thies with the United States are constantly expressed with cordiality and earnestness.

The claim arising from the seizure of the cargo of the brig Macedonian, in 1821, has been paid in full by the Government of Chili.

Civil war continues in the Spanish part of San Domingo, apparently without prospect of an early close.

Official correspondence has been freely opened with Liberia, and it gives us a pleasing view of social and political progress in that republic. It may be expected to derive new vigor from American influence, im proved by the rapid disappearance of slavery in the United States.

I solicit your authority to furnish to the republic a gunboat, at a moderate cost, to be reimbursed to the United States by instalments. Such a vessel is needed for the safety of that State against the native African races, and in Liberian hands it would be more effective in arresting the African slave-trade than a squadron in our own hands. The possession of the least organized naval force would stimulate a generous ambition in the republic, and the confidence which we should manifest by furnishing it, would win forbearance and favor towards the colony from al! civilized nations.

The proposed overland telegraph between America and Europe, by the way of Behring's Straits and Asiatic Russia, which was sanctioned by Congress at the last session, has been undertaken under very favorable circumstances by an association of American citizens, with the cordial good will and support as well of this Government as of those of Great Britain and Russia. Assurances have been received from most of the South American States of their high appreciation of the enterprise, and their readiness to co-operate in constructing lines tributary to that worldencircling communication.

I learn with much satisfaction that the noble design of a telegraphic communication between the eastern coast of America and Great Britain has been renewed, with the full expectation of its early accomplishment. Thus it is hoped that, with the return of domestic peace, the country will be able to resume with energy and advantage her former high career of commerce and civilization.

Our very popular and estimable representative in Egypt died in April last. An unpleasant altercation, which arose between the temporary incumbent of the office and the Government of the Pacha, resulted in a suspension of intercourse. The evil was promptly corrected on the arrival of the successor in the consulate, and our relations with Egypt, as well as our relations with the Barbary Powers, are entirely satisfactory.

The rebellion which has been so long flagrant in China, has at last been suppressed with the co-operating good offices of this Government, and of the other Western commercial States. The judicial consular establishment has become very difficult and onerous, and it will need legislative revision to adapt it to the extension of our commerce, and to the more intimate intercourse which has been instituted with the Gov.

ernment and people of that vast empire. China seems to be accepting with hearty good will the conventional laws which regulate commerce and social intercourse among Western nations.

Owing to the peculiar situation of Japan, and the anomalous form of its government, the action of that empire, in performing treaty stipulations, is inconstant and capricious. Nevertheless, good progress has been effected by the Western powers, moving with enlightened concert. Our own pecuniary claims have been allowed or put in course of settlement, and the inland sea has been reopened to commerce. There is reason also to believe that these proceedings have increased rather than diminished the friendship of Japan towards the United States.

The ports of Norfolk, Fernandina, and Pensacola have been opened by proclamation. It is hoped that foreign merchants will now consider whether it is not safer and more profitable to themselves, as well as just to the United States, to resort to them and other open ports, than it is to pursue, through many hazards, and at vast cost, a contraband trade with other ports which are closed, if not by actual military operations, at least by a lawful and effective blockade.

For myself, I have no doubt of the power and duty of the Executive, under the law of nations, to exclude enemies of the human race from an asylum in the United States. If Congress should think that proceedings in such cases lack the authority of law, or ought to be further regulated by it, I recommend that provision be made for effectually preventing foreign slave-traders from acquiring domicile and facilities for their criminal occupation in our country.

It is possible that if it were a new and open question, the maritime powers, with the light they now enjoy, would not concede the privileges of a naval belligerent to the insurgents of the United States, destitute as they are and always have been equally of ships and of ports and harbors. Disloyal emissaries have been neither less assiduous nor more successful during the last year than they were before that time in their efforts, under favor of that privilege, to embroil our country in foreign wars. The desire and determination of the maritime States to defeat that design are believed to be as sincere as, and cannot be more earnest than, our own. Nevertheless, unforeseen political difficulties have arisen, especially in Brazilian and British ports, and on the northern boundary of the United States, which have required, and are likely to continue to require, the practice of constant vigilance and a just and conciliatory spirit on the part of the United States, as well as of the nations concerned and their Governments. Commissioners have been appointed under the treaty with Great Britain on the adjustment of the claims of the Hudson's Bay and Puget's Sound Agricultural Companies in Oregon, and are now proceeding to the execution of the trust assigned to them.

In view of the insecurity of life in the region adjacent to the Canadian border by recent assaults and depredations committed by inimical and desperate persons who are harbored there, it has been thought proper to

give notice that after the expiration of six months, the period conditionally stipulated in the existing arrangements with Great Britain, the United States must hold themselves at liberty to increase their naval armament upon the lakes, if they shall find that proceeding necessary. The condition of the border will necessarily come into consideration in connection with the question of continuing or modifying the rights of transit from Canada through the United States, as well as the regulation of imports, which were temporarily established by the Reciprocity Treaty of the 5th of June, 1864.

I desire, however, to be understood, while making this statement, that the colonial authorities are not deemed to be intentionally unjust or unfriendly towards the United States; but, on the contrary, there is every reason to expect that, with the approval of the Imperial Government, they will take the necessary measures to prevent new incursions across the border.

The act passed at the last session for the encouragement of immigration has, so far as was possible, been put into operation.

It seems to need amendment which will enable the officers of the Government to prevent the practice of frauds against the immigrants while on their way and on their arrival in the ports, so as to secure them here a free choice of avocations and places of settlement. A liberal disposition towards this great national policy is manifested by most of the European States, and ought to be reciprocated on our part by giving the immigrants effective national protection. I regard our immigrants as one of the principal replenishing streams which are appointed by Providence to repair the ravages of internal war and its wastes of national strength and health. All that is necessary is to secure the flow of that stream in its present fulness, and to that end the Government must in every way make it manifest that it neither needs nor designs to impose involuntary military service upon those who come from other lands to cast their lot in our country. The financial affairs of the Government have been successfully administered during the last year.

The legislation of the last session of Congress has beneficially affected the revenue. Although sufficient time has not yet elapsed to experience the full effect of several of the provisions of the acts of Congress imposing increased taxation, the receipts during the year, from all sources, upon the basis of warrants signed by the Secretary of the Treasury, including loans and the balance in the treasury on the first day of July, 1863, were $1,394,796,007 62, and the aggregate disbursements upon the same basis were $1,298,056,101 89, leaving a balance in the treasury, as shown by warrants, of $96,739,905 79. Deduct from these amounts the amount of the principal of the public debt redeemed, and the amount of issues in substitution therefor, and the actual cash operations of the treasury were, receipts, $884,076,646 77, disbursements, $865,234,087 86, which leaves a cash balance in the treasury of $18,842,558 71. Of the receipts, there were derived from customs, $102,316,152 99; from lands, $588,333 29;

from direct taxes, $475,648 96; from internal revenues, $109,741,134 10; from miscellaneous sources, $47,511,448 10; and from loans applied to actual expenditures, including former balance, $623,443,929 13. There were disbursed, for the civil service, $27,505,599 46; for pensions and Indians, $7,517,930 97; for the War Department, $60,791,842 97; for the Navy Department, $85,733,292 97; for interest of the public debt, $53,685,421 69. Making an aggregate of $865,234,087 86, and leaving a balance in the treasury of $18,842,558 71, as before stated.

For the actual receipts and disbursements for the first quarter, and the estimated receipts and disbursements for the three remaining quarters of the current fiscal year, and the general operations of the Treasury in detail, I refer you to the report of the Secretary of the Treasury. I concur with him in the opinion that the proportion of the moneys required to meet the expenses consequent upon the war derived from taxation should be still further increased; and I earnestly invite your attention to this subject, to the end that there may be such additional legislation as shall be required to meet the just expectations of the Secretary. The public debt on the 1st day of July last, as appears by the books of the Treasury, amounted to one billion seven hundred and forty million six hundred and ninety thousand four hundred and eighty-nine dollars and forty-nine cents. Probably, should the war continue for another year, that amount may be increased by not far from five hundred millions. Held as it is, for the most part, by our own people, it has become a substantial branch of national though private property. For obvious reasons, the more nearly this property can be distributed among all the people, the better. To favor such general distribution, greater inducements to become owners, perhaps, might with good effect and without injury, be presented to persons of limited means. With this view, I suggest whether it might not be both expedient and competent for Congress to provide that a limited amount of some future issue of public securities might be held, by any bona-fide purchaser, exempt from taxation and from seizure for debt under such restrictions and limitations as might be necessary to guard against abuse of so important a privilege. This would enable prudent persons to set aside a small annuity against a possible day of want. Privileges like these would render the possession of such securities to the amount limited most desirable to any person of small means who might be able to save enough for the purpose. The great advantage of citizens being creditors as well as debtors with relation to the public debt is obvious. Men readily perceive that they cannot be much oppressed by a debt which they owe to themselves. The public debt on the 1st day of July last, although somewhat exceeding the estimate of the Secretary of the Treasury made to Congress at the commencement of last session, falls short of the estimate of that officer made in the preceding December as to its probable amount at the beginning of this year, by the sum of $3,995,079 33. This fact exhibits a satisfactory condition and conduct of the operations of the Treasury.

The national banking system is proving to be acceptable to capitalists and to the people. On the 25th day of November, five hundred and eighty-four national banks had been organized, a considerable number of which were conversions from State banks. Changes from the State system to the national system are rapidly taking place, and it is hoped that very soon there will be in the United States no banks of issue not authorized by Congress, and no bank-note circulation not secured by the Government. That the Government and the people will derive general benefit from this change in the banking system of the country can hardly be questioned. The national system will create a reliable and permanent influence in support of the national credit, and protect the people against losses in the use of paper money. Whether or not any further legislation is advisable for the suppression of State bank issues, it will be for Congress to determine. It seems quite clear that the Treasury cannot be satisfactorily conducted, unless the Government can exercise a restraining power over the bank-note circulation of the country.

The report of the Secretary of War and the accompanying documents will detail the campaigns of the armies in the field since the date of the last annual message, and also the operations of the several administrative bureaux of the War Department during the last year. It will also specify the measures deemed essential for the national defence, and to keep up and supply the requisite military force. The report of the Secretary of the Navy presents a comprehensive and satisfactory exhibit of the affairs of that department and of the naval service. It is a subject of congratulation and laudable pride to our countrymen that a navy of such proportions has been organized in so brief a period, and conducted with so much efficiency and success. The general exhibit of the navy, including vessels under construction on the 1st of December, 1864, shows a total of 671 vessels, carrying 4,610 guns, and 510,396 tons, being an actual increase during the year, over and above all losses by shipwreck or in battle, of 83 vessels, 167 guns, and 42,427 tons. The total number of men at this time in the naval service, including officers, is about 51,000. There have been captured by the navy during the year 324 vessels, and the whole number of naval captures since hostilities commenced is 1,379, of which 267 are steamers. The gross proceeds arising from the sale of condemned prize property thus far reported amounts to $14,396,250 51. A large amount of such proceeds is still under adjudication, and yet to be reported. The total expenditures of the Navy Department, of every description, including the cost of the immense squadrons that have been called into existence from the 4th of March, 1861, to the 1st of November, 1864, are $288,647,262 35. Your favorable consideration is invited to the various recommendations of the Secretary of the Navy, especially in regard to a navy-yard and suitable establishment for the construction and repair of iron vessels and the machinery and armature of our ships, to which reference was made in my last annual message.

Your attention is also invited to the views expressed in the report in