588 vessels, completed and in the course of completion, and of these 75 are iron-clad or armoured steamers. The events of the war gives an increased interest and importance to the navy which will probably extend beyond the war itself.

The armoured vessels in our navy completed and in service, or which are under contract and approaching completion, are believed to exceed in number those of any other Power. But while these · may be relied upon for harbour defence and coast service, others of greater strength and capacity will be necessary for cruizing purposes, and to maintain our rightful position on the ocean.

The change that has taken place in naval vessels and naval warfare since the introduction of steam as a motive power for shipsof-war demands either a corresponding change in some of our existing navy yards, or the establishment of new ones, for the construction and necessary repair of modern naval vessels. No inconsiderable embarrassment, delay, and public injury have been experienced from the want of such governmental establishments. The necessity of such a navy yard, so furnished, at some suitable place upon the Atlantic seaboard, has on repeated occasions been brought to the attention of Congress by the Navy Department, and is again presented in the report of the Secretary which accompanies this communication. I think it my duty to invite your special attention to this subject, and also to that of establishing a yard and depôt for naval purposes upon one of the western rivers. A naval force has been created on those interior waters, and under many disadvantages, within little more than two years, exceeding in numbers the whole naval force of the country at the commencement of the present administration. Satisfactory and important as have been the performances of the heroic men of the navy at this interesting period, they are scarcely more wonderful than the success of our mechanics and artisans in the production of war vessels which has created a new form of naval power.

Our country has advantages superior to any other nation in our resources of iron and timber, with inexhaustible quantities of fuel in the immediate vicinity of both, and all available and in close proximity to navigable waters. Without the advantage of public works, the resources of the nation have been developed and its power displayed in the construction of a navy of such magnitude which has, at the very period of its creation, rendered signal service to the Union.

The increase of the number of seamen in the public service, from 7,500 men, in the spring of 1861, to about 34,000 at the present time, has been accomplished without special legislation, or extraordinary bounties to promote that increase. It has been found, however, that the operation of the draft, with the high bounties [1862-63. LIII.] 2 B

paid for army recruits, is beginning to affect injuriously the naval service, and will, if not corrected, be likely to impair its efficiency, by detaching seamen from their proper vocation, and inducing them to enter the army. I therefore respectfully suggest that Congress might aid both the army and naval services by a definite provision on this subject, which would at the same time be equitable to the communities more especially interested.

I commend to your consideration the suggestions of the Secretary of the Navy in regard to the policy of fostering and training seamen, and also the education of officers and engineers for the naval service. The Naval Academy is rendering signal service in preparing midshipmen for the highly responsible duties which in after life they will be required to perform. In order that the country should not be deprived of the proper quota of educated officers, for which legal provision has been made at the naval school, the vacancies caused by the neglect or omission to make nominations from the States in insurrection, have been filled by the Secretary of the Navy. The school is now more full and complete than at any former period, and in every respect entitled to the favourable consideration of Congress.

During the past fiscal year the financial condition of the Post Office Department has been one of increasing prosperity, and I am gratified in being able to state that the actual postal revenue has nearly equalled the entire expenditures; the latter amounting to 11,314,206 dollars 84 cents, and the former to 11,163,789 dollars 59 cents, leaving a deficiency of but 150,417 dollars 25 cents. In 1860, the year immediately preceding the rebellion, the deficiency amounted to 5,656,705 dollars 49 cents, the postal receipts of that year being 2,645,722 dollars 19 cents less than those of 1863. The decrease since 1860 in the annual amount of transportation has been only about 25 per cent., but the annual expenditure on account of the same has been reduced 35 per cent. It is manifest, therefore, that the Post Office Department may become self-sustaining in a few years, even with the restoration of the whole service.

The International Conference of Postal Delegates from the principal countries of Europe and America, which was called at the suggestion of the Postmaster-General, met at Paris on the 11th of May last, and concluded its deliberations on the 8th of June. The principles established by the conference as best adapted to facilitate postal intercourse between nations, and as the basis of future postal Conventions, inaugurate a general system of uniform international charges, at reduced rates of postage, and cannot fail to produce beneficial results.

I refer you to the report of the Secretary of the Interior, which

is herewith laid before you, for useful and varied information in relation to the public lands, Indian affairs, patents, pensions, and other matters of public concern pertaining to his department.

The quantity of land disposed of during the last and the first quarter of the present fiscal year was 3,841,549 acres, of which 161,911 acres were sold for cash, 1,456,514 acres were taken up under the homestead law, and the residue disposed of under laws granting lands for military bounties, for railroad, and other purposes. It also appears that the sale of the public lands is largely on the increase.

It has long been a cherished opinion of some of our wisest statesmen that the people of The United States had a higher and more enduring interest in the early settlement and substantial cultivation of the public lands than in the amount of direct revenue to be derived from the sale of them. This opinion has had a controlling influence in shaping legislation upon the subject of our national domain. I may cite, as evidence of this, the liberal measures adopted in reference to actual settlers; the grant to the States of the overflowed lands within their limits in order to their being reclaimed and rendered fit for cultivation; the grants to railway companies of alternate sections of land upon the contemplated lines of their roads which, when completed, will so largely multiply the facilities for reaching our distant possessions. This policy ha received its most signal and beneficent illustration in the recent enactment granting homesteads to actual settlers. Since the 1st day of January last the before-mentioned quantity of 1,456,514 acres of land have been taken up under its provisions. This fact and the amount of sales furnish gratifying evidence of increasing settlement upon the public lands, notwithstanding the great struggle in which the energies of the nation have been engaged, and which has required so large a withdrawal of our citizens from their accustomed pursuits. I cordially concur in the recommendation of the Secretary of the Interior, suggesting a modification of the Act in favour of those engaged in the military and naval service of The United States. I doubt not that Congress will cheerfully adopt such measures as will, without essentially changing the general features of the system, secure, to the greatest practicable extent, its benefits to those who have left their homes in the defence of the country in this arduous crisis.

I invite your attention to the views of the Secretary as to the propriety of raising, by appropriate legislation, a revenue from the mineral lands of The United States.

The measures provided at your last session for the removal of certain Indian tribes have been carried into effect. Sundry Treaties have been negotiated which will, in due time, be submitted for the

constitutional action of the Senate. They contain stipulations for extinguishing the possessory rights of the Indians to large and valuable tracts of land. It is hoped that the effect of these Treaties will result in the establishment of permanent friendly relations with such of these tribes as have been brought into frequent and bloody collision with our outlying settlements and emigrants. Sound policy and our imperative duty to these wards of the government demand our anxious and constant attention to their material wellbeing, to their progress in the arts of civilization, and, above all, to that moral training which, under the blessing of Divine Providence, will confer upon them the elevated and sanctifying influences, the hopes and consolations of the Christian faith.

I suggested in my last annual message the propriety of remodelling our Indian system. Subsequent events have satisfied me of its necessity. The details set forth in the report of the Secretary evince the urgent need for immediate legislative action.

I commend the benevolent institutions, established or patronized by the Government in this district, to your generous and fostering

care.

The attention of Congress, during the last session, was engaged to some extent with a proposition for enlarging the water communication between the Mississippi river and the north-eastern seaboard, which proposition, however, failed for the time. Since then, upon a call of the greatest respectability, a Convention has been held at Chicago upon the same subject, a summary of whose views is contained in a memorial addressed to the President and Congress, and which I now have the honour to lay before you. That this interest is one which, ere long, will force its own way, I do not entertain a doubt, while it is submitted entirely to your wisdom as to what can be done now. Augmented interest is given to this subject by the actual commencement of work upon the Pacific railroad, under auspices so favourable to rapid progress and completion. The enlarged navigation becomes a palpable need to the great road.

I transmit the second annual report of the Commissioner of the Department of Agriculture, asking your attention to the developments in that vital interest of the nation.

When Congress assembled a year ago the war had already lasted nearly 20 months, and there had been many conflicts on both land and sea, with varying results. The rebellion had been pressed back into reduced limits; yet the tone of public feeling and opinion, at home and abroad, was not satisfactory. With other signs, the popular elections, then just past, indicated uneasiness among ourselves, while amid much that was cold and menacing the kindest words coming from Europe were uttered in accents of pity, that we were too blind to surrender a hopeless cause. Our commerce was

suffering greatly by a few armed vessels built upon and furnished from foreign shores, and we were threatened with such additions from the same quarter as would sweep our trade from the sea and raise our blockade. We had failed to elicit from European Governments anything hopeful upon this subject. The preliminary emancipation proclamation, issued in September, was running its assigned period to the beginning of the new year. A month later the final proclamation came, including the announcement that coloured men of suitable condition would be received into the war service. The policy of emancipation, and of employing black soldiers, gave to the future a new aspect, about which hope, and fear, and doubt contended in uncertain conflict. According to our political system, as a matter of civil administration, the General Government had no lawful power to effect emancipation in any State, and for a long time it had been hoped that the rebellion could be suppressed without resorting to it as a military measure. It was all the while deemed possible that the necessity for it might come, and that if it should, the crisis of the contest would then be presented. It came, and, as was anticipated, it was followed by dark and doubtful days. 11 months having now passed, we are permitted to take another review. The rebel borders are pressed still further back, and by the complete opening of the Mississippi the country dominated by the rebellion is divided into distinct parts, with no practical communication between them. Tennessee and Arkansas have been substantially cleared of insurgent control, and influential citizens in each, owners of slaves and advocates of slavery at the beginning of the rebellion, now declare openly for emancipation in their respective States. Of those States not included in the emancipation proclamation, Maryland and Missouri, neither of which 3 years ago would tolerate any restraint upon the extension of slavery into new territories, only dispute now as to the best mode of removing it within their own limits.

Of those who were slaves at the beginning of the rebellion, full 100,000 are now in The United States military service, about onehalf of which number actually bear arms in the ranks; thus giving the double advantage of taking so much labour from the insurgent cause, and supplying the places which otherwise must be filled with so many white men. So far as tested, it is difficult to say they are not as good soldiers as any. No servile insurrection, or tendency to violence or cruelty, has marked the measures of emancipation and arming the blacks. These measures have been much discussed in foreign countries, and contemporary with such discussion the tone of public sentiment there is much improved. At home the same measures have been fully discussed, supported, criticised, and denounced, and the annual elections following are highly encouraging