I repeat the recommendation of my predecessor in his annual message to

Congress in December last in regard to the disposition of the surplus

which will probably remain after satisfying the claims of American

citizens against China, pursuant to the awards of the commissioners under

the act of the 3d of March, 1859. If, however, it should not be deemed

advisable to carry that recommendation into effect, I would suggest that

authority be given for investing the principal, or the proceeds of the

surplus referred to, in good securities, with a view to the satisfaction

of such other just claims of our citizens against China as are not

unlikely to arise hereafter in the course of our extensive trade with that

empire.

By the act of the 5th of August last Congress authorized the President to

instruct the commanders of suitable vessels to defend themselves against

and to capture pirates. His authority has been exercised in a single

instance only. For the more effectual protection of our extensive and

valuable commerce in the Eastern seas especially, it seems to me that it

would also be advisable to authorize the commanders of sailing vessels to

recapture any prizes which pirates may make of United States vessels and

their cargoes, and the consular courts now established by law in Eastern

countries to adjudicate the cases in the event that this should not be

objected to by the local authorities.

If any good reason exists why we should persevere longer in withholding

our recognition of the independence and sovereignty of Haiti and Liberia,

I am unable to discern it. Unwilling, however, to inaugurate a novel

policy in regard to them without the approbation of Congress, I submit for

your consideration the expediency of an appropriation for maintaining

a charge d'affaires near each of those new States. It does not admit of

doubt that important commercial advantages might be secured by favorable

treaties with them.

The operations of the treasury during the period which has elapsed since

your adjournment have been conducted with signal success. The patriotism

of the people has placed at the disposal of the government the large means

demanded by the public exigencies. Much of the national loan has been

taken by citizens of the industrial classes, whose confidence in their

country's faith and zeal for their country's deliverance from present

peril have induced them to contribute to the support of the government

the whole of their limited acquisitions. This fact imposes peculiar

obligations to economy in disbursement and energy in action.

The revenue from all sources, including loans, for the financial year

ending on the 30th of June, 1861, was $86,835,900.27, and the expenditures

for the same period, including payments on account of the public debt,

were $84,578,834.47, leaving a balance in the treasury on the 1st of July

of $2,257,065.80. For the first quarter of the financial year ending on

the 30th of September, 1861, the receipts from all sources, including

the balance of the 1st of July, were $102,532,509.27, and the expenses

$98,239733.09, leaving a balance on the 1st of October, 1861, of

$4,292,776.18.

Estimates for the remaining three quarters of the year and for the

financial year 1863, together with his views of ways and means for meeting

the demands contemplated by them, will be submitted to Congress by the

Secretary of the Treasury. It is gratifying to know that the expenditures

made necessary by the rebellion are not beyond the resources of the

loyal people, and to believe that the same patriotism which has thus far

sustained the government will continue to sustain it till peace and union

shall again bless the land.

I respectfully refer to the report of the Secretary of War for information

respecting the numerical strength of the army and for recommendations

having in view an increase of its efficiency and the well-being of the

various branches of the service intrusted to his care. It is gratifying to

know that the patriotism of the people has proved equal to the occasion,

and that the number of troops tendered greatly exceeds the force which

Congress authorized me to call into the field.

I refer with pleasure to those portions of his report which make allusion

to the creditable degree of discipline already attained by our troops and

to the excellent sanitary condition of the entire army.

The recommendation of the Secretary for an organization of the militia

upon a uniform basis is a subject of vital importance to the future safety

of the country, and is commended to the serious attention of Congress.

The large addition to the regular army, in connection with the defection

that has so considerably diminished the number of its officers, gives

peculiar importance to his recommendation for increasing the corps of

cadets to the greatest capacity of the Military Academy.

By mere omission, I presume, Congress has failed to provide chaplains for

hospitals occupied by volunteers. This subject was brought to my notice,

and I was induced to draw up the form of a letter, one copy of which,

properly addressed, has been delivered to each of the persons, and at the

dates respectively named and stated in a schedule, containing also the

form of the letter, marked A, and herewith transmitted.

These gentlemen, I understand, entered upon the duties designated at the

times respectively stated in the schedule, and have labored faithfully

therein ever since. I therefore recommend that they be compensated at

the same rate as chaplains in the army. I further suggest that general

provision be made for chaplains to serve at hospitals, as well as with

regiments.

The report of the Secretary of the Navy presents in detail the operations

of that branch of the service, the activity and energy which have

characterized its administration, and the results of measures to increase

its efficiency and power such have been the additions, by construction and

purchase, that it may almost be said a navy has been created and brought

into service since our difficulties commenced.

Besides blockading our extensive coast, squadrons larger than ever before

assembled under our flag have been put afloat and performed deeds which

have increased our naval renown.

I would invite special attention to the recommendation of the Secretary

for a more perfect organization of the navy by introducing additional

grades in the service.

The present organization is defective and unsatisfactory, and the

suggestions submitted by the department will, it is believed, if adopted,

obviate the difficulties alluded to, promote harmony, and increase the

efficiency of the navy.

There are three vacancies on the bench of the Supreme Court--two by

the decease of Justices Daniel and McLean and one by the resignation of

Justice Campbell. I have so far forborne making nominations to fill these

vacancies for reasons which I will now state. Two of the outgoing judges

resided within the States now overrun by revolt, so that if successors

were appointed in the same localities they could not now serve upon their

circuits; and many of the most competent men there probably would not take

the personal hazard of accepting to serve, even here, upon the Supreme

bench. I have been unwilling to throw all the appointments north-ward,

thus disabling myself from doing justice to the South on the return of

peace; although I may remark that to transfer to the North one which has

heretofore been in the South would not, with reference to territory and

population, be unjust.

During the long and brilliant judicial career of Judge McLean his circuit

grew into an empire-altogether too large for any one judge to give the

courts therein more than a nominal attendance--rising in population from

1,470,018 in 1830 to 6,151,405 in 1860.

Besides this, the country generally has outgrown our present judicial

system. If uniformity was at all intended, the system requires that all

the States shall be accommodated with circuit courts, attended by Supreme

judges, while, in fact, Wisconsin, Minnesota, Iowa, Kansas, Florida,

Texas, California, and Oregon have never had any such courts. Nor can this

well be remedied without a change in the system, because the adding of

judges to the Supreme Court, enough for the accommodation of all parts

of the country with circuit courts, would create a court altogether too

numerous for a judicial body of any sort. And the evil, if it be one, will

increase as new States come into the Union. Circuit courts are useful or

they are not useful. If useful, no State should be denied them; if

not useful, no State should have them. Let them be provided for all or

abolished as to all.

Three modifications occur to me, either of which, I think, would be

an improvement upon our present system. Let the Supreme Court be of

convenient number in every event; then, first, let the whole country be

divided into circuits of convenient size, the Supreme judges to serve in a

number of them corresponding to their own number, and independent circuit

judges be provided for all the rest; or, secondly, let the Supreme judges

be relieved from circuit duties and circuit judges provided for all the

circuits; or, thirdly, dispense with circuit courts altogether, leaving

the judicial functions wholly to the district courts and an independent

Supreme Court.

I respectfully recommend to the consideration of Congress the present

condition of the statute laws, with the hope that Congress will be able

to find an easy remedy for many of the inconveniences and evils which

constantly embarrass those engaged in the practical administration of

them. Since the Organization of the government, Congress has enacted some

5000 acts and joint resolutions, which fill more than 6000 closely printed

pages and are scattered through many volumes. Many of these acts have been

drawn in haste and without sufficient caution, so that their provisions

are often obscure in themselves or in conflict with each other, or

at least so doubtful as to render it very difficult for even the

best-informed persons to ascertain precisely what the statute law really

is.

It seems to me very important that the statute laws should be made as

plain and intelligible as possible, and be reduced to as small a compass

as may consist with the fullness and precision of the will of the

Legislature and the perspicuity of its language. This well done would, I

think, greatly facilitate the labors of those whose duty it is to assist

in the administration of the laws, and would be a lasting benefit to the

people, by placing before them in a more accessible and intelligible form

the laws which so deeply concern their interests and their duties.

I am informed by some whose opinions I respect that all the acts of

Congress now in force and of a permanent and general nature might be

revised and rewritten so as to be embraced in one volume (or at most two

volumes) of ordinary and convenient size; and I respectfully recommend to

Congress to consider of the subject, and if my suggestion be approved

to devise such plan as to their wisdom shall seem most proper for the

attainment of the end proposed.

One of the unavoidable consequences of the present insurrection is

the entire suppression in many places of all the ordinary means of

administering civil justice by the officers and in the forms of existing

law. This is the case, in whole or in part, in all the insurgent States;

and as our armies advance upon and take possession of parts of those

States the practical evil becomes more apparent. There are no courts

or officers to whom the citizens of other States may apply for the

enforcement of their lawful claims against citizens of the insurgent

States, and there is a vast amount of debt constituting such claims.

Some have estimated it as high as $200,000,000, due in large part from

insurgents in open rebellion to loyal citizens who are even now making

great sacrifices in the discharge of their patriotic duty to support the

government.

Under these circumstances I have been urgently solicited to establish, by

military power, courts to administer summary justice in such cases. I

have thus far declined to do it, not because I had any doubt that the end

proposed--the collection of the debts--was just and right in itself, but

because I have been unwilling to go beyond the pressure of necessity in

the unusual exercise of power. But the powers of Congress, I suppose, are

equal to the anomalous occasion, and therefore I refer the whole matter to

Congress, with the hope that a plan maybe devised for the administration

of justice in all such parts of the insurgent States and Territories as

may be under the control of this government, whether by a voluntary return

to allegiance and order or by the power of our arms; this, however, not

to be a permanent institution, but a temporary substitute, and to cease as

soon as the ordinary courts can be reestablished in peace.

It is important that some more convenient means should be provided, if

possible, for the adjustment of claims against the government, especially

in view of their increased number by reason of the war. It is as much the

duty of government to render prompt justice against itself in favor of

citizens as it is to administer the same between private individuals. The

investigation and adjudication of claims in their nature belong to

the judicial department. Besides, it is apparent that the attention of

Congress will be more than usually engaged for some time to come with

great national questions. It was intended by the organization of the

Court of Claims mainly to remove this branch of business from the halls of

Congress; but, while the court has proved to be an effective and valuable

means of investigation, it in great degree fails to effect the object of

its creation for want of power to make its judgments final.

Fully aware of the delicacy, not to say the danger of the subject,

I commend to your careful consideration whether this power of making

judgments final may not properly be given to the court, reserving the

right of appeal on questions of law to the Supreme Court, with such other

provisions as experience may have shown to be necessary.

I ask attention to the report of the Postmaster general, the following

being a summary statement of the condition of the department:

The revenue from all sources during the fiscal year ending June 30,

1861, including the annual permanent appropriation of $700,000 for the

transportation of "free mail matter," was $9,049,296.40, being about 2 per

cent. less than the revenue for 1860.

The expenditures were $13,606,759.11, showing a decrease of more than

8 per cent. as compared with those of the previous year and leaving

an excess of expenditure over the revenue for the last fiscal year of

$4,557,462.71.

The gross revenue for the year ending June 30, 1863, is estimated at

an increase of 4 per cent. on that of 1861, making $8,683,000, to which

should be added the earnings of the department in carrying free matter,

viz., $700,000, making $9,383,000.

The total expenditures for 1863 are estimated at $12,528,000, leaving an

estimated deficiency of $3,145,000 to be supplied from the treasury in

addition to the permanent appropriation.

The present insurrection shows, I think, that the extension of this

District across the Potomac River at the time of establishing the capital

here was eminently wise, and consequently that the relinquishment of

that portion of it which lies within the State of Virginia was unwise and

dangerous. I submit for your consideration the expediency of regaining

that part of the District and the restoration of the original boundaries

thereof through negotiations with the State of Virginia.

The report of the Secretary of the Interior, with the accompanying

documents, exhibits the condition of the several branches of the public

business pertaining to that department. The depressing influences of the

insurrection have been specially felt in the operations of the Patent and

General Land Offices. The cash receipts from the sales of public lands

during the past year have exceeded the expenses of our land system only

about $200,000. The sales have been entirely suspended in the Southern

States, while the interruptions to the business of the country and the

diversion of large numbers of men from labor to military service have

obstructed settlements in the new States and Territories of the Northwest.

The receipts of the Patent Office have declined in nine months about

$100,000.00 rendering a large reduction of the force employed necessary to

make it self-sustaining.

The demands upon the Pension Office will be largely increased by

the insurrection. Numerous applications for pensions, based upon the

casualties of the existing war, have already been made. There is reason to

believe that many who are now upon the pension rolls and in receipt of the

bounty of the government are in the ranks of the insurgent army or

giving them aid and comfort. The Secretary of the Interior has directed

a suspension of the payment of the pensions of such persons upon proof

of their disloyalty. I recommend that Congress authorize that officer to

cause the names of such persons to be stricken from the pension rolls.

The relations of the government with the Indian tribes have been greatly

disturbed by the insurrection, especially in the southern superintendency

and in that of New Mexico. The Indian country south of Kansas is in the

possession of insurgents from Texas and Arkansas. The agents of the United

States appointed since the 4th of March for this superintendency have been

unable to reach their posts, while the most of those who were in office

before that time have espoused the insurrectionary cause, and assume

to exercise the powers of agents by virtue of commissions from the

insurrectionists. It has been stated in the public press that a portion of

those Indians have been organized as a military force and are attached

to the army of the insurgents. Although the government has no official

information upon this subject, letters have been written to the

Commissioner of Indian Affairs by several prominent chiefs giving

assurance of their loyalty to the United States and expressing a wish for

the presence of Federal troops to protect them. It is believed that upon

the repossession of the country by the Federal forces the Indians will

readily cease all hostile demonstrations and resume their former relations

to the government.

Agriculture, confessedly the largest interest of the nation, has not

a department nor a bureau, but a clerkship only, assigned to it in

the government. While it is fortunate that this great interest is so

independent in its nature as not to have demanded and extorted more from

the government, I respectfully ask Congress to consider whether something

more cannot be given voluntarily with general advantage.

Annual reports exhibiting the condition of our agriculture, commerce, and

manufactures would present a fund of information of great practical value

to the country. While I make no suggestion as to details, I venture the

opinion that an agricultural and statistical bureau might profitably be

organized.

The execution of the laws for the suppression of the African slave trade

has been confided to the Department of the Interior. It is a subject of

gratulation that the efforts which have been made for the suppression of

this inhuman traffic have been recently attended with unusual success.

Five vessels being fitted out for the slave trade have been seized and

condemned. Two mates of vessels engaged in the trade and one person in

equipping a vessel as a slaver have been convicted and subjected to the

penalty of fine and imprisonment, and one captain, taken with a cargo of

Africans on board his vessel, has been convicted of the highest grade of

offense under our laws, the punishment of which is death.

The Territories of Colorado, Dakota, and Nevada, created by the last

Congress, have been organized, and civil administration has been

inaugurated therein under auspices especially gratifying when it is

considered that the leaven of treason was found existing in some of these

new countries when the Federal officers arrived there.

The abundant natural resources of these Territories, with the security and

protection afforded by organized government, will doubtless invite to them

a large immigration when peace shall restore the business of the country

to its accustomed channels. I submit the resolutions of the Legislature

of Colorado, which evidence the patriotic spirit of the people of the

Territory. So far the authority of the United States has been upheld in

all the Territories, as it is hoped it will be in the future. I commend

their interests and defense to the enlightened and generous care of

Congress.

I recommend to the favorable consideration of Congress the interests of

the District of Columbia. The insurrection has been the cause of

much suffering and sacrifice to its inhabitants, and as they have no

representative in Congress that body should not overlook their just claims

upon the government.

At your late session a joint resolution was adopted authorizing the

President to take measures for facilitating a proper representation of

the industrial interests of the United States at the exhibition of the

industry of all nations to be holden at London in the year 1862. I regret

to say I have been unable to give personal attention to this subject--a

subject at once so interesting in itself and so extensively and intimately

connected with the material prosperity of the world. Through the

Secretaries of State and of the Interior a plan or system has been devised

and partly matured, and which will be laid before you.

Under and by virtue of the act of Congress entitled "An act to confiscate

property used for insurrectionary purposes," approved August 6, 1861, the

legal claims of certain persons to the labor and service of certain other

persons have become forfeited, and numbers of the latter thus liberated

are already dependent on the United States, and must be provided for in

some way. Besides this, it is not impossible that some of the States

will pass similar enactments for their own benefit respectively, and by

operation of which persons of the same class will be thrown upon them for

disposal. In such case I recommend that Congress provide for accepting

such persons from such States, according to some mode of valuation, in

lieu, pro tanto, of direct taxes, or upon some other plan to be agreed on

with such States respectively; that such persons, on such acceptance by

the General Government, be at once deemed free, and that in any event

steps be taken for colonizing both classes (or the one first mentioned if

the other shall not be brought into existence) at some place or places in

a climate congenial to them. It might be well to consider, too, whether

the free colored people already in the United States could not, so far as

individuals may desire, be included in such colonization.

To carry out the plan of colonization may involve the acquiring of

territory, and also the appropriation of money beyond that to be expended

in the territorial acquisition. Having practised the acquisition of

territory for nearly sixty years, the question of constitutional power to

do so is no longer an open one with us. The power was questioned at first

by Mr. Jefferson, who, however, in the purchase of Louisiana, yielded

his scruples on the plea of great expediency. If it be said that the only

legitimate object of acquiring territory is to furnish homes for white

men, this measure effects that object, for emigration of colored men

leaves additional room for white men remaining or coming here. Mr.

Jefferson, however, placed the importance of procuring Louisiana more on

political and commercial grounds than on providing room for population.

On this whole proposition, including the appropriation of money with

the acquisition of territory, does not the expediency amount to absolute

necessity--that without which the government itself cannot be perpetuated?

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