Fellow-Citizens of the Senate and House of Representatives:

The progress of our affairs since the last session has been such as may
justly be claimed and expected under a Government deriving all its powers
from an enlightened people, and under laws formed by their representatives,
on great consideration, for the sole purpose of promoting the welfare and
happiness of their constituents. In the execution of those laws and of the
powers vested by the Constitution in the Executive, unremitted attention
has been paid to the great objects to which they extend.

In the concerns which are exclusively internal there is good cause to be
satisfied with the result. The laws have had their due operation and
effect.

In those relating to foreign powers, I am happy to state that peace and
amity are preserved with all by a strict observance on both sides of the
rights of each.

In matters touching our commercial intercourse, where a difference of
opinion has existed as to the conditions on which it should be placed, each
party has pursued its own policy without giving just cause of offense to
the other.

In this annual communication, especially when it is addressed to a new
Congress, the whole scope of our political concerns naturally comes into
view, that errors, if such have been committed, may be corrected; that
defects which have become manifest may be remedied; and, on the other hand,
that measures which were adopted on due deliberation, and which experience
has shewn are just in themselves and essential to the public welfare,
should be persevered in and supported. In performing this necessary and
very important duty I shall endeavor to place before you on its merits
every subject that is thought to be entitled to your particular attention
in as distinct and clear a light as I may be able.

By an act of March 3rd, 1815, so much of the several acts as imposed higher
duties on the tonnage of foreign vessels and on the manufactures and
productions of foreign nations when imported into the United States in
foreign vessels than when imported in vessels of the United States were
repealed so far as respected the manufactures and productions of the nation
to which such vessels belonged, on the condition that the repeal should
take effect only in favor of any foreign nation when the Executive should
be satisfied that such discriminating duties to the disadvantage of the
United States had likewise been repealed by such nation.

By this act a proposition was made to all nations to place our commerce
with each on a basis which it was presumed would be acceptable to all.
Every nation was allowed to bring its manufactures and productions into our
ports and to take the manufactures and productions of the United States
back to their ports in their own vessels on the same conditions that they
might be transported in vessels of the United States, and in return it was
required that a like accommodation should be granted to the vessels of the
United States in the ports of other powers. The articles to be admitted or
prohibited on either side formed no part of the proposed arrangement. Each
party would retain the right to admit or prohibit such articles from the
other as it thought proper, and on its own conditions.

When the nature of the commerce between the United States and every other
country was taken into view, it was thought that this proposition would be
considered fair, and even liberal, by every power. The exports of the
United States consist generally of articles of the first necessity and of
rude materials in demand for foreign manufactories, of great bulk,
requiring for their transportation many vessels, the return for which in
the manufactures and productions of any foreign country, even when disposed
of there to advantage, may be brought in a single vessel. This observation
is the more especially applicable to those countries from which
manufactures alone are imported, but it applies in great extent to the
European dominions of every European power and in a certain extent to all
the colonies of those powers. By placing, then, the navigation precisely on
the same ground in the transportation of exports and imports between the
United States and other countries it was presumed that all was offered
which could be desired. It seemed to be the only proposition which could be
devised which would retain even the semblance of equality in our favor.

Many considerations of great weight gave us a right to expect that this
commerce should be extended to the colonies as well as to the European
dominions of other powers. With the latter, especially with countries
exclusively manufacturing, the advantage was manifestly on their side. An
indemnity for that loss was expected from a trade with the colonies, and
with the greater reason as it was known that the supplies which the
colonies derived from us were of the highest importance to them, their
labor being bestowed with so much greater profit in the culture of other
articles; and because, likewise, the articles of which those supplies
consisted, forming so large a proportion of the exports of the United
States, were never admitted into any of the ports of Europe except in cases
of great emergency to avert a serious calamity.

When no article is admitted which is not required to supply the wants of
the party admitting it, and admitted then not in favor of any particular
country to the disadvantage of others, but on conditions equally applicable
to all, it seems just that the articles thus admitted and invited should be
carried thither in the vessels of the country affording such supply and
that the reciprocity should be found in a corresponding accommodation on
the other side. By allowing each party to participate in the transportation
of such supplies on the payment of equal tonnage a strong proof was
afforded of an accommodating spirit. To abandon to it the transportation of
the whole would be a sacrifice which ought not to be expected. The demand
in the present instance would be the more unreasonable in consideration of
the great inequality existing in the trade with the parent country.

Such was the basis of our system as established by the act of 1815 and such
its true character. In the year in which this act was passed a treaty was
concluded with Great Britain, in strict conformity with its principles, in
regard to her European dominions. To her colonies, however, in the West
Indies and on this continent it was not extended, the British Government
claiming the exclusive supply of those colonies, and from our own ports,
and of the productions of the colonies in return in her own vessels. To
this claim the United States could not assent, and in consequence each
party suspended the intercourse in the vessels of the other by a
prohibition which still exists.

The same conditions were offered to France, but not accepted. Her
Government has demanded other conditions more favorable to her navigation,
and which should also give extraordinary encouragement to her manufactures
and productions in ports of the United States. To these it was thought
improper to accede, and in consequence the restrictive regulations which
had been adopted on her part, being countervailed on the part of the United
States, the direct commerce between the two countries in the vessels of
each party has been in great measure suspended. It is much to be regretted
that, although a negotiation has been long pending, such is the diversity
of views entertained on the various points which have been brought into
discussion that there does not appear to be any reasonable prospect of its
early conclusion.

It is my duty to state, as a cause of very great regret, that very serious
differences have occurred in this negotiation respecting the construction
of the 8th article of the treaty of 1803, by which Louisiana was ceded to
the United States, and likewise respecting the seizure of the Apollo, in
1820, for a violation of our revenue laws. The claim of the Government of
France has excited not less surprise than concern, because there does not
appear to be a just foundation for it in either instance. By the 8th
article of the treaty referred to it is stipulated that after the
expiration of twelve years, during which time it was provided by the 7th or
preceding article that the vessels of France and Spain should be admitted
into the ports of the ceded territory without paying higher duties on
merchandise or tonnage on the vessels than such as were paid by citizens of
the United States, the ships of France should forever afterwards be placed
on the footing of the most favored nation.

By the obvious construction of this article it is presumed that it was
intended that no favor should be granted to any power in those ports to
which France should not be forthwith entitled, nor should any accommodation
be allowed to another power on conditions to which she would not also be
entitled on the same conditions. Under this construction no favor or
accommodation could be granted to any power to the prejudice of France. By
allowing the equivalent allowed by those powers she would always stand in
those ports on the footing of the most favored nation.

But if this article should be so construed as that France should enjoy, of
right, and without paying the equivalent, all the advantages of such
conditions as might be allowed to other powers in return for important
concessions made by them, then the whole character of the stipulations
would be changed. She would not be placed on the footing of the most
favored nation, but on a footing held by no other nation. She would enjoy
all advantages allowed to them in consideration of like advantages allowed
to us, free from every and any condition whatever.

As little cause has the Government of France to complain of the seizure of
the Apollo and the removal of other vessels from the waters of the St.
Marys. It will not be denied that every nation has a right to regulate its
commercial system as it thinks fit and to enforce the collection of its
revenue, provided it be done without an invasion of the rights of other
powers. The violation of its revenue laws is an offense which all nations
punish, the punishment of which gives no just cause of complaint to the
power to which the offenders belong, provided it be extended to all
equally.

In this case every circumstance which occurred indicated a fixed purpose to
violate our revenue laws. Had the party intended to have pursued a fair
trade he would have entered the port of some other power, landed his goods
at the custom house according to law, and re-shipped and sent them in the
vessel of such power, or of some other power which might lawfully bring
them, free from such duties, to a port of the United States. But the
conduct of the party in this case was altogether different. He entered the
river St. Marys, the boundary line between the United States and Florida,
and took his position on the Spanish side, on which in the whole extent of
the river there was no town, no port or custom house, and scarcely any
settlement. His purpose, therefore, was not to sell his goods to the
inhabitants of Florida, but to citizens of the United States, in exchange
for their productions, which could not be done without a direct and
palpable breach of our laws. It is known that a regular systematic plan had
been formed by certain persons for the violation of our revenue system,
which made it the more necessary to check the proceeding in its
commencement.

That the unsettled bank of a river so remote from the Spanish garrisons and
population could give no protection to any party in such a practice is
believed to be in strict accord with the law of nations. It would not have
comported with a friendly policy in Spain herself to have established a
custom house there, since it could have subserved no other purpose than to
elude our revenue law. But the Government of Spain did not adopt that
measure. On the contrary, it is understood that the Captain-General of
Cuba, to whom an application to that effect was made by these adventurers,
had not acceded to it.

The condition of those Provinces for many years before they were ceded to
the United States need not now be dwelt on. Inhabited by different tribes
of Indians and an inroad for every kind of adventurer, the jurisdiction of
Spain may be said to have been almost exclusively confined to her
garrisons. It certainly could not extend to places where she had no
authority. The rules, therefore, applicable to settled countries governed
by laws could not be deemed so to the deserts of Florida and to the
occurrences there.

It merits attention also that the territory had been ceded to the United
States by a treaty the ratification of which had not been refused, and
which has since been performed. Under any circumstances, therefore, Spain
became less responsible for such acts committed there, and the United
States more at liberty to exercise authority to prevent so great a
mischief. The conduct of this Government has in every instance been
conciliatory and friendly to France. The construction of our revenue law in
its application to the cases which have formed the ground of such serious
complaint on her part and the order to the collector of St. Marys, in
accord with it, were given two years before these cases occurred, and in
reference to a breach which was attempted by the subjects of another power.
The application, therefore, to the cases in question was inevitable. As
soon as the treaty by which these Provinces were ceded to the United States
was ratified, and all danger of further breach of our revenue laws ceased,
an order was given for the release of the vessel which had been seized and
for the dismission of the libel which had been instituted against her.

The principles of this system of reciprocity, founded on the law of
March 3rd, 1815, have been since carried into effect with the Kingdoms of
the Netherlands, Sweden, Prussia, and with Hamburg, Lubeck, and Oldenburg,
with a provision made by subsequent laws in regard to the Netherlands,
Prussia, Hamburg, and Bremen that such produce and manufactures as could
only be, or most usually were, first shipped from the ports of those
countries, the same being imported in vessels wholly belonging to their
subjects, should be considered and admitted as their own manufactures and
productions.

The Government of Norway has by an ordinance opened the ports of that part
of the dominions of the King of Sweden to the vessels of the United States
upon the payment of no other or higher duties than are paid by Norwegian
vessels, from whatever place arriving and with whatever articles laden.
They have requested the reciprocal allowance for the vessels of Norway in
the ports of the United States. As this privilege is not within the scope
of the act of March 3rd, 1815, and can only be granted by Congress, and as
it may involve the commercial relations of the United States with other
nations, the subject is submitted to the wisdom of Congress.

I have presented thus fully to your view our commercial relations with
other powers, that, seeing them in detail with each power, and knowing the
basis on which they rest, Congress may in its wisdom decide whether any
change ought to be made, and, if any, in what respect. If this basis is
unjust or unreasonable, surely it ought to be abandoned; but if it be just
and reasonable, and any change in it will make concessions subversive of
equality and tending in its consequences to sap the foundations of our
prosperity, then the reasons are equally strong for adhering to the ground
already taken, and supporting it by such further regulations as may appear
to be proper, should any additional support be found necessary.

The question concerning the construction of the first article of the treaty
of Ghent has been, by a joint act of the representatives of the United
States and of Great Britain at the Court of St. Petersburg, submitted to
the decision of His Imperial Majesty the Emperor of Russia. The result of
that submission has not yet been received. The commissioners under the 5th
article of that treaty not having been able to agree upon their decision,
their reports to the two Governments, according to the provisions of the
treaty, may be expected at an early day.

With Spain the treaty of February 22nd, 1819, has been partly carried into
execution. Possession of East and West Florida has been given to the
United States, but the officers charged with that service by an order
from His Catholic Majesty, delivered by his minister to the Secretary of
State, and transmitted by a special agent to the Captain-General of Cuba,
to whom it was directed and in whom the Government of those Provinces
was vested, have not only omitted, in contravention of the order of their
Sovereign, the performance of the express stipulation to deliver over the
archives and documents relating to the property and sovereignty of those
Provinces, all of which it was expected would have been delivered either
before or when the troops were withdrawn, but defeated since every effort
of the United States to obtain them, especially those of the greatest
importance. This omission has given rise to several incidents of a painful
nature, the character of which will be fully disclosed by the documents
which will be hereafter communicated.

In every other circumstance of the law of the 3rd of March last, for
carrying into effect that treaty, has been duly attended to. For the
execution of that part which preserved in force, for the Government of the
inhabitants for the term specified, all the civil, military, and judicial
powers exercised by the existing Government of those Provinces an adequate
number of officers, as was presumed, were appointed, and ordered to their
respective stations. Both Provinces were formed into one Territory, and a
governor appointed for it; but in consideration of the pre-existing
division and of the distance and difficulty of communication between
Pensacola, the residence of the governor of West Florida, and St.
Augustine, that of the governor of East Florida, at which places the
inconsiderable population of each Province was principally collected, two
secretaries were appointed, the one to reside at Pensacola and the other at
St. Augustine.

Due attention was likewise paid to the execution of the laws of the United
States relating to the revenue and the slave trade, which were extended to
these Provinces. The whole Territory was divided into three collection
districts, that part lying between the river St. Marys and Cape Florida
forming one, that from the Cape to the Apalachicola another, and that from
the Apalachicola to the Perdido the third. To these districts the usual
number of revenue officers were appointed; and to secure the due operation
of these laws one judge and a district attorney were appointed to reside at
Pensacola, and likewise one judge and a district attorney to reside at St.
Augustine, with a specified boundary between them; and one marshal for the
whole, with authority to appoint a deputy.

In carrying this law into effect, and especially that part relating to the
powers of the existing Government of those Provinces, it was thought
important, in consideration of the short term for which it was to operate
and the radical change which would be made at the approaching session of
Congress, to avoid expense, to make no appointment which should not be
absolutely necessary to give effect to those powers, to withdraw none of
our citizens from their pursuits, whereby to subject the Government to
claims which could not be gratified and the parties to losses which it
would be painful to witness.

It has been seen with much concern that in the performance of these duties
a collision arose between the governor of the Territory and the judge
appointed for the western district. It was presumed that the law under
which this transitory Government was organized, and the commissions which
were granted to the officers who were appointed to execute each branch of
the system, and to which the commissions were adapted, would have been
understood in the same sense by them in which they were understood by the
Executive. Much allowance is due to officers employed in each branch of
this system, and the more so as there is good cause to believe that each
acted under the conviction that he possessed the power which he undertook
to exercise. Of the officer holding the principal station, I think it
proper to observe that he accepted it with reluctance, in compliance with
the invitation given him, and from a high sense of duty to his country,
being willing to contribute to the consummation of an event which would
insure complete protection to an important part of our Union, which had
suffered much from incursion and invasion, and to the defense of which his
very gallant and patriotic services had been so signally and usefully
devoted.

From the intrinsic difficulty of executing laws deriving their origin from
different sources, and so essentially different in many important
circumstances, the advantage, and indeed the necessity, of establishing as
soon as practicable a well-organized Government over that Territory on the
principles of our system is apparent. This subject is therefore recommended
to the early consideration of Congress.

In compliance with an injunction of the law of the 3rd of March last, three
commissioners have also been appointed and a board organized for carrying
into effect the 11th article of the treaty above recited, making provision
for the payment of such of our citizens as have well-founded claims on
Spain of the character specified by that treaty. This board has entered on
its duties and made some progress therein. The commissioner and surveyor of
His Catholic Majesty, provided for by the 4th article of the treaty, have
not yet arrived in the United States, but are soon expected. As soon as
they do arrive corresponding appointments will be made and every facility
be afforded for the due execution of this service.

The Government of His Most Faithful Majesty since the termination of the
last session of Congress has been removed from Rio de Janeiro to Lisbon,
where a revolution similar to that which had occurred in the neighboring
Kingdom of Spain had in like manner been sanctioned by the accepted and
pledged faith of the reigning monarch. The diplomatic intercourse between
the United States and the Portuguese dominions, interrupted by this
important event, has not yet been resumed, but the change of internal
administration having already materially affected the commercial
intercourse of the United States with the Portuguese dominions, the renewal
of the public missions between the two countries appears to be desirable at
an early day.

It is understood that the colonies in South America have had great success
during the present year in the struggle for their independence. The new
Government of Colombia has extended its territories and considerably
augmented its strength, and at Buenos Ayres, where civil dissensions had
for some time before prevailed, greater harmony and better order appear to
have been established. Equal success has attended their efforts in the
Provinces on the Pacific. It has long been manifest that it would be
impossible for Spain to reduce these colonies by force, and equally so that
no conditions short of their independence would be satisfactory to them. It
may therefore be presumed, and it is earnestly hoped, that the Government
of Spain, guided by enlightened and liberal councils, will find it to
comport with its interests and due to its magnanimity to terminate this
exhausting controversy on that basis. To promote this result by friendly
counsel with the Government of Spain will be the object of the Government
of the United States.

In conducting the fiscal operations of the year it has been found necessary
to carry into full effect the act of the last session of Congress
authorizing a loan of $5 millions. This sum has been raised at an average
premium of $5.59 per centum upon stock bearing an interest at the rate of
5% per annum, redeemable at the option of the Government after January
1st, 1835.

There has been issued under the provisions of this act $4,735,296.30 of 5%
stock, and there has been or will be redeemed during the year $3,197,030.71
of Louisiana 6% deferred stock and Mississippi stock. There has therefore
been an actual increase of the public debt contracted during the year of
$1,538,266.69.

The receipts into the Treasury from the first of January to the 30th of
September last have amounted to $16,219,197.70, which, with the balance of
$1,198,461.21 in the Treasury on the former day, make the aggregate sum of
$17,417,658.91. The payments from the Treasury during the same period have
amounted to $15,655,288.47, leaving in the Treasury on the last-mentioned
day the sum of $1,762,370.44. It is estimated that the receipts of the 4th
quarter of the year will exceed the demands which will be made on the
Treasury during the same period, and that the amount in the Treasury on the
30th of September last will be increased on the first day of January next.

At the close of the last session it was anticipated that the progressive
diminution of the public revenue in 1819 and 1820, which had been the
result of the languid state of our foreign commerce in those years, had in
the latter year reached its extreme point of depression. It has, however,
been ascertained that that point was reached only at the termination of the
first quarter of the present year. From that time until the 30th of
September last the duties secured have exceeded those of the corresponding
quarters of the last year $1.172 millions, whilst the amount of debentures
issued during the three first quarters of this year is $952,000 less than
that of the same quarters of the last year.

There are just grounds to believe that the improvement which has occurred
in the revenue during the last-mentioned period will not only be
maintained, but that it will progressively increase through the next and
several succeeding years, so as to realize the results which were presented
upon that subject by the official reports of the Treasury at the
commencement of the last session of Congress.

Under the influence of the most unfavorable circumstances the revenue for
the next and subsequent years to the year 1825 will exceed the demands at
present authorized by law.

It may fairly be presumed that under the protection given to domestic
manufactures by the existing laws we shall become at no distant period a
manufacturing country on an extensive scale. Possessing as we do the raw
materials in such vast amount, with a capacity to augment them to an
indefinite extent; raising within the country aliment of every kind to an
amount far exceeding the demand for home consumption, even in the most
unfavorable years, and to be obtained always at a very moderate price;
skilled also, as our people are, in the mechanic arts and in every
improvement calculated to lessen the demand for and the price of labor, it
is manifest that their success in every branch of domestic industry may and
will be carried, under the encouragement given by the present duties, to an
extent to meet any demand which under a fair competition may be made upon
it.

A considerable increase of domestic manufactures, by diminishing the
importation of foreign, will probably tend to lessen the amount of the
public revenue. As, however, a large proportion of the revenue which is
derived from duties is raised from other articles than manufactures, the
demand for which will increase with our population, it is believed that a
fund will still be raised from that source adequate to the greater part of
the public expenditures, especially as those expenditures, should we
continue to be blessed with peace, will be diminished by the completion of
the fortifications, dock yards, and other public works, by the augmentation
of the Navy to the point to which it is proposed to carry it, and by the
payment of the public debt, including pensions for military services.

It can not be doubted that the more complete our internal resources and the
less dependent we are on foreign powers for every national as well as
domestic purpose the greater and more stable will be the public felicity.
By the increase of domestic manufactures will the demand for the rude
materials at home be increased, and thus will the dependence of the several
parts of our Union on each other and the strength of the Union itself be
proportionably augmented.

In this process, which is very desirable, and inevitable under the existing
duties, the resources which obviously present themselves to supply a
deficiency in the revenue, should it occur, are the interests which may
derive the principal benefit from the change. If domestic manufactures are
raised by duties on foreign, the deficiency in the fund necessary for
public purposes should be supplied by duties on the former.

At the last session it seemed doubtful whether the revenue derived from the
present sources would be adequate to all the great purposes of our Union,
including the construction of our fortifications, the augmentation of the
Navy, and the protection of our commerce against the dangers to which it is
exposed. Had the deficiency been such as to subject us to the necessity
either to abandon those measures of defense or to resort to the other means
for adequate funds, the course presented to the adoption of a virtuous and
enlightened people appeared to be a plain one. It must be gratifying to all
to know that this necessity does not exist. Nothing, however, in
contemplation of such important objects, which can be easily provided for,
should be left to hazard. It is thought that the revenue may receive an
augmentation from the existing sources, and in a manner to aid our
manufactures, without hastening prematurely the result which has been
suggested. It is believed that a moderate additional duty on certain
articles would have that effect, without being liable to any serious
objection.

The examination of the whole coast, for the construction of permanent
fortifications, from St. Croix to the Sabine, with the exception of part of
the territory lately acquired, will be completed in the present year, as
will be the survey of the Mississippi, under the resolution of the House of
Representatives, from the mouth of the Ohio to the ocean, and likewise of
the Ohio from Louisville to the Mississippi. A progress corresponding with
the sums appropriated has also been made in the construction of these
fortifications at the ports designated. As they will form a system of
defense for the whole maritime frontier, and in consequence for the
interior, and are to last for ages, the greatest care has been taken to fix
the position of each work and to form it on such a scale as will be
adequate to the purpose intended by it. All the inlets and assailable parts
of our Union have been minutely examined, and positions taken with a view
to the best effect, observing in every instance a just regard for economy.
Doubts, however, being entertained as to the propriety of the position and
extent of the work at Dauphine Island, further progress in it was suspended
soon after the last session of Congress, and an order given to the Board of
Engineers and Naval Commissioners to make a further and more minute
examination of it in both respects, and to report the result without
delay.

Due progress has been made in the construction of vessels of war according
to the law providing for the gradual augmentation of the Navy, and to the
extent of existing appropriations. The vessels authorized by the act of
1820 have all been completed and are now in actual service. None of the
larger ships have been or will be launched for the present, the object
being to protect all which may not be required for immediate service from
decay by suitable buildings erected over them.

A squadron has been maintained, as heretofore, in the Mediterranean, by
means whereof peace has been preserved with the Barbary Powers. This
squadron has been reduced the present year to as small a force as is
compatible with the fulfillment of the object intended by it. From past
experience and the best information respecting the views of those powers it
is distinctly understood that should our squadron be withdrawn they would
soon recommence their hostilities and depredations upon our commerce. Their
fortifications have lately been rebuilt and their maritime force
increased.

It has also been found necessary to maintain a naval force on the Pacific
for the protection of the very important interests of our citizens engaged
in commerce and the fisheries in that sea. Vessels have likewise been
employed in cruising along the Atlantic coast, in the Gulf of Mexico, on
the coast of Africa, and in the neighboring seas. In the latter many
piracies have been committed on our commerce, and so extensive was becoming
the range of those unprincipled adventurers that there was cause to
apprehend, without a timely and decisive effort to suppress them, the worst
consequences would ensue. Fortunately, a considerable check has been given
to that spirit by our cruisers, who have succeeded in capturing and
destroying several of their vessels. Nevertheless, it is considered an
object of high importance to continue these cruises until the practice is
entirely suppressed.

Like success has attended our efforts to suppress the slave trade. Under
the flag of the United States and the sanction of their papers the trade
may be considered as entirely suppressed, and if any of our citizens are
engaged in it under the flags and papers of other powers, it is only from a
respect of those powers that these offenders are not seized and brought
home to receive the punishment which the laws inflict. If every other power
should adopt the same policy and pursue the same vigorous means for
carrying it into effect, the trade could no longer exist.

Deeply impressed with the blessings which we enjoy, and of which we have
such manifold proofs, my mind is irresistibly drawn to that Almighty Being,
the great source from whence they proceed and to whom our most grateful
acknowledgments are due.