differences of opinion constantly arising between the officers of the Government and those of the company, ending in costly and protracted litigation.

The condition of the road is stated as excellent. Since the submission of the report of the Board of January 30, 1886, floating debts have been entirely paid off, the bonded debt reduced, and about 100 miles of valuable feeders constructed. Within a few years large amounts of 6, 7, and 8 per cent. bonds will fall due, which can be refunded at much lower rates of interest.

The directors therefore recommend the passage of the bill reported by the House Committee on Pacific Railroads (H. R. 8318), now pending, which provides for the final adjustment of the debt of the Union Pacific Railway Company, and corrects the defects in existing egisla tion above enumerated. In this connection the directors say:

The obligations of the railway company to the Government may be treated as a single debt of about $70,000,000 due July 1, 1897.

The present value of that debt, at 3 per cent., simple interest, is about $53,000,000, or, in other words, that amount paid now in cash would extinguish the debt at maturity if allowed to accumulate even at simple interest. But the railway company, instead of paying that amount in cash at a single payment, is to pay $1,807,000 per annum for seventy years. The first year's payment will be equal to interest upon the entire cash debt at 3 per cent. ($1,590,000), and $217,000 on the principal. Each succeeding year's payment would reduce the principal by a still larger sum, until the seventieth or last, nearly the whole of which will be applied to the principal.

The directors express their entire confidence in the present manage. ment of the road, and their satisfaction with the present condition of the company's affairs.

I think the views presented by the board touching a final settlement of the existing unsatisfactory relations between the Government and this company are entitled to immediate consideration.

The proposition to anticipate the maturity of the debt, which is still about eleven years off; to treat it as due; to ascertain the amount which, if accepted by the Government now in cash, would be the exact equivalent of the debt at maturity; to then give the companies a term of years in which to pay the amount with 3 per cent. interest in semiannual equalized payments (the first payment being of an amount in excess of interest at 3 per cent. upon the whole present debt, so that from the first a part of the principal should be paid, and afterward in increasing amounts), seems to me a wise settlement for the Government, provided the present lien should be enlarged to cover, along with its present trunk-line security, all of the companies' interests in their branch lines, and all their property of every kind.

SUSPENSION OF PATENTS TO THE NEW ORLEANS PACIFIC RAILROAD

COMPANY.

In my last report I remarked at length on the matter of the assignment of its land grant by the New Orleans, Baton Rouge and Vicksburg

Railroad Company to the New Orleans Pacific Railroad Company, and alluded to the fact that the right to make the transfer was a question of grave doubt.

Prior to my incumbency patents had been issued to the New Orleans Pacific Railroad Company for 679,287.64 acres. In consideration of protests that had been filed against the issue of these patents, of the allegations that the selections by the company had been granted to the State of Louisiana under the swamp grant, of the homestead and preemption claims of actual settlers, and of the doubt relative to the transfer, I issued an order March 10, 1885, still in force, suspending the further issue of patents to the New Orleans Pacific Railroad Company. In giving the reasons in my former report for this action I used the following language:

Prior to the 3d of March, 1885, selections of laud had been made by the New Orleans Pacific Railroad along the line of its route, between New Orleans and Shreveport, to the amount of 1,015,993.76 acres; in pursuance of which, on the 3d of March, in obedience to the direction of the Secretary of the Interior and the Commissioner of the General Land Office, patents were issued to the company for 679,287.64 acres. Unusual assiduity was manifested, apparently having for its purpose the patenting of the whole amount of the selections of the company before the Department should pass under the control of the then incoming administration.

As this remark has been construed into unfavorable criticism of the action of my predecessor in this matter, I desire here to state that I have seen in that action nothing inconsistent with the strictest good faith and honest administration.

A hearing was subsequently had on a motion for the revocation of the order. On full consideration of the subject I had the honor to suggest the propriety of legislative action that would cure any defect that might exist in the transfer alluded to, and that would vest the title granted to the New Orleans, Baton Rouge and Vicksburg Railroad Company, from Whitecastle to Shreveport, in the New Orleans Pacific Railroad Company.

A bill is pending in Congress, having passed one branch thereof, with the above object in view.

PENSIONS.

There is submitted herewith the report of the Commissioner of Pensions, which exhibits in detail the operations of that Bureau during the past fiscal year. The report indicates a greatly increased amount of work at a considerably diminished expenditure and with less clerical force, evincing skill and activity in its management.

In considering appeals from the decision of the Pension Office I find some classes of cases of such peculiar hardship that I deem amendatory legislation advisable. I call attention to sections 4696 and 4707. Section 4707 limits the claim of dependence on the part of an aged parent or a minor child, and fixes its initiative at the moment of time of death

of a soldier on account of whose death the dependent is made pensionable.

It seems to me to be a wiser rule, and a more just one, that where the dependence has occurred in the natural order of events at a time subsequent to the death of the soldier on account of increasing years, or of misfortune, not contributed to by the beneficiary, the dependent pension should then have its foundation and point of beginning.

I suggest such a change in the law as that in the case of parents of increasing years, or children of tender years below the age of sixteen, where their condition of physical dependence is not due to their fault, or habits, but is merely a matter of misfortune or time, that they should be allowed pension from the date at which the dependence in the natural and ordinary state of human affairs would begin; such pension in all cases, however, to be prospective, and in no case to anticipate the date of the approval of the law authorizing its granting.

Section 4696, Revised Statutes, provides that pension shall be issued at a rate to be fixed, dependent upon the rank held by the soldier at the time he received the injury or contracted the disease which resulted in the disability on account of which he may be entitled to a pension. Under existing law it has very often happened that soldiers have been disabled, or have incurred disease, or have suffered from injuries in a certain degree, and that in spite of such injury or disease they have continued to perform military service, and have been promoted for efficiency, or gallantry, or meritorious conduct. They have not claimed pension until after discharge. Under existing law when pension is granted it is necessarily fixed at the lower rate allowed for the claimant's original rank, or, to speak more accurately, at the rank held at the time the original disability was incurred.

I suggest that the law be so amended so that the pension shall be allowed for the rank subsequently borne, bona fide, before discharge, or at date of discharge, where the disability is shown to have originated in the service and in line of duty, and subject to the further condition that in no event shall the pension antedate the law allowing such in

Anxious to procure the best talent that the salary would command for the six additional persons to be appointed by the Secretary of the Interior to aid him in determining appeals from the Commissioner of Pensions, required by act of Congress approved July 31, 1886, the organization of this force was delayed longer than accorded with my wishes. I am pleased to say, however, that since they have entered upon their duties the work has advanced with great rapidity. I recommend the continuance of the appropriation for another twelve months, at which time I think that the arrears will be entirely brought up. On the 1st day of November, 1886, there were 3,710 cases standing upon the appeal docket of this Department.