ed of interest-bearing securities $259,079,350,
resulting in a reduction of the annual interest charge of $11,684,675.
The money which had been deposited in banks without interest has been
gradually withdrawn and used in the redemption of bonds.

The result of this policy, of the silver legislation, and of the
refunding of the 4-1/2 per cent bonds has been a large increase of
the money in circulation. At the date last named the circulation was
$1,404,205,896, or $23.03 per capita, while on the 1st day of December,
1891, it had increased to $1,577,262,070, or $24.38 per capita. The
offer of the Secretary of the Treasury to the holders of the 4-1/2 per
cent bonds to extend the time of redemption, at the option of the
Government, at an interest of 2 per cent, was accepted by the holders of
about one-half the amount, and the unextended bonds are being redeemed
on presentation.

The report of the Secretary of War exhibits the results of an
intelligent, progressive, and businesslike administration of a
Department which has been too much regarded as one of mere routine. The
separation of Secretary Proctor from the Department by reason of his
appointment as a Senator from the State of Vermont is a source of great
regret to me and to his colleagues in the Cabinet, as I am sure it will
be to all those who have had business with the Department while under
his charge.

In the administration of army affairs some especially good work has
been accomplished. The efforts of the Secretary to reduce the percentage
of desertions by removing the causes that promoted it have been so
successful as to enable him to report for the last year a lower
percentage of desertion than has been before reached in the history
of the Army. The resulting money saving is considerable, but the
improvement in the morale of the enlisted men is the most valuable
incident of the reforms which have brought about this result.

The work of securing sites for shore batteries for harbor defense and
the manufacture of mortars and guns of high power to equip them have
made good progress during the year. The preliminary work of tests and
plans which so long delayed a start is now out of the way. Some guns
have been completed, and with an enlarged shop and a more complete
equipment at Watervliet the Army will soon be abreast of the Navy in gun
construction. Whatever unavoidable causes of delay may arise, there
should be none from delayed or insufficient appropriations