West Indies, and the Pacific squadron which has never been discontinued, are considered sufficient for the encouragement and protection of our countrymen engaged in legitimate commercial pursuits, and for upholding our flag abroad.

Some modifications of the limits of the respective squadrons, and the substitution of steamers for sailing vessels, will infuse more vigor into the service, and it is designed that there shall hereafter be greater activity and vigilance in their operations. The number of vessels and crews on foreign service will not be greatly increased over those of former years, while the number of guns will be less; yet the superiority of steam over sails for naval war vessels, and the improvement and new patterns of ordnance, will hereafter give our force abroad greatly augmented efficiency and power.

The European squadron is commanded by Rear-Admiral L. M. Goldsborough, and consists of the following vessels: the Colorado, Kearsarge, Ticonderoga, Frolic, Ino, and Guard, to which the Canandaigua will shortly be added. The field of operation of this squadron, besides the coast of Europe and the Mediterranean, will comprise Madeira, the Canaries, and the African coast as far as St. Paul de Loando.

The Brazil squadron is commanded by Acting Rear-Admiral S. W. Godon, who has ten vessels on that station, viz: the Susquehanna, Brooklyn, Juniata, Shamokin, Nipsic, Shawmut, Kansas, Wasp, Supply, and Onward. Besides the eastern coast of South America, this squadron will cruise on the coast of Africa from Cape Town to St. Paul de Loando.

The East India squadron consists at present of four vessels-the Hartford, Wyoming, Wachusett, and Relief. The Shenandoah will be shortly added to this number. This squadron is commanded by Acting Rear-Admiral H. H. Bell, who sailed from New York in his flag-ship, the Hartford, in August, and has probably already reached his station.

The Pacific squadron remains in command of Acting Rear-Admiral George F. Pearson, and comprises eleven vessels, viz: the Lancaster, Powhatan, Saranac, Suwance, Mohongo, Wateree, Saginaw, St. Mary's, Cyane, Nyack, and Tuscarora, and two store-ships, the Fredonia and Farallones. Some vessels sent to the Pacific (including two of the iron-clads) will be laid up in the harbor of San Francisco, ready for any emergency that may arise.

The extensive limits of this squadron, embracing the whole western coast of North and South America, with the islands of the Pacific; the rapidly increasing population of the States; and the growing and expanding commerce, and vast interests involved, render it advisable that the naval force of the Union should be largely re-enforced in that quarter. Considerable addition to the number of vessels will therefore be made, and it is proposed at an early day to make a division of the squadron.

But few vessels, and they on merely temporary duty, have as yet been employed in the West Indies. The Connecticut, the Kansas, the De Soto, and nearly all the vessels which have been sent to the coast of Brazil, have visited some of the more important points, particularly in the island of St. Domingo, and given attention to American interests there. It is proposed to revive the

West India squadron to cruise in those waters, where we have so large a trade, and where, owing to the proximity of the islands to our shores, it is essential that we should cultivate friendly relations. Commodore James S. Palmer has been designated to command the squadron, having for his flag-ship the Rhode Island. In addition to the De Soto, now on that station, it is proposed to send the Swatara, Monongahela, Florida, Augusta, Shamrock, Ashuelot, and Monocacy, making a squadron of nine vessels.

THE NAVAL FORCE.

When hostilities against the government were commenced in the spring of 1861, and the ports on our southern coast were ordered to be closed under the form of international blockade, instead of the municipal form of an embargo, the labor, embarrassments, and responsibilities suddenly and unexpectedly imposed upon this department were immensely increased.

To create and organize a navy such as the order for the blockade required would have been at any time an immense undertaking, but the task was vastly more onerous when the country, after a long interval of peace, was beginning to be rent by civil convulsions.

In this condition of affairs, with the navy reduced during fifty years of peace to a low standard of efficiency, without experience or precedent to guide the application of modern inventions to war purposes, with restricted and wholly insufficient navy yards for the construction and repair of vessels, and without any adequate establishment for the stupendous work before it, the department was compelled to feel its way and press on its work at the very time when a duty, was imposed upon it which a nation fully prepared and furnished with abundant ships and men and material would have found difficulty in performing. But the resources of the country were equal to the emergency. With only limited means at the command of the department to begin with, the navy became suddenly an immense power. An unrelaxing blockade was maintained for four years from the capes of the Chesapeake to the Rio Grande, while a flotilla of gunboats, protecting and aiding the army in its movements, penetrated and patrolled our rivers, through an internal navigation almost continental, from the Potomac to the Mississippi.

After the capture of Forts Hatteras and Clark, in August, 1861, port after port was wrested from the insurgents, until the flag of the Union was again restored in every harbor and along our entire coast, and the rebellion eventually wholly suppressed.

Coincident with these operations afloat, the department had its attention also actively engaged in developing the ingenuity, skill, and resources of the country, in the construction of new classes of vessels, in the introduction of new descriptions of ordnance, torpedoes, and projectiles, in experiments in steam, and in the improvement of steam machinery. Although compelled to encounter opposition in all its forms, the department has been unremitting in its efforts, and in almost every instance has met with a generous response from Congress and the country

Three hundred and twenty-two (322) officers traitorously abandoned the service to which they had dedicated their lives, proved false to the flag which they had sworn to support, and to the government which had confided in their honor and relied on their fidelity to sustain it in conflict and peril. The embarrassment caused by these desertions in the moment of trial was temporary. Better men from the merchant marine, educated and vastly more efficient, promptly volunteered their services, in many instances at great pecuniary sacrifice, to fight the battles of the Union. About seven thousand five hundred of these gallant and generous spirits have, after examination, received appointments and been employed in the navy. Schools were established to instruct and perfect them in the rudiments of gunnery and nautical routine, and it is due to them to say that they have acquitted themselves with credit and served with zeal and fidelity. The intercourse between these volunteer officers and the officers of the regular navy has been productive of mutual good will and respect. It will, I trust, lead to lasting personal friendships and insure enduring intimacy between the commercial and naval service. Most of the volunteer officers have received an honorable discharge and returned to their peaceful professional pursuits. I take this occasion to renew my annual suggestion, that some of the most distinguished of these heroic and loyal men, of admitted capability and merit, who have served the country so faithfully and so well, be added to the navy after an examination by a board of officers appointed for that purpose. Such an addition to the navy, of brave and intelligent representatives from the commercial marine, will be a fitting and honorable recognition of the services of a body of men who came gallantly forward in a period of national peril to sustain the cause of their country.

From seven thousand six hundred (7,600) men in service at the commencement of the rebellion, the number was increased to fifty-one thousand five hundred (51,500) at its close. In addition to these the aggregate of artisans and laborers employed in the navy yards was sixteen thousand eight hundred and eighty, (16,880) instead of three thousand eight hundred and forty-four (3,844) previously in the pay of the government. This is exclusive of those employed in the private ship yards and establishments, under contracts, constituting an almost equal aggregate number. Two hundred and eight (208) vessels have been commenced and most of them fitted for service during this period. A few of the larger ones will require still further time for completion. Only steamers, the propellers also having sailing power, have been built by the government during my administration of the department.

Since the 4th of March, 1861, four hundred and eighteen (418) vessels have been purchased, of which three hundred and thirteen were steamers, at a cost of $18,366,681 83, and of these there have been sold three hundred and forty (340) vessels, for which the government has received $5,621,800 27

THE CONDUCT OF THE BLOCKADE.

In order to guard the coast and enforce the blockade the department was under the necessity of breaking up and ordering home our foreign squadrons.

This recall, rendered imperative by the necessities of the case, left our extensive commerce on distant seas unprotected. The great maritime powers of Europe, as soon as they were aware of our domestic difficulty, hastened to recognize the rebels as belligerents, and proclaimed themselves neutral between the contending parties. The operations of this assumed neutrality were to deprive our national ships of the privileges which they had by national courtesy enjoyed, and while thus restricting and inflicting injury on our government, the professed and proclaimed neutrality gave encouragement and strength to the rebels who were in insurrection and waging war upon the Union. Each of these European neutrals had treaties of amity, and was in friendly official and commercial intercourse with the government of the United States, while with the rebels, who were without a recognized flag or nationality, they had neither treaties nor official relations. The United States had a navy which commanded respect, and a commerce that covered every sea, whilst the rebels had neither navy nor commerce to be affected by neutral exclusions and restrictions. Consequently this action of the neutral league operated, on the one hand, to injure and embarrass a friendly government that was cultivating and practicing peaceful and friendly relations with every nation; and, on the other hand, to give countenance and encouragement to rebels engaged in a causeless insurrection to subvert the most beneficent government on earth.

Virtually excluded from the ports of the great maritime powers by this as sumed neutrality, the difficulty of maintaining even a limited naval force abroad was greatly increased. The withdrawal of our squadrons left our unprotected commerce exposed to the depredations of semi-piratical cruisers, which were built, armed, manned, and sent out to plunder and destroy our merchantmen from the shores of neutral Europe. To these aggravated wrongs we were compelled, in the great emergency which existed, to submit, for under no circumstances would the department relax the blockade, or permit its efficiency to be impaired.

The suppression of the rebellion enables us to re-establish squadrons abroad, and to display again the flag of the Union in foreign ports. Our men-of-war, released from the blockade, will soon be found in every sea, prepared to assert American rights and protect American interests.

European neutrality, now that the insurrection is suppressed, no longer denies to our national vessels those supplies and courtesies which were refused in the days of our misfortune. No rebel rover, built in neutral ports, remains to take alarm or feel apprehension on the appearance of the armed vessels of the republic; and now that we have suppressed the insurrection, we may be permitted to receive hospitality and international comity from those neutral nations which during four years excluded our public ships, while they persistently insisted on elevating the rebels to be a distinct belligerent power.

We had, in 1860, five squadrons on foreign stations, numbering thirty-one vessels, carrying four hundred and forty-five guns. At the present time we have on the several stations abroad thirty-six vessels, mounting three hundred and forty-seven guns, and carrying fifty-six howitzers.

In time of peace our naval force should be actively employed in visiting

every commercial port where American capital is employed, and there are few available points on the globe which American enterprise has not penetrated and reached. But commerce needs protection, and our squadrons and public vessels in commission must not be inactive. One or more of our naval vessels ought annually to display the flag of the Union in every port where our ships may trade. The commerce and the navy of a people have a common identity and are inseparable companions. Each is necessary for the other, and both are essential to national prosperity and strength. Wherever our merchant ships may be employed, there should be within convenient proximity a naval force to protect them and make known our national power. Such are the energy and enterprise of our countrymen, that they will, now that the war has closed, compete for the trade and commerce of the world, provided the government performs its duty in fostering and protecting their interests. Besides guarding the channels hitherto occupied and explored, it would be well that examinations be made for new avenues of trade. In connexion with this subject, I would suggest the importance of a more thorough survey and exploration of the principal islands in the Pacific ocean, and that the department have authority to carry this suggestion into effect.

Following the tracks of commerce, and visiting every navigable portion of the globe, the intelligent officers of the navy are capable, from their position and opportunities, of acquiring and communicating a vast amount of useful information, thereby benefiting commerce, and, by continual additions to the stores of knowledge, promoting the welfare of the country and of mankind.

There are circumstances which render it necessary that a commercial and naval people should have coaling stations and ports for supplies at one or more important points on those seas and oceans where there are important interests to be protected, or naval power is to be maintained. Steamers cannot carry the same amount of supplies as the sailing vessels of former days, and the coal which is indispensable to their efficiency must, particularly in time of war, be furnished or obtainable at brief intervals, and in the immediate vicinity of their cruising grounds. A prudent regard for our future interests and welfare would seem to dictate the expediency of securing some eligible locations for the purpose indicated.

REBEL CRUISERS.

Information reached the department in May that the iron-clad ram Stonewall, a formidable vessel built in France, had arrived in Havana. This vessel had been conditionally sold to Denmark, but not proving satisfactory to that government, she was purchased by the rebels. Some difficulty in procuring armament and a crew caused a temporary slight embarrassment in her movements, but she was soon met by the English steamer City of Richmond off the coast of France, and her armament, which was made in England, with supplies for a cruise and an English crew, were transferred to the Stonewall. She remained for a short time at Ferroll, where she was watched by the Niagara and Sacramento and leaving that place, she did not reach Havana until after the down