laws of that service and to the jurisdiction of the United States consular authorities. I renew the recommendation which has been heretofore urged by the Executive upon the attention of Congress, that after the reduction of such amount as may be found due to American citizens, the balance of the indemnity funds heretofore obtained from China and Japan, and which are now in the hands of the State Department, be returned to the governments of those countries. The King of Hawaii, in the course of his homeward return after a journey around the world, has lately visited this country. While our relations with that kingdom are friendly, this government has viewed with concern the efforts to seek replenishment of the diminishing population of the islands from outward sources, to a degree which may impair the native sovereignty and independence, in which the United States was among the first to testify a lively interest. Relations of unimpaired amity have been maintained throughout the year with the respective Governments of Austria-Hungary, Belgium, Denmark, Hayti, Paraguay and Uruguay, Portugal, and Sweden and Norway. This may also be said of Greece and Ecuador, although our relations with those states have for some years been severed by the withdrawal of appropriations for diplomatic representatives at Athens and Quito. It seems expedient to restore those missions, even on a reduced scale, and I decidedly recommend such a course with respect to Ecuador, which is likely, within the near future, to play an important part among the nations of the Southern Pacific. At its last extra session the Senate called for the text of the Geneva Convention for the relief of the wounded in war. I trust that this action foreshadows such interest in the subject as will result in the adhesion of the United States to that humane and commendable engagement. I invite your attention to the propriety of adopting the new Code of International Rules for the Prevention of Collisions on the high seas, and of conforming the domestic legislation of the United States thereto, so that no confusion may arise from the application of conflicting rules in the case of vessels of different nationalities meeting in tidal waters. These international rules differ but slightly from our own. They have been adopted by the Navy Department for the governance of the war ships of the United States on the high seas and in foreign waters; and, through the action of the State Department in disseminating the rules, and in acquainting shipmasters with the option of conforming to them without the jurisdictional waters of the United States, they are now very generally known and obeyed. The State Department still continues to publish to the country the trade and manufacturing reports received from its officers abroad. The success of this course warrants its continuance, and such appro priation as may be required to meet the rapidly-increasing demand for these publications. With special reference to the Atlanta Cotton Exposition, the October number of the reports was devoted to a valuable collection of papers on the cotton-goods trade of the world. The International Sanitary Conference, for which, in 1879, Congress made provision, assembled in this city early in January last, and its sessions were prolonged until March. Although it reached no specific conclusions affecting the future action of the participant powers, the interchange of views proyed to be most valuable. The full protocols of the sessions have been already presented to the Senate. As pertinent to this general subject I call your attention to the operations of the National Board of Health. Established by act of Congress approved March 3, 1879, its sphere of duty was enlarged by the act of June 2 in the same year. By the last-named act the board was required to institute such measures as might be deemed necessary. for preventing the introduction of contagious or infectious diseases from foreign countries into the United States or from one State into another. The execution of the rules and regulations prepared by the board and approved by my predecessor has done much to arrest the progress of epidemic disease, and has thus rendered substantial service to the nation. The International Sanitary Conference, to which I have referred, adopted a form of a bill of health to be used by all vessels seeking to enter the ports of the countries whose representatives participated in its deliberatons. This form has since been prescribed by the National Board of Health and incorporated with its rules and regulations, which have been approved by me in pursuance of law. The health of the people is of supreme importance. All measures looking to their protection against the spread of contagious diseases, and to the increase of our sanitary knowledge for such purposes, deserve attention of Congress. The report of the Secretary of the Treasury presents in detail a highly satisfactory exhibit of the state of the finances and the condition of the various branches of the public service administered by that department. The ordinary revenues from all sources for the fiscal year ending June 30, 1881, were: From customs .......... From internal revenue... From sales of public lands. From tax on circulation and deposits of national banks From sinking fund for Pacific Railway Companies... From fees-consular, letters patent, and lands... $198, 159, 676 02 135, 264, 385 51 2,201, 863 17 8, 116, 115 72 810, 833 80 805, 180 54 1,225, 514 86 2,244, 983 98 From proceeds of sales of government property From profits on coinage.. From revenues of the District of Columbia. From miscellaneous sources Total ordinary receipts......... The ordinary expenditures for the same period were: $262, 174 00 3, 468, 485 61 2,016, 199 23 6, 206, 880 13 360,782,292 57 For civil expenses For foreign intercourse.. For Indians For pensions For the military establishment, including river and For interest on the public debt.. $17,941,177 19 1,093,954 92 6,514, 161 09 50,059, 279 62 40, 466, 460 55 15, 686, 671 66 41, 837, 280 57 3,543, 912 03 82, 508, 741 18 1,061, 248 78 260,712, 887 59 100, 069, 404 98 Which was applied as follows: To the redemption of Bonds for the sinking fund Fractional currency for the sinking fund. Loan of February, 1861 Ten-forties of 1864.... Five-twenties of 1862.. Five-twenties of 1864 Five-twenties of 1865. Consols of 1865.... Consols of 1867 .. Consols of 1868...... Texan indemnity stock..... Old demand, compound-interest, and other notes.. And to the increase of cash in the Treasury... $74,371,200 00 109, 001 05 7,418, 000 00 2,016, 150 00 18, 300 00 3, 400 00 37,300 00 143, 150 00 959, 150 00 337,400 00 1,000 00 18,330 00 14, 637, 023 93 100, 069, 404 98 The requirements of the sinking fund for the year amounted to $90,786,064.02, which sum included a balance of $49,817,128.78, not pro vided for during the previous fiscal year. The sum of $74,480,201.05 was applied to this fund, which left a deficit of $16,305,873.47. The increase of the revenues for 1881 over those of the previous year was $29,352,901.10. It is estimated that the receipts during the present fiscal year will reach $400,000,000, and the expenditures $270,000,000, leaving a surplus of $130,000,000 applicable to the sinking fund and the redemption of the public debt. I approve the recommendation of the Secretary of the Treasury, that provision be made for the early retirement of silver certificates, and that the act requiring their issue be repealed. They were issued in pursuance of the policy of the government to maintain silver at or near the gold standard, and were accordingly made receivable for all customs, taxes, and public dues. About sixty-six millions of them are now outstanding. They form an unnecessary addition to the paper currency, a sufficient amount of which may be readily supplied by the national banks. In accordance with the act of February 28, 1878, the Treasury Department has, monthly, caused at least two millions in value of silver bullion to be coined into standard silver dollars. One hundred and two millions of these dollars have been already coined, while only about thirty-four millions are in circulation. For the reasons which he specifies, I concur in the Secretary's recom. mendation that the provision for coinage of a fixed amount each month be repealed, and that hereafter only so much be coined as shall be neces sary to supply the demand. The Secretary advises that the issue of gold certificates should not for the present be resumed, and suggests that the national banks may properly be forbidden by law to retire their currency except upon reasonable notice of their intention so to do. Such legislation would seem to be justified by the recent action of certain banks on the occa sion referred to in the Secretary's report. Of the fifteen millions of fractional currency still outstanding, only about eighty thousand has been redeemed the past year. The sugges tion that this amount may properly be dropped from future statements of the public debt seems worthy of approval. So, also, does the suggestion of the Secretary as to the advisability of relieving the calendar of the United States courts in the southern district of New York, by the transfer to another tribunal of the numer ous suits there pending against collectors. The revenue from customs for the past fiscal year was $198,159,676.02, an increase of $11,637,611.42 over that of the year preceding. $138,098,562.39 of this amount was collected at the port of New York, leaving $50,251,113.63 as the amount collected at all the other ports of the country. Of this sum, $47,977,137.63 was collected on sugar, melado, and molasses; $27,285,624.78 on wool and its manufactures; $21,462,534.34 on iron and steel, and manufactures thereof; $19,038,665.81 on manufactures of silk; $10,825,115.21 on manufactures of cotton; and $6,469,643.04 on wines and spirits; making a total revenue from these sources, of $133,058,720.81. The expenses of collection for the past year were $6,419,345.20, an increase over the preceding year of $387,410.04. Notwithstanding the increase in the revenue from customs over the preceding year, the gross value of the imports, including free goods, decreased over twenty-five millions of dollars. The most marked decrease was in the value of unmanufactured wool, $14,023,682, and in that of scrap and pig iron, $12,810,671. The value of imported sugar, on the other hand showed an increase of $7,457,474; of steel rails, $4,345,521; of barley, $2,154,204; and of steel in bars, ingots, &c., $1,620,046. Contrasted with the imports during the last fiscal year, the exports were as follows: Excess of exports over imports of merchandise $883, 925, 947 18, 451, 399 902, 377, 346 642, 664, 628 259, 712, 718 1, 545, 041, 974 Compared with the previous year, there was an increase of $66,738,688 in the value of exports of merchandise, and a decrease of $25,290,118 in the value of imports. The annual average of the excess of imports of merchandise over exports thereof, for ten years previous to June 30, 1873, was $104,706,922; but for the last six years there has been an excess of exports over imports of merchandise amounting to $1,180,668,105, an annual average of $196,778,017. The specie value of the exports of domestic merchandise was $376,616,473 in 1870, and $883,925,947 in 1881, an increase of $507,309,474, or 135 per cent. The value of imports was $435,958,408 in 1870, and $642,664,628 in 1881, an increase of $206,706,220, or 47 per cent. During each year from 1862 to 1879, inclusive, the exports of specie exceeded the imports. The largest excess of such exports over imports was reached during the year 1864, when it amounted to $92,280,929. But during the year ended June 30, 1880, the imports of coin and bullion exceeded the exports by $75,891,391; and during the last fiscal year the excess of imports over exports was $91,168,650. In the last annual report of the Secretary of the Treasury the attention of Congress was called to the fact that $469,651,050 in five per centum bonds and $203,573,750 in six per centum bonds would become redeemable during the year, and Congress was asked to authorize the refunding of these bonds at a lower rate of interest. The bill for such refunding having failed to become a law, the Secretary of the |