To the Congress of the United States:

The assemblage within the nation's legislative halls of those charged with the duty of making laws for the benefit of a generous and free people impressively suggests the exacting obligation and inexorable responsibility involved in their task. At the threshold of such labor now to be undertaken by the Congress of the United States, and in the discharge of an executive duty enjoined by the Constitution, I submit this communication, containing a brief statement of the condition of our national affairs and recommending such legislation as seems to me necessary and expedient.

The history of our recent dealings with other nations and our peaceful relations with them at this time additionally demonstrate the advantage of consistently adhering to a firm but just foreign policy, free from envious or ambitious national schemes and characterized by entire honesty and sincerity. During the past year, pursuant to a law of Congress, commissioners were appointed to the Antwerp Industrial Exposition.

Though the participation of American exhibitors fell far short of completely illustrating our national ingenuity and industrial achievements, yet it was quite creditable in view of the brief time allowed for preparation. I have endeavored to impress upon the Belgian Government the heedlessness and positive harmfulness of its restrictions upon the importation of certain of our food products, and have strongly urged that the rigid supervision and inspection under our laws are amply sufficient to prevent the exportation from this country of diseased cattle and unwholesome meat.

The termination of the civil war in Brazil has been followed by the general prevalence of peace and order. It appearing at an early stage of the insurrection that its course would call for unusual watchfulness on the part of this Government, our naval force in the harbor of Rio de Janeiro was strengthened.

This precaution, I am satisfied, tended to restrict the issue to a simple trial of strength between the Brazilian Government and the insurgents and to avert complications which at times seemed imminent. Our firm attitude of neutrality was maintained to the end. The insurgents received no encouragement of eventual asylum from our commanders, and such opposition as they encountered was for the protection of our commerce and was clearly justified by public law.

A serious tension of relations having arisen at the close of the war between Brazil and Portugal by reason of the escape of the insurgent admiral Da Gama and his followers, the friendly offices of our representatives to those countries were exerted for the protection of the subjects of either within the territory of the other.

Although the Government of Brazil was duly notified that the commercial arrangement existing between the United States and that country based on the third section of the tariff act of 1890 was abrogated on August 28, 1894, by the taking effect of the tariff law now in force, that Government subsequently notified us of its intention to terminate such arrangement on the 1st day of January, 1895, in the exercise of the right reserved in the agreement between the two countries.

I invite attention to the correspondence between the Secretary of State and the Brazilian minister on this subject. The commission organized under the convention which we had entered into with Chile for the settlement of the outstanding claims of each Government against the other adjourned at the end of the period stipulated for its continuance leaving undetermined a number of American cases which had been duly presented.

These claims are not barred, and negotiations are in progress for their submission to a new tribunal. On the 17th of March last a new treaty with China in further regulation of emigration was signed at Washington, and on August 13 it received the sanction of the Senate. Ratification on the part of China and formal exchange are awaited to give effect to this mutually beneficial convention.

A gratifying recognition of the uniform impartiality of this country toward all foreign states was manifested by the coincident request of the Chinese and Japanese Governments that the agents of the United States should within proper limits afford protection to the subjects of the other during the suspension of diplomatic relations due to a state of war.

This delicate office was accepted, and a misapprehension which gave rise to the belief that in affording this kindly unofficial protection our agents would exercise the same authority which the withdrawn agents of the belligerents had exercised was promptly corrected. Although the war between China and Japan endangers no policy of the United States, it deserves our gravest consideration by reason of its disturbance of our growing commercial interests in the two countries and the increased dangers which may result to our citizens domiciled or sojourning in the interior of China.

Acting under a stipulation in our treaty with Korea (the first concluded with a western power), I felt constrained at the beginning of the controversy to tender our good offices to induce an amicable arrangement of the initial difficulty growing out of the Japanese demands for administrative reforms in Korea, but the unhappy precipitation of actual hostilities defeated this kindly purpose.

Deploring the destructive war between the two most powerful of the eastern nations and anxious that our commercial interests in those countries may be preserved and that the safety of our citizens there shall not be jeopardized, I would not hesitate to heed any intimation that our friendly aid for the honorable termination of hostilities would be acceptable to both belligerents.

A convention has been finally concluded for the settlement by arbitration of the prolonged dispute with Ecuador growing out of the proceedings against Emilio Santos, a naturalized citizen of the United States. Our relations with the Republic of France continue to be such as should exist between nations so long bound together by friendly sympathy and similarity in their form of government.

The recent cruel assassination of the President of this sister Republic called forth such universal expressions of sorrow and condolence from our people and Government as to leave no doubt of the depth and sincerity of our attachment. The resolutions passed by the Senate and House of Representatives on the occasion have been communicated to the widow of President Carnot.

Acting upon the reported discovery of Texas fever in cargoes of American cattle, the German prohibition against importations of live stock and fresh meats from this country has been revived. It is hoped that Germany will soon become convinced that the inhibition is as needless as it is harmful to mutual interests.

The German Government has protested against that provision of the customs tariff act which imposes a discriminating duty of one-tenth of 1 cent a pound on sugars coming from countries paying an export bounty thereon, claiming that the exaction of such duty is in contravention of Articles V and IX of the treaty of 1828 with Prussia.

In the interests of the commerce of both countries and to avoid even the accusation of treaty violation, I recommend the repeal of so much of the statute as imposes that duty, and I invite attention to the accompanying report of the Secretary of State, containing a discussion of the questions raised by the German protests.

Early in the present year an agreement was reached with Great Britain concerning instructions to be given to the naval commanders of the two Governments in Bering Sea and the contiguous North Pacific Ocean for their guidance in the execution of the award of the Paris Tribunal of Arbitration and the enforcement of the regulations therein prescribed for the protection of seal life in the waters mentioned.

An understanding has also been reached for the payment by the United States of $425,000 in full satisfaction of all claims which may be made by Great Britain for damages growing out of the controversy as to fur seals in Bering Sea or the seizure of British vessels engaged in taking seal in those waters.

The award and findings of the Paris Tribunal to a great extent determined the facts and principles upon which these claims should be adjusted, and they have been subjected by both Governments to a thorough examination upon the principles as well as the facts which they involve.

I am convinced that a settlement upon the terms mentioned would be an equitable and advantageous one, and I recommend that provision be made for the prompt payment of the stated sum. Thus far only France and Portugal have signified their willingness to adhere to the regulations established under the award of the Paris Tribunal of Arbitration.

Preliminary surveys of the Alaskan boundary and a preparatory examination of the question of protection of food fish in the contiguous waters of the United States and the Dominion of Canada are in progress. The boundary of British Guiana still remains in dispute between Great Britain and Venezuela. Believing that its early settlement on some just basis alike honorable to both parties is in the line of our established policy to remove from this hemisphere all causes of difference with powers beyond the sea, I shall renew the efforts heretofore made to bring about a restoration of diplomatic relations between the disputants and to induce a reference to arbitration -- a resort which Great Britain so conspicuously favors in principle and respects in practice and which is earnestly sought by her weaker adversary.

Since communicating the voluminous correspondence in regard to Hawaii and the action taken by the Senate and House of Representatives on certain questions submitted to the judgment and wider discretion of Congress the organization of a government in place of the provisional arrangement which followed the deposition of the Queen has been announced, with evidence of its effective operation.

The recognition usual in such cases has been accorded the new Government. Under our present treaties of extradition with Italy miscarriages of justice have occurred owing to the refusal of that Government to surrender its own subjects. Thus far our efforts to negotiate an amended convention obviating this difficulty have been unavailing.

Apart from the war in which the Island Empire is engaged, Japan attracts increasing attention in this country by her evident desire to cultivate more liberal intercourse with us and to seek our kindly aid in furtherance of her laudable desire for complete autonomy in her domestic affairs and full equality in the family of nations.

The Japanese Empire of to-day is no longer the Japan of the past, and our relations with this progressive nation should not be less broad and liberal than those with other powers. Good will, fostered by many interests in common, has marked our relations with our nearest southern neighbor. Peace being restored along her northern frontier, Mexico has asked the punishment of the late disturbers of her tranquillity.

There ought to be a new treaty of commerce and navigation with that country to take the place of the one which terminated thirteen years ago. The friendliness of the intercourse between the two countries is attested by the fact that during this long period the commerce of each has steadily increased under the rule of mutual consideration, being neither stimulated by conventional arrangements nor retarded by jealous rivalries or selfish distrust.

An indemnity tendered by Mexico as a gracious act for the murder in 1887 of Leon Baldwin, an American citizen, by a band of marauders in Durango has been accepted and is being paid in installments. The problem of the storage and use of the waters of the Rio Grande for irrigation should be solved by appropriate concurrent action of the two interested countries.

Rising in the Colorado heights, the stream flows intermittently, yielding little water during the dry months to the irrigation channels already constructed along its course. This scarcity is often severely felt in the regions where the river forms a common boundary. Moreover, the frequent changes in its course through level sands often raise embarrassing questions of territorial jurisdiction.

Prominent among the questions of the year was the Bluefields incident, in what is known as the Mosquito Indian Strip, bordering on the Atlantic Ocean and within the jurisdiction of Nicaragua. By the treaty of 1860 between Great Britain and Nicaragua the former Government expressly recognized the sovereignty of the latter over the strip, and a limited form of self-government was guaranteed to the Mosquito Indians, to be exercised according to their customs, for themselves and other dwellers within its limits.

The so-called native government, which grew to be largely made up of aliens, for many years disputed the sovereignty of Nicaragua over the strip and claimed the right to maintain therein a practically independent municipal government. Early in the past year efforts of Nicaragua to maintain sovereignty over the Mosquito territory led to serious disturbances, culminating in the suppression of the native government and the attempted substitution of an impracticable composite administration in which Nicaragua and alien residents were to participate.

Failure was followed by an insurrection, which for a time subverted Nicaraguan rule, expelling her officers and restoring the old organization. This in turn gave place to the existing local government established and upheld by Nicaragua. Although the alien interests arrayed against Nicaragua in these transactions have been largely American and the commerce of that region for some time has been and still is chiefly controlled by our citizens, we can not for that reason challenge the rightful sovereignty of Nicaragua over this important part of her domain.

For some months one, and during part of the time two, of our naval ships have been stationed at Bluefields for the protection of all legitimate interests of our citizens. In September last the Government at Managua expelled from its territory twelve or more foreigners, including two Americans, for alleged participation in the seditious or revolutionary movements against the Republic at Bluefields already mentioned;

But through the earnest remonstrance of this Government the two Americans have been permitted to return to the peaceful management of their business.

Our naval commanders at the scene of these disturbances by their constant exhibition of firmness and good judgment contributed largely to the prevention of more serious consequences and to the restoration of quiet and order. I regret that in the midst of these occurrences there happened a most grave and irritating failure of Nicaraguan justice.

An American citizen named Wilson, residing at Rama, in the Mosquito territory, was murdered by one Arguello, the acting governor of the town. After some delay the murderer was arrested, but so insecurely confined or guarded that he escaped, and notwithstanding our repeated demands it is claimed that his recapture has been impossible by reason of his flight beyond Nicaraguan jurisdiction.

The Nicaraguan authorities, having given notice of forfeiture of their concession to the canal company on grounds purely technical and not embraced in the contract, have receded from that position. Peru, I regret to say, shows symptoms of domestic disturbance, due probably to the slowness of her recuperation from the distresses of the war of 1881. Weakened in resources, her difficulties in facing international obligations invite our kindly sympathy and justify our forbearance in pressing long-pending claims.

I have felt constrained to testify this sympathy in connection with certain demands urgently preferred by other powers. The recent death of the Czar of Russia called forth appropriate expressions of sorrow and sympathy on the part of our Government with his bereaved family and the Russian people. As a further demonstration of respect and friendship our minister at St.

Petersburg was directed to represent our Government at the funeral ceremonies. The sealing interests of Russia in Bering Sea are second only to our own. A modus vivendi has therefore been concluded with the Imperial Government restrictive of poaching on the Russian rookeries and of sealing in waters which were not comprehended in the protected area defined in the Paris award.

Occasion has been found to urge upon the Russian Government equality of treatment for our great life-insurance companies whose operations have been extended throughout Europe. Admitting as we do foreign corporations to transact business in the United States, we naturally expect no less tolerance for our own in the ample fields of competition abroad.

But few cases of interference with naturalized citizens returning to Russia have been reported during the current year. One Krzeminski was arrested last summer in a Polish province on a reported charge of unpermitted renunciation of Russian allegiance, but it transpired that the proceedings originated in alleged malfeasance committed by Krzeminski while an imperial official a number of years ago.

Efforts for his release, which promised to be successful, were in progress when his death was reported. The Government of Salvador having been overthrown by an abrupt popular outbreak, certain of its military and civil officers, while hotly pursued by infuriated insurgents, sought refuge on board the United States war ship Bennington, then lying in a Salvadorean port.

Although the practice of asylum is not favored by this Government, yet in view of the imminent peril which threatened the fugitives and solely from considerations of humanity they were afforded shelter by our naval commander, and when afterwards demanded under our treaty of extradition with Salvador for trial on charges of murder, arson, and robbery I directed that such of them as had not voluntarily left the ship be conveyed to one of our nearest ports where a hearing could be had before a judicial officer, in compliance with the terms of the treaty.

On their arrival at San Francisco such a proceeding was promptly instituted before the United States district judge, who held that the acts constituting the alleged offenses were political and discharged all the accused except one Cienfuegos, who was held for an attempt to murder. Thereupon I was constrained to direct his release for the reason that an attempt to murder was not one of the crimes charged against him and upon which his surrender to the Salvadorean authorities had been demanded.

Unreasonable and unjust fines imposed by Spain on the vessels and commerce of the United States have demanded from time to time during the last twenty years earnest remonstrance on the part of our Government. In the immediate past exorbitant penalties have been imposed upon our vessels and goods by customs authorities of Cuba and Puerto Rico for clerical errors of the most trivial character in the manifests of bills of lading.

In some cases fines amounting to thousands of dollars have been levied upon cargoes or the carrying vessels when the goods in question were entitled to free entry. Fines have been exacted even when the error had been detected and the Spanish authorities notified before the arrival of the goods in port. This conduct is in strange contrast with the considerate and liberal treatment extended to Spanish vessels and cargoes in our ports in like cases.

No satisfactory settlement of these vexatious questions has yet been reached. The Mora case, referred to in my last annual message, remains unsettled. From the diplomatic correspondence on this subject which has been laid before the Senate it will be seen that this Government has offered to conclude a convention with Spain for disposal by arbitration of outstanding claims between the two countries, except the Mora claim.

Which, having been long ago adjusted, now only awaits payment as stipulated, and of course it could not be included in the proposed convention. It was hoped that this offer would remove parliamentary obstacles encountered by the Spanish Government in providing payment of the Mora indemnity. I regret to say that no definite reply to this offer has yet been made and all efforts to secure payment of this settled claim have been unavailing.

In my last annual message I adverted to the claim on the part of Turkey of the right to expel as persons undesirable and dangerous Armenians naturalized in the United States and returning to Turkish jurisdiction. Numerous questions in this relation have arisen. While this Government acquiesces in the asserted right of expulsion, it will not consent that Armenians may be imprisoned or otherwise punished for no other reason than having acquired without imperial consent American citizenship.

Three of the assailants of Miss Melton, an American teacher in Mosul, have been convicted by the Ottoman courts, and I am advised that an appeal against the acquittal of the remaining five has been taken by the Turkish prosecuting officer. A convention has been concluded with Venezuela for the arbitration of a long-disputed claim growing out of the seizure of certain vessels the property of citizens of the United States.

Although signed, the treaty of extradition with Venezuela is not yet in force, owing to the insistence of that Government that when surrendered its citizens shall in no case be liable to capital punishment. The rules for the prevention of collisions at sea which were framed by the maritime conference held in this city in 1889, having been concurrently incorporated in the statutes of the United States and Great Britain have been announced to take effect March 1, 1895, and invitations have been extended to all maritime nations to adhere to them.

Favorable responses have thus far been received from Austria, France, Portugal, Spain, and Sweden. In my last annual message I referred briefly to the unsatisfactory state of affairs in Samoa under the operation of the Berlin treaty as signally illustrating the impolicy of entangling alliances with foreign powers, and on May 9, 1894, in response to a resolution of the Senate, I sent a Special message and documents to that body on the same subject, which emphasized my previously expressed opinions.

Later occurrences, the correspondence in regard to which will be laid before the Congress, further demonstrate that the Government which was devised by the three powers and forced upon the Samoans against their inveterate hostility can be maintained only by the continued presence of foreign military force and at no small sacrifice of life and treasure.

The suppression of the Mataafa insurrection by the powers and the subsequent banishment of the leader and eleven other chiefs, as recited in my last message, did not bring lasting peace to the islands. Formidable uprisings continued, and finally a rebellion broke out in the capital island, Upolu, headed in Aana, the western district, by the younger Tamasese, and in Atua, the eastern district, by other leaders.

The insurgents ravaged the country and fought the Government's troops up to the very doors of Apia. The King again appealed to the powers for help, and the combined British and German naval forces reduced the Atuans to apparent subjection, not, however, without considerable loss to the natives. A few days later Tamasese and his adherents, fearing the ships and the marines, professed submission.

Reports received from our agents at Apia do not justify the belief that the peace thus brought about will be of long duration. It is their conviction that the natives are at heart hostile to the present Government, that such of them as profess loyalty to it do so from fear of the powers, and that it would speedily go to pieces if the war ships were withdrawn.

In reporting to his Government on the unsatisfactory situation since the suppression of the late revolt by foreign armed forces, the German consul at Apia stated: That peace will be lasting is hardly to be presumed. The lesson given by firing on Atua was not sufficiently sharp and incisive to leave a lasting impression on the forgetful Samoan temperament.

In fact, conditions are existing which show that peace will not last and is not seriously intended. Malietoa, the King, and his chiefs are convinced that the departure of the war ships will be a signal for a renewal of war. The circumstance that the representatives of the villages of all the districts which were opposed to the Government have already withdrawn to Atua to hold meetings, and that both Atua and Aana have forbidden inhabitants of those districts which fought on the side of the Government to return to their villages, and have already partly burned down the latter, indicates that a real conciliation of the parties is still far off.

And in a note of the 10th ultimo, inclosing a copy of that report for the information of this Government, the German ambassador said: The contents of the report awakened the imperial Government's apprehension that under existing circumstances the peace concluded with the rebels will afford no assurance of the lasting restoration of tranquillity in the islands.

The present Government has utterly failed to correct, if indeed it has not aggravated, the very evils it was intended to prevent. It has not stimulated our commerce with the islands. Our participation in its establishment against the wishes of the natives was in plain defiance of the conservative teachings and warnings of the wise and patriotic men who laid the foundations of our free institutions, and I invite an expression of the judgment of Congress on the propriety of steps being taken by this Government looking to the withdrawal from its engagements with the other powers on some reasonable terms not prejudicial to any of our existing rights.

The Secretary of the Treasury reports that the receipts of the Government from all sources of revenue during the fiscal year ending June 30, 1894, amounted to $372,802,498.29 and its expenditures to $442,605,758.87, leaving a deficit of $69,803,260.58. There was a decrease of $15,952,674.66 in the ordinary expense of the Government as compared with the fiscal year 1893. There was collected from customs $131,818,530.62 and from internal revenue $147,168,449.70. The balance of the income for the year, amounting to $93,815,517.97, was derived from the sales of lands and other sources.

The value of our total dutiable imports amounted to $275,199,086, being $146,657,625 less than during the preceding year, and the importations free of duty amounted to $379,795,536, being $64,748,675 less than during the preceding year. The receipts from customs were $73,536,486.11 less and from internal revenue $13,836,539.97 less than in 1893. The total tax collected from distilled spirits was $85,259,250.25, on manufactured tobacco $28,617,898.62, and on fermented liquors $31,414,788.04. Our exports of merchandise, domestic and foreign, amounted during the year to $892,140,572, being an increase over the preceding year of $44,495,378. The total amount of gold exported during the fiscal year was $76,898,061, as against $108,680,444 during the fiscal year 1893. The amount imported was $72,449,119, as against $21,174,381 during the previous year.

The imports of silver were $13,186,552 and the exports were $50,451,265. The total bounty paid upon the production of sugar in the United States for the fiscal year was $12,100,208.89, being an increase of $2,725,078.01 over the payments made during the preceding year. The amount of bounty paid from July 1, 1894, to August 28, 1894, the time when further payments ceased by operation of law, was $966,185.84. The total expenses incurred in the payment of the bounty upon sugar during the fiscal year was $130,140.85. It is estimated that upon the basis of the present revenue laws the receipts of the Government during the current fiscal year, ending June 30, 1895, will be $424,427,748.44 and its expenditures $444,427,748.44, resulting in a deficit of $20,000,000. On the 1st day of November, 1894, the total stock of money of all kinds in the country was $2,240,773,88.8, as against $2,204,651,000 on the 1st day of November, 1893, and the money of all kinds in circulation, or not included in the Treasury holdings, was $1,672,093,422, or $24.27 per capita upon an estimated population of 68,887,000. At the same date there was held in the Treasury gold bullion amounting to $44,615,177.55 and silver bullion which was purchased at a cost of $127,772,988. The purchase of silver bullion under the act of July 14, 1890, ceased on the 1st day of November, 1893, and up to that time there had been purchased during the fiscal year 11,917,658.78 fine ounces, at a cost of $8,715,521.32, an average cost of $0.7313 per fine ounce.

The total amount of silver purchased from the time that law took effect until the repeal of its purchasing clause, on the date last mentioned, was 168,674,682.53 fine ounces, which cost $155,931,002.25, the average price per fine ounce being $0.9244. The total amount of standard silver dollars coined at the mints of the United States since the passage of the act of February 28, 1878, is $421,776,408, of which $378,166,793 were coined under the provisions of that act, $38,531,143 under the provisions of the act of July 14, 1890, and $5,078,472 under the act providing for the coinage of trade-dollar bullion.

The total coinage of all metals at our mints during the last fiscal year consisted of 63,485,220 pieces, valued at $106,216,730.06, of which there were $99,474,912.50 in gold coined, $758 in standard silver dollars, $6,024,140.30 in subsidiary silver coin, and $716,919.26 in minor coin. During the calendar year 1893 the production of precious metals in the United States was estimated at 1,739,323 fine ounces of gold of the commercial and coinage value of $35,955,000 and 70,000,000 fine ounces of silver of the bullion or market value of $46,800,000 and of the coinage value of $77,576,000. It is estimated that on the 1st day of July, 1894, the stock of metallic money in the United States, consisting of coin and bullion, amounted to $1,251,640,958, of which $627,923,201 was gold and $624,347,757 was silver.

Fifty national banks were organized during the year ending October 31, 1894, with a capital of $5,285,000, and 79, with a capital of $10,475,000, went into voluntary liquidation. Twenty-one banks, with a capital of $2,770,000, were placed in the hands of receivers. The total number of national banks in existence on the 31st day of October last was 3,756, being 40 less than on the 31st day of October, 1893. The capital stock paid in was $672,671,365, being $9,678,491 less than at the same time in the previous year, and the surplus fund and individual profits, less expenses and taxes paid, amounted to $334,121,082.10, which was $16,089,780 less than on October 31, 1893. The circulation was decreased $1,741,563. The obligations of the banks to each other were increased $117,268,334 and the individual deposits were $277,294,489 less than at the corresponding date in the previous year.

Loans and discounts were $161,206,923 more than at the same time the previous year, and checks and other cash items were $90,349,963 more. The total resources of the banks at the date mentioned amounted to $3,473,922,055, as against $3,109,563,184.36 in 1893. From the report of the Secretary of War it appears that the strength of the Army on September 30, 1894, was 2,135 officers and 25,765 enlisted men.

Although this is apparently a very slight decrease compared with the previous year, the actual effective force has been increased to the equivalent of nearly two regiments through the reorganization of the system of recruiting and the consequent release to regimental duty of the large force of men hitherto serving at the recruiting depots.

The abolition of these depots, it is predicted, will furthermore effect an annual reduction approximating $250,000 in the direct expenditures, besides promoting generally the health, morale, and discipline of the troops. The execution of the policy of concentrating the Army at important centers of population and transportation, foreshadowed in the last annual report of the Secretary, has resulted in the abandonment of fifteen of the smaller posts, which was effected under a plan which assembles organizations of the same regiments hitherto widely separated.