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Second Session of the Thirty-Eighth Congress.—President Lincoln's last Annual Message.—Cabinet Changes.—Mr. Blair withdraws, and Gov. Dcnnison becomes Postmaster-General.—Mr. Speed Succceds Judge Bates, aa Attorney-General.—Death of Chief Justice Taney.—Mr. Chase his Successor.—Our Relations with Canada.— The Reciprocity Treaty to Terminate.—Call for 300,000 more Soldiers.—Amendment of the Constitution, Prohibiting Slavery, Concurred in by the House.—Popular Rejoicing.—The Rebel Treatment of Union Prisoners. — Retaliation Discussed in the Senate, but Repugnant to Public Sentiment.—The Wharncliffe Correspondence.— Testimony of Goldwin Smith.—Peace Memorial from Great Britain.—Correspondence Thereon.—Congratulatory Address of the Workingmen of Great Britain.—Speech of Mr. Lincoln in Reply to (ho Swedish Minister.—Speech of Mr. Lincoln on the Death of Edward Everett.—Political affairs in Tennessee, Louisiana and Arkansas.—Abortive Peace Negotiations.—Full Details of the Hampton Roads Conference.—Rebel Accounts of the Same.—Affairs in Richmond.—Close of tho Thirty-Eighth Congress.—Creation of the liurcau of Freedmen, and other Legislation.

The second session of tho Thirty-eighth Congress commenced on tho 5th of December, 1864. On the next day, President Lincoln transmitted to the two houses his annual message—exhibiting with brevity and force the general progress of events, and the present condition of national affairs—as follows:

Fellow-citizens Op The Senate And House Op RepreSentatives :—Again the blessings of health and abundant harvests claim our profoundest gratitude to Almighty God.

The condition of our foreign affairs is reasonably satisfactory.

Mexico continues to be a theater of civil war. While our political relations with that country have undergone no change, we have, at the same time, strictly maintained neutrality between the belligerents.

At the request of the States of Costa Rica and Nicaragua, a competent engineer has been authorized to make a survey of the river San Juan and the port of San Juan. It is a source of much satisfaction that the difficulties which for a moment excited somc political apprehensions, and caused a closing of the inter-oceanic transit route, have been amicably adjusted, and that there is a good prospect that the route will soon be re-opened with an increase of capacity and adaptation. Wo could not exaggerate cither tho commercial or the political importance of that great improvement.

It would be doing injustice to an important South American State not to acknowledge tho directness, frankness, and cordiality with which the United States of Colombia have entered iuto intimate relations with this Government. A claims convention has been constituted to complete tho unfinished work of the one which closed its session in 1861.

The new liberal constitution of Venezuela having gone into effect with tho universal acquiescence of the people, tho Government under it has been recognized, and diplomatic intercourse with it has opened in a cordial and friendly spirit. Tho long-deferred Aves Island claim has been satisfactorily paid and discharged.

Mutual payments have been made of the claims awarded by the late joint commission for the settlement of- claims between the United States and Peru". An earnest and cordial friendship continues to exist between the two countries, and such efforts as wero in my power havo been used to remove misunderstanding and avert a threatened war between Peru and Spain.

Our relations are of the most friendly nature with Chili, the Argentine Republie, Bolivia, Costa Rica, Paraguay, San Salvador, and Hayti.

During the past year no differences of any kind havo arisen with any of those republics, and, on the other hand, their sympathies with the United States aro constantly expressed with cordiality and earnestness.

The claim arising from tho seizuro 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, improved by the rapid disappearance of slavery in the United States.

I solicit your authority to furnish to the republic a gunboat at moderato cost, to bo reimbursed to the United States by installments. 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 trado than a squadron in our own hands. The possession of tho least organized naval force would stimulate a generous ambition in the republie, and the confidence which we should manifest by furnishing it would win forbearance and favor toward the colony from all 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 tho South American States of their high appreciation of the enterprise, and their readiness to cooperate in constructing lines tributary to that world-encircliug communication. I learn with much satisfaction that the noble design of a telegraphio communication between the eastern coast of America and Great Britain has been renewed with 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 its former high career of commerce and civilization.

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

The rebellion which has so long been flagrant in China, has at last been suppressed, with tho cooperating good offices of this Government, and of the other western commercial States. The judicial consular establishment there has become very difficult and onorous, and it will need legislative revision to adapt it to the extension of our commerce, and to the moro intimate intercourse which has been instituted with the Government and people of that vast empire. China seems to bo accepting with hearty good-will tho conventional laws which regulate commercial and social intercourse among tho 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 re-opened to commerce. There is reason also to believe that these proceedings have increased rather than diminished the friendship of Japan toward the United States.

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

For myself, I have no doubt of the power and duty of tho 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 tho authority of law, or ought to be further regulated by it, I recommend that provision bo made for cffcctully 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 lights they now enjoy, would not concede tho privileges of a naval belligerent to the insurgents of the United States, destitute, as they are, and always nave been, equally of ships-of-war and of port and harbors. Disloyal emmissarics have been neither less assiduous nor more successful during the last year than they were before that timo in their efforts, under favor of that privilege, to embroil our country in foreign wars. The desire and determination of the governments of the maritime States to defeat that design are believed to be as sincere as, and can not be more earnest than our own. Nevertheless, unforseen political difficulties have arisen, especially in Brazilian and British ports, and on the northern boundary of tho United States, which have required, and arc likely to continue to require, the practice of constant vigilance, and a just and conciliatory spirit on the part of tho 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 PugetSound Agricultural Companies, in Oregon, au4 are now proceeding to the execution of the trust assigned to them.

In view of the insecurity of life and property in the region adjacent to the Canadian border, by reason of recent assaults and depredations, committed by inimical and desperate persons who are harbored there, it has been thought proper to givo 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 imposts, which were temporarily established by the reciprocity treaty of the 5th June, 1854.

I desire, however, to bo understood, while making this statement, that the colonial authorities of Canada are not deemed to be intentionally unjust or unfriendly toward 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 emigration, 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 tho 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 toward 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 emigrants as one of the principle 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 fullness, and to that end the Government must, in every way, make it manifest that it neither needs nor designs to impose involuntarily 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 revenues, although sufficient time has not yet elapsed to experience the

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