the case with France, Italy, Russia, and Turkey, and to a less extent with Switzerland. From time to time earnest efforts have been made to regulate this subject by conventions with those countries. An improper use of naturalization should not be permitted, but it is most important that those who have been duly naturalized should everywhere be accorded recognition of the rights pertaining to the citizenship of the country of their. adoption. The appropriateness of special conventions for that purpose is recognized in treaties which this Government has concluded with a number of European states, and it is advisable that the difficulties which now. arise in our relations with other countries on the same subject should be similarly adjusted.

The recent revolution in Brazil in favor of the establishment of a republican form of government is an event of great interest to the United States. Our minister at Rio de Janeiro was at once. instructed to maintain friendly diplomatic relations with the provisional government, and the Brazilian representatives at this capital were instructed by the provisional government to continue their functions. Our friendly intercourse with Brazil has, therefore, suffered no interruption.

Our minister has been further instructed to extend on the part of this Government a formal and cordial recognition of the new Republic so soon as the majority of the people of Brazil shall have signified their assent to its establishment and maintenance.

Within our own borders a general condition of prosperity prevails. The harvests of the last summer were exceptionally abundant, and the trade conditions now prevailing seem to promise a successful season to the merchant and the manufacturer, and general employment to our working people.

The report of the Secretary of the Treasury for the fiscal year ending June 30, 1889, has been prepared, and will be presented to Congress. It presents with clearness the fiscal operations of the Government, and I avail myself of it to obtain some facts for use here.

The aggregate receipts from all sources for the year were $387,050,058.84, derived as follows:

From customs

From internal revenue

From miscellaneous sources

$223, 832, 741. 69

130, 881, 513. 92

32, 335, 803. 23

The ordinary expenditures for the same period were $281,996,615.60, and the total expenditures, including the sinking fund, were $329,579,929.25. The excess of receipts over expenditures was, after providing for the sinking fund, $57,470,129.59.

For the current fiscal year the total revenues, actual and estimated, are $385,000,000, and the ordinary expenditures, actual and estimated, are $293,000,000, making, with the sinking fund, a total expenditure of $341,321,116.99, leaving an estimated surplus of $43,678,883.01.

During the fiscal year there was applied to the purchase of bonds, in addition to those for the sinking fund, $90,456, 172.35, and during the first quarter of the current year the sum of $37,838,937-77, all of which were credited to the sinking fund. The revenues for the fiscal year ending June 30, 1891, are estimated by the Treasury Department at $385,000,000, and the expenditures for the same period, including the sinking fund, at $341,430,477.70. This shows an estimated surplus for that year of $43,569, 522.30, which is more likely to be increased than reduced when the actual transactions are written up.

The existence of so large an actual and anticipated surplus should have the immediate attention of Congress, with a view to reducing the receipts of the Treasury to the needs of the Government as closely as may be. The collection of moneys not needed for public uses imposes an unnecessary burden upon our people, and the presence of so large a surplus in the public vaults is a disturbing element in the conduct of private business. It has called into use expedients for putting it into circulation of very questionable propriety. We should not collect revenue for the purpose of anticipating our bonds, beyond the requirements of the sinking fund, but any unappropriated surplus in the Treasury should be so used, as there is no other lawful way of returning the money to circulation, and the profit realized by the Government offers a substantial advantage.

The loaning of public funds to the banks without interest, upon the security of Government bonds, I regard as an unauthorized and dangerous expedient. It results in a temporary and unnatural increase of the banking capital of favored localities, and compels a cautious and gradual recall of the deposits to avoid injury to the commercial interests. It is not to be expected that the banks having these deposits will sell their bonds to the Treasury so long as the present highly beneficial arrangement is continued. They now practically get interest both upon the bonds and their proceeds. No further use should be made of this method of getting the surplus

into circulation, and the deposits now outstanding should be gradually withdrawn and applied to the purchase of bonds. It is fortunate that such a use can be made of the existing surplus, and for some time to come of any casual surplus that may exist after Congress has taken the necessary steps for a reduction of the revenue. Such legislation should be promptly, but very considerately, enacted.

I recommend a revision of our tariff law, both in its administrative features and in the schedules. The need of the former is generally conceded, and an agreement upon the evils and inconveniences to be remedied and the best methods for their correction will probably not be difficult. Uniformity of valuation at all our ports is essential, and effective measures should be taken to secure it. It is equally desirable that questions affecting rates and classifications should be promptly decided.

The preparation of a new schedule of customs duties is a matter of great delicacy because of its direct effect upon the business of the country, and of great difficulty by reason of the wide divergence of opinion as to the objects that may properly be promoted by such legislation. Some disturbance of business may perhaps result from the consideration of this subject by Congress, but this temporary ill effect will be reduced to the minimum by prompt action and by the assurance which the country already enjoys that any necessary changes will be so made as not to impair the just and reasonable protection of our home industries. The inequalities of the law should be adjusted, but the protective principle should be maintained and fairly applied to the products of our farms as well as of our shops. These duties necessarily have relation to other things besides the public revenues. We can not limit their effects by fixing our eyes on the public treasury alone. They have a direct relation to home production, to work, to wages, and to the commercial independence of our country, and the wise and patriotic legislator should enlarge the field of his vision to include all of these.

The necessary reduction in our public revenues can, I am sure, be made without making the smaller burden more onerous than the larger by reason of the disabilities and limitations which the process of reduction puts upon both capital and labor. The free list can very safely be extended by placing thereon articles that do not offer injurious competition to such domestic products as our home labor can supply. The removal of the internal tax upon tobacco would relieve an important agricultural product from a burden which was imposed only because our revenue from customs duties was insufficient for the public needs. If safe provision against fraud can be

devised the removal of the tax upon spirits used in the arts and in manufactures would also offer an unobjectionable method of reducing the surplus.

A table presented by the Secretary of the Treasury, showing the amount of money of all kinds in circulation each year from 1878 to the present time, is of interest. It appears that the amount of national-bank notes in circulation has decreased during that period $114,109,729, of which $37,799,229 is chargeable to the last year. The withdrawal of bank circulation will necessarily continue under existing conditions. It is probable that the adoption of the suggestions made by the Comptroller of the Currency, viz, that the minimum deposit of bonds for the establishment of banks be reduced, and that an issue of notes to the par value of the bonds be allowed, would help to maintain the bank circulation. But, while this withdrawal of bank notes has been going on, there has been a large increase in the amount of gold and silver coin in circulation and in the issues of gold and silver certificates.

The total amount of money of all kinds in circulation on March I, 1878, was $805,793,807, while on October 1, 1889, the total was $1,405,018,000. There was an increase of $293,417,552 in gold coin, of $57,554,100 in standard silver dollars, of $72,311,249 in gold certificates, of $276,619,715 in silver certificates, and of $14,073,787 in United States notes, making a total of $713,976,403. There was during the same period a decrease of $114, 109, 729 in bank circulation, and of $642,481 in subsidiary silver. The net increase was $599,224, 193. The circulation per capita has increased about five dollars during the time covered by the table referred to.

The total coinage of silver dollars was, on November 1, 1889, $343,638,001, of which $283,539,521 were in the Treasury vaults and $60,098,480 were in circulation. Of the amount in the vaults, $277,319,944 were represented by outstanding silver certificates, leaving $6,219,577 not in circulation and not represented by certifi

cates.

The law requiring the purchase, by the Treasury, of two million dollars' worth of silver bullion each month, to be coined into silver dollars of four hundred and twelve and one-half grains, has been observed by the Department; but neither the present Secretary nor any of his predecessors has deemed it safe to exercise the discretion given by law to increase the monthly purchases to four million dollars. When the law was enacted (February 28, 1878) the price

of silver in the market was $1.20 per ounce, making the bullion value of the dollar 93 cents. Since that time the price has fallen as low as 91.2 cents per ounce, reducing the bullion value of the dollar to 70.6 cents. Within the last few months the market price has somewhat advanced, and on the 1st day of November last the bullion value of the silver dollar was 72 cents.

The evil anticipations, which have accompanied the coinage and use of the silver dollar have not been realized. As a coin it has not had general use, and the public Treasury has been compelled to store it. But this is manifestly owing to the fact that its paper representative is more convenient. The general acceptance and use of the silver certificate show that silver has not been otherwise discredited. Some favorable conditions have contributed to maintain this practical equality, in their commercial use, between the gold and silver dollars. But some of these are trade conditions that statutory enactments do not control and of the continuance of which we cannot be certain.

I think it is clear that if we should make the coinage of silver at the present ratio free, we must expect that the difference in the bullion values of the gold and silver dollars will be taken account of in commercial transactions, and I fear the same result would follow any considerable increase of the present rate of coinage. Such a result would be discreditable to our financial management and disastrous to all business interests. We should not tread the dangerous edge of such a peril. indeed, nothing more harmful could happen to the silver interests. Any safe legislation upon this subject must secure the equality of the two coins in their commercial uses.

And,

I have always been an advocate of the use of silver in our currency. We are large producers of that metal, and should not discredit it. To the plan which will be presented by the Secretary of the Treasury for the issuance of notes or certificates upon the deposit of silver bullion at its market value, I have been able to give only a hasty examination, owing to the press of other matters and to the fact that it has been so recently formulated. The details of such a law require careful consideration, but the general plan suggested by him seems to satisfy the purpose-to continue the use of silver in connection with our currency, and at the same time to obviate the danger of which I have spoken. At a later day I may communicate further with Congress upon this subject.

The enforcement of the Chinese exclusion act has been found to be very difficult on the northwestern frontier. Chinamen, land