The report of the Postmaster-General herewith transmitted gives a full history of the workings of the Department for the year just past.  It will be observed that the deficiency to be supplied from the General Treasury is increased over the amount required for the preceding year.  In a country so vast in area as the United States, with large portions sparsely settled, it must be expected that this important service will be more or less a burden upon the Treasury for many years to come.  But there is no branch of the public service which interests the whole people more than that of cheap and rapid transmission of the mails to every inhabited part of our territory.  Next to the free school, the post-office is the great educator of the people, and it may well receive the support of the General Government.

The subsidy of $150,000 per annum given to vessels of the United States for carrying the mails between New York and Rio de Janeiro having ceased on the 30th day of September last, we are without direct mail facilities with the South American States.  This is greatly to be regretted, and I do not hesitate to recommend the authorization of a renewal of that contract, and also that the service may be increased from monthly to semi-monthly trips.  The commercial advantages to be gained by a direct line of American steamers to the South American States will far outweigh the expense of the service.

By act of Congress approved March 3, 1875, almost all matter, whether properly mail matter or not, may be sent any distance through the mails, in packages not exceeding 4 pounds in weight, for the sum of 16 cents per pound.  So far as the transmission of real mail matter goes, this would seem entirely proper; but I suggest that the law be so amended as to exclude from the mails merchandise of all descriptions, and limit this transportation to articles enumerated, and which may be classed as mail matter proper.

The discovery of gold in the Black Hills, a portion of the Sioux Reservation, has had the effect to induce a large emigration of miners to that point.  Thus far the effort to protect the treaty rights of the Indians to that section has been successful, but the next year will certainly witness a large increase of such emigration.  The negotiations for the relinquishment of the gold fields having failed, it will be necessary for Congress to adopt some measures to relieve the embarrassment growing out of the causes named.  The Secretary of the Interior suggests that the supplies now appropriated for the sustenance of that people, being no longer obligatory under the treaty of 1868, but simply a gratuity, may be issued or withheld at his discretion.

The condition of the Indian Territory, to which I have referred in several of my former annual messages, remains practically unchanged.  The Secretary of the Interior has taken measures to obtain a full report of the condition of that Territory, and will make it the subject of a special report at an early day.  It may then be necessary to make some further recommendation in regard to legislation for the government of that Territory.