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The new commercial treaty between the United States and the Sultan of Turkey has been carried into execution.

A commercial and consular treaty has been negotiated, subject to the Senate's consent, with Liberia; and a similar negotiation is now pend. ing with the Republic of Hayti. A considerable improvement of the national commerce is expected to result from these measures.

Our relations with Great Britain, France, Spain, Portugal, Russia, Prussia, Denmark, Sweden, Austria, the Netherlands, Italy, Rome, and the other European states remain undisturbed. Very favorable relations also continue to be maintained with Turkey, Morocco, China, and Japan.

During the last year there has not only been no change of our previous relations with the Independent States of our own continent, but more friendly sentiments than have heretofore existed are believed to be entertained by these neighbors, whose safety and progress are so intimately connected with our own. This statement especially applies to Mexico, Nicaragua, Costa Rica, Honduras, Peru, and Chili.

The commission under the convention with the Republic of New Granada closed its session without having audited and passed upon all the claims which were submitted to it. A proposition is pending to revive the convention, that it be able to do more complete justice. The joint commission between the United States and the Republic of Costa Rica has completed its labors and submitted its report.

I have favored the project for connecting the United States with Europe by an Atlantic telegraph, and a similar project to extend the telegraph from San Francisco to connect by a Pacific telegraph with the line which is being extended across the Russian Empire.

The Territories of the United States, with unimportant exceptions, have remained undisturbed by the civil war; and they are exhibiting such evidence of prosperity as justifies an expectation that some of them will soon be in a condition to be organized as States, and be constitutionally admitted into the Federal Union.

The immense mineral resources of some of those Territories ought to be developed as rapidly as possible. Every step in that direction would have a tendency to improve the revenues of the Government and diminish the burdens of the people. It is worthy of your serious consideration whether some extraordinary measures to promote that end cannot be adopted. The means which suggests itself as most likely to be effective, is a scientific exploration of the mineral regions in those Territories, with a view to the publication of its results at

home and in foreign countries-results which cannot fail to be auspicious.

The condition of the finances will claim your most diligent consideration. The vast expenditures incident to the military and naval operations required for the suppression of the rebellion have been hitherto met with a promptitude and certainty unusual in similar circumstances : and the public credit has been fully maintained. The continuance of the war, however, and the increased disbursements made necessary by the augmented forces now in the field, demand your best reflections as to the best modes of providing the necessary revenue, without injury to business, and with the least possible burdens upon labor.

The suspension of specie payments by the Banks, soon after tho commencement of your last session, made large issues of United States notes unavoidable. In no other way could the payment of the troops and the satisfaction of other just demands, be so economically or so well provided for. The judicious legislation of Congress, securing the receivability of these notes for loans and internal duties, and making them a legal tender for other debts, has made them a universal currency, and has satisfied, partially at least, and for the time, the long felt want of an uniform circulating medium, saving thereby to the people immense sums in discounts and exchanges.

A return to specie payments, however, at the earliest period compatible with due regard to all interests concerned, should ever be kept in view. Fluctuations in the value of currency are always injurious, and to reduce these fluctuations to the lowest possible point will always be a leading purpose in wise legislation. Convertibility, prompt and certain convertibility into coin, is generally 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 advantages 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 Congregs, 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 labor 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 of June, 1862, were $583,885,247 60, of which sum $49,056,397 62 were derived from customs; $1,795,331 73 from the direct tax; from public lands, $152,203 77; from miscellaneous sources, $931,787 64; from loans in all forms, $529,692,460 50. The remainder, $2,257,065 80, was the balance from last year.

The disbursements during the same period were for Congressional, Executive, and Judicial purposes, $5,939,009 29; for foreign intercourse, $1,339,710 35; for miscellaneous expenses, including the mints, loans, post-office deficiencies, collection of revenue, and other like charges, $14,129,771 50; for expenses under the Interior Department, $3,102,985 52 under the War Department, $394,368,407 36 ; under the Navy Department, $42,674,569 69; for interest on public debt, $13,190,324 45; and for payment of public debt, including reimbursement of tempporary loan, and redemptions, $96,096, 922 09; making an aggregate of $570,841,700 25, and leaving a balance in the Treasury on the Ist day of July, 1862, of 13,043,546 81.

It should be observed that the sum of $96,096,922 09, expended for reimbursements and redemption of public debt, being included also in the loans made, may be properly deducted, both from receipts and ex. penditures, leaving the actual receipts for the year $487,788,324 97, and the expenditures, $474,744,778 16. 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 abstracts 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, 40, 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 90, being only $50,000 less than was derived from all the States of the Union during the previous year. The expenditures show a still moro favorable result. The amount expended in 1861 was $13,606,759 11. For the last year the amount has been reduced to $11,125,364 13, showing a decrease of about $2,481,000 in the expenditures as compared with the preceding year, and about $3,750,000 as compared with the fiscal year 1860. The deficiency in the Department for the previous year was $4,551,966 98. For the last fiscal year it was reduced to $2,112,814 57. These favorable 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 postago, and to expedite the foreign mails. This proposition, equally important to our adopted citizens and to the commercial interests of this country, has been favorably 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 PostmasterGeneral 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 il 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 26-a sum much less than the expenses of our land system during the same period. The homestead law, which will take etfect 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 expense 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 three 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 settlement 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 eight hundred 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

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