The diminution of our enormous pension roll and the decrease of pension expenditure which have been so often confidently foretold, still fail in material realization. The number of pensioners on the rolls at the close of the fiscal year ended June 30, 1896, was 970,678. This is the largest number ever reported. The amount paid exclusively for the pensions during the year was $138,214,761.94, a slight decrease from that of the preceding year, while the total expenditures on account of pensions, including the cost of maintaining the department and expenses attending pension distribution amounted to $142,206,550.59, or within a very small fraction of one-third of the entire expense of supporting the government during the same year. The number of new pension certiflcates issued was 90,640. Of these, 40.374 represent original allowances of claims and 15,878 increase of existing pensions. The number of persons receiving pensions from the United States, but residing in foreign countries at the close of the last fiscal year was 3,781, and the amount paid to them during the year was $582,735.38. The sum appropriated for the payment of pensions for the current fiscal year ending June 30, 1897, is $140,000,000, and for the succeeding year it is estimated that the same amount will be necessary. The commissioner of pensions reports that during the last fiscal year 339 indictments were found against violators of the pension laws. Upon ' these indictments 157 convictions resulted. In my opinión based upon such statements as these and much other Information and observation, the abuses which have been allowed to creep into our pension system have done incalculable harm in demoralizing our people and rendering good citizenship. I have endeavored within my sphere of official duty to protect our pension roll and make it what it should be, a roll of honor, containing the names of those disabled in their country's service and worthy of their country's affectionate remembran ce. "When I have seen those who pose as the soldiers' friends active and alert in urging greater laxity and more reckless pension expenditure, while nursing selfish schemes, I have deprecated the approach of a situation when necessary retrenchment and enforced economy may lead to an attack upon pension abuses, so determined as to overlook the discriminatie due to those who, worthy of a nation's care, ought to live and die under the protection of a nation's gratitude. The secretary calis attention to the public interests involved in an adjustment of the obligations of the Pacific railroads to the government. I deern it to be an important duty to especially present this subject to the consideration of the congress. The organized militia numbers 112,879 men. The appropriations for its support by the several states approximate $2,600,000 annually and $400,000 is contributed by the federah government. Investigation shows these troops to be usually drilled and inspired with much military interest, but In many Instances they are so deficiënt in proper arms and equipment that a sudden cali to active duty would find them inadequately prepared for field service. I therefore recommend that prompt measures be taken to remedy this condition and that every encouragement be given to this deserving body of unpaid and voluntary citizen soldiers, upon wohse assistance we must largely rely in time of trouble. During the past year rapid progress has been made toward the completion of the scheme adopted for the erection and armament of fortifications along our seacoast, while equal progress has been made in providing the material for submarine defense in connection with these works. The experience and results of the past year demonstrates that with a continuation of present careful methods the cost of the remaining work will be much less than the original estímate. The construction of vessels for our new navy has been energetically prosecuted by the present administration upon the general lines previously adopted, the department having seen no necessity for radical changes in prior methods under which the work was found to bp progressing In a manner highly satisfactory. It has been de' cided, however, to provide in every ship building contract, that the buiider should pay all trial expenses and it has also been determined to pay no Bpeed premiums in the future contracts. Eight new unarmored cruisers and two new gunboats have also been commigEioned. The Iowa, another battleship, will be completed about March 1, and at least four more gunboats will be ready íor sea in the early spring. It is gratifying to state that our ships and their outfits are believed to be equal to the best that can be manufactured elsewhere, and that such notable reductions have been made in their cost, as to justify the statement that quite a number of vessels are now constructed at rates as low as those that prevail in European shipyards. It is most gratifying to note the satisfactory results that have followed the inauguration of the new system provided for by the act of May 28, 1893, under which cer.tain federal officials are compensated by salaries instead of fees. The new plan was put in operation on the lst day of July, 1896, and already the great economy it enforces, lts prevention of abuses, and its tendency to a better enforcement of the laws, are strikingly apparent. Detailed evidence of the usefulness of this long-delayed but now happily accomplished reform will be found clearly set forth in the attorney general's report. Our postofflce department is in good condition, and the exhibit made of its operatlons during the fiscal year ended June 30,1896, if allowance is made for imperfections in the laws applicable to it is very satisfactory. The total receipts during the year were $82,499,208.40. The total expenditures were $90,626,296.84, exclusive of $1,559,898.27, which was earned by the Pacific railroad for transportation and credited on their debt to the government. There was an increase of receipts over the previous year of $5,516,080.21, or 7.1 per cent. and an increase of expenditures of $3,836,124.02, or 4.42 per cent. The number of emigrants arriving in the United States during the fiscal year was 343,267, of whom 340,468 were permitted to land, and 2,799 were debarred on various grounds prescribed by law and returned to the countries whence they came at the expense of the steamship company by which they were brought in. The inerease in immigration over the pi-eceding year amounted to 84,131. It is reported that with some exceptions the immigrants of the past year were of a hardy laboring class, accustomed and able to earn a support for themselves, and it is estimated that the money brought with them amounted to at least $5,000,000, though it was probably much in excess of that sum since only those having less than $20 are required to disclose the exact amount and it is known that many brought considerable sums of money to buv land and build homes. Including all the immigrants arriving who were over 14 years of age, 28.63 per cent. were illiterate as against 20.37 per cent. of those of that age arriving during the preceding fiscal year. There arrived from Japan during the year only 1,110 immigrants, and it is the opinión of the immigration authorities that the apprehension heretofore existing to some extent of a large immigration from Japan to the United States is without any substantial foundation. The department of agriculture is so intimately related to the welfar-e of our people and the prosperity of our nation that it should constantly receive the care and encouragement of the government. From small beginnings it has grown to be the center of agricultural intelligence and the source of aid and encouragement to agricultural efforts. Large sums of money are annually appropriated for the maintenance of this department and it must be confessed that the legislation relatlng to it has not always been directly in the interest of practical farming or properly guarded against waste and extravagance. So far, however, the public money has been appropriated fairly and sensibly to help those who actually till the soil. No expenditure has been more profitably made or more generally approved by the peole. Under the present management of the department of its usefulness has been enhanced in every direction and at the same time strict economy has been enforced to the utmost extent permitted by congressional action. From the report of the secretary it appears that through careful and prudent financial management he has annually saved a large sum from his appropriations, aggregating during his incumbency and up to the close of the present .fiscal year nearly one-fifth of the entire amount appropriated. These results have been accomplished by a conscientious study of the real needs of the farmer and such a regard for economy as the genuine farmer ought to appreciate. The secretary reports that the value of our exports of farm products during the last fiscal year amounted to $570,000,000, an increase of $17,000,000 over those of the year immediately preceding. This statement is not the less welcome because of the fact that, nowithstanding such increase, the proportion of exported agricultural products to our total exports of all descriptions feil off during the year. The benefits of an increase in agricultural exports being assured, the decrease in its proportion to our total exports is the more gratifying when we consider that it is owing to the fact that such total exports for the year increased more than $75,000,000. The weather bureau, now attached to the department of agriculture, has continued to extend its sphere of usefulness, and by an uninterrupted improvement in the accuracy of its forecasts has greatly increased its efficiency as an aid and protection to all whose occupations are related to weather conditions. Progress made in civil service reform furnishes a cause for the utmost congratulations. It has survived the doubts of its friends as well as the rancor of its enemies, and has gained a permanent places among the agencies destined to cleanse our politics and improve, economize, and elévate the public service. There are now in the competitive classified service upward of 84,000 places. More than half of these have been included from time to time since March 4, 1893. A most radical and sweeping extensión was made by executive order dated the 6th day of May, 1896. The civil service rules as amended during the last year provide for a sensible and uniform method of promotion, basing eligibility to better positions upon demonstrated efficiency and faithfulness. The absence of fixed rules on this subject has been an infirmity in the system more and more apparent as its other beneflts have been better appreciated. In concluding this communication its last words shall be an appeal to the eongress for the most rigid economy in the expenditure of the money it holds In trust for the people. The way to perplexing extravagance is easy, but a return to frugality is difficult. When, however, it is considered that those who bear the burdens of taxation have no guarantee of honest care save il the fidelity of their public servants, tht duty of all possible retrenchment is plainly manifest. When our differences are forgotten and our contests of political opinión are no longer remembered, nothing in the retrospect of our public service will be as fortúnate and comforting as the recollection of official fluly well performed, and the memory of a constant devotion to the intercács of our confiding fellowoountrTiien. Executivt Mansión, Dec. 7. 1896.