force of Mexican troops on the other side of the river is also making an energetic movement against the marauding Indian tribes. This Government looks with the greatest satisfaction upon every evidence of strength in the national authority of Mexico, and upon every effort put forth to prevent or to punish incursions upon our territory. Reluctant to assume any action or attitude in the control of these incursions, by military movements across the border, not imperatively demanded for the protection of the lives and property of our own citizens, I shall take the earliest opportunity, consistent with the proper discharge of this plain duty, to recognize the ability of the Mexican Government to restrain effectively violations of our territory. It is proposed to hold next year an International Exhibition in Mexico, and it is believed that the display of the agricultural and manufacturing products of the two nations will tend to better understanding and increased commercial intercourse between their people.

With Brazil, and the Republics of Central and South America, some steps have been taken toward the development of closer commercial intercourse. Diplomatic relations have been resumed with Colombia and with Bolivia. A boundary question between the Argentine Republic and Paraguay has been submitted by those Governments for arbitration to the President of the United States, and I have, after careful examination, given a decision upon it.

A naval expedition up the Amazon and Madeira rivers has brought back information valuable both for scientific and commercial purposes. A like expedition is about visiting the coast of Africa and the Indian ocean. The reports of diplomatic and consular officers in relation to the development of our foreign commerce, have furnished many facts that have proved of public interest, and have stimulated to practical exertion the enterprise of our people.

The report of the Secretary of the Treasury furnishes a detailed statement of the operations of that Department of the Government, and of the condition of the public finances.

The ordinary revenues from all sources for the fiscal year ended June 30, 1878, were $257,763,878 70; the ordinary expenditures for the same period, were $236,964,326 80-leaving a surplus revenue for the year, of $20,799,551 90.

The receipts for the present fiscal year, ending June 30, 1879, actual and estimated, are as follows: Actual receipts for the first quarter commencing July 1, 1878, $73,389,743 43; estimated receipts for the remaining three-quarters of the year, $191,110,256 57; total receipts for the current fiscal year, actual and estimated, $264,500,000. The

expenditures for the same period will be, actual and estimated, as follows: For the quarter commencing July 1, 1878, actual expendi tures, $73,344,573 27; and for the remaining three-quarters of the year, the expenditures are estimated at $166,755,426 73-making the total expenditures, $240,100,000; and leaving an estimated surplus rev. enue, for the year ending June 30, 1879, of $24,400,000.

The total receipts during the next fiscal year, ending June 30, 1880, estimated according to existing laws, will be $264,500,000; and the estimated ordinary expenditures, for the same period, will be $236,320,412 68; leaving a surplus of $28,179,587 32 for that year.

In the foregoing statements of expenditures, actual and estimated, no amount is allowed for the sinking-fund provided for by the act approved February 25, 1862, which requires that one per cent. of the entire debt of the United States shall be purchased or paid within each fiscal year, to be set apart as a sinking-fund. There has been, however, a substantial compliance with the conditions of the law. By its terms, the public debt should have been reduced between 1862 and the close of the last fiscal year, $518,361,806 28; the actual reduction of the ascertained debt, in that period, has been $720,644,739 61; being in excess of the reduction required by the sinking-fund act-$202,282,933 33.

The amount of the public debt, less cash in the Treasury, November 1, 1878, was $2,024,200,083 18-a reduction, since the same date last year, of $23,150,617 39.

The progress made during the last year, in refunding the public debt at lower rates of interest, is very gratifying. The amount of four per cent. bonds sold during the present year prior to November 23, 1878, is $100,270,900, and six per cent. bonds, commonly known as five-twenties, to an equal amount, have been, or will be redeemed as calls mature.

It has been the policy of the Department to place the four per cent. bonds within easy reach of every citizen who desires to invest his savings, whether small or great, in these securities. The Secretary of the Treasury recommends that the law be so modified, that small sums may be invested, and that through the post offices, or other agents of the Government, the freest opportunity may be given in all parts of the country for such investments.

The best mode suggested is, that the Department be authorized to issue certificates of deposit, of the denomination of ten dollars, bearing interest at the rate of 3.65 per cent. per annum and convertible at any time within one year after their issue into the four per cent. bonds authorized by the refunding act, and to be issued only in exchange for United States notes sent to the Treasury by mail

or otherwise. Such a provision of law, supported by suitable regulations, would enable any person readily, without cost or risk, to convert his money into an interest-bearing security of the United States, and the money so received could be applied to the redemption of six per cent. bonds.

The coinage of gold during the last fiscal year was $52,798,980. The coinage of silver dollars, under the act passed February 28, 1878, amounted on the 23d of November, 1878, to $19,814,550, of which amount $4,984,947 are in circulation, and the balance, $14,829,603, is still in the possession of the Government.

With views unchanged with regard to the act under which the coinage of silver proceeds, it has been the purpose of the Secretary faithfully to execute the law, and to afford a fair trial to the measure.

In the present financial condition of the country, I am persuaded that the welfare of legitimate business and industry of every description will be best promoted by abstaining from all attempts to make radical changes in the existing financial legislation. Let it be understood that during the coming year the business of the country will be undisturbed by governmental interference with the laws affecting it, and we may confidently expect that the resumption of specie payments, which will take place at the appointed time, will be successfully and easily maintained, and that it will be followed by a healthful and enduring revival of business prosperity.

Let the healing influence of time, the inherent energies of our people, and the boundless resources of our country, have a fair opportu nity, and relief from present difficulties will surely follow.

The report of the Secretary of War shows that the army has been well and economically supplied, that our small force has been actively employed, and has faithfully performed all the service required of it. The mordle of the army has improved, and the number of desertions has materially decreased during the year.

The Secretary recommends

1. That a pension be granted to the widow of the late Lieutenant Henry H. Benner, 18th Infantry, who lost his life by yellow-fever while in command of the steamer "J. M. Chambers," sent with supplies for the relief of sufferers in the South from that disease.

2. The establishment of the annuity scheme for the benefit of the heirs of deceased officers, as suggested by the Paymaster General.

3. The adoption by Congress of a plan for the publication of the records of the War of the Rebellion, now being prepared for that pur pose.

4. The increase of the extra per diem of soldier-teachers employed in post-schools, and liberal appropriations for the erection of buildings for schools and libraries at the different posts.

5. The repeal or amendment of the act of June 18, 1878, forbidding the "use of the army as a posse comitatus, or otherwise, for the purpose of executing the laws, except in such cases and under such circumstances as may be expressly authorized by the Constitution or by act of Congress."

6. The passage of a joint resolution of Congress legalizing the issues of rations, tents, and medicines which were made for the relief of suf ferers from yellow-fever.

7. That provision be made for the erection of a fire-proof building for the preservation of certain valuable records, now constantly exposed to destruction by fire.

These recommendations are all commended to your favorable consideration.

The report of the Secretary of the Navy shows that the navy has improved during the last fiscal year. Work has been done on seventy-five vessels, ten of which have been thoroughly repaired, and made ready for sea. Two others are in rapid progress towards completion. The total expenditures of the year, including the amount appropriated for the deficiencies of the previous year, were $17,468,392 65. The actual expenses chargeable to the year, exclusive of these deficiencies, were $13,306,914 09, or $767,199 18 less than those of the previous year, and $4,928,677 74 less than the expenses, including the deficiencies. The estimates for the fiscal year ending June 30, 1880, are $14,562,381 45-exceeding the appropriations of the present year only $33,949 75; which excess is occasioned by the demands of the Naval Academy and the Marine Corps, as explained in the Secretary's report. The appropriations for the present fiscal year are $14,528,431 70, which, in the opinion of the Secretary, will be ample for all the current expenses of the Department during the year. The amount drawn from the Treasury from July 1, to November 1, 1878, is $4,740,544 14, of which $70,980 75 has been refunded, leaving as the expenditure for that period $4,669,563 39, or $520,899 24 less than the corresponding period of the last fiscal year.

The report of the Postmaster General embraces a detailed statement of the operations of the Post Office Department. The expenditures of that Department for the fiscal year ended June 30, 1878, were $34,165,084 49. The receipts, including sales of stamps, money-order business, and official stamps, were $29,277,516 95. The sum of

$290,436 90, included in the foregoing statement of expenditures, is chargeable to preceding years, so that the actual expenditures for the fiscal year ended June 30, 1878, are $33,874,647 50. The amount drawn from the Treasury on appropriations, in addition to the revenues of the Department, was $5,307,652 82. The expenditures for the fiscal year ending June 30, 1880, are estimated at $36,571,900, and the receipts from all sources at $30,664,023 90, leaving a deficiency to be appropriated out of the Treasury of $5,907,876 10. The report calls attention to the fact that the compensation of postmasters and of railroads for carrying the mail is regulated by law, and that the failure of Congress to appropriate the amounts required for these purposes does not relieve the Government of responsibility, but necessarily increases the deficiency bills which Congress will be called upon to pass.

In providing for the postal service, the following questions are presented: Should Congress annually appropriate a sum for its expenses largely in excess of its revenues, or should such rates of postage be established as will make the Department self-sustaining? Should the postal service be reduced by excluding from the mails, matter which does not pay its way? Should the number of post-routes be diminished? Should other methods be adopted which will increase the revenues or diminish the expenses of the postal service?

The International Postal Congress, which met at Paris May 1, 1878, and continued in session until June 4 of the same year, was composed of delegates from nearly all the civilized countries of the world. It adopted a new convention, to take the place of the treaty concluded at Berne October 9, 1874; which goes into effect on the 1st of April, 1879, between the countries whose delegates have signed it. It was ratified and approved, by and with the consent of the President, August 13, 1878. A synopsis of this Universal Postal Convention will be found in the report of the Postmaster General, and the full text in the appendix thereto. In its origin the Postal Union comprised twentythree countries, having a population of three hundred and fifty millions of people. On the 1st of April next it will comprise forty-three countries and colonies, with a population of more than six hundred and fifty millions of people, and will soon, by the accession of the few remaining countries and colonies which maintain organized postal services, constitute, in fact as well as in name, as its new title indicates, a Universal Union, regulating, upon a uniform basis of cheap postage-rates, the postal intercourse between all civilized nations.

Some embarrassment has arisen out of the conflict between the cus