acknowledged to be the best and surest safeguard against them; and it is extremely doubtful whether a circulation of United States' notes, payable in coin, and sufficiently large for the wants of the people, can be permanently, usefully, and safely maintained.

Is there, then, any other mode in which the necessary provision for the public wants can be made, and the great advantage of a safe and uniform currency secured?

I know of none which promises so certain results, and is, at the same time, so unobjectionable, as the organization of banking associations, under a general Act of Congress, well guarded in its provisions. To such associations the Government might furnish circulating notes, on the security of United States' bonds deposited in the treasury. These notes, prepared under the supervision of proper officers, being uniform in appearance and security, and convertible always into coin, would at once protect labour against the evils of a vicious currency, and facilitate commerce by cheap and safe exchanges.

A moderate reservation from the interest on the bonds would compensate The United States for the preparation and distribution of the notes, and a general supervision of the system, and would lighten the burden of that part of the public debt employed as securities. The public credit, moreover, would be greatly improved, and the negotiation of new loans greatly facilitated by the steady market demand for Government bonds which the adoption of the proposed system would create.

It is an additional recommendation of the measure, of considerable weight, in my judgment, that it would reconcile, as far as possible, all existing interests, by the opportunity offered to existing institutions to reorganize under the Act, substituting only the secured uniform national circulation for the local and various circulation, secured and unsecured, now issued by them.

The receipts into the treasury from all sources, including loans, and balance from the preceding year, for the fiscal year ending on the 30th June, 1862, were 583,885,247 dollars 06 cents, of which sum 49,056,397 dollars 62 cents were derived from customs; 1,795,331 dollars 73 cents from the direct tax; from public lands 152,203 dollars 77 cents; from miscellaneous sources, 931,787 dollars 64 cents; from loans in all forms, 529,692,460 dollars 50 cents. The remainder, 2,257,065 dollars 80 cents, was the balance from last year.

The disbursements during the same period were for congressional, executive, and judicial purposes, 5,939,009 dollars 29 cents; for foreign intercourse, 1,339,710 dollars 35 cents; for miscellaneous expenses, including the mints, loans, post-office deficiencies, collection of revenue, and other like charges, 14,129,771 dollars 50 cents;

for expenses under the Interior Department, 3,102,985 dollars 52 cents; under the War Department, 394,368,407 dollars 36 cents; under the Navy Department, 42,674,569 dollars 69 cents; for interest on public debt, 13,190,324 dollars 45 cents; and for payment of public debt, including reimbursement of temporary loan, and redemptions, 96,096,922 dollars 09 cents; making an aggregate of 570,841,700 dollars 25 cents, and leaving a balance in the treasury on the 1st day of July, 1862, of 13,043,546 dollars 81 cents.

It should be observed that the sum of 96,096,922 dollars 09 cents, expended for reimbursements and redemption of public debt, being included also in the loans made, may be properly deducted, both from receipts and expenditures, leaving the actual receipts for the year 487,788,324 dollars 97 cents; and the expenditures, 474,744,778 dollars 16 cents.

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 abtracts 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 content myself with laying the reports before you, and asking your attention to them.

It gives me pleasure to report a decided improvement in the financial condition of the Post-Office Department, as compared with several preceding years. The receipts for the fiscal year 1861 amounted to 8,349,296 dollars 40 cents, which embraced the revenue from 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 8,299,820 dollars 90 cents, being only 50,000 dollars less than was derived from all the States of the Union during the previous year. The expenditures show a still more favourable result. The amount expended in 1861 was 13,606,759 dollars 11 cents. For the last year the amount has been reduced to 11,125,364 dollars 13 cents, showing a decrease of about 2,481,000 dollars in the expenditures as compared with the preceding year, and about 3,750,000 dollars as compared with the fiscal year 1860. The deficiency in the department for the previous year was 4,551,966 dollars 98 cents. For the last fiscal year it was reduced to 2,112,814 dollars 57 cents. These favourable 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 favourably entertained, and agreed to, by all the Governments from whom replies have been received.

I ask the attention of Congress to the suggestions of the Postmaster-General 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 dollars 26 cents-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 expenses of the General Land Office, and the cost of surveying and bringing the land into market."

The discrepancy between the sum here stated as arising from the sales of the public lands, and the sum 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 considerable sum now, which had previously been reported from the Interior-sufficiently large to greatly overreach the sum derived from the 3 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 neglected to furnish the protection which their Treaty stipulations required.

In the month of August last the Sioux Indians, in Minnesota, attacked the settlements in their vicinity with extreme ferocity, killing, indiscriminately, 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 800 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 to be stated. Information was received by the Indian bureau, from different sources, about the time hostilities were commenced, that a simultaneous attack was to be made upon the white settlements by all the tribes between the Mississippi River and the Rocky Mountains. The State of Minnesota has suffered great injury from this Indian war. A large portion of her territory has been depopulated, and a severe loss 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 Commissioner 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 men 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 favourable 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 be 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 Illinois 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 Commissioner 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 highly 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 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 22nd day of September last a proclamation was issued. by the Executive, a copy of which is herewith submitted.

In accordance with the purpose expressed in the second paragraph of that paper, I now respectively recall 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. "One generation passeth away, and another generation cometh, but the earth abideth for ever." It is of the first importance to duly consider, and estimate, 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 be 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, telegraphs, 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 slave trade, 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, and a few break over in each. This, I think, cannot be perfectly cured; and