tion on the part of the town to comply with his requisitions, he appealed to the commander of her Britannic Majesty's schooner "Bermuda," who was seen to have intercourse, and apparently much influence with the leaders among them,to interpose, and persuade them to take some course calculated to save the necessity of resorting to the extreme measure indicated in his proclamation; but that officer, instead of acceding to the request, did nothing more than to protest against the contemplated bombardment. No steps of any sort were taken, by the people, to give the satisfaction required. No individuals, if any there were, who regarded themselves as not responsible for the misconduct of the community, adopted any means to separate themselves from the fate of the guilty. The several charges, on which the demands for redress were founded, had been publicly known to all for some time, and were again announced to them. They did not deny any of these charges; they offered no explanation, nothing in extenuation of their conduct; but contumaciously refused to hold any intercourse with the commander of the "Cyane." By their obstinate silence they seemed rather desirous to provoke chastisement than to escape it. There is ample reason to believe that this conduct of wanton defiance, on their part, is imputable chiefly to the delusive idea that the American government would be deterred from punishing them, through fear of displeasing a formidable foreign power, which, they presumed to think, looked with complacency upon their aggressive and insulting deportment towards the United States. The "Cyane" at length fired upon the town. Before much injury had been done, the fire was twice suspended, in order to afford opportunity for an arrangement; but this was declined. Most of the buildings of the place, of little value generally, were, in the sequel, destroyed; but, owing to the considerate precautions taken by our naval commander, there was no destruction of life.

When the "Cyane" was ordered to Central America, it was confidently hoped and expected that no occasion would arise for "a resort to violence and destruction of property and loss of life." Instructions to that effect were given to her commander. And no extreme act would have been requisite had not the people themselves, by their extraordinary conduct in the affair, frustrated all the possible mild measures for obtaining satisfaction. A withdrawal from the place, the object of his visit entirely defeated, would, under the circumstances in which the commander of the "Cyane" found himself, have been absolute abandonment of all claim of our citizens for indemnification, and submissive acquiescence in national indig

nity. It would have encouraged in these lawless men a spirit of insolence and rapine most dangerous to the lives and property of our citizens at Punta Arenas, and probably emboldened them to grasp at the treasures and valuable merchandise continually passing over the Nicaragua route. certainly would have been most satisfactory to me if the objects of the "Cyane's" mission could have been consummated without any act of public force; but the arrogant contumacy of the offenders rendered it impossible to avoid the alternative, either to break up their establishment, or to leave them impressed with the idea that they might persevere with impunity in a career of insolence and plunder.

This transaction has been the subject of complaint on the part of some foreign powers, and has been characterized with more of harshness than of justice. If comparisons were to be instituted, it would not be difficult to present repeated instances in the history of States, standing in the very front of modern civilization, where communities, far less offending and more defenceless than Greytown, have been chastised with much greater severity, and where not cities only have been laid in ruins, but human life has been recklessly sacrificed, and the blood of the innocent made profusely to mingle with that of the guilty.

Passing from foreign to domestic affairs, your attention is naturally directed to the financial condition of the country, always a subject of general interest. For complete and exact information regarding the finances, and the various branches of the public service connected therewith, I refer you to the report of the Secretary of the Treasury; from which it will appear, that the amount of revenue during the last fiscal year, from all sources, was seventy-three million five hundred and forty-nine thousand seven hundred and five dollars; and that the public expenditures for the same period, exclusive of payments on account of the public debt, amounted to fifty-one million eighteen thousand two hundred and fortynine dollars. During the same period, the payments made in redemption of the public debt, including interest and premium, amounted to twenty-four million three hundred and thirty-six thousand three hundred and eighty dollars. To the sum total of the receipts of that year is to be added a balance remaining in the Treasury at the commencement thereof, amounting to twenty-one million nine hundred and fortytwo thousand eight hundred and ninety-two dollars; and at the close of the same year, a corresponding balance amounting to twenty million one hundred and thirty-seven thousand nine hundred and sixty-seven dollars of receipts above expen

ditures, also remained in the Treasury. Although, in the opinion of the Secretary of the Treasury, the receipts of the current fiscal year are not likely to equal in amount those of the last, yet they will undoubtedly exceed the amount of expenditures by at least fifteen millions of dollars. I shall, therefore, continue to direct that the surplus revenue be applied, so far as it can be judiciously and economically done, to the reduction of the public debt, the amount of which, at the commencement of the last fiscal year, was sixty-seven million three hundred and forty thousand six hundred and twenty-eight dollars; of which there had been paid on the twentieth day of November 1854, the sum of twenty-two million three hundred and sixty-five thousand one hundred and seventy-two dollars; leaving a balance of outstanding public debt of only forty-four million nine hundred and seventy-five thousand four hundred and fifty-six dollars, redeemable at different periods within fourteen years. There are also remnants of other government stocks, most of which are already due, and on which the interest has ceased, but which have not yet been presented for payment, amounting to two hundred and thirty-three thousand one hundred and seventy-nine dollars. This statement exhibits the fact, that the annual income of the government greatly exceeds the amount of its public debt, which latter remains unpaid, only because the time of payment has not yet matured, and it cannot be discharged at once, except at the option of public creditors, who prefer to retain the securities of the United States; and the other fact, not less striking, that the annual revenue from all sources exceeds, by many millions of dollars, the amount needed for a prudent and economical administration of the Government.

The estimates presented to Congress from the different Executive Departments, at the last session, amounted to thirtyeight million four hundred and six thousand five hundred and eighty-one dollars; and the appropriations made, to the sum of fifty-eight million one hundred and sixteen thousand nine hundred and fifty-eight dollars. Of this excess of appropriations over estimates, however, more than twenty millions was applicable to extraordinary objects, having no reference to the usual annual expenditures. Among these objects, was embraced ten millions to meet the third article of the treaty between the United States and Mexico; so that, in fact, for objects of ordinary expenditure, the appropriations were limited to considerably less than forty millions of dollars. I therefore, renew my recommendation for a reduction of the duties on imports. The report of the Secretary of the

Treasury presents a series of tables, showing the operation of the revenue system for several successive years, and as the general principle of reduction of duties with a view to revenue and not to protection may now be regarded as the settled policy of the country, I trust that little difficulty will be encountered in settling the details of a measure to that effect.

In connexion with this subject, I recommend a change in the laws, which recent experience has shown to be essential to the protection of the Government. There is no express provision of law, requiring the records and papers of a public character, of the several officers of the Government, to be left in their offices for the use of their successors, nor any provision declaring it felony on their part to make false entries in the books, or return false accounts. In the absence of such express provision by law, the outgoing officers, in many instances, have claimed and exercised the right to take into their own possession, important books and papers, on the ground that these were their private property; and have placed them beyond the reach of the Government. Conduct of this character, brought in several instances to the notice of the present Secretary of the Treasury, naturally awakened his suspicion, and resulted in the disclosure that at four ports, namely, Oswego, Toledo, Sandusky, and Milwaukie, the treasury had, by false entries, been defrauded, within the four years next preceding March, 1853, of the sum of one hundred and ninety-eight thousand dollars. The great difficulty with which the detection of these frauds has been attended, in consequence of the abstraction of books and papers by the retiring officers, and the facility with which similar frauds in the public service may be perpetrated, render the necessity of new legal enactments, in the respects above referred to, quite obvious. For other material modifications of the revenue laws which seem to me desirable, I refer you to the report of the Secretary of the Treasury. That report, and the tables which accompany it, furnish ample proofs of the solid foundation on which the financial security of the country rests, and of the salutary influence of the independent treasury system upon commerce and all monetary operations.

The experience of the last year furnishes additional reasons, I regret to say, of a painful character, for the recommendation heretofore made, to provide for increasing the military force employed in the territory inhabited by the Indians. The settlers on the frontier have suffered much from the incursions of predatory bands, and large parties of emigrants to our Pacific possessions have been massacred

with impunity. The recurrence of such scenes can only be prevented by teaching these wild tribes the power of, and their responsibility to, the United States. From the garrisons of our frontier posts, it is only possible to detach troops in small bodies; and though these have on all occasions displayed a gallantry and stern devotion to duty, which on a larger field would have commanded universal admiration, they have usually suffered severely in these conflicts with superior numbers, and have sometimes been entirely sacrificed. All the disposable force of the army is already employed on this service, and is known to be wholly inadequate to the protection which should be afforded. The public mind of the country has been recently shocked by savage atrocities committed upon defenceless emigrants and border settlements, and hardly less by the unnecessary destruction of valuable lives, where inadequate detachments of troops have undertaken to furnish the needed aid. Without increase of the military force, these scenes will be repeated, it is to be feared, on a larger scale, and with more disastrous consequences. Congress, I am sure, will perceive that the plainest duties and responsibilities of Government are involved in this question, and I doubt not that prompt action may be confidently anticipated when delay must be attended by such fearful hazards. The bill of the last session, providing for an increase of the pay of the rank and file of the army has had beneficial results, not only in facilitating enlistments, but in obvious improvements in the class of men who enter the service. I regret that corresponding consideration was not bestowed on the officers, who, in view of their character and services, and the expenses to which they are necessarily subject, receive at present what is, in my judgment, inadequate compensation.

The valuable services constantly rendered by the army, and its inestimable importance, as the nucleus around which the volunteer forces of the nation can promptly gather in the hour of danger, sufficiently attest the wisdom of maintaining a military peace establishment; but the theory of our system and the wise practice under it, require that any proposed augmentation, in time of peace, be only commensurate with our extended limits and frontier relations. While scrupulously adhering to this principle, I find, in existing circumstances, a necessity for increase of our military force, and it is believed that four new regiments, two of infantry and two of mounted men, will be sufficient to meet the present exigency. If it were necessary carefully to weigh the cost in a case of such urgency, it would be shown that the additional expense would be comparatively light.