debt on the first day of November last is stated to have been $2,527,129,552. It is estimated by the Secretary that the returns for the past month will add to our liabilities the further sum of $11,000,000-making a total increase during 13 months of $46,500,000.

In my Message to Congress of December 4, 1865, it was suggested that a policy should be devised which, without being oppressive to the people, would at once begin to effect a reduction of the debt, and, if persisted in, discharge it fully within a definite number of years. The Secretary of the Treasury forcibly recommends legislation of this character, and justly urges that the longer it is deferred the more difficult must become its accomplishment. We should follow the wise precedents established in 1789 and 1816, and without further delay make provision for the payment of our obligations at as early a period as may be practicable. The fruits of their labours should be enjoyed by our citizens rather than used to build up and sustain monied monopolies in our own and other lands. Our foreign debt is already computed by the Secretary of the Treasury at $850,000,000; citizens of foreign countries receive . interest upon a large portion of our securities, and American taxpayers are made to contribute large sums for their support. The idea that such a debt is to become permanent should be at all times discarded, as involving taxation too heavy to be borne, and payment once in every sixteen years, at the present rate of interest, of an amount equal to the original sum.

"Various plans have been proposed for the payment of the public debt. However they may have varied as to the time and mode in which it should be redeemed, there seems to be a general concurrence as to the propriety and justness of a reduction in the present rate of interest. The Secretary of the Treasury in his report recommends 5 per cent.; Congress, in a Bill passed prior to adjournment on the 27th of July last, agreed upon 4 and 4 per cent., while by many 3 per cent. has been held to be an amply sufficient return for the investment. The general impression as to the exorbitancy of the existing rate of interest has led to an inquiry in the public mind respecting the consideration which the Government has actually received for its bonds, and the conclusion is becoming prevalent that the amount which it obtained was in real money 300 or 400 per cent. less than the obligations which it issued in return. It cannot be denied that we are paying an extravagant percentage for the use of the money borrowed, which was paper currency greatly depreciated below the value of coin. This fact is made apparent when we consider that bondholders receive from the Treasury upon each dollar they own in Government securities 6 per cent. in gold, which is nearly or quite equal to 9 per cent. in currency; that the bonds are then converted into capital for the national banks, upon which those institutions issue their circulation, bearing 6 per cent. interest; and that they are exempt from taxation by the Government and the States, and

thereby enhanced 2 per cent. in the hands of the holders. We thus have an aggregate of 17 per cent. which may be received upon each dollar by the owners of Government securities. A system that produces such results is justly regarded as favouring a few at the expense of the many, and has led to the further inquiry whether our bondholders, in view of the large profits which they have enjoyed, would themselves be averse to a settlement of our indebtedness upon a plan which would yield them a fair remuneration, and at the same time be just to the tax-payers of the nation. Our national credit should be sacredly observed; but, in making provision for our creditors we should not forget what is due to the masses of the people. It may be assumed that the holders of our securities have already received upon their bonds a larger amount than their original investment, measured by a gold standard. Upon this statement of facts it would seem but just and equitable that the 6 per cent. interest now paid by the Government should be applied to the reduction of the principal in semi-annual instalments, which in sixteen years and eight months would liquidate the entire National Debt. Six per cent. in gold would at present rates be equal to 9 per cent. in currency, and equivalent to the payment of the debt one and a half times in a fraction less than seventeen years. This, in connexion with all the other advantages derived from their investment, would afford to the public creditors a fair and liberal compensation for the use of their capital, and with this they should be satisfied.

"THE CURRENCY.

"The proportion which the currency of any country should bear to the whole value of the annual produce circulated by its means is a question upon which political economists have not agreed. Nor can it be controlled by legislation, but must be left to the irrevocable laws which everywhere regulate commerce and trade. The circulating medium will ever irresistibly flow to those points where it is in greatest demand. The law of demand and supply is as unerring as that which regulates the tides of the ocean; and indeed currency, like the tides, has its ebbs and flows throughout the commercial world.

"At the beginning of the rebellion the bank-note circulation of the country amounted to not much more than two hundred millions of dollars; now the circulation of national bank-notes and those known as 'legal tenders' is nearly seven hundred millions. While it is urged by some that this amount should be increased, others contend that a decided reduction is absolutely essential to the best interests of the country. In view of these divers opinions, it may be well to ascertain the real value of our paper issues, when compared with a metallic or convertible currency. For this purpose, let us inquire how much gold and silver could be purchased by the seven hundred millions of paper money now in circulation. Probably not more than half the amount of the latter-showing that

when our paper currency is compared with gold and silver its commercial value is compressed into $350,000,000. This striking fact makes it the obvious duty of the Government, as early as may be consistent with the principle of sound political economy, to take such measures as will enable the holders of its notes and those of the national banks to convert them without loss into specie or its equivalent. A reduction of our paper circulating medium need not necessarily follow. This, however, would depend upon the law of demand and supply, though it should be borne in mind that by making legal tender and bank-notes convertible into coin or its equivalent their present specie value in the hands of their holders would be enhanced 100 per cent. . . .

"The feasibility of making our currency correspond with the Constitutional standard may be seen by reference to a few facts derived from our commercial statistics.

"The aggregate product of precious metals in the United States from 1849 to 1867 amounted to $1,174,000,000, while for the same period the net exports of specie were $741,000,000. This shows an excess of product over net exports of $433,000,000. There are in the Treasury $103,407,985 in coin, in circulation in the States on the Pacific coast about $40,000,000, and a few millions in the national and other banks-in all less than $160,000,000. Taking into consideration the specie in the country prior to 1849 and that produced since 1867, and we have more than $300,000,000 not accounted for by exportation or by the returns of the Treasury, and therefore most probably remaining in the country.

"These are important facts, and show how completely the inferior currency will supersede the better, forcing it from circulation among the masses, and causing it to be exported as a mere article of trade to add to the money capital of foreign lands. They show the necessity of retiring our paper money, that the return of gold and silver to the avenues of trade may be invited, and a demand created which will cause the retention at home of at least so much of the productions of our rich and inexhaustible gold-bearing fields as may be sufficient for purposes of circulation.

"Specie payments having been resumed by the Government and banks, all notes or bills of paper issued by either of a less denomination than twenty dollars should by law be excluded from circulation, so that the people may have the benefit and convenience of a gold and silver currency which in all their business transactions will be uniform in value at home and abroad.

"THE PUBLIC LANDS.-INDIANS.

"The Secretary of the Interior, in his report, gives valuable information in reference to the interests confided to the supervision of his department, and reviews the operations of the Landoffice, Pension-office, Patent-office, and the Indian Bureau.

"During the fiscal year ending June 30, 1868, 6,655,700 acres of public land were disposed of. The entire cash receipts of the

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General Land-office for the same period were $81,632,745, being greater by $284,883, than the amount realized from the same sources during the previous year. The entries under the homestead law cover 2,328,923 acres, nearly one-fourth of which was taken under the Act of June 21, 1866, which applies only to the States of Alabama, Mississippi, Louisiana, Arkansas, and Florida.

"Treaties with various Indian tribes have been concluded and will be submitted to the Senate for its constitutional action. I cordially sanction the stipulations which provide for reserving lands for the various tribes where they may be encouraged to abandon their nomadic habits and engage in agricultural and industrial pursuits. This policy, inaugurated many years since, has met with signal success whenever it has been pursued in good faith and with becoming liberality by the United States. The necessity for extending it as far as practicable, in our relations with the aboriginal population is greater now than at any preceding period. While we furnish subsistence and instruction to the Indians, and guarantee the undisturbed enjoyment of treaty rights, we should habitually insist upon the faithful observance of their agreement to remain within their respective reservations. This is the only mode by which collisions with other tribes and with the whites can be avoided and the safety of our frontier settlements secured.

"WAR DEPARTMENT AFFAIRS.

"The report of the Secretary of War contains information of interest and importance respecting the several Bureaux of the War Department and the operations of the army. The strength of our military force on the 30th of September last was 48,000 men, and it is computed that, by the 1st of January next, this number will be decreased to 43,000. It is the opinion of the Secretary of War that, within the next year, a considerable diminution of the infantry force may be made without detriment to the interests of the country, and in view of the great expense attending the military peace establishment, and the absolute necessity of retrenchment wherever it can be applied, it is hoped that Congress will sanction the reduction which his report recommends. While in 1860 16,300 men cost the nation $16,472,000, the sum of $65,682,000 is estimated as necessary for the support of the army during the fiscal year ending June 30, 1870. The estimates of the War Department for the last two fiscal years were for 1867 $33,814,461, and for 1868 $25,205,669. The actual expenditures during the same periods were respectively $95,224,415 and 123,246,648. The estimate submitted in December last for the fiscal year ending June 30, 1869, was $77,124,707; the expenditures for the first quarter, ending the 30th of September last, were $27,219,117, and the Secretary of the Treasury gives $66,000,000 as the amount which will probably be required during the remaining three quarters, if there should be no reduction in the army, making its aggregate cost for the year considerably in excess of $93,000,000. The differ

ence between the estimates and expenditures for the three fiscal years which have been named is thus shown to be $175,545,343 for this single branch of the public service.

"THE NAVY.

"The report of the Secretary of the Navy exhibits the operations of that department and of the navy during the year. A considerable reduction of the force has been effected. There are forty-two vessels, carrying 411 guns, in the six squadrons which are established in different parts of the world. Three of these vessels are returning to the United States, and four are used as store-ships, leaving the actual cruising force thirty-five vessels, carrying 356 guns. The total number of vessels in the navy is 206, mounting 1743 guns. Eighty-one vessels of every description are in use, armed with 696 guns. The number of enlisted men in the service, including apprentices, has been reduced to 8500. An increase of navyyard facilities is recommended as a measure which will, in the event of war, be promotive of economy and security. A more thorough and systematic survey of the North Pacific Ocean is advised in view of our recent acquisitions, our expanding commerce, and the increasing intercourse between the Pacific States and Asia. The naval pension fund, which consists of a moiety of the avails of prizes captured during the war, amounts to $14,000,000. Exception is taken to the Act of the 23rd of July last, which reduces the interest on the fund loaned to the Government by the Secretary as trustee to 3 per cent., instead of 6 per cent., which was originally stipulated when the investment was made. An amendment of the pension laws is suggested to remedy omissions and defects in existing enactments. The expenditures of the department during the last fiscal year were $20,120,394, and the estimates for the coming year amount to $20,993,414.

"FOREIGN RELATIONS.

"No important question has occurred during the last year in our accustomed cordial and friendly intercourse with Costa Rica, Guatemala, Honduras, San Salvador, France, Austria, Belgium, Switzerland, Portugal, the Netherlands, Denmark, Sweden and Norway, Rome, Greece, Turkey, Persia, Egypt, Liberia, Morocco, Tripoli, Tunis, Muscat, Siam, Borneo, and Madagascar.

"Cordial relations have also been maintained with the Argentine and the Oriental Republics. The expressed wish of Congress that our national good offices might be tendered to those republics, and also to Brazil and Paraguay, for bringing to an end the calamitous war which has so long been raging in the valley of the La Plata, has been assiduously complied with and kindly acknowledged by all the belligerents. That important negotiation, however, has thus far been without result. . . . .

"The correspondence herewith submitted will be found painfully replete with accounts of the ruin and wretchedness produced by