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pursuance of our established policy, we should be compelled to resist. We could never consent that Mexico should be tints converted into a monarchy government by a foreign prince. Mexico is our near neighbor, and her boundaries are coterminous with our otvn. through the whole ex tent across me North American continent, from ocean i to ocean. Hath politically and commercially, we j b&vc tne deepest interest in her regeneration and! prosperity. Indeed, it i* ruipos-ibie that, with any j •:nt regard tn our osvfi.saiety*, we can ever become in- j didbrent to her tale. j It may be that the Mexican government and poo- { pie have misconstrued and iiesmulerstood our forbear ance aiul our objects, in <U**iring to conclude an aini-! cable adjustment of tne .liuercnccs between ; the two Countries. They tnay have Mipponed that we would submit t” t*rms to ti e nation; or they nuv bare drawn falsi* inferences from the sup posed division ei opinion in the l. . States on the sub ject of the war, and may have calculated to gam mneii t*Y protracting :i; ami. indeed, that we might ulii inately abandon it altogether, without insisting on’ any indemnify, territorial or otherwise. Whatever! may be the lalse iuipre-sions under which Kiev have acted, the adoption and prosecution of tin* energetic : policy proposed must soon undeceive them. j LEVYING CONTRIBUTIONS OS THE r IUIV. In the future prosecution of the war, the enemy j must be made to feel its pressure more than they ! have heretofore done. At its commencement, it was deemed proper to conduct it in a spirit of forbearance and liberaiitv. With this end in view, early measures were adopted to conciliate, as fur as a state of war would permit, tiie mass ol the Mexican population ; to convince ti.ouj that Jhe war was waged riot against tire peaceful inhabitants of Mexico, lint against their faithiesß government, which hail commenced hostili ties; to remove from their minds the false impres sions which their designing and interested rulers had artfully attempted to make, that the war on our part was una of conquest ; that it was a war against their religion and their churches, which were to be dese crated and overthrown; and that their rights of per son and property would be violated. To remove these false impressions, our commanders in the field were directed scrupulously to respect their religion, their churches, and their church property, which were in no manner to be'violated; they were directed also to respect the rights of persons and property oi all who ahould not take up arms against us. Assurances to this ettect were’givon to the Mexi can people by Maj. lien. Taylor, in a proclamation issued in pursuance of instructions from the Secre tary of War, in tiie month of June, 1846, and again by Maj. (.i n. fecott. v. no acted upon his own convic tions of the pr-priety of issuing it, in a proclamation of the 11th of May, 1817. In this spirit of liberality and conciliation, and with a view to prevent the body o| tiie Mexican population from taking up arms against us, was the war conduct •d on our part. Provisions and other supplies fur- MsheJ to our srtnv by Mexican citizens were paid for at fair and liberal prices agreed upon by the parties. After the lapse of a few months, it became apparent that these assurances, and this mild treatment, had failed to produce the desired effect upon the Mexican population. \\ line tiie war had been conducted on our part according to the most hit mane and liberal principles observed by civilized nations, it was waged in a far different spitit on the part of Mexico. Not appreciating our forbearance, the Mexican people generally became hostile to the U. States, and avail ed themselves oi every opportunity to commit the most ravage excesses upon our troops. Large mini bersot the population look up arms, and engaging in guerrilla warfare, robbed and murdered in the most cruel manner individual soldiers or small parties, whom accident or oilier causes had separated from the main s**ty ot our army ; bunds of guerrillerosand robber* coteated the roads, harrassed our trains, and whenever it was in their power, cut off our supplies. i he Mexicans having thus shown themselves lobe wholly incapable of appreciating our forbearance and liberality, it was deemed proper to change the manner ■ol conducting tiie war, by making them feel its pres sure according to the usages observed under similar Circumstance* ‘O’ a” other civilized nations. Accordingly, an early a* September 23, 18-16, in •‘ructions were given by the Secretary of War to Maj. Gen. I'aylor to “draw supplies ” for our army from the enemy without paying for them, and to re quire contributions for its support,” if in tlmt way he was satisfied lie could “get abundant supplies for his forces- In directing the execution of these instruc tiona, much was lett to the discretion of the command ing otiicer, who was best acquainted with the circum stances by which he was surrounded, the wants of the army, and the practicability of enforcing the measure. Gen. ‘l’aylor,on the 2iilh of October, I8 tt, replied, from Monterey, that “ it would have been impossible hitherto, and is so now, to sustain the army to any extent, by iorcetl contributions of money or supplies.” For the reasons assigned by him, lie did not adopt the policy of his instructions, but declared bis readiness to do so, “should the army in its future operations, reach a portion of the country which maybe made to supply the troops with advantage.” He continued to pay lor the articles of supply which were drawn from the enemy's country. Similar instructions were issued to Maj. Gen. Scott April 3, 18 47. who replied from Jalapa, May 30, IS 17, that, il it be expected that” the army is to support it self by forced contributions levied upon the eountrv, we may ruin and exasperate the inhabitants, aiid starve ourselves.” The same discretion was given to him that had been given to Gen. Taylor in this re, spect. Gen. Scott. tor the reasons assigned bv him, also continued to pay for the articles of supply lor the army which were drawn from the enemy. After the army had reached the heart of the most wealthy portion of Mexico, it was supposed that the obstacles which had tie lore that time prevented it would not he such as to render impracticable the levy of forced contributions for its support; and on the Ist o! September, and again on the oth of October, 1817. the order was repeated in despatches to Gen. Scott, and his attention was again called to the importance t making the enemy bear the burdens of the war In requiring them to furnish the means of supporting our army ; ufid he was directed to adopt tin- policy, unless, by doing so, there was danger of depriving tile army of the necessary supplies. Copies of these de spatches were forwarded to Gen. Taylor for his Gov ernment. On the 31 st of March last, I caused an order to he issued to our militaiv and naval commanders to levy and collect a military contribution upon all vessels and merchandize which might enter any f the ports of Mexico in our military occupation, and to apply •uch contributions towards defraying the expenses of •the war. By virtue of the right of conquest and the laws at war. the conqueror, consulting his own safety •or convenience, may either exclude foreign commerce Altogether trorn all encli ports, or permit it upon such terras and-conditions as he may prescribe. Before the principal parts of Mexico were blockaded by our navy, tbo revenue derived from impost duties, under the laws of Mexico, was paid into the Mexican treasury. Alter these ports had (alien into our military posses sion, the blockade was raised, ai.d commerce with Xhem permitted upon prescribed term; and conditions. They were opened to the trade of all nations upon the payment of duties more moderate in ths'r amount than those which had been previously levied by Mex ico ; and the revenue, which was formerly pun. into the Mexican treasury, was directed to lie collected bv iour military and navai officers, and applied to the use of our army and navy. Cart* was taken that the of- j ficers, soldiers and sailors of our army and navy i should be exempted from the operations of the order ; and as the merchandize imported upon which the or der operated must be consumed by Mexican citizens, the contributions exacted were, in efli-ct, the reizure ; of the public revenues of Mexico, and the application of them to our own ue. In directing this measure,; the object was to compel the enemy to coninbiiie, us far as practicable, towards the expenses of the war. For the amount of contributions which have been levied in this form, I refer you to the accompanying , reports of the Secretary of \Vur and the Secretary ol the Navy,by which it appears that a Mitn excei ding half a million of dollars has been collected. This a •nount would undoubtedly have been much larger, but fortha difficulty of keeping open communications bo twoen the coast and the interior, so a* to enable the owners of the merchandize imported, to transport and vend it to the inhabitants of the country. It is ronfi- dently expected Diet this difficulty will, to a great ► 1 tent, be soon removed by our Increased forces which ■ he.* been asm to the held 1 Measures have been recently adopted by which the internal as well os external revenues of Mexico, in all places in our military occupation, will lie seized and appropriated to the v.se ol our army and navy. The policy oflevying upon the enemy contribu tions in every form, consistently with the laws ot na tions, which it may be practicable for our miltary com manders to adopt, should, in my judgment, he rigidly ! enforced, and orders to fbis effect have accordingly been given. By such a policy, at tiie same time that j our own treasury w ill be relieved horn a heavy drain, tiie Mexican people will he made to leel the burdens of the war. and. consulting their own interests, may he induced tiie more readily to require their rulers to accede to a just peace. more moors. Alter the adjournment ol tin* last session of Con- j gross, events transpired in the prosecution of the war j which, in my judgment, required a greater number al ! troops in tin* held than hud been anticipated. The i strength of the army was accordingly increased by 1 •‘accepting'’ the services of all the volunteer forces authorized by the act ol the Kith of May, 18 16, with out putting a construction on that act, the correctness of which was seriously questioned. The volunteer force now in tiie ue.d, witu those which had been *’ ac cepted,” to •• serve for 12 month*,” and were dis charged at the end of their term of service, exhaust the 30,000 men authorized by that act. Had it been i clear that a proper construction o! the act warranted i it, the services of an additional number would have ! been called and accepted ; but doubts existing upon i this point, the power was not exercised. 1 It is deemed important that Congress should, at an j early js'iiod ol their session, ranter the authority to j raise an additional regular lorce to serve during the 1 war with Mexico, and to be discharged upon the con j elusion and ratification of a treaty of peace. 1 invite 1 the attention of Congress to the views presented bv j tiie .Secretary of War upon this subject. I recommend, also, that authority be given by law i to call for and accept the services ol an additional I number of Volunteers, to he exercised at such time | and to such extent as the emergencies of the service I may require. J in prosecuting the war with Mexico, whilst the ut [ most care has been taken to avoid every just cause of i complaint on the partol neutral nations, and none lias I been given, liberal privileges have been granted to | their commerce ill the ports of the enemy in our mil itary occupation. OCR FOREIGN RELATIONS. The difficulty with the Brazilian government, which at one time threatened to interrupt the friendly relations between the two countries, will, I trust, be speedily adjusted. 1 have received inlormatioii that an envoy extraordinary and minister plenipotentiary to the United States will shortly be appointed by his Imperial Majesty ; and it is hoped that he will come instructed and prepared to adjust all remaining ditler ences between the two governments in a manner ac ceptableand honorable to both. In the meantime, 1 have every reason to believe that nothing will occur to interrupt our amicable relations with Brazil. It has been my constant elli.rt to maintain and cul ; tivate the most intimate relations ot friendship with ! all the independent powers of South America ; and ! this policy has been attended with ti.o happiest re i suits. It is true, that the settlement and payment ol many just claims of American citizens against these ! nations have been long delayed. The peculiar posi tion in which they have been placed, and the desire J on the part of my predecessors, as well ns invsell, to ! grant them the utmost indulgence, have hitherto pre vented these claims from being urged in a manner demanded by strict justice. The time has arrived ! when they ought to be filially adjusted and liquidated, ] and efforts are now making for that purpose. it is proper to inform you that the government of I Peru has in good laitli paid the tirst two instalments i of the indemnity of $30,000 each, and the greater j portion of the interest due thereon, in execution ol j the convention between that government and the U. I States, the ratifications of which were exchanged at j Lima on the 31st of October, 18 Hi. The Attorney i General of the United States, early in August last, i completed the adjudication ot the claims under tins 1 convention; and mad* his report thereon, til pursu ! unev of tlu* net of the Bth ot August, 1848. Ihe j sums to which the claimants are respectively entitled I will be paid on demand at tbe treasury. I invite the early attention of Congress to the pres i ent condition of our citizens in China. Under our | treaty with that power, American citizens arc witli | draw’ll from the jurisdiction, whether civil or criminal, i of the Chinese government, and placed under that of i our public functionaries in that country. By these j alone can our citizens he tr.ed and punished for the i commission of any crime ; by these alone can qties j tious be decided between thorn, involving the rights ; of person and property ; and by those alone can con j tracts he enforced, into which they may have entered | with the citizens or subjects ot foreign powers.. The j merchant vessels oi the United States lying in the j waters of the live ports of China open to foreign i commerce are under the exclusive jurisdiction ol oili- I oers of'theiroivn government. Until Congress shall j establish competent tribunals to try and punish crimes i and to exercise jurisdiction in civil cases in China, I American citizens there are subject to no law what j ever. Crimes may be committed with impunity, and ! debts may be contracted without any means to enforce i their payment. Inconveniences have already result led from the omission of Congress to legislate upon the subject, and still greater are apprehended. The ’ British authorities in China have already complained ! that this government has not provided lor the punish j moot of crimes, or the enforcement of contracts I against American citizens in that country, whilst j their government has established tribunals by which j an American citizen can recover debts due from Brit | ish subjects. ! Accustomed as the Chinese are to summary jus | tice, they could not he made to comprehend why j criminals who are citizens ol ilie United States should [ escape with impunity, in violation of treaty obliga j tious, whilst the punishment ol a Chinese, who had j committed any crime against an American citizen, ! would be rigorously exacted. Indeed, the consequen j ces might be fatal to American citizens in China, | should a flagrant crime be committed by any one ol i them upon a Chinese, ami should trial anil punish ! moot not lolloiv according to the requisitions of the 1 treaty. This might disturb, if not destroy,our friend ! lv relations with that empire, and cause an interrup tion of otir valuable commerce. Our treaties with the Sublime Porte, Tripoli, Tu nis. Morocco and Muscat, also require the legislation of Congress to carry them into execution, though the j necessity for immediate action may not be so urgent ; as in regard to China. ! The Secretary of State has submitted an estimate to defray the expense of opening diplomatic relations | with the Papal States. The interesting political I events now in progress in these States, as well as a j just regard to our commercial interests, have, in my i opinion, rendered such a measure highly expedient, j Estimates have also been submitted tor the outlits , and salaries of charges d'affaires to the republics ol I , Bolivia,Guatemala, and Ecuador. The manifest im- ! portanco of cultivating the most friendly relations ! : with nil the independent States upon this continent I ha induced me to recommend appropriations neces sary tor the maintenance of these missions. 1 recommend to Congress that an appropriation he 1 made, to be paid to the Spanish government tor the | | purpose of distribution among the claimants in *• the i Amistad case.” I entertain the conviction that this : [ ;s due to Spain under the treaty of the i’Oth of Or to * wCc. I■y. r >; and. moreover, that, from the earnest : manner in which tiie claim continues to he urged, h> long as ii shall remain unsettled, it will he a source ol irritation ;it*>! discord between the two countries, wlrch may prove highly prejudicial to the interests ot tl)e United States. Good policy, no less than a faith hit compliance with our treaiy obligations, requires that the* inconsiderable nppioprlulin demanded shliolt! he made CONDITION’ OF Tltr. FINANCES. A detailed statement of the condition of the finances will he presented in the anniml report of the Secretary of the Treasury. The imports lor the last fiscal year ending on the 30th of June, 1847, were of tiie value of $ 140,545,688 ; ol which the amount exported was $8 011,159 leaving SIBB 534 88(1 in the country for domes, tic use. The value of the exports lor the sunn peijud wa*slss,G4B,U22 of which $150,087,401 consisted of domestic productions, ami $8,1)11,. JM of Assign article'. HO tyj §■ ©®(@ ii ©HMtSMITo The receipts into the. Treasury for the same’ period amounted to $26,340,790.37, of which there was derived from customs, $23,747,864.66; from sales of public lands, $2,498,335.20; and from incidental ami miscellaneous sources, SIOO,- 570.51. The last fiscal year, during which tills amount was receieved, embraced five months un der the operation ot the tariff act of 1842, and ! seven months during which the tariff act of 1846 was in force. Duiing the five months under the act of 1842, the amount received from customs was $7,942,306.90, and during tho seven months udder the act of 1846 the amount received was $15,905,557.76. The net revenue from customs during the year j ending on the Ist of December, 1946, being the ! last year under the operation of the tariff act of 1842, was $22,971,403.10 ; and the net revenue i from customs during the year ending on the Ist of December, 1847, being the first year under the operation of the tariff of 184 b, was about ! $31,500,000; being an increase of revenue for she first year under the tariff act of 18-10, of more than $9,500,000 over that of the last year under the tariff of 1842. The expenditures during the fiscal year end ing on the 30th of June lust, were $59,451,177,-, 63; of which $3,522,082.37 was on account of payment of principal and interest ot the public debt, including treasury notes redeemed and not! i funded. ‘The expenditures, exclusive of payment 1 of public debt, were. $55,929,095.28. J it is estimated that the receipts into the tretflo’ ; my (or the fiscal year ending on the 30th of! June, 1849, including the balance in the treasu-1 | ry on the Ist ot July last, will amount to $12,-! | 886,545.80, of which $31,000,000, it is estiuia- I ted will be derived from customs. $3 500,000, | | Iruin the sale of the public lands ; SIOO,OOO from incidental source’s, including sales made by the .Solicitor of the treasury; and $3,285,294.55, from loans already authorized by law, which, to gether with the balance in the treasury on the Ist of July last, make the sum estimated. The. expenditures for the same period, if peace with Mexico shall not lie concluded, and the ar my shall be increased, as is proposed, will a inount, including the necessary payments on ac count of principal and interest of the public debt and treasury notes, to $59,615,660.07. On the Ist day of the present month, the a mount of tho public debt actually incurred, inclu. ding treasuiy notes, was $15,009,659.40. Thy public debt due on the 4th of March, 1815, inclu- ] ding treasury notes, was $17,78-9,790.02; and consequently the addition made to tiie public debt since that time is $27,870,959.78. Os the loan of $23 000,000 authorized by the act of the 28tli of January, 1847, the sum ol | 5,000,000 was paid out to the public creditors, or exchanged at par for specie ; the remaining 18,000,000 was offered for specie to the highest bidder not below par, by an advertisement issued by the Secretary of the Treasury, and published from tire 9ih of February until tiie 10th ol April, 1847, when it was awarded to the several high est bidders, at premiums varying from J of one per cent, to two per cent, above par. The pre mium lias been paid into the treasury, and the sums awarded deposited in specie in the treasury ; as last as it was required by the wants of the government. To meet the expenditures for the remainder of the present and for the next fiscal year, ending on tiie 30th of June, 1849, a further loan, in aid \ of tho ordinary revenues ol the government, will be necessary, Ifictaining a sufficient surplus in j the treasury, the loan required tor the remainder of the present fiscal year will lie about $18,500,v 000. If the duty on tea andr coffee be imposed, j and the graduation oflhe price of tho public lands i shall be made at an early period of your session, l | as recommended, the loan for the present fiscal i year may lie reduced to $17,000,000. Tliti j i loan may be further reduced by whatever amount \ | of expenditures can he saved by military contrii j | tuitions collected in Mexico. The most vigorous | I measures for the augmentation of these contribu tions have been directed, and a very considera ble sum is expected from that source, its amount cannot, however, be calculated with any certain ly. It is recommended that the loan to be niado be authorized upon the same terms, and for tiie same time, as that which was authorized under the provisions ol the act of the 28th of Jan. 1847. Should the war with Mexico he continued un. til the 39th of June, 1849, it is estimated that a further loan of $20,500,000 will be required for the fiscal year ending on that day, in case no duly be imposed on tea and codec, and the pub. i lie lands be not reduced and graduated in price, and no military contributions shall be collected in Mexico. If tho duty on tea and coffee be ini posed, and the hinds be reduced and graduated m price, as proposed, the loan may be reduced to $17,000,000, and will be subject to be still! further reduced by the amount of the military | contri 1:41 ions which may be collected in Mexico.! ! It is not proposed, however, at present, to ask | I Congress for authority to negotiate this loan for j the next fiscal year, as it is hoped that the loan j i asked lor the remainder of the present fiscal year,: j aided by military contributions w hich may bo I collected in Mexico, may be sufficient. It, con trary to my expectation, there should he a neces- I sity for it, the tact will be communicated to Coil j gross in time tor their action during the present [session. In no event will a sum exceeding six | millions of dollars oftliis amount he needed be ! line the meeting of the session of Congress in i December, 1848. ISliuufo the war with Mexico he continued un til the thirtieth of June, 1846, it is estimated lhut a further loan ol twenty million live hun dred thousand dollars will he required for the fiscal tear ending on that day, in case no duty lx? imposed on tea ami collec, and the public lands lie not reduced and graduated in price, and ! proposed, tiie loan may lie reduced to 17,000,000 ! of dollars, and will be subject to be still further! [ reduced by the amount of the military contribu ! lions which may lie collected in Mexico. It is! ; not proposed, however, at present, to ask Con- j gross tin - authority to negotiate this loan for the [ next fiscal year, as il is Imped d.at the loan asked for the remainder of the present liseal year, aided liy military contributions which may be collec led in Mexico, may be sufficient. If, contrary j to my expectation, the re should he a necessity tor it, the tact will be communicated to Congress j in time for their action during tiie present ses-! sioii. In no event will a sum exceding six mil- 1 dons of dollars oftliis amount be needed hetbre j die meeting oflhe session ol Congress in Decem ber, 1948. The act of the thirtieth of July, 1846, “redu-| ring the duties <n iupcits,” has been in force I since the Inst of December lust; and lam grat. | ilit and to state that all the beneficial effect* which | weie anticipated fri m its operation have been idly realized. The public revenue derived from uatums during I lit* year ending on the tirst of j December, 1847, exceeds by more than eight uillions t>f dollars the amount received in the ■receding year under the operation oflhe act of 1942, which was suhercoded and repealed by it. Its effects are visible in the great and almost unexampled prosperity which prevails in every! brtmeh es limitless. While the repeal of the prohibitory and re strctive duties of the act of’42, and the substitu tion in their place of reasonable revenue rates levied on articles imported according to their ac tual value, has increased the revenue and aug mented our foreign trade, all the great interests of the country have been advanced and promoted. The great and important interests of agricul ture, which had been not only too much neglec ted, but actually taxed under the protective policy for the benefit of other interests, have been re lieved ol'thc burdens which that policy imposed on them ; and our farmers and planters, under a more just and liberal commercial policy, are fin ding new and profitable markets abroad for their augmented products. Our commerce is rapidly increasing, and is extending more w idely the circle of international exchanges. Great as has been the increase of ! our imports during the past year, our exports of I domestic products sold in foreign markets have ! been still greater. . | Our navigating interest is eminently prosper ; oils. The number of vessels built in the United | States has been greater than during any prece ding period of equal length. Large profits have ■ been derived by those who have constructed as well as by those who have navigated them, ] Should the ratio of increase in the number of j our merchants vessels be progressive, and he as j great for the future as during the past year, the j time is not distant w hen ourtonage and commer-1 ‘trial marine will he larger thant that of any other! ; nation in the world. Whilst the interests of agriculture, of com ! merce, and of navigation have been enlarged | and invigorated, it is highly gratifying to observe | that our manufactures are also in a prosperous j I condition. None of the ruinous effects upon this | interest, which were apprehended, by some, | as the result of the operation of the revenue 1 I system established by the act of 1840, have been experienced. On the contrary, ihe number of manufactories, and the amount of capital inves ted in them, Is steadily and rapidly increasing, affording gratifying proofs that American enter prise and skill employed in this branch ofdomes tic industry, with no other advantages than those fairly and incidcntly accruing from a just system of revenue duties, are abundantly able to i ! meet successfully all competition from abroad, ! and still derive fair and remunerating profits, j While capital invested in manufactures is ! yielding adequate and fair profits under the new ! j system, the wages of labor, whether employed ] | in manufactures, agriculture, commerce, or navi. \ I gation, have been argumented. , The toiling | millions, whose daily labor furnishes the supply I of food and raiment, and all the necessaries anil ! comforts of life, are receiving higher wages, and more steady and permanent employment than in any other country, or at any previous period of our own history. So suecesfui have been all branches of our industry, that a foreign war, which generally dim inishes the resources of a nation, has in no essen tial degree retarded our onward progress, or checked ourgencral prosperity. With such gratifying evidences of prosperity, and of the successful operation of the revenue i act of 1840, every consideration of public policy i recommends that it shall remain unchanged. It ; is hoped that the system of impost duties which I it established may be regarded as the permanent j policy of the country, and that the great interests I affected by it may not again be subject to be in juriously disturbed as they have heretofore been, j by frequent and sometimes sudden changes. TAX Ojt TK V AND COFFEE. For the purpose of increasing the revenue ! and without changing or modifying the rates | imposed by the act of 1846 on the dutiable ar ticles embraced by its provisions, I again rec- I commend to your favorable consideration the expediency of levying a revenue duty on tea] l and coffee. The policy which exempted these j ! articles from duty during peace, and when the revenue to be he deprived from them was not needed, ceases to exist when the country is en gaged in war, and requires the use of all its available resources. It is a tax which would be so generally diffused among the people, that it would be felt oppressively by none, and be complained of by none. It is believed that there are not, in tho list of imported articles, any which are more properly the subject of war duties than tea and coffee, i It is estimated that three millions of dollars would be derived annually by a moderate du ty imposed on these articles. Should Congress avail itself of this additional source of revenue, not only would the amount of the public loan rendered necessary bv the war with M exico be diminished to that extent, but the public credit and the public confidence in the ability and determination of the govern ment to meet all its engagements promptly, would lie more firmly established, and the re duced amount of the loan which it may be ne cessary to negotiate could probably be obtained at cheaper rates. Congress is therefore called upon to deter mine whether it is wiser to impose the war du ties if commended, or, by omitting to do so, in- i crease the public debt annually $3,000,000 so ! long as loans shall be required to prosecute j the war. and afterwards provide in some other I form, to pay the semi-anttal interest upon it, and ultimately to extinguish the principle. If, in ad dition to these duties Congress should graduate and reduce the price of such of the public lands as experience has proved will not command the price placed upon them by the government, an additional annual income to the Treasury, of between halfa million and a $1,000,000, it is estimated would be derived from this source. Should both measures receive the sanction ol Congress, the annual amount of public debt nc- 1 cesairy to be contracted during the continuance ; ofthe war, would be reduced near $4,1*00.000. i The duties reecoinmended to be levied on tea and coffee, it is proposed shall be limited in their duration to the end of the war, and until the public debt rendered necessary to be con tracted by it shall be discharged. The amount of the public debt to be contracted should be j limited to the lowest practicable sum, and i should be extinguished as early after the cun- I elusion of the war as the means ofthe treasury \ will permit. When this view it is recomendcd that, as soon as the war shall be over, all the surplus in ! the treasury, not needed for other indispensable I objects, shall continue a sinking fund, and be applied to the purchase ofthe funded debt, and : that authority be conferred by law for that pur pose. TItF. WAHKHOrSI.NO SYSTEM. The act of the 6th of August, 1846. ‘to estiib. lisli it warehousing system,’ bus been in oneru. lion more than a year, and lias proved to ho an * important auxiliar) to the tariff uct of 1846, in augimionlitig the revenue, mid extending the eommme of the country. Whilst it has tendod to enlarge commerce, it has been beneficial to ; our manufactures, by diminishing forced sales at auction of foreign goods at low prices, to raise the duties to be advanced on them, and 1 by checking fluctuations in the market. The ; system although sanctioned by the experience of other countries, was entirely new in the U. j S. and is susceptible of improvement in some of] its provisions. The Secretary ofthe Treasury ] on whom was devolved large discretionary pow- 1 ers in carrying this measure into effect, has col- j late, the practical results of the system in oth- ] er countries, where it has long been estab- j lished, and will report a* an early period of your session such further regulations suggested ! by the investigation us may render it still more i effective and beneficial. By the act to‘provide for the better organi zation of the treasury, and for the collection j safe keeping, and disbursement ol” the public revenue,’ all banks were discontinued as fis cal agents of the government, and the paper currency issued bv them was no longer permit ted to be received in payments of public dues. TIIK SUB-TKEASV'BY. The constitutional treasury created by tins act went into operation on the first of January jlast. Under the system established by it, the j public moneys have been collected, safely kept, j and disbursed by the direct agency of officers of the government in gold and silver; and transfers of large amounts have been made from points of collection to points of disburse ment, without loss to the treasury, or injury or . inconvenience to the trade of the country, f While the fiscal operations of the govern ment have been conducted with regularity and I ease, under this system, it has had salutary es. feet in checking and preventing an undue in flation of th(s paper currency issued by the banks which exist under State charters. Re. quiring. as it does, all dues to the government to he paid in gold and silver, its effect is to re strain excessive issues of bank paper by the banks disproportioned to the specie in their vaults, for the reason that they are at all times I liable to be called on by tho holders of their j notes for their redemption, in order to obtain i specie for the payment of duties and other pub : lie dues. The batiks, therefore, must keep 1 their business within prudent limits, and be al ] ways in a condition to meet such calls, or run I the hazard of being compelled to suspend spe. cie payments, and be thereby discredited. The amount of specie imported into the U. S. dur ing the last fiscal year was $24,121,289, of which there were retained in the country $22, 270,170. Had the former financial system pre vailed, and the public moneys been placed on deposite in banks, nearly the whole of this amount would have gone into their vaults, not to be thrown into circulation by them, but to be withheld from the hands of the people as a cur rency, and made the basis of new and enor mous issues of bank paper. A large propor tion ofthe specie imported lias been paid into the treasury for public dues ; and after having been, to a great extent, recoined at the mint, has been paid out to the public creditors, and gone into circulation as a currency among the people. The amounts of gold and silver coin now in circulation in the country is larger than at any former period. The financial system established by the con. stitutional treasury has been thus far, eminently successful iu its operations ; and I recommend an adherence to all its essentia! provisions, ami especially to that vital provision which wholly separates the government from all connection ] with banks, and excludes bank paper from all i revenue receipts. In some of its details, not involving its gener al principles, the system is defective, and will require modification. These defects, and such amendments as are deemed important, were set forth in the last annual report ofthe Secretary ofthe Treasury. These amendments are again recommended to tho early and favorable consid eration of Congress. THK MINT. During the past year, the coinage at the Mint and its branches lias exceeded 8-0,000, 000. This has consisted chiefly in converting the coins of foreign countries into American coin. The largest amount of foreign coin ini ported has been received at New York ; and if a branch mint were established at that city, all the foreign coin received at that port could at once be converted into our own coin without the expense, risk, and delay of transporting it to the mint for that purpose, and the amount re coined would he much larger. Experience has proved that foreign coin, and especially foreign gold coin, will not circulate extensively among the people. The important measures of extending specie circulation, both j of gold and silver, and of diffusing it among the ; people, can only he effected hy converting such j foreign coin into Ameriern coin. I repeat the j recommendation contained in my last annual I message for the establishment of a branch of i the mint of the U. S. at the city of New Y'ork. THE PL’FLIC LANDS. All the public lands which have been survey, ed and were ready for market have been pro claimed for sale during the past year. The quantity offered and to be offered for sale, under proclamation, issued since the Ist of January last, amounts to 9,138,531 acres. The pros perily of the western States and territories in which these lands lie will be advanced by their 1 speedy sale. By withholding them from mar ket, their growth and increase of population would be retarded, while thousands of our en terprising and meritorious frontier population would be deprived of ih>* opportunity of secur ing freeholds for themselves and ther families. Hut in addition to the general considerations w hich render the early sale of the lands proper it was a leading object at this time to derive as large a sum as possible from this source, ami thus diminish, by that amount, the public loan rendered necessary by the existence of a for oign war. It is estimated that not less than 10,000,000 > of acres of public lands will be surveyed, and he , in a condition to he proclaimed for sale during the year 1848. In my last annual messuge 1 presented the reasons which, in my judgement rendered it ‘ proper to graduate and reduce the price of such us the public lands as have remained unsold lor long periods alier they had been lor sale at public auction. Many millions of acres of public lands lying within the limits of several of the western States have been offered in the market, and heen snbjeet to sale at private entry for more than 1 twenty years, at the lowest price prescribed by :he existing laws, and it has been fouhd that they will not command that price. They must remain unsold and uncultivated for an indefinite period, unless the price demanded for them by the government shall be reduced. No salisfac* lory reason is perceived why they should be longer held at rates above their real valuE..*— At the present period an additional reason ex* ists for adopting the measures reecoinmended. W hen the country is engaged in a foreign war, and we must necessarily resort to loans, it would seem to be the dictate of wisdom that we should avail ourselves of all our resources, and thus limit the amount ofthe public indebtedness to the lowest possible sum. I recommend that the existing laws oto the subject of pre-emption rights be amended and modified so as to operate prospectively, and to embrace all who may settle upon the public lands and make improvements upon them be fore they are surveyed, as well as afterwards, in all cases where such setllements may bo made after the Indian title shall have been ex tinguished. • If the right of pre-emption be thus extended, it will embrace a large and meritorious class of j our citizens. It will increase the number of ! small freeholders upon our borders, who will ! Ik*, enabled thereby to educate their children j and otherwise improve their condition, they S will be found at all times, as they have ever i proved themselves to be, in the hour of danger ; to their country, among our hardiest and best j volunteer soldiers, ever ready to tender their j services in cases of emergency and among tho last to leave the field as long as an enemy re mains to be encountered. Such a policy will also impress these patriotic pioneer emigrants with deeper feelings of gratitude for the parental care of their government, when they find their dearest interests secured to them by the perma nent laws of the land, and that they are no lon ger in danger of losing their homes and hard earned improvements by being brought into competition with a more wealthy class of pur. chasers at the land sales. OKEUO.X. The attention of Congress was invited, at their last and the proceeding session, to the im portance ol establishing a Teritorial govern ment over our possessions in Oregon ; and it is to be regretted that there was no legislation on the subject. Our citizens who inhabit that dis tant region of country are still left without the protection of our laws, or any regularly organi zed government. Before the question of limits and boundaries of tlie territory of Oregon was definitely settled, from the necessity oftheir con dition, the inhabitants had established a tempor ary government of their own. Besides the want ot legal authority for continuing such a govern ment, it is wholly inadequate to protect them in their rights of person and property, or to secure to them the enjoyment of the privileges of other citizens to which they are entitled under the constitution ofthe U. >S. They should have tho right ol suffrage, be represented in a Territorial legislature, and by a delegate in Congress ; and possess all the rights and privileges which citi zens of other portions ofthe Territory of the U. ts. have heretofore enjoyed or may now enjoy. Our judicial system, revenue laws, law s regu lating trade and intercourse with the Indian tribos and the protection of our laws generally, should be extended over them. In addition to the inhabitants who had previ ously emigrated to it, large numbers of our citi zens have followed them during the present year ; and it is not doubted that (luring the next and subsequent years their numbers will btv greatly increased. Congress, at its last session, established post routes loading to Oregon, and between different points within that territory, and authorized the establishment of post offices at ‘Astoria and such other places on the coasts ofthe Pacific, within the territory ol the L. S. as the public interests may require.’ Post Offices have accordingly been established, deputy postmosters appointed, and provision made for the transportation of the mails. The preservation of peace with the Indian tribes residing xvest of the Rocky mountains will render it proper that authority should he given bv law for the appointment of an adequate num ber of Indian agents to reside among them. 1 recconirnend that they surveyor general’s of fice be established in that territory, and that the public lands he surveyed and brought into mar ket at an early period. I recommend, also, that grants upon liberal terms, of limited quantities of the public lands be made to all citizens ol the U S. who have emi grated, or may hereafter within a prescribed pe i iod emigrate to Oregon, and settle upon them.— 1 hese hardy and adventurous citizens, who have encountered the dangers and privations of a long and toilsome journey, and have at length tound an abiding place lor themselves and their families upon the utmost verge of our western limits, should be secured in the homes which they have improved by their labor. 1 relbr you to the accompanying report ofthe Secretary ot War for a detailed account of the operations ofthe various branches of the public service connected with the department under his charge. Ihe duties devolved on this depart ment have been unusually onerous and respon sible during the past year, and have been dischar ged with ability and success. INDIAN RELATIONS. Pacific relations continue to exist with the va ! r ' ous Indian tribes, and most of them manifest a strong friendship for the U. S. Some depreda tions were committed during the past y ear upon our trains transporting supplies for the army, on. the road between the western border of Missouri and Santa le. These depredations, which are. supposed to have been committed by bands from the region of New Mexico, have been arrested, by the presence of a military force, ordered out for that purpose. Some outrages have been per | petrated by a portion of the northwestern bunds upon the weaker and coniparitively defenceless neighboring tribes. Prompt measures wero ta ken to prevent such occurrences in future. Between one and 2,000 Indians, belonging to several tribes, have been removed during the year from the east ot the Mississippi to the coun • try allotted to them west ol that river, as their j permanent home ; and arrangements have beon made for others to follow, j Since the treaty of 1846 with the Cherokees, the feuds among them appear to have subsided, and they have become more united and contented tliun they have been for many years past. The commissioner's, appiuted in pursuance ot the act “l June 2 1 tit, 1840, to settle claims nrising un der the treaty of 1835- 30 with that tribe, hav. mg executed their duties j and nfler a patien. in vestjgution, und a lull mid luir examination of all the cases brought before them, closed their labors in the month of July last. This is the fourth board of commissioners which has bet*