To the Senate and House of Representatives of the United States:

In coming together, fellow-citizens, to enter again upon the discharge of
the duties with which the people have charged us severally, we find great
occasion to rejoice in the general prosperity of the country. We are in the
enjoyment of all the blessings of civil and religious liberty, with
unexampled means of education, knowledge, and improvement. Through the year
which is now drawing to a close peace has been in our borders and plenty in
our habitations, and although disease has visited some few portions of the
land with distress and mortality, yet in general the health of the people
has been preserved, and we are all called upon by the highest obligations
of duty to renew our thanks and our devotion to our Heavenly Parent, who
has continued to vouchsafe to us the eminent blessings which surround us
and who has so signally crowned the year with His goodness. If we find
ourselves increasing beyond example in numbers, in strength, in wealth, in
knowledge, in everything which promotes human and social happiness, let us
ever remember our dependence for all these on the protection and merciful
dispensations of Divine Providence.

Since your last adjournment Alexander McLeod, a British subject who was
indicted for the murder of an American citizen, and whose case has been the
subject of a correspondence heretofore communicated to you, has been
acquitted by the verdict of an impartial and intelligent jury, and has
under the judgment of the court been regularly discharged.

Great Britain having made known to this Government that the expedition
which was fitted out from Canada for the destruction of the steamboat
Caroline in the winter of 1837, and which resulted in the destruction of
said boat and in the death of an American citizen, was undertaken by orders
emanating from the authorities of the British Government in Canada, and
demanding the discharge of McLeod upon the ground that if engaged in that
expedition he did but fulfill the orders of his Government, has thus been
answered in the only way in which she could be answered by a government the
powers of which are distributed among its several departments by the
fundamental law. Happily for the people of Great Britain, as well as those
of the United States, the only mode by which an individual arraigned for a
criminal offense before the courts of either can obtain his discharge is by
the independent action of the judiciary and by proceedings equally familiar
to the courts of both countries.

If in Great Britain a power exists in the Crown to cause to be entered a
nolle prosequi, which is not the case with the Executive power of the
United States upon a prosecution pending in a State court, yet there no
more than here can the chief executive power rescue a prisoner from custody
without an order of the proper tribunal directing his discharge. The
precise stage of the proceedings at which such order may be made is a
matter of municipal regulation exclusively, and not to be complained of by
any other government. In cases of this kind a government becomes
politically responsible only when its tribunals of last resort are shown to
have rendered unjust and injurious judgments in matters not doubtful. To
the establishment and elucidation of this principle no nation has lent its
authority more efficiently than Great Britain. Alexander McLeod, having his
option either to prosecute a writ of error from the decision of the supreme
court of New York, which had been rendered upon his application for a
discharge, to the Supreme Court of the United States, or to submit his case
to the decision of a jury, preferred the latter, deeming it the readiest
mode of obtaining his liberation; and the result has fully sustained the
wisdom of his choice. The manner in which the issue submitted was tried
will satisfy the English Government that the principles of justice will
never fail to govern the enlightened decision of an American tribunal. I
can not fail, however, to suggest to Congress the propriety, and in some
degree the necessity, of making such provisions by law, so far as they may
constitutionally do so, for the removal at their commencement and at the
option of the party of all such cases as may hereafter arise, and which may
involve the faithful observance and execution of our international
obligations, from the State to the Federal judiciary. This Government, by
our institutions, is charged with the maintenance of peace and the
preservation of amicable relations with the nations of the earth, and ought
to possess without question all the reasonable and proper means of
maintaining the one and preserving the other. While just confidence is felt
in the judiciary of the States, yet this Government ought to be competent
in itself for the fulfillment of the high duties which have been devolved
upon it under the organic law by the States themselves.

In the month of September a party of armed men from Upper Canada invaded
the territory of the United States and forcibly seized upon the person of
one Grogan, and under circumstances of great harshness hurriedly carried
him beyond the limits of the United States and delivered him up to the
authorities of Upper Canada. His immediate discharge was ordered by those
authorities upon the facts of the case being brought to their knowledge--a
course of procedure which was to have been expected from a nation with whom
we are at peace, and which was not more due to the rights of the United
States than to its own regard for justice. The correspondence which passed
between the Department of State and the British envoy, Mr. Fox, and with
the governor of Vermont, as soon as the facts had been made known to this
department, are herewith communicated.

I regret that it is not in my power to make known to you an equally
satisfactory conclusion in the case of the Caroline steamer, with the
circumstances connected with the destruction of which, in December, 1837,
by an armed force fitted out in the Province of Upper Canada, you are
already made acquainted. No such atonement as was due for the public wrong
done to the United States by this invasion of her territory, so wholly
irreconcilable with her rights as an independent power, has yet been made.
In the view taken by this Government the inquiry whether the vessel was in
the employment of those who were prosecuting an unauthorized war against
that Province or was engaged by the owner in the business of transporting
passengers to and from Navy Island in hopes of private gain, which was most
probably the case, in no degree alters the real question at issue between
the two Governments. This Government can never concede to any foreign
government the power, except in a case of the most urgent and extreme
necessity, of invading its territory, either to arrest the persons or
destroy the property of those who may have violated the municipal laws of
such foreign government or have disregarded their obligations arising under
the law of nations. The territory of the United States must be regarded as
sacredly secure against all such invasions until they shall voluntarily
acknowledge their inability to acquit themselves of their duties to others.
And in announcing this sentiment I do but affirm a principle which no
nation on earth would be more ready to vindicate at all hazards than the
people and Government of Great Britain. If upon a full investigation of all
the facts it shall appear that the owner of the Caroline was governed by a
hostile intent or had made common cause with those who were in the
occupancy of Navy Island, then so far as he is concerned there can be no
claim to indemnity for the destruction of his boat which this Government
would feel itself bound to prosecute, since he would have acted not only in
derogation of the rights of Great Britain, but in clear violation of the
laws of the United States; but that is a question which, however settled,
in no manner involves the higher consideration of the violation of
territorial sovereignty and jurisdiction. To recognize it as an admissible
practice that each Government in its turn, upon any sudden and unauthorized
outbreak which, on a frontier the extent of which renders it impossible for
either to have an efficient force on every mile of it, and which outbreak,
therefore, neither may be able to suppress in a day, may take vengeance
into its own hands, and without even a remonstrance, and in the absence of
any pressing or overruling necessity may invade the territory of the other,
would inevitably lead to results equally to be deplored by both. When
border collisions come to receive the sanction or to be made on the
authority of either Government general war must be the inevitable result.
While it is the ardent desire of the United States to cultivate the
relations of peace with all nations and to fulfill all the duties of good
neighborhood toward those who possess territories adjoining their own, that
very desire would lead them to deny the right of any foreign power to
invade their boundary with an armed force. The correspondence between the
two Governments on this subject will at a future day of your session be
submitted to your consideration; and in the meantime I can not but indulge
the hope that the British Government will see the propriety of renouncing
as a rule of future action the precedent which has been set in the affair
at Schlosser.

I herewith submit the correspondence which has recently taken place between
the American minister at the Court of St. James, Mr. Stevenson, and the
minister of foreign affairs of that Government on the right claimed by that
Government to visit and detain vessels sailing under the American flag and
engaged in prosecuting lawful commerce in the African seas. Our commercial
interests in that region have experienced considerable increase and have
become an object of much importance, and it is the duty of this Government
to protect them against all improper and vexatious interruption. However
desirous the United States may be for the suppression of the slave trade,
they can not consent to interpolations into the maritime code at the mere
will and pleasure of other governments. We deny the right of any such
interpolation to any one or all the nations of the earth without our
consent. We claim to have a voice in all amendments or alterations of that
code, and when we are given to understand, as in this instance, by a
foreign government that its treaties with other nations can not be executed
without the establishment and enforcement of new principles of maritime
police, to be applied without our consent, we must employ a language
neither of equivocal import or susceptible of misconstruction. American
citizens prosecuting a lawful commerce in the African seas under the flag
of their country are not responsible for the abuse or unlawful use of that
flag by others; nor can they rightfully on account of any such alleged
abuses be interrupted, molested, or detained while on the ocean, and if
thus molested and detained while pursuing honest voyages in the usual way
and violating no law themselves they are unquestionably entitled to
indemnity. This Government has manifested its repugnance to the slave trade
in a manner which can not be misunderstood. By its fundamental law it
prescribed limits in point of time to its continuance, and against its own
citizens who might so far forget the rights of humanity as to engage in
that wicked traffic it has long since by its municipal laws denounced the
most condign punishment. Many of the States composing this Union had made
appeals to the civilized world for its suppression long before the moral
sense of other nations had become shocked by the iniquities of the traffic.
Whether this Government should now enter into treaties containing mutual
stipulations upon this subject is a question for its mature deliberation.
Certain it is that if the right to detain American ships on the high seas
can be justified on the plea of a necessity for such detention arising out
of the existence of treaties between other nations, the same plea may, be
extended and enlarged by the new stipulations of new treaties to which the
United States may not be a party. This Government will not cease to urge
upon that of Great Britain full and ample remuneration for all losses,
whether arising from detention or otherwise, to which American citizens
have heretofore been or may hereafter be subjected by the exercise of
rights which this Government can not recognize as legitimate and proper.
Nor will I indulge a doubt but that the sense of justice of Great Britain
will constrain her to make retribution for any wrong or loss which any
American citizen engaged in the prosecution of lawful commerce may have
experienced at the hands of her cruisers or other public authorities. This
Government, at the same time, will relax no effort to prevent its citizens,
if there be any so disposed, from prosecuting a traffic so revolting to the
feelings of humanity. It seeks to do no more than to protect the fair and
honest trader from molestation and injury; but while the enterprising
mariner engaged in the pursuit of an honorable trade is entitled to its
protection, it will visit with condign punishment others of an opposite
character.

I invite your attention to existing laws for the suppression of the African
slave trade, and recommend all such alterations as may give to them greater
force and efficacy. That the American flag is grossly abused by the
abandoned and profligate of other nations is but too probable. Congress has
not long since had this subject under its consideration, and its importance
well justifies renewed and anxious attention.

I also communicate herewith the copy of a correspondence between Mr.
Stevenson and Lord Palmerston upon the subject, so interesting to several
of the Southern States, of the rice duties, which resulted honorably to the
justice of Great Britain and advantageously to the United States.

At the opening of the last annual session the President informed Congress
of the progress which had then been made in negotiating a convention
between this Government and that of England with a view to the final
settlement of the question of the boundary between the territorial limits
of the two countries. I regret to say that little further advancement of
the object has been accomplished since last year, but this is owing to
circumstances no way indicative of any abatement of the desire of both
parties to hasten the negotiation to its conclusion and to settle the
question in dispute as early as possible. In the course of the session it
is my hope to be able to announce some further degree of progress toward
the accomplishment of this highly desirable end.

The commission appointed by this Government for the exploration and survey
of the line of boundary separating the States of Maine and New Hampshire
from the conterminous British Provinces is, it is believed, about to close
its field labors and is expected soon to report the results of its
examinations to the Department of State. The report, when received, will be
laid before Congress.

The failure on the part of Spain to pay with punctuality the interest due
under the convention of 1834 for the settlement of claims between the two
countries has made it the duty of the Executive to call the particular
attention of that Government to the subject. A disposition has been
manifested by it, which is believed to be entirely sincere, to fulfill its
obligations in this respect so soon as its internal condition and the state
of its finances will permit. An arrangement is in progress from the result
of which it is trusted that those of our citizens who have claims under the
convention will at no distant day receive the stipulated payments.

A treaty of commerce and navigation with Belgium was concluded and signed
at Washington on the 29th of March, 1840, and was duly sanctioned by the
Senate of the United States. The treaty was ratified by His Belgian
Majesty, but did not receive the approbation of the Belgian Chambers within
the time limited by its terms, and has therefore become void.

This occurrence assumes the graver aspect from the consideration that in
1833 a treaty negotiated between the two Governments and ratified on the
part of the United States failed to be ratified on the part of Belgium. The
representative of that Government at Washington informs the Department of
State that he has been instructed to give explanations of the causes which
occasioned delay in the approval of the late treaty by the legislature, and
to express the regret of the King at the occurrence.

The joint commission under the convention with Texas to ascertain the true
boundary between the two countries has concluded its labors, but the final
report of the commissioner of the United States has not been received. It
is understood, however, that the meridian line as traced by the commission
lies somewhat farther east than the position hitherto generally assigned to
it, and consequently includes in Texas some part of the territory which had
been considered as belonging to the States of Louisiana and Arkansas.

The United States can not but take a deep interest in whatever relates to
this young but growing Republic. Settled principally by emigrants from the
United States, we have the happiness to know that the great principles of
civil liberty are there destined to flourish under wise institutions and
wholesome laws, and that through its example another evidence is to be
afforded of the capacity of popular institutions to advance the prosperity,
happiness, and permanent glory of the human race. The great truth that
government was made for the people and not the people for government has
already been established in the practice and by the example of these United
States, and we can do no other than contemplate its further exemplification
by a sister republic with the deepest interest.

Our relations with the independent States of this hemisphere, formerly
under the dominion of Spain, have not undergone any material change within
the past year. The incessant sanguinary conflicts in or between those
countries are to be greatly deplored as necessarily tending to disable them
from performing their duty as members of the community of nations and
rising to the destiny which the position and natural resources of many of
them might lead them justly to anticipate, as constantly giving occasion
also, directly or indirectly, for complaints on the part of our citizens
who resort thither for purposes of commercial intercourse, and as retarding
reparation for wrongs already committed, some of which are by no means of
recent date.

The failure of the Congress of Ecuador to hold a session at the time
appointed for that purpose, in January last, will probably render abortive
a treaty of commerce with that Republic, which was signed at Quito on the
13th of June, 1839, and had been duly ratified on our part, but which
required the approbation of that body prior to its ratification by the
Ecuadorian Executive.

A convention which has been concluded with the Republic of Peru, providing
for the settlement of certain claims of citizens of the United States upon
the Government of that Republic, will be duly submitted to the Senate.

The claims of our citizens against the Brazilian Government originating
from captures and other causes are still unsatisfied. The United States
have, however, so uniformly shown a disposition to cultivate relations of
amity with that Empire that it is hoped the unequivocal tokens of the same
spirit toward us which an adjustment of the affairs referred to would
afford will be given without further avoidable delay.

The war with the Indian tribes on the peninsula of Florida has during the
last summer and fall been prosecuted with untiring activity and zeal. A
summer campaign was resolved upon as the best mode of bringing it to a
close. Our brave officers and men who have been engaged in that service
have suffered toils and privations and exhibited an energy which in any
other war would have won for them unfading laurels. In despite of the
sickness incident to the climate, they have penetrated the fastnesses of
the Indians, broken up their encampments, and harassed them unceasingly.
Numbers have been captured, and still greater numbers have surrendered and
have been transported to join their brethren on the lands elsewhere
allotted to them by the Government, and a strong hope is entertained that
under the conduct of the gallant officer at the head of the troops in
Florida that troublesome and expensive war is destined to a speedy
termination. With all the other Indian tribes we are enjoying the blessings
of peace. Our duty as well as our best interests prompts us to observe in
all our intercourse with them fidelity in fulfilling our engagements, the
practice of strict justice, as well as the constant exercise of acts of
benevolence and kindness. These are the great instruments of civilization,
and through the use of them alone can the untutored child of the forest be
induced to listen to its teachings.

The Secretary of State, on whom the acts of Congress have devolved the duty
of directing the proceedings for the taking of the sixth census or
enumeration of the inhabitants of the United States, will report to the two
Houses the progress of that work. The enumeration of persons has been
completed, and exhibits a grand total of 17,069,453, making an increase
over the census of 1830 of 4,202,646 inhabitants, and showing a gain in a
ratio exceeding 32 1/2 per cent for the last ten years.

From the report of the Secretary of the Treasury you will be informed of
the condition of the finances. The balance in the Treasury on the 1st of
January last, as stated in the report of the Secretary of the Treasury
submitted to Congress at the extra session, was $987,345.03. The receipts
into the Treasury during the first three quarters of this year from all
sources amount to $23,467,072.52; the estimated receipts for the fourth
quarter amount to $6,943,095.25, amounting to $30,410,167.77, and making
with the balance in the Treasury on the 1st of January last $31,397,512.80.
The expenditures for the first three quarters of this year amount to
$24,734,346.97. The expenditures for the fourth quarter as estimated will
amount to $7,290,723.73, thus making a total of $32,025,070.70, and leaving
a deficit to be provided for on the 1st of January next of about
$627,557.90.

Of the loan of $12,000,000 which was authorized by Congress at its late
session only $5,432,726.88 have been negotiated. The shortness of time
which it had to run has presented no inconsiderable impediment in the way
of its being taken by capitalists at home, while the same cause would have
operated with much greater force in the foreign market. For that reason the
foreign market has not been resorted to; and it is now submitted whether it
would not be advisable to amend the law by making what remains undisposed
of payable at a more distant day.

Should it be necessary, in any view that Congress may take of the subject,
to revise the existing tariff of duties, I beg leave to say that in the
performance of that most delicate operation moderate counsels would seem to
be the wisest. The Government under which it is our happiness to live owes
its existence to the spirit of compromise which prevailed among its
framers; jarring and discordant opinions could only have been reconciled by
that noble spirit of patriotism which prompted conciliation and resulted in
harmony. In the same spirit the compromise bill, as it is commonly called,
was adopted at the session of 1833. While the people of no portion of the
Union will ever hesitate to pay all necessary taxes for the support of
Government, yet an innate repugnance exists to the imposition of burthens
not really necessary for that object. In imposing duties, however, for the
purposes of revenue a right to discriminate as to the articles on which the
duty shall be laid, as well as the amount, necessarily and most properly
exists; otherwise the Government would be placed in the condition of having
to levy the same duties upon all articles, the productive as well as the
unproductive. The slightest duty upon some might have the effect of causing
their importation to cease, whereas others, entering extensively into the
consumption of the country, might bear the heaviest without any sensible
diminution in the amount imported. So also the Government may be justified
in so discriminating by reference to other considerations of domestic
policy connected with our manufactures. So long as the duties shall be laid
with distinct reference to the wants of the Treasury no well-rounded
objection can exist against them. It might be esteemed desirable that no
such augmentation of the taxes should take place as would have the effect
of annulling the land-proceeds distribution act of the last session, which
act is declared to be inoperative the moment the duties are increased
beyond 20 per cent, the maximum rate established by the compromise act.
Some of the provisions of the compromise act, which will go into effect on
the 30th day of June next, may, however, be found exceedingly inconvenient
in practice under any regulations that Congress may adopt. I refer more
particularly to that relating to the home valuation. A difference in value
of the same articles to some extent will necessarily exist at different
ports, but that is altogether insignificant when compared with the
conflicts in valuation which are likely to arise from the differences of
opinion among the numerous appraisers of merchandise. In many instances the
estimates of value must be conjectural, and thus as many different rates of
value may be established as there are appraisers. These differences in
valuation may also be increased by the inclination which, without the
slightest imputation on their honesty, may arise on the part of the
appraisers in favor of their respective ports of entry. I recommend this
whole subject to the consideration of Congress with a single additional
remark. Certainty and permanency in any system of governmental policy are
in all respects eminently desirable, but more particularly is this true in
all that affects trade and commerce, the operations of which depend much
more on the certainty of their returns and calculations which embrace
distant periods of time than on high bounties or duties, which are liable
to constant fluctuations.

At your late session I invited your attention to the condition of the
currency and exchanges and urged the necessity of adopting such measures as
were consistent with the constitutional competency of the Government in
order to correct the unsoundness of the one and, as far as practicable, the
inequalities of the other. No country can be in the enjoyment of its full
measure of prosperity without the presence of a medium of exchange
approximating to uniformity of value. What is necessary as between the
different nations of the earth is also important as between the inhabitants
of different parts of the same country. With the first the precious metals
constitute the chief medium of circulation, and such also would be the case
as to the last but for inventions comparatively modern, which have
furnished in place of gold and silver a paper circulation. I do not propose
to enter into a comparative analysis of the merits of the two systems. Such
belonged more properly to the period of the introduction of the paper
system. The speculative philosopher might find inducements to prosecute the
inquiry, but his researches could only lead him to conclude that the paper
system had probably better never have been introduced and that society
might have been much happier without it. The practical statesman has a very
different task to perform. He has to look at things as they are, to take
them as he finds them, to supply deficiencies and to prune excesses as far
as in him lies. The task of furnishing a corrective for derangements of the
paper medium with us is almost inexpressibly great. The power exerted by
the States to charter banking corporations, and which, having been carried
to a great excess, has filled the country with, in most of the States, an
irredeemable paper medium, is an evil which in some way or other requires a
corrective. The rates at which bills of exchange are negotiated between
different parts of the country furnish an index of the value of the local
substitute for gold and silver, which is in many parts so far depreciated
as not to be received except at a large discount in payment of debts or in
the purchase of produce. It could earnestly be desired that every bank not
possessing the means of resumption should follow the example of the late
United States Bank of Pennsylvania and go into liquidation rather than by
refusing to do so to continue embarrassments in the way of solvent
institutions, thereby augmenting the difficulties incident to the present
condition of things. Whether this Government, with due regard to the rights
of the States, has any power to constrain the banks either to resume specie
payments or to force them into liquidation, is an inquiry which will not
fail to claim your consideration. In view of the great advantages which are
allowed the corporators, not among the least of which is the authority
contained in most of their charters to make loans to three times the amount
of their capital, thereby often deriving three times as much interest on
the same amount of money as any individual is permitted by law to receive,
no sufficient apology can be urged for a long-continued suspension of
specie payments. Such suspension is productive of the greatest detriment to
the public by expelling from circulation the precious metals and seriously
hazarding the success of any effort that this Government can make to
increase commercial facilities and to advance the public interests.

This is the more to be regretted and the indispensable necessity for a
sound currency becomes the more manifest when we reflect on the vast amount
of the internal commerce of the country. Of this we have no statistics nor
just data for forming adequate opinions. But there can be no doubt but that
the amount of transportation coastwise by sea, and the transportation
inland by railroads and canals, and by steamboats and other modes of
conveyance over the surface of our vast rivers and immense lakes, and the
value of property carried and interchanged by these means form a general
aggregate to which the foreign commerce of the country, large as it is,
makes but a distant approach.

In the absence of any controlling power over this subject, which, by
forcing a general resumption of specie payments, would at once have the
effect of restoring a sound medium of exchange and would leave to the
country but little to desire, what measure of relief falling within the
limits of our constitutional competency does it become this Government to
adopt? It was my painful duty at your last session, under the weight of
most solemn obligations, to differ with Congress on the measures which it
proposed for my approval, and which it doubtless regarded as corrective of
existing evils. Subsequent reflection and events since occurring have only
served to confirm me in the opinions then entertained and frankly
expressed. I must be permitted to add that no scheme of governmental policy
unaided by individual exertions can be available for ameliorating the
present condition of things. Commercial modes of exchange and a good
currency are but the necessary means of commerce and intercourse, not the
direct productive sources of wealth. Wealth can only be accumulated by the
earnings of industry and the savings of frugality, and nothing can be more
ill judged than to look to facilities in borrowing or to a redundant
circulation for the power of discharging pecuniary obligations. The country
is full of resources and the people fall of energy, and the great and
permanent remedy for present embarrassments must be sought in industry,
economy, the observance of good faith, and the favorable influence of time.
In pursuance of a pledge given to you in my last message to Congress, which
pledge I urge as an apology for adventuring to present you the details of
any plan, the Secretary of the Treasury will be ready to submit to you,
should you require it, a plan of finance which, while it throws around the
public treasure reasonable guards for its protection and rests on powers
acknowledged in practice to exist from the origin of the Government, will
at the same time furnish to the country a sound paper medium and afford all
reasonable facilities for regulating the exchanges. When submitted, you
will perceive in it a plan amendatory of the existing laws in relation to
the Treasury Department, subordinate in all respects to the will of
Congress directly and the will of the people indirectly, self-sustaining
should it be found in practice to realize its promises in theory, and
repealable at the pleasure of Congress. It proposes by effectual restraints
and by invoking the true spirit of our institutions to separate the purse
from the sword, or, more properly to speak, denies any other control to the
President over the agents who may be selected to carry it into execution
but what may be indispensably necessary to secure the fidelity of such
agents, and by wise regulations keeps plainly apart from each other private
and public funds. It contemplates the establishment of a board of control
at the seat of government, with agencies at prominent commercial points or
wherever else Congress shall direct, for the safe-keeping and disbursement
of the public moneys and a substitution at the option of the public
creditor of Treasury notes in lieu of gold and silver. It proposes to limit
the issues to an amount not to exceed $15,000,000 without the express
sanction of the legislative power. It also authorizes the receipt of
individual deposits of gold and silver to a limited amount, and the
granting certificates of deposit divided into such sums as may be called
for by the depositors. It proceeds a step further and authorizes the
purchase and sale of domestic bills and drafts resting on a real and
substantial basis, payable at sight or having but a short time to run, and
drawn on places not less than 100 miles apart, which authority, except in
so far as may be necessary for Government purposes exclusively, is only to
be exerted upon the express condition that its exercise shall not be
prohibited by the State in which the agency is situated. In order to cover
the expenses incident to the plan, it will be authorized to receive
moderate premiums for certificates issued on deposits and on bills bought
and sold, and thus, as far as its dealings extend, to furnish facilities to
commercial intercourse at the lowest possible rates and to subduct from the
earnings of industry the least possible sum. It uses the State banks at a
distance from the agencies as auxiliaries without imparting any power to
trade in its name. It is subjected to such guards and restraints as have
appeared to be necessary. It is the creature of law and exists only at the
pleasure of the Legislature. It is made to rest on an actual specie basis
in order to redeem the notes at the places of issue, produces no dangerous
redundancy of circulation, affords no temptation to speculation, is
attended by no inflation of prices, is equable in its operation, makes the
Treasury notes (which it may use along with the certificates of deposit and
the notes of specie-paying banks) convertible at the place where collected,
receivable in payment of Government dues, and without violating any
principle of the Constitution affords the Government and the people such
facilities as are called for by the wants of both. Such, it has appeared to
me, are its recommendations, and in view of them it will be submitted,
whenever you may require it, to your consideration.

I am not able to perceive that any fair and candid objection can be urged
against the plan, the principal outlines of which I have thus presented. I
can not doubt but that the notes which it proposes to furnish at the
voluntary option of the public creditor, issued in lieu of the revenue and
its certificates of deposit, will be maintained at an equality with gold
and silver everywhere. They are redeemable in gold and silver on demand at
the places of issue. They are receivable everywhere in payment of
Government dues. The Treasury notes are limited to an amount of one-fourth
less than the estimated annual receipts of the Treasury, and in addition
they rest upon the faith of the Government for their redemption. If all
these assurances are not sufficient to make them available, then the idea,
as it seems to me, of furnishing a sound paper medium of exchange may be
entirely abandoned.

If a fear be indulged that the Government may be tempted to run into excess
in its issues at any future day, it seems to me that no such apprehension
can reasonably be entertained until all confidence in the representatives
of the States and of the people, as well as of the people themselves, shall
be lost. The weightiest considerations of policy require that the
restraints now proposed to be thrown around the measure should not for
light causes be removed. To argue against any proposed plan its liability
to possible abuse is to reject every expedient, since everything dependent
on human action is liable to abuse. Fifteen millions of Treasury notes may
be issued as the maximum, but a discretionary power is to be given to the
board of control under that sum, and every consideration will unite in
leading them to feel their way with caution. For the first eight years of
the existence of the late Bank of the United States its circulation barely
exceeded $4,000,000, and for five of its most prosperous years it was about
equal to $16,000,000; furthermore, the authority given to receive private
deposits to a limited amount and to issue certificates in such sums as may
be called for by the depositors may so far fill up the channels of
circulation as greatly to diminish the necessity of any considerable issue
of Treasury notes. A restraint upon the amount of private deposits has
seemed to be indispensably necessary from an apprehension, thought to be
well founded, that in any emergency of trade confidence might be so far
shaken in the banks as to induce a withdrawal from them of private deposits
with a view to insure their unquestionable safety when deposited with the
Government, which might prove eminently disastrous to the State banks. Is
it objected that it is proposed to authorize the agencies to deal in bills
of exchange? It is answered that such dealings are to be carried on at the
lowest possible premium, are made to rest on an unquestionably sound basis,
are designed to reimburse merely the expenses which would otherwise devolve
upon the Treasury, and are in strict subordination to the decision of the
Supreme Court in the case of the Bank of Augusta against Earle, and other
reported cases, and thereby avoids all conflict with State jurisdiction,
which I hold to be indispensably requisite. It leaves the banking
privileges of the States without interference, looks to the Treasury and
the Union, and while furnishing every facility to the first is careful of
the interests of the last. But above all, it is created by law, is
amendable by law, and is repealable by law, and, wedded as I am to no
theory, but looking solely to the advancement of the public good, I shall
be among the very first to urge its repeal if it be found not to subserve
the purposes and objects for which it may be created. Nor will the plan be
submitted in any overweening confidence in the sufficiency of my own
judgment, but with much greater reliance on the wisdom and patriotism of
Congress. I can not abandon this subject without urging upon you in the
most emphatic manner, whatever may be your action on the suggestions which
I have felt it to be my duty to submit, to relieve the Chief Executive
Magistrate, by any and all constitutional means, from a controlling power
over the public Treasury. If in the plan proposed, should you deem it
worthy of your consideration, that separation is not as complete as you may
desire, you will doubtless amend it in that particular. For myself, I
disclaim all desire to have any control over the public moneys other than
what is indispensably necessary to execute the laws which you may pass.

Nor can I fail to advert in this connection to the debts which many of the
States of the Union have contracted abroad and under which they continue to
labor. That indebtedness amounts to a sum not less than $200,000,000, and
which has been retributed to them for the most part in works of internal
improvement which are destined to prove of vast importance in ultimately
advancing their prosperity and wealth. For the debts thus contracted the
States are alone responsible. I can do not more than express the belief
that each State will feel itself bound by every consideration of honor as
well as of interest to meet its engagements with punctuality. The failure,
however, of any one State to do so should in no degree affect the credit of
the rest, and the foreign capitalist will have no just cause to experience
alarm as to all other State stocks because any one or more of the States
may neglect to provide with punctuality the means of redeeming their
engagements. Even such States, should there be any, considering the great
rapidity with which their resources are developing themselves, will not
fail to have the means at no very distant day to redeem their obligations
to the uttermost farthing; nor will I doubt but that, in view of that
honorable conduct which has evermore governed the States and the people of
the Union, they will each and all resort to every legitimate expedient
before they will forego a faithful compliance with their obligations.

From the report of the Secretary of War and other reports accompanying it
you will be informed of the progress which has been made in the
fortifications designed for the protection of our principal cities,
roadsteads, and inland frontier during the present year, together with
their true state and condition. They will be prosecuted to completion with
all the expedition which the means placed by Congress at the disposal of
the Executive will allow.

I recommend particularly to your consideration that portion of the
Secretary's report which proposes the establishment of a chain of military
posts from Council Bluffs to some point on the Pacific Ocean within our
limits. The benefit thereby destined to accrue to our citizens engaged in
the fur trade over that wilderness region, added to the importance of
cultivating friendly relations with savage tribes inhabiting it, and at the
same time of giving protection to our frontier settlements and of
establishing the means of safe intercourse between the American settlements
at the mouth of the Columbia River and those on this side of the Rocky
Mountains, would seem to suggest the importance of carrying into effect the
recommendations upon this head with as little delay as may be practicable.

The report of the Secretary of the Navy will place you in possession of the
present condition of that important arm of the national defense. Every
effort will be made to add to its efficiency, and I can not too strongly
urge upon you liberal appropriations to that branch of the public service.
Inducements of the weightiest character exist for the adoption of this
course of policy. Our extended and otherwise exposed maritime frontier
calls for protection, to the furnishing of which an efficient naval force
is indispensable. We look to no foreign conquests, nor do we propose to
enter into competition with any other nation for supremacy on the ocean;
but it is due not only to the honor but to the security of the people of
the United States that no nation should be permitted to invade our waters
at pleasure and subject our towns and villages to conflagration or pillage.
Economy in all branches of the public service is due from all the public
agents to the people, but parsimony alone would suggest the withholding of
the necessary means for the protection of our domestic firesides from
invasion and our national honor from disgrace. I would most earnestly
recommend to Congress to abstain from all appropriations for objects not
absolutely necessary; but I take upon myself, without a moment of
hesitancy, all the responsibility of recommending the increase and prompt
equipment of that gallant Navy which has lighted up every sea with its
victories and spread an imperishable glory over the country.

The report of the Postmaster-General will claim your particular attention,
not only because of the valuable suggestions which it contains, but because
of the great importance which at all times attaches to that interesting
branch of the public service. The increased expense of transporting the
mail along the principal routes necessarily claims the public attention,
and has awakened a corresponding solicitude on the part of the Government.
The transmission of the mail must keep pace with those facilities of
intercommunication which are every day becoming greater through the
building of railroads and the application of steam power, but it can not be
disguised that in order to do so the Post-Office Department is subjected to
heavy exactions. The lines of communication between distant parts of the
Union are to a great extent occupied by railroads, which, in the nature of
things, possess a complete monopoly, and the Department is therefore liable
to heavy and unreasonable charges. This evil is destined to great increase
in future, and some timely measure may become necessary to guard against
it.

I feel it my duty to bring under your consideration a practice which has
grown up in the administration of the Government, and which, I am deeply
convinced, ought to be corrected. I allude to the exercise of the power
which usage rather than reason has vested in the Presidents of removing
incumbents from office in order to substitute others more in favor with the
dominant party. My own conduct in this respect has been governed by a
conscientious purpose to exercise the removing power only in cases of
unfaithfulness or inability, or in those in which its exercise appeared
necessary in order to discountenance and suppress that spirit of active
partisanship on the part of holders of office which not only withdraws them
from the steady and impartial discharge of their official duties, but
exerts an undue and injurious influence over elections and degrades the
character of the Government itself, inasmuch as it exhibits the Chief
Magistrate as being a party through his agents in the secret plots or open
workings of political parties.

In respect to the exercise of this power nothing should be left to
discretion which may safely be regulated by law, and it is of high
importance to restrain as far as possible the stimulus of personal
interests in public elections. Considering the great increase which has
been made in public offices in the last quarter of a century and the
probability of further increase, we incur the hazard of witnessing violent
political contests, directed too often to the single object of retaining
office by those who are in or obtaining it by those who are out. Under the
influence of these convictions I shall cordially concur in any
constitutional measure for regulating and, by regulating, restraining the
power of removal.

I suggest for your consideration the propriety of making without further
delay some specific application of the funds derived under the will of Mr.
Smithson, of England, for the diffusion of knowledge, and which have
heretofore been vested in public stocks until such time as Congress should
think proper to give them a specific direction. Nor will you, I feel
confident, permit any abatement of the principal of the legacy to be made
should it turn out that the stocks in which the investments have been made
have undergone a depreciation.

In conclusion I commend to your care the interests of this District, for
which you are the exclusive legislators. Considering that this city is the
residence of the Government and for a large part of the year of Congress,
and considering also the great cost of the public buildings and the
propriety of affording them at all times careful protection, it seems not
unreasonable that Congress should contribute toward the expense of an
efficient police.