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then existing state of affairs; many of them by obtaining contracts, and by swindling the Government in the delivery of their goods.

Immediately on the cessation of hostilities, the then noble President, who bad carried the country so far through its perils, fell a martyr to his patriotism at the hands of an assassin.

The intervening time to my first inauguration was filled up with wranglings between Congress and the new Executive as to the best mode of “reconstruction," or, to speak plainly, as to whether the control of the Government should be thrown immediately into the hands of those who had so recently and persistently tried to destroy it, or whether the victors should continue to bave an equal voice with them in this control. Reconstruction, as finally agreed upon, means this and only this, except that the late slave was enfranchised, giving an in. crease, as was supposed, to the Union-loving and Union-supporting votes. If free, in the full sense of the word, they would not disappoint this expectation. Hence, at the beginning of my first administration, the work of reconstruction-much embarrassed by tbe long delay-virtually commenced. It was the work of the legislative branch of the Government. My province was wholly in approving their acts, which I did most heartily, urging the legislatures of States that had not yet done so to ratify the fifteenth amendment to the Constitution. The country was laboring under an enormous debt, contracted in the suppression of rebellion, and taxation was so oppressive as to discourage production. Another danger also threatened us—a foreign war. The last difficulty had to be adjusted, and was adjusted, without a war, and in a manner highly honorable to all parties concerned. Taxes have been reduced within the last seven years nearly three hundred millions of dollars, and the national debt has been reduced in the same time over four hundred and thirty-five millions of dollars. By refunding the six per cent. bonded debt for bonds bearing five and four and one-half per cent. interest, respectively, the annual interest has been reduced from over one hundred and thirty millions of dollars in 1869 to but little over one hundred millions of dollars in 1876. The balance of trade has been changed from over one hundred and thirty millions against the United States in 1869 to more than one hundred and twenty millions of dollars in our favor in 1876.

It is confidently believed that the balance of trade in favor of the United States will increase, not diminish, and that the pledge of Con. gress to resume specie payments in 1879 will be easily accomplished, even in the absence of much desired further legislation on the subject.

A policy has been adopted toward the Indian tribes inbabiting a large portion of the territory of the United States which has been humane, and bas substantially ended Indian hostilities in the whole land, except in a portion of Nebraska, and Dakota, Wyoming, and Montana Territo. ries—the Black Hills region and approaches thereto. Hostilities there have grown out of the avarice of the white man, who has violated our treaty stipulations in his search for gold. The question might be asked why the Government has not enforced obedience to the terms of the treaty prohibiting the occupation of the Black Hills region by whites ! The answer is simple : The first immigrants to the Black Hills were removed by troops, but rumors of rich discoveries of gold took into that region increased numbers. Gold bas actually been found in paying quantity, and an effort to remove the winers would only result in the desertion of the bulk of the troops that might be sent there to remove them. All difficulty in this matter has, however, been removed--subject to the approval of Congress-by a treaty ceding the Black Hills and approaches to settlement by citizens.

The subject of Indian policy and treatment is so fully set forth by the Secretary of the Interior and the Commissioner of Indian Affairs, and my views so fully expressed therein, that I refer to their reports and recommendations as my own.

The relations of the United States with foreign powers continue on a friendly footing.

Questions have arisen from time to time in the foreign relations of the Government, but the United States have been happily free during the past year from the complications and embarrassments which have surrounded some of the foreign powers.

The diplomatic correspondence submitted herewith contains information as to certain of the matters which have occupied the Government.

The cordiality which attends our relations with the powers of the earth has been plainly shown by the general participation of foreign pations in the exhibition which has just closed, and by the exertions made by distant powers to show their interest in and friendly feelings toward the United States in the commemoration of the centennial of the nation. The Government and people of the United States have not only fully appreciated this exhibition of kindly feeling, but it may be justly and fairly expected that no small benefits will result both to ourselves and other nations froin a better acquaintance, and a better appreciation of our mutual advantages and mutual wants.

Congress at its last session'saw fit to reduce the amount usually appropriated for foreign intercourse by withholding appropriations for representatives of the United States in certain foreign countries, and for certain consular officers, and by reducing the amounts usually appropriated for certain other diplomatic posts, and thus necessitating a change in the grade of the representatives. For these reasons, immedi. ately upon the passage of the bill making appropriations for the diplo. matic and consular service for the present fiscal year, instructions were issued to the representatives of the United States at Bolivia, Ecuador, and Colombia, and to the consular officers for whom no appropriation had been made, to close their respective legations and consulates, and cease from the performance of their duties; and in like manner steps were immediately taken to substitute chargés d'affaires for ministers resident in Portugal, Denmark, Greece, Switzerland, and Paraguay.

While thoroughly impressed with the wisdom of sound economy in the foreign service as in other branches of the Government, I cannot escape the conclusion that in some instances the withholding of appro. priations will prove an expensive economy, and that the small retrenchment secured by a change of grade in certain diplomatic posts is not an adequate consideration for the loss of influence and importance which will attend our foreign representatives under this reduction. I am of the opinion that a re-examination of the subject will cause a change in some instances in the conclusions reached on these subjects at the last session of Congress.

The Court of Commissioners of Alabama Claims, whose functions were continued by an act of the last session of Congress until the 1st day of January, 1877, has carried on its labors with diligence and general satisfaction. By a report from the clerk of the court, transmitted herewith, bearing date November 14, 1876, it appears that within the time now allowed by law the court will have disposed of all the claims presented for adjudication. This report also contains a statement of the general results of the labors of the court to the date thereof. It is a cause of satisfaction that the method adopted for the satisfaction of the classes of claims submitted to the court, which are of long standing and justly entitled to early consideration, should have proved successful and acceptable.

It is with satisfaction tbat I am enabled to state that the work of the joint commission for determining the boundary-line between the United States and British possessions from the northwest angle of the Lake of the Woods to the Rocky Mountains, commenced in 1872, has been completed. The final agreements of the commissioners, with the maps, have been duly signed, and the work of the commission is complete.

The fixing of the boundary upon the Pacific coast by the protocol of March 10, 1873, pursuant to the award of the Emperor of Germany by Article XXXIV of the treaty of Washington, with the termination of the work of this commission, adjusts and fixes the entire boundary between the United States and the British possessions, except as to the portion of territory ceded by Russia to the United States under the treaty of 1867. The work intrusted to the commissioner and the officers of the Army attached to the commission has been well and satisfactorily performed. The original of the final agreement of the commissioners, signed upon the 29th of May, 1876, with the original “ list of astronomical stations observed,” the original official “list of monuments marking the international boundary-line,” and the maps, records, and general re. ports relating to the commission, have been deposited in the Department of State. The official report of the commissioner on the part of the United States, with the report of the chief astronomer of the United States, will be submitted to Congress within a short time.

I reserve for a separate communication to Congress a statement of the condition of the questions which lately arose with Great Britain respecting the surrender of fugitive criminals under the treaty of 1842.

The Ottoman government gave notice, under date of January 15, 1874, of its desire to terminate the treaty of 1862, concerning commerce and navigation, pursuant to the provisions of the twenty-second article thereof. Under this notice the treaty terininated upon the 5th day of June, 1876. That government has invited negotiations toward the conclusion of a new treaty.

By the act of Congress of March 23, 1874, the President was authorized, when he should receive satisfactory information that the Ottoman government or that of Egypt bad organized new tribunals likely to secure to citizens of the United States the same impartial justice enjoyed under the exercise of judicial functions by diplomatic and consular officers of the United States, to suspend the operation of the act of June 22, 1860, and to accept for citizens of the United States the jurisdiction of the new tribunals. Satisfactory information having been received of the organization of such new tribunals in Egypt, I caused a proclamation to be issued upon the 27th of March last, suspending the operation of the act of June 22, 1860, in Egypt, according to the provisions of the act. A copy of the proclamation accompanies this message. The United States has united with the other powers in the organization of these courts. It is hoped that the jurisdictional questions which have arisen may be readily adjusted, and that this advance in judicial reform may be hindered by no obstacles.

The necessary legislation to carry into effect the convention respect. ing commercial reciprocity concluded with the Hawaiian Islands in 1875 having been had, the proclamation to carry into effect the conven. tion as provided by the act approved August 15, 1876, was duly issued opon the 9th day of September last. A copy' thereof accompanies this message.

The commotions which bave been prevalent in Mexico for some time past, and which unhappily seem to be not yet wholly quieted, have led to complaints of citizens of the United States of injuries by persons in authority. It is hoped, however, that these will ultimately be adjusted to the satisfaction of both governments. The frontier of the United States in that quarter has not been exempt from acts of violence by citizens of one republic on those of the other. The frequency of these is supposed to be increased and their adjustment made more difficult by the considerable changes in the course of the lower part of the Rio Grande River, which river is a part of the boundary between the two countries. These changes bave placed on either side of that river portions of land which by existing conventions belong to the jurisdiction of the government on the opposite side of the river. The subject of adjustment of this cause of difficulty is under consideration between the two republics.

The government of the United States of Colombia has paid the award in the case of the steamer Montijo, seized by authorities of that government some years since, and the amount has been transferred to the claimants.

It is with satisfaction that I am able to announce that the Joint Commission for the adjustment of claims between the United States and Mexico, under the convention of 1868, the duration of which has been several times extended, has brought its labors to a close. From the report of the agent of the United States, which accompanies the papers transmitted herewith, it will be seen that within the time limited by the commission one thousand and seventeen claims on the part of citizens of the United States against Mexico were referred to the commission. Of these claims, eight hundred and thirty-one were dismissed or disal. lowed, and in one hundred and eighty-six cases awards were made in favor of the claimants against the Mexican Republic, amounting in the aggregate to four million one hundred and twenty-five thousand six hundred and twenty-two dollars and twenty cents. Within the same period nipe hundred and ninety-eight claims on the part of citizens of the Mexican Republic against the United States were referred to the commission. Of these claims, eight hundred and thirty-one were dismissed or disallowed; and in one hundred and sixty-seven cases awards were made in favor of the claimants against the United States, amounting in the aggregate to one hundred and fifty thousand four hundred and pinetyeight dollars and forty-one certs.

By the terms of the convention the amount of these awards is to be deducted from the amount awarded in favor of our citizens against Mexico, and the balance only to be paid by Mexico to the United States, leaving the United States to make provision for this proportion of the awards in favor of its own citizens.

I invite your attention to the legislation which will be necessary to provide for the payment.

In this connection I am pleased to be able to express the acknowl. edgments due to Sir Edward Thornton, the umpire of the commission, who has given to the consideration of the large number of claims submitted to him much time, unwearied patience, and that firmness and intelligence which are well known to belong to the accomplished representative of Great Britain, and which are likewise recognized by the representative in this country of the republic of Mexico.

Monthly payments of a very small part of the amount due bs the government of Venezuela to citizens of the United States on account of claims of the latter against that government continue to be made with reasonable punctuality. That government has proposed to change the system which it has hitherto pursued in this respect, by issuing bonds for part of the amount of the several claims. The proposition, how. ever, could not, it is supposed, properly be accepted, at least without the consent of the holders of certificates of the indebtedness of Vene

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