Fellow-Citizens of the Senate and House of Representatives:

We have reason to renew the expression of our devout gratitude to the Giver
of All Good for His benign protection. Our country presents on every side
the evidences of that continued favor under whose auspices it, has
gradually risen from a few feeble and dependent colonies to a prosperous
and powerful confederacy. We are blessed with domestic tranquillity and all
the elements of national prosperity. The pestilence which, invading for a
time some flourishing portions of the Union, interrupted the general
prevalence of unusual health has happily been limited in extent and
arrested in its fatal career. The industry and prudence of our citizens are
gradually relieving them from the pecuniary embarrassments under which
portions of them have labored; judicious legislation and the natural and
boundless resources of the country have afforded wise end timely aid to
private enterprise, and the activity always characteristic of our people
has already in a great degree resumed its usual and profitable channels.

The condition of our foreign relations has not materially changed since the
last annual message of my predecessor. We remain at peace with all nations,
and no efforts on my part consistent with the preservation of our rights
and the honor of the country shall be spared to maintain a position so
consonant to our institutions. We have faithfully sustained the foreign
policy with which the United States, under the guidance of their first
President, took their stand in the family of nations--that of regulating
their intercourse with other powers by the approved principles of private
life; asking and according equal rights and equal privileges; rendering and
demanding justice in all cases; advancing their own and discussing the
pretensions of others with candor, directness, and sincerity; appealing at
all times to reason, but never yielding to force nor seeking to acquire
anything for themselves by its exercise.

A rigid adherence to this policy has left this Government with scarcely a
claim upon its justice for injuries arising from acts committed by its
authority. The most imposing and perplexing of those of the United States
upon foreign governments for aggressions upon our citizens were disposed of
by my predecessor. Independently of the benefits conferred upon our
citizens by restoring to the mercantile community so many millions of which
they had been wrongfully divested, a great service was also rendered to his
country by the satisfactory adjustment of so many ancient and irritating
subjects of contention; and it reflects no ordinary credit on his
successful administration of public affairs that this great object was
accomplished without compromising on any occasion either the honor or the
peace of the nation.

With European powers no new subjects of difficulty have arisen, and those
which were under discussion, although not terminated, do not present a more
unfavorable aspect for the future preservation of that good understanding
which it has ever been our desire to cultivate.

Of pending questions the most important is that which exists with the
Government of Great Britain in respect to our northeastern boundary. It is
with unfeigned regret that the people of the United States must look back
upon the abortive efforts made by the Executive, for a period of more than
half a century, to determine what no nation should suffer long to remain in
dispute--the true line which divides its possessions from those of other
powers. The nature of the settlements on the borders of the United States
and of the neighboring territory was for a season such that this, perhaps,
was not indispensable to a faithful performance of the duties of the
Federal Government. Time has, however, changed this state of things, and
has brought about a condition of affairs in which the true interests of
both countries imperatively require that this question should be put at
rest. It is not to be disguised that, with full confidence, often
expressed, in the desire of the British Government to terminate it, we are
apparently as far from its adjustment as we were at the time of signing the
treaty of peace in 1783. The sole result of long-pending negotiations and a
perplexing arbitration appears to be a conviction on its part that a
conventional line must be adopted, from the impossibility of ascertaining
the true one according to the description contained in that treaty. Without
coinciding in this opinion, which is not thought to be well rounded, my
predecessor gave the strongest proof of the earnest desire of the United
States to terminate satisfactorily this dispute by proposing the
substitution of a conventional line if the consent of the States interested
in the question could be obtained. To this proposition no answer has as yet
been received. The attention of the British Government has, however, been
urgently invited to the subject, and its reply can not, I am confident, be
much longer delayed. The general relations between Great Britain and the
United States are of the most friendly character, and I am well satisfied
of the sincere disposition of that Government to maintain them upon their
present footing. This disposition has also, I am persuaded, become more
general with the people of England than at any previous period. It is
scarcely necessary to say to you how cordially it is reciprocated by the
Government and people of the United States. The conviction, which must be
common to all, of the injurious consequences that result from keeping open
this irritating question, and the certainty that its final settlement can
not be much longer deferred, will, I trust, lead to an early and
satisfactory adjustment. At your last session I laid before you the recent
communications between the two Governments and between this Government and
that of the State of Maine, in whose solicitude concerning a subject in
which she has so deep an interest every portion of the Union participates.

The feelings produced by a temporary interruption of those harmonious
relations between France and the United States which are due as well to the
recollections of former times as to a correct appreciation of existing
interests have been happily succeeded by a cordial disposition on both
sides to cultivate an active friendship in their future intercourse. The
opinion, undoubtedly correct, and steadily entertained by us, that the
commercial relations at present existing between the two countries are
susceptible of great and reciprocally beneficial improvements is obviously
gaining ground in France, and I am assured of the disposition of that
Government to favor the accomplishment of such an object. This disposition
shall be met in a proper spirit on our part. The few and comparatively
unimportant questions that remain to be adjusted between us can, I have no
doubt, be settled with entire satisfaction and without difficulty.

Between Russia and the United States sentiments of good will continue to be
mutually cherished. Our minister recently accredited to that Court has been
received with a frankness and cordiality and with evidences of respect for
his country which leave us no room to doubt the preservation in future of
those amicable and liberal relations which have so long and so
uninterruptedly existed between the two countries. On the few subjects
under discussion between us an early and just decision is confidently
anticipated.

A correspondence has been opened with the Government of Austria for the
establishment of diplomatic relations, in conformity with the wishes of
Congress as indicated by an appropriation act of the session of 1837, and
arrangements made for the purpose, which will be duly carried into effect.

With Austria and Prussia and with the States of the German Empire (now
composing with the latter the Commercial League) our political relations
are of the most friendly character, whilst our commercial intercourse is
gradually extending, with benefit to all who are engaged in it.

Civil war yet rages in Spain, producing intense suffering to its own
people, and to other nations inconvenience and regret. Our citizens who
have claims upon that country will be prejudiced for a time by the
condition of its treasury, the inevitable consequence of long-continued and
exhausting internal wars. The last installment of the interest of the debt
due under the convention with the Queen of Spain has not been paid and
similar failures may be expected to happen until a portion of the resources
of her Kingdom can be devoted to the extinguishment of its foreign debt.

Having received satisfactory evidence that discriminating tonnage duties
were charged upon the vessels of the United States in the ports of
Portugal, a proclamation was issued on the 11th day of October last, in
compliance with the act of May 25, 1832, declaring that fact, and the
duties on foreign tonnage which were levied upon Portuguese vessels in the
United States previously to the passage of that act are accordingly
revived.

The act of July 4, 1836, suspending the discriminating duties upon the
produce of Portugal imported into this country in Portuguese vessels, was
passed, upon the application of that Government through its representative
here, under the belief that no similar discrimination existed in Portugal
to the prejudice of the United States. I regret to state that such duties
are now exacted in that country upon the cargoes of American vessels, and
as the act referred to vests no discretion in the Executive, it is for
Congress to determine upon the expediency of further legislation on the
subject. Against these discriminations affecting the vessels of this
country and their cargoes seasonable remonstrance was made, and notice was
given to the Portuguese Government that unless they should be discontinued
the adoption of countervailing measures on the part of the United States
would become necessary; but the reply of that Government, received at the
Department of State through our charge d'affaires at Lisbon in the month of
September last, afforded no ground to hope for the abandonment of a system
so little in harmony with the treatment shown to the vessels of Portugal
and their cargoes in the ports of this country and so contrary to the
expectations we had a right to entertain.

With Holland, Sweden, Denmark, Naples, and Belgium a friendly intercourse
has been uninterruptedly maintained.

With the Government of the Ottoman Porte and its dependencies on the coast
of the Mediterranean peace and good will are carefully cultivated, and have
been fostered by such good offices as the relative distance and the
condition of those countries would permit.

Our commerce with Greece is carried on under the laws of the two
Governments, reciprocally beneficial to the navigating interests of both;
and I have reason to look forward to the adoption of other measures which
will be more extensively and permanently advantageous.

Copies of the treaties concluded with the Governments of Siam and Muscat
are transmitted for the information of Congress, the ratifications having
been received and the treaties made public since the close of the last
annual session. Already have we reason to congratulate ourselves on the
prospect of considerable commercial benefit; and we have, besides, received
from the Sultan of Muscat prompt evidence of his desire to cultivate the
most friendly feelings, by liberal acts toward one of our vessels, bestowed
in a manner so striking as to require on our part a grateful
acknowledgment.

Our commerce with the islands of Cuba and Porto Rico still labors under
heavy restrictions, the continuance of which is a subject of regret. The
only effect of an adherence to them will be to benefit the navigation of
other countries at the expense of both the United States and Spain.

The independent nations of this continent have ever since they emerged from
the colonial state experienced severe trials in their progress to the
permanent establishment of liberal political institutions. Their unsettled
condition not only interrupts their own advances to prosperity, but has
often seriously injured the other powers of the world. The claims of our
citizens upon Peru, Chili, Brazil, the Argentine Republic, the Governments
formed out of the Republics of Colombia and Mexico, are still pending,
although many of them have been presented for examination more than twenty
years. New Granada, Venezuela, and Ecuador have recently formed a
convention for the purpose of ascertaining and adjusting claims upon the
Republic of Colombia, from which it is earnestly hoped our citizens will
ere long receive full compensation for the injuries inflicted upon them and
for the delay in affording it.

An advantageous treaty of commerce has been concluded by the United States
with the Peru-Bolivian Confederation, which wants only the ratification of
that Government. The progress of a subsequent negotiation for the
settlement of claims upon Peru has been unfavorably affected by the war
between that power and Chili and the Argentine Republic, and the same event
is also likely to produce delays in the settlement of out demands on those
powers.

The aggravating circumstances connected with our claims upon Mexico and a
variety of events touching the honor and integrity of our Government led my
predecessor to make at the second session of the last Congress a special
recommendation of the course to be pursued to obtain a speedy and final
satisfaction of the injuries complained of by this Government and by our
citizens. He recommended a final demand of redress, with a contingent
authority to the Executive to make reprisals if that demand should be made
in vain. From the proceedings of Congress on that recommendation it
appeared that the opinion of both branches of the Legislature coincided
with that of the Executive, that any mode of redress known to the law of
nations might justifiably be used. It was obvious, too, that Congress
believed with the President that another demand should be made, in order to
give undeniable and satisfactory proof of our desire to avoid extremities
with a neighboring power, but that there was an indisposition to vest a
discretionary authority in the Executive to take redress should it
unfortunately be either denied or unreasonably delayed by the Mexican
Government.

So soon as the necessary documents were prepared, after entering upon the
duties of my office, a special messenger was sent to Mexico to make a final
demand of redress, with the documents required by the provisions of our
treaty. The demand was made on the 20th of July last. The reply, which
bears date the 29th of the same month, contains assurances of a desire on
the part of that Government to give a prompt and explicit answer respecting
each of the complaints, but that the examination of them would necessarily
be deliberate; that in this examination it would be guided by the
principles of public law and the obligation of treaties; that nothing
should be left undone that might lead to the most speedy and equitable
adjustment of our demands, and that its determination in respect to each
case should be communicated through the Mexican minister here.

Since that time an envoy extraordinary and minister plenipotentiary has
been accredited to this Government by that of the Mexican Republic. He
brought with him assurances of a sincere desire that the pending
differences between the two Governments should be terminated in a manner
satisfactory to both. He was received with reciprocal assurances, and a
hope was entertained that his mission would lead to a speedy, satisfactory,
and final adjustment of all existing subjects of complaint. A sincere
believer in the wisdom of the pacific policy by which the United States
have always been governed in their intercourse with foreign nations, it was
my particular desire, from the proximity of the Mexican Republic and
well-known occurrences on our frontier, to be instrumental in obviating all
existing difficulties with that Government and in restoring to the
intercourse between the two Republics that liberal and friendly character
by which they should always be distinguished. I regret, therefore, the more
deeply to have found in the recent communications of that Government so
little reason to hope that any future efforts of mine for the
accomplishment of those desirable objects would be successful.

Although the larger number--and many of them aggravated cases of personal
wrongs--have been now for years before the Mexican Government, and some of
the causes of national complaint, and those of the most offensive
character, admitted of immediate, simple, and satisfactory replies, it is
only within a few days past that any specific communication in answer to
our last demand, made five months ago, has been received from the Mexican
minister. By the report of the Secretary of State herewith presented and
the accompanying documents it will be seen that for not one of our public
complaints has satisfaction been given or offered, that but one of the
cases of personal wrong has been favorably considered, and that but four
cases of both descriptions out of all those formally presented and
earnestly pressed have as yet been decided upon by the Mexican Government.

Not perceiving in what manner any of the powers given to the Executive
alone could be further usefully employed in bringing this unfortunate
controversy to a satisfactory termination, the subject was by my
predecessor referred to Congress as one calling for its interposition. In
accordance with the clearly understood wishes of the Legislature, another
and formal demand for satisfaction has been made upon the Mexican
Government, with what success the documents now communicated will show. On
a careful and deliberate examination of their contents, and considering the
spirit manifested by the Mexican Government, it has become my painful duty
to return the subject as it now stands to Congress, to whom it belongs to
decide upon the time, the mode, and the measure of redress. Whatever may be
your decision, it shall be faithfully executed, confident that it will be
characterized by that moderation and justice which will, I trust, under all
circumstances govern the councils of our country.

The balance in the Treasury on the 1st January, 1837, was $45,968,523. The
receipts during the present year from all sources, including the amount of
Treasury notes issued, are estimated at $23,499,981, constituting an
aggregate of $69,468,504. Of this amount about $35,281,361 will have been
expended at the end of the year on appropriations made by Congress, and the
residue, amounting to $34,187,143, will be the nominal balance in the
Treasury on the 1st of January next; but of that sum only $1,085,498 is
considered as immediately available for and applicable to public purposes.
Those portions of it which will be for some time unavailable consist
chiefly of sums deposited with the States and due from the former deposit
banks. The details upon this subject will be found in the annual report of
the Secretary of the Treasury. The amount of Treasury notes which it will
be necessary to issue during the year on account of those funds being
unavailable will, it is supposed, not exceed four and a half millions. It
seemed proper, in the condition of the country, to have the estimates on
all subjects made as low as practicable without prejudice to any great
public measures. The Departments were therefore desired to prepare their
estimates accordingly, and I am happy to find that they have been able to
graduate them on so economical a scale. In the great and often unexpected
fluctuations to which the revenue is subjected it is not possible to
compute the receipts beforehand with great certainty, but should they not
differ essentially from present anticipations, and should the
appropriations not much exceed the estimates, no difficulty seems likely to
happen in defraying the current expenses with promptitude and fidelity.

Notwithstanding the great embarrassments which have recently occurred in
commercial affairs, and the liberal indulgence which in consequence of
these embarrassments has been extended to both the merchants and the banks,
it is gratifying to be able to anticipate that the Treasury notes which
have been issued during the present year will be redeemed and that the
resources of the Treasury, without any resort to loans or increased taxes,
will prove ample for defraying all charges imposed on it during 1838.

The report of the Secretary of the Treasury will afford you a more minute
exposition of all matters connected with the administration of the finances
during the current year--a period which for the amount of public moneys
disbursed and deposited with the States, as well as the financial
difficulties encountered and overcome, has few parallels in our history.

Your attention was at the last session invited to the necessity of
additional legislative provisions in respect to the collection,
safe-keeping, and transfer of the public money. No law having been then
matured, and not understanding the proceedings of Congress as intended to
be final, it becomes my duty again to bring the subject to your notice.

On that occasion three modes of performing this branch of the public
service were presented for consideration. These were, the creation of a
national bank; the revival, with modifications, of the deposit system
established by the act of the 23d of June, 1836, permitting the use of the
public moneys by the banks; and the discontinuance of the use of such
institutions for the purposes referred to, with suitable provisions for
their accomplishment through the agency of public officers. Considering the
opinions of both Houses of Congress on the first two propositions as
expressed in the negative, in which I entirely concur, it is unnecessary
for me again in to recur to them. In respect to the last, you have had an
opportunity since your adjournment not only to test still further the
expediency of the measure by the continued practical operation of such
parts of it as are now in force, but also to discover what should ever be
sought for and regarded with the utmost deference--the opinions and wishes
of the people.

The national will is the supreme law of the Republic, and on all subjects
within the limits of his constitutional powers should be faithfully obeyed
by the public servant. Since the measure in question was submitted to your
consideration most of you have enjoyed the advantage of personal
communication with your constituents. For one State only has an election
been held for the Federal Government; but the early day at which it took
place deprived the measure under consideration of much of the support it
might otherwise have derived from the result. Local elections for State
officers have, however, been held in several of the States, at which the
expediency of the plan proposed by the Executive has been more or less
discussed. You will, I am confident, yield to their results the respect due
to every expression of the public voice. Desiring, however, to arrive at
truth and a just view of the subject in all its bearings, you will at the
same time remember that questions of far deeper and more immediate local
interest than the fiscal plans of the National Treasury were involved in
those elections. Above all, we can not overlook the striking fact that
there were at the time in those States more than one hundred and sixty
millions of bank capital, of which large portions were subject to actual
forfeiture, other large portions upheld only by special and limited
legislative indulgences, and most of it, if not all, to a greater or less
extent dependent for a continuance of its corporate existence upon the will
of the State legislatures to be then chosen. Apprised of this circumstance,
you will judge whether it is not most probable that the peculiar condition
of that vast interest in these respects, the extent to which it has been
spread through all the ramifications of society, its direct connection with
the then pending elections, and the feelings it was calculated to infuse
into the canvass have exercised a far greater influence over the result
than any which could possibly have been produced by a conflict of opinion
in respect to a question in the administration of the General Government
more remote and far less important in its bearings upon that interest.

I have found no reason to change my own opinion as to the expediency of
adopting the system proposed, being perfectly satisfied that there will be
neither stability nor safety either in the fiscal affairs of the Government
or in the pecuniary transactions of individuals and corporations so long as
a connection exists between them which, like the past, offers such strong
inducements to make them the subjects of political agitation. Indeed, I am
more than ever convinced of the dangers to which the free and unbiased
exercise of political opinion--the only sure foundation and safeguard of
republican government--would be exposed by any further increase of the
already overgrown influence of corporate authorities. I can not, therefore,
consistently with my views of duty, advise a renewal of a connection which
circumstances have dissolved.

The discontinuance of the use of State banks for fiscal purposes ought not
to be regarded as a measure of hostility toward those institutions. Banks
properly established and conducted are highly useful to the business of the
country, and will doubtless continue to exist in the States so long as they
conform to their laws and are found to be safe and beneficial. How they
should be created, what privileges they should enjoy, under what
responsibilities they should act, and to what restrictions they should be
subject are questions which, as I observed on a previous occasion, belong
to the States to decide. Upon their rights or the exercise of them the
General Government can have no motive to encroach. Its duty toward them is
well performed when it refrains from legislating for their special benefit,
because such legislation would violate the spirit of the Constitution and
be unjust to other interests; when it takes no steps to impair their
usefulness, but so manages its own affairs as to make it the interest of
those institutions to strengthen and improve their condition for the
security and welfare of the community at large. They have no right to
insist on a connection with the Federal Government, nor on the use of the
public money for their own benefit. The object of the measure under
consideration is to avoid for the future a compulsory connection of this
kind. It proposes to place the General Government, in regard to the
essential points of the collection, safe-keeping, and transfer of the
public money, in a situation which shall relieve it from all dependence on
the will of irresponsible individuals or corporations; to withdraw those
moneys from the uses of private trade and confide them to agents
constitutionally selected and controlled by law; to abstain from improper
interference with the industry of the people and withhold inducements to
improvident dealings on the part of individuals; to give stability to the
concerns of the Treasury; to preserve the measures of the Government from
the unavoidable reproaches that flow from such a connection, and the banks
themselves from the injurious effects of a supposed participation in the
political conflicts of the day, from which they will otherwise find it
difficult to escape.

These are my views upon this important subject, formed after careful
reflection and with no desire but to arrive at what is most likely to
promote the public interest. They are now, as they were before, submitted
with unfeigned deference for the opinions of others. It was hardly to be
hoped that changes so important on a subject so interesting could be made
without producing a serious diversity of opinion; but so long as those
conflicting views are kept above the influence of individual or local
interests, so long as they pursue only the general good and are discussed
with moderation and candor, such diversity is a benefit, not an injury. If
a majority of Congress see the public welfare in a different light, and
more especially if they should be satisfied that the measure proposed would
not be acceptable to the people, I shall look to their wisdom to substitute
such as may be more conducive to the one and more satisfactory to the
other. In any event, they may confidently rely on my hearty cooperation to
the fullest extent to which my views of the Constitution and my sense of
duty will permit.

It is obviously important to this branch of the public service and to the
business and quiet of the country that the whole subject should in some way
be settled and regulated by law, and, if possible, at your present session.
Besides the plans above referred to, I am not aware that any one has been
suggested except that of keeping the public money in the State banks in
special deposit. This plan is to some extent in accordance with the
practice of the Government and with the present arrangements of the
Treasury Department, which, except, perhaps, during the operation of the
late deposit act, has always been allowed, even during the existence of a
national bank, to make a temporary use of the State banks in particular
places for the safe-keeping of portions of the revenue. This discretionary
power might be continued if Congress deem it desirable, whatever general
system be adopted. So long as the connection is voluntary we need, perhaps,
anticipate few of those difficulties and little of that dependence on the
banks which must attend every such connection when compulsory in its nature
and when so arranged as to make the banks a fixed part of the machinery of
government. It is undoubtedly in the power of Congress so to regulate and
guard it as to prevent the public money from being applied to the use or
intermingled with the affairs of individuals. Thus arranged, although it
would not give to the Government that entire control over its own funds
which I desire to secure to it by the plan I have proposed, it would, it
must be admitted, in a great degree accomplish one of the objects which has
recommended that plan to my judgment--the separation of the fiscal concerns
of the Government from those of individuals or corporations.

With these observations I recommend the whole matter to your dispassionate
reflection, confidently hoping that some conclusion may be reached by your
deliberations which on the one hand shall give safety and stability to the
fiscal operations of the Government, and be consistent, on the other, with
the genius of our institutions and with the interests and wishes of the
great mass of our constituents.

It was my hope that nothing would occur to make necessary on this occasion
any allusion to the late national bank. There are circumstances, however,
connected with the present state of its affairs that bear so directly on
the character of the Government and the welfare of the citizen that I
should not feel myself excused in neglecting to notice them. The charter
which terminated its banking privileges on the 4th of March, 1836,
continued its corporate power two years more for the sole purpose of
closing its affairs, with authority "to use the corporate name, style, and
capacity for the purpose of suits for a final settlement and liquidation of
the affairs and acts of the corporation, and for the sale and disposition
of their estate--real, personal, and mixed--but for no other purpose or in
any other manner whatsoever." Just before the banking privileges ceased,
its effects were transferred by the bank to a new State institution, then
recently incorporated, in trust, for the discharge of its debts and the
settlement of its affairs. With this trustee, by authority of Congress, an
adjustment was subsequently made of the large interest which the Government
had in the stock of the institution. The manner in which a trust
unexpectedly created upon the act granting the charter, and involving such
great public interests, has been executed would under any circumstances be
a fit subject of inquiry; but much more does it deserve your attention when
it embraces the redemption of obligations to which the authority and credit
of the United States have given value. The two years allowed are now nearly
at an end. It is well understood that the trustee has not redeemed and
canceled the outstanding notes of the bank, but has reissued and is
actually reissuing, since the 3d of March, 1836, the notes which have been
received by it to a vast amount. According to its own official statement,
so late as the 1st of October last, nineteen months after the banking
privileges given by the charter had expired, it had under its control
uncanceled notes of the late Bank of the United States to the amount of
$27,561,866, of which $6,175,861 were in actual circulation, $ 1,468,627 at
State bank agencies, and $3,002,390 in transitu, thus showing that upward
of ten millions and a half of the notes of the old bank were then still
kept outstanding.

The impropriety of this procedure is obvious, it being the duty of the
trustee to cancel and not to put forth the notes of an institution whose
concerns it had undertaken to wind up. If the trustee has a right to
reissue these notes now, I can see no reason why it may not continue to do
so after the expiration of the two years. As no one could have anticipated
a course so extraordinary, the prohibitory clause of the charter above
quoted was not accompanied by any penalty or other special provision for
enforcing it, nor have we any general law for the prevention of similar
acts in future.

But it is not in this view of the subject alone that your interposition is
required. The United States in settling with the trustee for their stock
have withdrawn their funds from their former direct liability to the
creditors of the old bank, yet notes of the institution continue to be sent
forth in its name, and apparently upon the authority of the United States.
The transactions connected with the employment of the bills of the old bank
are of vast extent, and should they result unfortunately the interests of
individuals may be deeply compromised. Without undertaking to decide how
far or in what form, if any, the trustee could be made liable for notes
which contain no obligation on its part, or the old bank for such as are
put in circulation after the expiration of its charter and without its
authority, or the Government for indemnity in case of loss, the question
still presses itself upon your consideration whether it is consistent with
duty and good faith on the part of the Government to witness this
proceeding without a single effort to arrest it.

The report of the Commissioner of the General Land Office, which will be
laid before you by the Secretary of the Treasury, will show how the affairs
of that office have been conducted for the past year. The disposition of
the public lands is one of the most important trusts confided to Congress.
The practicability of retaining the title and control of such extensive
domains in the General Government, and at the same time admitting the
Territories embracing them into the Federal Union as coequals with the
original States, was seriously doubted by many of our wisest statesmen. All
feared that they would become a source of discord, and many carried their
apprehensions so far as to see in them the seeds of a future dissolution of
the Confederacy. But happily our experience has already been sufficient to
quiet in a great degree all such apprehensions. The position at one time
assumed, that the admission of new States into the Union on the same
footing with the original States was incompatible with a right of soil in
the United States and operated as a surrender thereof, notwithstanding the
terms of the compacts by which their admission was designed to be
regulated, has been wisely abandoned. Whether in the new or the old States,
all now agree that the right of soil to the public lands remains in the
Federal Government, and that these lands constitute a common property, to
be disposed of for the common benefit of all the States, old and new.
Acquiescence in this just principle by the people of the new States has
naturally promoted a disposition to adopt the most liberal policy in the
sale of the public lands. A policy which should be limited to the mere
object of selling the lands for the greatest possible sum of money, without
regard to higher considerations, finds but few advocates. On the contrary,
it is generally conceded that whilst the mode of disposition adopted by the
Government should always be a prudent one, yet its leading object ought to
be the early settlement and cultivation of the lands sold, and that it
should discountenance, if it can not prevent, the accumulation of large
tracts in the same hands, which must necessarily retard the growth of the
new States or entail upon them a dependent tenantry and its attendant
evils.

A question embracing such important interests and so well calculated to
enlist the feelings of the people in every quarter of the Union has very
naturally given rise to numerous plans for the improvement of the existing
system. The distinctive features of the policy that has hitherto prevailed
are to dispose of the public lands at moderate prices, thus enabling a
greater number to enter into competition for their purchase and
accomplishing a double object--of promoting their rapid settlement by the
purchasers and at the same time increasing the receipts of the Treasury; to
sell for cash, thereby preventing the disturbing influence of a large mass
of private citizens indebted to the Government which they have a voice in
controlling; to bring them into market no faster than good lands are
supposed to be wanted for improvement, thereby preventing the accumulation
of large tracts in few hands; and to apply the proceeds of the sales to the
general purposes of the Government, thus diminishing the amount to be
raised from the people of the States by taxation and giving each State its
portion of the benefits to be derived from this common fund in a manner the
most quiet, and at the same time, perhaps, the most equitable, that can be
devised. These provisions, with occasional enactments in behalf of special
interests deemed entitled to the favor of the Government, have in their
execution produced results as beneficial upon the whole as could reasonably
be expected in a matter so vast, so complicated, and so exciting. Upward of
70,000,000, acres have been sold, the greater part of which is believed to
have been purchased for actual settlement. The population of the new States
and Territories created out of the public domain increased between 1800 and
1830 from less than 60,000 to upward of 2,300,000 souls, constituting at
the latter period about one-fifth of the whole people of the United States.
The increase since can not be accurately known, but the whole may now be
safely estimated at over three and a half millions of souls, composing nine
States, the representatives of which constitute above one-third of the
Senate and over one-sixth of the House of Representatives of the United
States.

Thus has been formed a body of free and independent landholders with a
rapidity unequaled in the history of mankind; and this great result has
been produced without leaving anything for future adjustment between the
Government and its citizens. The system under which so much has been
accomplished can not be intrinsically bad, and with occasional
modifications to correct abuses and adapt it to changes of circumstances
may, I think, be safely trusted for the future. There is in the management
of such extensive interests much virtue in stability; and although great
and obvious improvements should not be declined, changes should never be
made without the fullest examination and the clearest demonstration of
their practical utility. In the history of the past we have an assurance
that this safe rule of action will not be departed from in relation to the
public lands; nor is it believed that any necessity exists for interfering
with the fundamental principles of the system, or that the public mind,
even in the new States, is desirous of any radical alterations. On the
contrary, the general disposition appears to be to make such modifications
and additions only as will the more effectually carry out the original
policy of filling our new States and Territories with an industrious and
independent population.

The modification most perseveringly pressed upon Congress, which has
occupied so much of its time for years past, and will probably do so for a
long time to come, if not sooner satisfactorily adjusted, is a reduction in
the cost of such portions of the public lands as are ascertained to be
unsalable at the rate now established by law, and a graduation according to
their relative value of the prices at which they may hereafter be sold. It
is worthy of consideration whether justice may not be done to every
interest in this matter, and a vexed question set at rest, perhaps forever,
by a reasonable compromise of conflicting opinions. Hitherto, after being
offered at public sale, lands have been disposed of at one uniform price,
whatever difference there might be in their intrinsic value. The leading
considerations urged in favor of the measure referred to are that in almost
all the land districts, and particularly in those in which the lands have
been long surveyed and exposed to sale, there are still remaining numerous
and large tracts of every gradation of value, from the Government price
downward; that these lands will not be purchased at the Government price so
long as better can be conveniently obtained for the same amount; that there
are large tracts which even the improvements of the adjacent lands will
never raise to that price, and that the present uniform price, combined
with their irregular value, operates to prevent a desirable compactness of
settlements in the new States and to retard the full development of that
wise policy on which our land system is founded, to the injury not only of
the several States where the lands lie, but of the United States as a
whole.

The remedy proposed has been a reduction of the prices according to the
length of time the lands have been in market, without reference to any
other circumstances. The certainty that the efflux of time would not always
in such cases, and perhaps not even generally, furnish a true criterion of
value, and the probability that persons residing in the vicinity, as the
period for the reduction of prices approached, would postpone purchases
they would otherwise make, for the purpose of availing themselves of the
lower price, with other considerations of a similar character, have
hitherto been successfully urged to defeat the graduation upon time.

May not all reasonable desires upon this subject be satisfied without
encountering any of these objections? All will concede the abstract
principle that the price of the public lands should be proportioned to
their relative value, so far as can be accomplished without departing from
the rule heretofore observed requiring fixed prices in cases of private
entries. The difficulty of the subject seems to lie in the mode of
ascertaining what that value is. Would not the safest plan be that which
has been adopted by many of the States as the basis of taxation--an actual
valuation of lands and classification of them into different rates? Would
it not be practicable and expedient to cause the relative value of the
public lands in the old districts which have been for a certain length of
time in market to be appraised and classed into two or more rates below the
present minimum price by the officers now employed in this branch of the
public service or in any other mode deemed preferable, and to make those
prices permanent if upon the coming in of the report they shall prove
satisfactory to Congress? Could not all the objects of graduation be
accomplished in this way, and the objections which have hitherto been urged
against it avoided? It would seem to me that such a step, with a
restriction of the sales to limited quantities and for actual improvement,
would be free from all just exception.

By the full exposition of the value of the lands thus furnished and
extensively promulgated persons living at a distance would be informed of
their true condition and enabled to enter into competition with those
residing in the vicinity; the means of acquiring an independent home would
be brought within the reach of many who are unable to purchase at present
prices; the population of the new States would be made more compact, and
large tracts would be sold which would otherwise remain on hand. Not only
would the land be brought within the means of a larger number of
purchasers, but many persons possessed of greater means would be content to
settle on a larger quantity of the poorer lands rather than emigrate
farther west in pursuit of a smaller quantity of better lands. Such a
measure would also seem to be more consistent with the policy of the
existing laws--that of converting the public domain into cultivated farms
owned by their occupants. That policy is not best promoted by sending
emigration up the almost interminable streams of the West to occupy in
groups the best spots of land, leaving immense wastes behind them and
enlarging the frontier beyond the means of the Government to afford it
adequate protection, but in encouraging it to occupy with reasonable
denseness the territory over which it advances, and find its best defense
in the compact front which it presents to the Indian tribes. Many of you
will bring to the consideration of the subject the advantages of local
knowledge and greater experience, and all will be desirous of making an
early and final disposition of every disturbing question in regard to this
important interest. If these suggestions shall in any degree contribute to
the accomplishment of so important a result, it will afford me sincere
satisfaction.

In some sections of the country most of the public lands have been sold,
and the registers and receivers have very little to do. It is a subject
worthy of inquiry whether in many cases two or more districts may not be
consolidated and the number of persons employed in this business
considerably reduced. Indeed, the time will come when it will be the true
policy of the General Government, as to some of the States, to transfer to
them for a reasonable equivalent all the refuse and unsold lands and to
withdraw the machinery of the Federal land offices altogether. All who take
a comprehensive view of our federal system and believe that one of its
greatest excellencies consists in interfering as little as possible with
the internal concerns of the States look forward with great interest to
this result.

A modification of the existing laws in respect to the prices of the public
lands might also have a favorable influence on the legislation of Congress
in relation to another branch of the subject. Many who have not the ability
to buy at present prices settle on those lands with the hope of acquiring
from their cultivation the means of purchasing under preemption laws from
time to time passed by Congress. For this encroachment on the rights of the
United States they excuse themselves under the plea of their own
necessities; the fact that they dispossess nobody and only enter upon the
waste domain: that they give additional value to the public lands in their
vicinity, and their intention ultimately to pay the Government price. So
much weight has from time to time been attached to these considerations
that Congress have passed laws giving actual settlers on the public lands a
right of preemption to the tracts occupied by them at the minimum price.
These laws have in all instances been retrospective in their operation, but
in a few years after their passage crowds of new settlers have been found
on the public lands for similar reasons and under like expectations, who
have been indulged with the same privilege. This course of legislation
tends to impair public respect for the laws of the country. Either the laws
to prevent intrusion upon the public lands should be executed, or, if that
should be impracticable or inexpedient, they should be modified or
repealed. If the public lands are to be considered as open to be occupied
by any, they should by law be thrown open to all. That which is intended in
all instances to be legalized should at once be made legal, that those who
are disposed to conform to the laws may enjoy at least equal privileges
with those who are not. But it is not believed to be the disposition of
Congress to open the public lands to occupancy without regular entry and
payment of the Government price, as such a course must tend to worse evils
than the credit system, which it was found necessary to abolish.

It would seem, therefore, to be the part of wisdom and sound policy to
remove as far as practicable the causes which produce intrusions upon the
public lands, and then take efficient steps to prevent them in future.
Would any single measure be so effective in removing all plausible grounds
for these intrusions as the graduation of price already suggested? A short
period of industry and economy in any part of our country would enable the
poorest citizen to accumulate the means to buy him a home at the lower
prices, and leave him without apology for settling on lands not his own. If
he did not under such circumstances, he would enlist no sympathy in his
favor, and the laws would be readily executed without doing violence to
public opinion.

A large portion of our citizens have seated themselves on the public lands
without authority since the passage of the last preemption law, and now ask
the enactment of another to enable them to retain the lands occupied upon
payment of the minimum Government price. They ask that which has been
repeatedly granted before. If the future may be judged of by the past,
little harm can be done to the interests of the Treasury by yielding to
their request. Upon a critical examination it is found that the lands sold
at the public sales since the introduction of cash payments, in 1820, have
produced on an average the net revenue of only 6 cents an acre more than
the minimum Government price. There is no reason to suppose that future
sales will be more productive. The Government, therefore, has no adequate
pecuniary interest to induce it to drive these people from the lands they
occupy for the purpose of selling them to others.

Entertaining these views, I recommend the passage of a preemption law for
their benefit in connection with the preparatory steps toward the
graduation of the price of the public lands, and further and more effectual
provisions to prevent intrusions hereafter. Indulgence to those who have
settled on these lands with expectations that past legislation would be
made a rule for the future, and at the same time removing the most
plausible ground on which intrusions are excused and adopting more
efficient means to prevent them hereafter, appears to me the most judicious
disposition which can be made of this difficult subject. The limitations
and restrictions to guard against abuses in the execution of a preemption
law will necessarily attract the careful attention of Congress, but under
no circumstances is it considered expedient to authorize floating claims in
any shape. They have been heretofore, and doubtless would be hereafter,
most prolific sources of fraud and oppression, and instead of operating to
confer the favor of the Government on industrious settlers are often used
only to minister to a spirit of cupidity at the expense of the most
meritorious of that class.

The accompanying report of the Secretary of War will bring to your view the
state of the Army and all the various subjects confided to the
superintendence of that officer.

The principal part of the Army has been concentrated in Florida, with a
view and in the expectation of bringing the war in that Territory to a
speedy close. The necessity of stripping the posts on the maritime and
inland frontiers of their entire garrisons for the purpose of assembling in
the field an army of less than 4,000 men would seem to indicate the
necessity of increasing our regular forces; and the superior efficiency, as
well as greatly diminished expense of that description of troops, recommend
this measure as one of economy as well as of expediency. I refer to the
report for the reasons which have induced the Secretary of War to urge the
reorganization and enlargement of the staff of the Army, and of the
Ordnance Corps, in which I fully concur.

It is not, however, compatible with the interests of the people to maintain
in time of peace a regular force adequate to the defense of our extensive
frontiers. In periods of danger and alarm we must rely principally upon a
well-organized militia, and some general arrangement that will render this
description of force more efficient has long been a subject of anxious
solicitude. It was recommended to the First Congress by General Washington,
and has been since frequently brought to your notice, and recently its
importance strongly urged by my immediate predecessor. The provision in the
Constitution that renders it necessary to adopt a uniform system of
organization for the militia throughout the United States presents an
insurmountable obstacle to an efficient arrangement by the classification
heretofore proposed, and I invite your attention to the plan which will be
submitted by the Secretary of War, for the organization of volunteer corps
and the instruction of militia officers, as more simple and practicable, if
not equally advantageous, as a general arrangement of the whole militia of
the United States.

A moderate increase of the corps both of military and topographical
engineers has been more than once recommended by my predecessor, and my
conviction of the propriety, not to say necessity, of the measure, in order
to enable them to perform the various and important duties imposed upon
them, induces me to repeat the recommendation.

The Military Academy continues to answer all the purposes of its
establishment, and not only furnishes well-educated officers to the Army,
but serves to diffuse throughout the mass of our citizens individuals
possessed of military knowledge and the scientific attainments of civil and
military engineering. At present the cadet is bound, with consent of his
parents or guardians, to remain in service five years from the period of
his enlistment, unless sooner discharged, thus exacting only one year's
service in the Army after his education is completed. This does not appear
to me sufficient. Government ought to command for a longer period the
services of those who are educated at the public expense, and I recommend
that the time of enlistment be extended to seven years, and the terms of
the engagement strictly enforced.

The creation of a national foundry for cannon, to be common to the service
of the Army and Navy of the United States, has been heretofore recommended,
and appears to be required in order to place our ordnance on an equal
footing with that of other countries and to enable that branch of the
service to control the prices of those articles and graduate the supplies
to the wants of the Government, as well as to regulate their quality and
insure their uniformity. The same reasons induce me to recommend the
erection of a manufactory of gunpowder, to be under the direction of the
Ordnance Office. The establishment of a manufactory of small arms west of
the Alleghany Mountains, upon the plan proposed by the Secretary of War,
will contribute to extend throughout that country the improvements which
exist in establishments of a similar description in the Atlantic States,
and tend to a much more economical distribution of the armament required in
the western portion of our Union.

The system of removing the Indians west of the Mississippi, commenced by
Mr. Jefferson in 1804, has been steadily persevered in by every succeeding
President, and may be considered the settled policy of the country.
Unconnected at first with any well-defined system for their improvement,
the inducements held out to the Indians were confined to the greater
abundance of game to be found in the West; but when the beneficial effects
of their removal were made apparent a more philanthropic and enlightened
policy was adopted in purchasing their lands east of the Mississippi.
Liberal prices were given and provisions inserted in all the treaties with
them for the application of the funds they received in exchange to such
purposes as were best calculated to promote their present welfare and
advance their future civilization. These measures have been attended thus
far with the happiest results.

It will be seen by referring to the report of the Commissioner of Indian
Affairs that the most sanguine expectations of the friends and promoters of
this system have been realized. The Choctaws, Cherokees, and other tribes
that first emigrated beyond the Mississippi have for the most part
abandoned the hunter state and become cultivators of the soil. The
improvement in their condition has been rapid, and it is believed that they
are now fitted to enjoy the advantages of a simple form of government,
which has been submitted to them and received their sanction; and I can not
too strongly urge this subject upon the attention of Congress.

Stipulations have been made with all the Indian tribes to remove them
beyond the Mississippi, except with the bands of the Wyandots, the Six
Nations in New York, the Menomonees, Munsees, and Stockbridges in
Wisconsin, and Miamies in Indiana. With all but the Menomonees it is
expected that arrangements for their emigration will be completed the
present year. The resistance which has been opposed to their removal by
some of the tribes even after treaties had been made with them to that
effect has arisen from various causes, operating differently on each of
them. In most instances they have been instigated to resistance by persons
to whom the trade with them and the acquisition of their annuities were
important, and in some by the personal influence of interested chiefs.
These obstacles must be overcome, for the Government can not relinquish the
execution of this policy without sacrificing important interests and
abandoning the tribes remaining east of the Mississippi to certain
destruction.

The decrease in numbers of the tribes within the limits of the States and
Territories has been most rapid. If they be removed, they can be protected
from those associations and evil practices which exert so pernicious and
destructive an influence over their destinies. They can be induced to labor
and to acquire property, and its acquisition will inspire them with a
feeling of independence. Their minds can be cultivated, and they can be
taught the value of salutary and uniform laws and be made sensible of the
blessings of free government and capable of enjoying its advantages. In the
possession of property, knowledge, and a good government, free to give what
direction they please to their labor, and sharers in the legislation by
which their persons and the profits of their industry are to be protected
and secured, they will have an ever-present conviction of the importance of
union and peace among themselves and of the preservation of amicable
relations with us. The interests of the United States would also be greatly
promoted by freeing the relations between the General and State Governments
from what has proved a most embarrassing incumbrance by a satisfactory
adjustment of conflicting titles to lands caused by the occupation of the
Indians, and by causing the resources of the whole country to be developed
by the power of the State and General Governments and improved by the
enterprise of a white population.

Intimately connected with this subject is the obligation of the Government
to fulfill its treaty stipulations and to protect the Indians thus
assembled "at their new residences from all interruptions and disturbances
from any other tribes or nations of Indians or from any other person or
persons whatsoever," and the equally solemn obligation to guard from Indian
hostility its own border settlements, stretching along a line of more than
1,000 miles. To enable the Government to redeem this pledge to the Indians
and to afford adequate protection to its own citizens will require the
continual presence of a considerable regular force on the frontiers and the
establishment of a chain of permanent posts. Examinations of the country
are now making, with a view to decide on the most suitable points for the
erection of fortresses and other works of defense, the results of which
will be presented to you by the Secretary of War at an early day, together
with a plan for the effectual protection of the friendly Indians and the
permanent defense of the frontier States.

By the report of the Secretary of the Navy herewith communicated it appears
that unremitted exertions have been made at the different navy-yards to
carry into effect all authorized measures for the extension and employment
of our naval force. The launching and preparation of the ship of the line
Pennsylvania and the complete repairs of the ships of the line Ohio,
Delaware, and Columbus may be noticed as forming a respectable addition to
this important arm of our national defense. Our commerce and navigation
have received increased aid and protection during the present year. Our
squadrons in the Pacific and on the Brazilian station have been much
increased, and that in the Mediterranean, although small, is adequate to
the present wants of our commerce in that sea. Additions have been made to
our squadron on the West India station, where the large force under
Commodore Dallas has been most actively and efficiently employed in
protecting our commerce, in preventing the importation of slaves, and in
cooperating with the officers of the Army in carrying on the war in
Florida.

The satisfactory condition of our naval force abroad leaves at our disposal
the means of conveniently providing for a home squadron for the protection
of commerce upon our extensive coast. The amount of appropriations required
for such a squadron will be found in the general estimates for the naval
service for the year 1838.

The naval officers engaged upon our coast survey have rendered important
service to our navigation. The discovery of a new channel into the harbor
of New York, through which our largest ships may pass without danger, must
afford important commercial advantages to that harbor and add greatly to
its value as a naval station. The accurate survey of Georges Shoals, off
the coast of Massachusetts, lately completed, will render comparatively
safe a navigation hitherto considered dangerous.

Considerable additions have been made to the number of captains,
commanders, lieutenants, surgeons, and assistant surgeons in the Navy.
These additions were rendered necessary by the increased number of vessels
put in commission to answer the exigencies of our growing commerce.

Your attention is respectfully invited to the various suggestions of the
Secretary for the improvement of the naval service.

The report of the Postmaster-General exhibits the progress and condition of
the mail service. The operations of the Post-Office Department constitute
one of the most active elements of our national prosperity, and it is
gratifying to observe with what vigor they are conducted. The mail routes
of the United States cover an extent of about 142,877 miles, having been
increased about 37,103 miles within the last two years. The annual mail
transportation on these routes is about 36,228,962 miles, having been
increased about 10,359,476 miles within the same period. The number of
post-offices has also been increased from 10,770 to 12,099, very few of
which receive the mails less than once a week, and a large portion of them
daily. Contractors and postmasters in general are represented as attending
to their duties with most commendable zeal and fidelity. The revenue of the
Department within the year ending on the 30th of June last was
$4,137,056.59, and its liabilities accruing within the same time were
$3,380,847.75. The increase of revenue over that of the preceding year was
$708,166.41.

For many interesting details I refer you to the report of the
Postmaster-General, with the accompanying papers, Your particular attention
is invited to the necessity of providing a more safe and convenient
building for the accommodation of that Department.

I lay before Congress copies of reports submitted in pursuance of a call
made by me upon the heads of Departments for such suggestions as their
experience might enable them to make as to what further legislative
provisions may be advantageously adopted to secure the faithful application
of public moneys to the objects for which they are appropriated, to prevent
their misapplication or embezzlement by those intrusted with the
expenditure of them, and generally to increase the security of the
Government against losses in their disbursement. It is needless to dilate
on the importance of providing such new safeguards as are within the power
of legislation to promote these ends, and I have little to add to the
recommendations submitted in the accompanying papers.

By law the terms of service of our most important collecting and disbursing
officers in the civil departments are limited to four years, and when
reappointed their bonds are required to be renewed. The safety of the
public is much increased by this feature of the law, and there can be no
doubt that its application to all officers intrusted with the collection or
disbursement of the public money, whatever may be the tenure of their
offices, would be equally beneficial. I therefore recommend, in addition to
such of the suggestions presented by the heads of Departments as you may
think useful, a general provision that all officers of the Army or Navy, or
in the civil departments, intrusted with the receipt or payment of public
money, and whose term of service is either unlimited or for a longer time
than four years, be required to give new bonds, with good and sufficient
sureties, at the expiration of every such period.

A change in the period of terminating the fiscal year, from the 1st of
October to the 1st of April, has been frequently recommended, and appears
to be desirable.

The distressing casualties in steamboats which have so frequently happened
during the year seem to evince the necessity of attempting to prevent them
by means of severe provisions connected with their customhouse papers. This
subject was submitted to the attention of Congress by the Secretary of the
Treasury in his last annual report, and will be again noticed at the
present session, with additional details. It will doubtless receive that
early and careful consideration which its pressing importance appears to
require.

Your attention has heretofore been frequently called to the affairs of the
District of Columbia, and I should not again ask it did not their entire
dependence on Congress give them a constant claim upon its notice.
Separated by the Constitution from the rest of the Union, limited in
extent, and aided by no legislature of its own, it would seem to be a spot
where a wise and uniform system of local government might have been easily
adopted. This District has, however, unfortunately been left to linger
behind the rest of the Union. Its codes, civil and criminal, are not only
very defective, but full of obsolete or inconvenient provisions. Being
formed of portions of two States, discrepancies in the laws prevail in
different parts of the territory, small as it is; and although it was
selected as the seat of the General Government, the site of its public
edifices, the depository of its archives, and the residence of officers
intrusted with large amounts of public property and the management of
public business, yet it has never been subjected to or received that
special and comprehensive legislation which these circumstances peculiarly
demand. I am well aware of the various subjects of greater magnitude and
immediate interest that press themselves on the consideration of Congress,
but I believe there is not one that appeals more directly to its justice
than a liberal and even generous attention to the interests of the District
of Columbia and a thorough and careful revision of its local government. M.
VAN BUREN