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I am quite sure a sound argument could be made to show them that they can reach their aim more readily and easily by aiding to crush this rebellion, than by giving encouragement to it.

The principal lever relied on by the insurgents for exciting foreign nations to hostility against us, as already intimated, is the embarrassment of commerce. Those nations, however, not improbably, saw from the first, that it was the Union which made, as well our foreign as our domestic commerce. They can scarcely have failed to perceive that the effort for disunion produced the existing difficulty; and that one strong nation promises more durable peace, and a more extensive, valuable, and reliable commerce, than can the samo nation broken into hostile fragments.

It is not my purpose to review our discussions with foreign States; because whatever might be their wishes or dispositions, the integrity of our country and the stability of our Government mainly depend, not upon them, but on the loyalty, virtue, patriotism, and intelligence of the American people. The correspondence itself, with the usual reservations, is herewith submitted.

I venture to hope it will appear that we have practised prudence and liberality towards foreign powers, averting causes of irritation; and with firmness maintaining our own rights and honor.

Since, however, it is apparent that here, as in every other State, foreign dangers necessarily attend domestic difficulties, I recommend that adequate and ample measures be adopted for maintaining the public defences on every side. While, under this general recommendation, provision for defending our sea-coast line readily occurs to the mind, I also, in the same connection, ask the attention of Congress to our great lakes and rivers. It is believed that some fortifications and dépôts of arms and munitions, with harbor and navigation improvements, all at wellselected points upon these, would be of great importance to the national defence and preservation. I ask attention to the views of the Secretary of War, expressed in his report upon the same general subject.

I deem it of importance that the loyal regions of East Tennessee and Western North Carolina should be connected with Kentucky and other faithful parts of the Union by railroad. I, therefore, recommend, as a military measure, that Congress provide for the construction of such road as speedily as possible.

Kentucky will no doubt co-operate, and, through her Legislature, make the most judicious selection of a line. The northern terminus must connect with some existing railroad, and whether the route shall be from Lexington or Nicholasville to the Cumberland Gap, or from Lebanon to the Tennessee line, in the direction of Knoxville, or on soine still different line, can easily be determined. Kentucky and the General Government co-operating, the work can be completed in a very short time, and when done it will be not only of vast present usefulness, but also a valuable permanent improvement worth its cost in all the future.

Some treaties, designed chiefly for the interests of commerce, and having no grave political importance, have been negotiated, and will be submitted to the Senate for their consideration. Although we have failed to induce some of the commercial Powers to adopt a desirable melioration of the rigor of maritime war, we have removed all obstructions from the way of this humane reform, except such as are merely of temporary and accidental occurrence.

I invite your attention to the correspondence between her Britannic Majesty's Minister, accredited to this Government, and the Secretary of State, relative to the detention of the British ship Perthshire in June last by the United States steamer Massachusetts, for a supposed breach of the blockade. As this detention was occasioned by an obvious misapprehension of the facts, and as justice requires that we should commit no belligerent act not founded in strict right as sanctioned by public law, I recommend that an appropriation be made to satisfy the reason. able demand of the owners of tho vessel for her detention.

I repeat the recommendation of my predecessor in his annual message to Congress in December last in regard to the disposition of the surplus which will probably remain after satisfying the claims of American citizens against China, pursuant to the awards of the commissioners under the act of the 3d of March, 1859.

If, however, it should not be deemed advisable to carry that recommendation into effect, I would suggest that authority be given for investing the principal over the proceeds of the surplus referred to in good securities, with a view to the satisfaction of such other just claim of our citizens against China as are not unlikely to arise hereafter in the course of our extensive trade with that Empire.

By the act of the 5th of August last, Congress authorized the President to instruct the commanders of suitable vessels to defend themselves against and to capture pirates. This authority has been exercised in a single instance only.

For the more effectual protection of our extensive and valuable commerce in the Eastern seas, especially, it seems to me that it would also be advisable to authorize the commandors of sailing-vessels to recapture aný prizes which pirates may make of the United States vessels and their cargoes, and the Consular Courts established by law in Eastern countries to adjudicate the cases in the event that this should not be objected to by the local authorities.

If any good reason exists why we should persevere longer in with. holding our recognition of the independence and sovereignty of Hayti and Liberia, I am unable to discern it. Unwilling, however, to inaugurate a novel policy in regard to them without the approbation of Congress, I submit for your consideration the expediency of an appropriation for maintaining a Chargé d'Affaires near each of those now States. It does not admit of doubt that important commercial advantages might be secured by favorable treaties with them.

The operations of the Treasury during the period which has elapsed since your adjournment have been conducted with signal success. The patriotism of the people has placed at the disposal of the Government the large means demanded by the public exigencies. Much of the national loan has been taken by citizens of the industrial classes, whose confidence in their country's faith, and zeal for their country's deliverance, from its present peril, have induced them to contribute to the support of the Government the whole of their limited acquisitions. This fact imposes peculiar obligations to economy and disbursement and energy in action. The revenue from all sources, including loans for the financial year ending on the 30th of June, 1861, was $86,835,900 27; I and the expenditures for the same period, including payments on account of the public debt, were $84,578,034 47, leaving a balance in the treasury, on the 1st of July, of $2,257,065 80 for the first quarter of the financial year ending on September 30, 1861. The receipts from all sources, including the balance of July 1, were $102,532,509 27, and the expenses $98,239,733 09, leaving a balance, on the 1st of October, 1861, of $4,292,776 18.

Estimates for the remaining three-quarters of the year and for the financial year of 1863, together with his viows of the ways and means for meeting the demands contemplated by them, will be submitted to Congress by the Secretary of the Treasury. It is gratifying to know that the expenses made necessary by the rebellion are not beyond the resources of the loyal people, and to believe that the same patriotism which has thus far sustained the Government will continue to sustain it till peace and union shall again bless the land. I respectfully refer to the report of the Secretary of War for information respecting the numerical strongth of the army, and for recommendations having in

view an increase of its efficiency, and the well-being of the various branches of the service intrusted to his care. It is gratifying to know that the patriotism of the people has proved equal to the occasion, and that the number of troops tendered greatly exceed the force which Congress authorized me to call into the field. I refer with pleasure to these portions of his report which make allusion to the creditable degree of discipline already attained by our troops, and to the excellent sanitary condition of the entire army. The recommendation of the Secretary for an organization of the militia upon a uniform basis is a subject of vital importance to the future safety of the country, and is commended to the serious attention of Congress. The large addition to the regular army, in connection with the defection that has so considerably diminished the number of its officers, gives peculiar importance to his recommendation for increasing the corps of cadets to the greatest capacity of the Military Academy.

By mere omission I presume Congress has failed to provide chaplains for the hospitals occupied by the volunteers. This subject was brought to my notice, and I was induced to draw up the form of a letter, one copy of which, properly addressed, has been delivered to each of the persons, and at the dates respectively named and stated in a schedule, containing, also, the form of the letter marked A, and herewith transmitted. These gentlemen, I understand, entered upon the duties designated at the times respectively stated in the schedule, and have labored faithfully therein ever since. I therefore recommend that they be compensated at the same rate as chaplains in the army. I further suggest that general provision be made for chaplains to serve at hospitals, as well as with regiments. The report of the Secretary of the Navy presents, in detail

, the operations of that branch of the service, the activity and energy which have characterized its administration, and the results of measures to increase its efficiency and power. Such have been the additions, by construction and purchase, that it may almost be said a navy has been created and brought into service since our difficulties commenced.

Besides blockading our extensive coast, squadrons larger than ever before assembled under our flag have been put afloat, and performed deeds which have increased our naval renown.

I would invite special attention to the recommendation of the Secretary for a more perfect organization of the navy, by introducing additional grades in the service.eu The present organization is defective and unsatisfactory, and the suggestions submitted by the department will, it is believed, if adopted, obviate the difficulties alluded to, promote harmony, and increase the efficiency of the navy.

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There are three vacancies on the bench of the Supreme Court_two by the decease of Justices Daniel and McLean, and one by the resignation of Justice Campbell. I have so far forborne making nominations to fill these vacancies for reasons which I will now state. Two of the outgoing judges resided within the States now overrun by revolt; so that if successors were appointed in the same localities, they could not now serve upon their circuits; and many of the most competent men there probably would not take the personal hazard of accepting to serve, even here, upon the supreme bench.' I have been unwilling to throw all the appointments northward, thus disabling myself from doing justice to the South on the return of peace; although I may remark that to transfer to the North one which has heretofore been in the South, would not, with reference to territory and population, be unjust.

During the long and brilliant judicial career of Judge McLean, his circuit grew into an empire--altogether too large for any one judge to give the courts therein more than a nominal attendance-rising in population from one million four hundred and seventy thousand and eighteen, in 1830, to six million one hundred and fifty-one thousand four hundred and five, in 1860.

Besides this, the country generally has outgrown our present judicial system. If uniformity was at all intended, the system requires that all the States shall be accommodated with Circuit Courts, attended by supreme judges, while, in fact, Wisconsin, Minnesota, Iowa, Kansas, Florida, Texas, California, and Oregon, have never had any such courts. · Nor can this well be remedied without a change of the system; because the adding of judges to the Supreme Court, enough for the accommodation of all parts of the country with Circuit Courts, would create a court. altogether too numerous for a judicial body of any sort. And the evil, if it be one, will increase as now States come into the Union Circuit Courts are useful, or they are not useful. If useful, no State should be denied them; if not useful, no State should have them. Let them be provided for all, or abolished as to all.

Three modifications occur to me, either of which, I think, would be an improvement upon our present system. Let the Supreme Court be of convenient number in every event. Then, first, let the whole country be divided into circuits of convenient size, the supreme judges to serve in a number of them corresponding to their own number, and indepen

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