The execution of the policy of concentrating the Army at important centers of population and transportation, foreshadowed in the last annual report of the Secretary, has resulted in the abandonment of fifteen of the smaller posts, which was effected under a plan which assembles organizations of the same regiments hitherto widely separated. This renders our small forces more readily effective for any service which they may be called upon to perform, increases the extent of the territory under protection without diminishing the security heretofore afforded to any locality, improves the discipline, training, and esprit de corps of the Army, besides considerably decreasing the cost of its maintenance. Though the forces of the Department of the East have been somewhat increased, more than three-fourths of the Army is still stationed west of the Mississippi. This carefully matured policy, which secures the best and greatest service in the interests of the general welfare from the small force comprising our Regular Army, should not be thoughtlessly embarrassed by the creation of new and unnecessary posts through acts of Congress to gratify the ambitions or interests of localities. While the maximum legal strength of the Army is 25,000 men, the effective strength, through various causes, is but little over 20,000 men. The purpose of Congress does not, therefore, seem to be fully attained by the existing condition. While no considerable increase in the Army is, in my judgment, demanded by recent events, the policy of seacoast fortification, in the prosecution of which we have been steadily engaged for some years, has so far developed as to suggest that the effective strength of the Army be now made at least equal to the legal strength. Measures taken by the Department during the year, as indicated, have already considerably augmented the effective force, and the Secretary of War presents a plan, which I recommend to the consideration of Congress, to attain the desired end. Economies effected in the Department in other lines of its work will offset to a great extent the expenditure involved in the proposition submitted. Among other things this contemplates the adoption of the three-battalion formation of regiments, which for several years has been indorsed by the Secretaries of War and the Generals Commanding the Army. Compact in itself, it provides a skeleton organization, ready to be filled out in the event of war, which is peculiarly adapted to our strength and requirements; and the fact that every other nation, with a single exception, has adopted this formation to meet the conditions of modern warfare should alone secure for the recommendation an early consideration.