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born in foreign countries, who have declared their intention to become citizens, or who have been fully naturalized, have evaded the military duty required of them by denying the fact, and thereby throwing upon the government the burden of proof. It has been found difficult or impracticable to obtain this proof, from the want of guides to the proper sources of information. These might be supplied by requiring clerks of courts, where declarations of intention may be made, or naturalizations effected, to send, periodically, lists of the names of the persons naturalized, or declaring their intention to become citizens, to the Secretary of the Interior, in whose department those names might be arranged and printed for general information.

There is also reason to believe that foreigners frequently become citizens of the United States for the sole purpose of evading duties imposed by the laws of their native countries, to which, on becoming naturalized here, they at once repair, and, though never returning to the United States, they still claim the interposition of this government as citizens. Many altercations and great prejudices have heretofore arisen out of this abuse. It is, therefore, submitted to your serious consideration. It might be advisable to fix a limit, beyond which no citizen of the United States residing abroad may claim the interposition of his government.

The right of suffrage has often been assumed and exercised by aliens, under pretenses of naturalization, which they have disavowed when drafted into the military service. I submit the expediency of such an amendment of the law as will make the fact of voting an estoppel against any plea of exemption from military service, or other civil obligation, on the ground of alienage.

In common with other Western powers, our relations with Japan have been brought into serious jeopardy, through the perverse opposition of the hereditary aristocracy of the empire to the enlightened and liberal policy of the Tycoon, designed to bring the country into the society of nations. It is hoped, although not with entire confidence, that these difficulties may be peacefully overcome. I ask your attention to the claim of the minister residing there for the damages he sustained in the destruction by fire of the residence of the legation at Yeddo.

Satisfactory arrangements have been made with the Emperor of Russia, which, it is believed, will result in effecting a continuous line of telegraph through that empire from our Pacific coast.

I recommend to your favorable consideration the subject of an international telegraph across the Atlantic Ocean; and also of a telegraph between this capital and the national forts along the Atlantic seaboard and the Gulf of Mexico. Such communications, established with any reasonable outlay, would be economical as well as effective aids to the diplomatic, military, and naval service.

The consular system of the United States, under the enactments of the last Congress, begins to be self-sustaining; and there is reason to hope that it may become entirely so, with the increase of trade which will ensue whenever peace is restored. Our ministers abroad have been faithful in defending American rights. In protecting commercial interests, our consuls have

necessarily had to encounter increased labors and responsibilities, growing out of the war. These they have, for the most part, met and discharged with zeal and efficiency. This acknowledgment justly includes those consuls who, residing in Morocco, Egypt, Turkey, Japan, China, and other Oriental countries, are charged with complex functions and extraordinary powers.

The condition of the several organized Territories is generally satisfactory, although Indian disturbances in New Mexico have not been entirely suppressed. The mineral resources of Colorado, Nevada, Idaho, New Mexico, and Arizona are proving far richer than has been heretofore understood. I lay before you a communication on this subject from the governor of New Mexico. I again submit to your consideration the expediency of establishing a system for the encouragement of immigration. Although this source of national wealth and strength is again flowing with greater freedom than for several years before the insurrection occurred, there is still a great deficiency of laborers in every field of industry, especially in agriculture, and in our mines, as well of iron and coal as of the precious metals. While the demand for labor is thus increased here, tens of thousands of persons, destitute of remunerative occupation, are thronging our foreign consulates, and offering to emigrate to the United States if essential, but very cheap, assistance can be afforded them. It is easy to see that, under the sharp discipline of civil war, the nation is beginning a new life. This noble effort demands the aid, and ought to receive the attention and support of the government.

Injuries, unforeseen by the government and unintended, may, in some cases, have been inflicted on the subjects or citizens of foreign countries, both at sea and on land, by persons in the service of the United States. As this government expects redress from other powers when similar injuries are inflicted by persons in their service upon citizens of the United States, we must be prepared to do justice to foreigners. If the existing judicial tribunals are inadequate to this purpose, a special court may be authorized, with power to hear and decide such claims of the character referred to as may have arisen under treaties and the public law. Conventions for adjusting the claims by joint commission have been proposed to some governments, but no definitive answer to the proposition has yet been received

from any.

In the course of the session I shall probably have occasion to request you to provide indemnification to claimants where decrees of restitution have been rendered, and damages awarded by admiralty courts; and in other cases, where this government may be acknowledged to be liable in principle, and where the amount of that liability has been ascertained by an informal arbitration.

The proper officers of the treasury have deemed themselves required by the law of the United States upon the subject to demand a tax upon the incomes of foreign consuls in this country. While such a demand may not, in strictness, be in derogation of public law, or perhaps of any existing treaty between the United States and a foreign country, the expediency of so far modifying the act as to exempt from tax the income of such consuls as are not citizens of the United States, derived from the emoluments of their office, or from property not situated in the United States, is submitted to your serious consideration. I make this suggestion upon the ground that a comity which ought to be reciprocated exempts our consuls, in all other countries, from taxation to the extent thus indicated. The United States, I think, ought not to be exceptionally illiberal to international trade and commerce.

The operations of the treasury during the last year have been successfully conducted. The enactment by Congress of a national banking law has proved a valuable support of the public credit; and the general legislation in relation to loans has fully answered the expectations of its favorers. Some amendments may be required to perfect existing laws, but no change in their principles or general scope is believed to be needed.

Since these measures have been in operation, all demands on the treasury, including the pay of the army and navy, have been promptly met

, and fully satisfied. No considerable body of troops, it is believed, were ever more amply provided, and more liberally and punctually paid; and it may be added, that by no people were the burdens incident to a great war ever more cheerfully borne.

The receipts during the year from all sources, including loans and the balance in the treasury at its commencement, were $901,125,674.86, and the aggregate disbursements $895,796,630.65, leaving a balance on the ist of July, 1863, of $5,329,044.21. Of the receipts there were derived from customs $69,059,642.40; from internal revenue, $37,640,787.95; from direct tax, $1,485,103.61; from lands, $167,617.17; from miscellaneous sources, $3,046,615.35; and from

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