The income of the Government, by its increased volume and through economies in its collection, is now more than ever in excess of public necessities. The application of the surplus to the payment of such portion of the public debt as is now at our option subject to extinguishment, if continued at the rate which has lately prevailed, would retire that class of indebtedness within less than one year from this date. Thus a continuation of our present revenue system would soon result in the receipt of an annual income much greater than necessary to meet Government expenses, with no indebtedness upon which it could be applied. We should then be confronted with a vast quantity of money, the circulating medium of the people, hoarded in the Treasury when it should be in their hands, or we should be drawn into wasteful public extravagance with all the corrupting national demoralization which follows in its train.

But it is not the simple existence of this surplus and its threatened attendant evils, which furnish the strongest argument against our present scale of Federal taxation. Its worst phase is the exaction of such a surplus through a perversion of the relations between the people and their Government, and a dangerous departure from the rules which limit the right of Federal taxation.

Good government, and especially the government of which every American citizen boasts, has for its objects, the protection of every person within its care in the greatest liberty consistent with the good order of society, and his perfect security in the enjoyment of his earnings, with the least possible diminution for public needs. When more of the people's substance is exacted through the form of taxation than is necessary to meet the just obligations of the Government and the expense of its economical administration, such exaction becomes ruthless extortion and a violation of the fundamental principles of a free Government.

The indirect manner in which these exactions are made, has a tendency to conceal their true character and their extent. have arrived at a stage of superfluous revenue which has aroused the people to a realization of the fact, that the amount raised professedly for the support of the Government, is paid by them as absolutely, if added to the price of the things which supply their daily wants, as if it was paid at fixed periods into the hand of the tax-gatherer.

Those who toil for daily wages are beginning to understand that capital, though sometimes vaunting its importance and clamoring for the protection and favor of the Government, is dull and sluggish, till, touched by the magical hand of labor, it springs into activity, furnishing an occasion for Federal taxation and gaining

the value which enables it to bear its burden. And the laboring man is thoughtfully inquiring whether in these circumstances, and considering the tribute he constantly pays into the public Treasury as he supplies his daily wants, he receives his fair share of advantages.

There is also a suspicion abroad, that the surplus of our revenues. indicates abnormal and exceptional business profits, which, under the system which produces such surplus, increase without corresponding benefit to the people at large, the vast accumulations of a few among our citizens whose fortunes, rivaling the wealth of the most favored in anti-democratic nations, are not the natural growth of a steady, plain and industrious republic.

Our farmers too, and those engaged directly and indirectly in supplying the products of agriculture, see that day by day, and as often as the daily wants of their households recur, they are forced to pay excessive and needless taxation, while their products struggle in foreign markets with the competition of nations, which by allowing a freer exchange of productions than we permit, enable their people to sell for prices which distress the American farmer.

As every patriotic citizen rejoices in the constantly increasing pride of our people in American citizenship and in the glory of our national achievements and progress, a sentiment prevails that the leading-strings useful to a nation in its infancy, may well be to a great extent discarded in the present stage of American ingenuity, courage and fearless self-reliance. And for the privilege of indulging this sentiment with true American enthusiasm, our citizens are quite willing to forego an idle surplus in the public Treasury.

And all the people know that the average rate of Federal taxation upon imports is to-day, in time of peace, but little less, while upon some articles of necessary consumption it is actually more, than was imposed by the grievous" burden willingly borne, at a time when the Government needed millions to maintain by war the safety and integrity of the Union.

It has been the policy of the Government to collect the principal part of its revenues by a tax upon imports; and no change in this policy is desirable. But the present condition of affairs constrains our people to demand, that by a revision of our revenue laws, the receipts of the Government shall be reduced to the necessary expense of its economical administration; and this demand should be recognized and obeyed by the people's representatives in the legis lative branch of the Government.

In readjusting the burdens of Federal taxation, a sound public policy requires that such of our citizens as have built up large and

important industries under present conditions, should not be suddenly and to their injury, deprived of advantages to which they have adapted their business; but if the public good requires it, they should be content with such consideration as shall deal fairly and cautiously with their interests, while the just demand of the people for relief from needless taxation is honestly answered.

A reasonable and timely submission to such a demand should certainly be possible without disastrous shock to any interest; and a cheerful concession sometimes averts abrupt and heedless action, often the outgrowth of impatience and delayed justice.

Due regard should be also accorded in any proposed readjustment, to the interests of American labor so far as they are involved. We congratulate ourselves that there is among us no laboring class, fixed within unyielding bounds and doomed under all conditions to the inexorable fate of daily toil. We recognize in labor a chief factor in the wealth of the republic, and we treat those who have it in their keeping as citizens entitled to the most careful regard and thoughtful attention. This regard and attention should be awarded them, not only because labor is the capital of our workingmen, justly entitled to its share of Governinent favor, but for the further and not less important reason, that the laboring man surrounded by his family in his humble home, as a consumer is vitally interested in all that cheapens the cost of living and enables him to bring within his domestic circle, additional comforts and advantages.

This relation of the workingman to the revenue laws of the country, and the manner in which it palpably influences the question of wages, should not be forgotten in the justifiable prominence given to the proper maintenance of the supply and protection of well-paid labor. And these considerations suggest such an arrangement of Government revenues as shall reduce the expense of living, while it does not curtail the opportunity for work nor reduce the compensation of American labor, and injuriously affect its condition and the dignified place it holds in the estimation of our people.

But our farmers and agriculturists-those who from the soil produce the things consumed by all-are perhaps more directly and plainly concerned than any other of our citizens, in a just and careful system of Federal taxation. Those actually engaged in and more remotely connected with this kind of work, number nearly onehalf of our population. None labor harder or more continuously than they. No enactments limit their hours of toil, and no interposition of the Government enhances to any great extent the value of their products. And yet for many of the necessaries and comforts of life, which the most scrupulous economy enables them to bring

into their homes, and for their implements of husbandry, they are obliged to pay a price largely increased by an unnatural profit which, by the action of the Government, is given to the more favored manufacturer.

I recommend that, keeping in view all these considerations, the increasing and unnecessary surplus of national income annually accunulating, be released to the people, by an amendment to our revenue laws which shall cheapen the price of the necessaries of life and give freer entrance to such imported materials as by American labor may be manufactured into marketable commodities.

Nothing can be accomplished however, in the direction of this much-needed reform, unless the subject is approached in a patriotic spirit of devotion to the interests of the entire country and with a willingness to yield something for the public good.

The sum paid upon the public debt during the fiscal year ended June 30, 1886, was $44,551,043.36.

During the twelve months ended October 31, 1886, three per cent. bonds were called for redemption amounting to $127,283, 100, of which $80,643,200 was so called to answer the requirements of the law relating to the sinking fund and $46,639,900 for the purpose of reducing the public debt by application of a part of the surplus in the Treasury to that object. Of the bonds thus called $102,269,450 became subject under such calls to redemption prior to November 1, 1886. The remainder, amounting to $25,013,650, matured under the calls after that date.

In addition to the amount subject to payment and cancellation prior to November 1st, there were also paid before that day certain of these bonds, with the interest thereon, amounting to $5,072,350, which were anticipated as to their maturity, of which $2,664,850 had not been called. Thus $107,341,800 had been actually applied prior to the Ist of November 1886, to the extinguishment of our bonded and interest-bearing debt, leaving on that day still outstanding the sum of $1,153,443,112. Of this amount $86,848,700 were still represented by three per cent. bonds. They, however, have been since November 1st, or will at once be, further reduced by $22,606, 150, being bonds which have been called, as already stated, but not redeemed and canceled before the latter date.

During the fiscal year ended June 30, 1886, there were coined under the compulsory silver-coinage act of 1878, 29,838,905 silver dollars, and the cost of the silver used in such coinage was $23,448,960.01. There had been coined up to the close of the previous fiscal year under the provisions of the law, 203,882,554 silver dollars, and on

the 1st day of December, 1886, the total amount of such coinage

was $247,131,549.

The Director of the Mint reports that at the time of the passage of the law of 1878 directing this coinage, the intrinsic value of the dollars thus coined was ninety-four and one-fourth cents each, and that on the 31st day of July 1886, the price of silver reached the lowest stage ever known, so that the intrinsic or bullion price of our standard silver dollar at that date was less than seventy-two cents. The price of silver on the 30th day of November last was such as to make these dollars intrinsically worth seventy-eight cents each.

These differences in value of the coins represent the fluctuations. in the price of silver, and they certainly do not indicate that compulsory coinage by the Government enhances the price of that commod ity or secures uniformity in its value.

Every fair and legal effort has been made by the Treasury Department to distribute this currency among the people. The withdrawal of United States Treasury notes of small denominations, and the issuing of small silver certificates have been resorted to in the endeavor to accomplish this result, in obedience to the will and sentiments of the representatives of the people in the Congress. On the 27th day of November, 1886, the people held of these coins, or certificates representing them, the nominal sum of $166,873,041, and we still had $79,464, 345 in the Treasury—as against about $142,894,055 so in the hands of the people, and $72,865,376 remaining in the Treasury one year ago. The Director of the Mint again urges the necessity of more vault room for the purpose of storing these silver dollars which are not needed for circulation by the people.

I have seen no reason to change the views expressed in my last annual message on the subject of this compulsory coinage; and I again urge its suspension on all the grounds contained in my former recommendation, reinforced by the significant increase of our gold exportations during the last year, as appears by the comparative statement herewith presented, and for the further reasons that the more this currency is distributed among the people the greater becomes our duty to protect it from disaster; that we now have abundance for all our needs; and that there seems but little propriety in building vaults to store such currency when the only pretense for its coinage is the necessity of its use by the people as a circulating medium.

The great number of suits now pending in the United States courts for the southern district of New York, growing out of the collection of customs revenue at the port of New York, and the number of such suits that are almost daily instituted, are certainly worthy the attention of the Congress. These legal controversies