It is perhaps doubtful whether the immediate reduction of the rate of taxation upon liquors and tobacco is advisable, especially in view of the drain upon the Treasury which must attend the payment of arrears of pensions.  A comparison, however, of the amount of taxes collected under the varying rates of taxation which have at different times prevailed suggests the intimation that some reduction may soon be made without material diminution of the revenue.

The tariff laws also need revision; but, that a due regard may be paid to the conflicting interests of our citizens, important changes should be made with caution.  If a careful revision can not be made at this session, a commission such as was lately approved by the Senate and is now recommended by the Secretary of the Treasury would doubtless lighten the labors of Congress whenever this subject shall be brought to its consideration.

The accompanying report of the Secretary of War will make known to you the operations of that Department for the past year.

He suggests measures for promoting the efficiency of the Army without adding to the number of its officers, and recommends the legislation necessary to increase the number of enlisted men to 30,000, the maximum allowed by law.

This he deems necessary to maintain quietude on our ever-shifting frontier; to preserve peace and suppress disorder and marauding in new settlements; to protect settlers and their property against Indians, and Indians against the encroachments of intruders; and to enable peaceable immigrants to establish homes in the most remote parts of our country.

The Army is now necessarily scattered over such a vast extent of territory that whenever an outbreak occurs reenforcements must be hurried from many quarters, over great distances, and always at heavy cost for transportation of men, horses, wagons, and supplies.

I concur in the recommendations of the Secretary for increasing the Army to the strength of 30,000 enlisted men.

It appears by the Secretary’s report that in the absence of disturbances on the frontier the troops have been actively employed in collecting the Indians hitherto hostile and locating them on their proper reservations; that Sitting Bull and his adherents are now prisoners at Fort Randall; that the Utes have been moved to their new reservation in Utah; that during the recent outbreak of the Apaches it was necessary to reenforce the garrisons in Arizona by troops withdrawn from New Mexico; and that some of the Apaches are now held prisoners for trial, while some have escaped, and the majority of the tribe are now on their reservation.

There is need of legislation to prevent intrusion upon the lands set apart for the Indians.  A large military force, at great expense, is now required to patrol the boundary line between Kansas and the Indian Territory.  The only punishment that can at present be inflicted is the forcible removal of the intruder and the imposition of a pecuniary fine, which in most cases it is impossible to collect.  There should be a penalty by imprisonment in such cases.