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character. I regret to say, however, that such claims have been put forward, and, in some instances, in behalf of foreigners who have lived in the United States the greater part of their lives.

There is reason to believe that many persons 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 pretences of naturalization, which they have disavowed when drafted into the military service.

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

war.

rights. In protecting commercial interests, our Consuls have necessarily had to encounter increased labors and responsibilities growing out of the 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 emigration. 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 definite 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 situate 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 exceptionably 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 expectation 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 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 1st 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 loans, $776,682,361 57, making the aggregate $901,125,674 86. Of the disbursements there were for the civil service $23,253,922 08; for pensions and Indians, $4,216,520 79; for interest on public debt, $24,729,846 51; for the War Department, $599,298,600 83; for the

Navy Department, $63,211,105 27; for payment of funded and temporary debt, $181,086,635 07, making the aggregate $895,796,630 65, and leaving the balance of $5,329,044 21.

But the payment of the funded and temporary debt, having been made from moneys borrowed during the year, must be regarded as merely nominal payments, and the moneys borrowed to make them as merely nominal receipts; and their amount, $181,086,535 07, should therefore be deducted both from receipts and disbursements. This being done, there remains, as actual receipts, $720,039,039 79, and the actual disbursements $714,709,995 58, leaving the balance as already stated.

The actual receipts and disbursements for the first quarter, and the estimated receipts and disbursements for the remaining three quarters of the current fiscal year, 1864, will be shown in detail by the report of the Secretary of the Treasury, to which I invite your attention.

It is sufficient to say here, that it is not believed that actual results will exhibit a state of the finances less favorable to the country than the estimates of that officer heretofore submitted, while it is confidently expected that, at the close of the year, both disbursements and debt will be found very considerably less than has been anticipated.

The report of the Secretary of War is a document of great interest. It consists of:

First. The military operations of the year detailed in the report of the General-in-Chief.

Second. The organization of colored persons into the war service. Third.-The exchange of prisoners fully set forth in the letter of General Hitchcock..

Fourth. The operations under the act for enrolling and calling out the National forces, detailed in the report of the Provost-Marshal General. Fifth. The organization of the Invalid Corps. And

Sixth. The operations of the several departments of the Quartermaster-General, Commissary-General, Paymaster-General, Chief of Engineers, Chief of Ordnance, and Surgeon-General. It has appeared impossible to make a valuable summary of this report, except such as would be too extended for this place, and hence I content myself by asking your careful attention to the report itself. The duties devolving on the naval branch of the service during the year, and throughout the whole of this unhappy contest, have been discharged with fidelity and eminent success. The extensive blockade has been constantly increasing in efficiency, as the navy has expanded, yet on so long a line it has, so far, been impossible entirely to suppress illicit trade. From

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mi a te Jury Department i accears that more than T3 Thanks but dem acarei sace the blockade was inmed and the irres siready sent in for adjudica

30. Com o retea mlions of iclas

Teava ore of the Toad Sues consists at this time of five bunma at agent Theses zombiered and in the course of compleTu hi i Jese seventy-tre re rn-dad or armored steamers. The events ff de vru cressei marest and importance to the par vien vill possit exent beyond the war iseif. The armored ir smietet mi in service, or which are under con

Fact and practing miction, are believed to exceed in number ze if n the lower mu vile these may be relied upon for harbor lefence and rcass erves, shers of greater strength and capacity vil be decessary or rising purposes, and to maintain our rightful pesten me an

The mange mat has en place in naval vessels and naval warfare sacs de noodletion of steam as a motive power for ships of war, demands atter & corresponding change in some of our existing NavyJaris. r e estabisumers of new cres, for the construction and Decessary repair of modern naval vesseis. No inconsiderable embarrassment feiay, and pubie injury, have been experienced from the want of such governmental escacshments.

The necessity of such a Navy-vard, so furnished, at some suitable piace upon the Atlantic seaboard, has, on repeated occasions, been brought to the attention of Congress by the Navy Department, and is again presented in the report of the Secretary, which accompanies this communication. I think it my duty to invite your special attention to this subject, and also to that of establishing a yard and dépôt for naval purposes upon one of the Western rivers. A naval force has been created on these interior waters, and under many disadvantages, within a little more than two years, exceeding in number the whole naval force of the country at the commencement of the present Administration. Satisfactory and important as have been the performances of the heroic men of the navy at this interesting period, they are scarcely more wonderful than the success of our mechanics and artisans in the production of war-vessels, which has created a new form of naval power.

Our country has advantages superior to any other nation in our resources of iron and timber, with inexhaustible quantities of fuel in the immediate vicinity of both, and all available and in close proximity to navi.

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