My Fellow-Citizens:

When we assembled here on the 4th of March, 1897, there was great anxiety with regard to our currency and credit. None exists now. Then our Treasury receipts were inadequate to meet the current obligations of the Government. Now they are sufficient for all public needs, and we have a surplus instead of a deficit. Then I felt constrained to convene the Congress in extraordinary session to devise revenues to pay the ordinary expenses of the Government. Now I have the satisfaction to announce that the Congress just closed has reduced taxation in the sum of $41,000,000. Then there was deep solicitude because of the long depression in our manufacturing, mining, agricultural, and mercantile industries and the consequent distress of our laboring population. Now every avenue of production is crowded with activity, labor is well employed, and American products find good markets at home and abroad.

Our diversified productions, however, are increasing in such unprecedented volume as to admonish us of the necessity of still further enlarging our foreign markets by broader commercial relations. For this purpose reciprocal trade arrangements with other nations should in liberal spirit be carefully cultivated and promoted.

The national verdict of 1896 has for the most part been executed. Whatever remains unfulfilled is a continuing obligation resting with undiminished force upon the Executive and the Congress. But fortunate as our condition is, its permanence can only be assured by sound business methods and strict economy in national administration and legislation. We should not permit our great prosperity to lead us to reckless ventures in business or profligacy in public expenditures. While the Congress determines the objects and the sum of appropriations, the officials of the executive departments are responsible for honest and faithful disbursement, and it should be their constant care to avoid waste and extravagance.

Honesty, capacity, and industry are nowhere more indispensable than in public employment. These should be fundamental requisites to original appointment and the surest guaranties against removal.

Four years ago we stood on the brink of war without the people knowing it and without any preparation or effort at preparation for the impending peril. I did all that in honor could be done to avert the war, but without avail. It became inevitable; and the Congress at its first regular session, without party division, provided money in anticipation of the crisis and in preparation to meet it. It came. The result was signally favorable to American arms and in the highest degree honorable to the Government. It imposed upon us obligations from which we cannot escape and from which it would be dishonorable to seek escape. We are now at peace with the world, and it is my fervent prayer that if differences arise between us and other powers they may be settled by peaceful arbitration and that hereafter we may be spared the horrors of war.

Intrusted by the people for a second time with the office of President, I enter upon its administration appreciating the great responsibilities which attach to this renewed honor and commission, promising unreserved devotion on my part to their faithful discharge and reverently invoking for my guidance the direction and favor of Almighty God. I should shrink from the duties this day assumed if I did not feel that in their performance I should have the co-operation of the wise and patriotic men of all parties. It encourages me for the great task which I now undertake to believe that those who voluntarily committed to me the trust imposed upon the Chief Executive of the Republic will give to me generous support in my duties to "preserve, protect, and defend, the Constitution of the United States" and to "care that the laws be faithfully executed." The national purpose is indicated through a national election. It is the constitutional method of ascertaining the public will. When once it is registered it is a law to us all, and faithful observance should follow its decrees.

Strong hearts and helpful hands are needed, and, fortunately, we have them in every part of our beloved country. We are reunited. Sectionalism has disappeared. Division on public questions can no longer be traced by the war maps of 1861. These old differences less and less disturb the judgment. Existing problems demand the thought and quicken the conscience of the country, and the responsibility for their presence, as well as for their righteous settlement, rests upon us all--no more upon me than upon you. There are some national questions in the solution of which patriotism should exclude partisanship. Magnifying their difficulties will not take them off our hands nor facilitate their adjustment. Distrust of the capacity, integrity, and high purposes of the American people will not be an inspiring theme for future political contests. Dark pictures and gloomy forebodings are worse than useless. These only becloud, they do not help to point the way of safety and honor. "Hope maketh not ashamed." The prophets of evil were not the builders of the Republic, nor in its crises since have they saved or served it. The faith of the fathers was a mighty force in its creation, and the faith of their descendants has wrought its progress and furnished its defenders. They are obstructionists who despair, and who would destroy confidence in the ability of our people to solve wisely and for civilization the mighty problems resting upon them. The American people, intrenched in freedom at home, take their love for it with them wherever they go, and they reject as mistaken and unworthy the doctrine that we lose our own liberties by securing the enduring foundations of liberty to others. Our institutions will not deteriorate by extension, and our sense of justice will not abate under tropic suns in distant seas. As heretofore, so hereafter will the nation demonstrate its fitness to administer any new estate which events devolve upon it, and in the fear of God will "take occasion by the hand and make the bounds of freedom wider yet." If there are those among us who would make our way more difficult, we must not be disheartened, but the more earnestly dedicate ourselves to the task upon which we have rightly entered. The path of progress is seldom smooth. New things are often found hard to do. Our fathers found them so. We find them so. They are inconvenient. They cost us something. But are we not made better for the effort and sacrifice, and are not those we serve lifted up and blessed?

We will be consoled, too, with the fact that opposition has confronted every onward movement of the Republic from its opening hour until now, but without success. The Republic has marched on and on, and its step has exalted freedom and humanity. We are undergoing the same ordeal as did our predecessors nearly a century ago. We are following the course they blazed. They triumphed. Will their successors falter and plead organic impotency in the nation? Surely after 125 years of achievement for mankind we will not now surrender our equality with other powers on matters fundamental and essential to nationality. With no such purpose was the nation created. In no such spirit has it developed its full and independent sovereignty. We adhere to the principle of equality among ourselves, and by no act of ours will we assign to ourselves a subordinate rank in the family of nations.

My fellow-citizens, the public events of the past four years have gone into history. They are too near to justify recital. Some of them were unforeseen; many of them momentous and far-reaching in their consequences to ourselves and our relations with the rest of the world. The part which the United States bore so honorably in the thrilling scenes in China, while new to American life, has been in harmony with its true spirit and best traditions, and in dealing with the results its policy will be that of moderation and fairness.

We face at this moment a most important question that of the future relations of the United States and Cuba. With our near neighbors we must remain close friends. The declaration of the purposes of this Government in the resolution of April 20, 1898, must be made good. Ever since the evacuation of the island by the army of Spain, the Executive, with all practicable speed, has been assisting its people in the successive steps necessary to the establishment of a free and independent government prepared to assume and perform the obligations of international law which now rest upon the United States under the treaty of Paris. The convention elected by the people to frame a constitution is approaching the completion of its labors. The transfer of American control to the new government is of such great importance, involving an obligation resulting from our intervention and the treaty of peace, that I am glad to be advised by the recent act of Congress of the policy which the legislative branch of the Government deems essential to the best interests of Cuba and the United States. The principles which led to our intervention require that the fundamental law upon which the new government rests should be adapted to secure a government capable of performing the duties and discharging the functions of a separate nation, of observing its international obligations of protecting life and property, insuring order, safety, and liberty, and conforming to the established and historical policy of the United States in its relation to Cuba.

The peace which we are pledged to leave to the Cuban people must carry with it the guaranties of permanence. We became sponsors for the pacification of the island, and we remain accountable to the Cubans, no less than to our own country and people, for the reconstruction of Cuba as a free commonwealth on abiding foundations of right, justice, liberty, and assured order. Our enfranchisement of the people will not be completed until free Cuba shall "be a reality, not a name; a perfect entity, not a hasty experiment bearing within itself the elements of failure."

While the treaty of peace with Spain was ratified on the 6th of February, 1899, and ratifications were exchanged nearly two years ago, the Congress has indicated no form of government for the Philippine Islands. It has, however, provided an army to enable the Executive to suppress insurrection, restore peace, give security to the inhabitants, and establish the authority of the United States throughout the archipelago. It has authorized the organization of native troops as auxiliary to the regular force. It has been advised from time to time of the acts of the military and naval officers in the islands, of my action in appointing civil commissions, of the instructions with which they were charged, of their duties and powers, of their recommendations, and of their several acts under executive commission, together with the very complete general information they have submitted. These reports fully set forth the conditions, past and present, in the islands, and the instructions clearly show the principles which will guide the Executive until the Congress shall, as it is required to do by the treaty, determine "the civil rights and political status of the native inhabitants." The Congress having added the sanction of its authority to the powers already possessed and exercised by the Executive under the Constitution, thereby leaving with the Executive the responsibility for the government of the Philippines, I shall continue the efforts already begun until order shall be restored throughout the islands, and as fast as conditions permit will establish local governments, in the formation of which the full co-operation of the people has been already invited, and when established will encourage the people to administer them. The settled purpose, long ago proclaimed, to afford the inhabitants of the islands self-government as fast as they were ready for it will be pursued with earnestness and fidelity. Already something has been accomplished in this direction. The Government's representatives, civil and military, are doing faithful and noble work in their mission of emancipation and merit the approval and support of their countrymen. The most liberal terms of amnesty have already been communicated to the insurgents, and the way is still open for those who have raised their arms against the Government for honorable submission to its authority. Our countrymen should not be deceived. We are not waging war against the inhabitants of the Philippine Islands. A portion of them are making war against the United States. By far the greater part of the inhabitants recognize American sovereignty and welcome it as a guaranty of order and of security for life, property, liberty, freedom of conscience, and the pursuit of happiness. To them full protection will be given. They shall not be abandoned. We will not leave the destiny of the loyal millions the islands to the disloyal thousands who are in rebellion against the United States. Order under civil institutions will come as soon as those who now break the peace shall keep it. Force will not be needed or used when those who make war against us shall make it no more. May it end without further bloodshed, and there be ushered in the reign of peace to be made permanent by a government of liberty under law!