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For the fiscal year ending June 30, 1868, it is estimated that the receipts will amount to $436,000,000, and that the expenditures will be $350,247,641; showing an excess of $85,752,359 in favour of the Government. These estimated receipts may be diminished by a reduction of excise and import duties; but, after all necessary reductions shall have been made, the revenue of the present and of following years will doubtless be sufficient to cover all legitimate charges upon the Treasury, and leave a large annual surplus to be applied to the payment of the principal of the debt. There seems now to be no good reason why taxes may not be reduced as the country advances in population and wealth, and yet the debt be extinguished within the next quarter of a century'.

THE NAVY.-"It is stated in the report of the Secretary of the Navy that the naval force at this time consists of 278 vessels, armed with 2,351 guns. Of these, 115 vessels, carrying 1,029 guns, are in commission, distributed chiefly among seven squadrons. The number of the men in the service is 13,600.

FOREIGN RELATIONS.-"It is a subject of congratulation that no foreign combinations against our domestic peace and safety, or our legitimate influence among the nations, have been formed or attempted. While sentiments of reconciliation, loyalty and patriotism, have increased at home, a more just consideration of our national character and rights has been manifested by foreign nations.

ATLANTIC TELEGRAPH.-"The entire success of the Atlantic Telegraph between the coast of Ireland and the province of Newfoundland is an achievement which has been justly celebrated in both hemispheres as the opening of an era in the progress of civilization. There is reason to expect that equal success will attend, and even greater results follow, the enterprise for connecting the two continents through the Pacific ocean by the projected line of telegraph between Kamtschatka and the Russian possessions in America.

MEXICO. "In the month of April last, as Congress is aware, a friendly arrangement was made between the Emperor of France and the President of the United States for the withdrawal from Mexico of the French expeditionary forces. This withdrawal was to be effected in three detachments, the first of which, it was understood, would leave Mexico in November, now past, the second in March next, and the third and last in November, 1867. Immediately upon the completion of the evacuation, the French Government was to assume the same attitude of non-intervention in

1 The extraordinary elasticity of the United States' revenue was remarkably shown by a statement published by the Secretary of the Treasury of the receipts and expenditure of the Treasury during the quarter ending on the 30th of June in the present year. From this it appears that there had been a net reduction of the National Debt during that quarter of upwards of 57 millions of dollars. The total receipts of the quarter were 321,433,092 dollars, and the expenditure, including the reduction of the debt, 322,442,701 dollars. The revenue of the Treasury was estimated to exceed the expenditure by not less than two millions and a half of dollars every week.

regard to Mexico as is held by the Government of the United States. Repeated assurances have been given by the Emperor since that agreement that he would complete the promised evacuation within the period mentioned, or sooner.

"It was reasonably expected that the proceedings thus contemplated would produce a crisis of great political interest in the Republic of Mexico. The newly-appointed Minister of the United States, Mr. Campbell, was therefore sent forward on the 9th day of November last to assume his proper functions as Minister Plenipotentiary of the United States to that Republic. It was also thought expedient that he should be attended in the vicinity of Mexico by the Lieut.-General of the army of the United States, with the view of obtaining such information as might be important to determine the course to be pursued by the United States in re-establishing and maintaining necessary and proper intercourse with the Republic of Mexico. Deeply interested in the cause of liberty and humanity, it seemed an obvious duty on our part to exercise whatever influence we possessed for the restoration and permanent establishment in that country of a domestic and republican form of government.

"Such was the condition of affairs in regard to Mexico, when, on the 22nd of November last, official information was received from Paris that the Emperor of the French had some time before decided not to withdraw a detachment of his forces in the month of November past, according to engagement, but that this decision was made with the purpose of withdrawing the whole of those forces in the ensuing spring. Of this determination, however, the United States had not received any notice or information; and so soon as the information was received by the Government, care was taken to make known its dissent to the Emperor of the French.

"I cannot forego the hope that France will reconsider the subject, and adopt some resolution in regard to the evacuation of Mexico which will conform as nearly as practicable with the existing engagement, and thus meet the just expectations of the United States. The papers relating to the subject will be laid before you. It is believed that, with the evacuation of Mexico by the expeditionary forces, no subject for serious differences between France and the United States would remain. The expressions of the Emperor and people of France warrant a hope that the traditionary friendship between the two countries might, in that case, be renewed and permanently restored.

CLAIMS AGAINST GREAT BRITAIN.-"It is a matter of regret that no considerable advance has been made towards an adjustment of the differences between the United States and Great Britain, arising out of the depredations upon our national commerce and other trespasses committed during our civil war by British subjects, in violation of international law and treaty obligations. The delay, however, may be believed to have resulted in no small degree from the domestic situation of Great Britain. An entire change of

Ministry occurred in that country during the last session of Parliament. The attention of the new Ministry was called to the subject at an early day, and there is some reason to expect that it will now be considered in a becoming and friendly spirit. The importance of an early disposition of the question cannot be exaggerated. Whatever might be the disposition of the two Governments, it is manifest that goodwill and friendship between the two countries cannot be established until a reciprocity in the practice of good faith and neutrality shall be restored between the respective nations.

FENIANISM." On the 6th of June last, in violation of our neutrality laws, a military expedition and enterprise against the British North American Colonies was projected and attempted to be carried on within the territory and jurisdiction of the United States. In obedience to the obligation imposed upon the Executive by the Constitution to see that the laws are faithfully executed, all citizens were warned, by proclamation, against taking part in or aiding such unlawful proceedings, and the proper civil, military, and naval officers were directed to take all necessary measures for the enforcement of the laws. The expedition failed, but it has not been without its painful consequences. Some of our citizens who, it was alleged, were engaged in the expedition, were captured, and have been brought to trial, as for a capital offence, in the Province of Canada. Judgment and sentence of death have been pronounced against some, while others have been acquitted. Fully believing the maxim of Government, that severity of civil punishment for misguided persons who have engaged in revolutionary attempts which have disastrously failed is unsound and unwise, such representations have been made to the British Government in behalf of the convicted persons as, being sustained by an enlightened and humane judgment, will, it is hoped, induce in their cases an exercise of clemency, and a judicious amnesty to all who were engaged in the movement. Counsel has been employed by the Government to defend citizens of the United States on trial for capital offences in Canada; and a discontinuance of the prosecutions which were instituted in the courts of the United States against those who took part in the expedition has been directed.

"I have regarded the expedition as not only political in its nature, but as also in a great measure foreign from the United States in its causes, character, and objects. The attempt was understood to be made in sympathy with an insurgent party in Ireland, and, by striking at a British province on this continent, was designed to aid in obtaining redress for political grievances which, it was assumed, the people of Ireland had suffered at the hands of the British Government during a period of several centuries. The persons engaged in it were chiefly natives of that country, some of whom had, while others had not, become citizens of the United States under our general laws of naturalization. Complaints of misgovernment in Ireland continually engage the attention of the

British nation, and so great an agitation is now prevailing in Ireland that the British Government have deemed it necessary to suspend the habeas corpus in that country. These circumstances must necessarily modify the opinion which we might otherwise have entertained in regard to an expedition expressly prohibited by our neutrality laws. So long as those laws remain upon our statute books, they should be faithfully executed, and if they operate harshly, unjustly, or oppressively, Congress alone can apply the remedy, by their modification or repeal.

CONCLUSION." In the performance of a duty imposed upon me by the Constitution, I have thus submitted to the representatives of the States and of the people such information of our domestic and foreign affairs as the public interests seem to require. Our Government is now undergoing its most trying ordeal, and my earnest prayer is that the peril may be successfully and finally passed without impairing its original strength and symmetry. The interests of the nation are best to be promoted by the revival of fraternal relations, the complete obliteration of our past differences, and the re-inauguration of all the pursuits of peace. Directing our efforts to the early accomplishment of these great ends, let us endeavour to preserve harmony between the co-ordinate departments of the government, that each, in its proper sphere, may cordially co-operate with the other in securing the maintenance of the Constitution, the preservation of the Union, and the perpetuity of our free institutions."

RETROSPECT

OF

LITERATURE, ART, AND SCIENCE IN 1866.

We propose to commence our Annual Retrospect in the usual manner, by recording the publication of such works relating to English history as are either interesting at present or likely to be useful hereafter. So long as England continues to be a great Power, the records of her successful efforts to gain an honourable position-a position alike independent of foreign control and of internal tyranny, must necessarily claim the attention of all thinking people both at home and abroad. How long the prestige of England may last, it is impossible to tell. With every element of success about her, she may yet fail to preserve her leading position, by neglecting opportunities, or by ungratefully ignoring the motive causes of the advantages which she at present possesses. No nation of which we read in the world's annals has been so entirely favoured by the combination of productive discoveries and the manly energy required to make such discoveries useful, as England within the last sixty or seventy years. Now, however, we seem to be confronting two separate dangers; first, that of forgetting that iron, coal, and cotton have given us our present wealth; and secondly, that of imagining that iron, coal, and cotton ought to become our capricious masters, instead of continuing to be our useful servants. Our readers may ask, What has this to do with Literature, Art, and Science? We answer, that although at first sight our remarks may seem irrelevant, they will appear on a closer inspection to belong strictly to this particular department of the "Annual Register." Literature, Art, and Science must always be supported by the surplus money of the country in which they flourish. Apart from all questions as to what may conduce, in the way of climate, race, or the like, to the qualifications required for the production of Literary, Artistic, and Scientific works, it is clear that unless the nation can afford to pay for the results of composition and investigation, the classes who are wont to devote themselves to these things must gradually cease to exist. In the interest, therefore, of Literature, Art, and Science, we may fairly be allowed to lament any circumstance that tends to produce a wasteful expenditure of money; any thing that tends to make people in general less comfortably off than they are.

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