Total receipts, actual and estimated $343,000,000.00 Total expenditures, actual and estimated 258,000,000.00 ______________ 85,000,000.00 Estimated amount due the sinking fund 45,816,741.07 ______________ Leaving a balance of 39,183,258.93 If the revenue for the fiscal year which will end on June 30, 1885, be estimated upon the basis of existing laws, the Secretary is of the opinion that for that year the receipts will exceed by $60,000,000 the ordinary expenditures including the amount devoted to the sinking fund. Hitherto the surplus, as rapidly as it has accumulated, has been devoted to the reduction of the national debt. As a result the only bonds now outstanding which are redeemable at the pleasure of the Government are the 3 percents, amounting to about $305,000,000. The 4-1/2 percents, amounting to $250,000,000, and the $737,000,000 4 percents are not payable until 1891 and 1907, respectively. If the surplus shall hereafter be as large as the Treasury estimates now indicate, the 3 per cent bonds may all be redeemed at least four years before any of the 4-1/2 percents can be called in. The latter at the same rate of accumulation of surplus can be paid at maturity, and the moneys requisite for the redemption of the 4 percents will be in the Treasury many years before those obligations become payable. There are cogent reasons, however, why the national indebtedness should not be thus rapidly extinguished. Chief among them is the fact that only by excessive taxation is such rapidity attainable. In a communication to the Congress at its last session I recommended that all excise taxes be abolished except those relating to distilled spirits and that substantial reductions be also made in the revenues from customs. A statute has since been enacted by which the annual tax and tariff receipts of the Government have been cut down to the extent of at least fifty or sixty millions of dollars. While I have no doubt that still further reductions may be wisely made, I do not advise the adoption at this session of any measures for large diminution of the national revenues. The results of the legislation of the last session of the Congress have not as yet become sufficiently apparent to justify any radical revision or sweeping modifications of existing law. In the interval which must elapse before the effects of the act of March 3, 1883, can be definitely ascertained a portion at least of the surplus revenues may be wisely applied to the long-neglected duty of rehabilitating our Navy and providing coast defenses for the protection of our harbors. This is a matter to which I shall again advert.