the morning of April 21, but before he could

present it, the Spanish minister of state notified him that upon the

President's approval of the joint resolution the Madrid Government,

regarding the act as "equivalent to an evident declaration of war," had

ordered its minister in Washington to withdraw, thereby breaking off

diplomatic relations between the two countries and ceasing all official

communication between their respective representatives. General Woodford

thereupon demanded his passports and quitted Madrid the same day.

Spain having thus denied the demand of the United States and initiated

that complete form of rupture of relations which attends a state of war,

the executive powers authorized by the resolution were at once used by

me to meet the enlarged contingency of actual war between sovereign

states. On April 22 I proclaimed a blockade of the north coast of Cuba,

including ports on said coast between Cardenas and Bahia Honda, and the

port of Cienfuegos, on the south coast of Cuba,[14] and on the 23d I

called for volunteers to execute the purpose of the resolution.[15] By

my message of April 25 the Congress was informed of the situation, and

I recommended formal declaration of the existence of a state of war

between the United States and Spain. [16] The Congress accordingly voted

on the same day the act approved April 25, 1898, declaring the existence

of such war from and including the 21st day of April,[17] and reenacted

the provision of the resolution of April 20 directing the President

to use all the armed forces of the nation to carry that act into

effect.[18] Due notification of the existence of war as aforesaid was

given April 25 by telegraph to all the governments with which the

United States maintain relations, in order that their neutrality

might be assured during the war. The various governments responded with

proclamations of neutrality, each after its own methods. It is not among

the least gratifying incidents of the struggle that the obligations of

neutrality were impartially discharged by all, often under delicate and

difficult circumstances.

In further fulfillment of international duty I issued, April 26, 1898, a

proclamation announcing the treatment proposed to be accorded to vessels

and their cargoes as to blockade, contraband, the exercise of the right

of search, and the immunity of neutral flags and neutral goods under

enemy's flag.[19] A similar proclamation was made by the Spanish

Government. In the conduct of hostilities the rules of the Declaration

of Paris, including abstention from resort to privateering, have

accordingly been observed by both belligerents, although neither was a

party to that declaration.

Our country thus, after an interval of half a century of peace with all

nations, found itself engaged in deadly conflict with a foreign enemy.

Every nerve was strained to meet the emergency. The response to the

initial call for 125,000 volunteers[20] was instant and complete, as was

also the result of the second call, of May 25, for 75,000 additional

volunteers.[21] The ranks of the Regular Army were increased to the

limits provided by the act of April 26, 1898.

The enlisted force of the Navy on the 15th day of August, when it

reached its maximum, numbered 24,123 men and apprentices. One hundred

and three vessels were added to the Navy by purchase, 1 was presented

to the Government, 1 leased, and the 4 vessels of the International

Navigation Company--the _St. Paul_, _St. Louis_, _New York_, and

_Paris_--were chartered. In addition to these the revenue cutters

and lighthouse tenders were turned over to the Navy Department and

became temporarily a part of the auxiliary Navy.

The maximum effective fighting force of the Navy during the war,

separated into classes, was as follows:

Four battle ships of the first class, 1 battle ship of the second

class, 2 armored cruisers, 6 coast-defense monitors, 1 armored ram,

12 protected cruisers, 3 unprotected cruisers, 18 gunboats, 1 dynamite

cruiser, 11 torpedo boats; vessels of the old Navy, including monitors,

14. Auxiliary Navy: 11 auxiliary cruisers, 28 converted yachts, 27

converted tugs, 19 converted colliers, 15 revenue cutters, 4 light-house

tenders, and 19 miscellaneous vessels.

Much alarm was felt along our entire Atlantic seaboard lest some attack

might be made by the enemy. Every precaution was taken to prevent

possible injury to our great cities lying along the coast. Temporary

garrisons were provided, drawn from the State militia; infantry and

light batteries were drawn from the volunteer force. About 12,000 troops

were thus employed. The coast signal service was established for

observing the approach of an enemy's ships to the coast of the United

States, and the Life-Saving and Light-House services cooperated, which

enabled the Navy Department to have all portions of the Atlantic coast,

from Maine to Texas, under observation.

The auxiliary Navy was created under the authority of Congress and was

officered and manned by the Naval Militia of the several States. This

organization patrolled the coast and performed the duty of a second line

of defense.

Under the direction of the Chief of Engineers submarine mines were

placed at the most exposed points. Before the outbreak of the war

permanent mining casemates and cable galleries had been constructed at

nearly all important harbors. Most of the torpedo material was not to be

found in the market, and had to be specially manufactured. Under date

of April 19 district officers were directed to take all preliminary

measures short of the actual attaching of the loaded mines to the

cables, and on April 22 telegraphic orders were issued to place the

loaded mines in position.

The aggregate number of mines placed was 1,535, at the principal harbors

from Maine to California. Preparations were also made for the planting

of mines at certain other harbors, but owing to the early destruction of

the Spanish fleet these mines were not placed.

The Signal Corps was promptly organized, and performed service of the

most difficult and important character. Its operations during the war

covered the electrical connection of all coast fortifications, the

establishment of telephonic and telegraphic facilities for the camps at

Manila, Santiago, and in Puerto Rico. There were constructed 300 miles

of line at ten great camps, thus facilitating military movements from

those points in a manner heretofore unknown in military administration.

Field telegraph lines were established and maintained under the enemy's

fire at Manila, and later the Manila-Hongkong cable was reopened.

In Puerto Rico cable communications were opened over a discontinued

route, and on land the headquarters of the commanding officer was kept

in telegraphic or telephonic communication with the division commanders

on four different lines of operations.

There was placed in Cuban waters a completely outfitted cable ship,

with war cables and cable gear, suitable both for the destruction of

communications belonging to the enemy and the establishment of our own.

Two ocean cables were destroyed under the enemy's batteries at Santiago.

The day previous to the landing of General Shafter's corps, at

Caimanera, within 20 miles of the landing place, cable communications

were established and a cable station opened giving direct communication

with the Government at Washington. This service was invaluable to the

Executive in directing the operations of the Army and Navy. With a total

force of over 1,300, the loss was by disease in camp and field, officers

and men included, only 5.

The national-defense fund of $50,000,000 was expended in large part

by the Army and Navy, and the objects for which it was used are fully

shown in the reports of the several Secretaries. It was a most timely

appropriation, enabling the Government to strengthen its defenses and

make preparations greatly needed in case of war.

This fund being inadequate to the requirements of equipment and for the

conduct of the war, the patriotism of the Congress provided the means in

the war-revenue act of June 13 by authorizing a 3 per cent popular loan

not to exceed $400,000,000 and by levying additional imposts and taxes.

Of the authorized loan $200,000,000 were offered and promptly taken, the

subscriptions so far exceeding the call as to cover it many times over,

while, preference being given to the smaller bids, no single allotment

exceeded $5,000. This was a most encouraging and significant result,

showing the vast resources of the nation and the determination of the

people to uphold their country's honor.

It is not within the province of this message to narrate the history of

the extraordinary war that followed the Spanish declaration of April 21,

but a brief recital of its more salient features is appropriate.

The first encounter of the war in point of date took place April 27,

when a detachment of the blockading squadron made a reconnoissance in

force at Matanzas, shelled the harbor forts, and demolished several new

works in construction.

The next engagement was destined to mark a memorable epoch in maritime

warfare. The Pacific fleet, under Commodore George Dewey, had lain for

some weeks at Hongkong. Upon the colonial proclamation of neutrality

being issued and the customary twenty-four hours' notice being given,

it repaired to Mirs Bay, near Hongkong, whence it proceeded to the

Philippine Islands under telegraphed orders to capture or destroy the

formidable Spanish fleet then assembled at Manila. At daybreak on the

1st of May the American force entered Manila Bay, and after a few

hours' engagement effected the total destruction of the Spanish fleet,

consisting of ten war ships and a transport, besides capturing the naval

station and forts at Cavite, thus annihilating the Spanish naval power

in the Pacific Ocean and completely controlling the bay of Manila, with

the ability to take the city at will. Not a life was lost on our ships,

the wounded only numbering seven, while not a vessel was materially

injured. For this gallant achievement the Congress, upon my

recommendation, fitly bestowed upon the actors preferment and

substantial reward.

The effect of this remarkable victory upon the spirit of our people and

upon the fortunes of the war was instant. A prestige of invincibility

thereby attached to our arms which continued throughout the struggle.

Reenforcements were hurried to Manila under the command of Major-General

Merritt and firmly established within sight of the capital, which lay

helpless before our guns.

On the 7th day of May the Government was advised officially of the

victory at Manila, and at once inquired of the commander of our fleet

what troops would be required. The information was received on the 15th

day of May, and the first army expedition sailed May 25 and arrived off

Manila June 30. Other expeditions soon followed, the total force

consisting of 641 officers and 15,058 enlisted men.

Only reluctance to cause needless loss of life and property prevented

the early storming and capture of the city, and therewith the absolute

military occupancy of the whole group. The insurgents meanwhile had

resumed the active hostilities suspended by the uncompleted truce of

December, 1897. Their forces invested Manila from the northern and

eastern sides, but were constrained by Admiral Dewey and General Merritt

from attempting an assault. It was fitting that whatever was to be done

in the way of decisive operations in that quarter should be accomplished

by the strong arm of the United States alone. Obeying the stern precept

of war which enjoins the overcoming of the adversary and the extinction

of his power wherever assailable as the speedy and sure means to win a

peace, divided victory was not permissible, for no partition of the

rights and responsibilities attending the enforcement of a just and

advantageous peace could be thought of.

Following the comprehensive scheme of general attack, powerful forces

were assembled at various points on our coast to invade Cuba and Puerto

Rico. Meanwhile naval demonstrations were made at several exposed

points. On May 11 the cruiser _Wilmington_ and torpedo boat

_Winslow_ were unsuccessful in an attempt to silence the batteries

at Cardenas, a gallant ensign, Worth Bagley, and four seamen falling.

These grievous fatalities were, strangely enough, among the very few

which occurred during our naval operations in this extraordinary

conflict.

Meanwhile the Spanish naval preparations had been pushed with great

vigor. A powerful squadron under Admiral Cervera, which had assembled at

the Cape Verde Islands before the outbreak of hostilities, had crossed

the ocean, and by its erratic movements in the Caribbean Sea delayed our

military plans while baffling the pursuit of our fleets. For a time

fears were felt lest the _Oregon_ and _Marietta_, then nearing

home after their long voyage from San Francisco of over 15,000 miles,

might be surprised by Admiral Cervera's fleet, but their fortunate

arrival dispelled these apprehensions and lent much-needed

reenforcement. Not until Admiral Cervera took refuge in the harbor of

Santiago de Cuba, about May 19, was it practicable to plan a systematic

naval and military attack upon the Antillean possessions of Spain.

Several demonstrations occurred on the coasts of Cuba and Puerto Rico in

preparation for the larger event. On May 13 the North Atlantic Squadron

shelled San Juan de Puerto Rico. On May 30 Commodore Schley's squadron

bombarded the forts guarding the mouth of Santiago Harbor. Neither

attack had any material result. It was evident that well-ordered land

operations were indispensable to achieve a decisive advantage.

The next act in the war thrilled not alone the hearts of our countrymen

but the world by its exceptional heroism. On the night of June 3

Lieutenant Hobson, aided by seven devoted volunteers, blocked the narrow

outlet from Santiago Harbor by sinking the collier _Merrimac_ in

the channel, under a fierce fire from the shore batteries, escaping with

their lives as by a miracle, but falling into the hands of the

Spaniards. It is a most gratifying incident of the war that the bravery

of this little band of heroes was cordially appreciated by the Spanish

admiral, who sent a flag of truce to notify Admiral Sampson of their

safety and to compliment them on their daring act. They were

subsequently exchanged July 7.

By June 7 the cutting of the last Cuban cable isolated the island.

Thereafter the invasion was vigorously prosecuted. On June 10, under a

heavy protecting fire, a landing of 600 marines from the _Oregon_,

_Marblehead_, and _Yankee_ was effected in Guantanamo Bay, where it had

been determined to establish a naval station.

This important and essential port was taken from the enemy, after severe

fighting, by the marines, who were the first organized force of the

United States to land in Cuba.

The position so won was held despite desperate attempts to dislodge

our forces. By June 16 additional forces were landed and strongly

intrenched. On June 22 the advance of the invading army under

Major-General Shafter landed at Daiquiri, about 15 miles east of

Santiago. This was accomplished under great difficulties, but with

marvelous dispatch. On June 23 the movement against Santiago was begun.

On the 24th the first serious engagement took place, in which the First

and Tenth Cavalry and the First United States Volunteer Cavalry, General

Young's brigade of General Wheeler's division, participated, losing

heavily. By nightfall, however, ground within 5 miles of Santiago was

won. The advantage was steadily increased. On July 1 a severe battle

took place, our forces gaining the outworks of Santiago; on the 2d El

Caney and San Juan were taken after a desperate charge, and the

investment of the city was completed. The Navy cooperated by shelling

the town and the coast forts.

On the day following this brilliant achievement of our land forces, the

3d of July, occurred the decisive naval combat of the war. The Spanish

fleet, attempting to leave the harbor, was met by the American squadron

under command of Commodore Sampson. In less than three hours all the

Spanish ships were destroyed, the two torpedo boats being sunk and the

_Maria Teresa_, _Almirante Oquendo_, _Vizcaya_, and _Cristóbal Colón_

driven ashore. The Spanish admiral and over 1,300 men were taken

prisoners. While the enemy's loss of life was deplorably large, some 600

perishing, on our side but one man was killed, on the _Brooklyn_, and

one man seriously wounded. Although our ships were repeatedly struck,

not one was seriously injured. Where all so conspicuously distinguished

themselves, from the commanders to the gunners and the unnamed heroes in

the boiler rooms, each and all contributing toward the achievement of

this astounding victory, for which neither ancient nor modern history

affords a parallel in the completeness of the event and the marvelous

disproportion of casualties, it would be invidious to single out any for

especial honor. Deserved promotion has rewarded the more conspicuous

actors. The nation's profoundest gratitude is due to all of these brave

men who by their skill and devotion in a few short hours crushed the sea

power of Spain and wrought a triumph whose decisiveness and far-reaching

consequences can scarcely be measured. Nor can we be unmindful of the

achievements of our builders, mechanics, and artisans for their skill in

the construction of our war ships.

With the catastrophe of Santiago Spain's effort upon the ocean virtually

ceased. A spasmodic effort toward the end of June to send her

Mediterranean fleet, under Admiral Camara, to relieve Manila was

abandoned, the expedition being recalled after it had passed through the

Suez Canal.

The capitulation of Santiago followed. The city was closely besieged by

land, while the entrance of our ships into the harbor cut off all relief

on that side. After a truce to allow of the removal of noncombatants

protracted negotiations continued from July 3 until July 15, when, under

menace of immediate assault, the preliminaries of surrender were agreed

upon. On the 17th General Shafter occupied the city. The capitulation

embraced the entire eastern end of Cuba. The number of Spanish soldiers

surrendering was 22,000, all of whom were subsequently conveyed to Spain

at the charge of the United States. The story of this successful

campaign is told in the report of the Secretary of War, which will be

laid before you. The individual valor of officers and soldiers was never

more strikingly shown than in the several engagements leading to the

surrender of Santiago, while the prompt movements and successive

victories won instant and universal applause. To those who gained this

complete triumph, which established the ascendency of the United States

upon land as the fight off Santiago had fixed our supremacy on the seas,

the earnest and lasting gratitude of the nation is unsparingly due. Nor

should we alone remember the gallantry of the living; the dead claim our

tears, and our losses by battle and disease must cloud any exultation at

the result and teach us to weigh the awful cost of war, however rightful

the cause or signal the victory.

With the fall of Santiago the occupation of Puerto Rico became the next

strategic necessity. General Miles had previously been assigned to

organize an expedition for that purpose. Fortunately he was already at

Santiago, where he had arrived on the 11th of July with reenforcements

for General Shafter's army.

With these troops, consisting of 3,415 infantry and artillery, two

companies of engineers, and one company of the Signal Corps, General

Miles left Guantanamo on July 21, having nine transports convoyed by the

fleet under Captain Higginson with the _Massachusetts_ (flagship), _Dixie_,

_Gloucester_, _Columbia_, and _Yale_, the two latter carrying troops.

The expedition landed at Guanica July 25, which port was entered with

little opposition. Here the fleet was joined by the _Annapolis_ and

the _Wasp_, while the _Puritan_ and _Amphitrite_ went to San Juan and

joined the _New Orleans_, which was engaged in blockading that port. The

Major-General Commanding was subsequently reenforced by General Schwan's

brigade of the Third Army Corps, by General Wilson with a part of his

division, and also by General Brooke with a part of his corps, numbering

in all 16,973 officers and men.

On July 27 he entered Ponce, one of the most important ports in the

island, from which he thereafter directed operations for the capture of

the island.

With the exception of encounters with the enemy at Guayama,

Hormigueros, Coarno, and Yauco and an attack on a force landed at Cape

San Juan, there was no serious resistance. The campaign was prosecuted

with great vigor, and by the 12th of August much of the island was in

our possession and the acquisition of the remainder was only a matter

of a short time. At most of the points in the island our troops were

enthusiastically welcomed. Protestations of loyalty to the flag and

gratitude for delivery from Spanish rule met our commanders at every

stage. As a potent influence toward peace the outcome of the Puerto

Rican expedition was of great consequence, and generous commendation

is due to those who participated in it.

The last scene of the war was enacted at Manila, its starting place. On

August 15, after a brief assault upon the works by the land forces, in

which the squadron assisted, the capital surrendered unconditionally.

The casualties were comparatively few. By this the conquest of the

Philippine Islands, virtually accomplished when the Spanish capacity for

resistance was destroyed by Admiral Dewey's victory of the 1st of May,

was formally sealed. To General Merritt, his officers and men, for their

uncomplaining and devoted service and for their gallantry in action, the

nation is sincerely grateful. Their long voyage was made with singular

success, and the soldierly conduct of the men, most of whom were without

previous experience in the military service, deserves unmeasured praise.

The total casualties in killed and wounded in the Army during the war

with Spain were: Officers killed, 23; enlisted men killed, 257; total,

280; officers wounded, 113; enlisted men wounded, 1,464; total, 1,577.

Of the Navy: Killed, 17; wounded, 67; died as result of wounds, 1;

invalided from service, 6; total, 91.

It will be observed that while our Navy was engaged in two great battles

and in numerous perilous undertakings in blockade and bombardment, and

more than 50,000 of our troops were transported to distant lands and

were engaged in assault and siege and battle and many skirmishes in

unfamiliar territory, we lost in both arms of the service a total of

1,668 killed and wounded; and in the entire campaign by land and sea we

did not lose a gun or a flag or a transport or a ship, and, with the

exception of the crew of the _Merrimac_, not a soldier or sailor

was taken prisoner.

On August 7, forty-six days from the date of the landing of General

Shafter's army in Cuba and twenty-one days from the surrender of

Santiago, the United States troops commenced embarkation for home, and

our entire force was returned to the United States as early as August

24. They were absent from the United States only two months.

It is fitting that I should bear testimony to the patriotism and

devotion of that large portion of our Army which, although eager to be

ordered to the post of greatest exposure, fortunately was not required

outside of the United States. They did their whole duty, and, like their

comrades at the front, have earned the gratitude of the nation. In like

manner, the officers and men of the Army and of the Navy who remained

in their departments and stations faithfully performing most important

duties connected with the war, and whose requests for assignment in the

field and at sea I was compelled to refuse because their services were

indispensable here, are entitled to the highest commendation. It is my

regret that there seems to be no provision for their suitable

recognition.

In this connection it is a pleasure for me to mention in terms of

cordial appreciation the timely and useful work of the American National

Red Cross, both in relief measures preparatory to the campaigns, in

sanitary assistance at several of the camps of assemblage, and later,

under the able and experienced leadership of the president of the

society, Miss Clara Barton, on the fields of battle and in the hospitals

at the front in Cuba. Working in conjunction with the governmental

authorities and under their sanction and approval, and with the

enthusiastic cooperation of many patriotic women and societies in the

various States, the Red Cross has fully maintained its already high

reputation for intense earnestness and ability to exercise the noble

purposes of its international organization, thus justifying the

confidence and support which it has received at the hands of the

American people. To the members and officers of this society and all who

aided them in their philanthropic work the sincere and lasting gratitude

of the soldiers and the public is due and is freely accorded.

In tracing these events we are constantly reminded of our obligations to

the Divine Master for His watchful care over us and His safe guidance,

for which the nation makes reverent acknowledgment and offers humble

prayer for the continuance of His favor.

The annihilation of Admiral Cervera's fleet, followed by the

capitulation of Santiago, having brought to the Spanish Government

a realizing sense of the hopelessness of continuing a struggle now

become wholly unequal, it made overtures of peace through the French

ambassador, who, with the assent of his Government, had acted as the

friendly representative of Spanish interests during the war. On the

26th of July M. Cambon presented a communication signed by the Duke of

Almodóvar, the Spanish minister of state, inviting the United States to

state the terms upon which it would be willing to make peace. On the

30th of July, by a communication addressed to the Duke of Almodóvar

and handed to M. Cambon, the terms of this Government were announced

substantially as in the protocol afterwards signed. On the 10th of

August the Spanish reply, dated August 7, was handed by M. Cambon to the

Secretary of State. It accepted unconditionally the terms imposed as to

Cuba, Puerto Rico, and an island of the Ladrones group, but appeared to

seek to introduce inadmissible reservations in regard to our demand as

to the Philippine Islands. Conceiving that discussion on this point

could neither be practical nor profitable, I directed that in order

to avoid misunderstanding the matter should be forthwith closed by

proposing the embodiment in a formal protocol of the terms upon which

the negotiations for peace were to be undertaken. The vague and

inexplicit suggestions of the Spanish note could not be accepted, the

only reply being to present as a virtual ultimatum a draft of protocol

embodying the precise terms tendered to Spain in our note of July 30,

with added stipulations of detail as to the appointment of commissioners

to arrange for the evacuation of the Spanish Antilles. On August 12

M. Cambon announced his receipt of full powers to sign the protocol

so submitted. Accordingly, on the afternoon of August 12, M. Cambon,

as the plenipotentiary of Spain, and the Secretary of State, as the

plenipotentiary of the United States, signed a protocol providing--

ARTICLE I. Spain will relinquish all claim of sovereignty over and title

to Cuba.

ART. II. Spain will cede to the United States the island of Puerto Rico

and other islands now under Spanish sovereignty in the West Indies, and

also an island in the Ladrones to be selected by the United States.

ART. III. The United States will occupy and hold the city, bay, and

harbor of Manila pending the conclusion of a treaty of peace which shall

determine the control, disposition, and government of the Philippines.

The fourth article provided for the appointment of joint commissions on

the part of the United States and Spain, to meet in Havana and San Juan,

respectively, for the purpose of arranging and carrying out the details

of the stipulated evacuation of Cuba, Puerto Rico, and other Spanish

islands in the West Indies.

The fifth article provided for the appointment of not more than five

commissioners on each side, to meet at Paris not later than October 1

and to proceed to the negotiation and conclusion of a treaty of peace,

subject to ratification according to the respective constitutional forms

of the two countries.

The sixth and last article provided that upon the signature of the

protocol hostilities between the two countries should be suspended and

that notice to that effect should be given as soon as possible by each

Government to the commanders of its military and naval forces.

Immediately upon the conclusion of the protocol I issued a proclamation,

of August 12,[22] suspending hostilities on the part of the United

States. The necessary orders to that end were at once given by

telegraph. The blockade of the ports of Cuba and San Juan de Puerto Rico

was in like manner raised. On the 18th of August the muster out of

100,000 volunteers, or as near that number as was found to be

practicable, was ordered.

On the 1st of December 101,165 officers and men had been mustered out

and discharged from the service, and 9,002 more will be mustered out

by the 10th of this month; also a corresponding number of general and

general staff officers have been honorably discharged the service.

The military commissions to superintend the evacuation of Cuba, Puerto

Rico, and the adjacent islands were forthwith appointed--for Cuba,

Major-General James F. Wade, Rear-Admiral William T. Sampson,

Major-General Matthew C. Butler; for Puerto Rico, Major-General John R.

Brooke, Rear-Admiral Winfield S. Schley, Brigadier-General William W.

Gordon--who soon afterwards met the Spanish commissioners at Havana and

San Juan, respectively. The Puerto Rican Joint Commission speedily

accomplished its task, and by the 18th of October the evacuation of the

island was completed. The United States flag was raised over the island

at noon on that day. The administration of its affairs has been

provisionally intrusted to a military governor until the Congress shall

otherwise provide. The Cuban Joint Commission has not yet terminated its

labors. Owing to the difficulties in the way of removing the large

numbers of Spanish troops still in Cuba, the evacuation can not be

completed before the 1st of January next.

Pursuant to the fifth article of the protocol, I appointed William R.

Day, lately Secretary of State; Cushman K. Davis, William P. Frye, and

George Gray, Senators of the United States, and Whitelaw Reid to be the

peace commissioners on the part of the United States. Proceeding in due

season to Paris, they there met on the 1st of October five commissioners

similarly appointed on the part of Spain. Their negotiations have made

hopeful progress, so that I trust soon to be able to lay a definitive

treaty of peace before the Senate, with a review of the steps leading

to its signature.

I do not discuss at this time the government or the future of the new

possessions which will come to us as the result of the war with Spain.

Such discussion will be appropriate after the treaty of peace shall

be ratified. In the meantime and until the Congress has legislated

otherwise it will be my duty to continue the military governments which

have existed since our occupation and give to the people security in

life and property and encouragement under a just and beneficent rule.

As soon as we are in possession of Cuba and have pacified the island

it will be necessary to give aid and direction to its people to form

a government for themselves. This should be undertaken at the earliest

moment consistent with safety and assured success. It is important that

our relations with this people shall be of the most friendly character

and our commercial relations close and reciprocal. It should be our

duty to assist in every proper way to build up the waste places of the

island, encourage the industry of the people, and assist them to form a

government which shall be free and independent, thus realizing the best

aspirations of the Cuban people.

Spanish rule must be replaced by a just, benevolent, and humane

government, created by the people of Cuba, capable of performing all

international obligations, and which shall encourage thrift, industry,

and prosperity and promote peace and good will among all of the

inhabitants, whatever may have been their relations in the past. Neither

revenge nor passion should have a place in the new government. Until

there is complete tranquillity in the island and a stable government

inaugurated military occupation will be continued.

With the one exception of the rupture with Spain, the intercourse of

the United States with the great family of nations has been marked with

cordiality, and the close of the eventful year finds most of the issues

that necessarily arise in the complex relations of sovereign states

adjusted or presenting no serious obstacle to a just and honorable

solution by amicable agreement.

A long unsettled dispute as to the extended boundary between the

Argentine Republic and Chile, stretching along the Andean crests from

the southern border of the Atacama Desert to Magellan Straits, nearly a

third of the length of the South American continent, assumed an acute

stage in the early part of the year, and afforded to this Government

occasion to express the hope that the resort to arbitration, already

contemplated by existing conventions between the parties, might prevail

despite the grave difficulties arising in its application. I am happy to

say that arrangements to this end have been perfected, the questions of

fact upon which the respective commissioners were unable to agree being

in course of reference to Her Britannic Majesty for determination.

A residual difference touching the northern boundary line across the

Atacama Desert, for which existing treaties provided no adequate

adjustment, bids fair to be settled in like manner by a joint

commission, upon which the United States minister at Buenos Ayres has

been invited to serve as umpire in the last resort.

I have found occasion to approach the Argentine Government with a view

to removing differences of rate charges imposed upon the cables of an

American corporation in the transmission between Buenos Ayres and the

cities of Uruguay and Brazil of through messages passing from and

to the United States. Although the matter is complicated by exclusive

concessions by Uruguay and Brazil to foreign companies, there is strong

hope that a good understanding will be reached and that the important

channels of commercial communication between the United States and the

Atlantic cities of South America may be freed from an almost prohibitory

discrimination.

In this relation I may be permitted to express my sense of the fitness

of an international agreement whereby the interchange of messages over

connecting cables may be regulated on a fair basis of uniformity.

The world has seen the postal system developed from a congeries of

independent and exclusive services into a well-ordered union, of which

all countries enjoy the manifold benefits. It would be strange were the

nations not in time brought to realize that modern civilization, which

owes so much of its progress to the annihilation of space by the

electric force, demands that this all-important means of communication

be a heritage of all peoples, to be administered and regulated in their

common behoof. A step in this direction was taken when the international

convention of 1884 for the protection of submarine cables was signed,

and the day is, I trust, not far distant when this medium for the

transmission of thought from land to land may be brought within the

domain of international concert as completely as is the material

carriage of commerce and correspondence upon the face of the waters

that divide them.

The claim of Thomas Jefferson Page against Argentina, which has been

pending many years, has been adjusted. The sum awarded by the Congress

of Argentina was $4,242.35.

The sympathy of the American people has justly been offered to the ruler

and the people of Austria-Hungary by reason of the affliction that has

lately befallen them in the assassination of the Empress-Queen of that

historic realm.

On the 10th of September, 1897, a conflict took place at Lattimer, Pa.,

between a body of striking miners and the sheriff of Luzerne County and

his deputies, in which 22 miners were killed and 44 wounded, of whom

10 of the killed and 12 of the wounded were Austrian and Hungarian

subjects. This deplorable event naturally aroused the solicitude of the

Austro-Hungarian Government, which, on the assumption that the killing

and wounding involved the unjustifiable misuse of authority, claimed

reparation for the sufferers. Apart from the searching investigation and

peremptory action of the authorities of Pennsylvania, the Federal

Executive took appropriate steps to learn the merits of the case, in

order to be in a position to meet the urgent complaint of a friendly

power. The sheriff and his deputies, having been indicted for murder,

were tried, and acquitted, after protracted proceedings and the hearing

of hundreds of witnesses, on the ground that the killing was in the line

of their official duty to uphold law and preserve public order in the

State. A representative of the Department of Justice attended the trial

and reported its course fully. With all the facts in its possession,

this Government expects to reach a harmonious understanding on the

subject with that of Austria-Hungary, notwithstanding the renewed claim

of the latter, after learning the result of the trial, for indemnity for

its injured subjects.

Despite the brief time allotted for preparation, the exhibits of this

country at the Universal Exposition at Brussels in 1897 enjoyed the

singular distinction of a larger proportion of awards, having regard

to the number and classes of articles entered than those of other

countries. The worth of such a result in making known our national

capacity to supply the world's markets is obvious.

Exhibitions of this international character are becoming more frequent

as the exchanges of commercial countries grow more intimate and varied.

Hardly a year passes that this Government is not invited to national

participation at some important foreign center, but often on too short

notice to permit of recourse to Congress for the power and means to do

so. My predecessors have suggested the advisability of providing by

a general enactment and a standing appropriation for accepting such

invitations and for representation of this country by a commission.

This plan has my cordial approval.

I trust that the Belgian restrictions on the importation of cattle from

the United States, originally adopted as a sanitary precaution, will at

an early day be relaxed as to their present features of hardship and

discrimination, so as to admit live cattle under due regulation of their

slaughter after landing. I am hopeful, too, of favorable change in

the Belgian treatment of our preserved and salted meats. The growth

of direct trade between the two countries, not alone for Belgian

consumption and Belgian products, but by way of transit from and to

other continental states, has been both encouraging and beneficial. No

effort will be spared to enlarge its advantages by seeking the removal

of needless impediments and by arrangements for increased commercial

exchanges.

The year's events in Central America deserve more than passing mention.

A menacing rupture between Costa Rica and Nicaragua was happily composed

by the signature of a convention between the parties, with the

concurrence of the Guatemalan representative as a mediator, the act

being negotiated and signed on board the United States steamer

_Alert_, then lying in Central American waters. It is believed that

the good offices of our envoy and of the commander of that vessel

contributed toward this gratifying outcome.

In my last annual message the situation was presented with respect to

the diplomatic representation of this Government in Central America

created by the association of Nicaragua, Honduras, and Salvador under

the title of the Greater Republic of Central America, and the delegation

of their international functions to the Diet thereof. While the

representative character of the Diet was recognized by my predecessor

and has been confirmed during my Administration by receiving its

accredited envoy and granting exequaturs to consuls commissioned under

its authority, that recognition was qualified by the distinct

understanding that the responsibility of each of the component sovereign

Republics toward the United States remained wholly unaffected.

This proviso was needful inasmuch as the compact of the three

Republics was at the outset an association whereby certain

representative functions were delegated to a tripartite commission

rather than a federation possessing centralized powers of government

and administration. In this view of their relation and of the

relation of the United States to the several Republics, a change

in the representation of this country in Central America was neither

recommended by the Executive nor initiated by Congress, thus leaving one

of our envoys accredited, as heretofore, separately to two States of the

Greater Republic, Nicaragua and Salvador, and to a third State, Costa

Rica, which was not a party to the compact, while our other envoy was

similarly accredited to a union State, Honduras, and a nonunion State,

Guatemala. The result has been that the one has presented credentials

only to the President of Costa Rica, the other having been received only

by the Government of Guatemala.

Subsequently the three associated Republics entered into negotiations

for taking the steps forecast in the original compact. A convention of

their delegates framed for them a federal constitution under the name of

the United States of Central America, and provided for a central federal

government and legislature. Upon ratification by the constituent States,

the 1st of November last was fixed for the new system to go into

operation. Within a few weeks thereafter the plan was severely tested

by revolutionary movements arising, with a consequent demand for unity

of action on the part of the military power of the federal States to

suppress them. Under this strain the new union seems to have been

weakened through the withdrawal of its more important members. This

Government was not officially advised of the installation of the

federation and has maintained an attitude of friendly expectancy, while

in no wise relinquishing the position held from the outset that the

responsibilities of the several States toward us remained unaltered by

their tentative relations among themselves.

The Nicaragua Canal Commission, under the chairmanship of Rear-Admiral

John G. Walker, appointed July 24, 1897, under the authority of a

provision in the sundry civil act of June 4 of that year, has nearly

completed its labors, and the results of its exhaustive inquiry into the

proper route, the feasibility, and the cost of construction of an

interoceanic canal by a Nicaraguan route will be laid before you. In the

performance of its task the commission received all possible courtesy

and assistance from the Governments of Nicaragua and Costa Rica, which

thus testified their appreciation of the importance of giving a speedy

and practical outcome to the great project that has for so many years

engrossed the attention of the respective countries.

As the scope of the recent inquiry embraced the whole subject, with the

aim of making plans and surveys for a canal by the most convenient

route, it necessarily included a review of the results of previous

surveys and plans, and in particular those adopted by the Maritime Canal

Company under its existing concessions from Nicaragua and Costa Rica, so

that to this extent those grants necessarily hold as essential a part

in the deliberations and conclusions of the Canal Commission as they

have held and must needs hold in the discussion of the matter by the

Congress. Under these circumstances and in view of overtures made to the

Governments of Nicaragua and Costa Rica by other parties for a new canal

concession predicated on the assumed approaching lapse of the contracts

of the Maritime Canal Company with those States, I have not hesitated

to express my conviction that considerations of expediency and

international policy as between the several governments interested in

the construction and control of an interoceanic canal by this route

require the maintenance of the _status quo_ until the Canal

Commission shall have reported and the United States Congress shall have

had the opportunity to pass finally upon the whole matter during the

present session, without prejudice by reason of any change in the

existing conditions.

Nevertheless, it appears that the Government of Nicaragua, as one

of its last sovereign acts before merging its powers in those of the

newly formed United States of Central America, has granted an optional

concession to another association, to become effective on the expiration

of the present grant. It does not appear what surveys have been made

or what route is proposed under this contingent grant, so that an

examination of the feasibility of its plans is necessarily not embraced

in the report of the Canal Commission. All these circumstances suggest

the urgency of some definite action by the Congress at this session

if the labors of the past are to be utilized and the linking of the

Atlantic and Pacific oceans by a practical waterway is to be realized.

That the construction of such a maritime highway is now more than ever

indispensable to that intimate and ready intercommunication between our

eastern and western seaboards demanded by the annexation of the Hawaiian

Islands and the prospective expansion of our influence and commerce in

the Pacific, and that our national policy now more imperatively than

ever calls for its control by this Government, are propositions which

I doubt not the Congress will duly appreciate and wisely act upon.

A convention providing for the revival of the late United States and

Chilean Claims Commission and the consideration of claims which were

duly presented to the late commission, but not considered because of the

expiration of the time limited for the duration of the commission, was

signed May 24, 1897, and has remained unacted upon by the Senate. The

term therein fixed for effecting the exchange of ratifications having

elapsed, the convention falls unless the time be extended by amendment,

which I am endeavoring to bring about, with the friendly concurrence of

the Chilean Government.

The United States has not been an indifferent spectator of the

extraordinary events transpiring in the Chinese Empire, whereby portions

of its maritime provinces are passing under the control of various

European powers; but the prospect that the vast commerce which the

energy of our citizens and the necessity of our staple productions for

Chinese uses has built up in those regions may not be prejudiced through

any exclusive treatment by the new occupants has obviated the need of

our country becoming an actor in the scene. Our position among nations,

having a large Pacific coast and a constantly expanding direct trade

with the farther Orient, gives us the equitable claim to consideration

and friendly treatment in this regard, and it will be my aim to subserve

our large interests in that quarter by all means appropriate to the

constant policy of our Government. The territories of Kiao-chow, of

Wei-hai-wei, and of Port Arthur and Talienwan, leased to Germany,

Great Britain, and Russia, respectively, for terms of years, will,

it is announced, be open to international commerce during such alien

occupation; and if no discriminating treatment of American citizens and

their trade be found to exist or be hereafter developed, the desire of

this Government would appear to be realized.

In this relation, as showing the volume and value of our exchanges with

China and the peculiarly favorable conditions which exist for their

expansion in the normal course of trade, I refer to the communication

addressed to the Speaker of the House of Representatives by the

Secretary of the Treasury on the 14th of last June, with its

accompanying letter of the Secretary of State, recommending an

appropriation for a commission to study the commercial and industrial

conditions in the Chinese Empire and report as to the opportunities

for and obstacles to the enlargement of markets in China for the

raw products and manufactures of the United States. Action was not

taken thereon during the late session. I cordially urge that the

recommendation receive at your hands the consideration which its

importance and timeliness merit.

Meanwhile there may be just ground for disquietude in view of the unrest

and revival of the old sentiment of opposition and prejudice to alien

people which pervades certain of the Chinese provinces. As in the case

of the attacks upon our citizens in Szechuen and at Kutien in 1895, the

United States minister has been instructed to secure the fullest measure

of protection, both local and imperial, for any menaced American

interests, and to demand, in case of lawless injury to person or

property, instant reparation appropriate to the case. War ships have

been stationed at Tientsin for more ready observation of the disorders

which have invaded even the Chinese capital, so as to be in a position

to act should need arise, while a guard of marines has been sent to

Peking to afford the minister the same measure of authoritative

protection as the representatives of other nations have been constrained

to employ.

Following close upon the rendition of the award of my predecessor as

arbitrator of the claim of the Italian subject Cerruti against the

Republic of Colombia, differences arose between the parties to the

arbitration in regard to the scope and extension of the award, of which

certain articles were contested by Colombia, while Italy claimed their

literal fulfillment. The award having been made by the President of the

United States, as an act of friendly consideration and with the sole

view to an impartial composition of the matter in dispute, I could

not but feel deep concern at such a miscarriage, and while unable to

accept the Colombian theory that I, in my official capacity, possessed

continuing functions as arbitrator, with power to interpret or revise

the terms of the award, my best efforts were lent to bring the parties

to a harmonious agreement as to the execution of its provisions.

A naval demonstration by Italy resulted in an engagement to pay

the liabilities claimed upon their ascertainment; but this apparent

disposition of the controversy was followed by a rupture of diplomatic

intercourse between Colombia and Italy, which still continues, although,

fortunately, without acute symptoms having supervened. Notwithstanding

this, efforts are reported to be continuing for the ascertainment of

Colombia's contingent liability on account of Cerruti's debts under the

fifth article of the award.

A claim of an American citizen against the Dominican Republic for

a public bridge over the Ozama River, which has been in diplomatic

controversy for several years, has been settled by expert arbitration

and an award in favor of the claimant amounting to about $90,000. It,

however, remains unpaid, despite urgent demands for its settlement

according to the terms of the compact.

There is now every prospect that the participation of the United States

in the Universal Exposition to be held in Paris in 1900 will be on a

scale commensurate with the advanced position held by our products and

industries in the world's chief marts.

The preliminary report of Mr. Moses P. Handy, who, under the act

approved July 19, 1897, was appointed special commissioner with a view

to securing all attainable information necessary to a full and complete

understanding by Congress in regard to the participation of this

Government in the Paris Exposition, was laid before you by my message

of December 6, 1897, and showed the large opportunities opened to make

known our national progress in arts, science, and manufactures, as

well as the urgent need of immediate and adequate provision to enable

due advantage thereof to be taken. Mr. Handy's death soon afterwards

rendered it necessary for another to take up and complete his unfinished

work, and on January 11 last Mr. Thomas W. Cridler, Third Assistant

Secretary of State, was designated to fulfill that task. His report was

laid before you by my message of June 14, 1898, with the gratifying

result of awakening renewed interest in the projected display. By a

provision in the sundry civil appropriation act of July 1, 1898, a sum

not to exceed $650,000 was allotted for the organization of a commission

to care for the proper preparation and installation of American exhibits

and for the display of suitable exhibits by the several Executive

Departments, particularly by the Department of Agriculture, the Fish

Commission, and the Smithsonian Institution, in representation of the

Government of the United States.

Pursuant to that enactment I appointed Mr. Ferdinand W. Peck, of

Chicago, commissioner-general, with an assistant commissioner-general

and a secretary. Mr. Peck at once proceeded to Paris, where his success

in enlarging the scope and variety of the United States exhibit has

been most gratifying. Notwithstanding the comparatively limited area

of the exposition site--less than one-half that of the World's Fair at

Chicago--the space assigned to the United States has been increased from

the absolute allotment of 157,403 square feet reported by Mr. Handy to

some 202,000 square feet, with corresponding augmentation of the field

for a truly characteristic representation of the various important

branches of our country's development. Mr. Peck's report will be laid

before you. In my judgment its recommendations will call for your early

consideration, especially as regards an increase of the appropriation to

at least one million dollars in all, so that not only may the assigned

space be fully taken up by the best possible exhibits in every class,

but the preparation and installation be on so perfect a scale as to

rank among the first in that unparalleled competition of artistic and

inventive production, and thus counterbalance the disadvantage with

which we start as compared with other countries whose appropriations are

on a more generous scale and whose preparations are in a state of much

greater forwardness than our own.

Where our artisans have the admitted capacity to excel, where our

inventive genius has initiated many of the grandest discoveries of these

later days of the century, and where the native resources of our land

are as limitless as they are valuable to supply the world's needs, it is

our province, as it should be our earnest care, to lead in the march of

human progress, and not rest content with any secondary place. Moreover,

if this be due to ourselves, it is no less due to the great French

nation whose guests we become, and which has in so many ways testified

its wish and hope that our participation shall befit the place the two

peoples have won in the field of universal development.

The commercial arrangement made with France on the 28th of May, 1898,

under the provisions of section 3 of the tariff act of 1897, went into

effect on the 1st day of June following. It has relieved a portion of

our export trade from serious embarrassment. Further negotiations

are now pending under section 4 of the same act with a view to the

increase of trade between the two countries to their mutual advantage.

Negotiations with other governments, in part interrupted by the war with

Spain, are in progress under both sections of the tariff act. I hope to

be able to announce some of the results of these negotiations during the

present session of Congress.

Negotiations to the same end with Germany have been set on foot.

Meanwhile no effort has been relaxed to convince the Imperial Government

of the thoroughness of our inspection of pork products for exportation,

and it is trusted that the efficient administration of this measure by

the Department of Agriculture will be recognized as a guaranty of the

healthfulness of the food staples we send abroad to countries where

their use is large and necessary.

I transmitted to the Senate on the 10th of February last information

touching the prohibition against the importation of fresh fruits from

this country, which had then recently been decreed by Germany on the

ground of danger of disseminating the San José scale insect. This

precautionary measure was justified by Germany on the score of the

drastic steps taken in several States of the Union against the spread of

the pest, the elaborate reports of the Department of Agriculture being

put in evidence to show the danger to German fruit-growing interests

should the scale obtain a lodgment in that country. Temporary relief was

afforded in the case of large consignments of fruit then on the way by

inspection and admission when found noninfected. Later the prohibition

was extended to dried fruits of every kind, but was relaxed so as to

apply only to unpeeled fruit and fruit waste. As was to be expected, the

alarm reached to other countries, and Switzerland has adopted a similar

inhibition. Efforts are in progress to induce the German and Swiss

Governments to relax the prohibition in favor of dried fruits shown to

have been cured under circumstances rendering the existence of animal

life impossible.

Our relations with Great Britain have continued on the most friendly

footing. Assenting to our request, the protection of Americans and their

interests in Spanish jurisdiction was assumed by the diplomatic and

consular representatives of Great Britain, who fulfilled their delicate

and arduous trust with tact and zeal, eliciting high commendation.

I may be allowed to make fitting allusion to the instance of Mr. Ramsden,

Her Majesty's consul at Santiago de Cuba, whose untimely death after

distinguished service and untiring effort during the siege of that city

was sincerely lamented.

In the early part of April last, pursuant to a request made at the

instance of the Secretary of State by the British ambassador at this

capital, the Canadian government granted facilities for the passage of

four United States revenue cutters from the Great Lakes to the Atlantic

coast by way of the Canadian canals and the St. Lawrence River. The

vessels had reached Lake Ontario and were there awaiting the opening of

navigation when war was declared between the United States and Spain.

Her Majesty's Government thereupon, by a communication of the latter

part of April, stated that the permission granted before the outbreak of

hostilities would not be withdrawn provided the United States Government

gave assurance that the vessels in question would proceed direct to

a United States port without engaging in any hostile operation.

This Government promptly agreed to the stipulated condition, it being

understood that the vessels would not be prohibited from resisting any

hostile attack.

It will give me especial satisfaction if I shall be authorized to

communicate to you a favorable conclusion of the pending negotiations

with Great Britain in respect to the Dominion of Canada. It is the

earnest wish of this Government to remove all sources of discord and

irritation in our relations with the neighboring Dominion. The trade

between the two countries is constantly increasing, and it is important

to both countries that all reasonable facilities should be granted for

its development.

The Government of Greece strongly urges the onerousness of the duty here

imposed upon the currants of that country, amounting to 100 per cent or

more of their market value. This fruit is stated to be exclusively a

Greek product, not coming into competition with any domestic product.

The question of reciprocal commercial relations with Greece, including

the restoration of currants to the free list, is under consideration.

The long-standing claim of Bernard Campbell for damages for injuries

sustained from a violent assault committed against him by military

authorities in the island of Haiti has been settled by the agreement of

that Republic to pay him $10,000 in American gold. Of this sum $5,000

has already been paid. It is hoped that other pending claims of American

citizens against that Republic may be amicably adjusted.

Pending the consideration by the Senate of the treaty signed June 16,

1897, by the plenipotentiaries of the United States and of the Republic

of Hawaii, providing for the annexation of the islands, a joint

resolution to accomplish the same purpose by accepting the offered

cession and incorporating the ceded territory into the Union was adopted

by the Congress and approved July 7, 1898. I thereupon directed the

United States steamship _Philadelphia_ to convey Rear-Admiral

Miller to Honolulu, and intrusted to his hands this important

legislative act, to be delivered to the President of the Republic of

Hawaii, with whom the Admiral and the United States minister were

authorized to make appropriate arrangements for transferring the

sovereignty of the islands to the United States. This was simply but

impressively accomplished on the 12th of August last by the delivery of

a certified copy of the resolution to President Dole, who thereupon

yielded up to the representative of the Government of the United States

the sovereignty and public property of the Hawaiian Islands.

Pursuant to the terms of the joint resolution and in exercise of

the authority thereby conferred upon me, I directed that the civil,

judicial, and military powers theretofore exercised by the officers of

the Government of the Republic of Hawaii should continue to be exercised

by those officers until Congress shall provide a government for the

incorporated territory, subject to my power to remove such officers and

to fill vacancies. The President, officers, and troops of the Republic

thereupon took the oath of allegiance to the United States, thus

providing for the uninterrupted continuance of all the administrative

and municipal functions of the annexed territory until Congress shall

otherwise enact.

Following the further provision of the joint resolution, I appointed the

Hons. Shelby M. Cullom, of Illinois, John T. Morgan, of Alabama, Robert

R. Hitt, of Illinois, Sanford B. Dole, of Hawaii, and Walter F. Frear,

of Hawaii, as commissioners to confer and recommend to Congress such

legislation concerning the Hawaiian Islands as they should deem

necessary or proper. The commissioners having fulfilled the mission

confided to them, their report will be laid before you at an early day.

It is believed that their recommendations will have the earnest

consideration due to the magnitude of the responsibility resting upon

you to give such shape to the relationship of those mid-Pacific lands to

our home Union as will benefit both in the highest degree, realizing the

aspirations of the community that has cast its lot with us and elected

to share our political heritage, while at the same time justifying the

foresight of those who for three-quarters of a century have looked to

the assimilation of Hawaii as a natural and inevitable consummation, in

harmony with our needs and in fulfillment of our cherished traditions.

The questions heretofore pending between Hawaii and Japan growing out

of the alleged mistreatment of Japanese treaty immigrants were, I am

pleased to say, adjusted before the act of transfer by the payment of

a reasonable indemnity to the Government of Japan.

Under the provisions of the joint resolution, the existing customs

relations of the Hawaiian Islands with the United States and with other

countries remain unchanged until legislation shall otherwise provide.

The consuls of Hawaii here and in foreign countries continue to fulfill

their commercial agencies, while the United States consulate at Honolulu

is maintained for all appropriate services pertaining to trade and the

revenue. It would be desirable that all foreign consuls in the Hawaiian

Islands should receive new exequaturs from this Government.

The attention of Congress is called to the fact that, our consular

offices having ceased to exist in Hawaii and being about to cease in

other countries coming under the sovereignty of the United States, the

provisions for the relief and transportation of destitute American

seamen in these countries under our consular regulations will in

consequence terminate. It is proper, therefore, that new legislation

should be enacted upon this subject in order to meet the changed

conditions.

The interpretation of certain provisions of the extradition convention

of December 11, 1861, has been at various times the occasion of

controversy with the Government of Mexico. An acute difference arose in

the case of the Mexican demand for the delivery of Jesús Guerra, who,

having led a marauding expedition near the border with the proclaimed

purpose of initiating an insurrection against President Diaz, escaped

into Texas. Extradition was refused on the ground that the alleged

offense was political in its character, and therefore came within the

treaty proviso of nonsurrender. The Mexican contention was that the

exception only related to purely political offenses, and that as

Guerra's acts were admixed with the common crime of murder, arson,

kidnaping, and robbery, the option of nondelivery became void, a

position which this Government was unable to admit in view of the

received international doctrine and practice in the matter. The Mexican

Government, in view of this, gave notice January 24, 1898, of the

termination of the convention, to take effect twelve months from that

date, at the same time inviting the conclusion of a new convention,

toward which negotiations are on foot.

In this relation I may refer to the necessity of some amendment of

our existing extradition statute. It is a common stipulation of such

treaties that neither party shall be bound to give up its own citizens,

with the added proviso in one of our treaties, that with Japan, that it

may surrender if it see fit. It is held in this country by an almost

uniform course of decisions that where a treaty negatives the obligation

to surrender the President is not invested with legal authority to act.

The conferment of such authority would be in the line of that sound

morality which shrinks from affording secure asylum to the author of a

heinous crime. Again, statutory provision might well be made for what is

styled extradition by way of transit, whereby a fugitive surrendered by

one foreign government to another may be conveyed across the territory

of the United States to the jurisdiction of the demanding state.

A recommendation in this behalf made in the President's message of

1886[23] was not acted upon. The matter is presented for your

consideration.

The problem of the Mexican free zone has been often discussed with

regard to its inconvenience as a provocative of smuggling into the

United States along an extensive and thinly guarded land border.

The effort made by the joint resolution of March 1, 1895, to remedy the

abuse charged by suspending the privilege of free transportation in

bond across the territory of the United States to Mexico failed of good

result, as is stated in Report No. 702 of the House of Representatives,

submitted in the last session, March 11, 1898. As the question is one to

be conveniently met by wise concurrent legislation of the two countries

looking to the protection of the revenues by harmonious measures

operating equally on either side of the boundary, rather than by

conventional arrangements, I suggest that Congress consider the

advisability of authorizing and inviting a conference of representatives

of the Treasury Departments of the United States and Mexico to consider

the subject in all its complex bearings, and make report with pertinent

recommendations to the respective Governments for the information and

consideration of their Congresses.

The Mexican Water Boundary Commission has adjusted all matters

submitted to it to the satisfaction of both Governments save in three

important cases--that of the "Chamizal" at El Paso, Tex., where the two

commissioners failed to agree, and wherein, for this case only, this

Government has proposed to Mexico the addition of a third member; the

proposed elimination of what are known as "Bancos," small isolated

islands formed by the cutting off of bends in the Rio Grande, from

the operation of the treaties of 1884 and 1889, recommended by the

commissioners and approved by this Government, but still under

consideration by Mexico; and the subject of the "Equitable distribution

of the waters of the Rio Grande," for which the commissioners

recommended an international dam and reservoir, approved by Mexico, but

still under consideration by this Government. Pending these questions

it is necessary to extend the life of the commission, which expires

December 23 next.

The coronation of the young Queen of the Netherlands was made the

occasion of fitting congratulations.

The claim of Victor H. McCord against Peru, which for a number of

years has been pressed by this Government and has on several occasions

attracted the attention of the Congress, has been satisfactorily

adjusted. A protocol was signed May 17, 1898, whereby, the fact of

liability being admitted, the question of the amount to be awarded was

submitted to the chief justice of Canada as sole arbitrator. His award

sets the indemnity due the claimant at $40,000.

The Government of Peru has given the prescribed notification of its

intention to abrogate the treaty of friendship, commerce, and navigation

concluded with this country August 31, 1887. As that treaty contains

many important provisions necessary to the maintenance of commerce

and good relations, which could with difficulty be replaced by the

negotiation of renewed provisions within the brief twelve months

intervening before the treaty terminates, I have invited suggestions by

Peru as to the particular provisions it is desired to annul, in the hope

of reaching an arrangement whereby the remaining articles may be

provisionally saved.

His Majesty the Czar having announced his purpose to raise the

Imperial Russian mission at this capital to the rank of an embassy,

I responded, under the authority conferred by the act of March 3,

1893, by commissioning and accrediting the actual representative

at St. Petersburg in the capacity of ambassador extraordinary and

plenipotentiary. The Russian ambassador to this country has since

presented his credentials.

The proposal of the Czar for a general reduction of the vast military

establishments that weigh so heavily upon many peoples in time of peace

was communicated to this Government with an earnest invitation to be

represented in the conference which it is contemplated to assemble with

a view to discussing the means of accomplishing so desirable a result.

His Majesty was at once informed of the cordial sympathy of this

Government with the principle involved in his exalted proposal and of

the readiness of the United States to take part in the conference.

The active military force of the United States, as measured by our

population, territorial area, and taxable wealth, is, and under any

conceivable prospective conditions must continue to be, in time of peace

so conspicuously less than that of the armed powers to whom the Czar's

appeal is especially addressed that the question can have for us no

practical importance save as marking an auspicious step toward the

betterment of the condition of the modern peoples and the cultivation

of peace and good will among them; but in this view it behooves us as

a nation to lend countenance and aid to the beneficent project.

The claims of owners of American sealing vessels for seizure by Russian

cruisers in Bering Sea are being pressed to a settlement. The equities

of the cases justify the expectation that a measure of reparation will

eventually be accorded in harmony with precedent and in the light of the

proven facts.

The recommendation made in my special message of April 27 last is

renewed, that appropriation be made to reimburse the master and owners

of the Russian bark _Hans_ for wrongful arrest of the master and

detention of the vessel in February, 1896, by officers of the United

States district court for the southern district of Mississippi. The

papers accompanying my said message make out a most meritorious claim

and justify the urgency with which it has been presented by the

Government of Russia.

Malietoa Laupepa, King of Samoa, died on August 22 last. According to

Article I of the general act of Berlin, "his successor shall be duly

elected according to the laws and customs of Samoa."

Arrangements having been agreed upon between the signatories of the

general act for the return of Mataafa and the other exiled Samoan

chiefs, they were brought from Jaluit by a German war vessel and landed

at Apia on September 18 last.

Whether the death of Malietoa and the return of his old-time rival

Mataafa will add to the undesirable complications which the execution of

the tripartite general act has heretofore developed remains to be seen.

The efforts of this Government will, as heretofore, be addressed toward

a harmonious and exact fulfillment of the terms of the international

engagement to which the United States became a party in 1889.

The Cheek claim against Siam, after some five years of controversy, has

been adjusted by arbitration under an agreement signed July 6, 1897, an

award of 706,721 ticals (about $187,987.78), with release of the Cheek

estate from mortgage claims, having been rendered March 21, 1898, in

favor of the claimant by the arbitrator, Sir Nicholas John Hannen,

British chief justice for China and Japan.

An envoy from Siam has been accredited to this Government and has

presented his credentials.

Immediately upon the outbreak of the war with Spain the Swiss

Government, fulfilling the high mission it has deservedly assumed as the

patron of the International Red Cross, proposed to the United States and

Spain that they should severally recognize and carry into execution,

as a _modus vivendi_, during the continuance of hostilities, the

additional articles proposed by the international conference of Geneva,

October 20, 1868, extending the effects of the existing Red Cross

convention of 1864 to the conduct of naval war. Following the example

set by France and Germany in 1870 in adopting such a _modus vivendi_,

and in view of the accession of the United States to those additional

articles in 1882, although the exchange of ratifications thereof still

remained uneffected, the Swiss proposal was promptly and cordially

accepted by us, and simultaneously by Spain.

This Government feels a keen satisfaction in having thus been enabled to

testify its adherence to the broadest principles of humanity even amidst

the clash of war, and it is to be hoped that the extension of the Red

Cross compact to hostilities by sea as well as on land may soon become

an accomplished fact through the general promulgation of the additional

naval Red Cross articles by the maritime powers now parties to the

convention of 1864.

The important question of the claim of Switzerland to the perpetual

cantonal allegiance of American citizens of Swiss origin has not made

hopeful progress toward a solution, and controversies in this regard

still continue.

The newly accredited envoy of the United States to the Ottoman Porte

carries instructions looking to the disposal of matters in controversy

with Turkey for a number of years. He is especially charged to press for

a just settlement of our claims for indemnity by reason of the

destruction of the property of American missionaries resident in that

country during the Armenian troubles of 1895, as well as for the

recognition of older claims of equal justness.

He is also instructed to seek an adjustment of the dispute growing

out of the refusal of Turkey to recognize the acquired citizenship of

Ottoman-born persons naturalized in the United States since 1869 without

prior imperial consent, and in the same general relation he is directed

to endeavor to bring about a solution of the question which has more or

less acutely existed since 1869 concerning the jurisdictional rights of

the United States in matters of criminal procedure and punishment under

Article IV of the treaty of 1830. This latter difficulty grows out of a

verbal difference, claimed by Turkey to be essential, between the

original Turkish text and the promulgated translation.

After more than two years from the appointment of a consul of this

country to Erzerum, he has received his exequatur.

The arbitral tribunal appointed under the treaty of February 2, 1897,

between Great Britain and Venezuela, to determine the boundary line

between the latter and the colony of British Guiana, is to convene at

Paris during the present month. It is a source of much gratification to

this Government to see the friendly resort of arbitration applied to the

settlement of this controversy, not alone because of the earnest part we

have had in bringing about the result, but also because the two members

named on behalf of Venezuela, Mr. Chief Justice Fuller and Mr. Justice

Brewer, chosen from our highest court, appropriately testify the

continuing interest we feel in the definitive adjustment of the question

according to the strictest rules of justice. The British members,

Lord Herschell and Sir Richard Collins, are jurists of no less exalted

repute, while the fifth member and president of the tribunal, M.F.

De Martens, has earned a world-wide reputation as an authority upon

international law.

The claim of Felipe Scandella against Venezuela for arbitrary expulsion

and injury to his business has been adjusted by the revocation of the

order of expulsion and by the payment of the sum of $16,000.

I have the satisfaction of being able to state that the Bureau of

the American Republics, created in 1890 as the organ for promoting

commercial intercourse and fraternal relations among the countries of

the Western Hemisphere, has become a more efficient instrument of the

wise purposes of its founders, and is receiving the cordial support of

the contributing members of the international union which are actually

represented in its board of management. A commercial directory, in two

volumes, containing a mass of statistical matter descriptive of the

industrial and commercial interests of the various countries, has been

printed in English, Spanish, Portuguese, and French, and a monthly

bulletin published in these four languages and distributed in the

Latin-American countries as well as in the United States has proved to

be a valuable medium for disseminating information and furthering the

varied interests of the international union.

During the past year the important work of collecting information of

practical benefit to American industries and trade through the agency

of the diplomatic and consular officers has been steadily advanced, and

in order to lay such data before the public with the least delay the

practice was begun in January, 1898, of issuing the commercial reports

from day to day as they are received by the Department of State. It is

believed that for promptitude as well as fullness of information the

service thus supplied to our merchants and manufacturers will be found

to show sensible improvement and to merit the liberal support of

Congress.

The experiences of the last year bring forcibly home to us a sense of

the burdens and the waste of war. We desire, in common with most

civilized nations, to reduce to the lowest possible point the damage

sustained in time of war-by peaceable trade and commerce. It is true we

may suffer in such cases less than other communities, but all nations

are damaged more or less by the state of uneasiness and apprehension

into which an outbreak of hostilities throws the entire commercial

world. It should be our object, therefore, to minimize, so far as

practicable, this inevitable loss and disturbance. This purpose can

probably best be accomplished by an international agreement to regard

all private property at sea as exempt from capture or destruction by the

forces of belligerent powers. The United States Government has for many

years advocated this humane and beneficent principle, and is now in

position to recommend it to other powers without the imputation of

selfish motives. I therefore suggest for your consideration that the

Executive be authorized to correspond with the governments of the

principal maritime powers with a view of incorporating into the

permanent law of civilized nations the principle of the exemption of

all private property at sea, not contraband of war, from capture or

destruction by belligerent powers.

The Secretary of the Treasury reports that the receipts of the

Government from all sources during the fiscal year ended June 30,

1898, including $64,751,223 received from sale of Pacific railroads,

amounted to $405,321,335 and its expenditures to $443,368,582. There

was collected from customs $149,575,062 and from internal revenue

$170,900,641. Our dutiable imports amounted to $324,635,479, a decrease

of $58,156,690 over the preceding year, and importations free of duty

amounted to $291,414,175, a decrease from the preceding year of

$90,524,068. Internal-revenue receipts exceeded those of the preceding

year by $24,212,067.

The total tax collected on distilled spirits was $92,546,999;

on manufactured tobacco, $36,230,522, and on fermented liquors,

$39,515,421. We exported merchandise during the year amounting to

$1,231,482,330, an increase of $180,488,774 from the preceding year.

It is estimated upon the basis of present revenue laws that the

receipts of the Government for the year ending June 30, 1899, will

be $577,874,647, and its expenditures $689,874,647, resulting in a

deficiency of $112,000,000.

On the 1st of December, 1898, there was held in the Treasury gold coin

amounting to $138,441,547, gold bullion amounting to $138,502,545,

silver bullion amounting to $93,359,250, and other forms of money

amounting to $451,963,981.

On the same date the amount of money of all kinds in circulation, or not

included in Treasury holdings, was $1,886,879,504, an increase for the

year of $165,794,966. Estimating our population at 75,194,000 at the

time mentioned, the per capita circulation was $25.09. On the same date

there was in the Treasury gold bullion amounting to $138,502,545.

The provisions made for strengthening the resources of the Treasury in

connection with the war have given increased confidence in the purpose

and power of the Government to maintain the present standard, and have

established more firmly than ever the national credit at home and

abroad. A marked evidence of this is found in the inflow of gold to the

Treasury. Its net gold holdings on November 1, 1898, were $239,885,162

as compared with $153,573,147 on November 1, 1897, and an increase of

net cash of $207,756,100, November 1, 1897, to $300,238,275, November 1,

1898. The present ratio of net Treasury gold to outstanding Government

liabilities, including United States notes, Treasury notes of 1890,

silver certificates, currency certificates, standard silver dollars,

and fractional silver coin, November 1, 1898, was 25.35 per cent, as

compared with 16.96 per cent, November 1, 1897.

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