It gives me pleasure to report a decided improvement in the financial

condition of the Post-Office Department as compared with several preceding

years. The receipts for the fiscal year 1861 amounted to $8,349,296.40,

which embraced the revenue from all the States of the Union for three

quarters of that year. Notwithstanding the cessation of revenue from the

so-called seceded States during the last fiscal year, the increase of

the correspondence of the loyal States has been sufficient to produce a

revenue during the same year of $8,299,820.90, being only $50,000 less

than was derived from all the States of the Union during the previous

year. The expenditures show a still more favorable result. The amount

expended in 1861 was $13,606,759.11. For the last year the amount has been

reduced to $11,125,364.13, showing a decrease of about $2,481,000 in the

expenditures as compared with the preceding year, and about $3,750,000 as

compared with the fiscal year 1860. The deficiency in the department

for the previous year was $4,551,966.98. For the last fiscal year it was

reduced to $2,112,814.57. These favorable results are in part owing to the

cessation of mail service in the insurrectionary States and in part to a

careful review of all expenditures in that department in the interest of

economy. The efficiency of the postal service, it is believed, has

also been much improved. The Postmaster-General has also opened a

correspondence through the Department of State with foreign governments

proposing a convention of postal representatives for the purpose of

simplifying the rates of foreign postage and to expedite the foreign

mails. This proposition, equally important to our adopted citizens and to

the commercial interests of this country, has been favorably entertained

and agreed to by all the governments from whom replies have been received.

I ask the attention of Congress to the suggestions of the

Postmaster-General in his report respecting the further legislation

required, in his opinion, for the benefit of the postal service.

The Secretary of the Interior reports as follows in regard to the public

lands:

"The public lands have ceased to be a source of revenue. From the 1st

July, 1861, to the 30th September, 1862, the entire cash receipts from the

sale of lands were $137,476.2--a sum much less than the expenses of our

land system during the same period. The homestead law, which will take

effect on the 1st of January next, offers such inducements to settlers

that sales for cash cannot be expected to an extent sufficient to meet the

expenses of the General Land Office and the cost of surveying and bringing

the land into market."

The discrepancy between the sum here stated as arising from the sales of

the public lands and the sum derived from the same source as reported from

the Treasury Department arises, as I understand, from the fact that the

periods of time, though apparently were not really coincident at the

beginning point, the Treasury report including a considerable sum now

which had previously been reported from the Interior, sufficiently large

to greatly overreach the sum derived from the three months now reported

upon by the Interior and not by the Treasury.

The Indian tribes upon our frontiers have during the past year manifested

a spirit of insubordination, and at several points have engaged in open

hostilities against the white settlements in their vicinity. The tribes

occupying the Indian country south of Kansas renounced their allegiance to

the United States and entered into treaties with the insurgents. Those

who remained loyal to the United States were driven from the country. The

chief of the Cherokees has visited this city for the purpose of restoring

the former relations of the tribe with the United States. He alleges that

they were constrained by superior force to enter into treaties with the

insurgents, and that the United States neglected to furnish the protection

which their treaty stipulations required.

In the month of August last the Sioux Indians in Minnesota attacked

the settlements in their vicinity with extreme ferocity, killing

indiscriminately men, women, and children. This attack was wholly

unexpected, and therefore no means of defense had been provided. It is

estimated that not less than 800 persons were killed by the Indians, and

a large amount of property was destroyed. How this outbreak was induced is

not definitely known, and suspicions, which may be unjust, need not to

be stated. Information was received by the Indian Bureau from different

sources about the time hostilities were commenced that a simultaneous

attack was to be made upon white settlements by all the tribes between

the Mississippi River and the Rocky Mountains. The State of Minnesota

has suffered great injury from this Indian war. A large portion of her

territory has been depopulated, and a severe loss has been sustained

by the destruction of property. The people of that State manifest much

anxiety for the removal of the tribes beyond the limits of the State as

a guaranty against future hostilities. The Commissioner of Indian Affairs

will furnish full details. I submit for your especial consideration

whether our Indian system shall not be remodeled. Many wise and good men

have impressed me with the belief that this can be profitably done.

I submit a statement of the proceedings of commissioners, which shows the

progress that has been made in the enterprise of constructing the Pacific

Railroad. And this suggests the earliest completion of this road, and also

the favorable action of Congress upon the projects now pending before them

for enlarging the capacities of the great canals in New York and Illinois,

as being of vital and rapidly increasing importance to the whole nation,

and especially to the vast interior region hereinafter to be noticed at

some greater length. I purpose having prepared and laid before you at an

early day some interesting and valuable statistical information upon this

subject. The military and commercial importance of enlarging the Illinois

and Michigan Canal and improving the Illinois River is presented in the

report of Colonel Webster to the Secretary of War, and now transmitted to

Congress. I respectfully ask attention to it.

To carry out the provisions of the act of Congress of the 15th of May

last, I have caused the Department of Agriculture of the United States to

be organized.

The Commissioner informs me that within the period of a few months this

department has established an extensive system of correspondence and

exchanges, both at home and abroad, which promises to effect highly

beneficial results in the development of a correct knowledge of recent

improvements in agriculture, in the introduction of new products, and in

the collection of the agricultural statistics of the different States.

Also, that it will soon be prepared to distribute largely seeds, cereals,

plants, and cuttings, and has already published and liberally diffused

much valuable information in anticipation of a more elaborate report,

which will in due time be furnished, embracing some valuable tests in

chemical science now in progress in the laboratory.

The creation of this department was for the more immediate benefit of a

large class of our most valuable citizens, and I trust that the

liberal basis upon which it has been organized will not only meet your

approbation, but that it will realize at no distant day all the fondest

anticipations of its most sanguine friends and become the fruitful source

of advantage to all our people.

On the 22d day of September last a proclamation was issued by the

Executive, a copy of which is herewith submitted.

In accordance with the purpose expressed in the second paragraph of that

paper, I now respectfully recall your attention to what may be called

"compensated emancipation."

A nation may be said to consist of its territory, its people, and its

laws. The territory is the only part which is of certain durability.

"One generation passeth away and another generation cometh, but the earth

abideth forever." It is of the first importance to duly consider and

estimate this ever enduring part. That portion of the earth's surface

which is owned and inhabited by the people of the United States is well

adapted to be the home of one national family, and it is not well

adapted for two or more. Its vast extent and its variety of climate and

productions are of advantage in this age for one people, whatever they

might have been in former ages. Steam, telegraphs, and intelligence have

brought these to be an advantageous combination for one united people.

In the inaugural address I briefly pointed out the total inadequacy of

disunion as a remedy for the differences between the people of the

two sections. I did so in language which I cannot improve, and which,

therefore, I beg to repeat:

"One section of our country believes slavery is right and ought to

be extended, while the other believes it is wrong and ought not to be

extended. This is the only substantial dispute. The fugitive-slave clause

of the Constitution and the laws for the suppression of the foreign slave

trade are each as well enforced, perhaps, as any law can ever be in a

community where the moral Sense of the people imperfectly supports the law

itself. The great body of the people abide by the dry legal obligation

in both cases, and a few break over in each. This, I think, cannot be

perfectly cured, and it would be worse in both cases after the separation

of the sections than before. The foreign slave trade, now imperfectly

suppressed, would be ultimately revived without restriction in one

section, while fugitive slaves, now only partially surrendered, would not

be surrendered at all by the other.

"Physically speaking, we can not separate. We can not remove our

respective sections from each other nor build an impassable wall between

them. A husband and wife may be divorced and go out of the presence and

beyond the reach of each other, but the different parts of our country

cannot do this. They cannot but remain face to face, and intercourse,

either amicable or hostile, must continue between them. Is it possible,

then, to make that intercourse more advantageous or more satisfactory

after separation than before? Can aliens make treaties easier than friends

can make laws? Can treaties be more faithfully enforced between aliens

than laws can among friends? Suppose you go to war, you cannot fight

always; and when, after much loss on both sides and no gain on either, you

cease fighting, the identical old questions, as to terms of intercourse,

are again upon you."

There is no line, straight or crooked, suitable for a national boundary

upon which to divide. Trace through, from east to west, upon the line

between the free and slave country, and we shall find a little more than

one third of its length are rivers, easy to be crossed, and populated,

or soon to be populated, thickly upon both sides; while nearly all its

remaining length are merely surveyors' lines, over which people may walk

back and forth without any consciousness of their presence. No part of

this line can be made any more difficult to pass by writing it down on

paper or parchment as a national boundary. The fact of separation, if it

comes, gives up on the part of the seceding section the fugitive-slave

clause along with all other constitutional obligations upon the section

seceded from, while I should expect no treaty stipulation would ever be

made to take its place.

But there is another difficulty. The great interior region bounded east

by the Alleghenies, north by the British dominions, west by the Rocky

Mountains, and south by the line along which the culture of corn and

cotton meets, and which includes part of Virginia, part of Tennessee,

all of Kentucky, Ohio, Indiana, Michigan, Wisconsin, Illinois, Missouri,

Kansas, Iowa, Minnesota, and the Territories of Dakota, Nebraska, and part

of Colorado, already has above 10,000,000 people, and will have 50,000,000

within fifty years if not prevented by any political folly or mistake.

It contains more than one third of the country owned by the United

States--certainly more than 1,000,000 square miles. Once half as populous

as Massachusetts already is, it would have more than 75,000,000 people. A

glance at the map shows that, territorially speaking, it is the great

body of the Republic. The other parts are but marginal borders to it, the

magnificent region sloping west from the Rocky Mountains to the Pacific

being the deepest and also the richest in undeveloped resources. In the

production of provisions, grains, grasses, and all which proceed from them

this great interior region is naturally one of the most important in the

world. Ascertain from statistics the small proportion of the region which

has yet been brought into cultivation, and also the large and rapidly

increasing amount of products, and we shall be overwhelmed with

the magnitude of the prospect presented. And yet this region has no

seacoast--touches no ocean anywhere. As part of one nation, its people

now find, and may forever find, their way to Europe by New York, to South

America and Africa by New Orleans, and to Asia by San Francisco; but

separate our common country into two nations, as designed by the present

rebellion, and every man of this great interior region is thereby cut off

from some one or more of these outlets, not perhaps by a physical barrier,

but by embarrassing and onerous trade regulations.

And this is true, wherever a dividing or boundary line may be fixed. Place

it between the now free and slave country, or place it south of Kentucky

or north of Ohio, and still the truth remains that none south of it can

trade to any port or place north of it, and none north of it can trade to

any port or place south of it, except upon terms dictated by a government

foreign to them. These outlets, east, west, and south, are indispensable

to the well-being of the people inhabiting and to inhabit this vast

interior region. Which of the three may be the best is no proper question.

All are better than either, and all of right belong to that people and to

their successors forever. True to themselves, they will not ask where a

line of separation shall be, but will vow rather that there shall be no

such line.

Nor are the marginal regions less interested in these communications to

and through them to the great outside world. They, too, and each of them,

must have access to this Egypt of the West without paying toll at the

crossing of any national boundary.

Our national strife springs not from our permanent part; not from the land

we inhabit; not from our national homestead. There is no possible severing

of this but would multiply and not mitigate evils among us. In all its

adaptations and aptitudes it demands union and abhors separation. In fact,

it would ere long force reunion, however much of blood and treasure the

separation might have cost.

Our strife pertains to ourselves--to the passing generations of men--and

it can without convulsion be hushed forever with the passing of one

generation.

In this view I recommend the adoption of the following resolution and

articles amendatory to the Constitution of the United States:

Resolved by the Senate and House of Representatives of the United States

of America, in Congress assembled, (two thirds of both Houses concurring),

That the following articles be proposed to the Legislatures (or

conventions) of the several States as amendments to the Constitution of

the United States, all or any of which articles, when ratified by three

fourths of the said Legislatures (or conventions), to be valid as part or

parts of the said Constitution, viz.

ART.--Every State wherein slavery now exists which shall abolish the same

therein at any time or times before the 1st day of January, A.D. 1900,

shall receive compensation from the United States as follows, to wit:

The President of the United States shall deliver to every such State bonds

of the United States bearing interest at the rate of -- per cent. per

annum to an amount equal to the aggregate sum of ------ for each slave

shown to have been therein by the Eighth Census of the United States, said

bonds to be delivered to such State by instalments or in one parcel at

the completion of the abolishment, accordingly as the same shall have been

gradual or at one time within such State; and interest shall begin to run

upon any such bond only from the proper time of its delivery as aforesaid.

Any State having received bonds as aforesaid and afterwards reintroducing

or tolerating slavery therein shall refund to the United States the bonds

so received, or the value thereof, and all interest paid thereon.

ART.--All slaves who shall have enjoyed actual freedom by the chances of

the war at any time before the end of the rebellion shall be forever

free; but all owners of such who shall not have been disloyal shall be

compensated for them at the same rates as is provided for States adopting

abolishment of slavery, but in such way that no slave shall be twice

accounted for.

ART.--Congress may appropriate money and otherwise provide for colonizing

free colored persons with their own consent at any place or places without

the United States.

I beg indulgence to discuss these proposed articles at some length.

Without slavery the rebellion could never have existed; without slavery it

could not continue.

Among the friends of the Union there is great diversity of sentiment and

of policy in regard to slavery and the African race amongst us. Some

would perpetuate slavery; some would abolish it suddenly and without

compensation; some would abolish it gradually and with compensation; some

would remove the freed people from us, and some would retain them with us;

and there are yet other minor diversities. Because of these diversities we

waste much strength in struggles among ourselves. By mutual concession we

should harmonize and act together. This would be compromise, but it would

be compromise among the friends and not with the enemies of the Union.

These articles are intended to embody a plan of such mutual concessions.

If the plan shall be adopted, it is assumed that emancipation will follow,

at least in several of the States.

As to the first article, the main points are, first, the emancipation;

secondly, the length of time for consummating it (thirty-seven years);

and, thirdly, the compensation.

The emancipation will be unsatisfactory to the advocates of perpetual

slavery, but the length of time should greatly mitigate their

dissatisfaction. The time spares both races from the evils of sudden

derangement--in fact, from the necessity of any derangement--while most

of those whose habitual course of thought will be disturbed by the measure

will have passed away before its consummation. They will never see it.

Another class will hail the prospect of emancipation, but will deprecate

the length of time. They will feel that it gives too little to the now

living slaves. But it really gives them much. It saves them from the

vagrant destitution which must largely attend immediate emancipation in

localities where their numbers are very great, and it gives the inspiring

assurance that their posterity shall be free forever. The plan leaves to

each State choosing to act under it to abolish slavery now or at the end

of the century, or at any intermediate tune, or by degrees extending

over the whole or any part of the period, and it obliges no two States to

proceed alike. It also provides for compensation, and generally the

mode of making it. This, it would seem, must further mitigate the

dissatisfaction of those who favor perpetual slavery, and especially of

those who are to receive the compensation. Doubtless some of those who are

to pay and not to receive will object. Yet the measure is both just and

economical. In a certain sense the liberation of slaves is the destruction

of property--property acquired by descent or by purchase, the same as any

other property. It is no less true for having been often said that the

people of the South are not more responsible for the original introduction

of this property than are the people of the North; and when it is

remembered how unhesitatingly we all use cotton and sugar and share the

profits of dealing in them, it may not be quite safe to say that the South

has been more responsible than the North for its continuance. If, then,

for a common object this property is to be sacrificed, is it not just that

it be done at a common charge?

And if with less money, or money more easily paid, we can preserve the

benefits of the Union by this means than we can by the war alone, is it

not also economical to do it? Let us consider it, then. Let us ascertain

the sum we have expended in the war Since compensated emancipation

was proposed last March, and consider whether if that measure had been

promptly accepted by even some of the slave States the same sum would not

have done more to close the war than has been otherwise done. If so,

the measure would save money, and in that view would be a prudent and

economical measure. Certainly it is not so easy to pay something as it is

to pay nothing, but it is easier to pay a large sum than it is to pay a

larger one. And it is easier to pay any sum when we are able than it is to

pay it before we are able. The war requires large sums, and requires

them at once. The aggregate sum necessary for compensated emancipation of

course would be large. But it would require no ready cash, nor the bonds

even any faster than the emancipation progresses. This might not, and

probably would not, close before the end of the thirty-seven years. At

that time we shall probably have a hundred millions of people to share the

burden, instead of thirty-one millions as now. And not only so, but the

increase of our population may be expected to continue for a long time

after that period as rapidly as before, because our territory will not

have become full. I do not state this inconsiderately. At the same ratio

of increase which we have maintained, on an average, from our first

national census, in 1790, until that of 1860, we should in 1900 have a

population of 103,208,415. And why may we not continue that ratio far

beyond that period? Our abundant room, our broad national homestead,

is our ample resource. Were our territory as limited as are the British

Isles, very certainly our population could not expand as stated. Instead

of receiving the foreign born as now, we should be compelled to send part

of the native born away. But such is not our condition. We have 2,963,000

square miles. Europe has 3,800,000, with a population averaging 73 persons

to the square mile. Why may not our country at some time average as many?

Is it less fertile? Has it more waste surface by mountains, rivers,

lakes, deserts, or other causes? Is it inferior to Europe in any natural

advantage? If, then, we are at some time to be as populous as Europe, how

soon? As to when this may be, we can judge by the past and the present;

as to when it will be, if ever, depends much on whether we maintain the

Union...............

[a page of tables of projected statistics]

These figures show that our country may be as populous as Europe now is

at some point between 1920 and 1930, say about 1925--our territory, at 73

persons to the square mile, being of capacity to contain 217,186,000.

And we will reach this, too, if we do not ourselves relinquish the chance

by the folly and evils of disunion or by long and exhausting war springing

from the only great element of national discord among us. While it cannot

be foreseen exactly how much one huge example of secession, breeding

lesser ones indefinitely, would retard population, civilization, and

prosperity, no one can doubt that the extent of it would be very great and

injurious.

The proposed emancipation would shorten the war, perpetuate peace,

insure this increase of population, and proportionately the wealth of

the country. With these we should pay all the emancipation would cost,

together with our other debt, easier than we should pay our other debt

without it. If we had allowed our old national debt to run at six per

cent. per annum, simple interest, from the end of our revolutionary

struggle until to-day, without paying anything on either principal or

interest, each man of us would owe less upon that debt now than each man

owed upon it then; and this because our increase of men through the

whole period has been greater than six per cent.--has run faster than the

interest upon the debt. Thus time alone relieves a debtor nation, so long

as its population increases faster than unpaid interest accumulates on its

debt.

This fact would be no excuse for delaying payment of what is justly due,

but it shows the great importance of time in this connection--the great

advantage of a policy by which we shall not have to pay until we number

100,000,000 what by a different policy we would have to pay now, when

we number but 31,000,000. In a word, it shows that a dollar will be much

harder to pay for the war than will be a dollar for emancipation on the

proposed plan. And then the latter will cost no blood, no precious life.

It will be a saving of both.

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