"The question of renewing a treaty for reciprocal trade between the United States and the British provinces on this continent has not been favourably considered by the Administration. The advantages of such a treaty would be wholly in favour of the British producer. Except, possibly, a few engaged in the trade between the two sections, no citizen of the United States would be benefited by reciprocity. Our internal taxation would prove a protection to the British producer almost equal to the protection which our manufacturers now receive from the tariff. Some arrangement, however, for the regulation of commercial intercourse between the United States and the Dominion of Canada may be desirable.

"The Commission for adjusting the claims of the Hudson Bay and Puget's Sound Agricultural Company upon the United States has terminated its labours. The award of six hundred and fifty thousand dollars has been made, and all rights and titles of the company on the territory of the United States have been extinguished. Deeds for the property of the company have been delivered. An appropriation by Congress to meet this sum is asked.

"The Commissioners for determining the north-western land boundary between the United States and the British Possessions, under the treaty of 1856, have completed their labours, and the Commission has been dissolved.

"In conformity with the recommendation of Congress, a proposition was early made to the British Government to abolish the mixed courts created under the treaty of April 7, 1862, for the suppression of the slave trade. The subject is still under negotiation.

"It having come to my knowledge that a corporate company, organized under British laws, proposed to land upon the shores of the United States and to operate there a submarine cable, under a concession from his Majesty the Emperor of the French, of an exclusive right for twenty years of telegraphic communication between the shores of France and the United States, with the very objectionable feature of subjecting all messages conveyed thereby to the scrutiny and control of the French Government, I caused the French and British legations at Washington to be made acquainted with the probable policy of Congress on this subject as foreshadowed by the Bill which passed the Senate in March last. This drew from the representatives of the company an agreement to accept, as the basis of their operations, the provisions of that Bill, or of such other enactment on the subject as might be passed during the approaching session of Congress; also, to use their influence to secure from the French Government a modification of their concession, so as to permit the landing upon French soil of any cable belonging to any company incorporated by the authority of the United States, or of any State in the Union, and on their part not to oppose the establishment of any such cable. In consideration of this agreement, I directed the withdrawal of all opposition by the United States' authorities to the landing of the cable, and to the working of it,

until the meeting of Congress. I regret to say that there has been no modification made in the company's concession, nor, so far as I can learn, have they attempted to secure one. Their concession excludes the capital and the citizens of the United States from competition upon the shores of France. I recommend legislation, to protect the rights of citizens of the United States, as well as the dignity and sovereignty of the nation, against such an assumption. I shall also endeavour to secure, by negotiation, an abandonment of the principle of monopolies in ocean telegraphic cables. Copies of this correspondence are herewith furnished.

"The unsettled political condition of other countries less fortunate than our own sometimes induces their citizens to come to the United States for the sole purpose of becoming naturalized. Having secured this, they return to their native country and reside there without disclosing their change of allegiance. They accept official positions of trust or honour, which can only be held by citizens of their native land; they journey under passports describing them as such citizens; and it is only when civil discord, after perhaps years of quiet, threatens their persons or their property, or when their native State drafts them into its military service, that the fact of their change of allegiance is made known. They reside permanently away from the United States, they contribute nothing to its revenues, they avoid the duties of its citizenship, and they only make themselves known by a claim of protection. I have directed the diplomatic and consular officers of the United States to scrutinize carefully all such claims of protection. The citizen of the United States, whether native or adopted, who discharges his duty to his country, is entitled to its complete protection. While I have a voice in the direction of affairs I shall not consent to imperil this sacred right by conferring it upon fictitious or fraudulent claimants.

"On the accession of the present Administration it was found that the Minister for North Germany had made propositions for the negotiation of a convention for the protection of emigrant passengers, to which no response had been given. It was concluded that, to be effectual, all the maritime powers engaged in the trade should join in such a measure. Invitations have been extended to the cabinets of London, Paris, Florence, Berlin, Brussels, The Hague, Copenhagen, and Stockholm, to empower their representatives at Washington to simultaneously enter into negotiations, and to conclude with the United States conventions identical in form, making uniform regulations as to the construction of the parts of vessels to be devoted to the use of emigrant passengers, as to the quality and quantity of food, as to the medical treatment of the sick, and as to the rules to be observed during the voyage in order to secure venti lation, to promote health, to prevent intrusion, and to protect the females, and providing for the establishment of tribunals in the several countries for enforcing such regulations by summary

process.

"Your attention is respectfully called to the law regulating the

tariff on Russian hemp, and to the question whether, to fix the charges on Russian hemp higher than they are fixed upon Manilla, is not a violation of our treaty with Russia placing her products upon the same footing with those of the most favoured nations.

"Our manufactures are increasing with wonderful rapidity under the encouragement which they now receive. With the improvements in machinery already effected, and still increasing, causing machinery to take the place of skilled labour to a large extent, our imports of many articles must fall off largely within a very few years. Fortunately, too, manufactures are not confined to a few localities, as formerly, and it is to be hoped will become more and more diffused, making the interest in them equal in all sections. They give employment and support to hundreds of thousands of people at home, and retain with us the means which otherwise would be shipped abroad. The extension of railroads in Europe and the East is bringing into competition with our agricultural products like products of other countries. Self-interest, if not self-preservation, therefore, dictates caution against disturbing any industrial interest of the country. It teaches us also the necessity of looking to other markets for the sale of our surplus. Our neighbours south of us, and China and Japan, should receive our special attention. It will be the endeavour of the Administration to cultivate such relations with all these nations as to entitle us to their confidence, and make it their interest, as well as ours, to establish better commercial relations.

"Through the agency of a more enlightened policy than that heretofore pursued toward China, largely due to the sagacity and efforts of one of our own distinguished citizens, the world is about to commence largely increased relations with that populous and hitherto exclusive nation. As the United States have been the initiators in this new policy, so they should be the most earnest in showing their good faith in making it a success. In this connexion I advise such legislation as will for ever preclude the enslavement of the Chinese upon our soil under the name of coolies; and also prevent American vessels from engaging in the transportation of coolies to any country tolerating the system. I also recommend that the mission to China be raised to one of the first class.

"On my assuming the responsible duties of Chief Magistrate of the United States it was with the conviction that three things were essential to its peace, prosperity, and fullest development. First among these is strict integrity in fulfilling all our obligations. Second, to secure protection to the person and property of the citizen of the United States in each and every portion of our common country, wherever he may choose to move, without reference to original nationality, religion, colour, or politics, demanding of him only obedience to the laws and proper respect for the rights of others. Third, union of all the States-with equal rights-indestructible by any constitutional means.

"To secure the first of these Congress has taken two essential

steps: first, in declaring, by joint resolution, that the public debt shall be paid, principal and interest, in coin; and second, by providing the means for paying. Providing the means, however, could not secure the object desired, without a proper administration of the laws for the collection of the revenues and an economical disbursement of them. To this subject the Administration has most earnestly addressed itself, with results, I hope, satisfactory to the country. There has been no hesitation in changing officials in order to secure an efficient execution of the laws, sometimes too, where, in a mere party view, undesirable political results were likely to follow, nor any hesitation in sustaining efficient officials, against remonstrances wholly political.

"It may be well to mention here the embarrassment possible to arise from leaving on the statute books the so-called 'tenure-of-office acts,' and to earnestly recommend their total repeal. It could not have been the intention of the framers of the Constitution, when providing that appointments made by the President should receive the consent of the Senate, that the latter should have the power to retain in office persons placed there, by federal appointment, against the will of the President. The law is inconsistent with a faithful and efficient administration of the Government. What faith can an Executive put in officials forced upon him, and those, too, whom he has suspended for reason? How will such officials be likely to serve an administration which they know does not trust them?

"For the second requisite to our growth and prosperity time and a firm but humane administration of existing laws (amended from time to time as they may prove ineffective, or prove harsh and unnecessary) are probably all that are required.

"The third cannot be attained by special legislation, but must be regarded as fixed by the Constitution itself, and gradually acquiesced in by force of public opinion.

"From the foundation of the Government to the present, the management of the original inhabitants of this continent, the Indians, has been a subject of embarrassment and expense, and has been attended with continuous robberies, murders, and wars. From my own experience upon the frontiers, and in Indian countries, I do not hold either legislation, or the conduct of the whites who come most in contact with the Indian, blameless for these hostilities. The past, however, cannot be undone, and the question must be met as we now find it. I have attempted a new policy toward these wards of the nation (they cannot be regarded in any other light than as wards), with fair results, so far as tried, and which I hope will be attended ultimately with great success. The Society of Friends is well known as having succeeded in living in peace with the Indians in the early settlement of Pennsylvania, while their white neighbours of other sects, in other sections, were constantly embroiled. They are also known for their opposition to all strife, violence, and war, and are generally noted for their strict integrity

and fair dealings. These considerations induced me to give the management of a few reservations of Indians to them, and to throw the burden of selection of agents upon the society itself. The result has proven most satisfactory. It will be found more fully set forth in the report of the Commissioner of Indian Affairs. For superintendents and Indian agents not on the reservations, officers of the army were selected. The reasons for this are numerous. Where Indian agents are sent, there, or near there, troops must be sent also. The agent and the commander of troops are independent of each other, and are subject to orders from different departments of the government. The army officer holds a position for life; the agent one at the will of the President. The former is personally interested in living in harmony with the Indian, and in establishing a permanent peace, to the end that some portion of his life may be spent within the limits of civilized society. The latter has no such personal interest. Another reason is an economic one; and still another, the hold which the Government has upon a life officer to secure a faithful discharge of duties in carrying out a given policy.

"The building of railroads, and the access thereby given to all the agricultural and mineral regions of the country, is rapidly bringing civilized settlements into contact with all the tribes of Indians. No matter what ought to be the relations between such settlements and the aborigines, the fact is they do not harmonize well, and one or the other has to give way in the end. A system which looks to the extinction of a race is too horrible for a nation to adopt without entailing upon itself the wrath of all Christendom and engendering in the citizen a disregard for human life and the rights of others dangerous to society. I see no substitute for such a system except in placing all the Indians on large reservations as rapidly as it can be done, and giving them absolute protection there. As soon as they are fitted for it they should be induced to take their lands in severalty, and to set up territorial governments for their own protection. For full details on this subject I call your special attention to the reports of the Secretary of the Interior and the Commissioner of Indian Affairs.

"The report of the Secretary of War shows the expenditure of the War Department for the year ending June 30, 1869, to be $80,644,042, of which $23,882,310 was disbursed in the payment of debts contracted during the war, and is not chargeable to current army expenses. His estimate of $34,531,031 for the expenses of the army for the next fiscal year is as low as it is believed can be relied on. The estimates of bureau officers have been carefully scrutinized, and reduced wherever it has been deemed practicable. If, however, the condition of the country should be such by the beginning of the next fiscal year as to admit of a greater concentration of troops, the appropriation asked for will not be expended.

"The appropriations estimated for river and harbour improvements