the
revival of our merchant marine as the wisdom of Congress may devise.

The 3 per cent bonds of the Government to the amount of more than
$100,000,000 have since my last annual message been redeemed by the
Treasury. The bonds of that issue still outstanding amount to little
over $200,000,000, about one-fourth of which will be retired through the
operations of the sinking fund during the coming year. As these bonds
still constitute the chief basis for the circulation of the national
banks, the question how to avert the contraction of the currency caused
by their retirement is one of constantly increasing importance.

It seems to be generally conceded that the law governing this matter
exacts from the banks excessive security, and that upon their present
bond deposits a larger circulation than is now allowed may be granted
with safety. I hope that the bill which passed the Senate at the last
session, permitting the issue of notes equal to the face value of the
deposited bonds, will commend itself to the approval of the House of
Representatives.

In the expenses of the War Department the Secretary reports a decrease
of more than $9,000,000. Of this reduction $5,600,000 was effected in
the expenditures for rivers and harbors and $2,700,000 in expenditures
for the Quartermaster's Department.

Outside of that Department the annual expenses of all the Army bureaus
proper (except possibly the Ordnance Bureau) are substantially fixed
charges, which can not be materially diminished without a change in the
numerical strength of the Army. The expenditures in the Quartermaster's
Department can readily be subjected to administrative discretion, and it
is reported by the Secretary of War that as a result of exercising such
discretion in reducing the number of draft and pack animals in the Army
the annual cost of supplying and caring for such animals is now
$1,108,085.90 less than it was in 1881.

The reports of military commanders show that the last year has been
notable for its entire freedom from Indian outbreaks.

In defiance of the President's proclamation of July 1, 1884,[20] certain
intruders sought to make settlements in the Indian Territory. They were
promptly removed by a detachment of troops.

During the past session of Congress a bill to provide a suitable
fireproof building for the Army Medical Museum and the library of the
Surgeon-General's Office received the approval of the Senate. A similar
bill, reported fa