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loan, and redemptions, $96,096,922.09; making an aggregate of $570,841,700.25, and leaving a balance in the Treasury on the 1st day of July, 1862, of $13,043,546.81.

It should be observed that the sum of $96,096,922.09, expended for reimbursements and redemption of public debt, being included also in the loans made, inay be properly deducted, both froin receipts and expenditures, leaving the actual receipts for the year $487,788,324.97, and the expenditures, $474,744,778.16.

Other information on the subject of the finances will be found in the report of the Secretary of the Treasury, to whose statements and views I invite your most candid and considerate attention.

The reports of the Secretaries of War and of the Navy are herewith transmitted. These reports, though lengthy, are scarcely more than brief abstracts of the very numerous and extensive transactions and operations conducted through those Departments, Nor could I give a summary of them here, upon any principle which would admit of its being much shorter than the reports themselves. I therefore conteni myself with laying the reports before you, and asking your attention to them.

It gives me pleasure to report a decided improvement in the financia nondition of the Post-Office Department, as compared with several pre. ceding years. The receipts for the fiscal year 1861 amounted to $8,349,296.40, which embraced the revenue froin all the States of the Union for three-quarters of that year. Notwithstanding the cessation of revenue from the so-called seceded States during the last fiscal year, the increase of the correspondence of the loyal States has been sufficient to produce a revenue during the same year of $8,299,420.90, being only $50,000 less than was derived from all the States of the Union during the previous year. The expenditures show a still more favorable result. The amount expended in 1861 was $13,606,759.11. For the last year the amount has been reduced to $11,125,364.13, showing a decrease of about $2,481,000 in the expenditures as compared with the preceding year, and about $3,750,000 as compared with the fiscal year 1860. The deficiency in the Department for the previous year was $4,551,966.98. For the last fiscal year it was reduced to $2,112,814.57. These favorable results are in part owing to the cessation of mail service in the insurrectionary States, and in part to a careful review of all expenditures in that department in the interest of economy. The efficiency of the postal service, it is believed, has also been much improved. The Postmaster-General has also opened a correspondence, through the Department of State, with foreign Governments, proposing a convention of postal representatives for the purpose of simplifying the rates of foreign postage, and to expedite the foreign mails. This proposition, equally important to our adopted citizens and to the commercial interests of this country, has been favorably entertained and agreed to by all the GovernInents from whom replies bave been received.

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I ask the attention of Congress to the suggestions of the PostmasterGeneral in his report respecting the further legislation required, in his opinion, for the benefit of the postal service.

The Secretary of the Interior reports as follows in regard to the public lands:

The public lands have ceased to be a source of revenue. From the 1st July, 1861, to the 30th September, 1862, the entire cash receipts from the sale of lands were $137,476.26-a sum much less than the expenses of our land system during the same period. The homestead law, which will take effect on the 1st of January next, offers such inducements to settlers that sales for cash cannot be expected, to an extent sufficient to meet the expense of the General Land Office, and the cost of surveying and bringing the land into market.

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The discrepancy between the sum here stated as arising from the sales of the public lands, and the sun derived from the same source as reported from the Treasury Department, arises, as I understand, from the fact that the periods of time, though apparently, were not really coincident at the beginning-point—the Treasury report including a considerablo sum now which had previously been reported from the interior-sufficiently large to greatly overreach the sum derived from the three months now reported upon by the Interior, and not by the Treasury.

The Indian tribes upon our frontiers have, during the past year, manifested a spirit of insubordination, and, at several points, have engaged in open hostilities against the white settlements in their vicinity. The tribes occupying the Indian country south of Kansas renounced their allegiance to the United States, and entered into treaties with the insurgents. Those who remained loyal to the United States were driven from the country. The chief of the Cherokees has visited this city for the purpose of restoring the former relations of the tribe with the United States. He alleges that they were constrained, by superior force, to enter into treaties with the insurgents, and that the United States neg. lected to furnish the protection which their treaty stipulations required.

In the month of August last, the Sioux Indians in Minnesota attacked the settlement in their vicinity with extreme ferocity, killing, indiscrimi. nately, men, women, and children. This attack was wholly unexpected, and therefore no means of defence had been provided. It is estimated that not less than eight hundred persons were killed by the Indians, and a large amount of property was destroyed. How this outbreak was induced is not definitely known, and suspicions, which may be unjust, need not be stated. Information was received by the Indian Bureau, from different sources, about the time hostilities were cominenced, that a si multaneous attack was to be made upon the white settlements by all the tribes between the Mississippi River and the Rocky Mountains. Thu State of Minnesota has suffered great injury from this Indian war. A large portion of her territory has been depopulated, and a serere loss

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has been sustained by the destruction of property. The people of that State manifest much anxiety for the removal of the tribes beyond the limits of the State as a guarantee against future hostilities. The Comuniesioner of Indian Affairs will furnish full details. I submit for your especial consideration whether our Indian system shall not be remodelled. Many wise and good inen have impressed me with the belief that this can be profitably done.

I submit a statement of the proceedings of commissioners, which shows the progress that has been made in the enterprise of constructing the Pacific Railroad. And this suggests the earliest completion of this road, and also the favorable action of Congress upon the projects now pending before them for enlarging the capacities of the great canals in New York and Illinois, as being of vital and rapidly increasing importance to the whole nation, and especially to the vast interior region hereinafter to noticed at some greater length. I purpose having prepared and laid before you at an early day some interesting and valuable statistical information upon this subject. The military and commercial importance of enlarging the Ilinois and Michigan Canal, and improving the Illinois River, is presented in the report of Colonel Webster to the Secretary of War, and now transmitted to Congress. I respectfully ask attention to it.

To carry out the provisions of the act of Congress of the 15th of May last, I have caused the Department of Agriculture of the United States to be organized. .

The Comidissioner informs me that within the period of a few months this department has established an extensive system of correspondence and exchanges, both at home and abroad, which promises to effect liighly beneficial results in the development of a correct knowledge of recent improvements in agriculture, in the introduction of new products, and in the collection of the agricultural statistics of the different States. Also, that it will soon be prepared to distribute largely seeds, cereals, plants, and cuttings, and has already published and liberally diffused much valuable information in anticipation of a more elaborate report, which will in due time be furnished, embracing some valuable tests in chemical science now in progress in the laboratory.

The creation of this department was for the more immediate benefit of a large class of our most valuable fellow-citizens; and I trust that the liberal basis upon which it has been organized will not only meet your approbation, but that it will realize, at no distant day, all the fondest anticipations of its most sanguine friends, and become the fruitful source of advantage to all our people.

On the 22d day of September last, a proclamation was issued by the Executive, a copy of wbich is herewith submitted.

In accordance with the purpose expressed in the second paragraph of that paper, I now respectfully call your attention to what may be called "compensated emancipation."

A nation may be said to consist of its territory, its people, and its laws

The territory is the only part which is of certain.durability. “Ono gener. ation passeth away, and another generation cometh, but the earth ibideth forever.” It is of the first importance to duly consider and estimi ie this ever-enduring part. That portion of the earth's surface which is owned and inhabited by the people of the United States is well adapted to the home of one national family, and it is not well adapted for two or more. Its vast extent, and its variety of climate and productions, are of advantage in this age for one people, whatever they might have been in former ages. Steam, telegraphıs, and intelligence have brought these to be an advantageous combination for one united people.

In the Inaugural Address I briefly pointed out the total inadequacy of disunion as a remedy for the differences between the people of the two sections. I did so in language which I cannot improve, and which, therefore, I beg to repeat:

“One section of our country believes slavery is right, and ought to be extended; while the other believes it is wrong, and ought not to be extended. This is the only substantial dispute. The fugitive slave clause of the Constitution, and the law for the suppression of the foreign slavetrade, are each as well enforced, perhaps, as any law can ever be in a community where the moral sense of the people imperfectly supports the law itself. The great body of the people abide by the dry legal obligation in both cases, aud a few break over in each. This, I think, cannot be cured ; and it would be worse, in both cases, after the separation of the sections than before. The foreign slave-trade, now iinperfectly suppressed, would be ultiinately revived without restriction in one section; while fugitive slaves, now only partially surrendered, would not be surrendered at all by the other.

“Physically speaking, we cannot separate. We cannot remove our respective sections from each other, nor build an impassable wall between thein. A husband and wife may be divorced, and go out of the presence and beyond the reach of each other ; but the different parts of our country cannot do this. They cannot but remain face to face; and intercourse, either arnicable or hostile, must continue between them. Is it possible, then, to make that intercourse more advantageous or more satisfactory after separation than before? Can aliens make treaties easier than friends can make laws? Can treaties be more faithfully enforced between aliens than laws can among friends? Suppose you go to war, you cannot fight always; and wlien, after much loss on both sides, and no gain on either, vou cease fighting, the identical old questions, as to terms of intercourse, :!le again upon you."

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There is no line, straight or crooked, suitable for a national boundary, upon which to divide. Trace through, from east to west, upon the line between the free and slave country, and we shall find a little more than one-third of its length are rivers, easy to be crossed, and populated, or soon to be populated, thickly upon both sides; while nearly all its re maining length are merely surveyors' lines, over which people may walk back and forth without any consciousness of their presence. No part of this line can be made any more difficult to pass by writing it down on

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Crnes, gives up, on the part of the secoding section, the fugitive slavo dlause, along with all other constitutional obligations upon the section soceded from, while I should expect no treaty stipulation would ever be made to take its place.

But there is another difficulty. The great interior region, bounded east by the Alloghanies, Dorth by the British dominions, west by the Rocky Mountains, and south by the line along which the culture of corn and cotton meets, and which includes part of Virginia, part of Tennessee, all of Kentucky, Ohio, Indiana, Michigan, Wisconsin, Illinois, Missouri, Kansas, Iowa, Minnesota, and the Territories of. Dakota, Nebraska, and part of Colorudo, already has above ten millions of people, and will have fifty millions within fifty years, if not prevented by any political folly or mistake. It contains more than one-third of the country owned by the United States certainly more than one million of square miles. Once half as populous as Massachusetts already is, it would have more than soventy-five inillions of people. A glance at the map shows that, terri.

orially speaking, it is the great body of the Republic. The other parts are but marginal borders to it, the magnificent region sloping west from the Rocky Mountains to the Pacific being the deepest, and also the richest in andeveloped resources. In the production of provisions, grains, grasses, and all which proceed from them, this great interior region is naturally one of the most important of the world. Ascertain from the statistics tho small proportion of the region which bas as yet been brought into cultivation, and also the large and rapidly increasing amount of its products, and we shall be overwhelmed with the magnitude of the prospect pre sented. And yet this region has no sea-coast-touches no ocean any. where. As part of one nation, its people now find, and may forever find, their way to Europe by New York, to South America and Africa by New Orleans, and to Asia by San Francisco. But separate our common conntry into two nations, as designed by the present rebellion, and every dian of this great interior region is thereby cut off from some one or more of these outlets, not perhaps by a physical barrier, but by embarrassing and onerous trade regulations.

And this is true, wherever a dividing or boundary line may be fixed. Place it between the now free and slave country, or place it south of Kentucky, or north of Ohio, and still the truth remains that none south of it can trade to any port or place north of it, and none north of it can trade to any port or place south of it, except upon terms dictated by a Government foreign to them. These outlets, east, west, and south, are indispensable to the well-being of the people inhabiting and to inhabit this vast interior region. Which of the three may be the best is no proper question. All are better than either, and all of right belong to that people and to their successors forever. True to themselves, they will not ask where a line of separation shall be, but will vow rather that there shall be no such line. Nor are the marginal regions less interested in these communications to and through them to the great

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