one time, and the whole amount unredeemed now falls short of three millions. Of these the chief portion is not due till next year, and the whole would have been already extinguished could the Taeasury have realized the payments due to it from the Banks. If those due from them during the next year shall be punctually made, and if Congress shall keep the appropriations within the estimates there is every reason to believe that all the outstanding Treasury notes can be redeemed and the ordinary expenses defrayed, without imposing on the people any additional burden, either of loans or increased taxes.

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

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

my public functions, it is a satisfaction to me to be able to count on a cordial co-operation from you. At the time I entered upon my present duties, our ordinary disbursements-without including those on account of the public debt, the post office, and the trust funds in charge of the Government-had been largely increased by appropriations for the removal of the Indians, for repelling Indian hostilities, and for other less urgent expenses which grew out of an overflowing Treasury. Independent of the redemption of the public debt and trusts, the gross expenditures of seventeen and eighteen millions in 1834 and 1835 had, by these causes, swelled to twenty-nine millions in 1836; and the appropriations for 1837, made previously to the 4th of March, caused the expenditure to rise to the very large amount of thirty-three millions. We were enabled during the year 1838, notwithstanding the continuance of our Indian enbarrassments, somewhat to reduce this amount; and that for the present year, 1839, will not in all probability exceed twentysix millions, or six millions less than it was last year. With a determination so far as depends on me to continue this reduction, I have directed the estimates for 1840 to be subjected to the severest scrutiny, and to be limited to the absolute requirements of the public service. They will be found less than the expenditures of 1839 by over five millions of dollars. The precautionary measures which will be recommenced by the Secretary of the Treasury, to protect faithfully the public credit under the fluctuations and contingencies to which our receipts and expenditures are exposed, and especially in a commercial crisis like the present, are commended to your early attention.

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

The passage of a graduation law, with the guards before recommended, would also, I am persuaded, add considerably to the revenue for several years, and prove in other respects just and beneficial.

Your early consideration of the subject is therefore, once more earnestly requested.

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

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

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

ency of company officers, were very apparent, and I recommend that the staff officers be permanently separated from the line.

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

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

sources.

The latest accounts from the Exploring Expedition represent it as proceeding successfully in its objects, and promising results no less useful to trade and navigation than to science. The extent of post roads covered by mail service on the 1st of July last, was about 133,999 miles, and the rate of annual transportation upon them 34,496,878 miles. The number of post offices on that day was 12,789, and on the 30th ultimo, 13,028.

The revenue of the Post Office Department for the year ending the 30th of June last, was four millions four hundred and seventy-six thousand six hundred and thirty-eight dollars -exhibiting an increase over the preceding year of two hundred and forty-one thousand five hundred and sixty dollars. The engagements and liabilities of the department for the same period are four millions six hundred and twenty-four thousand one hundred and seventeen dollars.

The excess of liabilities over the revenue for the last two years has been met out of the surplus which had previously accumulated. The cash on hand on the 30th ultimo, was about $206,701 95, and the current income of the Department varies very little from the rate of current expenditures. Most of the service suspended last year has been restored, and most of the new routes established by the act of 7th July 1838, have been set in operation at an annual cost of $136,963. Notwithstanding the pecuniary difficulties of the country, the revenue of the Department appears to be increasing; and unless it shall be seriously checked by the recent suspension of payment by so many of the banks, it will be able not only to maintain the present mail service, but in a short time to extend it. It is gratifying to witness the promptitude and fidelity with which the agents of this department in general perform their public duties.

Some difficulties have arisen in relation to contracts for the transportation of the mails by railroad and steamboat companies. It appears that the maximum of compensation pro

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

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

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

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

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

From a report made in December of last year by the Secretary of State, to the Senate, showing the trial docket of each of the circuit courts, and the number of miles each judge has to travel in the performance of his duties, a great inequality appears in the amount of labour assigned to each judge. The number of terms to be held in each of the courts composing the ninth circuit, the distances between the places at which they sit, and from thence to the seat of Government, are represented to be such as to render it impossible for the judge of that circuit to perform in a manner corresponding with the public exigencies, his term and circuit duties. A revision, therefore, of the present arrangement of the circuits seems to be called for and is recommended to your notice. I think it proper to call your attention to the power assumed by Territorial Legislatures to authorize the issue of bonds by corporate companies on the guarantee of the Territory. Congress passed a law in 1836, providing that no act of a Territorial Legislature incorporating banks should have the force of law until approved by Congress, but acts of a very exceptionable character previously passed by the Legislature of Florida, were suffered to remain in force, by virtue of which bonds may be issued to a very large amount by those institutions. upon the faith of the Territory. A resolution intending to be a joint one, passed the Senate at the same session, expressing the sense of Congress that the laws in question ought not to be permitted to remain in force unless amended in many material respects, but it failed in the House of Representatives for want of time, and the desired amendments have not been made. The interests involved are of great importance, and the subject deserves your early and careful attention.

The continued agitation of the question relative to the best mode of keeping and disbursing the public money, still injuriously affects the business of the country. The suspension of specie payments in 1837, rendered the use of deposit banks as prescribed by the act of 1836, a source rather of

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

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

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

Nor is it to be overlooked that there exists a chain of necessary dependance among these institutions which obliges them to a great extent, to follow the course of others, notwithstanding its injustice to their own immediate creditors, or injury to the particular community in which they are placed. This dependance of a bank, which is in proportion to the extent of its debts for circulation and deposits, is not merely on others in its own vicinity, but on all those which connect it with the centre of trade. Distant banks may fail, without seriously affecting those in our principal commercial cities;

but the failure of the latter is felt at the extremities of the Union. The suspension at New York, in 1837, was everywhere, with very few exceptions, followed, as soon as it was known; that recently at Philadelphia immediately af fected the banks of the South and West in a similar manner. This dependance of our whole banking system on the institutions in a few large cities, is not found in the laws of their organization, but in those of trade and exchange. The banks at that centre to which currency flows, and where it is required in payments for merchandise, hold the power of controlling those in regions whence it comes, while the latter possess no means of restraining them; so that the value of individual property, and the prosperity of trade, through the whole interior of the country, are made to depend on the good or bad management of the banking institutions in the great seats of trade on the seaboard.

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

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

serious consideration.

Is an argument required beyond the exposition of these facts to show the impropriety of using our banking institution as depositories of the public money? Can we venture not only to encounter the risk of their individual and mutual mismanagement; but, at the same time, to place our foreign and domestic policy entirely under the control of a foreign moneyed interest? To do so is to impair the independence of our Government, as the present credit system has already impaired the independence of our banks. It is to submit all its important operations, whether of peace or war, to be con