10th day of June, 1848, which guaranties the perfect neutrality of the Isthmus, and the rights of sovereignty and property of New Grenada over that territory, "with a view that the free transit from ocean to ocean may not be interrupted or embarrassed" during the existence of the treaty. It is our policy to encourage every practicable route across the Isthmus, which connects North and South America, either by rail-road or canal, which the energy and enterprise of our citizens may induce them to complete; and I consider it obligatory upon me to adopt that policy, especially in consequence of the absolute necessity of facilitating intercourse with our possessions on the Pacific.

The position of the Sandwich Islands, with reference to the territory of the United States on the Pacific; the success of our persevering and benevolent citizens who have repaired to that remote quarter in Christianizing the natives and inducing them to adopt a system of government and laws suited to their capacity and wants; and the use made by our numerous whale-ships of the harbours of the islands as places of resort for obtaining refreshments and repairs, all combine to render their destiny peculiarly interesting to us.

It is our duty to encourage the authorities of those islands in their efforts to improve the moral and political condition of the inhabitants; and we should make reasonable allowances for the difficulties inseparable from this task. We desire that the islands may maintain their independence, and that other nations should concur with us in this sentiment. We could, in no event, be indifferent to their passing under the dominion of any other power. The principal commercial states have in this a common interest, and it is to be hoped that no one of them will attempt to interpose obstacles to the entire independence of the islands.

The receipts into the treasury for the fiscal year ending on the thirtieth of June last, were, in cash, forty-eight millions eight hundred and thirty thousand ninetyseven dollars and fifty cents, (48,830,097 50,) and in Treasury notes funded, ten millions eight hundred and thirty-three thousand dollars, (10,833,000,) making an aggregate of fifty-nine millions six hundred and sixty-three thousand ninetyseven dollars and fifty cents, (59,663,097 50,) and the expenditures, for the same time, were, in cash, forty-six millions seven hundred and ninety-eight thousand six hundred and sixty-seven dollars and eighty-two cents, (46,798,667 82,) and in Treasury notes, funded, ten millions eight hundred and thirty-three thousand dollars, (10,833,000,) making an aggregate of fifty-seven millions six hundred and thirty-one thousand six hundred and sixty-seven dollars and eighty-two cents, (57,631,667 82.)

The accounts and estimates which will be submitted to Congress in the report of the Secretary of the Treasury, show that there will probably be a deficit occasioned by the expenses of the Mexican war and treaty, on the first day of July next, of five millions eight hundred and twenty-eight thousand one hundred and twenty-one dollars and sixty-six cents, (5,828,121 66,) and on the first day of July, 1851, of ten millions five hundred and forty-seven thousand and ninety-two dollars and seventy-three cents, (10,547,092 73,) making in the whole a probable deficit, to be provided for, of sixteen millions three hundred and seventy-five thousand two hundred and fourteen dollars and thirty-nine cents, (16,375,214 39.) The extraordinary expenses of the war with Mexico, and the purchase of California and New Mexico, exceed in amount this deficit, together with the loans heretofore made for those objects. I therefore recommend that authority be given to borrow whatever sum may be necessary to cover that deficit. I recommend the observance of strict economy in the appropriation and expenditure of the public money.

1 recommend a revision of the existing tariff, and its adjustment on a basis which may augment the revenue. I do not doubt the right or duty of Congress to encourage domestic industry, which is the great source of national as well as individual wealth and prosperity. I look to the wisdom and patriotism of Congress for the adoption of a system which may place home labour at last on a sure and

permanent footing, and, by due encouragement of manufactures, give a new and increased stimulus to agriculture, and promote the development of our vast resources, and the extension of our commerce. Believing that to the attainment of these ends (as well as the necessary augmentation of the revenue and the prevention of frauds,) a system of specific duties is best adapted, I strongly recommend to Congress the adoption of that system, fixing the duties at rates high enough to afford substantial and sufficient encouragement to our own industry, and at the same time so adjusted as to insure stability.

The question of the continuance of the sub-Treasury system is respectfully submitted to the wisdom of Congress. If continued, important modifications of it appear to be indispensable.

For further details and views of the above, and other matters connected with commerce, the finances and revenues, I refer to the report of the Secretary of the Treasury.

No direct aid has been given by the general government to the improvement of agriculture, except by the expenditure of small sums for the collection and publication of agricultural statistics, and for some chemical analyses, which have been, thus far, paid for out of the patent fund. This aid is, in my opinion, wholly inadequate. To give to this leading branch of American industry the encourage. ment which it merits, I respectfully recommend the establishment of an Agricultural Bureau, to be connected with the Department of the Interior. To elevate the social condition of the agriculturist, to increase his prosperity, and to extend his means of usefulness to his country, by multiplying his sources of information, should be the study of every statesman, and a primary object with every legislator.

No civil government having been provided by Congress for California, the people of that territory, impelled by the necessities of their political condition, recently met in convention for the purpose of forming a constitution and state government, which, the latest advices give me reason to suppose, has been accomplished; and it is believed they will shortly apply for the admission of California into the Union as a sovereign state. Should such be the case, and should their constitution be conformable to the requisitions of the constitution of the United States, I recommend their application to the favourable consideration of Congress.

The people of New Mexico will also, it is believed, at no very distant period, present themselves for admission into the union. Preparatory to the admission of California and New Mexico, the people of each will have instituted for themselves a republican form of government, "laying its foundations in such principles, and organizing its powers in such form as to them shall seem most likely to effect their safety and happiness."

By awaiting their action, all causes of uneasiness may be avoided, and confidence and kind feeling preserved. With a view of maintaining the harmony and tranquillity so dear to all, we should abstain from the introduction of those exciting topics of a sectional character which have hitherto produced painful apprehensions in the public mind; and I repeat the solemn warning of the first and most illustrious of my predecessors, against furnishing "any ground for characterizing parties by geographical discriminations."

A collector has been appointed at San Francisco under the act of Congress extending the revenue laws over California; and measures have been taken to organize the custom-house at that and the other ports mentioned in that act, at the earliest period practicable. The collector proceeded overland, and advices have not yet been received of his arrival at San Francisco. Meanwhile it is understood that the customs have continued to be collected there by officers acting under the military authority, as they were during the administration of my predecessor.

It will, I think, be expedient to confirm the collections thus made, and direct

the avails (after such allowances as Congress may think fit to authorize,) to be expended within the territory, or to be paid into the treasury, for the purpose of meeting appropriations for the improvement of its rivers and harbours."

A party, engaged on the coast survey, was despatched to Oregon in January last. According to the latest advices, they had not left California; and directions have been given to them, as soon as they shall have fixed on the sites of the two light-houses, and the buoys authorized to be constructed and placed in Oregon, to proceed without delay to make reconnoisances of the most important points on the coast of California, and especially to examine and determine on sites for lighthouses on that coast, the speedy erection of which is urgently demanded by our rapidly increasing commerce.

1 have transferred the Indian agencies from upper Missouri and Council Bluffs to Santa Fe and Salt Lake; and have caused to be appointed sub-agents in the valleys of the Gila, the Sacramento, and San Joaquin rivers. Still further legal provisions will be necessary for the effective and successful extension of our system of Indian intercourse over the new territories.

I recommend the establishment of a branch mint in California, as it will, in my opinion, afford important facilities to those engaged in mining, as well as to the government in the disposition of the mineral lands.

I also recommend that commissions be organized by Congress to examine and decide upon the validity of the present subsisting land titles in California and New Mexico; and that provision be made for the establishment of offices of surveyor general in New Mexico, California, and Oregon, and for the surveying and bringing into market the public lands in those territories. Those lands remote in position and difficult of access, ought to be disposed of on terms liberal to all, but especially favourable to the early emigrants.

In order that the situation and character of the principal mineral deposites in California may be ascertained, I recommend that a geological and mineralogical exploration be connected with the linear surveys, and that the mineral lands be divided into small lots suitable for mining, and be disposed of, by sale or lease, so as to give our citizens an opportunity of procuring a permanent right of property in the soil. This would seem to be as important to the success of mining as of agricultural pursuits.

The great mineral wealth of California, and the advantages which its ports and harbours, and those of Oregon afford to commerce, especially with the islands of the Pacific and Indian oceans, and the populous regions of Eastern Asia, make it certain that there will arise, in a few years, large and prosperous communities on our western coast. It therefore becomes important that a line of communication, the best and most expeditious which the nature of the country will admit, should be opened within the territory of the United States from the navigable waters of the Atlantic or the Gulf of Mexico to the Pacific.

Opinion, as elicited and expressed by two large and respectable conventions lately assembled at St. Louis and Memphis, points to a railroad as that which, if practicable, will best meet the wishes and wants of the country. But while this, if in successful operation, would be a work of great national importance, and of a value to the country which it would be difficult to estimate, it ought also to be regarded as an undertaking of vast magnitude and expense, and one which must, if it be indeed practicable, encounter many difficulties in its construction and use.

Therefore, to avoid failure and disappointment; to enable Congress to judge whether in the condition of the country through which it must pass, the work be feasible, and if it be found so, whether it should be undertaken as a national improvement, or left to individual enterprise; and in the latter alternative, what aid, if any, ought to be extended to it by the government, I recommend, as a preliminary measure, a careful reconnoisance of the proposed several routes by a scientific corps, and a report as to the practicability of making such a road, with an estimate of the cost of its construction and support.

For further views on these and other matters connected with the duties of the home department, I refer you to the report of the secretary of the interior.

I recommend early appropriations for continuing the river and harbour improvements which have been already begun, and also for the construction of those for which estimates have been made, as well as for examinations and estimates preparatory to the commencement of such others as the wants of our country, and especially the advance of our population over new districts, and the extension of commerce, may render necessary. An estimate of the amount which can be advantageously expended within the next fiscal year, under the direction of the bureau of topographical engineers, accompanies the report of the secretary of war, to which I respectfully invite the attention of Congress.

The cession of territory made by the late treaty with Mexico, has greatly extended our exposed frontier, and rendered its defence more difficult. That treaty has also brought us under obligations to Mexico, to comply with which a military force is requisite. But our military establishment is not materially changed as to its efficiency from the condition in which it stood before the commencement of the Mexican war. Some addition to it will therefore be necessary; and I recommend to the favourable consideration of Congress an increase of the several corps of the army at our distant western posts, as proposed in the accompanying report of the secretary of war.

Great embarrassment has resulted from the effect upon rank in the army heretofore given to brevet and staff commissions. The views of the secretary of war on this subject are deemed important, and if carried into effect will, it is believed, promote the harmony of the service. The plan proposed for retiring disabled of ficers, and providing an asylum for such of the rank and file as from age, wounds, and other infirmities, occasioned by service, have become unfit to perform their respective duties, is recommended as a means of increasing the efficiency of the army, and as an act of justice due from a grateful country to the faithful soldier. The accompanying report of the secretary of the navy presents a full and satisfactory account of the condition and operations of the naval service during the past year. Our citizens engaged in the legitimate pursuits of commerce have enjoyed its benefits. Wherever our national vessels have gone, they have been received with respect, our officers have been treated with kindness and courtesy, and they have, on all'occasions, pursued a course of strict neutrality, in accord ance with the policy of our government.

The naval force at present in commission is as large as is admissible, with the number of men authorized by Congress to be employed.

I invite your attention to the recommendation of the secretary of the navy on the subject of a reorganization of the navy in its various grades of officers, and the establishing of a retired list for such of the officers as are disqualified for active and effective service. Should Congress adopt some such measure as is recommended, it will greatly increase the efficiency of the navy, and reduce its expenditures.

I also ask your attention to the views expressed by him in reference to the employment of war-steamers, and in regard to the contracts for the transportation of the United States' mails, and the operation of the system upon the prosperity of the Navy.

By an act of Congress passed August 14, 1848, provision was made for extending post-office and mail accommodations to California and Oregon. Exertions have been made to execute that law; but the limited provisions of the act, the inadequacy of the means it authorizes, the ill adaptation of our postoffice laws to the situation of that country, and the measure of compensation for services allowed by those laws, compared with the prices of labour and rents in California, render those exertions, in a great degree, ineffectual. More particular and efficient provision by law is required on this subject.

The act of 1845, reducing postage, has now, by its operation during four

years, produced results fully showing that the income from such reduced postage is sufficient to sustain the whole expense of the service of the PostOffice Department, not including the cost of transportation in mail steamers on the lines from New York to Chagres, and from Panama to Astoria, which have not been considered by Congress as properly belonging to the mail service.

It is submitted to the wisdom of Congress, whether a further reduction of postage should not now be made, more particularly on the letter correspondence. This should be relieved from the unjust burden of transporting and delivering the franked matter of Congress, for which public service provision should be made from the treasury. I confidently believe that a change may safely be made, reducing all single letter postage to the uniform rate of five cents, regardless of distance, without thereby imposing any greater tax on the treasury than would constitute a very moderate compensation for this public service; and I therefore respectfully recommend such a reduction.

Should Congress prefer to abolish the franking privilege entirely, it seems probable that no demand on the Treasury would result from the proposed reduction of postage. Whether any further diminution should now be made, or the result of the reduction to five cents, which I have recommended, should be first tested, is submitted to your decision.

Since the commencement of the last session of Congress, a postal treaty with Great Britain has been received and ratified, and such regulations have been formed by the Post-Office Departments of the two countries, in pursuance of that treaty, as to carry its provisions into full operation. The attempt to extend this same arrangement, through England, to France, has not been equally successful; but the purpose has not been abandoned.

For a particular statement of the condition of the Post-Office Department, and other matters connected with that branch of the public service, I refer you to the report of the Postmaster General.

By the act of the 3d of March, 1849, a Board was constituted to make arrangements for taking the seventh census, composed of the Secretary of State, the Attorney General, and the Postmaster General; and it was made the duty of this Board "to prepare and cause to be printed such forms and schedules as might be necessary for the full enumeration of the inhabitants of the United States; and also proper forms and schedules for collecting in statistical tables, under proper heads, such information as to mines, agriculture, commerce, manufactures, education, and other topics, as would exhibit a full view of the pursuits, industry, education, and resources of the country."

The duties enjoined upon the census board, thus established, having been performed, it now rests with Congress to enact a law for carrying into effect the provision of the constitution which requires an actual enumeration of the people of the United States within the ensuing year.

Among the duties assigned by the constitution to the general government is one of local and limited application, but not, on that account, the less obligatory; I allude to the trust committed to Congress, as the exclusive legislator and sole guardian of the interests of the District of Columbia. I beg to commend these interests to your kind attention. As the national metropolis, the city of Washington must be an object of general interest; and, founded as it was under the auspices of him whose immortal name it bears, its claims to the fostering care of Congress present themselves with additional strength. Whatever can contribute to its prosperity must enlist the feelings of its constitutional guardians, and command their favourable consideration.

Our government is one of limited powers, and its successful administration eminently depends on the confinement of each of its co-ordinate branches within its own appropriate sphere. The first section of the Constitution ordains that "all legislative powers therein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Re