The number of existing banks organized under State laws is 5,708. The

number of immigrants arriving in the United States during the fiscal

year was 343,267, of whom 340,468 were permitted to land and 2,799 were

debarred on various grounds prescribed by law and returned to the

countries whence they came at the expense of the steamship companies by

which they were brought in. The increase in immigration over the

preceding year amounted to 84,731. It is reported that with some

exceptions the immigrants of the past year were of a hardy laboring

class, accustomed and able to earn a support for themselves, and it is

estimated that the money brought with them amounted to at least

$5,000,000, though it was probably much in excess of that sum, since

only those having less than $30 are required to disclose the exact

amount, and it is known that many brought considerable sums of money to

buy land and build homes. Including all the immigrants arriving who

were over 14 years of age, 28.63 per cent were illiterate, as against

20.37 per cent of those of that age arriving during the preceding

fiscal year. The number of immigrants over 14 years old, the countries

from which they came, and the percentage of illiterates among them were

as follows: Italy, 57,515, with 54.59 per cent; Ireland, 37,496, with 7

per cent; Russia, 35,188, with 41.14 per cent; Austria-Hungary and

provinces, 57,053, with 38.92 per cent; Germany, 25,334, with 2.96 per

cent; Sweden, 18,821, with 1.16 per cent; while from Portugal there

came 2,067, of whom 77.69 per cent were illiterate. There arrived from

Japan during the year only 1,110 immigrants, and it is the opinion of

the immigration authorities that the apprehension heretofore existing

to some extent of a large immigration from Japan to the United States

is without any substantial foundation.

From the Life-Saving Service it is reported that the number of

disasters to documented vessels within the limits of its operations

during the year was 437. These vessels had on board 4,608 persons, of

whom 4,595 were saved and 13 lost. The value of such vessels is

estimated at $8,880,140 and of their cargoes $3,846,380, making the

total value of property imperiled $12,726,520. Of this amount

$11,292,707 was saved and $1,432,750 was lost. Sixty-seven of the

vessels were totally wrecked. There were besides 243 casualties to

small undocumented craft, on board of which there were 594 persons, of

whom 587 were saved and 7 were lost. The value of the property involved

in these latter casualties is estimated at $119,265, of which $114,915

was saved and $4,350 was lost. The life-saving crews during the year

also rescued or assisted numerous other vessels and warned many from

danger by signals, both by day and night. The number of disasters

during the year exceeded that of any previous year in the history of

the service, but the saving of both life and property was greater than

ever before in proportion to the value of the property involved and to

the number of persons imperiled.

The operations of the Marine-Hospital Service, the Revenue-Cutter

Service, the Steamboat-Inspection Service, the Light-House Service, the

Bureau of Navigation, and other branches of public work attached to the

Treasury Department, together with various recommendations concerning

their support and improvement, are fully stated in the report of the

Secretary of the Treasury, to which the attention of the Congress is

especially invited.

The report of the Secretary of War exhibits satisfactory conditions in

the several branches of the public service intrusted to his charge.

The limit of our military force as fixed by law is constantly and

readily maintained. The present discipline and morale of our Army are

excellent, and marked progress and efficiency are apparent throughout

its entire organization.

With the exception of delicate duties in the suppression of slight

Indian disturbances along our southwestern boundary, in which the

Mexican troops cooperated, and the compulsory but peaceful return, with

the consent of Great Britain, of a band of Cree Indians from Montana to

the British possessions, no active operations have been required of the

Army during the year past.

Changes in methods of administration, the abandonment of unnecessary

posts and consequent concentration of troops, and the exercise of care

and vigilance by the various officers charged with the responsibility

in the expenditure of the appropriations have resulted in reducing to a

minimum the cost of maintenance of our military establishment.

During the past year the work of constructing permanent infantry and

cavalry posts has been continued at the places heretofore designated.

The Secretary of War repeats his recommendation that appropriations for

barracks and quarters should more strictly conform to the needs of the

service as judged by the Department rather than respond to the wishes

and importunities of localities. It is imperative that much of the

money provided for such construction should now be allotted to the

erection of necessary quarters for the garrisons assigned to the coast

defenses, where many men will be needed to properly care for and

operate modern guns. It is essential, too, that early provision be made

to supply the necessary force of artillery to meet the demands of this

service.

The entire Army has now been equipped with the new magazine arms, and

wise policy demands that all available public and private resources

should be so employed as to provide within a reasonable time a

sufficient number to supply the State militia with these modern weapons

and provide an ample reserve for any emergency.

The organized militia numbers 112,879 men. The appropriations for its

support by the several States approximate $2,800,000 annually, and

$400,000 is contributed by the General Government. Investigation shows

these troops to be usually well drilled and inspired with much military

interest, but in many instances they are so deficient in proper arms

and equipment that a sudden call to active duty would find them

inadequately prepared for field service. I therefore recommend that

prompt measures be taken to remedy this condition and that every

encouragement be given to this deserving body of unpaid and voluntary

citizen soldiers, upon whose assistance we must largely rely in time of

trouble.

During the past year rapid progress has been made toward the completion

of the scheme adopted for the erection and armament of fortifications

along our seacoast, while equal progress has been made in providing the

material for submarine defense in connection with these works.

It is peculiarly gratifying at this time to note the great advance that

has been made in this important undertaking since the date of my annual

message to the Fifty-third Congress at the opening of its second

session, in December, 1893. At that time I informed the Congress of the

approaching completion of nine 12-inch, twenty 10-inch, and thirty-four

8-inch high-power steel guns and seventy-five 12-inch rifled mortars.

This total then seemed insignificant when compared with the great work

remaining to be done. Yet it was none the less a source of satisfaction

to every citizen when he reflected that it represented the first

installment of the new ordnance of American design and American

manufacture and demonstrated our ability to supply from our own

resources guns of unexcelled power and accuracy.

At that date, however, there were practically no carriages upon which

to mount these guns and only thirty-one emplacements for guns and

sixty-four for mortars. Nor were all these emplacements in condition to

receive their armament. Only one high-power gun was at that time in

position for the defense of the entire coast.

Since that time the number of guns actually completed has been

increased to a total of twenty-one 12-inch, fifty-six 10-inch,

sixty-one 8-inch high-power breech-loading steel guns, ten rapid-fire

guns, and eighty 12-inch rifled mortars. In addition there are in

process of construction one 16-inch-type gun, fifty 12-inch, fifty-six

10-inch, twenty-seven 8-inch high-power guns, and sixty-six 12-inch

rifled mortars; in all, four hundred and twenty-eight guns and mortars.

During the same year, immediately preceding the message referred to,

the first modern gun carriage had been completed and eleven more were

in process of construction. All but one were of the nondisappearing

type. These, however, were not such as to secure necessary cover for

the artillery gunners against the intense fire of modern machine

rapid-fire and high-power guns.

The inventive genius of ordnance and civilian experts has been taxed in

designing carriages that would obviate this fault, resulting, it is

believed, in the solution of this difficult problem. Since 1893 the

number of gun carriages constructed or building has been raised to a

total of 129, of which 90 are on the disappearing principle, and the

number of mortar carriages to 152, while the 95 emplacements which were

provided for prior to that time have been increased to 280 built and

building.

This improved situation is largely due to the recent generous response

of Congress to the recommendations of the War Department.

Thus we shall soon have complete about one-fifth of the comprehensive

system the first step in which was noted in my message to the Congress

of December 4, 1893.

When it is understood that a masonry emplacement not only furnishes a

platform for the heavy modern high-power gun, but also in every

particular serves the purpose and takes the place of the fort of former

days, the importance of the work accomplished is better comprehended.

In the hope that the work will be prosecuted with no less vigor in the

future, the Secretary of War has submitted an estimate by which, if

allowed, there will be provided and either built or building by the end

of the next fiscal year such additional guns, mortars, gun carriages,

and emplacements as will represent not far from one-third of the total

work to be done under the plan adopted for our coast defenses, thus

affording a prospect that the entire work will be substantially

completed within six years. In less time than that, however, we shall

have attained a marked degree of security.

The experience and results of the past year demonstrate that with a

continuation of present careful methods the cost of the remaining work

will be much less than the original estimate.

We should always keep in mind that of all forms of military preparation

coast defense alone is essentially pacific in its nature. While it

gives the sense of security due to a consciousness of strength, it is

neither the purpose nor the effect of such permanent fortifications to

involve us in foreign complications, but rather to guarantee us against

them. They are not temptation to war, but security against it. Thus

they are thoroughly in accord with all the traditions of our national

diplomacy.

The Attorney-General presents a detailed and interesting statement of

the important work done under his supervision during the last fiscal

year.

The ownership and management by the Government of penitentiaries for

the confinement of those convicted in United States courts of

violations of Federal laws, which for many years has been a subject of

Executive recommendation, have at last to a slight extent been realized

by the utilization of the abandoned military prison at Fort Leavenworth

as a United States penitentiary.

This is certainly a movement in the right direction, but it ought to be

at once supplemented by the rebuilding or extensive enlargement of this

improvised prison and the construction of at least one more, to be

located in the Southern States. The capacity of the Leavenworth

penitentiary is so limited that the expense of its maintenance,

calculated at a per capita rate upon the number of prisoners it can

accommodate, does not make as economical an exhibit as it would if it

were larger and better adapted to prison purposes; but I am thoroughly

convinced that economy, humanity, and a proper sense of responsibility

and duty toward those whom we punish for violations of Federal law

dictate that the Federal Government should have the entire control and

management of the penitentiaries where convicted violators are confined.

It appears that since the transfer of the Fort Leavenworth Military

Prison to its new uses the work previously done by prisoners confined

there, and for which expensive machinery has been provided, has been

discontinued. This work consisted of the manufacture of articles for

army use, now done elsewhere. On all grounds it is exceedingly

desirable that the convicts confined in this penitentiary be allowed to

resume work of this description.

It is most gratifying to note the satisfactory results that have

followed the inauguration of the new system provided for by the act of

May 28, 1896, under which certain Federal officials are compensated by

salaries instead of fees. The new plan was put in operation on the 1st

day of July, 1896, and already the great economy it enforces, its

prevention of abuses, and its tendency to a better enforcement of the

laws are strikingly apparent. Detailed evidence of the usefulness of

this long-delayed but now happily accomplished reform will be found

clearly set forth in the Attorney-General's report.

Our Post-Office Department is in good condition, and the exhibit made

of its operations during the fiscal year ended June 30, 1896, if

allowance is made for imperfections in the laws applicable to it, is

very satisfactory. The total receipts during the year were

$82,499,208.40. The total expenditures were $90,626,296.84, exclusive

of the $1,559,898.27 which was earned by the Pacific Railroad for

transportation and credited on their debt to the Government. There was

an increase of receipts over the previous year of $5,516,080.21, or 7.1

per cent, and an increase of expenditures of $3,836,124.02, or 4.42 per

cent. The deficit was $1,679,956.19 less than that of the preceding

year. The chief expenditures of the postal service are regulated by law

and are not in the control of the Postmaster-General. All that he can

accomplish by the most watchful administration and economy is to

enforce prompt and thorough collection and accounting for public moneys

and such minor savings in small expenditures and in letting those

contracts, for post-office supplies and star service, which are not

regulated by statute.

An effective cooperation between the Auditor's Office and the

Post-Office Department and the making and enforcement of orders by the

Department requiring immediate notification to their sureties of all

delinquencies on the part of postmasters, and compelling such

postmasters to make more frequent deposits of postal funds, have

resulted in a prompter auditing of their accounts and much less default

to the Government than heretofore.

The year's report shows large extensions of both star-route service and

railway mail service, with increased postal facilities. Much higher

accuracy in handling mails has also been reached, as appears by the

decrease of errors in the railway mail service and the reduction of

mail matter returned to the Dead-Letter Office.

The deficit for the last year, although much less than that of the last

and preceding years, emphasizes the necessity for legislation to

correct the growing abuse of second-class rates, to which the

deficiency is mainly attributable. The transmission at the rate of 1

cent a pound of serial libraries, advertising sheets," house organs"

(periodicals advertising some particular "house" or institution),

sample copies, and the like ought certainly to be discontinued. A

glance at the revenues received for the work done last year will show

more plainly than any other statement the gross abuse of the postal

service and the growing waste of its earnings.

The free matter carried in the mails for the Departments, offices,

etc., of the Government and for Congress, in pounds, amounted to

94,480,189.

If this is offset against buildings for post-offices and stations, the

rental of which would more than compensate for such free postal

service, we have this exhibit:

Weight of mail matter (other than above) transmitted through the mails

for the year ending June 30, 1896.

Class Weight Revenue

Pounds

1. Domestic and foreign letters and

postal cards, etc 65,337,343 $60,624,464

2. Newspapers and periodicals,

1 cent per pound 348,988,648 2,996,403

3. Books, seeds, etc.,

8 cents a pound 78,701,148 10,324,069

4. Parcels, etc., 16 cents a pound 19,950,187 3,129,321

Total 512,977,326 77,044,257

The remainder of our postal revenue, amounting to something more than

$5,000,000, was derived from box rents, registry fees, money-order

business, and other similar items.

The entire expenditures of the Department, including pay for

transportation credited to the Pacific railroads, were $92,186,195.11,

which may be considered as the cost of receiving, carrying, and

delivering the above mail matter. It thus appears that though the

second-class matter constituted more than two-thirds of the total that

was carried, the revenue derived from it was less than one-thirtieth of

the total expense.

The average revenue was--

From each pound of first-class matter ......... cents 93.0

From each pound of second class ............... mills 8.5

From each pound of third class ................ cents 13.1

From each pound of fourth class ............... do 15.6

Of the second class 52,348,297 was county-free matter.

The growth in weight of second-class matter has been from 299,000,000

pounds in 1894 to 312,000,000 in 1895 and to almost 349,000,000 in

1896, and it is quite evident this increasing drawback is far

outstripping any possible growth of postal revenues.

Our mail service should of course be such as to meet the wants and even

the conveniences of our people at a direct charge upon them so light as

perhaps to exclude the idea of our Post-Office Department being a

money-making concern; but in the face of a constantly recurring

deficiency in its revenues and in view of the fact that we supply the

best mail service in the world it seems to me it is quite time to

correct the abuses that swell enormously our annual deficit. If we

concede the public policy of carrying weekly newspapers free in the

county of publication, and even the policy of carrying at less than

one-tenth of their cost other bona fide newspapers and periodicals,

there can be no excuse for subjecting the service to the further

immense and increasing loss involved in carrying at the nominal rate of

1 cent a pound the serial libraries, sometimes including trashy and

even harmful literature, and other matter which under the loose

interpretation of a loose statute have been gradually given

second-class rates, thus absorbing all profitable returns derived from

first-class matter, which pays three or four times more than its cost,

and producing a large annual loss to be paid by general taxation. If

such second-class matter paid merely the cost of its handling, our

deficit would disappear and a surplus result which might be used to

give the people still better mail facilities or cheaper rates of letter

postage. I recommend that legislation be at once enacted to correct

these abuses and introduce better business ideas in the regulation of

our postal rates.

Experience and observation have demonstrated that certain improvements

in the organization of the Post-Office Department must be secured

before we can gain the full benefit of the immense sums expended in its

administration. This involves the following reforms, which I earnestly

recommend:

There should be a small addition to the existing inspector service, to

be employed in the supervision of the carrier force, which now numbers

13,000 men and performs its service practically without the

surveillance exercised over all other branches of the postal or public

service. Of course such a lack of supervision and freedom from

wholesome disciplinary restraints must inevitably lead to imperfect

service. There should also be appointed a few inspectors who could

assist the central office in necessary investigation concerning matters

of post-office leases, post-office sites, allowances for rent, fuel,

and lights, and in organizing and securing the best results from the

work of the 14,000 clerks now employed in first and second class

offices.

I am convinced that the small expense attending the inauguration of

these reforms would actually be a profitable investment.

I especially recommend such a recasting of the appropriations by

Congress for the Post-Office Department as will permit the

Postmaster-General to proceed with the work of consolidating

post-offices. This work has already been entered upon sufficiently to

fully demonstrate by experiment and experience that such consolidation

is productive of better service, larger revenues, and less

expenditures, to say nothing of the further advantage of gradually

withdrawing post-offices from the spoils system.

The Universal Postal Union, which now embraces all the civilized world

and whose delegates will represent 1,000,000,000 people, will hold its

fifth congress in the city of Washington in May, 1897. The United

States may be said to have taken the initiative which led to the first

meeting of this congress, at Berne in 1874, and the formation of the

Universal Postal Union, which brings the postal service of all

countries to every man's neighborhood and has wrought marvels in

cheapening postal rates and securing absolutely safe mail communication

throughout the world. Previous congresses have met in Berne, Paris,

Lisbon, and Vienna, and the respective countries in which they have

assembled have made generous provision for their accommodation and for

the reception and entertainment of the delegates.

In view of the importance of this assemblage and of its deliberations

and of the honors and hospitalities accorded to our representatives by

other countries on similar occasions, I earnestly hope that such an

appropriation will be made for the expenses necessarily attendant upon

the coming meeting in our capital city as will be worthy of our

national hospitality and indicative of our appreciation of the event.

The work of the Navy Department and its present condition are fully

exhibited in the report of the Secretary.

The construction of vessels for our new Navy has been energetically

prosecuted by the present Administration upon the general lines

previously adopted, the Department having seen no necessity for radical

changes in prior methods, under which the work was found to be

progressing in a manner highly satisfactory. It has been decided,

however, to provide in every shipbuilding contract that the builder

should pay all trial expenses, and it has also been determined to pay

no speed premiums in future contracts. The premiums recently earned and

some yet to be decided are features of the contracts made before this

conclusion was reached.

On March 4, 1893, there were in commission but two armored vessels--the

double-turreted monitors Miantonomoh and Monterey. Since that date, of

vessels theretofore authorized, there have been placed in their first

commission 3 first-class and 2 second-class battle ships, 2 armored

cruisers, 1 harbor-defense ram, and 5 double-turreted monitors,

including the Maine and the Puritan, just completed. Eight new

unarmored cruisers and 2 new gunboats have also been commissioned. The

Iowa, another battle ship, will be completed about March 1, and at

least 4 more gunboats will be ready for sea in the early spring.

It is gratifying to state that our ships and their outfits are believed

to be equal to the best that can be manufactured elsewhere, and that

such notable reductions have been made in their cost as to justify the

statement that quite a number of vessels are now being constructed at

rates as low as those that prevail in European shipyards.

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