Railroad Company, the Vicksburgh, Shreveport and Texas Railroad Company, the managers of Morgan's Louisiana and Texas Railroad and Steamship Company.

The following have complied in a measure with the requests of the Auditor, viz: The Hannibal and Saint Joseph Railroad Company, the Leavenworth, Lawrence and Galveston Railroad Company, the Missouri River, Fort Scott and Gulf Railroad Company, the North Wisconsin Railroad Company, the Winona and Saint Peter Railroad Company, the Southern Minnesota Railway Company, and the Saint Paul and Duluth Railroad Company.

The following railroad companies are preparing to comply with the requests of the Auditor, viz: The Little Rock and Fort Smith Railway Company, the Memphis and Little Rock Railroad Company, the Atchison, Topeka and Santa Fé Railroad Company, the Chicago, Rock Island and Pacific Railroad Company, and the Missouri Pacific Railroad Company.

Four months only having elapsed since the establishment of the bureau, most of which time has been consumed in organizing and in correspondence with railroad companies, it became questionable whether any report of its operations could be made at so early a day, and in consequence it is necessarily incomplete.

The Auditor's report is accompanied by an appendix, containing statements and compilations of facts relating to the Pacific and land-grant railroad companies, the laws affecting them, official correspondence, statements of the affairs of the companies, their receipts, expenditures, and operations, the accounts between the United States and the Pacific Railroad companies, the condition of the respective land-grants, and other matters of general interest in respect to railroad companies.

It will be seen from Appendix C of the Auditor's report, that about 196,424,800.68 acres of land have been granted for railroad purposes, of which, to June 30, 1878, 31,014,496.7 acres were patented. The acts of Congress making these large grants were passed with conditions intended, in a measure, to repay the people for such valuable donations; but, until the passage of the act creating the Bureau of the Auditor of Railroad Accounts, the government had no certain way of ascertaining whether these conditions were complied with, nor was it possible to know what they were worth.

The recommendations of the Auditor in regard to legislation are worthy of consideration.

THE PRO-RATE QUESTION.

The suit of the Kansas Pacific Railway Company et al. vs. The Union Pacific Railroad Company, instituted January 21, 1875, in the United States circuit court of the district of Nebraska, commonly known as "the pro-rate case," has not been determined. In view of this fact, and the fact that legislation bearing upon this question is now pending in Con

gress, and that much complaint continues to be made against the Union Pacific Railroad Company for non-compliance with the requirements of law in this respect, it is hoped that the whole subject will receive early consideration by Congress, so that some final settlement of these difficulties may be had.

THE GOVERNMENT DIRECTORS.

The report of the government directors of the Union Pacific Railroad Company has not yet been received, but it is understood that it will be shortly made, and will be laid before Congress during the present session.

PENSIONS.

The number of unsettled pension claims of all classes at the beginning of the year was 91,444, of which 49,369 were original Army invalid claims, 5,610 invalid increase; 32,969 original widows, dependent relations, and minors, 907 widows increase; 1,053 original Navy invalid, 65 invalid increase; 485 original widows, dependent relations, and minors, 1 widow increase; 448 survivors War of 1812, and 537 widows.

During the year there were 67,218 new pension claims of all classes filed, of which 18,812 were original Army invalid, 21,915 invalid increase; 6,661 original widows, dependent relations, and minors, 516 widows increase; 300 original Navy invalid, 182 invalid increase; 131 original widows, dependent relations, and minors, 14 widows increase; 2,789 survivors War of 1812, and 15,898 widows. There were filed in addition 291 claims for bounty land warrants. Besides these, 5,095 claims of the several classes which had been rejected were reopened for further consideration.

Of the new claims, 18,240 were under the act of March 9, 1878. During the year, 43,370 pension claims of the various classes and 394 claims for bounty land warrants were settled.

The whole number of unsettled pension claims at the close of the year was 120,387.

As shown by an actual count in all the agencies, there were at the beginning of the year 226,643 pensioners on the rolls. At the close of the year there were on the rolls 223,998 pensioners, a decrease of 2,645.

Owing to the large number of 1812 claims, which will be settled within the year, it is probable that there will be a considerable increase in the number of pensioners during the current year.

The amount appropriated for pensions for the year ending June 30, 1878, exclusive of surgeons' fees and the salaries and fees of the agents for paying pensions, was $27,850,000, of which $26,530,792.10 were disbursed for pensions, leaving unexpended $1,319,207.90.

For a more particular statistical account of the transactions of the Pension Bureau, reference is made to the Commissioner's annual report. The special service division of the office investigated during the year 1,830 cases, resulting in a total saving to the government, by dropping

from the rolls the names of those not entitled to receive pensions, the rejection of cases presented in proper form but found to be without merit, the reduction of pensions already granted, and the refanding of money improperly collected by pensioners, with one year's pension added in each case, of $402,096.95.

The total cost of the investigations to the fund appropriated for the expenses of the special service was $38,235.80

In referring to this special work of his office the Commissioner says: Considering the extraordinary opportunities for the successful prosecution of fraudulent or unmeritorious claims which exist under the present system of adjudication, in connection with the fact that the Commissioner of Pensions has no authority to go out and hunt for fraud, but is limited by the statute to the investigation of such cases only as suspicion attaches to in the usual routine of the office, the investigations of the last year, as well as those of the preceding year, furnish a very suggestive lesson. I am convinced that a great number of persons have been pensioned who had no just title, and that the number of that class is being constantly increased in the settlements which are now going on, and this must continue to be the case until some measure shall be adopted by which the truth of the parol testimony which is offered can be tested. No such test is possible under the present system.

The annual expenditure of so large an amount of public money should certainly have thrown about it all the safeguards that are attainable by improved methods of settlement and payment. The greatest care should be taken to establish beyond doubt the right of a claimant to pension money; for, once allowed, it becomes through a long series of years an annual tax upon the government.

The results of investigation into a limited number of claims which have attracted suspicion appear to justify the conclusion arrived at by the Commissioner, that the present system of examining the evidence on which pension is allowed is defective and ought to be corrected.

In two previous annual reports the Commissioner recommended the substitution of a corps of efficient surgeons, to be assigned by districts throughout the country and assisted by competent clerks, for the present unwieldy and unreliable system of medical examination, which requires the services of over 1,500 examining surgeons.

By the system proposed, the claimants and their witnesses would be brought face to face with the officers of the government, a more accurate knowledge would be received by the facts set forth, and more reliable data than can be now obtained would be secured for the settlement of claims. In his present report he states that another year's observation and experience have only tended to confirm his previous opinion that the change of system proposed is necessary and that it is both feasible and economical.

The magnitude of the interests involved commends this proposed system to the considerate attention of Congress. If on examination it is found to be an improvement on the present one, no time should be lost in securing the legislation necessary to the change.

The consolidation of pension agencies, which went into effect July 1,

1877, has proved satisfactory. Pensions are now paid at 18 agencies with equal promptness and less inconvenience than when the number was 58. A more uniform system of payment has been secured, at a reduction on salary account alone of $142,000.

The Commissioner reports an increased efficiency in the clerical force of his bureau, and attributes it to the comparatively few changes in the personnel of the office. Merit has been regarded as the basis of retention and promotion, and this has tended to dispel the feeling of uncertainty and insecurity in relation to the tenure of office.

The Commissioner makes the following recommendations:

1. The amendment of section 4702 Revised Statutes, by adding a proviso, that when a widow remarries the children entitled to pension should be paid from the date of last payment to their mother.

Under the law as it now stands the children are entitled from the date of remarriage, so that through concealment of the fact subsequent payments may be made, which, although used for the support of the children, cannot be deducted from the amount found due them under the present law.

2. Repeal of section 4717 Revised Statutes, which bars the admission of claims not prosecuted to successful issue within five years from the date of filing, without record evidence from the War or Navy Department of the injury or disease which resulted in the disability or death of the person on whose account the claim is made.

It is claimed that this section works great hardship to many claimants, in whose cases the records are alleged to be incomplete or not in accordance with the facts.

3. The amendment of section 4698 Revised Statutes, which prescribes that no increase of an invalid pension, except in cases of "specific disabilities," shall commence prior to the date of the medical examination upon which the claim is adjusted.

The application of this is attended by considerable confusion and often by injustice. It prevents an increase, in many cases covering a period wherein the disability was clearly in excess of the pension paid, or a low rate was allowed on the mistaken opinion of an examining surgeon or a misapprehension of the case by the Commissioner. The statute should be so amended as to extend to this class of claims the exception made in specific disability cases.

As the amendments commend themselves on the grounds of necessity and justice, I earnestly recommend them to the favorable consideration of Congress.

PATENTS.

The report of the Commissioner of Patents shows a gratifying increase of the business of the office for the year ending June 30, 1878.

The number of original applications received for patents was 19,657; for design patents, 722; for reissue of patents, 627; for registration of trade-marks, 1,536; for registration of labels, 727; caveats filed, 2,737.

Patents granted, including reissues and designs, 14,100; trade-marks registered, 1,505; labels registered, 492; forfeited for non-payment of final fee after allowance, 668.

The total receipts from all sources $734,887.98, an increase over last year of $19,923.25. Total expenditures, including $50,000 for repair of models, $665,906.02; leaving an excess of receipts over expenditures of $68,981.96.

The treaty between the United States and Great Britain for the reciprocal protection of the marks of manufacture and trade in the two countries, proclaimed by the President July 17, 1878, has already produced good results, mutually advantageous to the citizens of both nations.

During the year duplicate copies of all British patents have been received. The contribution is a valuable one, especially to the examining corps of the office.

The Commissioner reports the restoration of 18,563 models damaged by the fire of September, 1877. A careful record has been kept of the repaired models, showing the condition of each when taken up for repair. The work has been skillfully done and reflects credit on those employed.

The necessity of additional room is daily growing more apparent. The various divisions are suffering from this cause, some of them lacking the proper space for the desk-room needed for the transaction of business. The continued accumulation of applications, works of reference, copies of drawings and specifications, models, &c., will in the near future crowd the working force out of the building, unless relief is found by providing the additional room needed.

Previous recommendations are renewed by the Commissioner for liberal appropriations for the purchase of books of reference for the library and for the preparation of complete digests of United States patents. As the office yields a handsome revenue over and above all its expenditures, it would appear but simple justice to the inventors who contribute to this revenue that a portion of the surplus should be yearly appropriated for the improvement of its scientific library and for the preparation of such digests of patents as will facilitate the work of examination and make its results more accurate and valuable.

EDUCATION.

The Commissioner of Education reports increased attention to the collection of statistics and increased use by the public of the facts thus collected. He states that the small force of his office has been unequal to the performance of its regular current business, and that he has been compelled to delay special reports or set them aside for the time.

A special report is being prepared on Indian education from the sixteenth century to the present time.

The amount of lands and money hitherto granted by the general goverment to the several States for the benefit of education, and the amount