I am convinced that the proper solution of the Indian problem and the success of every step taken in that direction depend to a very large extent upon the intelligence and honesty of the reservation agents and the interest they have in their work.  An agent fitted for his place can do much toward preparing the Indians under his charge for citizenship and allotment of their lands, and his advice as to any matter concerning their welfare will not mislead.  An unfit agent will make no effort to advance the Indians on his reservation toward civilization or preparation for allotment of lands in severalty, and his opinion as to their condition in this and other regards is heedless and valueless.

The indications are that the detail of army officers as Indian agents will result in improved management on the reservations.

Whenever allotments are made and any Indian on the reservation has previously settled upon a lot and cultivated it or shown a disposition to improve it in any way, such lot should certainly be allotted to him, and this should be made plainly obligatory by statute.

In the light of experience and considering the uncertainty of the Indian situation and its exigencies in the future, I am not only disposed to be very cautious in making allotments, but I incline to agree with the Secretary of the Interior in the opinion that when allotments are made the balance of reservation land remaining after allotment, instead of being bought by the Government from the Indians and opened for settlement with such scandals and unfair practices as seem unavoidable, should remain for a time at least as common land or be sold by the Government on behalf of the Indians in an orderly way and at fixed prices, to be determined by its location and desirability, and that the proceeds, less expenses, should be held in trust for the benefit of the Indian proprietors.

The intelligent Indian-school management of the past year has been followed by gratifying results.  Efforts have been made to advance the work in a sound and practical manner.  Five institutes of Indian teachers have been held during the year, and have proved very beneficial through the views exchanged and methods discussed particularly applicable to Indian education.

Efforts are being made in the direction of a gradual reduction of the number of Indian contract schools, so that in a comparatively short time they may give way altogether to Government schools, and it is hoped that the change may be so gradual as to be perfected without too great expense to the Government or undue disregard of investments made by those who have established and are maintaining such contract schools.

The appropriation for the current year, ending June 30, 1895, applicable to the ordinary expenses of the Indian service amounts to $6,733,003.18, being less by $663,240.64 than the sum appropriated on the same account for the previous year.

At the close of the last fiscal year, on the 30th day of June, 1894, there were 969,544 persons on our pension rolls, being a net increase of 3,532 over the number reported at the end of the previous year.