Fellow-Citizens of the Senate and House of Representatives:

I regret that I can not on this occasion congratulate you that the past
year has been one of unalloyed prosperity. The ravages of fire and disease
have painfully afflicted otherwise flourishing portions of our country, and
serious embarrassments yet derange the trade of many of our cities. But
notwithstanding these adverse circumstances, that general prosperity which
has been heretofore so bountifully bestowed upon us by the Author of All
Good still continues to call for our warmest gratitude. Especially have we
reason to rejoice in the exuberant harvests which have lavishly recompensed
well-directed industry and given to it that sure reward which is vainly
sought in visionary speculations. I cannot, indeed, view without peculiar
satisfaction the evidences afforded by the past season of the benefits that
spring from the steady devotion of the husbandman to his honorable pursuit.
No means of individual comfort is more certain and no source of national
prosperity is so sure. Nothing can compensate a people for a dependence
upon others for the bread they eat, and that cheerful abundance on which
the happiness of everyone so much depends is to be looked for nowhere with
such sure reliance as in the industry of the agriculturist and the bounties
of the earth.

With foreign countries our relations exhibit the same favorable aspect
which was presented in my last annual message, and afford continued proof
of the wisdom of the pacific, just, and forbearing policy adopted by the
first Administration of the Federal Government and pursued by its
successors. The extraordinary powers vested in me by an act of Congress for
the defense of the country in an emergency, considered so far probable as
to require that the Executive should possess ample means to meet it, have
not been exerted. They have therefore been attended with no other result
than to increase, by the confidence thus reposed in me, my obligations to
maintain with religious exactness the cardinal principles that govern our
intercourse with other nations. Happily, in our pending questions with
Great Britain, out of which this unusual grant of authority arose, nothing
has occurred to require its exertion, and as it is about to return to the
Legislature I trust that no future necessity may call for its exercise by
them or its delegation to another Department of the Government.

For the settlement of our northeastern boundary the proposition promised by
Great Britain for a commission of exploration and survey has been received,
and a counter project, including also a provision for the certain and final
adjustment of the limits in dispute, is now before the British Government
for its consideration. A just regard to the delicate state of this question
and a proper respect for the natural impatience of the State of Maine, not
less than a conviction that the negotiation has been already protracted
longer than is prudent on the part of either Government, have led me to
believe that the present favorable moment should on no account be suffered
to pass without putting the question forever at rest. I feel confident that
the Government of Her Britannic Majesty will take the same view of this
subject, as I am persuaded it is governed by desires equally strong and
sincere for the amicable termination of the controversy.

To the intrinsic difficulties of questions of boundary lines, especially
those described in regions unoccupied and but partially known, is to be
added in our country the embarrassment necessarily arising out of our
Constitution by which the General Government is made the organ of
negotiating and deciding upon the particular interests of the States on
whose frontiers these lines are to be traced. To avoid another controversy
in which a State government might rightfully claim to have her wishes
consulted previously to the conclusion of conventional arrangements
concerning her rights of jurisdiction or territory, I have thought it
necessary to call the attention of the Government of Great Britain to
another portion of our conterminous dominion of which the division still
remains to be adjusted I refer to the line from the entrance of Lake
Superior to the most northwestern point of the Lake of the Woods,
stipulations for the settlement of which are to be found in the seventh
article of the treaty of Ghent. The commissioners appointed under that
article by the two Governments having differed in their opinions, made
separate reports, according to its stipulations, upon the points of
disagreement, and these differences are now to be submitted to the
arbitration of some friendly sovereign or state. The disputed points should
be settled and the line designated before the Territorial government of
which it is one of the boundaries takes its place in the Union as a State,
and I rely upon the cordial cooperation of the British Government to effect
that object.

There is every reason to believe that disturbances like those which lately
agitated the neighboring British Provinces will not again prove the sources
of border contentions or interpose obstacles to the continuance of that
good understanding which it is the mutual interest of Great Britain and the
United States to preserve and maintain.

Within the Provinces themselves tranquillity is restored, and on our
frontier that misguided sympathy in favor of what was presumed to be a
general effort in behalf of popular rights, and which in some instances
misled a few of our more inexperienced citizens, has subsided into a
rational conviction strongly opposed to all intermeddling with the internal
affairs of our neighbors. The people of the United States feel, as it is
hoped they always will, a warm solicitude for the success of all who are
sincerely endeavoring to improve the political condition of mankind. This
generous feeling they cherish toward the most distant nations, and it was
natural, therefore, that it should be awakened with more than common warmth
in behalf of their immediate neighbors; but it does not belong to their
character as a community to seek the gratification of those feelings in
acts which violate their duty as citizens, endanger the peace of their
country, and tend to bring upon it the stain of a violated faith toward
foreign nations. If, zealous to confer benefits on others, they appear for
a moment to lose sight of the permanent obligations imposed upon them as
citizens, they are seldom long misled. From all the information I receive,
confirmed to some extent by personal observation, I am satisfied that no
one can now hope to engage in such enterprises without encountering public
indignation, in addition to the severest penalties of the law.

Recent information also leads me to hope that the emigrants from Her
Majesty's Provinces who have sought refuge within our boundaries are
disposed to become peaceable residents and to abstain from all attempts to
endanger the peace of that country which has afforded them an asylum. On a
review of the occurrences on both sides of the line it is satisfactory to
reflect that in almost every complaint against our country the offense may
be traced to emigrants from the Provinces who have sought refuge here. In
the few instances in which they were aided by citizens of the United States
the acts of these misguided men were not only in direct contravention of
the laws and well-known wishes of their own Government, but met with the
decided disapprobation of the people of the United States.

I regret to state the appearance of a different spirit among Her Majesty's
subjects in the Canadas. The sentiments of hostility to our people and
institutions which have been so frequently expressed there, and the
disregard of our rights which has been manifested on some occasions, have,
I am sorry to say, been applauded and encouraged by the people, and even by
some of the subordinate local authorities, of the Provinces. The chief
officers in Canada, fortunately, have not entertained the same feeling, and
have probably prevented excesses that must have been fatal to the peace of
the two countries.

I look forward anxiously to a period when all the transactions which have
grown out of this condition of our affairs, and which have been made the
subjects of complaint and remonstrance by the two Governments,
respectively, shall be fully examined, and the proper satisfaction given
where it is due from either side.

Nothing has occurred to disturb the harmony of our intercourse with
Austria, Belgium, Denmark, France, Naples, Portugal, Prussia, Russia, or
Sweden. The internal state of Spain has sensibly improved, and a
well-grounded hope exists that the return of peace will restore to the
people of that country their former prosperity and enable the Government to
fulfill all its obligations at home and abroad. The Government of Portugal,
I have the satisfaction to state, has paid in full the eleventh and last
installment due to our citizens for the claims embraced in the settlement
made with it on the 3d of March, 1837.

I lay before you treaties of commerce negotiated with the Kings of Sardinia
and of the Netherlands, the ratifications of which have been exchanged
since the adjournment of Congress. The liberal principles of these treaties
will recommend them to your approbation. That with Sardinia is the first
treaty of commerce formed by that Kingdom, and it will, I trust, answer the
expectations of the present Sovereign by aiding the development of the
resources of his country and stimulating the enterprise of his people. That
with the Netherlands happily terminates a long-existing subject of dispute
and removes from our future commercial intercourse all apprehension of
embarrassment. The King of the Netherlands has also, in further
illustration of his character for justice and of his desire to remove every
cause of dissatisfaction, made compensation for an American vessel captured
in 1800 by a French privateer, and carried into Curacoa, where the proceeds
were appropriated to the use of the colony, then, and for a short time
after, under the dominion of Holland.

The death of the late Sultan has produced no alteration in our relations
with Turkey. Our newly appointed minister resident has reached
Constantinople, and I have received assurances from the present ruler that
the obligations of our treaty and those of friendship will be fulfilled by
himself in the same spirit that actuated his illustrious father.

I regret to be obliged to inform you that no convention for the settlement
of the claims of our citizens upon Mexico has yet been ratified by the
Government of that country. The first convention formed for that purpose
was not presented by the President of Mexico for the approbation of its
Congress, from a belief that the King of Prussia, the arbitrator in case of
disagreement in the joint commission to be appointed by the United States
and Mexico, would not consent to take upon himself that friendly office.
Although not entirely satisfied with the course pursued by Mexico, I felt
no hesitation in receiving in the most conciliatory spirit the explanation
offered, and also cheerfully consented to a new convention, in order to
arrange the payments proposed to be made to our citizens in a manner which,
while equally just to them, was deemed less onerous and inconvenient to the
Mexican Government. Relying confidently upon the intentions of that
Government, Mr. Ellis was directed to repair to Mexico, and diplomatic
intercourse has been resumed between the two countries. The new convention
has, he informs us, been recently submitted by the President of that
Republic to its Congress under circumstances which promise a speedy
ratification, a result which I can not allow myself to doubt.

Instructions have been given to the commissioner of the United States under
our convention with Texas for the demarcation of the line which separates
us from that Republic. The commissioners of both Governments met in New
Orleans in August last. The joint commission was organized, and adjourned
to convene at the same place on the 12th of October. It is presumed to be
now in the performance of its duties.

The new Government of Texas has shown its desire to cultivate friendly
relations with us by a prompt reparation for injuries complained of in the
cases of two vessels of the United States.

With Central America a convention has been concluded for the renewal of its
former treaty with the United States. This was not ratified before the
departure of our late charge d'affaires from that country, and the copy of
it brought by him was not received before the adjournment of the Senate at
the last session. In the meanwhile, the period limited for the exchange of
ratifications having expired, I deemed it expedient, in consequence of the
death of the charge d'affaires, to send a special agent to Central America
to close the affairs of our mission there and to arrange with the
Government an extension of the time for the exchange of ratifications.

The commission created by the States which formerly composed the Republic
of Colombia for adjusting the claims against that Government has by a very
unexpected construction of the treaty under which it acts decided that no
provision was made for those claims of citizens of the United States which
arose from captures by Colombian privateers and were adjudged against the
claimants in the judicial tribunals. This decision will compel the United
States to apply to the several Governments formerly united for redress.
With all these--New Granada, Venezuela, and Ecuador--a perfectly good
understanding exists. Our treaty with Venezuela is faithfully carried into
execution, and that country, in the enjoyment of tranquillity, is gradually
advancing in prosperity under the guidance of its present distinguished
President, General Paez. With Ecuador a liberal commercial convention has
lately been concluded, which will be transmitted to the Senate at an early
day.

With the great American Empire of Brazil our relations continue unchanged,
as does our friendly intercourse with the other Governments of South
America--the Argentine Republic and the Republics of Uruguay, Chili, Peru,
and Bolivia. The dissolution of the Peru-Bolivian Confederation may
occasion some temporary inconvenience to our citizens in that quarter, but
the obligations on the new Governments which have arisen out of that
Confederation to observe its treaty stipulations will no doubt be soon
understood, and it is presumed that no indisposition will exist to fulfill
those which it contracted with the United States.

The financial operations of the Government during the present year have, I
am happy to say, been very successful. The difficulties under which the
Treasury Department has labored, from known defects in the existing laws
relative to the safe-keeping of the public moneys, aggravated by the
suspension of specie payments by several of the banks holding public
deposits or indebted to public officers for notes received in payment of
public dues, have been surmounted to a very gratifying extent. The large
current expenditures have been punctually met, and the faith of the
Government in all its pecuniary concerns has been scrupulously maintained.

The nineteen millions of Treasury notes authorized by the act of Congress
of 1837, and the modifications thereof with a view to the indulgence of
merchants on their duty bonds and of the deposit banks in the payment of
public moneys held by them, have been so punctually redeemed as to leave
less than the original ten millions outstanding at any one time, and the
whole amount unredeemed now falls short of three millions. Of these the
chief portion is not due till next year, and the whole would have been
already extinguished could the Treasury have realized the payments due to
it from the banks. If those due from them during the next year shall be
punctually made, and if Congress shall keep the appropriations within the
estimates, there is every reason to believe that all the outstanding
Treasury notes can be redeemed and the ordinary expenses defrayed without
imposing on the people any additional burden, either of loans or increased
taxes.

To avoid this and to keep the expenditures within reasonable bounds is a
duty second only in importance to the preservation of our national
character and the protection of our citizens in their civil and political
rights. The creation in time of peace of a debt likely to become permanent
is an evil for which there is no equivalent. The rapidity with which many
of the States are apparently approaching to this condition admonishes us of
our own duties in a manner too impressive to be disregarded. One, not the
least important, is to keep the Federal Government always in a condition to
discharge with ease and vigor its highest functions should their exercise
be required by any sudden conjuncture of public affairs--a condition to
which we are always exposed and which may occur when it is least expected.
To this end it is indispensable that its finances should be untrammeled and
its resources as far as practicable unencumbered. No circumstance could
present greater obstacles to the accomplishment of these vitally important
objects than the creation of an onerous national debt. Our own experience
and also that of other nations have demonstrated the unavoidable and
fearful rapidity with which a public debt is increased when the Government
has once surrendered itself to the ruinous practice of supplying its
supposed necessities by new loans. The struggle, therefore, on our part to
be successful must be made at the threshold. To make our efforts effective,
severe economy is necessary. This is the surest provision for the national
welfare, and it is at the same time the best preservative of the principles
on which our institutions rest. Simplicity and economy in the affairs of
state have never failed to chasten and invigorate republican principles,
while these have been as surely subverted by national prodigality, under
whatever specious pretexts it may have been introduced or fostered.

These considerations can not be lost upon a people who have never been
inattentive to the effect of their policy upon the institutions they have
created for themselves, but at the present moment their force is augmented
by the necessity which a decreasing revenue must impose. The check lately
given to importations of articles subject to duties, the derangements in
the operations of internal trade, and especially the reduction gradually
taking place in our tariff of duties, all tend materially to lessen our
receipts; indeed, it is probable that the diminution resulting from the
last cause alone will not fall short of $5,000,000 in the year 1842, as the
final reduction of all duties to 20 per cent then takes effect. The whole
revenue then accruing from the customs and from the sales of public lands,
if not more, will undoubtedly be wanted to defray the necessary expenses of
the Government under the most prudent administration of its affairs. These
are circumstances that impose the necessity of rigid economy and require
its prompt and constant exercise. With the Legislature rest the power and
duty of so adjusting the public expenditure as to promote this end. By the
provisions of the Constitution it is only in consequence of appropriations
made by law that money can be drawn from the Treasury. No instance has
occurred since the establishment of the Government in which the Executive,
though a component part of the legislative power, has interposed an
objection to an appropriation bill on the sole ground of its extravagance.
His duty in this respect has been considered fulfilled by requesting such
appropriations only as the public service may be reasonably expected to
require. In the present earnest direction of the public mind toward this
subject both the Executive and the Legislature have evidence of the strict
responsibility to which they will be held; and while I am conscious of my
own anxious efforts to perform with fidelity this portion of my public
functions, it is a satisfaction to me to be able to count on a cordial
cooperation from you.

At the time I entered upon my present duties our ordinary disbursements,
without including those on account of the public debt, the Post-Office, and
the trust funds in charge of the Government, had been largely increased by
appropriations for the removal of the Indians, for repelling Indian
hostilities, and for other less urgent expenses which grew out of an
overflowing Treasury. Independent of the redemption of the public debt and
trusts, the gross expenditures of seventeen and eighteen millions in 1834
and 1835 had by these causes swelled to twenty-nine millions in 1836, and
the appropriations for 1837, made previously to the 4th of March, caused
the expenditure to rise to the very large amount of thirty-three millions.
We were enabled during the year 1838, notwithstanding the continuance of
our Indian embarrassments, somewhat to reduce this amount, and that for the
present year (1839) will not in all probability exceed twenty-six millions,
or six millions less than it was last year. With a determination, so far as
depends on me, to continue this reduction, I have directed the estimates
for 1840 to be subjected to the severest scrutiny and to be limited to the
absolute requirements of the public service. They will be found less than
the expenditures of 1839 by over $5,000,000.

The precautionary measures which will be recommended by the Secretary of
the Treasury to protect faithfully the public credit under the fluctuations
and contingencies to which our receipts and expenditures are exposed, and
especially in a commercial crisis like the present, are commended to your
early attention.

On a former occasion your attention was invited to various considerations
in support of a preemption law in behalf of the settlers on the public
lands, and also of a law graduating the prices for such lands as had long
been in the market unsold in consequence of their inferior quality. The
execution of the act which was passed on the first subject has been
attended with the happiest consequences in quieting titles and securing
improvements to the industrious, and it has also to a very gratifying
extent been exempt from the frauds which were practiced under previous
preemption laws. It has at the same time, as was anticipated, contributed
liberally during the present year to the receipts of the Treasury.

The passage of a graduation law, with the guards before recommended, would
also, I am persuaded, add considerably to the revenue for several years,
and prove in other respects just and beneficial. Your early consideration
of the subject is therefore once more earnestly requested.

The present condition of the defenses of our principal seaports and
navy-yards, as represented by the accompanying report of the Secretary of
War, calls for the early and serious attention of Congress; and, as
connecting itself intimately with this subject, I can not recommend too
strongly to your consideration the plan submitted by that officer for the
organization of the militia of the United States.

In conformity with the expressed wishes of Congress, an attempt was made in
the spring to terminate the Florida war by negotiation. It is to be
regretted that these humane intentions should have been frustrated and that
the effort to bring these unhappy difficulties to a satisfactory conclusion
should have failed; but after entering into solemn engagements with the
commanding general, the Indians, without any provocation, recommenced their
acts of treachery and murder. The renewal of hostilities in that Territory
renders it necessary that I should recommend to your favorable
consideration the plan which will be submitted to you by the Secretary of
War, in order to enable that Department to conduct them to a successful
issue.

Having had an opportunity of personally inspecting a portion of the troops
during the last summer, it gives me pleasure to bear testimony to the
success of the effort to improve their discipline by keeping them together
in as large bodies as the nature of our service will permit. I recommend,
therefore, that commodious and permanent barracks be constructed at the
several posts designated by the Secretary of War. Notwithstanding the high
state of their discipline and excellent police, the evils resulting to the
service from the deficiency of company officers were very apparent, and I
recommend that the staff officers be permanently separated from the line.

The Navy has been usefully and honorably employed in protecting the rights
and property of our citizens wherever the condition of affairs seemed to
require its presence. With the exception of one instance, where an outrage,
accompanied by murder, was committed on a vessel of the United States while
engaged in a lawful commerce, nothing is known to have occurred to impede
or molest the enterprise of our citizens on that element, where it is so
signally displayed. On learning this daring act of piracy, Commodore Reed
proceeded immediately to the spot, and receiving no satisfaction, either in
the surrender of the murderers or the restoration of the plundered
property, inflicted severe and merited chastisement on the barbarians.

It will be seen by the report of the Secretary of the Navy respecting the
disposition of our ships of war that it has been deemed necessary to
station a competent force on the coast of Africa to prevent a fraudulent
use of our flag by foreigners.

Recent experience has shown that the provisions in our existing laws which
relate to the sale and transfer of American vessels while abroad are
extremely defective. Advantage has been taken of these defects to give to
vessels wholly belonging to foreigners and navigating the ocean an apparent
American ownership. This character has been so well simulated as to afford
them comparative security in prosecuting the slave trade--a traffic
emphatically denounced in our statutes, regarded with abhorrence by our
citizens, and of which the effectual suppression is nowhere more sincerely
desired than in the United States. These circumstances make it proper to
recommend to your early attention a careful revision of these laws, so that
without impeding the freedom and facilities of our navigation or impairing
an important branch of our industry connected with it the integrity and
honor of our flag may be carefully preserved. Information derived from our
consul at Havana showing the necessity of this was communicated to a
committee of the Senate near the close of the last session, but too late,
as it appeared, to be acted upon. It will be brought to your notice by the
proper Department, with additional communications from other sources.

The latest accounts from the exploring expedition represent it as
proceeding successfully in its objects and promising results no less useful
to trade and navigation than to science.

The extent of post-roads covered by mail service on the 1st of July last
was about 133,999 miles and the rate of annual transportation upon them
34,496,878 miles. The number of post-offices on that day was 12,780 and on
the 30th ultimo 13,028.

The revenue of the Post-Office Department for the year ending with the 30th
of June last was $4,476,638, exhibiting an increase over the preceding year
of $241,560. The engagements and liabilities of the Department for the same
period are $4,624,117.

The excess of liabilities over the revenue for the last two years has been
met out of the surplus which had previously accumulated. The cash on hand
on the 30th ultimo was about $206,701.95 and the current income of the
Department varies very little from the rate of current expenditures. Most
of the service suspended last year has been restored, and most of the new
routes established by the act of 7th July, 1838, have been set in
operation, at an annual cost of $136,963. Notwithstanding the pecuniary
difficulties of the country, the revenue of the Department appears to be
increasing, and unless it shall be seriously checked by the recent
suspension of payment by so many of the banks it will be able not only to
maintain the present mail service, but in a short time to extend it. It is
gratifying to witness the promptitude and fidelity with which the agents of
this Department in general perform their public duties.

Some difficulties have arisen in relation to contracts for the
transportation of the mails by railroad and steamboat companies. It appears
that the maximum of compensation provided by Congress for the
transportation of the mails upon railroads is not sufficient to induce some
of the companies to convey them at such hours as are required for the
accommodation of the public. It is one of the most important duties of the
General Government to provide and maintain for the use of the people of the
States the best practicable mail establishment. To arrive at that end it is
indispensable that the Post-Office Department shall be enabled to control
the hours at which the mails shall be carried over railroads, as it now
does over all other roads. Should serious inconveniences arise from the
inadequacy of the compensation now provided by law, or from unreasonable
demands by any of the railroad companies, the subject is of such general
importance as to require the prompt attention of Congress.

In relation to steamboat lines, the most efficient remedy is obvious and
has been suggested by the Postmaster-General. The War and Navy Departments
already employ steamboats in their service; and although it is by no means
desirable that the Government should undertake the transportation of
passengers or freight as a business, there can be no reasonable objection
to running boats, temporarily, whenever it may be necessary to put down
attempts at extortion, to be discontinued as soon as reasonable contracts
can be obtained.

The suggestions of the Postmaster-General relative to the inadequacy of the
legal allowance to witnesses in cases of prosecutions for mail depredations
merit your serious consideration. The safety of the mails requires that
such prosecutions shall be efficient, and justice to the citizen whose time
is required to be given to the public demands not only that his expenses
shall be paid, but that he shall receive a reasonable compensation.

The reports from the War, Navy, and Post-Office Departments will accompany
this communication, and one from the Treasury Department will be presented
to Congress in a few days.

For various details in respect to the matters in charge of these
Departments I would refer you to those important documents, satisfied that
you will find in them many valuable suggestions which will be found well
deserving the attention of the Legislature.

From a report made in December of last year by the Secretary of State to
the Senate, showing the trial docket of each of the circuit courts and the
number of miles each judge has to travel in the performance of his duties,
a great inequality appears in the amount of labor assigned to each judge.
The number of terms to be held in each of the courts composing the ninth
circuit, the distances between the places at which they sit and from thence
to the seat of Government, are represented to be such as to render it
impossible for the judge of that circuit to perform in a manner
corresponding with the public exigencies his term and circuit duties. A
revision, therefore, of the present arrangement of the circuit seems to be
called for and is recommended to your notice.

I think it proper to call your attention to the power assumed by
Territorial legislatures to authorize the issue of bonds by corporate
companies on the guaranty of the Territory. Congress passed a law in 1836
providing that no act of a Territorial legislature incorporating banks
should have the force of law until approved by Congress, but acts of a very
exceptionable character previously passed by the legislature of Florida
were suffered to remain in force, by virtue of which bonds may be issued to
a very large amount by those institutions upon the faith of the Territory.
A resolution, intending to be a joint one, passed the Senate at the same
session, expressing the sense of Congress that the laws in question ought
not to be permitted to remain in force unless amended in many material
respects; but it failed in the House of Representatives for want of time,
and the desired amendments have not been made. The interests involved are
of great importance, and the subject deserves your early and careful
attention.

The continued agitation of the question relative to the best mode of
keeping and disbursing the public money still injuriously affects the
business of the country. The suspension of specie payments in 1837 rendered
the use of deposit banks as prescribed by the act of 1836 a source rather
of embarrassment than aid, and of necessity placed the custody of most of
the public money afterwards collected in charge of the public officers. The
new securities for its safety which this required were a principal cause of
my convening an extra session of Congress, but in consequence of a
disagreement between the two Houses neither then nor at any subsequent
period has there been any legislation on the subject. The effort made at
the last session to obtain the authority of Congress to punish the use of
public money for private purposes as a crime a measure attended under other
governments with signal advantage--was also unsuccessful, from diversities
of opinion in that body, notwithstanding the anxiety doubtless felt by it
to afford every practicable security. The result of this is still to leave
the custody of the public money without those safeguards which have been
for several years earnestly desired by the Executive, and as the remedy is
only to be found in the action of the Legislature it imposes on me the duty
of again submitting to you the propriety of passing a law providing for the
safe-keeping of the public moneys, and especially to ask that its use for
private purposes by any officers intrusted with it may be declared to be a
felony, punishable with penalties proportioned to the magnitude of the
offense.

These circumstances, added to known defects in the existing laws and
unusual derangement in the general operations of trade, have during the
last three years much increased the difficulties attendant on the
collection, keeping, and disbursement of the revenue, and called forth
corresponding exertions from those having them in charge. Happily these
have been successful beyond expectation. Vast sums have been collected and
disbursed by the several Departments with unexpected cheapness and ease,
transfers have been readily made to every part of the Union, however
distant, and defalcations have been far less than might have been
anticipated from the absence of adequate legal restraints. Since the
officers of the Treasury and Post-Office Departments were charged with the
custody of most of the public moneys received by them there have been
collected $66,000,000, and, excluding the case of the late collector at New
York, the aggregate amount of losses sustained in the collection can not,
it is believed, exceed $60,000. The defalcation of the late collector at
that city, of the extent and circumstances of which Congress have been
fully informed, ran through all the modes of keeping the public money that
have been hitherto in use, and was distinguished by an aggravated disregard
of duty that broke through the restraints of every system, and can not,
therefore, be usefully referred to as a test of the comparative safety of
either. Additional information will also be furnished by the report of the
Secretary of the Treasury, in reply to a call made upon that officer by the
House of Representatives at the last session requiring detailed information
on the subject of defaults by public officers or agents under each
Administration from 1789 to 1837. This document will be submitted to you in
a few days. The general results (independent of the Post-Office, which is
kept separately and will be stated by itself), so far as they bear upon
this subject, are that the losses which have been and are likely to be
sustained by any class of agents have been the greatest by banks,
including, as required in the resolution, their depreciated paper received
for public dues; that the next largest have been by disbursing officers,
and the least by collectors and receivers. If the losses on duty bonds are
included, they alone will be threefold those by both collectors and
receivers. Our whole experience, therefore, furnishes the strongest
evidence that the desired legislation of Congress is alone wanting to
insure in those operations the highest degree of security and facility.
Such also appears to have been the experience of other nations. From the
results of inquiries made by the Secretary of the Treasury in regard to the
practice among them I am enabled to state that in twenty-two out of
twenty-seven foreign governments from which undoubted information has been
obtained the public moneys are kept in charge of public officers. This
concurrence of opinion in favor of that system is perhaps as great as
exists on any question of internal administration.

In the modes of business and official restraints on disbursing officers no
legal change was produced by the suspension of specie payments. The report
last referred to will be found to contain also much useful information in
relation to this subject.

I have heretofore assigned to Congress my reasons for believing that the
establishment of an independent National Treasury, as contemplated by the
Constitution, is necessary to the safe action of the Federal Government.
The suspension of specie payments in 1837 by the banks having the custody
of the public money showed in so alarming a degree our dependence on those
institutions for the performance of duties required by law that I then
recommended the entire dissolution of that connection. This recommendation
has been subjected, as I desired it should be, to severe scrutiny and
animated discussion, and I allow myself to believe that notwithstanding the
natural diversities of opinion which may be anticipated on all subjects
involving such important considerations, it has secured in its favor as
general a concurrence of public sentiment as could be expected on one of
such magnitude.

Recent events have also continued to develop new objections to such a
connection. Seldom is any bank, under the existing system and practice,
able to meet on demand all its liabilities for deposits and notes in
circulation. It maintains specie payments and transacts a profitable
business only by the confidence of the public in its solvency, and whenever
this is destroyed the demands of its depositors and note holders, pressed
more rapidly than it can make collections from its debtors, force it to
stop payment. This loss of confidence, with its consequences, occurred in
1837, and afforded the apology of the banks for their suspension. The
public then acquiesced in the validity of the excuse, and while the State
legislatures did not exact from them their forfeited charters, Congress, in
accordance with the recommendation of the Executive, allowed them time to
pay over the public money they held, although compelled to issue Treasury
notes to supply the deficiency thus created.

It now appears that there are other motives than a want of public
confidence under which the banks seek to justify themselves in a refusal to
meet their obligations. Scarcely were the country and Government relieved
in a degree from the difficulties occasioned by the general suspension of
1837 when a partial one, occurring within thirty months of the former,
produced new and serious embarrassments, though it had no palliation in
such circumstances as were alleged in justification of that which had
previously taken place. There was nothing in the condition of the country
to endanger a well-managed banking institution; commerce was deranged by no
foreign war; every branch of manufacturing industry was crowned with rich
rewards, and the more than usual abundance of our harvests, after supplying
our domestic wants, had left our granaries and storehouses filled with a
surplus for exportation. It is in the midst of this that an irredeemable
and depreciated paper currency is entailed upon the people by a large
portion of the banks. They are not driven to it by the exhibition of a loss
of public confidence or of a sudden pressure from their depositors or note
holders, but they excuse themselves by alleging that the current of
business and exchange with foreign countries, which draws the precious
metals from their vaults, would require in order to meet it a larger
curtailment of their loans to a comparatively small portion of the
community than it will be convenient for them to bear or perhaps safe for
the banks to exact. The plea has ceased to be one of necessity. Convenience
and policy are now deemed sufficient to warrant these institutions in
disregarding their solemn obligations. Such conduct is not merely an injury
to individual creditors, but it is a wrong to the whole community, from
whose liberality they hold most valuable privileges, whose rights they
violate, whose business they derange, and the value of whose property they
render unstable and insecure. It must be evident that this new ground for
bank suspensions, in reference to which their action is not only
disconnected with, but wholly independent of, that of the public, gives a
character to their suspensions more alarming than any which they exhibited
before, and greatly increases the impropriety of relying on the banks in
the transactions of the Government.

A large and highly respectable portion of our banking institutions are, it
affords me unfeigned pleasure to state, exempted from all blame on account
of this second delinquency. They have, to their great credit, not only
continued to meet their engagements, but have even repudiated the grounds
of suspension now resorted to. It is only by such a course that the
confidence and good will of the community can be preserved, and in the
sequel the best interests of the institutions themselves promoted.

New dangers to the banks are also daily disclosed from the extension of
that system of extravagant credit of which they are the pillars. Formerly
our foreign commerce was principally rounded on an exchange of commodities,
including the precious metals, and leaving in its transactions but little
foreign debt. Such is not now the case. Aided by the facilities afforded by
the banks, mere credit has become too commonly the basis of trade. Many of
the banks themselves, not content with largely stimulating this system
among others, have usurped the business, while they impair the stability,
of the mercantile community; they have become borrowers instead of lenders;
they establish their agencies abroad; they deal largely in stocks and
merchandise; they encourage the issue of State securities until the foreign
market is glutted with them; and, unsatisfied with the legitimate use of
their own capital and the exercise of their lawful privileges, they raise
by large loans additional means for every variety of speculation. The
disasters attendant on this deviation from the former course of business in
this country are now shared alike by banks and individuals to an extent of
which there is perhaps no previous example in the annals of our country. So
long as a willingness of the foreign lender and a sufficient export of our
productions to meet any necessary partial payments leave the flow of credit
undisturbed all appears to be prosperous, but as soon as it is checked by
any hesitation abroad or by an inability to make payment there in our
productions the evils of the system are disclosed. The paper currency,
which might serve for domestic purposes, is useless to pay the debt due in
Europe. Gold and silver are therefore drawn in exchange for their notes
from the banks. To keep up their supply of coin these institutions are
obliged to call upon their own debtors, who pay them principally in their
own notes, which are as unavailable to them as they are to the merchants to
meet the foreign demand. The calls of the banks, therefore, in such
emergencies of necessity exceed that demand, and produce a corresponding
curtailment of their accommodations and of the currency at the very moment
when the state of trade renders it most inconvenient to be borne. The
intensity of this pressure on the community is in proportion to the
previous liberality of credit and consequent expansion of the currency.
Forced sales of property are made at the time when the means of purchasing
are most reduced, and the worst calamities to individuals are only at last
arrested by an open violation of their obligations by the banks--a refusal
to pay specie for their notes and an imposition upon the community of a
fluctuating and depreciated currency.

These consequences are inherent in the present system. They are not
influenced by the banks being large or small, created by National or State
Governments. They are the results of the irresistible laws of trade or
credit. In the recent events, which have so strikingly illustrated the
certain effects of these laws, we have seen the bank of the largest capital
in the Union, established under a national charter, and lately
strengthened, as we were authoritatively informed, by exchanging that for a
State charter with new and unusual privileges--in a condition, too, as it
was said, of entire soundness and great prosperity--not merely unable to
resist these effects, but the first to yield to them.

Nor is it to be overlooked that there exists a chain of necessary
dependence among these institutions which obliges them to a great extent to
follow the course of others, notwithstanding its injustice to their own
immediate creditors or injury to the particular community in which they are
placed. This dependence of a bank, which is in proportion to the extent of
its debts for circulation and deposits, is not merely on others in its own
vicinity, but on all those which connect it with the center of trade.
Distant banks may fail without seriously affecting those in our principal
commercial cities, but the failure of the latter is felt at the extremities
of the Union. The suspension at New York in 1837 was everywhere, with very
few exceptions, followed as soon as it was known. That recently at
Philadelphia immediately affected the banks of the South and West in a
similar manner. This dependence of our whole banking system on the
institutions in a few large cities is not found in the laws of their
organization, but in those of trade and exchange. The banks at that center,
to which currency flows and where it is required in payments for
merchandise, hold the power of controlling those in regions whence it
comes, while the latter possess no means of restraining them; so that the
value of individual property and the prosperity of trade through the whole
interior of the country are made to depend on the good or bad management of
the banking institutions in the great seats of trade on the seaboard.

But this chain of dependence does not stop here. It does not terminate at
Philadelphia or New York. It reaches across the ocean and ends in London,
the center of the credit system. The same laws of trade which give to the
banks in our principal cities power over the whole banking system of the
United States subject the former, in their turn, to the money power in
Great Britain. It is not denied that the suspension of the New York banks
in 1837, which was followed in quick succession throughout the Union, was
produced by an application of that power, and it is now alleged, in
extenuation of the present condition of so large a portion of our banks,
that their embarrassments have arisen from the same cause.

From this influence they can not now entirely escape, for it has its origin
in the credit currencies of the two countries; it is strengthened by the
current of trade and exchange which centers in London, and is rendered
almost irresistible by the large debts contracted there by our merchants,
our banks, and our States. It is thus that an introduction of a new bank
into the most distant of our villages places the business of that village
within the influence of the money power in England; it is thus that every
new debt which we contract in that country seriously affects our own
currency and extends over the pursuits of our citizens its powerful
influence. We can not escape from this by making new banks, great or small,
State or national. The same chains which bind those now existing to the
center of this system of paper credit must equally fetter every similar
institution we create. It is only by the extent to which this system has
been pushed of late that we have been made fully aware of its irresistible
tendency to subject our own banks and currency to a vast controlling power
in a foreign lad, and it adds a new argument to those which illustrate
their precarious situation.. Endangered in the first place by their own
mismanagement and again by the conduct of every institution which connects
them with the center of trade in our own country, they are yet subjected
beyond all this to the effect of whatever measures policy, necessity, or
caprice may induce those who control the credits of England to resort to. I
mean not to comment upon these measures, present or past, and much less to
discourage the prosecution of fair commercial dealing between the two
countries, based on reciprocal benefits; but it having now been made
manifest that the power of inflicting these and similar injuries is by the
resistless law of a credit currency and credit trade equally capable of
extending their consequences through all the ramifications of our banking
system, and by that means indirectly obtaining, particularly when our banks
are used as depositories of the public moneys, a dangerous political
influence in the United States, I have deemed it my duty to bring the
subject to your notice and ask for it your serious consideration.

Is an argument required beyond the exposition of these facts to show the
impropriety of using our banking institutions as depositories of the public
money? Can we venture not only to encounter the risk of their individual
and mutual mismanagement, but at the same time to place our foreign and
domestic policy entirely under the control of a foreign moneyed interest?
To do so is to impair the independence of our Government, as the present
credit system has already impaired the independence of our banks; it is to
submit all its important operations, whether of peace or war, to be
controlled or thwarted, at first by our own banks and then by a power
abroad greater than themselves. I can not bring myself to depict the
humiliation to which this Government and people might be sooner or later
reduced if the means for defending their rights are to be made dependent
upon those who may have the most powerful of motives to impair them.

Nor is it only in reference to the effect of this state of things on the
independence of our Government or of our banks that the subject presents
itself for consideration; it is to be viewed also in its relations to the
general trade of our country. The time is not long passed when a deficiency
of foreign crops was thought to afford a profitable market for the surplus
of our industry, but now we await with feverish anxiety the news of the
English harvest, not so much from motives of commendable sympathy, but
fearful lest its anticipated failure should narrow the field of credit
there. Does not this speak volumes to the patriot? Can a system be
beneficent, wise, or just which creates greater anxiety for interests
dependent on foreign credit than for the general prosperity of our own
country and the profitable exportation of the surplus produce of our
labor?

The circumstances to which I have thus adverted appear to me to afford
weighty reasons, developed by late events, to be added to those which I
have on former occasions offered when submitting to your better knowledge
and discernment the propriety of separating the custody of the public money
from banking institutions. Nor has anything occurred to lessen, in my
opinion, the force of what has been heretofore urged. The only ground on
which that custody can be desired by the banks is the profitable use which
they may make of the money. Such use would be regarded in individuals as a
breach of trust or a crime of great magnitude, and yet it may be reasonably
doubted whether, first and last, it is not attended with more mischievous
consequences when permitted to the former than to the latter. The practice
of permitting the public money to be used by its keepers, as here, is
believed to be peculiar to this country and to exist scarcely anywhere
else. To procure it here improper influences are appealed to, unwise
connections are established between the Government and vast numbers of
powerful State institutions, other motives than the public good are brought
to bear both on the executive and legislative departments, and selfish
combinations leading to special legislation are formed. It is made the
interest of banking institutions and their stockholders throughout the
Union to use their exertions for the increase of taxation and the
accumulation of a surplus revenue, and while an excuse is afforded the
means are furnished for those excessive issues which lead to extravagant
trading and speculation and are the forerunners of a vast debt abroad and a
suspension of the banks at home.

Impressed, therefore, as I am with the propriety of the funds of the
Government being withdrawn from the private use of either banks or
individuals, and the public money kept by duly appointed public agents, and
believing as I do that such also is the judgment which discussion,
reflection, and experience have produced on the public mind, I leave the
subject with you. It is, at all events, essential to the interests of the
community and the business of the Government that a decision should be
made.

Most of the arguments that dissuade us from employing banks in the custody
and disbursement of the public money apply with equal force to the receipt
of their notes for public dues. The difference is only in form. In one
instance the Government is a creditor for its deposits, and in the other
for the notes it holds. They afford the same opportunity for using the
public moneys, and equally lead to all the evils attendant upon it, since a
bank can as safely extend its discounts on a deposit of its notes in the
hands of a public officer as on one made in its own vaults. On the other
hand, it would give to the Government no greater security, for in case of
failure the claim of the note holder would be no better than that of a
depositor.

I am aware that the danger of inconvenience to the public and unreasonable
pressure upon sound banks have been urged as objections to requiring the
payment of the revenue in gold and silver. These objections have been
greatly exaggerated. From the best estimates we may safely fix the amount
of specie in the country at $85,000,000, and the portion of that which
would be employed at any one time in the receipts and disbursements of the
Government, even if the proposed change were made at once, would not, it is
now, after fuller investigation, believed exceed four or five millions. If
the change were gradual, several years would elapse before that sum would
be required, with annual opportunities in the meantime to alter the law
should experience prove it to be oppressive or inconvenient. The portions
of the community on whose business the change would immediately operate are
comparatively small, nor is it believed that its effect would be in the
least unjust or injurious to them.

In the payment of duties, which constitute by far the greater portion of
the revenue, a very large proportion is derived from foreign commission
houses and agents of foreign manufacturers, who sell the goods consigned to
them generally at auction, and after paying the duties out of the avails
remit the rest abroad in specie or its equivalent. That the amount of
duties should in such cases be also retained in specie can hardly be made a
matter of complaint. Our own importing merchants, by whom the residue of
the duties is paid, are not only peculiarly interested in maintaining a
sound currency, which the measure in question will especially promote, but
are from the nature of their dealings best able to know when specie will be
needed and to procure it with the least difficulty or sacrifice. Residing,
too, almost universally in places where the revenue is received and where
the drafts used by the Government for its disbursements must concentrate,
they have every opportunity to obtain and use them in place of specie
should it be for their interest or convenience. Of the number of these
drafts and the facilities they may afford, as well as of the rapidity with
which the public funds are drawn and disbursed, an idea may be formed from
the fact that of nearly $20,000,000 paid to collectors and receivers during
the present year the average amount in their hands at any one time has not
exceeded a million and a half, and of the fifteen millions received by the
collector of New York alone during the present year the average amount held
by him subject to draft during each week has been less than half a
million.

The ease and safety of the operations of the Treasury in keeping the public
money are promoted by the application of its own drafts to the public dues.
The objection arising from having them too long outstanding might be
obviated and they yet made to afford to merchants and banks holding them an
equivalent for specie, and in that way greatly lessen the amount actually
required. Still less inconvenience will attend the requirement of specie in
purchases of public lands. Such purchases, except when made on speculation,
are in general but single transactions, rarely repeated by the same person;
and it is a fact that for the last year and a half, during which the notes
of sound banks have been received, more than a moiety of these payments has
been voluntarily made in specie, being a larger proportion than would have
been required in three years under the graduation proposed.

It is, moreover, a principle than which none is better settled by
experience that the supply of the precious metals will always be found
adequate to the uses for which they are required. They abound in countries
where no other currency is allowed. In our own States, where small notes
are excluded, gold and silver supply their place. When driven to their
hiding places by bank suspensions, a little firmness in the community soon
restores them in a sufficient quantity for ordinary purposes. Postage and
other public dues have been collected in coin without serious inconvenience
even in States where a depreciated paper currency has existed for years,
and this, with the aid of Treasury notes for a part of the time, was done
without interruption during the suspension of 1837. At the present moment
the receipts and disbursements of the Government are made in legal currency
in the largest portion of the Union. No one suggests a departure from this
rule, and if it can now be successfully carried out it will be surely
attended with even less difficulty when bank notes are again redeemed in
specie.

Indeed, I can not think that a serious objection would anywhere be raised
to the receipt and payment of gold and silver in all public transactions
were it not from an apprehension that a surplus in the Treasury might
withdraw a large portion of it from circulation and lock it up unprofitably
in the public vaults. It would not, in my opinion, be difficult to prevent
such an inconvenience from occurring; but the authentic statements which I
have already submitted to you in regard to the actual amount in the public
Treasury at any one time during the period embraced in them and the little
probability of a different state of the Treasury for at least some years to
come seem to render it unnecessary to dwell upon it. Congress, moreover, as
I have before observed, will in every year have an opportunity to guard
against it should the occurrence of any circumstances lead us to apprehend
injury from this source. Viewing the subject in all its aspects, I can not
believe that any period will be more auspicious than the present for the
adoption of all measures necessary to maintain the sanctity of our own
engagements and to aid in securing to the community that abundant supply of
the precious metals which adds so much to their prosperity and gives such
increased stability to all their dealings.

In a country so commercial as ours banks in some form will probably always
exist, but this serves only to render it the more incumbent on us,
notwithstanding the discouragements of the past, to strive in our
respective stations to mitigate the evils they produce; to take from them
as rapidly as the obligations of public faith and a careful consideration
of the immediate interests of the community will permit the unjust
character of monopolies; to check, so far as may be practicable, by prudent
legislation those temptations of interest and those opportunities for their
dangerous indulgence which beset them on every side, and to confine them
strictly to the performance of their paramount duty--that of aiding the
operations of commerce rather than consulting their own exclusive
advantage. These and other salutary reforms may, it is believed, be
accomplished without the violation of any of the great principles of the
social compact, the observance of which is indispensable to its existence,
or interfering in any way with the useful and profitable employment of real
capital.

Institutions so framed have existed and still exist elsewhere, giving to
commercial intercourse all necessary facilities without inflating or
depreciating the currency or stimulating speculation. Thus accomplishing
their legitimate ends, they have gained the surest guaranty for their
protection and encouragement in the good will of the community. Among a
people so just as ours the same results could not fail to attend a similar
course. The direct supervision of the banks belongs, from the nature of our
Government, to the States who authorize them. It is to their legislatures
that the people must mainly look for action on that subject. But as the
conduct of the Federal Government in the management of its revenue has also
a powerful, though less immediate, influence upon them, it becomes our duty
to see that a proper direction is given to it. While the keeping of the
public revenue in a separate and independent treasury and of collecting it
in gold and silver will have a salutary influence on the system of paper
credit with which all banks are connected, and thus aid those that are
sound and well managed, it will at the same time sensibly check such as are
otherwise by at once withholding the means of extravagance afforded by the
public funds and restraining them from excessive issues of notes which they
would be constantly called upon to redeem.

I am aware it has been urged that this control may be best attained and
exerted by means of a national bank. The constitutional objections which I
am well known to entertain would prevent me in any event from proposing or
assenting to that remedy; but in addition to this, I can not after past
experience bring myself to think that it can any longer be extensively
regarded as effective for such a purpose. The history of the late national
bank, through all its mutations, shows that it was not so. On the contrary,
it may, after a careful consideration of the subject, be, I think, safely
stated that at every period of banking excess it took the lead; that in
1817 and 1818, in 1823, in 1831, and in 1834 its vast expansions, followed
by distressing contractions, led to those of the State institutions. It
swelled and maddened the tides of the banking system, but seldom allayed or
safely directed them. At a few periods only was a salutary control
exercised, but an eager desire, on the contrary, exhibited for profit in
the first place; and if afterwards its measures were severe toward other
institutions, it was because its own safety compelled it to adopt them. It
did not differ from them in principle or in form; its measures emanated
from the same spirit of gain; it felt the same temptation to overissues; it
suffered from and was totally unable to avert those inevitable laws of
trade by which it was itself affected equally with them; and at least on
one occasion, at an early day, it was saved only by extraordinary exertions
from the same fate that attended the weakest institution it professed to
supervise. In 1837 it failed equally with others in redeeming its notes
(though the two years allowed by its charter for that purpose had not
expired), a large amount of which remains to the present time outstanding.
It is true that, having so vast a capital and strengthened by the use of
all the revenues of the Government, it possessed more power; but while it
was itself by that circumstance freed from the control which all banks
require, its paramount object and inducement were left the same--to make
the most for its stockholders, not to regulate the currency of the country.
Nor has it, as far as we are advised, been found to be greatly otherwise
elsewhere. The national character given to the Bank of England has not
prevented excessive fluctuations in their currency, and it proved unable to
keep off a suspension of specie payments, which lasted for nearly a quarter
of a century. And why should we expect it to be otherwise? A national
institution, though deriving its charter from a different source than the
State banks, is yet constituted upon the same principles, is conducted by
men equally exposed to temptation, and is liable to the same disasters,
with the additional disadvantage that its magnitude occasions an extent of
confusion and distress which the mismanagement of smaller institutions
could not produce. It can scarcely be doubted that the recent suspension of
the United State Bank of Pennsylvania, of which the effects are felt not in
that State alone, but over half the Union, had its origin in a course of
business commenced while it was a national institution, and there is no
good reason for supposing that the same consequences would not have
followed had it still derived its powers from the General Government. It is
in vain, when the influences and impulses are the same, to look for a
difference in conduct or results. By such creations we do, therefore, but
increase the mass of paper credit and paper currency, without checking
their attendant evils and fluctuations. The extent of power and the
efficiency of organization which we give, so far from being beneficial, are
in practice positively injurious. They strengthen the chain of dependence
throughout the Union, subject all parts more certainly to common disaster,
and bind every bank more effectually in the first instance to those of our
commercial cities, and in the end to a foreign power. In a word, I can not
but believe that, with the full understanding of the operations of our
banking system which experience has produced, public sentiment is not less
opposed to the creation of a national bank for purposes connected with
currency and commerce than for those connected with the fiscal operations
of the Government.

Yet the commerce and currency of the country are suffering evils from the
operations of the State banks which can not and ought not to be overlooked.
By their means we have been flooded with a depreciated paper, which it was
evidently the design of the framers of the Constitution to prevent when
they required Congress to "Coin money and regulate the value of foreign
coins," and when they forbade the States "to coin money, emit bills of
credit, make anything but gold and silver a tender in payment of debts," or
"pass any law impairing the obligation of contracts." If they did not guard
more explicitly against the present state of things, it was because they
could not have anticipated that the few banks then existing were to swell
to an extent which would expel to so great a degree the gold and silver for
which they had provided from the channels of circulation, and fill them
with a currency that defeats the objects they had in view. The remedy for
this must chiefly rest with the States from whose legislation it has
sprung. No good that might accrue in a particular case front the exercise
of powers not obviously conferred on the General Government would authorize
its interference or justify a course that might in the slightest degree
increase at the expense of the States the power of the Federal authorities;
nor do I doubt that the States will apply the remedy. Within the last few
years events have appealed to them too strongly to be disregarded. They
have seen that the Constitution, though theoretically adhered to, is
subverted in practice; that while on the statute books there is no legal
tender but gold and silver, no law impairing the obligations of contracts,
yet that in point of fact the privileges conferred on banking corporations
have made their notes the currency of the country; that the obligations
imposed by these notes are violated under the impulses of interest or
convenience, and that the number and power of the persons connected with
these corporations or placed under their influence give them a fearful
weight when their interest is in opposition to the spirit of the
Constitution and laws. To the people it is immaterial whether these results
are produced by open violations of the latter or by the workings of a
system of which the result is the same. An inflexible execution even of the
existing statutes of most of the States would redress many evils now
endured, would effectually show the banks the dangers of mismanagement
which impunity encourages them to repeat, and would teach all corporations
the useful lesson that they are the subjects of the law and the servants of
the people. What is still wanting to effect these objects must be sought in
additional legislation, or, if that be inadequate, in such further
constitutional grants or restrictions as may bring us back into the path
from which we have so widely wandered.

In the meantime it is the duty of the General Government to cooperate with
the States by a wise exercise of its constitutional powers and the
enforcement of its existing laws. The extent to which it may do so by
further enactments I have already adverted to, and the wisdom of Congress
may yet enlarge them. But above all, it is incumbent upon us to hold erect
the principles of morality and law, constantly executing our own contracts
in accordance with the provisions of the Constitution, and thus serving as
a rallying point by which our whole country may be brought back to that
safe and honored standard.

Our people will not long be insensible to the extent of the burdens
entailed upon them by the false system that has been operating on their
sanguine, energetic, and industrious character, nor to the means necessary
to extricate themselves from these embarrassments. The weight which presses
upon a large portion of the people and the States is an enormous debt,
foreign and domestic. The foreign debt of our States, corporations, and men
of business can scarcely be less than $200,000,000, requiring more than
$10,000,000 a year to pay the interest. This sum has to be paid out of the
exports of the country, and must of necessity cut off imports to that
extent or plunge the country more deeply in debt from year to year. It is
easy to see that the increase of this foreign debt must augment the annual
demand on the exports to pay the interest, and to the same extent diminish
the imports, and in proportion to the enlargement of the foreign debt and
the consequent increase of interest must be the decrease of the import
trade. In lieu of the comforts which it now brings us we might have our.
gigantic banking institutions and splendid, but in many instances
profitless, railroads and canals absorbing to a great extent in interest
upon the capital borrowed to construct them the surplus fruits of national
industry for years to come, and securing to posterity no adequate return
for the comforts which the labors of their hands might otherwise have
secured. It is not by the increase of this debt that relief is to be
sought, but in its diminution. Upon this point there is, I am happy to say,
hope before us; not so much in the return of confidence abroad, which will
enable the States to borrow more money, as in a change of public feeling at
home, which prompts our people to pause in their career and think of the
means by which debts are to be paid before they are contracted. If we would
escape embarrassment, public and private, we must cease to run in debt
except for objects of necessity or such as will yield a certain return. Let
the faith of the States, corporations, and individuals already pledged be
kept with the most punctilious regard. It is due to our national character
as well as to justice that this should on the part of each be a fixed
principle of conduct. But it behooves us all to be more chary in pledging
it hereafter. By ceasing to run in debt and applying the surplus of our
crops and incomes to the discharge of existing obligations, buying less and
selling more, and managing all affairs, public and private, with strict
economy and frugality, we shall see our country soon recover from a
temporary depression, arising not from natural and permanent causes, but
from those I have enumerated, and advance with renewed vigor in her career
of prosperity.

Fortunately for us at this moment, when the balance of trade is greatly
against us and the difficulty of meeting it enhanced by the disturbed state
of our money affairs, the bounties of Providence have come to relieve us
from the consequences of past errors. A faithful application of the immense
results of the labors of the last season will afford partial relief for the
present, and perseverance in the same course will in due season accomplish
the rest. We have had full experience in times past of the extraordinary
results which can in this respect be brought about in a short period by the
united and well-directed efforts of a community like ours. Our surplus
profits, the energy and industry of our population, and the wonderful
advantages which Providence has bestowed upon our country in its climate,
its various productions, indispensable to other nations, will in due time
afford abundant means to perfect the most useful of those objects for which
the States have been plunging themselves of late in embarrassment and debt,
without imposing on ourselves or our children such fearful burdens.

But let it be indelibly engraved on our minds that relief is not to be
found in expedients. Indebtedness can not be lessened by borrowing more
money or by changing the form of the debt. The balance of trade is not to
be turned in our favor by creating new demands upon us abroad. Our currency
can not be improved by the creation of new banks or more issues from those
which now exist. Although these devices sometimes appear to give temporary
relief, they almost invariably aggravate the evil in the end. It is only by
retrenchment and reform--by curtailing public and private expenditures, by
paying our debts, and by reforming our banking system--that we are to
expect effectual relief, security for the future, and an enduring
prosperity. In shaping the institutions and policy of the General
Government so as to promote as far as it can with its limited powers these
important ends, you may rely on my most cordial cooperation.

That there should have been in the progress of recent events doubts in many
quarters and in some a heated opposition to every change can not surprise
us. Doubts are properly attendant on all reform, and it is peculiarly in
the nature of such abuses as we are now encountering to seek to perpetuate
their power by means of the influence they have been permitted to acquire.
It is their result, if not their object, to gain for the few an ascendency
over the many by securing to them a monopoly of the currency, the medium
through which most of the wants of mankind are supplied; to produce
throughout society a chain of dependence which leads all classes to look to
privileged associations for the means of speculation and extravagance; to
nourish, in preference to the manly virtues that give dignity to human
nature, a craving desire for luxurious enjoyment and sudden wealth, which
renders those who seek them dependent on those who supply them; to
substitute for republican simplicity and economical habits a sickly
appetite for effeminate indulgence and an imitation of that reckless
extravagance which impoverished and enslaved the industrious people of
foreign lands, and at last to fix upon us, instead of those equal political
rights the acquisition of which was alike the object and supposed reward of
our Revolutionary struggle, a system of exclusive privileges conferred by
partial legislation. To remove the influences which had thus gradually
grown up among us, to deprive them of their deceptive advantages, to test
them by the light of wisdom and truth, to oppose the force which they
concentrate in their sup-port--all this was necessarily the work of time,
even among a people so enlightened and pure as that of the United States.
In most other countries, perhaps, it could only be accomplished through
that series of revolutionary movements which are too often found necessary
to effect any great and radical reform; but it is the crowning merit of our
institutions that they create and nourish in the vast majority of our
people a disposition and a power peaceably to remedy abuses which have
elsewhere caused the effusion of rivers of blood and the sacrifice of
thousands of the human race. The result thus far is most honorable to the
self-denial, the intelligence, and the patriotism of our citizens; it
justifies the confident hope that they will carry through the reform which
has been so well begun, and that they will go still further than they have
yet gone in illustrating the important truth that a people as free and
enlightened as ours will, whenever it becomes necessary, show themselves to
be indeed capable of self-government by voluntarily adopting appropriate
remedies for every abuse, and submitting to temporary sacrifices, however
great, to insure their permanent welfare.

My own exertions for the furtherance of these desirable objects have been
bestowed throughout my official career with a zeal that is nourished by
ardent wishes for the welfare of my country, and by an unlimited reliance
on the wisdom that marks its ultimate decision on all great and
controverted questions. Impressed with the solemn obligations imposed upon
me by the Constitution, desirous also of laying before my fellow-citizens,
with whose confidence and support I have been so highly honored, such
measures as appear to me conducive to their prosperity, and anxious to
submit to their fullest consideration the grounds upon which my opinions
are formed, I have on this as on preceding occasions freely offered my
views on those points of domestic policy that seem at the present time most
prominently to require the action of the Government. I know that they will
receive from Congress that full and able consideration which the importance
of the subjects merits, and I can repeat the assurance heretofore made that
I shall cheerfully and readily cooperate with you in every measure that
will tend to promote the welfare of the Union.

M. VAN BUREN