the Government in respect of certain vessels unfinished at the time
of his accession to office, and also concerning the dispatch boat
_Dolphin_, claimed to be completed and awaiting the acceptance of
the Department. No one can fail to see from recitals contained in this
report that only the application of business principles has been
insisted upon in the treatment of these subjects, and that whatever
controversy has arisen was caused by the exaction on the part of the
Department of contract obligations as they were legally construed. In
the case of the _Dolphin_, with entire justice to the contractor,
an agreement has been entered into providing for the ascertainment by a
judicial inquiry of the complete or partial compliance with the contract
in her construction, and further providing for the assessment of any
damages to which the Government may be entitled on account of a partial
failure to perform such contract, or the payment of the sum still
remaining unpaid upon her price in case a full performance is adjudged.

The contractor, by reason of his failure in business, being unable to
complete the other three vessels, they were taken possession of by the
Government in their unfinished state under a clause in the contract
permitting such a course, and are now in process of completion in the
yard of the contractor, but under the supervision of the Navy
Department.

Congress at its last session authorized the construction of two
additional new cruisers and two gunboats, at a cost not exceeding in the
aggregate $2,995,000. The appropriation for this purpose having become
available on the 1st day of July last, steps were at once taken for the
procurement of such plans for the construction of these vessels as would
be likely to insure their usefulness when completed. These are of the
utmost importance, considering the constant advance in the art of