Negotiations are pending with Denmark to discontinue the practice of levying tolls on our vessels and their cargoes passing through the Sound. I do not doubt that we can claim exemption therefrom as a matter of right. It is admitted on all hands that this exaction is sanctioned, not by the general principles of the law of nations, but only by special conventions which most of the commercial nations have entered into with Denmark. The fifth article of our treaty of 1826 with Denmark provides that there shall not be paid on the vessels of the United States and their cargoes when passing through the Sound higher duties than those of the most favored nations. This may be regarded as an implied agreement to submit to the tolls during the continuance of the treaty, and consequently may embarrass the assertion of our right to be released therefrom. There are also other provisions in the treaty which ought to be modified. It was to remain in force for ten years and until one year after either party should give notice to the other of intention to terminate it. I deem it expedient that the contemplated notice should be given to the Government of Denmark.

The naval expedition dispatched about two years since for the purpose of establishing relations with the Empire of Japan has been ably and skillfully conducted to a successful termination by the officer to whom it was intrusted. A treaty opening certain of the ports of that populous country has been negotiated, and in order to give full effect thereto it only remains to exchange ratifications and adopt requisite commercial regulations.

The treaty lately concluded between the United States and Mexico settled some of our most embarrassing difficulties with that country, but numerous claims upon it for wrongs and injuries to our citizens remained unadjusted, and many new cases have been recently added to the former list of grievances. Our legation has been earnest in its endeavors to obtain from the Mexican Government a favorable consideration of these claims, but hitherto without success. This failure is probably in some measure to be ascribed to the disturbed condition of that country. It has been my anxious desire to maintain friendly relations with the Mexican Republic and to cause its rights and territories to be respected, not only by our citizens, but by foreigners who have resorted to the United States for the purpose of organizing hostile expeditions against some of the States of that Republic. The defenseless condition in which its frontiers have been left has stimulated lawless adventurers to embark in these enterprises and greatly increased the difficulty of enforcing our obligations of neutrality. Regarding it as my solemn duty to fulfill efficiently these obligations not only toward Mexico, but other foreign nations, I have exerted all the powers with which I am invested to defeat such proceedings and bring to punishment those who by taking a part therein violated our laws. The energy and activity of our civil and military authorities have frustrated the designs of those who meditated expeditions of this character except in two instances. One of these, composed of foreigners, was at first countenanced and aided by the Mexican Government itself, it having been deceived as to their real object. The other, small in number, eluded the vigilance of the magistrates at San Francisco and succeeded in reaching the Mexican territories; but the effective measures taken by this Government compelled the abandonment of the undertaking.

The commission to establish the new line between the United States and Mexico, according to the provisions of the treaty of the 30th of December last, has been organized, and the work is already commenced.

Our treaties with the Argentine Confederation and with the Republics of Uruguay and Paraguay secure to us the free navigation of the river La Plata and some of its larger tributaries, but the same success has not attended our endeavors to open the Amazon. The reasons in favor of the free use of that river I had occasion to present fully in a former message, and, considering the cordial relations which have long existed between this Government and Brazil, it may be expected that pending negotiations will eventually reach a favorable result.

Convenient means of transit between the several parts of a country are not only desirable for the objects of commercial and personal communication, but essential to its existence under one government. Separated, as are the Atlantic and Pacific coasts of the United States, by the whole breadth of the continent, still the inhabitants of each are closely bound together by community of origin and institutions and by strong attachment to the Union. Hence the constant and increasing intercourse and vast interchange of commercial productions between these remote divisions of the Republic. At the present time the most practicable and only, commodious routes for communication between them are by the way of the isthmus of Central America. It is the duty of the Government to secure these avenues against all danger of interruption.

In relation to Central America, perplexing questions existed between the United States and Great Britain at the time of the cession of California. These, as well as questions which subsequently arose concerning interoceanic communication across the Isthmus, were, as it was supposed, adjusted by the treaty of April 19, 1850, but, unfortunately, they have been reopened by serious misunderstanding as to the import of some or its provisions, a readjustment of which is now under consideration. Our minister at London has made strenuous efforts to accomplish this desirable object, but has not yet found it possible to bring the negotiations to a termination.

As incidental to these questions, I deem it proper to notice an occurrence which happened in Central America near the close of the last session of Congress. So soon as the necessity was perceived of establishing interoceanic communications across the Isthmus a company was organized, under the authority of the State of Nicaragua, but composed for the most part of citizens of the United States, for the purpose of opening such a transit way by the river San Juan and Lake Nicaragua, which soon became an eligible and much used route in the transportation of our citizens and their property between the Atlantic and Pacific. Meanwhile, and in anticipation of the completion and importance of this transit way, a number of adventurers had taken possession of the old Spanish port at the mouth of the river San Juan in open defiance of the State or States of Central America, which upon their becoming independent had rightfully succeeded to the local sovereignty and jurisdiction of Spain. These adventurers undertook to change the name of the place from San Juan del Norte to Greytown, and though at first pretending to act as the subjects of the fictitious sovereign of the Mosquito Indians, they subsequently repudiated the control of any power whatever, assumed to adopt a distinct political organization, and declared themselves an independent sovereign state. If at some time a faint hope was entertained that they might become a stable and respectable community, that hope soon vanished. They proceeded to assert unfounded claims to civil jurisdiction over Punta Arenas, a position on the opposite side of the river San Juan, which was in possession, under a title wholly independent of them, of citizens of the United States interested in the Nicaragua Transit Company, and which was indispensably necessary to the prosperous operation of that route across the Isthmus. The company resisted their groundless claims, whereupon they proceeded to destroy some of its buildings and attempted violently to dispossess it.

At a later period they organized a strong force for the purpose of demolishing the establishment at Punta Arenas, but this mischievous design was defeated by the interposition of one of our ships of war at that time in the harbor of San Juan. Subsequently to this, in May last, a body of men from Greytown crossed over to Punta Arenas, arrogating authority to arrest on the charge of murder a captain of one of the steamboats of the Transit Company. Being well aware that the claim to exercise jurisdiction there would be resisted then, as it had been on previous occasions, they went prepared to assert it by force of arms. Our minister to Central America happened to be present on that occasion. Believing that the captain of the steamboat was innocent (for he witnessed the transaction on which the charge was founder), and believing also that the intruding party, having no jurisdiction over the place where they proposed to make the arrest, would encounter desperate resistance if they persisted in their purpose, he interposed, effectually, to prevent violence and bloodshed. The American minister afterwards visited Greytown, and whilst he was there a mob, including certain of the so-called public functionaries of the place, surrounded the house in which he was, avowing that they had come to arrest him by order of some person exercising the chief authority. While parleying with them he was wounded by a missile from the crowd. A boat dispatched from the American steamer Northern Light to release him from the perilous situation in which he was understood to be was fired into by the town guard and compelled to return. These incidents, together with the known character of the population of Greytown and their excited state, induced just apprehensions that the lives and property of our citizens at Punta Arenas would be in imminent danger after the departure of the steamer, with her passengers, for New York, unless a guard was left for their protection. For this purpose, and in order to insure the safety of passengers and property passing over the route, a temporary force was organized, at considerable expense to the United States, for which provision was made at the last session of Congress.

This pretended community, a heterogeneous assemblage gathered from various countries, and composed for the most part of blacks and persons of mixed blood, had previously given other indications of mischievous and dangerous propensities. Early in the same month property was clandestinely abstracted from the depot of the Transit Company and taken to Greytown. The plunderers obtained shelter there and their pursuers were driven back by its people, who not only protected the wrongdoers and shared the plunder, but treated with rudeness and violence those who sought to recover their property.

Such, in substance, are the facts submitted to my consideration, and proved by trustworthy evidence. I could not doubt that the case demanded the interposition of this Government. Justice required that reparation should be made for so many and such gross wrongs, and that a course of insolence and plunder, tending directly to the insecurity of the lives of numerous travelers and of the rich treasure belonging to our citizens passing over this transit way, should be peremptorily arrested. Whatever it might be in other respects, the community in question, in power to do mischief, was not despicable. It was well provided with ordnance, small arms, and ammunition, and might easily seize on the unarmed boats, freighted with millions of property, which passed almost daily within its reach. It did not profess to belong to any regular government, and had, in fact, no recognized dependence on or connection with anyone to which the United States or their injured citizens might apply for redress or which could be held responsible in any way for the outrages committed. Not standing before the world in the attitude of an organized political society, being neither competent to exercise the rights nor to discharge the obligations of a government, it was, in fact, a marauding establishment too dangerous to be disregarded and too guilty to pass unpunished, and yet incapable of being treated in any other way than as a piratical resort of outlaws or a camp of savages depredating on emigrant trains or caravans and the frontier settlements of civilized states.

Seasonable notice was given to the people of Greytown that this Government required them to repair the injuries they had done to our citizens and to make suitable apology for their insult of our minister, and that a ship of war would be dispatched thither to enforce compliance with these demands. But the notice passed unheeded. Thereupon a commander of the Navy, in charge of the sloop of war Cyane, was ordered to repeat the demands and to insist upon a compliance therewith. Finding that neither the populace nor those assuming to have authority over them manifested any disposition to make the required reparation, or even to offer excuse for their conduct, he warned them by a public proclamation that if they did not give satisfaction within a time specified he would bombard the town. By this procedure he afforded them opportunity to provide for their personal safety. To those also who desired to avoid loss of property in the punishment about to be inflicted on the offending town he furnished the means of removing their effects by the boats of his own ship and of a steamer which he procured and tendered to them for that purpose. At length, perceiving no disposition on the part of the town to comply with his requisitions, he appealed to the commander of Her Britannic Majesty's schooner Bermuda, who was seen to have intercourse and apparently much influence with the leaders among them, to interpose and persuade them to take some course calculated to save the necessity of resorting to the extreme measure indicated in his proclamation; but that officer, instead of acceding to the request, did nothing more than to protest against the contemplated bombardment. No steps of any sort were taken by the people to give the satisfaction required. No individuals, if any there were, who regarded themselves as not responsible for the misconduct of the community adopted any means to separate themselves from the fate of the guilty. The several charges on which the demands for redress were founded had been publicly known to all for some time, and were again announced to them. They did not deny any of these charges; they offered no explanation, nothing in extenuation of their conduct, but contumaciously refused to hold any intercourse with the commander of the Cyane. By their obstinate silence they seemed rather desirous to provoke chastisement than to escape it. There is ample reason to believe that this conduct of wanton defiance on their part is imputable chiefly to the delusive idea that the American Government would be deterred from punishing them through fear of displeasing a formidable foreign power, which they presumed to think looked with complacency upon their aggressive and insulting deportment toward the United States. The Cyane at length fired upon the town. Before much injury had been done the fire was twice suspended in order to afford opportunity for an arrangement, but this was declined. Most of the buildings of the place, of little value generally, were in the sequel destroyed, but, owing to the considerate precautions taken by our naval commander, there was no destruction of life.

When the Cyane was ordered to Central America, it was confidently hoped and expected that no occasion would arise for "a resort to violence and destruction of property and loss of life." Instructions to that effect were given to her commander; and no extreme act would have been requisite had not the people themselves, by their extraordinary conduct in the affair, frustrated all the possible mild measures for obtaining satisfaction. A withdrawal from the place, the object of his visit entirely defeated, would under the circumstances in which the commander of the Cyane found himself have been absolute abandonment of all claim of our citizens for indemnification and submissive acquiescence in national indignity. It would have encouraged in these lawless men a spirit of insolence and rapine most dangerous to the lives and property of our citizens at Punta Arenas, and probably emboldened them to grasp at the treasures and valuable merchandise continually passing over the Nicaragua route. It certainly would have been most satisfactory to me if the objects of the Cyane's mission could have been consummated without any act of public force, but the arrogant contumacy of the offenders rendered it impossible to avoid the alternative either to break up their establishment or to leave them impressed with the idea that they might persevere with impunity in a career of insolence and plunder.

This transaction has been the subject of complaint on the part of some foreign powers, and has been characterized with more of harshness than of justice. If comparisons were to be instituted, it would not be difficult to present repeated instances in the history of states standing in the very front of modern civilization where communities far less offending and more defenseless than Greytown have been chastised with much greater severity, and where not cities only have been laid in ruins, but human life has been recklessly sacrificed and the blood of the innocent made profusely to mingle with that of the guilty.

Passing from foreign to domestic affairs, your attention is naturally directed to the financial condition of the country, always a subject of general interest. For complete and exact information regarding the finances and the various branches of the public service connected therewith I refer you to the report of the Secretary of the Treasury, from which it will appear that the amount of revenue during the last fiscal year from all sources was $73,549,705, and that the public expenditures for the same period, exclusive of payments on account of the public debt, amounted to $51, 018,249. During the same period the payments made in redemption of the public debt, including interest and premium, amounted to $24,336,380. To the sum total of the receipts of that year is to be added a balance remaining in the Treasury at the commencement thereof, amounting to $21,942,892; and at the close of the same year a corresponding balance, amounting to $20,137,967, of receipts above expenditures also remained in the Treasury. Although, in the opinion of the Secretary of the Treasury, the receipts of the current fiscal year are not likely to equal in amount those of the last, yet they will undoubtedly exceed the amount of expenditures by at least $15,000,000. I shall therefore continue to direct that the surplus revenue be applied, so far as it can be judiciously and economically done, to the reduction of the public debt, the amount of which at the commencement of the last fiscal year was $67,340,628; of which there had been paid on the 20th day of November, 1854, the sum of $22,365,172, leaving a balance of outstanding public debt of only $44,975,456, redeemable at different periods within fourteen years. There are also remnants of other Government stocks, most of which are already due, and on which the interest has ceased, but which have not yet been presented for payment, amounting to $233,179. This statement exhibits the fact that the annual income of the Government greatly exceeds the amount of its public debt, which latter remains unpaid only because the time of payment has not yet matured, and it can not be discharged at once except at the option of public creditors, who prefer to retain the securities of the United States; and the other fact, not less striking, that the annual revenue from all sources exceeds by many millions of dollars the amount needed for a prudent and economical administration of the Government.

The estimates presented to Congress from the different Executive Departments at the last session amounted to $38,406,581 and the appropriations made to the sum of $58,116,958. Of this excess of appropriations over estimates, however, more than twenty millions was applicable to extraordinary objects, having no reference to the usual annual expenditures. Among these objects was embraced ten millions to meet the third article of the treaty between the United States and Mexico; so that, in fact, for objects of ordinary expenditure the appropriations were limited to considerably less than $40,000,000. I therefore renew my recommendation for a reduction of the duties on imports. The report of the Secretary of the Treasury presents a series of tables showing the operation of the revenue system for several successive years; and as the general principle of reduction of duties with a view to revenue, and not protection, may now be regarded as the settled policy of the country, I trust that little difficulty will be encountered in settling the details of a measure to that effect.

In connection with this subject I recommend a change in the laws, which recent experience has shown to be essential to the protection of the Government. There is no express provision of law requiring the records and papers of a public character of the several officers of the Government to be left in their offices for the use of their successors, nor any provision declaring it felony on their part to make false entries in the books or return false accounts. In the absence of such express provision by law, the outgoing officers in many instances have claimed and exercised the right to take into their own possession important books and papers, on the ground that these were their private property, and have placed them beyond the reach of the Government. Conduct of this character, brought in several instances to the notice of the present Secretary of the Treasury, naturally awakened his suspicion, and resulted in the disclosure that at four ports--namely, Oswego, Toledo, Sandusky, and Milwaukee--the Treasury had, by false entries, been defrauded within the four years next preceding March, 1853, of the sum of $198,000. The great difficulty with which the detection of these frauds has been attended, in consequence of the abstraction of books and papers by the retiring officers, and the facility with which similar frauds in the public service may be perpetrated render the necessity of new legal enactments in the respects above referred to quite obvious. For other material modifications of the revenue laws which seem to me desirable, I refer you to the report of the Secretary of the Treasury. That report and the tables which accompany it furnish ample proofs of the solid foundation on which the financial security of the country rests and of the salutary influence of the independent-treasury system upon commerce and all monetary operations.

The experience of the last year furnishes additional reasons, I regret to say, of a painful character, for the recommendation heretofore made to provide for increasing the military force employed in the Territory inhabited by the Indians. The settlers-on the frontier have suffered much from the incursions of predatory bands, and large parties of emigrants to our Pacific possessions have been massacred with impunity. The recurrence of such scenes can only be prevented by teaching these wild tribes the power of and their responsibility to the United States. From the garrisons of our frontier posts it is only possible to detach troops in small bodies; and though these have on all occasions displayed a gallantry and a stern devotion to duty which on a larger field would have commanded universal admiration, they have usually suffered severely in these conflicts with superior numbers, and have sometimes been entirely sacrificed. All the disposable force of the Army is already employed on this service, and is known to be wholly inadequate to the protection which should be afforded. The public mind of the country has been recently shocked by savage atrocities committed upon defenseless emigrants and border settlements, and hardly less by the unnecessary destruction of valuable lives where inadequate detachments of troops have undertaken to furnish the needed aid. Without increase of the military force these scenes will be repeated, it is to be feared, on a larger scale and with more disastrous consequences. Congress, I am sure, will perceive that the plainest duties and responsibilities of Government are involved in this question, and I doubt not that prompt action may be confidently anticipated when delay must be attended by such fearful hazards.

The bill of the last session providing for an increase of the pay of the rank and file of the Army has had beneficial results, not only in facilitating enlistments, but in obvious improvement in the class of men who enter the service. I regret that corresponding consideration was not bestowed on the officers, who, in view of their character and services and the expenses to which they are necessarily subject, receive at present what is, in my judgment, inadequate compensation.

The valuable services constantly rendered by the Army and its inestimable importance as the nucleus around which the volunteer forces of the nation can promptly gather in the hour of danger, sufficiently attest the wisdom of maintaining a military peace establishment; but the theory of our system and the wise practice under it require that any proposed augmentation in time of peace be only commensurate with our extended limits and frontier relations. While scrupulously adhering to this principle, I find in existing circumstances a necessity for increase of our military force, and it is believed that four new regiments, two of infantry and two of mounted men, will be sufficient to meet the present exigency. If it were necessary carefully to weigh the cost in a case of such urgency, it would be shown that the additional expense would be comparatively light.

With the increase of the numerical force of the Army should, I think, be combined certain measures of reform in its organic arrangement and administration. The present organization is the result of partial legislation often directed to special objects and interests; and the laws regulating rank and command, having been adopted many years ago from the British code, are not always applicable to our service. It is not surprising, therefore, that the system should be deficient in the symmetry and simplicity essential to the harmonious working of its several parts, and require a careful revision.

The present organization, by maintaining large staff corps or departments, separates many officers from that close connection with troops and those active duties in the field which are deemed requisite to qualify them for the varied responsibilities of high command. Were the duties of the Army staff mainly discharged by officers detached from their regiments, it is believed that the special service would be equally well performed and the discipline and instruction of the Army be improved. While due regard to the security of the rights of officers and to the nice sense of honor which should be cultivated among them would seem to exact compliance with the established rule of promotion in ordinary cases, still it can hardly be doubted that the range of promotion by selection, which is now practically confined to the grade of general officers, might be somewhat extended with benefit to the public service. Observance of the rule of seniority sometimes leads, especially in time of peace, to the promotion of officers who, after meritorious and even distinguished service, may have been rendered by age or infirmity incapable of performing active duty, and whose advancement, therefore, would tend to impair the efficiency of the Army. Suitable provision for this class of officers, by the creation of a retired list, would remedy the evil without wounding the just pride of men who by past services have established a claim to high consideration. In again commending this measure to the favorable consideration of Congress I would suggest that the power of placing officers on the retired list be limited to one year. The practical operation of the measure would thus be tested, and if after the lapse of years there should be occasion to renew the provision it can be reproduced with any improvements which experience may indicate. The present organization of the artillery into regiments is liable to obvious objections. The service of artillery is that of batteries, and an organization of batteries into a corps of artillery would be more consistent with the nature of their duties. A large part of the troops now called artillery are, and have been, on duty as infantry, the distinction between the two arms being merely nominal. This nominal artillery in our service is disproportionate to the whole force and greater than the wants of the country demand. I therefore commend the discontinuance of a distinction which has no foundation in either the arms used or the character of the service expected to be performed.

In connection with the proposition for the increase of the Army, I have presented these suggestions with regard to certain measures of reform as the complement of a system which would produce the happiest results from a given expenditure, and which, I hope, may attract the early attention and be deemed worthy of the approval of Congress.

The recommendation of the Secretary of the Navy having reference to more ample provisions for the discipline and general improvement in the character of seamen and for the reorganization and gradual increase of the Navy I deem eminently worthy of your favorable consideration. The principles which have controlled our policy in relation to the permanent military force by sea and land are sound, consistent with the theory of our system, and should by no means be disregarded. But, limiting the force to the objects particularly set forth in the preceding part of this message, we should not overlook the present magnitude and prospective extension of our commercial marine, nor fail to give due weight to the fact that besides the 2,000 miles of Atlantic seaboard we have now a Pacific coast stretching from Mexico to the British possessions in the north, teeming with wealth and enterprise and demanding the constant presence of ships of war. The augmentation of the Navy has not kept pace with the duties properly and profitably assigned to it in time of peace, and it is inadequate for the large field of its operations, not merely in the present, but still more in the progressively increasing exigencies of the commerce of the United States. I cordially approve of the proposed apprentice system for our national vessels recommended by the Secretary of the Navy. The occurrence during the last few months of marine disasters of the most tragic nature, involving great loss of human life, has produced intense emotions of sympathy and sorrow throughout the country. It may well be doubted whether all these calamitous events are wholly attributable to the necessary and inevitable dangers of the sea. The merchants, mariners, and shipbuilders of the United States are, it is true, unsurpassed in far-reaching enterprise, skill, intelligence, and courage by any others in the world. But with the increasing amount of our commercial tonnage in the aggregate and the larger size and improved equipment of the ships now constructed a deficiency in the supply of reliable seamen begins to be very seriously felt. The inconvenience may perhaps be met in part by due regulation for the introduction into our merchant ships of indented apprentices, which, while it would afford useful and eligible occupation to numerous young men, would have a tendency to raise the character of seamen as a class. And it is deserving of serious reflection whether it may not be desirable to revise the existing laws for the maintenance of discipline at sea, upon which the security of life and property on the ocean must to so great an extent depend. Although much attention has already been given by Congress to the proper construction and arrangement of steam vessels and all passenger ships, still it is believed that the resources of science and mechanical skill in this direction have not been exhausted. No good reason exists for the marked distinction which appears upon our statutes between the laws for protecting life and property at sea and those for protecting them on land. In most of the States severe penalties are provided to punish conductors of trains, engineers, and others employed in the transportation of persons by railway or by steamboats on rivers. Why should not the same principle be applied to acts of insubordination, cowardice, or other misconduct on the part of masters and mariners producing injury or death to passengers on the high seas, beyond the jurisdiction of any of the States, and where such delinquencies can be reached only by the power of Congress? The whole subject is earnestly commended to your consideration.

The report of the Postmaster-General, to which you are referred for many interesting details in relation to this important and rapidly extending branch of the public service, shows that the expenditure of the year ending June 30, 1854, including $133,483 of balance due to foreign offices, amounted to $8,710,907. The gross receipts during the same period amounted to $6,955,586, exhibiting an expenditure over income of $1,755,321 and a diminution of deficiency as compared with the last year of $361,756. The increase of the revenue of the Department for the year ending June 30, 1854, over the preceding year was $970,399. No proportionate increase, however, can be anticipated for the current year, in consequence of the act of Congress of June 23, 1854, providing for increased compensation to all postmasters. From these statements it is apparent that the Post-Office Department, instead of defraying its expenses according to the design at the time of its creation, is now, and under existing laws must continue to be, to no small extent a charge upon the general Treasury. The cost of mail transportation during the year ending June 30, 1854, exceeds the cost of the preceding year by $495,074. I again call your attention to the subject of mail transportation by ocean steamers, and commend the suggestions of the Postmaster General to your early attention.

During the last fiscal year 11,070,935 acres of the public lands have been surveyed and 8,190,017 acres brought into market. The number of acres sold is 7,035,735 and the amount received therefor $9,285,533. The aggregate amount of lands sold, located under military scrip and land warrants, selected as swamp lands by States, and by locating under grants for roads is upward of 23,000,000 acres. The increase of lands sold over the previous year is about 6,000,000 acres, and the sales during the first two quarters of the current year present the extraordinary result of five and a half millions sold, exceeding by nearly 4,000,000 acres the sales of the corresponding quarters of the last year.

The commendable policy of the Government in relation to setting apart public domain for those who have served their country in time of war is illustrated by the fact that since 1790 no less than 30,000,000 acres have been applied to this object.

The suggestions which I submitted in my annual message of last year in reference to grants of land in aid of the construction of railways were less full and explicit than the magnitude of the subject and subsequent developments would seem to render proper and desirable. Of the soundness of the principle then asserted with regard to the limitation of the power of Congress I entertain no doubt, but in its application it is not enough that the value of lands in a particular locality may be enhanced; that, in fact, a larger amount of money may probably be received in a given time for alternate sections than could have been realized for all the sections without the impulse and influence of the proposed improvements. A prudent proprietor looks beyond limited sections of his domain, beyond present results to the ultimate effect which a particular line of policy is likely to produce upon all his possessions and interests. The Government, which is trustee in this matter for the people of the States, is bound to take the same wise and comprehensive view. Prior to and during the last session of Congress upward of 30,000,000 acres of land were withdrawn from public sale with a view to applications for grants of this character pending before Congress. A careful review of the whole subject led me to direct that all such orders be abrogated and the lands restored to market, and instructions were immediately given to that effect. The applications at the last session contemplated the construction of more than 5,000 miles of road and grants to the amount of nearly 20,000,000 acres of the public domain. Even admitting the right on the part of Congress to be unquestionable, is it quite clear that the proposed grants would be productive of good, and not evil? The different projects are confined for the present to eleven States of this Union and one Territory. The reasons assigned for the grants show that it is proposed to put the works speedily in process of construction. When we reflect that since the commencement of the construction of railways in the United States, stimulated, as they have been, by the large dividends realized from the earlier works over the great thoroughfares and between the most important points of commerce and population, encouraged by State legislation, and pressed forward by the amazing energy of private enterprise, only 17,000 miles have been completed in all the States in a quarter of a century; when we see the crippled condition of many works commenced and prosecuted upon what were deemed to be sound principles and safe calculations; when we contemplate the enormous absorption of capital withdrawn from the ordinary channels of business, the extravagant rates of interest at this moment paid to continue operations, the bankruptcies, not merely in money but in character, and the inevitable effect upon finances generally, can it be doubted that the tendency is to run to excess in this matter? Is it wise to augment this excess by encouraging hopes of sudden wealth expected to flow from magnificent schemes dependent upon the action of Congress? Does the spirit which has produced such results need to be stimulated or checked? Is it not the better rule to leave all these works to private enterprise, regulated and, when expedient, aided by the cooperation of States? If constructed by private capital the stimulant and the check go together and furnish a salutary restraint against speculative schemes and extravagance. But it is manifest that with the most effective guards there is danger of going too fast and too far. We may well pause before a proposition contemplating a simultaneous movement for the construction of railroads which in extent will equal, exclusive of the great Pacific road and all its branches, nearly one-third of the entire length of such works now completed in the United States, and which can not cost with equipments less than $150,000,000. The dangers likely to result from combinations of interests of this character can hardly be overestimated. But independently of these considerations, where is the accurate knowledge, the comprehensive intelligence, which shall discriminate between the relative claims of these twenty eight proposed roads in eleven States and one Territory? Where will you begin and where end? If to enable these companies to execute their proposed works it is necessary that the aid of the General Government be primarily given, the policy will present a problem so comprehensive in its bearings and so important to our political and social well-being as to claim in anticipation the severest analysis. Entertaining these views, I recur with satisfaction to the experience and action of the last session of Congress as furnishing assurance that the subject will not fail to elicit a careful reexamination and rigid scrutiny. It was my intention to present on this occasion some suggestions regarding internal improvements by the General Government, which want of time at the close of the last session prevented my submitting on the return to the House of Representatives with objections of the bill entitled "An act making appropriations for the repair, preservation, and completion of certain public works heretofore commenced under the authority of law;" but the space in this communication already occupied with other matter of immediate public exigency constrains me to reserve that subject for a special message, which will be transmitted to the two Houses of Congress at an early day. The judicial establishment of the United States requires modification, and certain reforms in the manner of conducting the legal business of the Government are also much needed; but as I have addressed you upon both of these subjects at length before, I have only to call your attention to the suggestions then made.

My former recommendations in relation to suitable provision for various objects of deep interest to the inhabitants of the District of Columbia are renewed. Many of these objects partake largely of a national character, and are important independently of their relation to the prosperity of the only considerable organized community in the Union entirely unrepresented in Congress.

I have thus presented suggestions on such subjects as appear to me to be of particular interest or importance, and therefore most worthy of consideration during the short remaining period allotted to the labors of the present Congress.

Our forefathers of the thirteen united colonies, in acquiring their independence and in rounding this Republic of the United States of America, have devolved upon us, their descendants, the greatest and the most noble trust ever committed to the hands of man, imposing upon all, and especially such as the public will may have invested for the time being with political functions, the most sacred obligations. We have to maintain inviolate the great doctrine of the inherent right of popular self-government; to reconcile the largest liberty of the individual citizen with complete security of the public order; to render cheerful obedience to the laws of the land, to unite in enforcing their execution, and to frown indignantly on all combinations to resist them; to harmonize a sincere and ardent devotion to the institutions of religions faith with the most universal religious toleration; to preserve the rights of all by causing each to respect those of the other; to carry forward every social improvement to the uttermost limit of human perfectibility, by the free action of mind upon mind, not by the obtrusive intervention of misapplied force; to uphold the integrity and guard the limitations of our organic law; to preserve sacred from all touch of usurpation, as the very palladium of our political salvation, the reserved rights and powers of the several States and of the people; to cherish with loyal fealty and devoted affection this Union, as the only sure foundation on which the hopes of civil liberty rest; to administer government with vigilant integrity and rigid economy; to cultivate peace and friendship with foreign nations, and to demand and exact equal justice from all, but to do wrong to none; to eschew intermeddling with the national policy and the domestic repose of other governments, and to repel it from our own; never to shrink from war when the rights and the honor of the country call us to arms, but to cultivate in preference the arts of peace, seek enlargement of the rights of neutrality, and elevate and liberalize the intercourse of nations; and by such just and honorable means, and such only, whilst exalting the condition of the Republic, to assure to it the legitimate influence and the benign authority of a great example amongst all the powers of Christendom.

Under the solemnity of these convictions the blessing of Almighty God is earnestly invoked to attend upon your deliberations and upon all the counsels and acts of the Government, to the end that, with common zeal and common efforts, we may, in humble submission to the divine will, cooperate for the promotion of the supreme good of these United States.

***

The Army during the past year has been actively engaged in defending the Indian frontier, the state of the service permitting but few and small garrisons in our permanent fortifications. The additional regiments authorized at the last session of Congress have been recruited and organized, and a large portion of the troops have already been sent to the field. All the duties which devolve on the military establishment have been satisfactorily performed, and the dangers and privations incident to the character of the service required of our troops have furnished additional evidence of their courage, zeal, and capacity to meet any requisition which their country may make upon them. For the details of the military operations, the distribution of the troops, and additional provisions required for the military service, I refer to the report of the Secretary of War and the accompanying documents.

Experience gathered from events which have transpired since my last annual message has but served to confirm the opinion then expressed of the propriety of making provision by a retired list for disabled officers and for increased compensation to the officers retained on the list for active duty. All the reasons which existed when these measures were recommended on former occasions continue without modification, except so far as circumstances have given to some of them additional force.

The recommendations heretofore made for a partial reorganization of the Army are also renewed. The thorough elementary education given to those officers who commenced their service with the grade of cadet qualifies them to a considerable extent to perform the duties of every arm of the service; but to give the highest efficiency to artillery requires the practice and special study of many years, and it is not, therefore, believed to be advisable to maintain in time of peace a larger force of that arm than can be usually employed in the duties appertaining to the service of field and siege artillery. The duties of the staff in all its various branches belong to the movements of troops, and the efficiency of an army in the field would materially depend upon the ability with which those duties are discharged. It is not, as in the case of the artillery, a specialty, but requires also an intimate knowledge of the duties of an officer of the line, and it is not doubted that to complete the education of an officer for either the line or the general staff it is desirable that he shall have served in both. With this view, it was recommended on a former occasion that the duties of the staff should be mainly performed by details from the line, and, with conviction of the advantages which would result from such a change, it is again presented for the consideration of Congress.

The report of the Secretary of the Navy, herewith submitted, exhibits in full the naval operations of the past year, together with the present condition of the service, and it makes suggestions of further legislation, to which your attention is invited.

The construction of the six steam frigates for which appropriations were made by the last Congress has proceeded in the most satisfactory manner and with such expedition as to warrant the belief that they will be ready for service early in the coming spring. Important as this addition to our naval force is, it still remains inadequate to the contingent exigencies of the protection of the extensive seacoast and vast commercial interests of the United States. In view of this fact and of the acknowledged wisdom of the policy of a gradual and systematic increase of the Navy an appropriation is recommended for the construction of six steam sloops of war.

In regard to the steps taken in execution of the act of Congress to promote the efficiency of the Navy, it is unnecessary for me to say more than to express entire concurrence in the observations on that subject presented by the Secretary in his report.

It will be perceived by the report of the postmaster-General that the gross expenditure of the Department for the last fiscal year was $9,968,342 and the gross receipts $7,342,136, making an excess of expenditure over receipts of $2,626,206; and that the cost of mail transportation during that year was $674,952 greater than the previous year. Much of the heavy expenditures to which the Treasury is thus subjected is to be ascribed to the large quantity of printed matter conveyed by the mails, either franked or liable to no postage by law or to very low rates of postage compared with that charged on letters, and to the great cost of mail service on railroads and by ocean steamers. The suggestions of the Postmaster-General on the subject deserve the consideration of Congress.

The report of the Secretary of the Interior will engage your attention as well for useful suggestions it contains as for the interest and importance of the subjects to which they refer.

The aggregate amount of public land sold during the last fiscal year, located with military scrip or land warrants, taken up under grants for roads, and selected as swamp lands by States is 24,557,409 acres, of which the portion sold was 15,729,524 acres, yielding in receipts the sum of $11,485,380. In the same period of time 8,723,854 acres have been surveyed, but, in consideration of the quantity already subject to entry, no additional tracts have been brought into market.

The peculiar relation of the General Government to the District of Columbia renders it proper to commend to your care not only its material but also its moral interests, including education, more especially in those parts of the District outside of the cities of Washington and Georgetown.

The commissioners appointed to revise and codify the laws of the District have made such progress in the performance of their task as to insure its completion in the time prescribed by the act of Congress.

Information has recently been received that the peace of the settlements in the Territories of Oregon and Washington is disturbed by hostilities on the part of the Indians, with indications of extensive combinations of a hostile character among the tribes in that quarter, the more serious in their possible effect by reason of the undetermined foreign interests existing in those Territories, to which your attention has already been especially invited. Efficient measures have been taken, which, it is believed, will restore quiet and afford protection to our citizens.

In the Territory of Kansas there have been acts prejudicial to good order, but as yet none have occurred under circumstances to justify the interposition of the Federal Executive. That could only be in case of obstruction to Federal law or of organized resistance to Territorial law, assuming the character of insurrection, which, if it should occur, it would be my duty promptly to overcome and suppress. I cherish the hope, however, that the occurrence of any such untoward event will be prevented by the sound sense of the people of the Territory, who by its organic law, possessing the right to determine their own domestic institutions, are entitled while deporting themselves peacefully to the free exercise of that right, and must be protected in the enjoyment of it without interference on the part of the citizens of any of the States. The southern boundary line of this Territory has never been surveyed and established. The rapidly extending settlements in that region and the fact that the main route between Independence, in the State of Missouri, and New Mexico is contiguous in this line suggest the probability that embarrassing questions of jurisdiction may consequently arise. For these and other considerations I commend the subject to your early attention.

I have thus passed in review the general state of the Union, including such particular concerns of the Federal Government, whether of domestic or foreign relation, as it appeared to me desirable and useful to bring to the special notice of Congress. Unlike the great States of Europe and Asia and many of those of America, these United States are wasting their strength neither in foreign war nor domestic strife. Whatever of discontent or public dissatisfaction exists is attributable to the imperfections of human nature or is incident to all governments, however perfect, which human wisdom can devise. Such subjects of political agitation as occupy the public mind consist to a great extent of exaggeration of inevitable evils, or over zeal in social improvement, or mere imagination of grievance, having but remote connection with any of the constitutional functions or duties of the Federal Government. To whatever extent these questions exhibit a tendency menacing to the stability of the Constitution or the integrity of the Union, and no further, they demand the consideration of the Executive and require to be presented by him to Congress.

Before the thirteen colonies became a confederation of independent States they were associated only by community of transatlantic origin, by geographical position, and by the mutual tie of common dependence on Great Britain. When that tie was sundered they severally assumed the powers and rights of absolute self-government. The municipal and social institutions of each, its laws of property and of personal relation, even its political organization, were such only as each one chose to establish, wholly without interference from any other. In the language of the Declaration of Independence, each State had "full power to levy war, conclude peace, contract alliances, establish commerce, and to do all other acts and things which independent states may of right do." The several colonies differed in climate, in soil, in natural productions, in religion, in systems of education, in legislation, and in the forms of political administration, and they continued to differ in these respects when they voluntarily allied themselves as States to carry on the War of the Revolution. The object of that war was to disenthrall the united colonies from foreign rule, which had proved to be oppressive, and to separate them permanently from the mother country. The political result was the foundation of a Federal Republic of the free white men of the colonies, constituted, as they were, in distinct and reciprocally independent State governments. As for the subject races, whether Indian or African, the wise and brave statesmen of that day, being engaged in no extravagant scheme of social change, left them as they were, and thus preserved themselves and their posterity from the anarchy and the ever-recurring civil wars which have prevailed in other revolutionized European colonies of America.

When the confederated States found it convenient to modify the conditions of their association by giving to the General Government direct access in some respects to the people of the States, instead of confining it to action on the States as such, they proceeded to frame the existing Constitution, adhering steadily to one guiding thought, which was to delegate only such power as was necessary and proper to the execution of specific purposes, or, in other words, to retain as much as possible consistently with those purposes of the independent powers of the individual States. For objects of common defense and security, they intrusted to the General Government certain carefully defined functions, leaving all others as the undelegated rights of the separate independent sovereignties.

Such is the constitutional theory of our Government, the practical observance of which has carried us, and us alone among modern republics, through nearly three generations of time without the cost of one drop of blood shed in civil war. With freedom and concert of action, it has enabled us to contend successfully on the battlefield against foreign foes, has elevated the feeble colonies into powerful States, and has raised our industrial productions and our commerce which transports them to the level of the richest and the greatest nations of Europe. And the admirable adaptation of our political institutions to their objects, combining local self-government with aggregate strength, has established the practicability of a government like ours to cover a continent with confederate states.

The Congress of the United States is in effect that congress of sovereignties which good men in the Old World have sought for, but could never attain, and which imparts to America an exemption from the mutable leagues for common action, from the wars, the mutual invasions, and vague aspirations after the balance of power which convulse from time to time the Governments of Europe. Our cooperative action rests in the conditions of permanent confederation prescribed by the Constitution. Our balance of power is in the separate reserved rights of the States and their equal representation in the Senate. That independent sovereignty in every one of the States, with its reserved rights of local self-government assured to each by their coequal power in the Senate, was the fundamental condition of the Constitution. Without it the Union would never have existed. However desirous the larger States might be to reorganize the Government so as to give to their population its proportionate weight in the common counsels, they knew it was impossible unless they conceded to the smaller ones authority to exercise at least a negative influence on all the measures of the Government, whether legislative or executive, through their equal representation in the Senate. Indeed, the larger States themselves could not have failed to perceive that the same power was equally necessary to them for the security of their own domestic interests against the aggregate force of the General Government. In a word, the original States went into this permanent league on the agreed premises of exerting their common strength for the defense of the whole and of all its parts, but of utterly excluding all capability of reciprocal aggression. Each solemnly bound itself to all the others neither to undertake nor permit any encroachment upon or intermeddling with another's reserved rights.

Where it was deemed expedient particular rights of the States were expressly guaranteed by the Constitution, but in all things besides these rights were guarded by the limitation of the powers granted and by express reservation of all powers not granted in the compact of union. Thus the great power of taxation was limited to purposes of common defense and general welfare, excluding objects appertaining to the local legislation of the several States; and those purposes of general welfare and common defense were afterwards defined by specific enumeration as being matters only of co-relation between the States themselves or between them and foreign governments, which, because of their common and general nature, could not be left to the separate control of each State.

Of the circumstances of local condition, interest, and rights in which a portion of the States, constituting one great section of the Union, differed from the rest and from another section, the most important was the peculiarity of a larger relative colored population in the Southern than in the Northern States.

A population of this class, held in subjection, existed in nearly all the States, but was more numerous and of more serious concernment in the South than in the North on account of natural differences of climate and production; and it was foreseen that, for the same reasons, while this population would diminish and sooner or later cease to exist in some States, it might increase in others. The peculiar character and magnitude of this question of local rights, not in material relations only, but still more in social ones, caused it to enter into the special stipulations of the Constitution.

Hence, while the General Government, as well by the enumerated powers granted to it as by those not enumerated, and therefore refused to it, was forbidden to touch this matter in the sense of attack or offense, it was placed under the general safeguard of the Union in the sense of defense against either invasion or domestic violence, like all other local interests of the several States. Each State expressly stipulated, as well for itself as for each and all of its citizens, and every citizen of each State became solemnly bound by his allegiance to the Constitution that any person held to service or labor in one State, escaping into another, should not, in consequence of any law or regulation thereof, be discharged from such service or labor, but should be delivered up on claim of the party to whom such service or labor might be due by the laws of his State.

Thus and thus only, by the reciprocal guaranty of all the rights of every State against interference on the part of another, was the present form of government established by our fathers and transmitted to us, and by no other means is it possible for it to exist. If one State ceases to respect the rights of another and obtrusively intermeddles with its local interests; if a portion of the States assume to impose their institutions on the others or refuse to fulfill their obligations to them, we are no longer united, friendly States, but distracted, hostile ones, with little capacity left of common advantage, but abundant means of reciprocal injury and mischief. Practically it is immaterial whether aggressive interference between the States or deliberate refusal on the part of any one of them to comply with constitutional obligations arise from erroneous conviction or blind prejudice, whether it be perpetrated by direction or indirection. In either case it is full of threat and of danger to the durability of the Union.

Placed in the office of Chief Magistrate as the executive agent of the whole country, bound to take care that the laws be faithfully executed, and specially enjoined by the Constitution to give information to Congress on the state of the Union, it would be palpable neglect of duty on my part to pass over a subject like this, which beyond all things at the present time vitally concerns individual and public security.

It has been matter of painful regret to see States conspicuous for their services in rounding this Republic and equally sharing its advantages disregard their constitutional obligations to it. Although conscious of their inability to heal admitted and palpable social evils of their own, and which are completely within their jurisdiction, they engage in the offensive and hopeless undertaking of reforming the domestic institutions of other States, wholly beyond their control and authority. In the vain pursuit of ends by them entirely unattainable, and which they may not legally attempt to compass, they peril the very existence of the Constitution and all the countless benefits which it has conferred. While the people of the Southern States confine their attention to their own affairs, not presuming officiously to intermeddle with the social institutions of the Northern States, too many of the inhabitants of the latter are permanently organized in associations to inflict injury on the former by wrongful acts, which would be cause of war as between foreign powers and only fail to be such in our system because perpetrated under cover of the Union.

Is it possible to present this subject as truth and the occasion require without noticing the reiterated but groundless allegation that the South has persistently asserted claims and obtained advantages in the practical administration of the General Government to the prejudice of the North, and in which the latter has acquiesced? That is, the States which either promote or tolerate attacks on the rights of persons and of property in other States, to disguise their own injustice, pretend or imagine, and constantly aver, that they, whose constitutional rights are thus systematically assailed, are themselves the aggressors. At the present time this imputed aggression, resting, as it does, only in the vague declamatory charges of political agitators, resolves itself into misapprehension, or misinterpretation, of the principles and facts of the political organization of the new Territories of the United States.

What is the voice of history? When the ordinance which provided for the government of the territory northwest of the river Ohio and for its eventual subdivision into new States was adopted in the Congress of the Confederation, it is not to be supposed that the question of future relative power as between the States which retained and those which did not retain a numerous colored population escaped notice or failed to be considered. And yet the concession of that vast territory to the interests and opinions of the Northern States, a territory now the seat of five among the largest members of the Union, was in great measure the act of the State of Virginia and of the South.

When Louisiana was acquired by the United States, it was an acquisition not less to the North than to the South; for while it was important to the country at the mouth of the river Mississippi to become the emporium of the country above it, so also it was even more important to the whole Union to have that emporium; and although the new province, by reason of its imperfect settlement, was mainly regarded as on the Gulf of Mexico, yet in fact it extended to the opposite boundaries of the United States, with far greater breadth above than below, and was in territory, as in everything else, equally at least an accession to the Northern States. It is mere delusion and prejudice, therefore, to speak of Louisiana as acquisition in the special interest of the South.

The patriotic and just men who participated in the act were influenced by motives far above all sectional jealousies. It was in truth the great event which, by completing for us the possession of the Valley of the Mississippi, with commercial access to the Gulf of Mexico, imparted unity and strength to the whole Confederation and attached together by indissoluble ties the East and the West, as well as the North and the South.

As to Florida, that was but the transfer by Spain to the United States of territory on the east side of the river Mississippi in exchange for large territory which the United States transferred to Spain on the west side of that river, as the entire diplomatic history of the transaction serves to demonstrate. Moreover, it was an acquisition demanded by the commercial interests and the security of the whole Union. In the meantime the people of the United States had grown up to a proper consciousness of their strength, and in a brief contest with France and in a second serious war with Great Britain they had shaken off all which remained of undue reverence for Europe, and emerged from the atmosphere of those transatlantic influences which surrounded the infant Republic, and had begun to turn their attention to the full and systematic development of the internal resources of the Union.

Among the evanescent controversies of that period the most conspicuous was the question of regulation by Congress of the social condition of the future States to be rounded in the territory of Louisiana.

The ordinance for the government of the territory northwest of the river Ohio had contained a provision which prohibited the use of servile labor therein, subject to the condition of the extraditions of fugitives from service due in any other part of the United States. Subsequently to the adoption of the Constitution this provision ceased to remain as a law, for its operation as such was absolutely superseded by the Constitution. But the recollection of the fact excited the zeal of social propagandism in some sections of the Confederation, and when a second State, that of Missouri, came to be formed in the territory of Louisiana proposition was made to extend to the latter territory the restriction originally applied to the country situated between the rivers Ohio and Mississippi.

Most questionable as was this proposition in all its constitutional relations, nevertheless it received the sanction of Congress, with some slight modifications of line, to save the existing rights of the intended new State. It was reluctantly acquiesced in by Southern States as a sacrifice to the cause of peace and of the Union, not only of the rights stipulated by the treaty of Louisiana, but of the principle of equality among the States guaranteed by the Constitution. It was received by the Northern States with angry and resentful condemnation and complaint, because it did not concede all which they had exactingly demanded. Having passed through the forms of legislation, it took its place in the statute book, standing open to repeal, like any other act of doubtful constitutionality, subject to be pronounced null and void by the courts of law, and possessing no possible efficacy to control the rights of the States which might thereafter be organized out of any part of the original territory of Louisiana.

In all this, if any aggression there were, any innovation upon preexisting rights, to which portion of the Union are they justly chargeable? This controversy passed away with the occasion, nothing surviving it save the dormant letter of the statute.

But long afterwards, when by the proposed accession of the Republic of Texas the United States were to take their next step in territorial greatness, a similar contingency occurred and became the occasion for systematized attempts to intervene in the domestic affairs of one section of the Union, in defiance of their rights as States and of the stipulations of the Constitution. These attempts assumed a practical direction in the shape of persevering endeavors by some of the Representatives in both Houses of Congress to deprive the Southern States of the supposed benefit of the provisions of the act authorizing the organization of the State of Missouri.

But the good sense of the people and the vital force of the Constitution triumphed over sectional prejudice and the political errors of the day, and the State of Texas returned to the Union as she was, with social institutions which her people had chosen for themselves and with express agreement by the reannexing act that she should be susceptible of subdivision into a plurality of States.

Whatever advantage the interests of the Southern States, as such, gained by this were far inferior in results, as they unfolded in the progress of time, to those which sprang from previous concessions made by the South.

To every thoughtful friend of the Union, to the true lovers of their country, to all who longed and labored for the full success of this great experiment of republican institutions, it was cause of gratulation that such an opportunity had occurred to illustrate our advancing power on this continent and to furnish to the world additional assurance of the strength and stability of the Constitution. Who would wish to see Florida still a European colony? Who would rejoice to hail Texas as a lone star instead of one in the galaxy of States? Who does not appreciate the incalculable benefits of the acquisition of Louisiana? And yet narrow views and sectional purposes would inevitably have excluded them all from the Union.

But another struggle on the same point ensued when our victorious armies returned from Mexico and it devolved on Congress to provide for the territories acquired by the treaty of Guadalupe Hidalgo. The great relations of the subject had now become distinct and clear to the perception of the public mind, which appreciated the evils of sectional controversy upon the question of the admission of new States. In that crisis intense solicitude pervaded the nation. But the patriotic impulses of the popular heart, guided by the admonitory advice of the Father of his Country, rose superior to all the difficulties of the incorporation of a new empire into the Union. In the counsels of Congress there was manifested extreme antagonism of opinion and action between some Representatives, who sought by the abusive and unconstitutional employment of the legislative powers of the Government to interfere in the condition of the inchoate States and to impose their own social theories upon the latter, and other Representatives, who repelled the interposition of the General Government in this respect and maintained the self-constituting rights of the States. In truth, the thing attempted was in form alone action of the General Government, while in reality it was the endeavor, by abuse of legislative power, to force the ideas of internal policy entertained in particular States upon allied independent States. Once more the Constitution and the Union triumphed signally. The new territories were organized without restrictions on the disputed point, and were thus left to judge in that particular for themselves; and the sense of constitutional faith proved vigorous enough in Congress not only to accomplish this primary object, but also the incidental and hardly less important one of so amending the provisions of the statute for the extradition of fugitives from service as to place that public duty under the safeguard of the General Government, and thus relieve it from obstacles raised up by the legislation of some of the States.

Vain declamation regarding the provisions of law for the extradition of fugitives from service, with occasional episodes of frantic effort to obstruct their execution by riot and murder, continued for a brief time to agitate certain localities. But the true principle of leaving each State and Territory to regulate its own laws of labor according to its own sense of right and expediency had acquired fast hold of the public judgment, to such a degree that by common consent it was observed in the organization of the Territory of Washington. When, more recently, it became requisite to organize the Territories of Nebraska and Kansas, it was the natural and legitimate, if not the inevitable, consequence of previous events and legislation that the same great and sound principle which had already been applied to Utah and New Mexico should be applied to them--that they should stand exempt from the restrictions proposed in the act relative to the State of Missouri.

These restrictions were, in the estimation of many thoughtful men, null from the beginning, unauthorized by the Constitution, contrary to the treaty stipulations for the cession of Louisiana, and inconsistent with the equality of these States.

They had been stripped of all moral authority by persistent efforts to procure their indirect repeal through contradictory enactments. They had been practically abrogated by the legislation attending the organization of Utah, New Mexico, and Washington. If any vitality remained in them it would have been taken away, in effect, by the new Territorial acts in the form originally proposed to the Senate at the first session of the last Congress. It was manly and ingenuous, as well as patriotic and just, to do this directly and plainly, and thus relieve the statute book of an act which might be of possible future injury, but of no possible future benefit; and the measure of its repeal was the final consummation and complete recognition of the principle that no portion of the United States shall undertake through assumption of the powers of the General Government to dictate the social institutions of any other portion.

The scope and effect of the language of repeal were not left in doubt. It was declared in terms to be "the true intent and meaning of this act not to legislate slavery into any Territory or State, nor to exclude it therefrom, but to leave the people thereof perfectly free to form and regulate their domestic institutions in their own way, subject only to the Constitution of the United States."

The measure could not be withstood upon its merits alone. It was attacked with violence on the false or delusive pretext that it constituted a breach of faith. Never was objection more utterly destitute of substantial justification. When before was it imagined by sensible men that a regulative or declarative statute, whether enacted ten or forty years ago, is irrepealable; that an act of Congress is above the Constitution? If, indeed, there were in the facts any cause to impute bad faith, it would attach to those only who have never ceased, from the time of the enactment of the restrictive provision to the present day, to denounce and condemn it; who have constantly refused to complete it by needful supplementary legislation; who have spared no exertion to deprive it of moral force; who have themselves again and again attempted its repeal by the enactment of incompatible provisions, and who, by the inevitable reactionary effect of their own violence on the subject, awakened the country to perception of the true constitutional principle of leaving the matter involved to the discretion of the people of the respective existing or incipient States.

It is not pretended that this principle or any other precludes the possibility of evils in practice, disturbed, as political action is liable to be, by human passions. No form of government is exempt from inconveniences; but in this case they are the result of the abuse, and not of the legitimate exercise, of the powers reserved or conferred in the organization of a Territory. They are not to be charged to the great principle of popular sovereignty. On the contrary, they disappear before the intelligence and patriotism of the people, exerting through the ballot box their peaceful and silent but irresistible power.

If the friends of the Constitution are to have another struggle, its enemies could not present a more acceptable issue than that of a State whose constitution clearly embraces "a republican form of government" being excluded from the Union because its domestic institutions may not in all respects comport with the ideas of what is wise and expedient entertained in some other State. Fresh from groundless imputations of breach of faith against others, men will commence the agitation of this new question with indubitable violation of an express compact between the independent sovereign powers of the United States and of the Republic of Texas, as well as of the older and equally solemn compacts which assure the equality of all the States.

But deplorable as would be such a violation of compact in itself and in all its direct consequences, that is the very least of the evils involved. When sectional agitators shall have succeeded in forcing on this issue, can their pretensions fail to be met by counter pretensions? Will not different States be compelled, respectively, to meet extremes with extremes? And if either extreme carry its point, what is that so far forth but dissolution of the Union? If a new State, formed from the territory of the United States, be absolutely excluded from admission therein, that fact of itself constitutes the disruption of union between it and the other States. But the process of dissolution could not stop there. Would not a sectional decision producing such result by a majority of votes, either Northern or Southern, of necessity drive out the oppressed and aggrieved minority and place in presence of each other two irreconcilably hostile confederations?

It is necessary to speak thus plainly of projects the offspring of that sectional agitation now prevailing in some of the States, which are as impracticable as they are unconstitutional, and which if persevered in must and will end calamitously. It is either disunion and civil war or it is mere angry, idle, aimless disturbance of public peace and tranquillity. Disunion for what? If the passionate rage of fanaticism and partisan spirit did not force the fact upon our attention, it would be difficult to believe that any considerable portion of the people of this enlightened country could have so surrendered themselves to a fanatical devotion to the supposed interests of the relatively few Africans in the United States as totally to abandon and disregard the interests of the 25,000,000 Americans; to trample under foot the injunctions of moral and constitutional obligation, and to engage in plans of vindictive hostility against those who are associated with them in the enjoyment of the common heritage of our national institutions.

Nor is it hostility against their fellow-citizens of one section of the Union alone. The interests, the honor, the duty, the peace, and the prosperity of the people of all sections are equally involved and imperiled in this question. And are patriotic men in any part of the Union prepared on such issue thus madly to invite all the consequences of the forfeiture of their constitutional engagements? It is impossible. The storm of frenzy and faction must inevitably dash itself in vain against the unshaken rock of the Constitution. I shall never doubt it. I know that the Union is stronger a thousand times than all the wild and chimerical schemes of social change which are generated one after another in the unstable minds of visionary sophists and interested agitators. I rely confidently on the patriotism of the people, on the dignity and self-respect of the States, on the wisdom of Congress, and, above all, on the continued gracious favor of Almighty God to maintain against all enemies, whether at home or abroad, the sanctity of the Constitution and the integrity of the Union.

***

The report of the Secretary of the Interior presents facts and views in relation to internal affairs over which the supervision of his Department extends of much interest and importance.

The aggregate sales of the public lands during the last fiscal year amount to 9,227,878 acres, for which has been received the sum of $8,821,414. During the same period there have been located with military scrip and land warrants and for other purposes 30,100,230 acres, thus making a total aggregate of 39,328,108 acres. On the 30th of September last surveys had been made of 16,873,699 acres, a large proportion of which is ready for market.

The suggestions in this report in regard to the complication and progressive expansion of the business of the different bureaus of the Department, to the pension system, to the colonization of Indian tribes, and the recommendations in relation to various improvements in the District of Columbia are especially commended to your consideration.

The report of the Postmaster-General presents fully the condition of that Department of the Government. Its expenditures for the last fiscal year were $10,407,868 and its gross receipts $7,620,801, making an excess of expenditure over receipts of $2,787,046. The deficiency of this Department is thus $744,000 greater than for the year ending June 30, 1853. Of this deficiency $330,000 is to be attributed to the additional compensation allowed to postmasters by the act of Congress of June 22, 1854. The mail facilities in every part of the country have been very much increased in that period, and the large addition of railroad service, amounting to 7,908 miles, has added largely to the cost of transportation.

The inconsiderable augmentation of the income of the Post-Office Department under the reduced rates of postage and its increasing expenditures must for the present make it dependent to some extent upon the Treasury for support. The recommendations of the Postmaster-General in relation to the abolition of the franking privilege and his views on the establishment of mail steamship lines deserve the consideration of Congress. I also call the special attention of Congress to the statement of the Postmaster-General respecting the sums now paid for the transportation of mails to the Panama Railroad Company, and commend to their early and favorable consideration the suggestions of that officer in relation to new contracts for mail transportation upon that route, and also upon the Tehuantepec and Nicaragua routes.

The United States continue in the enjoyment of amicable relations with all foreign powers.

When my last annual message was transmitted to Congress two subjects of controversy, one relating to the enlistment of soldiers in this country for foreign service and the other to Central America, threatened to disturb the good understanding between the United States and Great Britain. Of the progress and termination of the former question you were informed at the time, and the other is now in the way of satisfactory adjustment.

The object of the convention between the United States and Great Britain of the 19th of April, 1850, was to secure for the benefit of all nations the neutrality and the common use of any transit way or interoceanic communication across the Isthmus of Panama which might be opened within the limits of Central America. The pretensions subsequently asserted by Great Britain to dominion or control over territories in or near two of the routes, those of Nicaragua and Honduras, were deemed by the United States not merely incompatible with the main object of the treaty, but opposed even to its express stipulations. Occasion of controversy on this point has been removed by an additional treaty, which our minister at London has concluded, and which will be immediately submitted to the Senate for its consideration. Should the proposed supplemental arrangement be concurred in by all the parties to be affected by it, the objects contemplated by the original convention will have been fully attained.

The treaty between the United States and Great Britain of the 5th of June, 1854, which went into effective operation in 1855, put an end to causes of irritation between the two countries, by securing to the United States the right of fishery on the coast of the British North American Provinces, with advantages equal to those enjoyed by British subjects. Besides the signal benefits of this treaty to a large class of our citizens engaged in a pursuit connected to no inconsiderable degree with our national prosperity and strength, it has had a favorable effect upon other interests in the provision it made for reciprocal freedom of trade between the United States and the British Provinces in America. The exports of domestic articles to those Provinces during the last year amounted to more than $22,000,000, exceeding those of the preceding year by nearly $7,000,000; and the imports therefrom during the same period amounted to more than twenty-one million, an increase of six million upon those of the previous year.

The improved condition of this branch of our commerce is mainly attributable to the above-mentioned treaty.

Provision was made in the first article of that treaty for a commission to designate the mouths of rivers to which the common right of fishery on the coast of the United States and the British Provinces was not to extend. This commission has been employed a part of two seasons, but without much progress in accomplishing the object for which it was instituted, in consequence of a serious difference of opinion between the commissioners, not only as to the precise point where the rivers terminate, but in many instances as to what constitutes a river. These difficulties, however, may be overcome by resort to the umpirage provided for by the treaty.

The efforts perseveringly prosecuted since the commencement of my Administration to relieve our trade to the Baltic from the exaction of Sound dues by Denmark have not yet been attended with success. Other governments have also sought to obtain a like relief to their commerce, and Denmark was thus induced to propose an arrangement to all the European powers interested in the subject, and the manner in which her proposition was received warranting her to believe that a satisfactory arrangement with them could soon be concluded, she made a strong appeal to this Government for temporary suspension of definite action on its part, in consideration of the embarrassment which might result to her European negotiations by an immediate adjustment of the question with the United States. This request has been acceded to upon the condition that the sums collected after the 16th of June last and until the 16th of June next from vessels and cargoes belonging to our merchants are to be considered as paid under protest and subject to future adjustment. There is reason to believe that an arrangement between Denmark and the maritime powers of Europe on the subject will be soon concluded, and that the pending negotiation with the United States may then be resumed and terminated in a satisfactory manner.

With Spain no new difficulties have arisen, nor has much progress been made in the adjustment of pending ones.

Negotiations entered into for the purpose of relieving our commercial intercourse with the island of Cuba of some of its burdens and providing for the more speedy settlement of local disputes growing out of that intercourse have not yet been attended with any results. Soon after the commencement of the late war in Europe this Government submitted to the consideration of all maritime nations two principles for the security of neutral commerce--one that the neutral flag should cover enemies' goods, except articles contraband of war, and the other that neutral property on board merchant vessels of belligerents should be exempt from condemnation, with the exception of contraband articles. These were not presented as new rules of international law, having been generally claimed by neutrals, though not always admitted by belligerents. One of the parties to the war (Russia), as well as several neutral powers, promptly acceded to these propositions, and the two other principal belligerents (Great Britain and France) having consented to observe them for the present occasion, a favorable opportunity seemed to be presented for obtaining a general recognition of them, both in Europe and America. But Great Britain and France, in common with most of the States of Europe, while forbearing to reject, did not affirmatively act upon the overtures of the United States.

While the question was in this position the representatives of Russia, France, Great Britain, Austria, Prussia, Sardinia, and Turkey, assembled at Paris, took into consideration the subject of maritime rights, and put forth a declaration containing the two principles which this Government had submitted nearly two years before to the consideration of maritime powers, and adding thereto the following propositions: "Privateering is and remains abolished," and "Blockades in order to be binding must be effective; that is to say, maintained by a force sufficient really to prevent access to the coast of the enemy;" and to the declaration thus composed of four points, two of which had already been proposed by the United States, this Government has been invited to accede by all the powers represented at Paris except Great Britain and Turkey. To the last of the two additional propositions--that in relation to blockades--there can certainly be no objection. It is merely the definition of what shall constitute the effectual investment of a blockaded place, a definition for which this Government has always contended, claiming indemnity for losses where a practical violation of the rule thus defined has been injurious to our commerce. As to the remaining article of the declaration of the conference of Paris, that "privateering is and remains abolished," I certainly can not ascribe to the powers represented in the conference of Paris any but liberal and philanthropic views in the attempt to change the unquestionable rule of maritime law in regard to privateering. Their proposition was doubtless intended to imply approval of the principle that private property upon the ocean, although it might belong to the citizens of a belligerent state, should be exempted from capture; and had that proposition been so framed as to give full effect to the principle, it would have received my ready assent on behalf of the United States. But the measure proposed is inadequate to that purpose. It is true that if adopted private property upon the ocean would be withdrawn from one mode of plunder, but left exposed meanwhile to another mode, which could be used with increased effectiveness. The aggressive capacity of great naval powers would be thereby augmented, while the defensive ability of others would be reduced. Though the surrender of the means of prosecuting hostilities by employing privateers, as proposed by the conference of Paris, is mutual in terms, yet in practical effect it would be the relinquishment of a right of little value to one class of states, but of essential importance to another and a far larger class. It ought not to have been anticipated that a measure so inadequate to the accomplishment of the proposed object and so unequal in its operation would receive the assent of all maritime powers. Private property would be still left to the depredations of the public armed cruisers.

I have expressed a readiness on the part of this Government to accede to all the principles contained in the declaration of the conference of Paris provided that the one relating to the abandonment of privateering can be so amended as to effect the object for which, as is presumed, it was intended--the immunity of private property on the ocean from hostile capture. To effect this object, it is proposed to add to the declaration that "privateering is and remains abolished" the following amendment:

And that the private property of subjects and citizens of a belligerent on the high seas shall be exempt from seizure by the public armed vessels of the other belligerent, except it be contraband.

This amendment has been presented not only to the powers which have asked our assent to the declaration to abolish privateering, but to all other maritime states. Thus far it has not been rejected by any, and is favorably entertained by all which have made any communication in reply.

Several of the governments regarding with favor the proposition of the United States have delayed definitive action upon it only for the purpose of consulting with others, parties to the conference of Paris. I have the satisfaction of stating, however, that the Emperor of Russia has entirely and explicitly approved of that modification and will cooperate in endeavoring to obtain the assent of other powers, and that assurances of a similar purport have been received in relation to the disposition of the Emperor of the French. The present aspect of this important subject allows us to cherish the hope that a principle so humane in its character, so just and equal in its operation, so essential to the prosperity of commercial nations, and so consonant to the sentiments of this enlightened period of the world will command the approbation of all maritime powers, and thus be incorporated into the code of international law.

My views on the subject are more fully set forth in the reply of the Secretary of State, a copy of which is herewith transmitted, to the communications on the subject made to this Government, especially to the communication of France.

The Government of the United States has at all times regarded with friendly interest the other States of America, formerly, like this country, European colonies, and now independent members of the great family of nations. But the unsettled condition of some of them, distracted by frequent revolutions, and thus incapable of regular and firm internal administration, has tended to embarrass occasionally our public intercourse by reason of wrongs which our citizens suffer at their hands, and which they are slow to redress.

Unfortunately, it is against the Republic of Mexico, with which it is our special desire to maintain a good understanding, that such complaints are most numerous; and although earnestly urged upon its attention, they have not as yet received the consideration which this Government had a right to expect. While reparation for past injuries has been withheld, others have been added. The political condition of that country, however, has been such as to demand forbearance on the part of the United States. I shall continue my efforts to procure for the wrongs of our citizens that redress which is indispensable to the continued friendly association of the two Republics.

The peculiar condition of affairs in Nicaragua in the early part of the present year rendered it important that this Government should have diplomatic relations with that State. Through its territory had been opened one of the principal thoroughfares across the isthmus connecting North and South America, on which a vast amount of property was transported and to which our citizens resorted in great numbers in passing between the Atlantic and Pacific coasts of the United States. The protection of both required that the existing power in that State should be regarded as a responsible Government, and its minister was accordingly received. But he remained here only a short time. Soon thereafter the political affairs of Nicaragua underwent unfavorable change and became involved in much uncertainty and confusion. Diplomatic representatives from two contending parties have been recently sent to this Government, but with the imperfect information possessed it was not possible to decide which was the Government de facto, and, awaiting further developments, I have refused to receive either.

Questions of the most serious nature are pending between the United States and the Republic of New Granada. The Government of that Republic undertook a year since to impose tonnage duties on foreign vessels in her ports, but the purpose was resisted by this Government as being contrary to existing treaty stipulations with the United States and to rights conferred by charter upon the Panama Railroad Company, and was accordingly refurbished at that time, it being admitted that our vessels were entitled to be exempt from tonnage duty in the free ports of Panama and Aspinwall. But the purpose has been recently revived on the part of New Granada by the enactment of a law to subject vessels visiting her ports to the tonnage duty of 40 cents per ton, and although the law has not been put in force, yet the right to enforce it is still asserted and may at any time be acted on by the Government of that Republic.

The Congress of New Granada has also enacted a law during the last year which levies a tax of more than $3 on every pound of mail matter transported across the Isthmus. The sum thus required to be paid on the mails of the United States would be nearly $2,000,000 annually in addition to the large sum payable by contract to the Panama Railroad Company. If the only objection to this exaction were the exorbitancy of its amount, it could not be submitted to by the United States.

The imposition of it, however, would obviously contravene our treaty with New Granada and infringe the contract of that Republic with the Panama Railroad Company. The law providing for this tax was by its terms to take effect on the 1st of September last, but the local authorities on the Isthmus have been induced to suspend its execution and to await further instructions on the subject from the Government of the Republic. I am not yet advised of the determination of that Government. If a measure so extraordinary in its character and so clearly contrary to treaty stipulations and the contract rights of the Panama Railroad Company, composed mostly of American citizens, should be persisted in, it will be the duty of the United States to resist its execution.

I regret exceedingly that occasion exists to invite your attention to a subject of still graver import in our relations with the Republic of New Granada. On the 15th day of April last a riotous assemblage of the inhabitants of Panama committed a violent and outrageous attack on the premises of the railroad company and the passengers and other persons in or near the same, involving the death of several citizens of the United States, the pillage of many others, and the destruction of a large amount of property belonging to the railroad company. I caused full investigation of that event to be made, and the result shows satisfactorily that complete responsibility for what occurred attaches to the Government of New Granada. I have therefore demanded of that Government that the perpetrators of the wrongs in question should be punished; that provision should be made for the families of citizens of the United States who were killed, with full indemnity for the property pillaged or destroyed.

The present condition of the Isthmus of Panama, in so far as regards the security of persons and property passing over it, requires serious consideration. Recent incidents tend to show that the local authorities can not be relied on to maintain the public peace of Panama, and there is just ground for apprehension that a portion of the inhabitants are meditating further outrages, without adequate measures for the security and protection of persons or property having been taken, either by the State of Panama or by the General Government of New Granada. Under the guaranties of treaty, citizens of the United States have, by the outlay of several million dollars, constructed a railroad across the Isthmus, and it has become the main route between our Atlantic and Pacific possessions, over which multitudes of our citizens and a vast amount of property are constantly passing; to the security and protection of all which and the continuance of the public advantages involved it is impossible for the Government of the United States to be indifferent.

I have deemed the danger of the recurrence of scenes of lawless violence in this quarter so imminent as to make it my duty to station a part of our naval force in the harbors of Panama and Aspinwall, in order to protect the persons and property of the citizens of the United States in those ports and to insure to them safe passage across the Isthmus. And it would, in my judgment, be unwise to withdraw the naval force now in those ports until, by the spontaneous action of the Republic of New Granada or otherwise, some adequate arrangement shall have been made for the protection and security of a line of interoceanic communication, so important at this time not to the United States only, but to all other maritime states, both of Europe and America.

Meanwhile negotiations have been instituted, by means of a special commission, to obtain from New Granada full indemnity for injuries sustained by our citizens on the Isthmus and satisfactory security for the general interests of the United States.

In addressing to you my last annual message the occasion seems to me an appropriate one to express my congratulations, in view of the peace, greatness, and felicity which the United States now possess and enjoy. To point you to the state of the various Departments of the Government and of all the great branches of the public service, civil and military, in order to speak of the intelligence and the integrity which pervades the whole, would be to indicate but imperfectly the administrative condition of the country and the beneficial effects of that on the general welfare. Nor would it suffice to say that the nation is actually at peace at home and abroad; that its industrial interests are prosperous; that the canvas of its mariners whitens every sea, and the plow of its husbandmen is marching steadily onward to the bloodless conquest of the continent; that cities and populous States are springing up, as if by enchantment, from the bosom of oar Western wilds, and that the courageous energy of our people is making of these United States the great Republic of the world. These results have not been attained without passing through trials and perils, by experience of which, and thus only, nations can harden into manhood. Our forefathers were trained to the wisdom which conceived and the courage which achieved independence by the circumstances which surrounded them, and they were thus made capable of the creation of the Republic. It devolved on the next generation to consolidate the work of the Revolution, to deliver the country entirely from the influences of conflicting transatlantic partialities or antipathies which attached to our colonial and Revolutionary history, and to organize the practical operation of the constitutional and legal institutions of the Union. To us of this generation remains the not less noble task of maintaining and extending the national power. We have at length reached that stage of our country's career in which the dangers to be encountered and the exertions to be made are the incidents, not of weakness, but of strength. In foreign relations we have to attemper our power to the less happy condition of other Republics in America and to place ourselves in the calmness and conscious dignity of right by the side of the greatest and wealthiest of the Empires of Europe. In domestic relations we have to guard against the shock of the discontents, the ambitions, the interests, and the exuberant, and therefore sometimes irregular, impulses of opinion or of action which are the natural product of the present political elevation, the self-reliance, and the restless spirit of enterprise of the people of the United States.

I shall prepare to surrender the Executive trust to my successor and retire to private life with sentiments of profound gratitude to the good Providence which during the period of my Administration has vouchsafed to carry the country through many difficulties, domestic and foreign, and which enables me to contemplate the spectacle of amicable and respectful relations between ours and all other governments and the establishment of constitutional order and tranquillity throughout the Union.