money, accounts, and claims shall have been received. All captures are yet under consideration in the prize courts, and no money has been covered into the Treasury for distribution. Though not required by law, it is my purpose to keep the account of the prize money of the war with Spain distinct from that which accrued from former wars.

Of the prize money of former wars there was on the books of the Department June 30, 1898, an undistributed balance of $446,343.70. Some of this has been forfeited by desertion, but the most of it is due to the persons to whom it stands credited. That but a small part of this money will ever be claimed by those entitled to it is indicated by the fact that during the fiscal year 1897 but $1,475.58 was paid, and the average annual payment on valid claims during the past ten years has been only $2,861.

NAVY PENSION FUND.

By the act of July 17, 1862, the Government's share of prize money was assigned to the navy pension fund. The act of July 1, 1864, required the investment of the navy pension fund in the registered securities of the United States, and the act of July 23, 1868, fixed the rate of interest at 3 per cent per annum. Since then the invested portion of the navy pension fund has remained stationary at $14,000,000, and the annual income has been $420,000. The expenditure for navy pensions for the fiscal year 1898 was $3,823,447.28, and the average expenditure during the past eight years has been $3,389,837.79. The income from the navy pension fund is less than one-eighth of the amount required for navy pensions, and it now seems probable that it will never again be sufficient.

The Government's share of prize money from captures of the enemy's vessels during the war with Spain will be inconsiderable, while, on the other hand, a large increase of navy pensioners may be anticipated as a result of the war. These facts lead to the suggestion that no advantage accrues to anyone from the continuance of the navy pension fund, and that it may properly be abolished and dropped from the statement of the public debt, the whole of the amount required for navy pensions being provided by direct appropriation as is already done for seveneighths of the amount required. No increase of appropriations would result, as the appropriation for interest on the public debt would be decreased to the exact extent that the appropriation for navy pensions would be increased. The principal of the public debt would be reduced $14,000,000 and the accounts of the Department would be simplified.

WORK OF THE OFFICE.

The following is a statement of the work performed by the office during the fiscal year 1898:

REPORT

OF

THE SECRETARY OF WAR.

To the PRESIDENT:

WAR DEPARTMENT,

Washington, D. C., November 29, 1898.

I have the honor to submit the annual report of this Department: In my report for last year there were published the report of the Major-General Commanding the Army, and synopses of the reports of chiefs of bureaus, with recommendations for such legislation as would tend to better administration. The full reports are also sub

mitted herewith.

The work for the year was thus reviewed, and as that plan proved satisfactory it is followed this year.

The reports of the Major-General Commanding the Army, of MajorGeneral Merritt, commanding the troops in the Philippines, and of Major-General Shafter, commanding the troops in Cuba, and are published in full in this report, together with correspondence, telegraphic and otherwise, relating to the war. Each tells his story in his own way. The synopses of chiefs of bureaus follow, with such comments and recommendations as are deemed appropriate and necessary; also an extract from the report made by Major-General Breckinridge, Inspector-General, who was sent by the Major-General Commanding the Army to observe the operations of the Army at Santiago and to report thereon.

THE ARMY.

War with the Kingdom of Spain was declared April 21, 1898. By proclamation of April 23 the President called for 125,000 volunteers, and on May 25 he called for an additional force of 75,000. Congress also authorized an increase of the Regular Army to 61,000 men, and in addition provided for 16 regiments of volunteer infantry (immunes), cavalry, and engineers.

The appropriation of $50,000,000 for the national defense, made by Congress on the 9th day of March last without a dissenting vote, roused the enthusiasm of the people, fusing all shades of opinion into one patriotic thought.

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At that time the defenseless condition of our harbors and ocean cities and towns caused great apprehension among the people along the coast. The hastening of work on fortifications and the placing of mines in our harbors was therefore of the first importance; and, accordingly, every energy was bent from that time forward by the Chief of Engineers and the Chief of Ordnance to that end. In addition to those already in place, 185 guns, including mortars, were mounted; 102 seacoast carriages provided; 13 temporary batteries constructed at important points, and over 1,500 submarine mines planted in 28 different harbors.

On April 15 orders were issued concentrating the Regular Army in camps in the Southern States, where the Volunteers followed, nearly 125,000 having been mustered into service by May 31.

Soon after the declaration of war, a movement was contemplated looking to the investment of Havana, and orders to that effect were issued, and also for a reconnaissance in force along the south coast of Cuba; but the movement of the enemy's fleet changed these plans and culminated in the campaign of Santiago.

SANTIAGO CAMPAIGN.

On June 14 Major-General Shafter, with his command, sailed from Tampa for Santiago. June 22 his first troops landed at Daiquiri. Two days later the engagement of La Guasima occurred; and on July 1, 2, and 3 the battles of El Caney and San Juan Hill, in front of Santiago, were fought. After the cessation of firing about noon on the 3d, the surrender of the Spanish forces was demanded by General Shafter. This being refused, the commanding general of the Spanish forces was notified that the bombardment of Santiago would begin at noon of the 5th, thus giving two days to enable the women and children to leave the city.

On July 3 the Spanish fleet fled from the harbor and was destroyed by our navy. The surrender being again demanded on July 4, negotiations were renewed. No engagement, however, took place until July 10, when at 4 p. m. the Spaniards opened fire, which was soon silenced. On the morning of the next day the bombardment was renewed, and continued until 2 p. m., when upon another demand for the surrender of the enemy the firing ceased and was not again renewed.

Major-General Miles arrived off Santiago July 11, and that evening communicated with General Shafter by telephone, and on the 12th arrived at General Shafter's headquarters. July 13 and 14 he, with General Shafter, met the Spanish commander under flag of truce between the lines, to discuss the surrender of the Spanish forces. On the afternoon of July 14 General Miles left General Shafter's headquarters and soon thereafter went on board ship, preparatory to sailing for Porto Rico. July 17 the Spanish Commander, General Toral, surrendered the city, including the troops in Santiago and the surrendered district (over 23,000 men) upon our terms, and at noon of that

date the American flag was, by order of General Shafter, hoisted over the governor's palace.

Casualties: Twenty-three officers and 237 enlisted men killed; 99 officers and 1,332 enlisted men wounded. Some criticism having been made that there was a lack of surgeons present, it should be stated hat there were 74 surgeons in attendance at time of battle, and 70 joined immediately afterwards, and that of 1,431 wounded but 13 died from wounds.

The shipment of the Spanish prisoners to Spain, under the agreement, commenced August 9 and ended September 17. Total number of people shipped was 22,864.

August 4 General Shafter received orders to embark his command for Montauk Point, N. Y. The movement continued until August 25, when he sailed with the last of his troops, except a few left in hospital sick, turning over the command of the department to Major-General Lawton.

PHILIPPINES CAMPAIGN.

The movement of Major-General Merritt's command to the Philippines commenced May 25, the first expedition arriving off Manila June 30. Other troops arrived July 17, 25, 31, August 21, 24, and 31.

General Merritt arrived off Manila July 25, and immediately visited the troops in camp which had preceded him under command of Brigadier-General Anderson. Preparations were at once commenced to attack the enemy holding the city.

On July 31 the Spaniards made a sharp attack on our forces on the Calla Real. August 7 the Spanish commander was notified to remove all noncombatants from Manila within forty-eight hours. On same date he replied that the Spanish were without places of refuge for the wounded and the sick women and children then lodged within the walls.

August 9 a joint demand was made for the surrender of the city, signed by General Merritt and Admiral Dewey. The Captain-General offered to consult his Government, if time were allowed in which to communicate by way of Hongkong. This was refused, on account of the time required, the urgent need of relieving our troops from the trenches, and the great exposure to unhealthy conditions in a bivouac during the rainy season.

August 12 orders were issued for the advance, and on the 13th the combined attack by the Army and Navy occurred, resulting in the capture of Manila the same day. Immediately after the surrender the Spanish colors on the sea front were hauled down and the American flag raised. The prisoners captured at Manila were nearly 13,000; also 22,000 stand of arms.

The cablegram sent August 12 to General Merritt, containing the text of the President's proclamation directing a cessation of hostilities, was not received by him until August 16.